# Bitcoin’s Prehistory Sam Callahan - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/bitcoin-s-prehistory/ This is the story of the shoulders Satoshi stood on to bring about the Bitcoin Revolution. --- This is the story of the shoulders Satoshi stood on to bring about the Bitcoin Revolution. **Sam Callahan** ([@samcallah](https://twitter.com/samcallah)) The story of Bitcoin begins long before Satoshi sent his white paper to the Cryptography Mailing List in 2008\. The fight for privacy and freedom in the digital age started with the Cryptographers, and then the mantle was taken up by the Cypherpunks, and now, the torch has been passed to the Bitcoiners. Satoshi was no doubt a genius, but he didn't invent something new from scratch. Rather Satoshi cleverly combined existing technologies to create something new and groundbreaking, Bitcoin. - [Whitfield Diffie on the History of Cryptography](https://www.whatbitcoindid.com/podcast/whitfield-diffie-on-the-history-of-cryptography) (Peter McCormack, Whitfield Diffie): The history of BTC begins with the Cryptographers. Without these pioneers, BTC may have never come into existence. This is an interview with Whitfield Diffie, a cryptographer who recounts his time building in the space. - [The Genesis Files: How David Chaum's ECash Spawned a Cypherpunk Dream](https://bitcoinmagazine.com/culture/genesis-files-how-david-chaums-ecash-spawned-cypherpunk-dream) (Aaron van Wirdum): This is a great overview of David Chaum, the inventor of the first internet money, eCash. Despite its failure, Chaum managed to inspire many people, including a group of coders who called themselves "the Cypherpunks". - [A Crypto Anarchist Manifesto](https://nakamotoinstitute.org/crypto-anarchist-manifesto/) (Timothy C. May): Another Cypherpunk founder, Timothy C. May wrote another manifesto earlier in 1988 called, "the Crypto Anarchist Manifesto" which basically predicts the fight between cryptography and the State over the battle for power. - [A Cypherpunk's Manifesto](https://nakamotoinstitute.org/cypherpunk-manifesto/) (Eric Hughes): Inspired by Cryptographers like Chaum, the Cypherpunks were co-founded in 1992 by Timothy C. May, Eric Hughes, and John Gilmore. Eric Hughes penned "A Cyperpunk's Manifesto" which laid out the groups' mission & beliefs. - [Why I Wrote PGP](https://nakamotoinstitute.org/why-i-wrote-pgp/) (Philip R. Zimmermann): At the heart of the legal battle was Phil Zimmermann's program "Pretty Good Privacy" or PGP. Phil wrote this letter to explain why he wrote PGP. He made the tech to limit the State's ability to spy on its free citizens. - [Cypher Wars](https://www.wired.com/1994/11/cypher-wars/) (Steven Levy): PGP was a software encryption program that made private emails & files almost spy-proof. The State enjoyed infringing on the right to privacy of its citizens before PGP came around and ruined the party. A battle ensued. - [When Encryption Was a Crime: The 1990s Battle for Free Speech in Software](https://www.youtube.com/watch?v=lv8OFSWZkGs&t=4s) (ReasonTV): This video is a concise overview of the Crypto Wars in the 1990s. The NSA and other state actors were attempting to argue that Cryptography research not be made public. Cryptographers fought against this state movement. - [Why Bitcoin Now: David Chaum and Adam Back reflect on the Crypto Wars](https://unchainedpodcast.com/why-bitcoin-now-david-chaum-and-adam-back-reflect-on-the-crypto-wars/) (Laura Shin, David Chaum, Adam Back): David Chaum and Adam Back actually sat down and discussed these Crypto Wars and the time period on this podcast. It was interesting to hear them describe these times in their own words. - [Bitcoin and the Rise of the Cypherpunks](https://blog.lopp.net/bitcoin-and-the-rise-of-the-cypherpunks/) (Jameson Lopp): Since their founding, the Cypherpunks have been activists for privacy and freedom in the digital age. They've been in a constant fight against ever-invasive Governments to protect peoples' rights since the Crypto Wars. - [Hashcash - A Denial of Service Counter-Measure](https://nakamotoinstitute.org/static/docs/hashcash.pdf) (Adam Back): In 1997, Dr. Adam Back released his paper introducing Hashcash which utilized something called, Proof of Work to come to a consensus. - [Bitcoin's Proof Of work: with Adam Back](https://www.theinvestorspodcast.com/bitcoin-fundamentals/adam-back-bitcoins-proof-of-work/) (Preston Pysh, Adam Back): Dr. Adam Back describes Proof of Work in this podcast. It's a fascinating listen because he recounts his days with Hashcash and touches on what Proof of Work is. - [The Genesis Files: Hashcash or How Adam Back Designed Bitcoin's Motor Block](https://bitcoinmagazine.com/technical/genesis-files-hashcash-or-how-adam-back-designed-bitcoins-motor-block) (Aaron van Wirdum): Here is another great article from Aaron van Wirdum discussing Hashcash and Dr. Adam Back. - [b-money](http://www.weidai.com/bmoney.txt) (Wei Dai): Inspired by Dr. Adam Back, another Cypherpunk Wei Dai had an idea to further expand on Adam Back's PoW and he created something different. He created b-money to "enable online economies that are purely voluntary." - [The Genesis Files: If Bitcoin Had a First Draft, Wei-Dai's B-Money Was It](https://bitcoinmagazine.com/technical/genesis-files-if-bitcoin-had-first-draft-wei-dais-b-money-was-it) (Aaron van Wirdum): Aaron van Wirdum once again describes the story of b-money perfectly. - [Reusable Proofs of Work](https://web.archive.org/web/20071222072154/http://rpow.net/) (Hal Finney): Around the same time, another Cypherpunk was also starting to think about money and Hashcash, his name was Nick Szabo. He created a new money utilizing Hal Finney's Reusable Proof of Work. Read about RPOW in Hal's post. - [Bit Gold](https://unenumerated.blogspot.com/2005/12/bit-gold.html) (Nick Szabo): Bit Gold combined a lot of things about Hashcash but in a unique way that very closely resembles Bitcoin. Nick Szabo's Bit Gold without a doubt inspired Satoshi Nakamoto in his thinking around inventing Bitcoin. - [The Genesis Files: With Bit Gold, Szabo was Inches Away From Inventing Bitcoin](https://bitcoinmagazine.com/culture/genesis-files-bit-gold-szabo-was-inches-away-inventing-bitcoin) (Aaron van Wirdum): Aaron van Wirdum once again does a deep dive into Nick Szabo and Bit Gold in this in-depth article. - [Antiques, Time, Gold, and Bit gold](https://unenumerated.blogspot.com/2005/10/antiques-time-gold-and-bit-gold.html) (Nick Szabo): One of the things that Nick Szabo termed was the idea of "unforgeable costliness" in the production of Bit Gold which made it scarce. This important insight was shared in this short blog post. - [Bitcoin: A Peer-to-Peer Electronic Cash System](https://bitcoin.org/bitcoin.pdf) (Satoshi Nakamoto): Nakamoto's White Paper remains one of the most concise and straightforward technical explanations of Bitcoin in existence. Satoshi sent this to the mailing list on 10/31/2008 and the world has never been the same since. - [Satoshi's Original Email Thread](https://www.mail-archive.com/search?l=cryptography%40metzdowd.com&q=subject:%22Bitcoin+P2P+e%5C-cash+paper%22&o=oldest&f=1) (Satohsi Nakamoto): Here's the original email thread from Satoshi if you feel like reading a piece of history. - [The Quest For Digital Cash](https://bitcoinmagazine.com/culture/bitcoin-adam-back-and-digital-cash) (Alex Gladstein): If you are looking for a piece to share that reviews everything we discussed here in this rabbit hole, I would share this one from Alex Gladstein. It touches on every part of this journey. Thanks for reading! # The World of Bitcoin Art Brekkie von Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/the-world-of-bitcoin-art/ This Rabbit Hole is not all encompassing, but instead aims to share different perspectives, highlight the work of a few notable Bitcoin Artists, and hopefully provide a springboard for further exploration of Bitcoin Art. --- This Rabbit Hole is not all encompassing, but instead aims to share different perspectives, highlight the work of a few notable Bitcoin Artists, and hopefully provide a springboard for further exploration of Bitcoin Art. **Brekkie von Bitcoin** ([@BVBTC](https://twitter.com/BVBTC)) Throughout history, artists have played a major role in spreading ideas and furthering movements. Since the earliest days of Bitcoin, there have been artists inspired by Bitcoin and what it represents. The artwork and mediums in Bitcoin are as varied as Bitcoiners themselves, but I believe that all Bitcoin artists share a common passion to help spread the Bitcoin message and make the world a better place. “Bitcoin Art” means different things to different people, and that’s part of the beauty of this decentralized movement. - [Bitcoin Artwork Makes Life Beautiful](https://bitcoinmagazine.com/culture/bitcoin-artwork-makes-life-beautiful) (Nelson Chen): This article by Nelson Chen features images of Bitcoin artworks on display at the Bitcoin 2021 conference. Let the words and images wash over you and set the stage for the rest of this Rabbit Hole. - [Interview with Cryptograffiti on Bitcoin vs the Fed](https://bitcoinmagazine.com/culture/interview-cryptograffiti-on-bitcoin-vs-the-fed) (Joe Rogers): Cryptograffiti is an activist artist who often incorporates bank notes and other upcycled materials like old credit cards. This interview dives into a fantastic public work of his called "Bitcoin vs the Fed." - [Lucho Poletti: Bitcoin Art, Renaissance, Memes, Lightning, Finance](https://citizenbitcoin.world/episodes/lucho-poletti-bitcoin-art-renaissance-memes-lightning-finance-MlaX9cVB) (Brady Swensen): Lucho Poletti was one of my own inspirations for making Bitcoin Art. Lucho’s work is not only beautiful, but he is a master of Bitcoin propaganda and I love how well his work conveys various aspects of Bitcoin. - [NFTs and the Definition of Art](https://bitcoinmagazine.com/culture/nfts-and-definition-of-art) (Shinobi): What is art? Art is subjective, and it’s ok for people to disagree on what is and isn’t art. This article from Shinobi dives into the philosophy of art in the context of the recent and ongoing “NFT craze.” - [Twitter Thread on Bitcoin Art from FractalEncrypt](https://twitter.com/FractalEncrypt/status/1363969177996902406?s=20) (FractalEncrypt): FractalEncrypt's full node sculptures are a wonder to behold, and he brings a unique perspective to everything he does. This thread explores his masterpiece in detail and sets the stage for the next Rabbit Hole resource. - [Art on a Bitcoin Standard](https://saifedean.com/podcast/37-art-on-the-bitcoin-standard/) (Saifedean Ammous, FractalEncrypt, Stephen Chow): This episode of The Bitcoin Standard Podcast from Saifedean Ammous features FractalEncrypt as well as Stephen Chow, a Bitcoiner who has made it his mission to sponsor living artists to create masterpieces. - [Chris Tramount: Bitcoin Art a New Renaissance](https://youtu.be/t7OS6DGRl1M) (Anita Posch): In this podcast episode, Anita Posch interviews Chris Tramount, one of the founders of Scarce.City, a lightning network powered auction site for Bitcoin art and fine goods. - [21ism Art Collective](https://21ism.com/) (21ism): 21ism is a Bitcoin Art collective. From art, video, design, the written word and music, they highlight some incredible creatives in the space and I would highly recommend checking out their website. - [Citadel21 Magazine](https://www.citadel21.com/) (Citadel21): Citadel21 is a magazine focused on Bitcoin Culture in general. They have some fantastic articles and often feature Bitcoin artists. The cover of each edition is a work of art in itself. - [Bitcoin Artists & Artisans Twitter List](https://twitter.com/i/lists/1136807955372728320?s=20) (Brekkie von Bitcoin): “Bitcoin Artists & Artisans” is a Twitter list I maintain featuring Bitcoin Artists and makers of fine Bitcoin related goods, and I make an effort to add new artists and artisans to the list as I come across them. - [The Bitcoin Arsenal](https://www.swanbitcoin.com/arsenal) (Swan Bitcoin, Various): Memes are an important part of Bitcoin culture, and there is definitely an art to making a good Bitcoin meme. “The Bitcoin Arsenal” features some great bitcoin memes as well as tips and tricks for making your own. - [Bitcoin Art and Music](https://www.lopp.net/bitcoin-information/art-music.html) (Jameson Lopp, Various): This page from Jameson Lopp’s Bitcoin directory is a compendium of resources related to Bitcoin art and culture and includes links to various artists’ websites. It's a great resource for further exploration. # Why and How Bitcoin Consumes Energy Lyn Alden - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/why-and-how-bitcoin-consumes-energy/ Bitcoin’s energy consumption is complex and often misunderstood, so this rabbit hole provides some resources to help understand this topic. --- Bitcoin’s energy consumption is complex and often misunderstood, so this rabbit hole provides some resources to help understand this topic. **Lyn Alden** ([@lynaldencontact](https://twitter.com/lynaldencontact)) Bitcoin uses a proof-of-work protocol to operate the network, which means that miners expend real-world resources (electricity) in order to validate transactions and secure the blockchain. Rather than being a bug, this is a feature because it is what keeps the protocol decentralized. Other consensus protocols such as proof-of-stake may have their use-cases, but they make numerous trade-offs compared to proof-of-work. They are far more complex, with more attack surfaces, and are prone to centralization over time. In addition, Bitcoin miners use energy in a very unique and useful way. Specifically, unlike data centers or other types of electricity consumers, individual Bitcoin miners don’t require very high uptime or a lot of internet bandwidth, which means they can go to areas of stranded energy production or can be co-located with power generation facilities as load balancers. - [Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why.](https://www.lynalden.com/bitcoin-energy/) (Lyn Alden): This is my primary longform research piece that analyzes the Bitcoin network's energy consumption from multiple angles, discussing its scaling and the unique way that it uses energy. - [Proof-of-Stake and Stablecoins: A Blockchain Centralization Dilemma](https://www.lynalden.com/proof-of-stake/) (Lyn Alden): This article goes into detail on the trade-offs that proof-of-stake consensus protocols make relative to proof-of-work consensus protocols. - [TheBWord: Demystifying Bitcoin](https://www.thebword.org/c/track-1-demystifying-bitcoin) (Nic Carter): Nic Carter gave a concise video presentation at the B-Word event about Bitcoin's energy consumption which is a very accessible resource as a starting point. - [Crypto vs The Environment](https://www.youtube.com/watch?v=6LP8G-oZnEs) (Lyn Alden, Alex De Vries): In this hour-long debate, I counter a lot of the environmental arguments that are often used against Bitcoin, and explain why most of them are not accurate. # Stephan Livera Rabbit Hole Stephan Livera - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/stephan-livera-rabbit-hole/ My rabbit hole is a mix of curated concepts and ideas gathered across almost 9 years studying Bitcoin. I believe to really learn about Bitcoin, you have to know enough across various disciplines to understand the how… --- **Stephan Livera** ([@stephanlivera](https://twitter.com/stephanlivera)) My rabbit hole is a mix of curated concepts and ideas gathered across almost 9 years studying Bitcoin. I believe to really learn about Bitcoin, you have to know enough across various disciplines to understand the how, what, and importantly, the why. This includes austrian economics, cryptography, history, networking, politics, energy and distributed systems. - [Cypherpunks Write Code](https://youtu.be/9vM0oIEhMag) (ReasonTV): A great history and intro on the cypherpunks, who were the predecessors of Bitcoin. In this excellent documentary by ReasonTV, you will learn about the Crypto Wars and the predecessor technologies before Bitcoin. - [Intro to Bitcoin Austrian Thought](https://www.stephanlivera.com/71) (Stephan Livera): This is my solo episode from mid 2019 spelling out a 'Bitcoin Austrian' framework for thinking about Bitcoin from an austrian economist's perspective. This episode helped frame and influence other Bitcoin educators. - [Bitcoin Miners Beware: Invalid Blocks Need Not Apply](https://hackernoon.com/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b) (Stop And Decrypt): This was a seminal article by 'Stop and Decrypt' on what a Bitcoin Node does. - [A Most Peaceful Revolution](https://medium.com/@nic__carter/a-most-peaceful-revolution-8b63b64c203e) (Nic Carter): An excellent read on the reason behind Bitcoin as a project. This is about a peaceful revolution in the money of the world. - [The Bullish Case for Bitcoin](https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1) (Vijay Boyaparti): A great first read on Bitcoin. - [The True Costs (and Unseen Benefits) of Bitcoin Mining](https://mises.org/wire/true-costs-and-unseen-benefits-bitcoin-mining) (Stephan Livera): My explanation on why Bitcoin mining is valuable and the energy used is well worth it. - [Bitcoin Dematerializes Money](https://stephanlivera.com/episode/213/) (Stephan Livera, Michael Saylor): My episode with Michael Saylor, in this one we chat about the problem of fiat inflation and why he chose to buy Bitcoin with his company balance sheet. - [Inventing Bitcoin](https://swanbitcoin.com/freebook) (Yan Prtizker): Read Yan Pritzker's Inventing Bitcoin, a fantastic explanation for laypeople on the basics of Bitcoin technology. - [The Bitcoin Standard](https://saifedean.com/thebitcoinstandard/) (Saifedean Ammous): The must read book on Bitcoin economics by my friend Saifedean Ammous. - [Austrian Monetary Economics & Bitcoin](https://stephanlivera.com/episode/51) (Stephan Livera, Jorg Guido Hulsmann): My interview with Guido Hulsmann, author of The Ethics of Money Production, a highly influential book in Bitcoin circles. - [What Has Government Done to Our Money](https://mises.org/library/what-has-government-done-our-money) (Murray Rothbard): An excellent exploration of what government has done to our money, by Murray Rothbard and made available free at the Mises Institute. - [The Blocksize War](https://www.amazon.com/Blocksize-War-controls-Bitcoins-protocol/dp/B08YQMC2WM) (Jonathan Bier): The book to read on the 'block size wars' of 2015,16,17 culminating in the failure of BCash and of SegWit2X. - [Economic Eras of Bitcoin and Lightning Development, with Rusty Russell of Blockstream](https://stephanlivera.com/episode/23) (Stephan Livera, Rusty Russell): An intro episode on what the lightning network is by one of its main architects, Rusty Russell. - [10X Your Bitcoin Security with Multisig](https://stephanlivera.com/215) (Stephan Livera, Michael Flaxman): An exploration and update on thinking with Bitcoin security and multi-signature with Michael Flaxman. - [A Beginners Guide to the Lightning Network](https://bitcoiner.guide/lightning) (Bitcoiner.Guide): A great webpage / article explanation of the lightning network. - [What Most People Get Wrong About Deflation](https://stephanlivera.com/episode/153) (Stephan Livera, Philipp Bagus): An episode specifically on what most people get wrong about Deflation with Philipp Bagus. - [Bitcoin Core Contribution](https://stephanlivera.com/episode/124/) (Stephan Livera, Jon Atack): An explanation of Bitcoin Core contribution with a Bitcoin Core contributor, Jon Atack. - [Maintaining Bitcoin Core: Contribution, Consensus, Conflict](https://stephanlivera.com/episode/242) (Stephan Livera, Jonas Schnelli): An explanation of the role that Bitcoin maintainers perform, with ex-Bitcoin Core maintainer Jonas Schnelli. - [How Bitcoin UASF Went Down, Taproot Lot=TRUE, Speedy Trial, Small Blocks](https://stephanlivera.com/episode/260) (Stephan Livera, Luke Dashjr): An exploration of how SegWit2X and UASF went down with Bitcoin Core contributor Luke Dashjr. - [How Bitcoin Works Under the Hood](https://www.youtube.com/watch?v=Lx9zgZCMqXE) (CuriousInventor): A nice 'under the hood' explanation of Bitcoin. - [Everyone's a Scammer](https://nakamotoinstitute.org/mempool/everyones-a-scammer/) (Michael Goldstein): Beware! Everyone's a scammer as explained by Michael Goldstein (aka Bitstein). # Politicos Portal Trystine Payfer - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/politicos-portal/ Even those who claim they disagree entirely with individuals across the aisle agree on many things. Bitcoin being apolitical quickly puts this into perspective. Open minds, critical thinking caps on, and away we go. --- Even those who claim they disagree entirely with individuals across the aisle agree on many things. Bitcoin being apolitical quickly puts this into perspective. Open minds, critical thinking caps on, and away we go. **Trystine Payfer** ([@TrystineAnn](https://twitter.com/TrystineAnn)) The majority of people who go into public service do so with a big heart and a goal of giving back or fixing something that affected them or someone close to them. Pain points in public service typically stem from a lack of funding or transparency and accountability with appropriated funds. Other times, pain points come from manipulating monetary policies to avoid what would be a "catastrophic" outcome (i.e., one a representative or appointee wouldn't survive reelection or reappointment from.) This rabbit hole aims to show how Bitcoin can address these problems and many more. The resources below are not an exhaustive list of propositions or arguments to listen to or read, but it is a start, and I hope it encourages a continuance of a journey down the Bitcoin rabbit hole. See you down there! - [Check Your Financial Privilege](https://bitcoinmagazine.com/culture/check-your-financial-privilege) (Alex Gladstein): Take a step back to see the big picture! Alex Gladstein shares with readers how financial privilege blinds dollar users to Bitcoin's importance. - [Who Controls Bitcoin Core?](https://blog.lopp.net/who-controls-bitcoin-core-/) (Jameson Lopp): A technical conversation simplified by Jameson Lopp! Understanding how the focal point of Bitcoin development operates. - [Inflation Fights Innovation](https://www.youtube.com/watch?v=_ZyFv_BUTPg&list=PL2jAZ0x9H0bRvoNt1xNJWYa9_8_an03h0&index=11) (Robert Breedlove, Jeff Booth): “Our economic systems were not built for a world driven by technology where prices keep falling...That era is over. But we keep on pretending that those economic systems still work.” - Jeff Booth's The Price of Tomorrow. - [Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why.](https://www.lynalden.com/bitcoin-energy/) (Lyn Alden): Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why. - [Layered Money with Nik Bhatia | The Bitcoin Standard Podcast](https://www.youtube.com/watch?v=8nUYOmVzPL0) (Nik Bhatia, Saifedean Ammous): "No currency in the digital realm will ever be able to prove itself as resistant to corruption as BTC, wherein transactions once confirmed are impossible to override, making BTC the ultimate tool of financial freedom..." # Bitcoin Gaming Desiree Dickerson - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/bitcoin-gaming/ This Rabbit Hole walks through a brief summary of the beginnings of Bitcoin gaming and rounds out with resources covering the current state of the ecosystem. --- This Rabbit Hole walks through a brief summary of the beginnings of Bitcoin gaming and rounds out with resources covering the current state of the ecosystem. **Desiree Dickerson** ([@dickerson_des](https://twitter.com/dickerson_des)) Games have played an important part of social interaction since the dawn of civilization. While some sources date the earliest recorded game play to the Paleolithic era, the introduction of value into games emerged around 3,000 BC. As history progressed and games took on digital form, value in games quickly became regulated, outlawed, and deemed gambling. In parallel, in-game currencies quickly arose, stripping video games of real-world value. As we spend more time online and creating virtual content, re-integrating meaningful value is essential to paving the way for equitable virtual interactions and economies. Rather than minting new, and likely flawed, virtual currencies specific to a game, Bitcoin’s sound money principles along with the speed of the Lightning Network provide a highly divisible, interoperable asset, perfect for video games. Bitcoin gaming is quickly getting the attention it deserves. Companies like THNDR Games, ZEBEDEE, and Satoshi’s Games are building the foundation for the future of gaming on Bitcoin. - [Mobile Bitcoin Gaming Is Powering Up on Lightning](https://www.coindesk.com/layer2/culture-week/2021/12/15/mobile-bitcoin-gaming-is-powering-up-on-lightning/) (Jeff Wilser): CoinDesk’s Jeff Wilser investigates Bitcoin in mobile gaming and highlights the work of THNDR Games and their portfolio of work. - [Bitcoin in Gaming](https://bitcoinmagazine.com/culture/bitcoin-in-video-games) (Oleg Mikhalsky, Moritz Kaminski): Deep dive research piece from Mortiz Kaminski and Oleg Mikhalsky on Bitcoin and the Lightning Network applications in gaming. - [Don't Sleep on Lightning](https://versionone.vc/dont-sleep-on-lightning) (Max Webster): Max Webster explores major developments and ultimate use cases for the Lightning Network, one of which includes gaming powered by micropayments. - [State of Bitcoin's Lightning Network](https://www.okex.com/academy/en/bitcoin-lightning-network-adoption) (Rick Delaney): OKEx Insights takes an in-depth look at the current state of Lightning Network adoption and how gaming is positioned to draw in new users from outside the cryptocurrency industry. - [These Gaming Studios Are Bringing Bitcoin Payouts to Everyday Esport Gamers](https://www.coindesk.com/tech/2021/02/11/these-gaming-studios-are-bringing-bitcoin-payouts-to-everyday-esport-gamers) (Colin Harper): Colin Harper covers the current state of Bitcoin gaming and highlights the progress and potential for Bitcoin to disrupt traditional gaming and esports. - [The Top 5 Lightning Games in 2020](https://www.btctimes.com/insight/the-top-5-lightning-games-in-2020) (Andrew Yang): Andew Yang covers the hottest Lightning Network games in 2020, featuring games from THNDR Games, ZEBEDEE, Satoshi’s Games, and more. - [Lightning Network And Gaming With MintGox](https://www.youtube.com/watch?v=MD8bd9Z0YOc) (Christian Keroles, Desiree Dickerson, Simon Cowell, Christian Moss): Christian Keroles sits down with the team behind the MintGox project: Desiree Dickerson of THNDR Games, and Simon Cowell and Christian Moss of ZEBEDEE. They discuss the Bitcoin gaming ecosystem and its potential. - [The State of Lightning](https://www.research.arcane.no/the-state-of-lightning) (Arcane Research, opennode Research, Lightning Labs): Arcane Research’s annual report on the growth and development of the Lightning Network and ecosystem. The report includes several references to the potential of Bitcoin and the Lightning Network in gaming. - [THNDR](https://www.thndr.gg) (THNDR): A gaming company with the mission of accelerating mainstream adoption of Bitcoin, by building mobile games built on the Lightning Network. Thus, creating an effective method for orange pilling a massive amount of people. - [ZEBEDEE](https://zebedee.io/) (ZEBEDEE): A company that builds services to power real economies in virtual worlds. With ZEBEDEE, gaming becomes a meaningful economic activity & game developers get a new playground for weaving money into the worlds they create. - [Satoshi's Games](https://Satoshis.games) (Satoshi's Games): A full-service system for developers and publishers to build or integrate blockchain-based play-to-earn economies into their games. - [Bling](https://Blingfi.com) (Bling Financial): A Financial technology company developing mobile games for the Google Play store that allow players to earn Bling Points® that can be exchanged for Bitcoin. - [Viker](https://viker.co.uk) (Viker): Viker is dedicated to building a blockchain-based gaming platform using globally recognised IP through mobile games. - [SaruTobi](http://www.mandelduck.com/sarutobi/#faq) (Mandle Duck): Unequivocally the first Bitcoin game, Sarutobi, created by Christian Moss in 2014, is a mobile game requiring the user to swing as far as possible to collect Bitcoin and bananas for powerups. - ["Takara" Bitcoin Geocaching](https://www.youtube.com/watch?v=RGlhoFg8qHo) (Mandle Duck): Developed by Christian Moss in 2016, Takara explored the possibilities of adding Bitcoin into geocaching games. - [Satoshi's Place](https://satoshis.place/) (Satoshi's Place): While not a video game, Satoshi’s Place was one of the first examples of Bitcoin being used for “fun”. Satoshi’s Place is an online collaborative artboard, where users can pay 1 satoshi to paint in 1 pixel on the canvas. - [Lightning Roulette](https://lightning-roulette.com/) (Lightning Roulette): While technically gambling, this roulette-style casino game, created by Lightning K0ala, allows users to place bets and withdraw winnings on the Bitcoin Lightning Network. - [LNTXBOT Coinflips](https://t.me/lntxbot) (LNTXBOT): While also considered gambling, LNTXBOT Coinflips is a lottery game created by fiatjaf, that is integrated into the commands of the Telegram bot, LNTXBOT. - [Donnerlab’s Bitcoin Bounty Hunt](https://bitcoinbountyhunt.com/) (DonnerLab): Although Bitcoin Bounty Hunt has been sunset, it was the first example of an Online first-person shooter (FPS) centered around fighting other players to collect their bounty & cashing out on the Lightning Network. - [MintGox](https://mintgox.com/) (MintGox): Created by the founders of THNDR Games and ZEBEDEE during the COVID-19 pandemic, MintGox served as a monthly Bitcoin-gaming esports event featuring games being built in the space. # What the Hell Even is Bitcoin? Guy Swann URL: https://www.swanbitcoin.com/canon/what-the-hell-even-is-bitcoin/ The biggest hurdles to understanding Bitcoin, in my experience, have been understanding how a completely virtual thing could have such immense value, tied to a general ignorance about what money is. Below is a selection… --- **Guy Swann** ([@TheGuySwann](https://twitter.com/TheGuySwann)) The biggest hurdles to understanding Bitcoin, in my experience, have been understanding how a completely virtual thing could have such immense value, tied to a general ignorance about what money is. Below is a selection of episodes and article from my show, Bitcoin Audible, that will lay the framework for understanding Bitcoin in a different way. In my life I have never encountered anything as multifaceted and endlessly fascinating as Bitcoin. I hope you find value in what I've put together below. - [Guy's Take #44 - Bitcoin is Not What you Think it is](https://open.spotify.com/episode/6TghA3J4ozY5ybUSKQLiUy?si=b3927cb79da04dbd) (Guy Swann): The foundation for understanding Bitcoin is far deeper than one might first assume. It has less to do with computer literacy, and more to do with language and systems that ensure cooperation. - [The Bullish Case for Bitcoin](https://open.spotify.com/episode/6lOR6o5hyq0yBX1UNKzG3j?si=bd6af9ab663e48f9) (Vijay Boyapati, Guy Swann): This is a brief journey through the entire Bullish Case for Bitcoin. Touching on the history of money, the philosophy of Bitcoin, the problem it solves, & why we are set for a bright orange future. - [On Schelling Points, Network Effects and Lindy](https://open.spotify.com/episode/6f4quuwGshabhnWfkLUNhT?si=ff5fd1c2fb104ef2) (Willem Van Den Bergh, Guy Swann): This is an incredible piece by Willem Van Den Bergh that breaks down the game theory & foundational laws for understanding the protocols & networks that shape our world. - [Shelling Out: The Origins of Money](https://open.spotify.com/episode/2g86qdF8Z7p4xkk4I7WPAb?si=622e37f62c4a4dda) (Nick Szabo, Guy Swann): The brilliant Nick Szabo covers the origins of money & its meaning in this quintessential piece for anyone making their way down the Bitcoin rabbit hole. - [Guy's Take #36 - Walking Tall](https://open.spotify.com/episode/5W6JvAKpo9omRLmxN4zXHE?si=2115a5f4e62e4d52) (Guy Swann): How does fiat money change society and what perverse incentives does it create that poisons culture, prosperity, & the values of society? A brief glance back to the 1970s might help to shed some light in this Guy's Take. - [Misconceptions About Bitcoin](https://open.spotify.com/episode/2OTRtRadY2ywaylX0DXDcI?si=253196e4d0294749) (Lyn Alden, Guy Swann): The misconceptions and fallacies that many believe in regards to Bitcoin are too numerous to count, but there are a handful that seem to stand out. This is an article breaking down the most common ones in simple terms. - [The Hidden Costs of the Petrodollar System](https://open.spotify.com/episode/56zwXJcdoLQXm4gltzcHS5?si=dc8a2755d33b4843) (Alex Gladstein, Guy Swann): One of the least understood elements of our world today are the costs and consequences of our monetary system. Never considering the human toll to keep the dollar "king" of the monetary world. Gladstein fixes this. # The Political Economy of Decentralization Allen Farrington URL: https://www.swanbitcoin.com/canon/the-political-economy-of-decentralization/ Please enjoy the following reading list championing localism and decentralization in systems of human cooperation — to which I believe Bitcoin provides a natural addition. --- Please enjoy the following reading list championing localism and decentralization in systems of human cooperation - to which I believe Bitcoin provides a natural addition. **Allen Farrington** ([@allenf32](https://twitter.com/allenf32)) It goes without saying that Bitcoin has several entirely novel technical characteristics, some of which represent brilliant academic breakthroughs. However, I have always been wary of associating Bitcoin too strongly with advances in information technology, or indeed with "newness" at all. This is in part because these very same advances are argubaly insufficient yet necessary drivers of an increasingly politically and economically centralized world. They have contributed to many problems Bitcoin, and Bitcoiners, aspire to fix: the erosion of privacy, financial repression, monolithic power over dissemination of information, etc. Bitcoin provides a means to (re)decentralize, and I think it fits nicely and naturally in a canon of academic philosophy, politics, and economics analyzing this ideal. But, crucially, this analysis is without reference to Bitcoin itself, or, in most cases, even the internet or software design. It is not techno-utopinaism, but humanism. It is not new. - [The Use of Knowledge in Society](https://fee.org/articles/the-use-of-knowledge-in-society/) (F.A. Hayek): Astonishingly concise and powerful explanation of the power of the market to embed distributed information in prices. Possibly the seminal analysis of the mechanics of voluntary and decentralized consensus formation. - [Seeing Like a State](https://www.amazon.com/Seeing-Like-State-Condition-Institution/dp/0300070160/) (James C. Scott): Astute analysis of the persistent failure of centralized social schemes which fail to account for local knowledge and custom. - [The Mystery of Capital](https://www.amazon.com/Mystery-Capital-Hernando-Soto/dp/0552999237/) (Hernando De Soto): My favourite explanation of what "capital" really is, distinguished by minimal armchair theorising and extensive field research. Might seem removed from Bitcoin but the moral is that truthful, accessible records matter. - [The Unsettling of America](https://www.amazon.com/Unsettling-America-Culture-Agriculture/dp/161902599X/) (Wendell Berry): Poetic lament of what happens, not just to stocks of capital, not just economic but social, cultural, and *agri*cultural stocks when the participants' time preferences rise beyond what can sustain the stocks. - [Governing the Commons](https://www.amazon.com/Governing-Commons-Evolution-Institutions-Collective/dp/1107569788/) (Elinor Ostrom): Careful analysis of how common pool problems are reliably solved by voluntary organisations rather than a coercive state, with consideration of the factors that constitute effective governance in such organisations. - [The Cathedral & the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary](https://www.amazon.com/Cathedral-Bazaar-Musings-Accidental-Revolutionary/dp/0596001088/) (Eric C. Raymond): Classic anthropological investigation of the economics and sociology of open source software development, and explication of its superiority in many respects to closed source, top-down planning. - [Dark Age Ahead](https://www.amazon.com/Dark-Age-Ahead-Jane-Jacobs/dp/1400076706/) (Jane Jacobs): From the godmother of political localism, a dire warning of where we may be headed if we don't first appreciate and then do the work to keep local bonds and institutions alive. # Bitcoin & Quantum Computing Sam Callahan - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/bitcoin-and-quantum-computing/ Learn why the risk of quantum computing is overblown and far away from becoming a reality in the rabbit hole below. --- Learn why the risk of quantum computing is overblown and far away from becoming a reality in the rabbit hole below. **Sam Callahan** ([@samcallah](https://twitter.com/samcallah)) One piece of FUD that is very common to hear is advancements in quantum computing will eventually be able to break the underlying cryptography of Bitcoin. Because both quantum computing and Bitcoin are extremely complex topics, most people who believe this actually have no idea what they're talking about. To fix this problem, I compiled a list of resources here coming from people who actually do understand quantum computing and its impact (or lack thereof) on Bitcoin. - [The Biggest Flipping Challenge in Quantum Computing](https://www.sciencemag.org/news/2020/07/biggest-flipping-challenge-quantum-computing) (Adrian Cho): A good overview of quantum computing and the difficulties scientists and engineers face today in the field. - [The Limits of Quantum](https://www.cs.virginia.edu/~robins/The_Limits_of_Quantum_Computers.pdf) (Scott Aaronson): This is a great article that explains all of the current limitations of quantum computers today - [Quantum Computing and Cryptography ](https://www.schneier.com/blog/archives/2018/09/quantum_computi_2.html) (Bruce Scheiner): This is a concise piece that explains how quantum computers are still lacking the capabilities today and that quantum-resistant algorithms are currently being developed in. public-key cryptography. - [Can Quantum Computers Attack Bitcoin?](https://braiins.com/blog/can-quantum-computers-51-attack-bitcoin) (Braiins): A good introduction of how quantum computing could theoretically attack Bitcoin, how quantum is far behind ASICs today, and why the concern is overblown for now. - [Here's Why Quantum Computing Will Not Break Cryptocurrencies](https://www.forbes.com/sites/rogerhuang/2020/12/21/heres-why-quantum-computing-will-not-break-cryptocurrencies/?sh=12768f5f167b) (Roger Huang): Roger explains why quantum computing is unlikely to break the cryptography of Bitcoin anytime soon without all the jargon. Good piece for beginners. - [Bitcoin and Quantum Computing](https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoin-quantum-computing-andrew-fursman/) (Andrew Fursman): Listen to this in-depth conversation on quantum computing from an expert the field. He explains why there are many misconceptions around quantum computing such as it’s more powerful than traditional computers. - [Committing to Quantum Resistance: A Slow Defence for Bitcoin Against a Fast Quantum Computing Attack](https://royalsocietypublishing.org/doi/10.1098/rsos.180410) (I. Stewart, D. Ilie, A. Zamayatin, S. Werner, M. F. Torshizi, W. J. Knottenbelt): A technical paper that proposes a way that Bitcoin could defend itself from a quantum attack. It highlights how as advancements in quantum computing occur, so too do advancements in cryptography to combat the attack. - [Quantum Attacks on Bitcoin, and How to Protect Against Them](https://arxiv.org/pdf/1710.10377.pdf) (Divesh Aggarwal, Gavin K. Brennen, Troy Lee, Miklos Santha, Marco Tomamichel): An academic paper that explores the various ways quantum computing could in theory attack Bitcoin and various way that Bitcoin could defend against such attack vectors. - [What Effects Would A Scalable Quantum Computer have On Bitcoin?](https://bitcoin.stackexchange.com/questions/6062/what-effects-would-a-scalable-quantum-computer-have-on-bitcoin) (Chat Forum): To end with, this is a nice discussion of the subject matter. I recommend clicking through the links scattered throughout it to learn more. # The Best of Jimmy Song Sam Callahan - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/the-best-of-jimmy-song/ I’ve learned a tremendous amount from Jimmy and I highly recommend his books to better learn about Bitcoin. Here are some of my favorite pieces from a true Bitcoin OG. --- I’ve learned a tremendous amount from Jimmy and I highly recommend his books to better learn about Bitcoin. Here are some of my favorite pieces from a true Bitcoin OG. **Sam Callahan** ([@samcallah](https://twitter.com/samcallah)) Jimmy Song has been a prominent Bitcoin educator, developer, and writer for many years now. He has the rare skills to explain Bitcoin at a complex, technical level as well as simplify it for beginners to understand. This is a sign of someone who has truly mastered the subject matter at hand. Jimmy has authored several Bitcoin books including “The Little Bitcoin Book”, “Thank God for Bitcoin, “Programming Bitcoin”, and “Bitcoin and the American Dream”. He also pens the popular newsletter Bitcoin Tech Talk. - [Why Bitcoin Works](https://jimmysong.medium.com/why-bitcoin-works-fe32879a73f5) (Jimmy Song): In this piece, Jimmy explains why Bitcoin simply works and the impact that bringing back sound money will have on our society as a whole. - [Why Bitcoin is Different](https://jimmysong.medium.com/why-bitcoin-is-different-e17b813fd947) (Jimmy Song): In this post, Jimmy explains what sets Bitcoin apart from every other digital asset in the market. - [Why Blockchain is Not the Answer](https://jimmysong.medium.com/why-blockchain-is-not-the-answer-3b7d5f612d11) (Jimmy Song): Jimmy explains here why blockchains have become an obsession in the media, VCs, and traditional financial world, and why these individuals are mistaken in their thinking that it will solve all the world’s problems. - [Why Blockchain is Hard](https://jimmysong.medium.com/why-blockchain-is-hard-60416ea4c5c) (Jimmy Song): Jimmy explains here in detail all of the shortcomings of blockchains and why they are really only good for something that is meant to be unchanging and decentralized...like money...like Bitcoin. - [The Moral Case for Bitcoin](https://medium.com/the-bitcoin-times/the-moral-case-for-bitcoin-561ed592a464) (Jimmy Song): In this blog post, Jimmy explains the moral case for Bitcoin. He argues that Bitcoin aligns with Natural Law. Bitcoin offers us protection for individual rights, something most governments are slowly abandoning today. - [On Altcoin Valuation](https://jimmysong.medium.com/on-altcoin-valuation-bf19a30ee0df) (Jimmy Song): In this piece, Jimmy explains why altcoins are not a good long-term investment because they are technologically inferior. They only create largely artificial demand for their tokens by using clever marketing campaigns. - [The Truth About Smart Contracts](https://jimmysong.medium.com/the-truth-about-smart-contracts-ae825271811f) (Jimmy Song): Are smart contracts going to change the world? Jimmy pumps the brakes on the hype around smart contracts by explaining why they are simply too easy to screw up, too difficult to secure, too hard to make trustless. - [Killing the Hopes and Dreams of Shitcoin Bagholders ](https://open.spotify.com/episode/1mP4FLxYyPlidAamyBVDQX?si=f86c30f613c14a54) (Jimmy Song, Peter McCormack): Jimmy explains here why many shitcoins are engineered poorly and depend on artificial demand for their tokens via marketing instead of actually providing any real value. Therefore, they are bad long-term investments. # Bitcoin is a Living Organism 🍄 Brandon Quittem URL: https://www.swanbitcoin.com/canon/bitcoin-is-a-living-organism/ I believe Bitcoin’s best characteristics are simply reflections of successful evolutionary strategies found in nature. Enjoy this exploration of Bitcoin as a Living Organism. --- I believe Bitcoin’s best characteristics are simply reflections of successful evolutionary strategies found in nature. Enjoy this exploration of Bitcoin as a Living Organism. **Brandon Quittem** ([@bquittem](https://twitter.com/bquittem)) “Bitcoin is the first example of a new form of life. It lives and breathes on the internet. It lives because it can pay people to keep it alive. It lives because it performs a useful service that people will pay it to perform. It lives because anyone, anywhere, can run a copy of its code. It lives because all the running copies are constantly talking to each other. It lives because if any one copy is corrupted it is discarded, quickly and without any fuss or muss. It lives because it is radically transparent: anyone can see its code and see exactly what it does.” - Ralph Merkle Attempting to answer the question “what is Bitcoin,” I found exploring parallels to the natural world to be particularly illuminating. From this vantage point, Bitcoin appears to be a living system constantly evolving based on environmental stimuli. - [Bitcoin is The Mycelium of Money](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/) (Brandon Quittem): Exploring Bitcoin through the lens of Fungi. - [Proof of Life](https://dergigi.com/2019/08/07/proof-of-life/) (Gigi): Gigi is one of my favorite writers and this is a must-read essay arguing why Bitcoin is a living organism. "Life is like fire, not water; it is a process, not a pure substance" - [How Bitcoin is Like a Giant Cybernetic Meta-Brain](https://tomerstrolight.medium.com/how-bitcoin-is-like-a-giant-cybernetic-meta-brain-204fef9c0b08) (Tomer Strolight): Decentralization, social media graphs and full nodes in the Bitcoin ecosystem resemble the structures of and communications between neurons within a brain. - [Bitcoin is a Pioneer Species](https://medium.com/the-bitcoin-times/bitcoin-is-a-pioneer-species-38f42ecdbb88) (Brandon Quittem): Exploring Bitcoin Mining and the Energy Industry through the lens of Ecology. The main takeaway here is that Bitcoin miners and energy producers are symbiotic and their partnership produces positive externalities. - [Planting Bitcoin](https://danhedl.medium.com/planting-bitcoin-56bd1459cb23) (Dan Held): Dan Held explains Bitcoin's origin story through an analogy of planting a tree. This essay gave me the courage to write the first "Mycelium of money" essay back in 2018. - [Bitcoin & Biology](https://podcasts.apple.com/za/podcast/ep-20-bitcoin-biology-brandon-quittem-gigi-svetski/id1482223406?i=1000502256341) (Aleks Svetski, Gigi, Brandon Quittem): Gigi, Aleks Svetski, and Brandon Quittem (myself) explore Bitcoin as a living organism. Get ready for a mind-bending podcast. - [Bitcoin & Fungal Economies](https://www.youtube.com/watch?v=ifwUXSWVPQs&list=PLmduPIy_UCWv0fpuy1kZrhFc_tSj7bmP6&index=12) (Brandon Quittem, Toby Kiers, Michael Garfield): Discussing Bitcoin and Fungal Economies with an Evolutionary Biology (Toby Kiers). Toby studies Fungal economies for a living. Brandon is an amateur mycologist who loves Bitcoin. - [Bitcoin is a Decentralized Organism](https://www.youtube.com/watch?v=WLDFdOS4sWo&list=PLmduPIy_UCWv0fpuy1kZrhFc_tSj7bmP6&index=18) (Brandon Quittem): June 26th, 2019 presentation at the Bitcoin 2019 Conference in San Francisco. The title of my talk was "Bitcoin is a Decentralized Organism." - [Bitcoin: Two Parts Math, One Part Biology](https://hugonguyen.medium.com/bitcoin-two-parts-math-one-part-biology-b45ef48a0422) (Hugo Nguyen): Hugo explains how Bitcoin is a symbiosis between mathematics and Biology. - [Bitcoin's Habitats](https://dergigi.com/2020/03/01/bitcoin-s-habitats/) (Gigi): Gigi explores how bitcoin fits at the center of cyberspace, meatspace, and finspace. # Introducción a Bitcoin en Español ✴️ Camila Campton URL: https://www.swanbitcoin.com/canon/introduccion-a-bitcoin-en-espanol/ ¿Qué es mejor que aprender sobre Bitcoin? Cuando realmente puedes aprender sobre ello en tu idioma natal. Bienvenidos a mi “madriguera” de Bitcoin, completamente en español. Los libros y artículos que encontrarás en esta… --- **Camila Campton** ([@camilacampton](https://twitter.com/camilacampton)) ¿Qué es mejor que aprender sobre Bitcoin? Cuando realmente puedes aprender sobre ello en tu idioma natal. Bienvenidos a mi "madriguera" de Bitcoin, completamente en español. Los libros y artículos que encontrarás en esta página son increíbles introducciones sobre Bitcoin paras las personas que apenas estan empezando a aprender sobre esta technología. Estos recurzos detallan qué es el dinero, qué es Bitcoin, por qué lo necesitamos tan urgentemente, como funciona, y las caracteristicas que lo hacen completamente único. - [El Patrón Bitcoin: La alternativa descentralizada a los bancos centrales](https://www.amazon.com/patr%C3%B3n-Bitcoin-alternativa-descentralizada-centrales/dp/8423429717) (Saifedean Ammous): El Patrón Bitcoin explica la evolución del dinero basándose en la escuela de Economía Austríaca y hace un resumen de las diferentes clases de dinero que han habido a lo largo de la historia humana. - [El Pequeño Libro de Bitcoin](https://www.amazon.com/El-Peque%C3%B1o-Libro-Bitcoin-libertad/dp/1700678876/ref=sr_1_2?crid=2C8EB7OHZ7RR7&keywords=El+Peque%C3%B1o+libro+Bitcoin&qid=1644628324&s=books&sprefix=el+peque%C3%B1o+libro+bitcoin%2Cstripbooks%2C165&sr=1-2) (Jimmy Song, Alex Gladstein, Timi Ajiboye, Luis Buenaventura, Lily Liu, Alexander Lloyd, Alejandro Machado, Alena Vranova): Por qué Bitcoin importa para tu libertad, tus finanzas y tu futuro. - [Inventemos Bitcoin](https://event.swanbitcoin.com/librogratis/) (Yan Prtizker): Bitcoin podría ser el invento más importante de nuestro tiempo y sin embargo la mayor parte de la gente no tiene ni idea de lo que es o de cómo funciona. Esta lectura te guiará paso a paso por su invención. - [¿Qué es Bitcoin?](https://bitblioteca.com/que-es-bitcoin/#18) (Bitcoin Magazine): Bitcoin es dinero digital que no está controlado por ningún banco, empresa o persona. Esta es una guía con los significados de términos simples para poder entender Bitcoin. - [El Whitepaper de Bitcoin](https://bitcoin.org/files/bitcoin-paper/bitcoin_es_latam.pdf) (Satoshi Nakamoto): Bitcoin: Un Sistema de Efectivo Electrónico Usuario-a-Usuario. - [Internet del Dinero](https://www.amazon.com/Internet-del-Dinero-Money-Spanish-ebook/dp/B0783QS1NG/ref=sr_1_1?crid=25TIPNHRDSBZL&keywords=internet+del+dinero&qid=1644631455&s=digital-text&sprefix=internet+del+dinero%2Cdigital-text%2C103&sr=1-1) (Andreas Antonopoulos): Una recopilación de las mejores conferencias de Andreas M. Antonopoulos. - [Mastering Bitcoin: Traducción al español](https://bitcoinbook.info/wp-content/translations/es/book.pdf) (Andreas Antonopoulos): La guía completa del mundo de bitcoin y blockchain. - [Por qué Bitcoin, No S***coin](https://bitblioteca.com/por-que-bitcoin-no-shitcoins/) (Aleks Svetski): Por qué bitcoin no solo es la mejor inversión de nuestro tiempo y la única "criptomoneda" buena, sino el único lugar moral, económico y filosóficamente sólido para almacenar su riqueza. # The Best of Parker Lewis Sam Callahan - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/best-of-parker-lewis/ In this rabbit hole, I chose my personal favorite pieces and podcasts featuring Parker, but I highly recommend checking out his entire catalog of work. --- In this rabbit hole, I chose my personal favorite pieces and podcasts featuring Parker, but I highly recommend checking out his entire catalog of work. **Sam Callahan** ([@samcallah](https://twitter.com/samcallah)) Parker Lewis is the Head of Business Development at Unchained Capital and a prolific educator and writer in the Bitcoin space. His series “Gradually, Then Suddenly” has helped orange pill many Bitcoiners over the years. In that series, he debunks a lot of the common FUD while also providing a great framework of how Bitcoin will impact the world. Parker has a talent for distilling complex subjects in a way everyone can understand which makes him a great asset for the Bitcoin community. - [Enders Game](https://unchained-capital.com/blog/enders-game/) (Parker Lewis): If there is one piece to help you answer the question, “How did we get here?”, this might just be it. In this post, Parker masterfully explains QE and the history of the GFC. Where that whole story ends, Bitcoin begins. - [Explaining Bitcoin ](https://www.youtube.com/watch?v=ek115rniuZ8) (Parker Lewis): In this conversation, Parker Lewis gives a great overview of what Bitcoin is, addresses common FUD, and explains how Bitcoin fixes a lot of the problems seen today caused by the traditional financial system. - [Bitcoin First Principles ](https://www.youtube.com/watch?v=D4nmbPtd8IE) (Parker Lewis): In this conversation, Parker uses first principles to explain what Bitcoin is, what money is, and why it is likely that Bitcoin will be the de facto money of the entire world economy in the future. - [Bitcoin Obsoletes All Other Money](https://unchained-capital.com/blog/bitcoin-obsoletes-all-other-money/) (Parker Lewis): This piece is important because it touches on a point many people miss, that economies converge on one medium to act as money. Parker explains why money is a winner-take-all game and why BTC is primed to win that game. - [Bitcoin is the Great Definancialization](https://unchained-capital.com/blog/bitcoin-is-the-great-definancialization/) (Parker Lewis): The financialization of the economy over the last several decades has been one of the unfortunate outcomes of a traditional financial system. Bitcoin finally offers people to save in a sound money that holds its value. - [Bitcoin is Antifragile](https://unchained-capital.com/blog/bitcoin-is-antifragile/) (Parker Lewis): In a world that's become increasingly more chaotic and uncertain, Bitcoin thrives. It was built to thrive in a changing environment like the one we found ourselves in today. Parker brilliantly expands on this idea here. - [Bitcoin Cannot Be Banned](https://unchained-capital.com/blog/bitcoin-cannot-be-banned/) (Parker Lewis): Many people stay away from BTC because they believe it can be banned by governments. This piece thoroughly debunks this notion and clearly states why this is unlikely to matter in the end in terms of Bitcoin's adoption. - [Bitcoin is Not a Pyramid Scheme](https://unchained-capital.com/blog/bitcoin-is-not-a-pyramid-scheme/) (Parker Lewis): A critique you'll come across is "BTC is a pyramid scheme". This post explains what a pyramid is and then goes on to explain how Bitcoin's predictable monetary policy and lack of leaders exclude it from the definition. - [Bitcoin is Not Backed by Nothing](https://unchained-capital.com/blog/bitcoin-is-not-backed-by-nothing/) (Parker Lewis): Goldbugs will often say BTC isn't money because it "doesn't have intrinsic value." This is false. BTC is backed by its monetary properties that allow it to perform the function of money better than any money in history. - [Bitcoin Does Not Waste Energy](https://unchained-capital.com/blog/bitcoin-does-not-waste-energy/) (Parker Lewis): When critics say Bitcoin "wastes energy", they often never appreciate all the benefits it brings to the world. Similarly, they don't consider how destructive the traditional financial system is. BTC is worth every watt. - [Killing the FUD](https://www.youtube.com/watch?v=S6wB9RNraXQ) (Parker Lewis): For all you audio-visual learners out there, Parker gives a great overview of a lot of his articles that debunk common FUD (fear, uncertainty, and doubt) around Bitcoin in this conversation with Peter McCormack. # Bitcoin Security Jameson Lopp - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/bitcoin-security/ The Bitcoin whitepaper promised a way for us to transact without the need for trusted third parties. Unfortunately, many bitcoin users fail to take advantage of this feature and still keep their funds with custodians… --- **Jameson Lopp** ([@Lopp](https://twitter.com/Lopp)) The Bitcoin whitepaper promised a way for us to transact without the need for trusted third parties. Unfortunately, many bitcoin users fail to take advantage of this feature and still keep their funds with custodians. Those who do take custody of their funds find the journey fraught with peril and footguns. Conservative estimates suggest that millions of bitcoin have been lost over the years by holders who did not take proper care of their keys, while millions more have been stolen due to security weaknesses. It's important that Bitcoin users are confidently able to be their own banks, both to increase the security posture of each user and to increase the robustness of the entire ecosystem so that it does not evolve into another network of custodians who hold all of the money and power. - [The Dos and Don'ts of Bitcoin Key Management](https://blog.keys.casa/the-dos-and-donts-of-bitcoin-key-management/) (Jameson Lopp): There are a multitude of ways to lose your bitcoin - this is a nearly exhaustive list of common forms of loss and how to protect yourself from them. - [Why We Recommend Coldcard](https://guides.bitcoinsupport.com/guides/v/coldcard/) (Bitcoin Support): Coinkite's Coldcard is arguably one of the most secure hardware key managers currently in production. This guide will walk you through setting one up, step by step. - [Metal Bitcoin Seed Storage Reviews](https://jlopp.github.io/metal-bitcoin-storage-reviews/) (Jameson Lopp): While private keys should be managed on dedicated hardware devices, those devices can break or be lost. Be sure to back up your seed phrases on robust media - these stress tests will help you decide what to use. - [Documented Timeline of Exchange Hacks](https://cryptosec.info/exchange-hacks/) (CryptoSec): In case you believe that it's safe now to leave your funds on exchanges, this history of hacks will show otherwise. - [Known Physical Bitcoin Attacks](https://github.com/jlopp/physical-bitcoin-attacks/blob/master/README.md) (Jameson Lopp): While physical attacks against Bitcoin holders are still rare, they provide valuable learning experiences. - [Cryptoasset Inheritance Planning](https://www.amazon.com/Cryptoasset-Inheritance-Planning-Simple-Owners/dp/1947910116/) (Pamela Morgan): The final step to one's Bitcoin security planning should be what happens to your keys once you pass on. Don't leave your loved ones in limbo! # Bitcoin 101 Cory Klippsten - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/bitcoin-101/ If you are new to Bitcoin, this is the perfect rabbit hole for you! Learn the Bitcoin basics including what Bitcoin is, how it works, and why it’s important. Learn about the history of money and why some common… --- **Cory Klippsten** ([@CorySwan](https://twitter.com/CorySwan)) If you are new to Bitcoin, this is the perfect rabbit hole for you! Learn the Bitcoin basics including what Bitcoin is, how it works, and why it's important. Learn about the history of money and why some common misconceptions around Bitcoin are incorrect. This rabbit hole will help demystify Bitcoin and serve as a great foundation to begin your Bitcoin journey. - [Introduction to Bitcoin: What Is Bitcoin and Why Does It Matter?](https://www.youtube.com/watch?v=l1si5ZWLgy0) (Andreas Antonopoulos): This talk from Andreas Antonopoulous is a great way to start learning about this revolutionary technology. Sit back, relax, and learn what Bitcoin is and why it matters. - [The Bullish Case for Bitcoin](https://open.spotify.com/episode/6lOR6o5hyq0yBX1UNKzG3j?si=bd6af9ab663e48f9) (Vijay Boyapati, Guy Swann): This blog post will help you understand not just Bitcoin, but all of money. It delves into where money comes from, the different forms it has taken over the years, and why Bitcoin is the next evolution of money. - [Inventing Bitcoin](https://www.dropbox.com/s/d22rhv7p2s9wl1b/Inventing-Bitcoin-Print.pdf?dl=0) (Yan Pritzker): Inventing Bitcoin is a short book that brilliantly lays out how Bitcoin works at the technical level. It is beginner-friendly and explains the technical aspects of Bitcoin in a way anyone can understand. - [Dear Family, Dear Friends, A letter to all of you who still have no bitcoin](https://dergigi.com/2020/04/27/dear-family-dear-friends/) (Gigi): This letter is a concise description of why Bitcoin is important in this world today. It explains some of the problems facing our current financial system and how Bitcoin could help preserve your wealth in these times. - [The Quiet Master of Cryptocurrency ](https://podcastnotes.org/tim-ferris-show/szabo/) (Nick Szabo, Naval Ravikant, Tim Ferris): Tim Ferris sits down with Nick Szabo and Naval to discuss the origins of money and the basics of Bitcoin. Learn about how Bitcoin came to be and how it works in this fascinating conversation. - [Intro to Bitcoin Austrian Thought](https://www.stephanlivera.com/71) (Stephan Livera): This podcast is a great introduction to Austrian Economics which is important to understand to fully comprehend Bitcoin. Stephan brilliantly breaks down the big concepts when it comes to this branch of economics. - [7 Misconceptions About Bitcoin](https://www.lynalden.com/misconceptions-about-bitcoin/) (Lyn Alden): Now that you've learned a little about BTC, you might still have some doubts. Maybe you think it can be banned, or that it can't scale, or maybe you heard it wastes energy...this piece will debunk all those concerns. - [The Race to Avoid the War](https://www.swanbitcoin.com/the-race-to-avoid-the-war/) (Cory Klippsten): We Bitcoiners are in a race. Perhaps the most important race we will ever run. We are racing against time to drive the adoption of Bitcoin as fast as we can. # The Best of Robert Breedlove Robert Breedlove - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/the-best-of-robert-breedlove/ Robert Breedlove explores Bitcoin through philosophy, history, and economics, revealing how sound money restores freedom and human flourishing in a world corrupted by fiat. --- Robert Breedlove explores Bitcoin through philosophy, history, and economics, revealing how sound money restores freedom and human flourishing in a world corrupted by fiat. **Robert Breedlove** ([@Breedlove22](https://twitter.com/Breedlove22)) Robert Breedlove is a philosopher, writer, and podcast host who explores Bitcoin through the lenses of ethics, metaphysics, and monetary history. His essays and conversations combine conceptual thinking with clear explanations to show why sound money matters for individual freedom and human flourishing. Notable works such as "The Number Zero" series and "Masters and Slaves of Money" trace how corrupt monetary systems concentrate power and steal human time while arguing that Bitcoin offers an incorruptible alternative. Breedlove excels at connecting big ideas: philosophy, psychology, history, and economics, to practical questions about money and meaning. This rabbit hole suits readers who want deep, principled frameworks for understanding Bitcoin and its broader implications for liberty and society. - [The Number Zero and Bitcoin (Part 1)](https://breedlove22.substack.com/p/the-number-zero-and-bitcoin-part) (Robert Breedlove): Robert Breedlove traces zero's 4,000-year rise from ancient dots to math's game-changer, spotlighting its efficiency amid resistance — just like Bitcoin's unstoppable scarcity revolutionizing money. - [The Number Zero and Bitcoin (Part 2)](https://breedlove22.substack.com/p/the-number-zero-and-bitcoin-part-611) (Robert Breedlove): Breedlove extends the parallel: zero as placeholder, midpoint, and fraction enabler mirrors Bitcoin's store of value, exchange medium, and pricing unit, birthing infinite wealth from digital void. - [ Tuur Demeester and Robert Breedlove - E14](https://swansignalpodcast.com/episodes/tuur-demeester-and-robert-breedlove-e14) (Robert Breedlove): Robert Breedlove joins Tuur Demeester to explore how Bitcoin redefines money, bridges physical and digital realms, challenges fiat power, and revives foundational values through works like The Number Zero. - [Masters and Slaves of Money](https://breedlove22.medium.com/masters-and-slaves-of-money-255ecc93404f) (Robert Breedlove): Robert goes deep on Money being a tool for trading human time, and how central banks, the modern-era masters of money, wield this tool as a weapon to steal it. - [Robert Breedlove and Brandon Quittem - E37](https://swansignalpodcast.com/episodes/an-idea-for-the-ages-robert-breedlove-and-brandon-quittem-e37) (Robert Breedlove): Robert Breedlove discusses with Brandon Quittem how Bitcoin can reshape society by aligning with “The Fourth Turning”, turning chaos into opportunity, reinforcing property rights, and evolving money beyond state control. - [Robert Breedlove: Philosophy of Bitcoin from First Principles | Lex Fridman Podcast](https://www.youtube.com/watch?v=HrehEWYj16s) (Robert Breedlove): Robert Breedlove dives deep into the philosophy of Bitcoin, exploring how sound money protects freedom, restores truth, and empowers individuals against the corruption and coercion embedded in fiat-based systems. - [Robert Breedlove and Parker Lewis - E32](https://swansignalpodcast.com/episodes/robert-breedlove-and-parker-lewis-e32) (Robert Breedlove): Robert Breedlove joins Parker Lewis to discuss how fiat money fuels inequality, central banking distorts incentives, and Bitcoin’s scarcity restores fundamental monetary freedom and individual rights. # Bitcoin and the Most Valuable Brands of The 21st Century URL: https://www.swanbitcoin.com/culture/bitcoin-and-the-most-valuable-brands-of-the-21st-century/ A topic even more mysterious than cryptography itself—brands. --- **Tomer Strolight** The value of a brand is called *“brand equity”.* There’s even a dictionary definition for it: > The commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself. In other words brand equity is what a brand is worth over and above what the product itself is worth. The brand consulting company, Interbrand, maintains a list of the world’s most valuable brands. Here are the rankings of Brand Equity of the top 
 15 global brands from 2000 through to 2019. **2000 to 2019: Top 15 Global Brand Rankings:** ![Brand value in millions of dollars. You can view an animation of this change at https://youtu.be/uaNgtWBCOXw](https://www.datocms-assets.com/56652/1646379808-frame.png?auto=format) Brand value in millions of dollars. You can view an animation of this change at https://youtu.be/uaNgtWBCOXw ### How Did Coke Get To Be King of Brand Equity in the First Place? Do you know where the *“Coca”* in Coca Cola comes from? It comes from the coca plant, the source of cocaine. Cocaine was actually once the most important ingredient in Coca Cola. After all, oranges are the most important ingredient in orange juice, peanuts in peanut butter, and it was coca in Coca Cola. Even to this day, both Coca Cola and cocaine share the nickname *“coke”.* Recall our definition of brand equity: > The value over and above what a product itself is worth. Now, if you were to take out the main ingredient that gives a product all of its effectiveness, which is also what you’ve named the product after, almost all you’re going to be left with is brand value (and nearly worthless fillers like water). This is what happened to Coca Cola! ![](https://www.datocms-assets.com/56652/1646379269-pembertoncokeanzeige.jpeg?auto=format) ### In 1920 cocaine was outlawed Coca Cola was forced by law to take out its main ingredient. So with necessity being the mother of invention, the folks at Coca Cola were left with no alternative but to practically invent the idea of brand equity. Caffeine and sugar helped Coca Cola keeps some of its ‘stimulant’ qualities, but let’s face facts: Coca Cola certainly doesn’t have the same ‘kick’ it had back when it contained the powerful and addictive stimulant: cocaine. When Coke lost its most potent ingredient, its brand equity actually went up — way way up. This is just a fact of math. The product itself became worth less because of the removal of its most valuable ingredient, while the price did not drop. ![](https://www.datocms-assets.com/56652/1646635331-spi_feature_05-edited.png?auto=format) That mathematically meant that the difference was made up by the brand equity! ### The True King of Brands Reminding ourselves of the definition of brand equity—what a brand is worth over and above what the product itself is worth—**wouldn’t you agree that without a doubt, the brand with the most equity in the world is in fact the U.S. Dollar?** The product itself, after all, is just a rectangular piece of paper with some ink on it. **Paper itself is hardly worth anything.** However, **when stamped with the official mark of the dollar, the value of that paper is so high** and so widely recognized that when Interbrand or any other consulting company attempts to compare the brand equity of other brands to one another, they measure it using the brand of the US dollar! Now there’s a powerful brand. ![](https://www.datocms-assets.com/56652/1646369581-frame-166.png?auto=format) What other brand has a dedicated spot for its logo on the keyboard of every computer in the world? There’s for sure no Coca-Cola key on my keyboard. The consumer perception of the US dollar, both in America and just about everywhere else on earth is extremely high. It’s the standard by which we judge the monetary worth of things. It’s what everything is priced in, at least in America. In economics, they have their own fancy term for everything, so they don’t call this brand equity. Instead, they call the difference between what a dollar is worth and what a rectangular piece of paper is worth the monetary premium. But it means exactly the same thing — what a dollar is worth over what the product itself, a piece of paper, is worth. ### How Did the Dollar Get To Be the True King of Brand Equity? ### The dollar’s brand equity used to be zero. Interestingly, just like how Coca Cola used to have something much more potent in it than it does today, the same is true of the US dollar. **The dollar used to be fully, 100% backed by and completely redeemable for pure, solid gold.** Until 1933, one dollar was worth about one-twentieth of an ounce of gold. Back then, the dollar’s brand equity was actually zero. The US Federal reserve bank would give you an ounce of gold for a $20 note. Then, in 1933, Franklin Roosevelt confiscated consumer gold and passed the Gold Reserve Act and suddenly you needed $35 to get an ounce of gold. But the dollar still had no brand equity. It simply became worth one thirty-fifth of an ounce of gold. It also seems from the historical records that it became harder to get that ounce of gold then for your stack of one $20 note, one $10 note and one $5 note. But then, suddenly, all at once, in August 1971, the dollar’s brand equity went from absolute zero to one whole dollar per dollar. Brand equity instantly went from 0% to 100%. That was when the dollar was no longer backed by, nor redeemable, for gold. **Whatever value the world put on the dollar became, all at once, entirely brand equity.** ### Composition of Value of $1 USD ![](https://www.datocms-assets.com/56652/1646373659-screen-shot-2022-03-04-at-13-00-39.png?auto=format) Since all the dollars in the world were certainly perceived by all the people in the world to be worth more than just the Coca Cola company, we can all agree then that the US dollar, since that time, has been the king of brand equity. It’s just simple math again. Just as Coca Cola managed to remain valuable without the cocaine in the product, the US dollar remains very valuable without the gold backing it. Very valuable, but not quite as valuable as it used to be. ![](https://www.datocms-assets.com/56652/1646374099-group-785.png?auto=format) ### A dollar isn’t worth what it used to be The purchasing power of a dollar has fallen since it became 100% brand equity. Back in 1971, a dollar bought about 900 milligrams of gold. It now buys less than 10 milligrams of gold. Ouch. You know how an open bottle of Coke loses its *fizz* after a while? Seems the same thing happens to dollars. ### What We Can Learn From the Brands That Beat Coke? According to Interbrand, the top brands that surpassed Coke in brand equity were Apple and Google. Let’s remind ourselves yet again of the definition of brand equity — that it is what the brand is worth over what the product or service itself is worth. ### Brands that Bettered Coke Delivered More Than a *Brand* Is it really true that we value Apple and Google not because of the value of what their products and services provide to us, but simply because of our *brand perception*? I don’t think so. ![](https://www.datocms-assets.com/56652/1646376765-fipl98j5jvqfokcgoy77.png?auto=format) I think Interbrand is wrong about the brand equity of these companies. We use Apple products because they work really well. I wrote this article on a nine-year-old Macbook Pro! I did it using Google Docs, which is free! I researched the article with Google. There’s no reliable substitute for Google, especially for advertisers, who are the ones paying for it, since it is free to me. No. When I think about it, I realize **these companies have utility that goes way beyond the perceived value of their brand**, and that this value was missed by Interbrand’s researchers. #### If it’s not ‘Brand Equity’, what is the Value in Apple and Google? ![](https://www.datocms-assets.com/56652/1646377745-screen-shot-2022-03-04-at-14-07-39.png?auto=format) What the people at Interbrand missed is this: The value of the products and services provided by Apple and Google is not measured in the cost of materials, but in the benefit we get through how computer code makes those materials do extraordinary things. ### It Is The Code That is the Fundamental Value The brilliantly engineered software, and also the electronics in Apple’s case, is not something beyond the value of the product itself as indicated by the definition of brand equity. It is a part of the product itself. In many cases it IS the product itself. The code is certainly the main ingredient, the most potent ingredient, or the most important ingredient if we recall the terms we used in our discussions of Coca Cola and the dollar. Put concretely, if Interbrand analysts compare two similar office chairs, one with the Herman Miller brand and another with no brand, they’d say the brand equity of the Herman Miller chair is the difference in price between the two. But by this methodology, those same analysts would look at a Mac without its operating system and software on it beside one with all that software and be stumped as to why the first would be worthless and the second worth thousands of dollars. This is because they aren’t considering the value of the code. ### The Value of the *Digital Realm* Behold then, the value of the ***Digital Realm***. It is different from the ***physical realm*** of weights, measures, commodities and goods. It is different also from the ‘brand realm’ where a name and logo command value. **The** ***Digital Realm*** **is a third realm, which not everybody realizes actually exists.** This is why legendary investors, like Warren Buffet, who recognized the brand realm value of Coca Cola completely missed the boat on investments like Apple, Amazon and Google. And it’s why Interbrand thinks it is ‘brand equity’ rather than code that makes these companies’ products profoundly valuable. ### The Main Ingredient Is the Code — and It is Still In There What makes these companies’ offerings valuable is the code — the computer code —and the effects that code generates. The value is what the computer code actually does. It’s not what the perceived value is, but what its actual value is, that makes these things we rely on every day so valuable. The code creates capabilities that were previously impossible. It makes them not only possible, but easy, fast, and cheap. The code makes these capabilities available not just to a few people, but to almost everyone on Earth. But you cannot touch the code. You cannot weigh it. Measuring it by its size (in bytes) is not an accurate measure of its value. It’s what the code does that is valuable. Humankind is still in the earliest years of our history of discovering what code can do. Look at how much code has transformed our civilization since the year 2000. Back then we called each other on actual telephones — with physical keys on them. We didn’t text. We had never heard of social networks. Very few of us had an always-on, high speed connection to the internet let alone a wireless one. And none of us had a supercomputer in our pockets. This digital realm, where what the code actually does what is valuable, requires us to come up with a new measure of equity. Let’s call it code equity from here on. Of course, since this code does such wonderful things, we come to value and remember the names of the companies who make the code’s benefits available to us. And that’s why we seem to think their brands are valuable. But it’s really what their code does that is why we use their products, not what their brand is perceived to be worth. This is why Apple or Google do not bother to sell shirts with their logos on them — the logos do not add brand equity. But if Apple released an *“Apple Shirt”* in the future, you can bet that it would be loaded with software that would make it much more valuable than an ordinary shirt without software. Apple, and these other companies, overtook Coca Cola because Coca Cola couldn’t keep up with the digital realm’s advancing abilities. There is simply nothing (legal) that anyone could mix into sugary, carbonated water to make it do the magical things that great code does. Coke isn’t going to continuously get better and more valuable. Apple, Google and Amazon continuously do. They do it by improving the code. ### What Does Any of This Have to Do With Bitcoin Already? Okay, okay. A quick review of some facts first and then I promise to get to Bitcoin: - Recall how Coke’s value became mostly brand equity when they had to take out the main ingredient, cocaine? - Recall how the US dollar became all brand equity, or monetary premium, when they took away the gold backing it? - Remember how the brands that usurped Coke really do offer a fundamental value other than their brand equity,— value that comes from the digital realm? Let’s turn our thoughts to Bitcoin then. ![](https://www.datocms-assets.com/56652/1646379007-screen-shot-2022-03-04-at-14-29-51.png?auto=format) ### Bitcoin Is Code and its Value Is in the Digital Realm Bitcoin is code. Free, open source code. It does something no other code in the world does. What emerges from its code running is, in *technical jargon:* - Decentralized consensus - Digital scarcity - Immutable recordkeeping - Unbreakable rules But if we want to simplify these technical terms to something a little less specific but a lot more accessible, let’s put it thus: What Bitcoin’s code does, as it runs on computers all over the world, all inter-connected across the Internet, all synchronizing, all validating, is this: **It creates the best money the world has ever seen.** Bitcoin exists in the Digital Realm. The US dollar exists primarily the brand realm. What Bitcoin is doing to the US dollar is what Apple and Google did to Coca Cola. Just as Apple and Google provide, through code, valuable new capabilities that can’t be offered through the *brand value* of a beverage, Bitcoin provides, through code, valuable features that can’t be supplied by the ‘brand value’ of a national, government-issued currency. ### Bitcoin Isn’t Just Digital cash, Digital gold, or Digital Currency. It Isn’t Just Money. Bitcoin is a new social contract — a contract that can’t be broken. It is an unbreakable contract because of how the code ties its [rules to the unbreakable laws of math and physics](https://tomerstrolight.medium.com/why-bitcoins-rules-are-enforced-by-physics-b69f676cbb70). It’s a new platform — one that can’t be commandeered, because of how the code [prevents anyone from taking it over, breaking it or stopping it](https://tomerstrolight.medium.com/why-everything-that-should-hurt-bitcoin-only-makes-it-stronger-c62e8bb2e961). It’s global — because it is made of code that isn’t aware of the [existence of nations](https://tomerstrolight.medium.com/why-bitcoin-is-the-worlds-most-inclusive-institution-a5d4a6ea6625). It’s [immutable, incorruptible, irrefutable, inalienable, unseizable, irreversible, unbreakable](https://tomerstrolight.medium.com/why-bitcoin-is-not-like-anything-youve-ever-seen-before-9a7e09b5cc0f) — because of its code. How valuable are these things? Time will be the ultimate judge. However, each of these things seem increasingly important with the passing of time. It took Apple thirty-six years to overtake Coca Cola. Bitcoin is twelve years old at the time of writing. Bitcoin is currently ranked as the 14th most valuable currency in the world according to the website Fiat Market Capitalizations. With hindsight would you invest in Apple, coming from the Digital Realm, when it was the 14th most valuable brand in the world and up against all these companies operating in the Brand and Physical Realms? Of course. Bitcoin may now be that same opportunity once more. The *Digital Realm* now brings forth a contender in the arena of money, and its name is Bitcoin. Bitcoin may then some day become the world’s most valuable brand — or rather, thanks to code, the most valuable asset in the Code Realm — and perhaps then the most valuable asset in the whole world. --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Swan and Specter Integration Announcement URL: https://www.swanbitcoin.com/industry/swan-specter-integration-announcement/ Specter is an ideal desktop wallet for Swan users. The purpose is to give customers a seamless stacking experience into their Bitcoin wallets, especially into their multi-sig cold storage. --- **Nick Payton** · March 16, 2022 · Updated June 6, 2024 At Swan we are working to integrate our buy Bitcoin API experience in as many other apps as possible. We recently partnered with Specter's Bitcoin wallet software that connects to your Bitcoin Core node. Specter now also connects to Swan for native Bitcoin purchasing services. Here's what the CEO of Specter said: > At Specter, we share and support the mission of Swan Bitcoin to build an intransigent minority of Bitcoiners who hold their own keys. > > — [Moritz Wieters](https://specter.solutions/), Founder at Specter Solutions With this integration, the Specter desktop wallet will allow the user to hold their own keys offline and have the ability to use USB-connected devices or air-gapped QR code-based hardware wallets. Specter will also make it very easy to create and manage multi-sig wallets for cold storage or shared funds in collaborative custody. This supports the mission of Swan Bitcoin to move forward urgently on decentralized ownership through self-custody. Specter Desktop only connects to Bitcoin core and no electrum server, thus by default puts the user in a position to verify the transaction on their own node. This allows the user to better protect their privacy by using their own wallet infrastructure and not the backend of hardware wallet companies like Ledger and Trezor for transaction management and broadcasting. > With Specter Desktop the user is holding their keys offline. They can use most USB connect devices and air-gapped QR code Bitcoin hardware wallets. Our software will also make it very easy to create and manage multi-sign wallets for cold storage or shared funds in a collaborative custody. > > — [Moritz Wieters](https://specter.solutions/), Founder at Specter Solutions The Bitcoin community likes to preach self custody and holding your own private keys. This integration between Swan and Specter will allow you to become a truly sovereign individual: - [Your Node](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/), Your Verification - Your Wallet Infrastructure, Your Privacy - Your Keys, Your Bitcoin **The integration process from Swan withdrawal to Specter Desktop will be seamless:** - The user signs into their [**Swan Account**](https://www.swanbitcoin.com/satoshi/?gc=specter-integration&utm_campaign=specter-integration) through Specter Desktop - Specter Desktop sends 10 unused dedicated Bitcoin addresses to Swan backend Holding your private keys is the only true ownership of Bitcoin. The recent developments in Canada show again that the traditional fiat financial system is prone to censorship and can be used to lock people out of their accounts. With a wallet solution like Specter Desktop the user can be sure that they hold the keys to their own wallet infrastructure.  > We are excited to work with Specter, one of the leading solutions for secure Bitcoin cold storage with multi-sig technology. Now you can stack directly from Swan into your cold storage Specter setup! > > — [Yan Pritzker](https://www.swanbitcoin.com/satoshi/?gc=specter-integration&utm_campaign=specter-integration), CTO and Co-Founder of Swan Bitcoin This partnership is another tool from [Powered by Swan](https://www.swanbitcoin.com/powered-by-swan/?gc=specter-integration&utm_campaign=specter-integration) which enables partners to quickly integrate Swan’s Bitcoin services. Our mission is to create 10 million new Bitcoiners through fast, easy onboarding and world-class education and client service. We’re proud to work with our partners toward reaching this goal. ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # A Chronic Case of Bitcoin (Part 1) - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/a-chronic-case-of-bitcoin/ Bitcoin Is Here To Stay. This Is What It Means. --- **Tomer Strolight** · March 22, 2022 · Updated October 21, 2026 ### Turn Your Frown Upside-Down Bitcoin turns a lot of concepts on their head. It does this so much that we have had to invent new words or phrases to describe it. Often these are opposites of words we are familiar with. We end up relying on words such as *"permissionless"*, *"anti-fragile"*, *"unseizable"*, decentralized, and *"censorship-resistant".* Let's add another of these inversions. This time we'll base it on the word ‘chronic’. This one will be much easier to understand than something like anti-fragile. *Chronic* is defined as *“persisting for a long time or constantly recurring”*. It comes from the Greek word *“khronos,”* which means time. While there is nothing inherently negative about the word chronic, it is almost always used to describe illness, giving it a negative connotation. This does not need to be the case though. Let's dispense with that stigma. We don’t have to think of a *“chronic illness”* every time we hear the word *"chronic"*. We could think of its opposite instead — a chronic wellness. ### A Chronic Wellness? Wouldn’t you like to be diagnosed with a chronic wellness for once? What might that look like? > The test results are all back. Your blood pressure is perfect and no matter how much sodium you have in your diet, it’s going to stay perfect. In fact, it’s going to keep getting better. > > I’m happy to say you have developed a chronic case of perfect blood pressure. > > — [Your Imaginary Doctor](https://www.swanbitcoin.com/satoshi/?gc=chronic-case-of-bitcoin-part1&utm_campaign=chronic-case-of-bitcoin-part1) Being informed of a chronic wellness would of course be a joyous occasion. However, you would still want your doctor to explain the condition so that you could take the appropriate steps to make the most of it. You would also want to know how to confirm you had the condition. You’d want to know the symptoms. You might want to know how the condition could be expected to change over time. You would want to make appropriate changes to your life. That imaginary example of a chronic wellness in your health is regrettably just fiction. I don’t want to get your hopes high about this notion of chronic wellness when it comes to your health. We’re all mortal after all. I do, however, want to get your hopes up about our society. This is because it has contracted a seriously great case of a chronic wellness. Despite both America’s and our society’s many challenges, neither is destined to fail. Both can continue to adapt and improve. This can happen even when things look dark and desperate. The fact that humanity is still here is proof that we recovered from the darkest and most dangerous challenges we ever faced. We managed to overcome every obstacle even without having had a chronic wellness to empower us. ### The Diagnosis: A Chronic Case of Bitcoin Let’s begin with the diagnosis and not mince our words, because this is serious— Seriously Good. You might want to sit down for this. Or you might want to stand up and cheer. Here goes: Dear America, You’ve caught a chronic case of [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=chronic-case-of-bitcoin-part1&utm_campaign=chronic-case-of-bitcoin-part1). It’s spreading. Nobody knows how to stop it. Your neighbors have it too. Every country in the world is catching it. But your case is already the most advanced in the world. Don’t be alarmed now. Bitcoin is a chronic wellness. ![](https://www.datocms-assets.com/56652/1647884827-1000x563_cmsv2_c5fd29f4-9887-56f1-9009-be2ce600c2e9-5694114.jpg?auto=format) ### Part I: Validating the Diagnosis Let’s not get ahead of ourselves just yet. How can we be sure we have a chronic case of Bitcoin? There are a number of ways of testing for this. They are very reliable methods, and a diagnosis of a positive case of it is 100% accurate. Here then are the results of these many of these tests. It is important to point out we are still in the early stages of our case of Bitcoin, so while these results will show that we have it and that it is spreading, they will also demonstrate that it still has a long way to go. ### The Test Results #### Test #1 - Increasing ownership of Bitcoin in the population We’ve been measuring how many Americans own Bitcoin and the number is rising at an increasing rate. Bitcoin ownership is spreading throughout the population. Twelve years ago it was zero. Three years ago it had spread to 2% of Americans. *Today it stands at 6%*. That’s between 19 million and 20 million people! The last three years added twice as many new Bitcoin holders as the first 9 years of Bitcoin’s existence! ![](https://www.datocms-assets.com/56652/1647965692-screen-shot-2022-03-22-at-12-14-40-pm.png?auto=format) Source: [news.gallup.com](https://news.gallup.com) #### Test #2 - Intent to own Bitcoin Two years ago 72% of Americans said they had no intention of owning Bitcoin. This year that number dropped to 58%. For investors under age 50, that number is only 38%—a minority of the population that is in line to inherit America’s wealth! Furthermore, another 2% of Americans report that they plan to own Bitcoin in the near future. #### Test #3 - Bitcoin Nodes in America What is a node? A Bitcoin Node is a complete replica of Bitcoin’s programming and its ledger (which is known as its blockchain). It constantly maintains the ledger with all new entries. It is not possible to tell the location of every node in the world, or to even count how many there are, because they can hide their location or even their very existence. However, a decent percentage of nodes do not hide their existence or location. We do know there are about 10,500 visible nodes. Of all the world’s Bitcoin nodes that do make their location public, nodes in America represent *24.6% of the world’s total*! America’s population is only 4.2% of the world. If we divide the first figure by the second we get an index that shows penetration of Bitcoin nodes in America is **5.85 times** higher per capita than the rest of the world. This shows how much more developed America’s case is than the world at large—almost six times as advanced. Source: [news.gallup.com](https://news.gallup.com) #### Test #4 - Bitcoin Mining in America The number of Bitcoin mining companies in America is growing. Here is an alphabetical list of those that have joined the Bitcoin Mining Council: [Blockcap.com](https://www.blockcap.com), [Core Scientific](https://corescientific.com), [Hive](https://hiveblockchain.com), [Marathon](https://marathondh.com), [Riot](https://www.riotblockchain.com), and [Galaxy Digital](https://www.galaxydigital.io). Most are publicly traded. America’s share of the Bitcoin mining energy is now estimated to be 17%, up from only 4% two years ago. And this too, with an emphasis on clean sources of energy, is growing rapidly. #### Test #5 - Institutional Mining in America The 5 publicly traded companies with the most Bitcoin on their balance sheets are all American. In 2019, none of them held any Bitcoin. Of the top 15 publicly traded companies with Bitcoin on their balance sheets, eight of them are American, and those 8 companies’ holdings represent 91.5% of the total Bitcoin held by those top 15 companies. When it comes to exchange traded products, America has far and away the largest such fund, and in total accounts for 77% of all the Bitcoin held in such instruments worldwide! Almost 853,000 Bitcoin are held in these publicly disclosed treasuries of American organizations. At a $50K price, that’s $42 Billion worth of Bitcoin. Source: [bitcointreasuries.net](https://bitcointreasuries.net) #### Test #6 - Hodling through the tough times This last test is perhaps the most important in determining the chronic nature of America’s case of Bitcoin. Do American’s have a fleeting relationship with their Bitcoins? Is it a fad? Will they drop their Bitcoin for something else when the price drops or when the next new thing comes along? We got to test this at the start of the pandemic in March 2020. Bitcoin’s price fell to a low daily close of under $5,000 in March when it had been trading about $10,000 for most of 2020. Over 80% of Bitcoin holders held through the dip. It was this conviction that drew major investors like Paul Tudor Jones to Bitcoin. He now holds 5% of his portfolio in Bitcoin. Up from 1% a year ago and 0% the year before. ![](https://www.datocms-assets.com/56652/1647885549-ptj.jpg?auto=format) ### Conclusion There can be no doubt we’ve got a growing case of Bitcoin in America. What is it that makes it Chronic? Stay tuned for *"Chronic Case of Bitcoin"* part 2. In the meantime, if you'd like $10 in free Bitcoin just for signing up and starting a recurring buy plan with Swan Bitcoin [click here](https://www.swanbitcoin.com/satoshi/?gc=chronic-case-of-bitcoin-part1&utm_campaign=chronic-case-of-bitcoin-part1)! --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # A Chronic Case of Bitcoin (Part 2) - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/a-chronic-case-of-bitcoin-part-2/ Bitcoin is here to stay. This is what it means. --- **Tomer Strolight** · March 31, 2022 · Updated July 3, 2024 In [Part 1](https://www.swanbitcoin.com/a-chronic-case-of-bitcoin) of this article we discussed why America has a serious case of Bitcoin. In Part 2 we explore why it's chronic and spreading. ### Why Bitcoin is Chronic Bitcoin itself is unstoppable. It turns out that a lot of things are, but we don’t often think about that fact. We of course can’t stop aging — that’s unstoppable. We’ve also been unable to stop nearly everything that the government has set out to stop. For example, we can’t stop crime. We can just discourage it and punish it. Our government can stop certain things. It can shut down a web site, or even an entire company. (However, doing this often only forces whatever the company was offering into a ‘black market’ rather than making that offering stop.) Stopping Bitcoin is not so easy. Bitcoin is not a web site and not a company. It has no head office. It has no employees. It has no center of operations. It has no rulers. It has no assets. Bitcoin adjusts itself all by itself so that if energy resources are taken away from it, it simply requires less of it to survive. Bitcoin is built for ultimate survivability. It’s a good thing that Bitcoin is a good thing. Take a look at China where the government there, with far greater control over the economy and individuals than exists in America, has tried on numerous occasions and in different ways to stop Bitcoin. It just hasn’t worked, at all. Bitcoin would only stop if nobody in the world wanted it. It runs only because people choose to run it. So it runs only if it is good for people -- or at least as long as people judge bitcoin to be good for them. If you are considering the idea that Bitcoin can be stopped, perhaps the single-most important thing to understand is this: as long as someone—anyone, anywhere—is running Bitcoin, Bitcoin can’t be stopped. Lots of people, for lots of good reasons, want to, can, and do run Bitcoin. With all this, it’s therefore not surprising that we see growing political support replacing political opposition to Bitcoin. There’s a growing base of supporters. Shrewd politicians are waking up to this. Older politicians are facing younger opponents who, like the rest of us, are warming up to the benefits of Bitcoin and the importance of legally protecting the rights of Americans to use it. Smart politicians are seeing those test results from the previous section too, and they want to win the support of this growing body of citizens, employers and productive entrepreneurs. Understanding, supporting and embracing Bitcoin is even increasingly being recognized as important for America’s leadership role in the world. ### Part III: Getting to Know the Symptoms of Bitcoin There are a lot of things you’ll notice start to change as America’s case of Bitcoin progresses. Here are some symptoms to look out for that we can expect to see growing in America’s people and institutions: - Inclusivity for All - Critical thinking - Individualization - Honesty - Curiosity, question asking and answer seeking - Work ethic and pride in work - Motivation and purpose - Hope - Confidence - Generosity and kindness - Friendship and goodwill to others - Longer term focus Let’s look very quickly at one example of each. #### Inclusivity for All One unfortunate condition of present-day America is the rate at which it incarcerates people. In 2008, before, the launch of Bitcoin, America’s incarceration rate was the highest in the world — roughly seven times that of European countries or neighboring Canada. This situation has improved but America still remains the most highly incarcerated nation on Earth. Incarceration eventually ends for the overwhelming majority of those who have to serve time, but the stigma and hangover effects can last a lifetime. It is hard to get a loan, a credit card and even just a basic bank account if you have a criminal record or have been imprisoned. This makes it hard to get a job, to get paid and to become re-integrated into society. United States is the World’s Leading Jailer Prisoners per 100,000 Population in 2008 ![](https://www.datocms-assets.com/56652/1648748258-screen-shot-2022-03-31-at-1-37-00-pm.png?auto=format) Source: Roy Walmsley, World Prison Population List, 2009 (8th Ed.), United Kingdom Home Office Research But everyone can use Bitcoin. In fact, Bitcoin allows everyone, including ex-convicts, to access all the services it offers—services which are akin to what the banking and finance sector offer. Justin Rhedick wrote and recently released *“From Bars to Bitcoin”,* a book that tells his story of an incarcerated individual released into society who found Bitcoin, and over five years, made himself a productive individual who now assists others released from prison to learn to use it to save money and become productive law-abiding members of society. Bitcoin’s permissionlessness and censorship resistance means anyone can use it. Bitcoin welcomes all, not just ex-convicts, but new immigrants, anyone of any race, with any disability, of any income level, of all political stripes. The excerpt of the poem *“The New Colossus”* which is inscribed on the Statue of Liberty is highly appropriate to Bitcoin. > Give me your tired, your poor, > Your huddled masses yearning to breathe free, > The wretched refuse of your teeming shore. > Send these, the homeless, tempest-tost to me, > I lift my lamp beside the golden door!” If you want to further understand the general case for inclusivity in Bitcoin, there is a three-minute- long article in Why Bitcoin, The Series, called *“*[*Why Bitcoin is the World’s Most Inclusive Institution*](https://tomerstrolight.medium.com/why-bitcoin-is-the-worlds-most-inclusive-institution-a5d4a6ea6625)*"* #### Increased Critical Thinking Bitcoin is a radical departure from many long-held beliefs that were taken for granted but which are now being questioned. The view that government should have total control over the supply and price of money (interest rates being the price of money) has hardly been questioned in American politics or its academic institutions. Many Americans didn’t even think about this issue, and few were even aware that throughout most of history governments did not control money at all, let alone monopolize its issuance. But Bitcoin is raising awareness that there may be alternatives to our current system, just at the time when that system is demonstrating many weaknesses. Bitcoin is fanning the spirit of Americans to ask questions and to find sound solutions to problems they see. It starts with questions like *“What is money?”* and *“Can Bitcoin be money?”* but quickly spreads to *“How do economies actually work?”*, *“How does Bitcoin work?”*, *“How can I protect myself from t*he flaws in our current system?”, *“How do I preserve and enhance my Freedoms?”*, *“How does Bitcoin help with this?”.* And it goes on. Bitcoin encourages the study and integration of knowledge from many fields. That’s what we need most. Americans know deep down and from their history that it is only by research, experimentation, innovation and rational methods that progress is made. #### Increasing Individualization America is the nation of individuals. Its constitution was the first ever to acknowledge the rights of every individual in its historic Bill of Rights. Bitcoin is in many ways a new method for Americans to preserve, protect, and enhance some rights enshrined therein. Bitcoin is a form of speech—it is just strings of text sent back and forth among its participants. So it is legally protected by the first amendment. But its uncensorability also ensures that it is a form of speech that cannot be stopped. Bitcoin uses the most powerful technology known to secure it, making it unseizable—and thus creating something perfectly aligned with part of the fourth amendment, freedom from unreasonable seizure of property. Most importantly though, Bitcoin is something that individuals must choose and must learn how to use. It is not mandated. Choosing Bitcoin is an individual choice. That choice may be arrived at in many ways and for many reasons, but it is an act of individualism to choose Bitcoin, and as we saw from our tests above, more and more individuals are choosing it all the time. #### Increasing Honesty It is unfortunate, but honest nevertheless, to have to note that we are suffering from a lack of honesty. Our politicians’ promises are unreliable. We have lost confidence in big businesses because we don’t believe them to be honest. Trust in congress has fallen from 42% of Americans saying they have a *“great deal of”* or *“quite a lot of”* trust in congress in 1973 (when the study cited began) to only 12% today. One third of Americans trusted big business in 1975. Today that’s only 18%, down by nearly half. Trust of Public schools fell from 58% to 32% Televised news fell from 46% to 16%—down nearly two-thirds! The medical system dropped from 80% to 44%! And finally, trust in banks declined from 60% to 33%. Bitcoin on the other hand, is a truth machine. Every single transaction and block in the blockchain is mathematically verifiable to be true. Bitcoin cannot tell a lie. Every participant verifies every statement within it. Bearing witness to an institution of such honesty and integrity is inspiring to so many who have lost trust in the above institutions over the last fifty years. Bitcoin sets an example of honesty that may well spread back out to the institutions who have lost so much trust through having failed to maintain their honesty. #### Increasing Work Ethic and Pride in Work Perhaps another reason that trust in institutions is down is because people haven’t been taking as much pride in their work or working with the same ‘ethic’ as they used to. The global economy, which uses the U.S. dollar as its reserve currency, has encouraged outsourcing of American work overseas, often to the lowest bidder or lowest cost provider. Quality has been sacrificed for quantity and price. Bitcoin can help in two ways here, one practical and one philosophical or spiritual. Practically speaking if Bitcoin were to replace the U.S. dollar as the world reserve currency it would eliminate the disadvantage American manufacturing and American labor suffer from the Triffin Dilemma. This dilemma identifies the fact that other countries require U.S. dollars and trade their hard work for our paper, leaving our workers at a significant disadvantage. Philosophically, Bitcoin is money that can only be produced with hard work. It cannot be conjured from thin air or made ‘cheaply’. It is money that inspires doing good, honest, excellent, reliable work, because that is the type of work needed to create and maintain Bitcoin. #### Increasing Motivation and Purpose With money that can’t be conjured up for political advantage, a lot of the shenanigans that have led to the erosion of trust in our institutions and society simply become impossible. There is no way to print Bitcoin to buy votes, or to bail out bankrupt entities who have failed and need to be replaced by ones that won’t repeat the mistakes that led to failure. Without the expectation of being bailed out for mistakes, motivation to not make such mistakes increases from none-at-all, to being essential. #### Increasing Hope It is no surprise that the website *“hope.com”*, owned by MicroStrategy, the company founded and led by Michael Saylor. His quote at the top of the site reads *“Bitcoin is a bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, & secure savings account to billions of people that don’t have the option or desire to run their own hedge fund.”* Indeed, it is not hard to find plenty of testimonials online of individuals who have found their way out of hopelessness and into hope thanks to Bitcoin—not only those who achieved wealth through its appreciation in value, but those who found purpose. And it is easy to find even more who have hope that honesty, trust, motivation, work ethic and more of the virtues described above are, in fact, on the upswing thanks to Bitcoin. #### Increasing Longer Term Focus With money that cannot be debased, inflated, confiscated or destroyed, the possibility of longer term focus becomes increasingly realistic. One can rely on their money’s purchasing power long into the future. While inflationary government currencies instead guarantee that they will be worth less into the future, and government policies to stimulate the economy encourage short term consumption at the expense of the long term, Bitcoin can always be expected to increase in purchasing power. In Bitcoin circles this is tendency towards the long term is referred to as *“Low Time Preference”* and corresponds to an ongoing study famously known as *“The Marshmallow Test”* begun in 1972 by Stanford University professor Walter Mischel. This test offered children a marshmallow but told them if they didn’t eat it and waited fifteen minutes, they would receive two marshmallows. The study followed these children throughout their lives and found that those who delayed gratification and waited for the second marshmallow actually fared far better in life. Bitcoin is the ultimate marshmallow test. The longer you wait to spend your Bitcoin, the better you’re likely to do. #### Even More There’s plenty more positive effects Bitcoin is having on us. These include increasing self-confidence, generosity, kindness, friendship and goodwill. These topics can all be explored personally or through other readings. ### Review of The five stages of the process of a Nation’s Bitcoin Condition Broadly speaking, we can classify the chronic condition of Bitcoin as having five stages: ##### Stage 1: Onset of Bitcoin There are a few people, mostly computer and math enthusiasts or those in the fields of libertarian economists talking about Bitcoin. A few companies experimenting in it. ##### Stage 2: Mild Case of Bitcoin Significant savings start to move to Bitcoin. Some people begin moving large portions of their wealth into Bitcoin to protect their savings. Bitcoin is recognized as unstoppable by many. ##### Stage 3: Impossible to Ignore Bitcoin <- we are here now Skepticism of the fiat monetary system increases—people start calling it *“fiat”* and bureaucrats ask that those people stop doing that. Lightning network begins growing at double digit percentages each month. Legislators begin attempting to regulate activities around Bitcoin. Tremendous value captured. ##### Stage 4: Tipping Point Bitcoin based financial products and services explode in number and value. Bitcoin expands beyond a savings vehicle to medium of exchange and unit of account for many. Holders of Bitcoin outnumber non-holders. Politicians begin accepting the reality of Bitcoin and turn to laws that accommodate it rather than restrict it. ##### Stage 5: Full Bitcoinization Bitcoin is used nearly everywhere. It is the primary savings vehicle. People recognize the *“right to Bitcoin”* is a right to be free from interference in using Bitcoin and it is honored and cherished the world over. #### Advice: Learning to live with Bitcoin If you’re in agreement that Bitcoin is here to stay, is growing, and is good, what should you do? Be Prepared: - Buy Bitcoin. - Learn how to hold it and use it. There’s no big hurry to scramble to do this. Take your time. The Swan team loves to educate about Bitcoin and so does much of the Bitcoin community. Your concierge can guide you to great resources on any questions you might have. - Get enough Bitcoin for your family, for the long term. Consider its advantages over the things that might go away or lose value as Bitcoin spreads: low and negative yielding bonds, fiat currency sitting in savings accounts, and stocks of companies that rely on repeated bailouts and access to cheap credit for their valuations. - Learn and prepare for the principles of a Bitcoinized nation: Smaller government, less bureaucracy, more freedom, more personal responsibility, and a general view to live and let live. ### Conclusion The sequel to the groundbreaking film *“2001: A Space Odyssey”*, was called *“2010: The Year We Make Contact”*. The most famous line of dialog from that film was “Something is going to happen. Something wonderful.” It was just about then, only one year earlier, in 2009, that Bitcoin *“happened”.* Bitcoin may indeed be a *“something wonderful”*. And it couldn’t come at a better time for our country, our planet, and ourselves.  If you’d like $10 in free Bitcoin just for signing up and starting a recurring buy plan with Swan Bitcoin [click here](https://www.swanbitcoin.com/satoshi/?gc=chronic-case-of-bitcoin-part2&utm_campaign=chronic-case-of-bitcoin-part2)! --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Why Bitcoin is Different (Part 2) - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/why-bitcoin-is-different-part-2/ Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where the beginners run into confusion is how Bitcoin differs from other cryptocurrencies. --- **Sam Callahan** · March 28, 2022 · Updated June 27, 2024 Bitcoin is a brand new technology that differs from anything else that has come before it or after it. The goal of this series is to clearly distinguish the difference between Bitcoin and other cryptocurrencies. It is far too common for beginners to fall for the false promises and deceptive narratives that altcoins sell. Sophisticated investors also get duped into buying altcoins by thinking they’re diversifying risk across a new asset class when in reality they are diversifying out of hard money and into high-risk venture capital bets or outright scams. The reason these mistakes happen is that it takes a deep understanding of various factors, such as the underlying technology, game theory, monetary economics, and network economics, to fully comprehend why Bitcoin is different. [In Part 1 of this series](https://www.swanbitcoin.com/why-bitcoin-only-part-1/), we discussed how Bitcoin is unique because of its decentralization, its rules-based monetary policy, and its energy usage which creates an honest competitive environment for nodes to come to consensus. These factors have allowed Bitcoin’s monetary policy to remain unchanged, reinforcing market participants’ trust in its scarcity. In Part 2, we will dive into Bitcoin’s network effect, why Bitcoin will serve as the only [digital money](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-different-part-2&utm_campaign=bitcoin-different-part-2) in the future, and why all innovation can and will be built on top of the Bitcoin protocol.   From my own studies, I reached the conclusion that all, if not most of the value in the total cryptocurrency market cap today will be captured by Bitcoin in the future. Let’s further break down why there’s Bitcoin, and then there are sh*tcoins. ### Bitcoin’s Network Effect Won the Race Long Ago The appropriate comparison for a global digital monetary protocol is NOT a company like MySpace, but rather another protocol we all use today, TCP/IP (the Internet). Like with our one-and-only global Internet, in the future there will be only one global monetary protocol, Bitcoin. Bitcoin is the clear [Schelling Point](https://en.wikipedia.org/wiki/Focal_point_(game_theory)) because it solves the most important problem of all (money itself) and has a security model that cannot be surpassed. Most market participants will therefore choose Bitcoin as more users adopt it and more applications are built on it just like what we saw happen with TCP/IP during [the Protocol Wars](https://en.wikipedia.org/wiki/Protocol_Wars#:~:text=A%20long%2Drunning%20debate%20in,and%20most%20robust%20computer%20networks.).  ![](https://www.datocms-assets.com/56652/1648492752-fn5wv5twuay8nef.jpeg?auto=format) Bitcoin’s security model cannot be surpassed because Bitcoin represents the “[zero-to-one](https://en.wikipedia.org/wiki/Zero_to_One)” moment where digital scarcity was created for the first time. It has established itself over the past 13 years as a reliable store of value because it has never suffered a hack, never changed its rules, and has overcome every attack that it has faced. It has done this while preserving the monetary policy set by Satoshi Nakamoto in the Genesis Block. Bitcoin has proved over time that it is a robust, resilient, monetary network. Only time can build trust like that, and with Bitcoin being the very first widely accepted cryptocurrency, no other altcoin can compete with Bitcoin on that front.  A network effect occurs when a network becomes more valuable to the users as more people use it. Bitcoin’s network effect can be thought of as a combination of the number of its users, its liquidity, its brand, its hash rate, the value people store in it, and the general trust in the scarcity of bitcoin, the asset. Bitcoin already dominates all other cryptocurrencies in terms of its network effect and given what we know about [the Lindy Effect](https://en.wikipedia.org/wiki/Lindy_effect), this dominance will likely continue to expand. Unless Bitcoin somehow suffers a catastrophic event, no other cryptocurrency will be able to compete with Bitcoin’s powerful network effect. ### Economic Systems Trend Towards One Money - and Bitcoin Will Be It Bitcoin is an economic good competing in the free market of money. Other currencies and assets are competing with Bitcoin on the basis of being used to facilitate trade, preserve present work for future consumption, and communicate value between market participants. Bitcoin accomplishes this task better than any other money in existence. Bitcoin is superior because it perfectly embodies all of the things we want in a money: it’s portable, divisible, scarce, durable, fungible, verifiable, and permissionless. Since money is a zero-sum game (you have to sell dollars to buy bitcoin), we can expect Bitcoin, as the better money, to drive out weaker currencies. In economics, this concept of good money driving out the bad money is explained by [Theirs’ Law](https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gresham's_law_(Thiers'_law)).  Part of the reason this occurs is that the more people that use one money, the more liquid that money becomes in the economy. The more liquid that money becomes in the economy, the better it serves its function as a tool to facilitate trade and coordinate accurate price signals throughout the economy. This in turn increases the number of people who want to use it. The result is a positive feedback loop that leads to economies adopting one single monetary medium. Unchained Capital’s Parker Lewis explains this concept well: > While an individual can choose to hold one or multiple currencies, one is definitionally going to perform that function more effectively. One will preserve future purchasing power better than the other. Everyone intuitively understands this and makes a decision based on the inherent properties of one medium relative to another…It is not coincidence that the market converges on a single medium because each individual is attempting to solve the same problem of future exchange, which is interdependent on the preference of others. > > — [Parker Lewis](https://unchained.com/blog/bitcoin-obsoletes-all-other-money/), Bitcoin Obsoletes All Other Money Bitcoin holds its value better than any other money, and because of its superior monetary properties, more and more people will eventually choose it as their preferred money. Right now, there is still information asymmetry surrounding Bitcoin. Bitcoin is so different and so new that most people in the world still don’t understand it. But as time passes, more people will learn about it, become familiar with it, and this information asymmetry will diminish. More people will come to understand that Bitcoin is the best money and will act accordingly.  As adoption grows it becomes impractical for someone to use a less liquid and less secure form of money. It would be like someone speaking a different language when everyone else around them is speaking English. They would be communicating value in less effective money with no trading partners in the market economy. That’s why all market economies eventually converge on the most liquid and secure monetary good to facilitate trade, and today, that superior monetary good is Bitcoin. ### Only Money Requires a Blockchain “Blockchain technology” is a technology best described as a difficult to change, slow, and costly database compared to its traditional, centralized counterparts. Development is slow-moving, a blockchain is expensive to maintain, difficult to upgrade and it does not scale well. Many *“Blockchain, not Bitcoin”* advocates in the last bull run realized this only after they wasted millions of dollars and man-hours on enterprise blockchain projects *(See* [*IBM*](https://www.coindesk.com/business/2021/02/01/ibm-blockchain-is-a-shell-of-its-former-self-after-revenue-misses-job-cuts-sources/#:~:text=IBM%20has%20cut%20its%20blockchain,to%20one%20of%20the%20sources.) *and* [*Microsoft*](https://www.coindesk.com/business/2021/05/13/microsoft-to-shutter-its-azure-blockchain-service-this-autumn/)*)*. What they ultimately discovered was that a blockchain is not very useful if you need the ability to add new features, keep out people you don’t want using the system, make changes, or scale quickly to reach millions of users. It turns out companies like to have those capabilities when building products.  Since blockchains are also more expensive compared to centralized databases, the only reason to use one is if you want a database that is *resistant to change, permissionless, and decentralized*. The only real use case that we’ve discovered for a database with those traits is for money itself. Money benefits from being immutable and decentralized, so it’s a good use case for a blockchain. Bitcoin Developer and Author, Jimmy Song, eloquently describes this idea, The Bitcoin blockchain is the most robust and [proven money](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-different-part-2&utm_campaign=bitcoin-different-part-2) utilizing blockchain technology. Bitcoin has shown that while it’s difficult, it is still possible to run a decentralized ledger in a trustless manner. Bitcoin accomplishes this by being extremely simple in its design. You can track which addresses contain which bitcoin, and you can send/receive transactions whose addresses you own – and that’s basically it. Other projects that claim they will build a decentralized computer on a blockchain that can somehow run hundreds or thousands of applications simultaneously and quickly while remaining decentralized are either incredibly naive themselves, or taking advantage of other people who are naive and don’t understand basic software architecture realities.  > The essence of what blockchains provide is decentralized, authoritative, expensive to alter data. This is not a surprise as these properties are exactly what you want for sound money like Bitcoin. Unfortunately, what non-monetary projects generally need, given that it’s software for an industry that’s regulated, changing and growing, is a centralized, upgradeable and scalable system. Each need is made greatly more difficult when combined with a blockchain. In other words, blockchain is the wrong tool for the job. > > — [Jimmy Song](https://jimmysong.medium.com/why-blockchain-is-not-the-answer-3b7d5f612d11), Why Blockchain is Not the Answer What altcoin founders inevitably discover is that decentralized blockchains don’t scale well for applications other than money. This leads to decisions made by the altcoin teams to sacrifice decentralization for efficiency so that they can deliver on their promises of decentralized apps, NFTs, and fast transaction times. They sacrifice the most important traits – security and decentralization – for increased functionality and efficiency.  The question then becomes – What’s to stop another competing crypto project from making the decision to sacrifice even more decentralization and security for more efficiency and functionality? The answer is, in short – *“nothing”.* This is exactly what we’ve seen play out with competing Layer 1 smart contract protocols like Ethereum, Solana, and Binance Chain. Solana and Binance Chain came later and chose to be even more centralized so they could tout faster speeds and lower fees than Ethereum. This dynamic will continue to occur when the next new exciting crypto comes along, and the next, and the next, until users will simply wonder, *“why do I need to use a blockchain at all for this?”* It’s slow and expensive, and if these cryptos are centralized anyways, then why not just use a traditional database on Amazon Web Services?  Indeed – good question. This is the essence of the Bitcoin vs. *‘crypto’* debate. It doesn’t make sense to make another version of *“decentralized blockchain money”* because it’s impossible to compete with Bitcoin’s immutable monetary policy, decentralization, and network effects. Everything Bitcoin does cannot and need not be reinvented, and the things altcoin founders claim they can do that Bitcoin can’t A) can be built on Bitcoin eventually or B) can be done better today with existing technologies like centralized databases. ### All Innovation Will Eventually Be Built on Bitcoin One of the biggest strengths of Bitcoin is its resistance to change. This is a very different approach to the Silicon Valley Ventrue Capital framework of *“move fast and break things.”* For Bitcoin, this is a strength, not a weakness, because we are not building the next app here. We are building the foundation of the digital monetary protocol. Every change and upgrade to Bitcoin should be slow, meticulously reviewed, intentional, and methodical in nature to avoid making a mistake and jeopardizing the integrity of Bitcoin.  It’s much easier to build and go to market with a useless centralized token than to build on top of a truly decentralized platform like Bitcoin, but it isn’t better. While some have fallaciously stated that it’s impossible to build on Bitcoin, in reality, it’s just that Bitcoin is intentionally slow-moving *by design*. Bitcoin is the foundation and future of programmable money because it is the most secure, distributed, permissionless network, and this is impossible to replicate. Developers should take advantage of Bitcoin’s unique traits and build on top of it instead of trying to compete against it. Bitcoin is taking a different approach to scaling than altcoins. Instead of trying to put all the data and transactions into one base layer, Bitcoin will have many different layers on top of its secure base layer. These layers will offer users different levels of decentralization, transaction speeds, and functionality while maintaining the security, decentralization, and immutability of the base layer for settlement.  Think of the diagram above – Google and Netflix were built atop the Internet layer, not woven into it. The Internet itself didn’t change, but what you could do on it was limited only to the imaginations, creativity, and ingenuity of developers who chose to build on top of it rather than trying to re-invent it. Below is a good graphic attempts to depict how Bitcoin's base layer will underlie an entire layered ecosystem of functionality and innovation. ![](https://www.datocms-assets.com/56652/1648492776-layers.jpeg?auto=format) An example of this layered scaling approach can be observed in the traditional payment system we have today with mobile apps like Venmo/Cash App layered on top of credit card networks, which are layered on top of Fedwire or the Federal Reserve’s National Settlement Service. These layers solve different problems and have different requirements and trade-offs. The same layered approach will be taken in Bitcoin. In fact, it’s already happening with developments such as Lightning, Liquid, Impervious, and others.   Below is a diagram mapping out some of the innovations occurring on Bitcoin. ![](https://www.datocms-assets.com/56652/1648492784-innovation.jpeg?auto=format) The takeaway is that all of the promises of altcoins will eventually be built on top of the most distributed, secure, and open monetary network, Bitcoin. It will take time because of the slow-moving nature of Bitcoin’s development, but it will happen because none of these other altcoins can replicate Bitcoin’s scarcity, security, and decentralization. As altcoins continue to move fast and break, Bitcoin will slowly and methodically add functionality and other improvements on top of a global monetary infrastructure that is unbreakable. Like the classic tale of the tortoise and the hare, Bitcoin will win in the long run and ultimately make these altcoins irrelevant.   ### Altcoins are False Advertising, Bitcoin Needs No Advertising All other cryptocurrencies are constantly pushing solutions to problems that don’t exist, whereas with Bitcoin, the whole world seems to be one big unpaid advertisement for it. Whether it’s the censorship of donations, confiscation of assets by governments or entities, collapsing currencies in emerging markets, or decades-high inflation in the US, the world is in desperate need of permissionless, sound money that can’t be inflated, censored, or seized.  Maybe the biggest difference between other cryptocurrencies and Bitcoin is the incessant marketing that altcoins do to pump their coins. Bitcoin has no marketing team because Bitcoin is leaderless and its value speaks for itself. Altcoins need to constantly run advertisements full of buzzwords about how *“decentralized”* they are, how *“fast”* their transactions are, or how they are *“better than Bitcoin,”* because their promoters are always trying to sell you on something. One of the reasons they do this is to pump the value of their own coin when they themselves hold a portion of the coin’s supply.  The truth is, many altcoins consist of a centralized founding team that creates a token, grants themselves a percentage of the supply, and then sells it to the public under the guise of it being a decentralized, secure, and revolutionary token, when it’s, in fact, none of those things.  Below is a chart that shows some major altcoins and the percentage of the total supply that is controlled by the founding teams for various reasons.  ![](https://www.datocms-assets.com/56652/1648492821-shitcoin-premines.jpeg?auto=format) Most of the other platforms are primarily launchpads for dishonest projects that give worthless tokens in exchange for something of value, only to have the wealth disappear along with the founders not long after.  They often market their token as a secure solution or that you can trust them with the tokens they control. However, there have been countless hacks in the altcoin space. Last year we saw the largest altcoin hack at the time result in [$600 million dollars stolen](https://www.cnn.com/2021/08/11/tech/crypto-hack/index.html), and these heists occur with such frequency now that the total dollar amount lost to altcoin hacks is well into the billions today. Bitcoin on the other hand has never been hacked in its entire history. Its track record speaks for itself.  Altcoins also attempt to create the illusion that their token is decentralized. However, this is almost always just an illusion. Team members and insiders typically hold a majority of the coin's supply. There is also usually a founding team that is able to unilaterally control the protocol. This kind of false advertising is so prevalent within the altcoin space that it led to SEC Commissioner Hester Peirce inventing a term for it, *“DINO”* – short for *“Decentralized in Name Only”.* This lie is always exposed whenever these altcoins inevitably run into problems that require the team to interfere with the protocol to fix it, proving that it was never decentralized in the first place.  A prime example of this was when [Solana engineers and insiders had to hard fork its protocol](https://cointelegraph.com/news/solana-attributes-major-outage-to-denial-of-service-attack-targeting-dex-offering) after suffering a denial-of-service attack. This isn’t meant to pick on Solana, I had many examples to choose from. The takeaway here is if Solana was truly decentralized, they would not have been able to unilaterally hard fork the protocol, but that’s precisely what happened. And yet, when you go to their website, it reads, “Solana is a decentralized blockchain built to enable scalable, user-friendly apps for the world.” This is textbook altcoin marketing from a protocol that is DINO. You see, bitcoiners don’t need to hire a marketing team because Bitcoin is sound money that fixes a real problem in this world. Bitcoin’s value proposition speaks for itself, and if you ever find yourself in need of storing your wealth in an undebaseable, incorruptible money, then Bitcoin will always be open to anyone who needs it.  ### Conclusion [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-different-part-2&utm_campaign=bitcoin-different-part-2) is different from all other *“crypto”* contenders because of its network effect. Its purpose of being sound money justifies its usage of a blockchain, and its superior properties make it the money most likely to continue to see global adoption. Its resistance to change has allowed more and more people to place trust in Bitcoin’s scarcity, resulting in a powerful network effect that reinforces itself over time. Since economic systems converge on one money to facilitate trade and create a pricing system, one can conclude that Bitcoin will capture most, if not all, of the value in the market due to its superiority as money. In the end, all of the dreams of altcoins will eventually be built on top of the Bitcoin network to create a new, layered monetary system.  I hope this series helped clarify why Bitcoin is different from other cryptocurrencies. With how much money is spent on marketing by these sh*tcoin promoters, it is easy to feel like the cryptocurrency space is represented accurately by the picture on the left below.  ![](https://www.datocms-assets.com/56652/1648135775-unnamed-4.png?auto=format) The reality is displayed on the right side here. The peddlers of altcoins like to make people believe that all the innovation is occurring in this *crypto* space when in reality most of it is inferior technology or outright scams trying to capitalize on the success of a truly innovative technology, Bitcoin.  Don’t get fooled by the altcoin marketing. Don’t put yourself through the *“Sh*tcoin Cycle”*. And don’t diversify in this new asset class. If you want to gamble on high-risk digital penny stocks, then go right ahead and buy some altcoins. If you want to save for the long term in a sound money that protects your wealth against inflation, confiscation, and censorship, then Bitcoin is the only right choice for you.  Swan Bitcoin is giving away $10 in free Bitcoin if you [sign up](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-different-part-2&utm_campaign=bitcoin-different-part-2) today! --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Investigating the Dubious Investigations of Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-investigation/ Some challenging stories are begging to be properly investigated and told. The question is always which investigative journalists have the willingness, integrity and editorial freedom to take these on? --- **Scott Wolfe** · April 22, 2022 · Updated June 27, 2024 [Post on X](https://twitter.com/ScottAWolfe/status/1506776131961344002) Some challenging stories are begging to be properly investigated and told. The question is always which investigative journalists have the willingness, integrity, and editorial freedom to take these on? Sometimes, the question is why few or none do. The case of [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-investigation&utm_campaign=bitcoin-investigation), its global use cases, and its possible limitations is a great example. These stories are begging to be properly investigated and told because, as it stands, something just doesn't smell right. Beginning in late 2021, we began to see a noticeable uptick in reporting and legislative interest in *"cryptocurrencies".* On one level, this is totally understandable given the growth of this evolving technology space and the typical lag in journalistic and legislative attention. But there is more to it than that.  A disproportionate amount of legislative and journalistic interest in *"cryptocurrencies"* (a generic term applied incorrectly to Bitcoin, incidentally) has coalesced around Bitcoin and its consensus mechanism, known as *"Proof-of-Work (PoW)"*. This PoW protocol is one of the essential characteristics that distinguish Bitcoin from most of the roughly 17,000 other projects that are captured within the generic term *"cryptocurrencies"* – projects such as Cardano, Solana, Avalanche, Algorand, and others.  Mainstream reporting and legislative interest in Bitcoin / PoW – especially since late 2021 – has almost exclusively characterized Bitcoin and PoW as a *climate change culprit*, consuming vast amounts of energy. But is this true? Let's take a look. It is true that Bitcoin / PoW consumes a greater amount of energy than its alternative, *"Proof-of-Stake (PoS)"*, the consensus mechanism used by other projects termed *"cryptocurrencies"*. It is also true that, in the past, a much larger share of this energy came from non-renewable sources. So is that the whole story then? Not in the least.  Beginning several years ago, and in a *huge* way since 2020, Bitcoin / PoW mining has shifted to renewable energy sources, with a rapidly expanding amount of global Bitcoin mining now coming from renewable energy. In 2021 alone, the proportion of global Bitcoin mining utilizing renewable energy sources jumped from 36.8% to 58.5%. Over the course of 2021, the energy efficiency of Bitcoin mining – the hash rate per megawatt (PH/MW) – also increased significantly, jumping from 12.6 PH/MW to 19.3 PH/MW. Both of these metrics continue to improve due to further advances in Bitcoin mining technology and a flourishing of awareness among Bitcoin miners and energy producers that Bitcoin mining and renewable energy production have a powerful symbiotic relationship, contributing to the build-out of sustainable energy grids predicated on renewable energy. There is also concerted leadership among the Bitcoin mining industry to *continue improving* these metrics through the Bitcoin Mining Council, which launched in 2021. The industry group now represents nearly 50% of all Bitcoin mining (hash rate) globally and has committed to a shared agenda of increased renewable energy mining and efficiency, with quarterly reporting.  Just to put Bitcoin mining into further context, Bitcoin mining currently consumes just 0.14% of the world’s total energy consumption – far less than the global gold mining industry and existing financial industries, for instance. It’s about the equivalent of global energy consumption from seasonal lighting (eg, Christmas) or video games. ![](https://www.datocms-assets.com/56652/1650587889-swan-feature-image-main.png?auto=format) With respect to Bitcoin’s PoW mechanism, which has also come under specific criticism, most media coverage and legislative scrutiny to date have been found wanting. PoW energy consumption is an essential characteristic of Bitcoin – one that *enables security and functionality that PoS projects simply do not and cannot achieve.* To suggest that Bitcoin should move to PoS would be like suggesting that the banking industry should operate without vaults, security guards, and armored trucks. Or, that central banks should just be able to create new money out of thin air whenever they want (ok, so this one is already happening, I know).  If we acknowledge that, *yes*, Bitcoin / PoW does consume more energy than PoS, but we argue that it is an *essential* attribute of Bitcoin, then a fair and much-needed area for investigative journalism is whether this energy consumption differential is merited based on Bitcoin’s value and uses, globally.  An honest examination of Bitcoin's global use cases is mostly absent from mainstream reporting to date. It has featured only marginally in legislative hearings that have taken place in the United States and Europe. What are these use cases? How do we assess Bitcoin’s value, not just what energy it consumes? Let's take a look.  Often called a *"cryptocurrency"*, Bitcoin is better understood as a technology with three *core* use cases: a digital store of value (property); a medium of exchange (currency); and, a decentralized global network for *"layer 2 & layer 3"* applications (eg, Lightning Network). As these three core use cases continue to be built out globally, Bitcoin is already achieving impact in multiple domains of *social and public good*, including social and economic inclusion, advancing human rights, and catalyzing advances in sustainable and renewable energy production.  First, Bitcoin is providing a financial and economic on-ramp for millions of people worldwide who have been excluded by traditional financial institutions and government restrictions. In so doing, it is also providing a means for *oppressed individuals and groups to escape persecution*. This is a revolution in social and economic inclusion that is easy to overlook for most people in the more affluent countries of the global North but is of tremendous value just about everywhere else in the world. In this respect, a recently published book called *Check Your Financial Privilege: Inside the Global Bitcoin Revolution* by Alex Gladstein, from the Human Rights Foundation, is essential reading.  It bears noting, that while persistent economic and financial exclusion in countries in the global South is most acute, similar patterns of exclusion are also experienced by many groups and communities within the more affluent global North. For decades (centuries in some cases), Black, Latinx, and other groups have been systemically excluded from banking, credit, homeownership and other means of financial security and opportunity in the U.S., Canada, Europe, and elsewhere. These phenomena are fairly well documented, including the compounding, multi-generational impact of slavery and racial segregation for members of the African diaspora; the history of *“redlining”* in the United States; and a myriad of other forms of discriminatory lending practices for Black-owned businesses, and aspiring home purchasers. This social and economic use case extends to many other vulnerable groups as well, including individuals fleeing domestic violence, individuals who are homeless, and other groups kept in poverty and precarious situations due to exclusion from banking and the predatory nature of the other current alternatives such as payday loan businesses. Bitcoin now offers a censorship-free economic and financial onramp, to store value, and conduct peer-to-peer transactions.  Next, as indicated earlier, Bitcoin mining is also increasingly *catalyzing the build-out of renewable energy* production and helping stabilize local energy grids. This benefit is made possible by Bitcoin's flexible load energy consumption requirements – the ability to adjust operations to accommodate the broader energy consumption patterns of the population drawing from the local grid. In simpler terms, decreasing mining activity during peak demand periods and increases activity during lulls. It is increasingly acknowledged that in order to dramatically reduce global CO2 rates and reliance on fossil fuels, we are going to need to massively scale up renewable energy production and electrification of industry and goods. If this were an easy feat, we would already have made far more progress. However, this transition is complicated and requires us to meet energy demand with reliable, renewable energy production. Bitcoin mining is the tool *par excellence* to achieve this scale-up, providing the perfect mix of financial incentives, capitalization, and supply/demand dynamics.  The opportunity for unprecedented action on climate change offered by Bitcoin is one of the many promising developments that would probably have been unimaginable when Bitcoin’s protocol and network were being developed more than 13 years ago. But is gets better still. In the process of connecting Bitcoin mining to renewable energy production, a growing network of industry and non-profit groups are also connecting Bitcoin's energy use/expulsion dynamics to additional social purpose activities like local food production, residential heating, and more. Take the case of MintGreen, a Canadian cleantech company specializing in heat recovery from Bitcoin mining, which is providing residential and commercial heating from captured Bitcoin mining heat. Or, the case of Nhimbe Fresh, in Zimbabwe, which is integrating solar energy production and Bitcoin mining to capitalize and enable sustainable, local food production, increasing community economic empowerment at the same time. These are but two examples. As Bitcoin adoption grows and its global use cases are further elaborated, this technology is also *displacing portions of the high climate footprint of legacy industries* and assets such as banking, lending, financial settlement, gold mining, and more – much like the internet did to other media and communications industries before.  For any journalist or legislator who undertakes an assessment or investigation of Bitcoin, all of these global use cases are required learning. So too is learning about how Bitcoin is displacing segments of other legacy industries and asset classes – ones that consume vastly more energy than Bitcoin. As this displacement of portions of legacy industries and assets continues, Bitcoin’s environmental impact will continue to be offset by the reduced footprint from those industries and assets. Without carefully factoring in the global use cases and the disruptive and displacing role of Bitcoin / PoW, any opinion or declaration about the technology's social, economic, or environmental *"costs"* is methodologically and intellectually bankrupt. It’s like arguing that email uses energy while ignoring all the paper and envelopes and energy now conserved by the snail-mail it replaces.  A proper investigation would ask, for instance:  - How much energy is consumed around the world to maintain legacy financial institutions, including all their brick-and-mortar branches and office towers, their personnel, the data centers they run, and the jets their executives take to conferences where the environmental impact of Bitcoin is critiqued?  - And, what about gold mining which consumes tremendous amounts of energy and literally rips up tonnes of land to generate a few grams of gold?  - How "green" is the energy consumed by gold mining or by legacy financial institutions? What is the net social value of these industries and how inclusive are they?  The evidence stemming from these questions, and the subsequent implications, bear careful consideration. Yet, these questions are neither being asked by journalists, nor by most legislators when assessing Bitcoin / PoW. Lastly,  let's turn specifically to the very specific matter of how Bitcoin / PoW energy consumption *is* being calculated and reported in the bulk of news publications and policy briefs to date, and what this means for fair and informed legislative scrutiny, as well as emerging public narratives.  If one refers to source material for most journalists reporting on Bitcoin / PoW energy consumption and legislative policy briefs over the past few years (and past few months specifically), one sees a corpus of recurring and recycled methods and data.  Upon careful examination, this corpus is almost exclusively attributable to a single individual named Alex de Vries, known pseudonymously in some documents and on social media as *"Digiconomist"*. So who is he? Let's take a look. Investigative journalists, take note.  Digiconomist (deVries) is an employee of the Dutch Central Bank, currently in his first year of a Ph.D. program. His research methodology and findings on Bitcoin / PoW energy consumption have been carefully debunked and discredited in peer-reviewed journals and grey literature, yet his findings continue to be cited as evidence by an astonishingly large number of journalists and legislators. Never, in de Vries’ research is energy consumption measured or even considered against use cases and value. These, he categorically dismissed as non-existent.  How does the employee of a central bank – an institution which has a clear conflict of interest related to the disruptive nature and competing use cases of Bitcoin – become anointed and invested with such import? How is it that a wide range of legislators on multiple continents and journalists from a wide range of media outlets have adopted as gospel the demonstrably flawed research conducted by Digiconomist / de Vries about Bitcoin / PoW? Now *that* is something worth investigating! These are but a few of the critical considerations for journalists and legislators related to any future review of [Bitcoin / PoW](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-investigation&utm_campaign=bitcoin-investigation). They briefly outline a minimum set of considerations without which any journalistic or legislative review of Bitcoin / PoW is painfully and tragically inadequate.  I offer my thoughts and reflections on these issues guided by values that I try to embody, both personally and professionally – those of fairness, discernment, compassion, inclusivity, and global-mindedness, among others. These are values I hope to see increasingly reflected in journalistic and legislative undertakings on Bitcoin / PoW moving forward. --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Scott Wolfe Scott Wolfe is a health and social policy expert based in Toronto, Canada. For more than 20 years, he has worked and collaborated with a wide range of governments, academic institutions, professional associations, and community organizations around the world on a diversity of interconnected health and social policy issues including community-based primary health care; HIV/AIDS prevention, care, and treatment; affordable housing; food security; climate change; racial justice; and more. Wolfe has a Master’s degree in Political Science, and a joint undergraduate degree in Political Science and Communications & Media. He has served as Director of Global Health Policy for the International Association of Providers in AIDS Care (Chicago, Geneva, Johannesburg); Communications Advisor at the Pan American Health Organization / World Health Organization (Washington, DC); and, Senior Policy Advisor for the Alliance for Healthier Communities (Toronto). He currently serves in a dual role as Executive Director of the Canadian Association of Community Health Centres (CACHC) and Global Coordinator for the International Federation of Community Health Centres, both based in Toronto. # Bitcoin Is Not Your Typical Investment - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/bitcoin-is-not-your-typical-investment/ Heads They Win, Tails You Lose. You’ve been told you should be investing in stocks & bonds — a game full of world-class professionals playing against you. Bitcoin is the fair game, and an easy one to play. --- **Tomer Strolight** · April 11, 2022 · Updated June 27, 2024 ### Heads They Win, Tails You Lose How well do you think you would do if you had to play basketball against an NBA team? What about if you had to represent yourself in court against a ‘dream-team’ of the world’s best lawyers? What if you had to play poker against players who knew what cards were next to be turned over? Or what if you had to play in some game where the rules kept changing and your opponents were the ones getting to make the changes? Yet, somehow, you’ve been convinced that you should be investing in stocks and bonds – a game full  of world-class professionals playing against you, with deep pockets and limitless resources, often with inside information about what’s about to be announced, and closely connected to the regulators who change the rules if those professionals somehow lose.  It sounds like a sucker’s game. And it is. But the alternative of not playing, and just putting your money in a savings account, is an equally bad choice. In a savings account, you are guaranteed that your money will lose purchasing power. You’ll earn next to nothing in interest, have to pay taxes on anything that you do earn, and inflation will outpace your money’s growth by at least an order of magnitude. Currently, yearly inflation is now at 7.9% and savings accounts offer 0.1% interest – so inflation is eighty times as high as what you’ll earn by trying to [save money](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment). And then there's banking fees to pay on top of it all. ![The stock and bond market is rigged](https://www.datocms-assets.com/56652/1649683981-swan-feature-image-main.png?auto=format) ### It Should Not Be Like This, And It Doesn’t Have to Be This is clearly an unfair system. There are volumes written about how we ended up here. This article is not going to go into that history. Instead, it’s going to explain how [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment) gives you a fair option to exit this false alternative of being a severely disadvantaged player in the investment game, or a guaranteed loser in the savings game. Pause for a minute to think about this: If you didn’t have to get involved in investing would you? If the money you earned from your job and [saved for the future](https://www.swanbitcoin.com/private/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment) wasn’t being destroyed by inflation, and if home, gas, food, healthcare, and education costs weren’t soaring, would you risk your savings on things you aren’t an expert at? If you didn't have to, would you buy growth stocks, commodity futures, index funds, convertible bonds, or any of these other things that a person can’t understand without getting a detailed education and years of experience in? In the fifties and sixties, and even throughout much of the seventies, most people did not invest. A middle-class job got you a house, two cars, paid for school, healthcare, clothing, and even vacations. But this era ended. It didn’t have to, but it did. The reason the era of being able to save your money ended is because money got taken over by those regulators who are all cozy with the financial institutions and, in working to ‘maximize the shareholder value’ for the financial institutions, they destroyed the integrity of money. Check out the charts at [wtfhappenedin1971.com](https://wtfhappenedin1971.com/) to see what began in the seventies and has only accelerated since then – from wages to the cost of living, from household debt to national debt, and even down to the very fundamentals of investments. > Financial institutions and regulators destroyed your ability to save and then offered you an alleged solution to the thing they destroyed in the form of an investment portfolio. And then they hammered you there too. > > — [Tomer Strolight](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment), Swan Bitcoin ### So How Do You Get Out? Buy Bitcoin. How do you get out? Well, you don’t do it at a financial institution. They’re out to make money for their shareholders by making sure their own share of the money pie grows faster than people who aren’t their shareholders - people like you.  You also don’t hold out hope for the regulators to take care of you either.  They’re doing pretty fine getting rich personally while allegedly working for the public good. The current Secretary of the Treasury is Janet Yellen – who received [over $7 million](https://www.theguardian.com/business/2021/jan/01/janet-yellen-speaking-fees-us-treasury-secretary) dollars in ‘speaking fees' from banks after 'regulating' them in her role as Chair of the Federal Reserve. In other words, before assuming her current role as Treasury Secretary, Yellen was sometimes paid over $250,000 per speech by the same banks she was previously in charge of regulating and now is again. But this isn’t just a case of one bad egg, it’s systemic in nature. For instance, Yellen’s predecessor, Steven Mnuchin, spent his whole career as a banker and apparently has a net worth of over $450 million now. Furthermore, the Federal Reserve was involved in a trading scandal as recently as September, 2021 where insiders made very profitable trades in advance of public announcements by that organization. But don’t hold your breath waiting for any of those who made these illegal trades to have to give the money back, pay fines, or go to jail. Those involved in this scandal *“retired”* with a golden parachute and all their gains intact. What you can do, however, is exit this system that is rigged against you. It’s a system where regulators and bankers spend their time working for themselves, changing the rules on you, and destroying the middle class while they lie straight to your face. They lie about helping you, about the temporary or transitory nature of inflation, and about who they’re really working for. You can make your exit from this corrupt system through Bitcoin. Bitcoin is *not* controlled by the Federal Reserve, or the office of the President, or Congress, or any other politician. It’s not controlled by a cabal of bankers and regulators either. It’s not controlled by *anyone at all.*   Decades ago, money could be earned and saved and relied upon to store your purchasing power for the future. But the system got taken over and this ability to save was siphoned off into making bankers rich at the expense of the middle class.  Bitcoin, despite being an extraordinarily new invention, brings back that now-lost integrity to money.  It brings it to the currency of the Bitcoin system, which is called bitcoin. It does not and can not bring it back to the currency of the unholy banker-regulator matrimony which has seized control of the dollar. A lot of people are very excited about this. They should be. And so should you. Finally, there’s a way for you to keep what’s yours from the greedy and insatiable parasites who have been stealing from you your whole life.   ### A Profound Shift in Thinking and Perspective We’ve been taught, for most of our lives, that you lose out by [saving](https://www.swanbitcoin.com/private/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment) and have to speculate on investments in order to build wealth.  That was true only because the ability to save was destroyed by the people we entrusted to oversee it. When those who are meant to protect something benefit from destroying it, we have made the mistake of  *“putting the fox in charge of the henhouse”* as the saying goes. And, to carry on with this metaphor, Bitcoin is a henhouse that the foxes cannot get into. It is guarded not by animals, or humans, but rather is protected by the laws of math and physics themselves. These are protections that cannot be changed by bankers-turned-regulators who will soon become bankers-once-more.   Bitcoin has all the features of good money – especially that of not losing its purchasing power to inflation – because of its fixed supply. As you learn more about Bitcoin, keep in mind that it is not some other investment to be weighed alongside a bond or a stock. It is an invention that restores to civilization something that did once exist, but that you may not have even believed could exist. Its promise is that you can earn money and save it without having to gamble it in a game you must play against full-time, well-funded professionals. That’s tremendously liberating. The more you study it, the more you’ll come to realize that [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-not-typical-investment&utm_campaign=bitcoin-not-typical-investment) is not a risk-bearing financial investment. Instead, if it is even to be considered an investment at all, it is an investment in your freedom – your freedom to avoid unnecessary financial risk and to invest your time on whatever else you’d rather be doing than worrying about your investments. --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Where Are My Bitcoins? - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/where-are-my-bitcoins/ Bitcoin Basics: Easy Lessons About How Bitcoin Works --- **Tomer Strolight** · April 15, 2022 · Updated June 6, 2024 ### They’re Out There – Everywhere… ![](https://www.datocms-assets.com/56652/1649788169-unnamed-1.png?auto=format) If you [own some Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-memes&utm_campaign=bitcoin-memes) , whether you have taken *“self-custody”* or whether you have some agent holding your coins for you in their custody, you should be aware that your Bitcoin aren’t actually with you or with your agent.  That is by design and that is a good thing. Your Bitcoin are perfectly and flawlessly preserved in well over ten thousand locations. And if any one of these locations is damaged, destroyed, erased, tampered with, shut off, sealed off, cut off, or even just ticked off, you’ve got nothing to worry about. Even if that happens to many or most of those locations, you’ve got nothing to worry about. In fact, only one of those locations – any one at all – needs to be intact for your Bitcoin to be safe. ### …On This Thing Called a Blockchain, On These Things Called Nodes … ![](https://www.datocms-assets.com/56652/1649788255-unnamed-2.png?auto=format) The record, or ledger, of every single portion of every Bitcoin is often called the *Bitcoin blockchain*, and anyone in the world is free to create and maintain an up-to-the-minute correct copy of it. Maintaining a copy of it is called running a [Bitcoin *node*](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/).  Even you can run a node. It doesn’t take any special skill. You don’t need a license to do it. You can run a Bitcoin node on a pretty ordinary laptop even. Many people do so on a simple computer that doesn’t even need a monitor or keyboard hooked up to it.   To run a node you just install the software and run it. It takes some time to complete the download of the blockchain and it occupies quite a bit of hard disk space if you want to store the whole record. But you actually only need to keep track of Bitcoin that haven’t yet been spent, and that itself doesn’t take up very much space at all.  Most of the time that it takes to get a  node going isn’t in downloading the data, but in verifying it all. Bitcoin transactions must all be signed with cryptographic digital signatures and must also spend only coins that have not already been spent. Your computer checks that each one of them meets these requirements. It does so for every Bitcoin transaction that has ever taken place on Bitcoin’s blockchain. And that’s quite a bit of work.  Each node also checks that every ‘block,’ or group of transactions, meets the necessary conditions that make those blocks valid. So if you own some Bitcoin, the record of those Bitcoin exists in every single node in the world.  And if you buy some more Bitcoin and send it to a Bitcoin address on the Bitcoin blockchain, every single node in the whole world will update itself to record that that amount of Bitcoin now exists at that address.   So the good news is that your Bitcoin are everywhere, safe from destruction.  They’re really quite indestructible because of this.   ### … and If You Ever Want to Spend Them, You’ll Need to Keep Your Private Key ... ![](https://www.datocms-assets.com/56652/1649788325-unnamed-3.png?auto=format) Despite their indestructibility, there is a very important thing you must never ever lose. There is only one way in the world to spend Bitcoin. That is by creating a message to spend them containing a *cryptographic digital signature* that corresponds to the address they are stored at (on the blockchain, on every node in the whole world). And to create such a message, you need to have possession of the *private key* or keys that can unlock those coins.   Private keys aren’t physical keys – they’re very, very, very, big numbers.  But to make them easier to store, there are ways of storing them on physical computing devices or mediums like metal or paper. Bitcoin developers have created ways to store them using words instead of numbers. These words are often called seed phrases. So while you don’t need to ever worry about where your actual Bitcoins are, because they’re safely stored in tens of thousands of places, you do need to worry about where you store your private keys. *If you lose your private keys and have no backup, you will not ever be able to spend your Bitcoin*. You will have lost your proof that you own them.  It will not do to say *“Look, here’s Joe who sent me the coins and he swears that it was me he sent them to and you can see, by looking at the blockchain, that they haven’t been spent, so please let me spend them.”*  You could say that, but nobody would be able to help you. Bitcoin’s rules are clear. Nodes look for a valid digital signature to permit spending. If they don’t see a valid digital signature, they don’t allow the transaction. They’re machines after all, not people. You cannot appeal to them with anything but math. So keep personal backups of your private keys.  ### … And If You Don’t Want Them Stolen, You’ll Need To Keep Your Private Key, Well, Private. ![](https://www.datocms-assets.com/56652/1649788388-unnamed-4.png?auto=format) But, just as importantly, you must keep each of those copies of your private keys private. Because anyone who has your private keys can spend your coins.  So don’t put your keys in an unencrypted email to yourself, where anyone with access to the mail server can get them. Don’t write them out on a piece of paper that someone else is likely to see or find. Don’t do anything that will let someone else get a hold of your private keys. ### Hardware Wallets Are the Keys to Safely Storing Keys ![](https://www.datocms-assets.com/56652/1649788434-unnamed-5.png?auto=format) There are special devices, often called ‘hardware wallets,’ that are very good at storing your private keys securely and protecting them behind passcodes, and that contain other security features to prevent your coins from being lost or stolen. These will also create the digitally signed message you need to spend your Bitcoin. And they’ll make it easy for you to create addresses linked to your private keys which you can share with people who are going to be sending Bitcoin to you. Hardware wallets are the best solutions for most people to ensure that they don’t lose their keys **and** that they keep their keys out of the hands of thieves. ### Have Fun Out There, and Keep Your Private Keys Private. Let’s pull it all together into a single sentence: Your [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-memes&utm_campaign=bitcoin-memes) are safely copied in thousands of locations all over the world, but your ability to keep and access them requires that you, and you alone, have access to the private keys for them. --- *This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends.* --- ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Satoshi’s White Paper — the Hard Part Explained URL: https://www.swanbitcoin.com/education/satoshis-white-paper-explained/ Dissecting some of Satoshi’s Whitepaper to make it easier to understand. --- **Tomer Strolight** · May 2, 2022 · Updated June 27, 2024 The most famous artefact in all [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=satoshi-white-paper&utm_campaign=satoshi-white-paper) is the white paper published by the mysterious Satoshi Nakamoto persona on October 31st, 2008. While it is beautifully written in flawless English, there are some concepts that are particularly difficult to understand. I wanted to write an article helping make its most difficult part easier to understand. This part, section 11, is the very the mathy part. It’s called *“Calculations”:* Look at the snippet below. It’s got greek letters, fractions, exponents, curly brackets, the name of a French mathematician, and even computer code. But don’t worry, and don’t try to read it. I’m going to take on the challenge of explaining this and the entirety of section 11 in plain English. Let’s get started below the snippet. ![](https://www.datocms-assets.com/56652/1651422144-screen-shot-2022-05-01-at-12-22-12-pm.png?auto=format) ### Close enough to solving an age old problem. You have likely heard that Satoshi solved the *“double spending problem”*. You may even have heard of it referred to somewhat more exotically as him having solved *“The Byzantine generals’ problem”.* You may even have heard that prior to Satoshi’s solution, mathematicians had proven that the problem could not be solved. Were they wrong? Did Satoshi disprove their proof? Not exactly. What Satoshi came up with was a system that solved the problem **for all practical purposes**. *“Perfection is the enemy of the good”* wrote the famous and witty philosopher Voltaire. That statement captures the essence of Satoshi’s solution. Satoshi’s solution doesn’t eliminate the possibility of a double spend, it just makes it increasingly improbable over time. In fact, it makes double spends so improbable over time that they may as well be impossible. What is a double spend? Let’s not get too far ahead of ourselves. A double-spend is, simply put, trying to get away with spending the same money twice. Someone who spends money shouldn’t be able to spend it again, because if they can, they either created new money out of nowhere, or the first person who thought they received the money will find out that it was actually sent to the second person it was spent to. ![](https://www.datocms-assets.com/56652/1651277783-unnamed-1.png?auto=format) A good accounting system won’t let anyone get away with that. But the challenge in Bitcoin is that there isn’t one master accountant or Chief auditor. In Bitcoin, both you and I, and every other node operator are equals. We each account for every transaction and we each audit the whole record. But if my record shows that you sent some of your bitcoin to me, and someone else's shows that you sent the same bitcoin to someone else, well then, we have a problem. What’s to stop someone from sending the same bitcoins to two different people? The first mechanism in Bitcoin that stops this is that everyone’s node - their accounting system - doesn’t allow it. If your node sees anyone attempting to spend any coins that have already been spent in the blockchain, it throws out the transaction attempting a double spend. So no problem, right? Well, no. There is a problem. What if someone changes the blockchain itself? The only way we all agree on what the true blockchain is by looking to see which version is the longest one. If someone could produce a longer version than the one I am holding on to, with different transactions than the one I currently have, then I’m going to throw away the old chain and replace it with the new one. And, it’s possible that this new chain might have transactions in it that send some coins to different addresses than what was reflected in the chain I held before I replaced it with this longer chain. If someone could do this, they could ‘send’ you some bitcoin, have you perform the service you agreed to for those coins, and after that they could replace the transaction by essentially traveling backwards in time and replacing the block in which the original transaction sending coins to you was included (along with every block discovered since as well). All they have to do is produce a longer chain than the current chain replacing the block in which the original transaction was confirmed with a different block in which it isn’t present. But doing that is not so simple. The person trying to double spend actually has to produce as many blocks as have been discovered since that original block with the transaction in it sending the coins to you. They need to produce a longer chain than the one the rest of us all have, because they need **us all** to throw away the currently longest chain. ![](https://www.datocms-assets.com/56652/1651277831-unnamed-2.png?auto=format) And that’s very hard. And it gets harder the more blocks have been found since the original transaction was added to a block. And this section of the white paper shows, *with math*, just how hard it is. If you’re familiar with how Bitcoin works you’ll already know that to succeed with the attack described above, the attacker would need to deploy more energy than had been deployed to the whole chain since the transaction that they are seeking to undo was added to it. So if a transaction is six blocks old - roughly one hour old - then an attacker would need to deploy more energy than the entire mining network had deployed in that hour to replace the original transaction. He needs to do this before the honest network finds one more block , and that should take the whole network only ten minutes. So he’d need six to seven times as much power as the whole network to undo such a transaction. And nobody has that much equipment or access to energy. But what if he just got lucky? Mining is, after all, a giant lottery, where miners just guess random numbers and hope that one of those will lead to the outcome of them producing a valid block. A valid block contains the fingerprints of the previous block, of all of the transactions in the current block and some metadata — and which when digested by the famous SHA256 algorithm produces a number small enough to meet the network’s requirement for validity at the time. ( I’ll write a future installment explaining this if you’re not familiar with it - It’s section 4 of the white paper *“Proof-of-Work"*). So, how lucky does an attacker have to get? Satoshi does the math. And I’m going to put Satoshi’s math into charts. First off, Satoshi gives an example assuming the attacker (the person trying to execute a double spend) controls 10% of the equipment and energy used to mine Bitcoin blocks at a given time. What are the odds, Satoshi asks and answers, that such an attacker might some time catch up to and overtake the current chain? Well, that’s what all those fancy equations above show and what the code above does. And here’s a chart: ### Chances of successful attack for an attacker with 10% of the mining equipment and energy ![](https://www.datocms-assets.com/56652/1651277917-unnamed-3.png?auto=format) This chart shows the data in the table that Satoshi shared in the white paper. What it reveals is that if an attacker has 10% of the mining network power and tries to ‘double-spend’ a transaction from 6 blocks ago, or roughly one hour, the odds of him pulling off that attack are 0.02% or roughly 1 in 5000! Such an attacker would have to spend all his energy and equipment not trying to mine the next block, which he has a 10% chance of succeeding at, but instead on something he only has a 1 in 5000 chance of succeeding at. So it’s **500 times harder** for him to attack the network to reverse an hour old transaction than it is for him to continue strengthening the network. If he wanted to go back just 90 minutes, 9 blocks, then his chances of success 0.00046%, or worse than 1 success in **200,000** tries. So as soon as a transaction is 6 blocks old, as long as the attacker with 10% of the network isn't trying to reverse a transaction of more than 312 BTC, he is better off honestly mining. This is because he has a 10% chance of getting the block reward of 6.25 BTC (which is 0.625 BTC) than he is of attacking and having a 1 in 500 chance of reversing a 312 BTC transaction. And as soon as a transaction is 9 blocks old, as long as the attacker with 10% of the network isn't trying to reverse a transaction of more than 125,000 BTC, he is better of honestly mining than attacking. This is what's called *assymetry.* Next, Satoshi does the same thing assuming the attacker has 30% of all the energy and equipment and goes even further back than 10 blocks - all the way to 50 blocks, or about 8 and a half hours: ### Chances of Successful Attack For An Attacker With 30% Of The Mining Equipment And Energy ![](https://www.datocms-assets.com/56652/1651277972-unnamed-4.png?auto=format) This time, the attacker has a 4% chance of being able to undo a transaction from 10 blocks prior (about 100 minutes). If they want to erase a transaction from 5 hours prior, 30 blocks, their odds of success are 0.015% or about 1 in 2000. And going back almost 7 hours, 40 blocks, is even less than a 1 in 100,000 shot. In trying to attempt this attack, with such low odds of success, the attacker also gives up the 30% likelihood of discovering the next block and earning its reward. So this is a *very* expensive attack to try to pull off. With such bad odds of attack, it is not surprising that in practice we see nobody trying to double spend. *So it’s not that Satoshi’s invention makes double spending impossible, it just makes it incredibly improbable to succeed at, and also extremely expensive to even attempt!* Finally, Satoshi provides a different way to look at these numbers and we’ll chart it below. He asks and answers, *“For different levels of an attacker’s share of the mining resources, at what point does their likelihood of successfully attacking fall below 1 in 1000?”* That is, how many blocks deep does a transaction have to be for an attacker with a certain percentage of the mining network to have a less than 1 in 1000 chance of undoing it if that miner chooses to attack the network instead of supporting it. ### Block Depth At Which Attacker Has Less Than 1/1000 Chance of Success ![](https://www.datocms-assets.com/56652/1651278025-unnamed-5.png?auto=format) Here we see how safe Bitcoin transactions are by their age. Any attacker with 10% of the network has only a 1 in 1000 chance of erasing a transaction 5 blocks deep. In undertaking this attack they'd be giving up the 10% chance of winning the next block reward, which today is 6.25 bitcoin plus the transaction fees. That 6.25 BTC alone are worth over $250K at $40K per Bitcoin, so they’d be giving up the 10% chance of that, worth $25K, to get a 1 in 1000 chance to reverse a transaction 50 minutes old - meaning it would have to be a transaction worth 1000 times $25K or $25,000,000 for this to be a more economical, yet still improbable, gamble. This chart also shows that even if an attacker somehow obtained 45% of the mining network’s power, they still would have only a 1 in 1000 chance of erasing transactions that are 340 blocks old, which is 56 hours, or 2.5 days. So even if such an attacker existed, the odds would be incredibly small that any transactions older than 2.5 days could be undone, and it would cost this miner 45% of the block reward each time they tried this attack, so they’d have to be trying to undo over $120 million worth of transactions to consider taking this bet. ### Conclusion That’s it. You now have a mathematical understanding of the difficulty of altering Bitcoin’s blockchain. In the final analysis, Satoshi didn’t let perfection be the enemy of the good. Rather, he did do something extreme in accepting imperfection and minimizing it. His design principle can be summed in the following statement: *You don’t have to make something perfect,* *just good enough* *to last forever.* And isn’t that possibly a better definition of perfect than any other you’ve ever heard? We’ve just gone through the hardest part of the [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=satoshi-white-paper&utm_campaign=satoshi-white-paper) white paper. Part 11 - Calculations. I hope you had fun. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Riding the Lightning Network - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/running-the-numbers-riding-the-lightning-network/ The Lightning Network: Cheap Global Payments for All --- **Sam Callahan** · May 3, 2022 · Updated June 6, 2024 For many years, a prime focus of organizations such as the Bank of International Settlements, the IMF, and the World Bank has been making retail cross-border payments, including remittance payments, cheaper and faster for end-users. Yet despite the international community's efforts, cross-border payments continue to be plagued with issues including high fees, slow settlement times, poor transparency, and limited access. Technology has advanced at an exponential rate with the growth of the Internet. Domestic payments have benefited from this progress in the form of improved efficiency and lower costs, but international payments have not seen the same improvements. The world is connected technologically but not financially. Despite these technological advances, it can still take as long as 10 days to transfer money to different jurisdictions, and that transaction can come with costs as high as 15% in some countries. Believe it or not, cross-border payment systems today still use message formats developed nearly 50 years ago for the SWIFT network, an interbank messaging system. Part of the problem has been a lack of competition from the private sector due to the walled gardens incumbent banks have built. High barriers to entry stem from high fixed costs, complex regulatory requirements, lack of interoperability in data standards, outdated legacy platforms, and the economic scale required to perform sufficient liquidity and risk management to facilitate global payments. All of these reasons make it difficult for new entrants to innovate in this industry. Despite all of these constraints, the free market finally provided the competition these incumbent banks so desperately needed. [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=riding-lightning-network&utm_campaign=riding-lightning-network) and the Lightning Network have arrived to show the world that we finally have the technology available to bring cheap global payments to everyone in the world. ### The Problems **1. High Costs** " Among the long-standing issues, it is striking that in spite of technological progress and the decline in information processing costs, digital payments have remained stubbornly expensive." - Hyun Song Shin, Head of Research at the BIS (2021) To understand why cross-border payments still cost so much, we need to better understand today's system. I mentioned the SWIFT messaging network above, which allows banks from different jurisdictions to communicate with one another in a standardized manner, but banks don't actually send funds through the SWIFT network. They use something called the Correspondent Banking Network (CBN) for that task. Correspondent banks are a network of intermediary banks that connect disconnected financial institutions in order to settle funds between jurisdictions. Transactions can involve multiple stops at these intermediaries, increasing costs and delays. The friction associated with this model involves differing regulatory risks in each jurisdiction, compliance costs, foreign currency exchange costs, and the risk of loss of funds or fraud. Depending on the jurisdictions, sometimes, one single cross-border payment can involve several correspondent banks and multiple currency exchanges, each one with its own fees for processing and foreign exchange until the payment finally settles at its intended destination. ![](https://www.datocms-assets.com/56652/1651603125-screen-shot-2022-05-03-at-2-38-05-pm.png?auto=format) The average cost of sending a cross-border payment through the CBN is ~10%. These fees are from SWIFT messaging fees, transaction fees, and foreign currency exchange fees. **These fees add up with each intermediary that’s used and average out to around $25-$35 of fees per $200 transaction. The smaller and more secluded the jurisdiction is, the more expensive the payment is.** In 2022, 96% of the estimated $156 trillion dollars in cross-border payments will be done between banks using the CBN explained above. But what about the individual or small businesses that need to send smaller amounts of money internally? This smaller cohort typically sends international micropayments using traditional Money Transfer Operators or MTOs, such as Western Union, TransferWise, and Moneygram. ![](https://www.datocms-assets.com/56652/1651544364-screen-shot-2022-05-02-at-10-19-11-pm.png?auto=format) These MTOs are financial companies that facilitate cross-border payments for consumers using their own internal systems or other alternative cross-border banking networks. Below is a good graphic that displays the cross-border payment structure used by different user types today. **Typical Cross-Border Payments Structure** ![](https://www.datocms-assets.com/56652/1651544294-screen-shot-2022-05-02-at-10-18-00-pm.png?auto=format) Compared to the CBN used to facilitate bank-to-bank payments, MTOs are not much better in terms of cost for end-users. According to the World Bank's most recent data, the global average remittance payment cost per transaction for MTOs was recorded at 6.57% in Q2 2021. ![](https://www.datocms-assets.com/56652/1651603223-screen-shot-2022-05-03-at-2-39-49-pm.png?auto=format) Said differently, if an individual wants to send a $200 dollar cross-border payment to their family back home, the family will only receive $186.86 dollars after fees. This may not seem like a large difference to you, but these costs can greatly impact a family's living standards and quality of life in a poor, developing nation. Keep in mind, that's only the average cost as well. The MTO costs vary widely across different jurisdictions. In more remote, less developed jurisdictions, the cost to send a cross-border payment can be greater than 10%. These costs remain well above the UN's target goal of 3% by 2030. The high costs associated with cross-border payments in our traditional financial system are simply unacceptable given the technological capabilities we have at our disposal today, and disproportionately affect individuals transacting small dollar amounts in the poorest regions across the world. **2. Slow Settlement Times** One of the biggest challenges with cross-border payments is how long it takes for them to settle. An average international payment takes 2-3 days to clear, which stands in stark contrast to domestic payments, which typically show up in one's bank account in mere seconds. In certain jurisdictions, these delays can even take as long as 10 business days depending on the number of intermediaries involved to process the transaction. These long delays are caused by many factors including incompatible data formats between correspondent banks, complex compliance checks, limited operating hours across multiple timezones, and long transaction chains involving multiple intermediaries. To fix this issue, SWIFT has been working on a new system called SWIFT global payment initiative (gpi) that works to reduce the settlement times of international payments and allow banks and users to track payments on the SWIFT gpi's cloud solution. Below is the median end-to-end processing time for each beneficiary region using the SWIFT gpi. **The average payment processing time was eight hours and 36 minutes, or one business day, while the median time was one hour and 38 minutes.** ![](https://www.datocms-assets.com/56652/1651603410-screen-shot-2022-05-03-at-2-40-54-pm.png?auto=format) Although the processing time using the SWIFT gpi improved upon the 2-3 day average, after all of these years, it's underwhelming that an average of one business day is the best the international community can come up with in 2022. Also, the processing times differ drastically between jurisdictions and are noticeably worse in smaller emerging markets. Today international payments still remain stubbornly slow, especially in emerging markets where many families depend on cash sent from family members working abroad for their livelihoods. **3. Lack of Transparency/Interoperability** Transparency- or lack thereof- is a big problem in cross-border payments today that adds friction and increases costs for users of all types. Cross-border payments remain unpredictable and opaque. Users are not made aware of where the payment is at any time, nor the fees accumulated throughout the process until after the payment has settled. The complexity of the fees makes it very difficult for users to understand them. In a survey conducted by Capital Economics in 2021, 55% of American consumers said they understood the costs, but only ~20% of that same cohort correctly identified the costs. In another survey by Wise, they found three in four Singaporeans were unaware of hidden costs of cross-border payments, with 88% underestimating fees. Lack of transparency with fee structures is part of the issue, but another is the lack of transparency in tracking the funds between banks and other service providers. This difficulty in the tracking of funds is partly because many of these correspondent banks, MTOs, and fintech companies are not interoperable. In today's diverse financial ecosystem, customers cannot move funds between services because they are all using different data standards and communication tools. This incompatibility leads to more delays, increased compliance checks, and more fees. The opaque nature and lack of interoperability of the cross-border payments industry today lead to higher costs, slower processing times, and a worse experience for users and banks alike. **4. Lack of Accessibility** Today, bank account penetration remains low, with an estimated 1.7 billion unbanked people worldwide. Many people do not have access to the correspondent banking network or money transfer operators used for cross-border payments, and these solutions are especially unavailable in developing nations. This is partly due to the steady decline in the number of correspondent banks over the past decade. Most banks can't afford the high fixed costs of facilitating cross­ border payments and shut down, impacting accessibility for those who need it most. ![](https://www.datocms-assets.com/56652/1651603443-screen-shot-2022-05-03-at-2-43-48-pm.png?auto=format) Today, this outdated cross-border payment system is simply not accessible to billions of people, especially in emerging markets. ### The Solution is Here " There is no omnipresent system that connects various banks across the world through which international payments can be transacted," - Marc Recker, Managing Director & Global Head of Product, Institutional Cash Management at Deutsche Bank I have some good news for you Marc - that omnipresent system you dream of - it already exists. Bitcoin is an open monetary system that enables every bank and individual in the world to connect on one standardized protocol. It is a decentralized, digitally-native monetary network that is globally accessible and allows people to reliably send and receive payments that settle with cash finality. It is a system that solves all the problems that have plagued cross-border payments for decades. It's completely transparent, has relatively low fees, every entity that uses it is interoperable with one another, and anyone with a mobile phone and internet connection can access this network. Unlike bank accounts, mobile phone penetration in developing nations has rapidly increased. According to PEW research, over 83% of adults in emerging markets own a mobile phone. The alleged knock against Bitcoin is that the fees can be high, and it doesn't have the transaction speed capacity necessary for it to scale globally. However, Bitcoin is software, and solutions can be built on top of software. The Lightning Network is a second layer payment protocol built on top of the Bitcoin network that optimizes for speed and cost. Theoretically, the Lightning Network can allow for millions of transactions per second that can settle at practically no cost. Below is a graphic that highlights how the Lightning Network improves Bitcoin's shortcomings regarding payments. **Bitcoin on-chain Transactions per second vs. Visa Transactions per Second vs. Lightning Network** ![](https://www.datocms-assets.com/56652/1651603471-screen-shot-2022-05-03-at-2-44-20-pm.png?auto=format) The Lightning Network is a technology that allows individuals to send small international payments, without any bank intermediaries, nearly instantly and essentially for free. It is a groundbreaking innovation in cross-border payments, and it's just beginning to be adopted. ### The Rapid Growth of the Lightning Network This year we have seen the Lightning Network explode in usage across the globe as people wake up to its advantages over the incumbent system. The total amount of Bitcoin currently deployed for transfers over the Lightning Network now stands at 3,705 BTC, or $147.56 million dollars. ![](https://www.datocms-assets.com/56652/1651603514-bitcoin-lightning_network_capacity-glassnode_studio.png?auto=format) That means the total amount of liquidity on the Lightning Network has increased 300% over the last year alone! Furthermore, the total amount of Lightning nodes on the network has increased 63.86% over the last year to a total of 17,104 nodes online. ![](https://www.datocms-assets.com/56652/1651603554-bitcoin-lightning_network_number_of_nodes-glassnode_studio.png?auto=format) As more and more nodes come online, the Lightning Network's efficiency improves, liquidity increases, and more products and services will be built on top of it. Usage is growing rapidly, made possible by a whole ecosystem of companies and projects. The significant adoption occurring on the Lightning Network is evidence of the vast improvements it offers users compared to all other options that exist today to send cross-border payments. ### A Lightning Case Study We are already seeing how the Lightning Network is improving the lives of individuals in an emerging market today. El Salvador adopted Bitcoin as legal tender in September 2021. El Salvador is heavily reliant on remittances. It received over $6 billion dollars in remittances in 2020, or 23% of its GDP. According to an IMF report, it was estimated that the potential benefits of using the Bitcoin network for remittance payments could save El Salvadorans $54 million dollars, or 0.25% percent of GDP, per year. Also, the adoption of Bitcoin has already significantly increased financial inclusion by allowing more than 60% of the population to have access to the financial system in only 2 months. This occurred in only a few months of Bitcoin adoption after decades of unsuccessful initiatives where previously only 23% of the population was banked. El Salvador is only months into adopting Bitcoin, but it is already providing El Salvadorans with more financial access and making it easier and cheaper to send funds outside their borders. It shows how this new system is already proving to be a massive improvement over the outdated legacy cross-border payment system. The cross-border payment industry has been ripe for disruption for many years, but high barriers to entry have prevented competition from entering the space. [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=riding-lightning-network&utm_campaign=riding-lightning-network) and the Lightning Network together will make cross­ border payments faster, cheaper, more transparent, and more inclusive, which will have widespread benefits for increasing economic growth, international trade, and improving financial inclusion across the globe. The future of cross-border payments has arrived. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: An Empire For Us All - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-an-empire-for-us-all/ The rise and fall of an empire: It is a story that has repeated itself throughout human history. Where does Bitcoin fit in? --- **Tomer Strolight** · May 10, 2022 · Updated June 27, 2024 ### Introduction: The Rise and Collapse of Empires  The rise and fall of an empire: It is a story that has repeated itself throughout human history. Ray Dalio points out in his book “[Principles for Dealing with a Changing World Order](https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/1982160276/ref=sr_1_1?keywords=principles+for+dealing+with+the+changing+world+order&qid=1647946067&sprefix=principles+for%2Caps%2C71&sr=8-1)”, and in a [YouTube video with the same title](https://youtu.be/xguam0TKMw8), that it always seems to play out the same way. First, an empire rises by being productive, well-educated, innovative, and ambitious. It experiences growth and peace during this period. However, it becomes decadent over time and borrows to pay for things it can not afford and does not need. It then repeatedly defaults on its obligations both to its citizens and to outside nations who have come to depend on its currency as the unit of value for economic trade. Dalio points out that the empire’s leadership fails to take responsibility and instead *prints the empire’s money into oblivion to cover up for their decadent spending.* Next, internal strife and international loss of confidence lead to the empire’s collapse, while some other upstart empire rises to take its place, only to eventually repeat the same tragic mistakes that lead to the former empire’s collapse. ![](https://www.datocms-assets.com/56652/1652193570-14.png?auto=format) One might conclude that this is the inevitable and natural order of things – like the cycle of the seasons. But when we look closely, we see that the same *avoidable and unnecessary* mistakes repeat themselves each time. The two most significant of these errors are, first, the empire borrowing more than it can repay, and, second, *printing its money in excess* to *‘pay’* off that debt. Each time these mistakes are made, it is because they are very tempting ways of dealing with the problem. They appear to be an easy way out of a challenging situation. Or, at the very least, they seem to be a way to defer dealing with the challenge until later. That is, they are a way to make the problem someone else’s problem. But succumbing to this temptation is not a necessity. Resisting temptation is hard, but it is not impossible. Even in the bible’s first moral, it warns that succumbing to temptation will lead to a fall from grace. Without making this too much of a biblically inspired analogy, the *“forbidden fruit”* for any empire is excess money printing – which is the debasement of the money. Every time this indulgence is taken, it is a poison pill that eventually leads to the collapse of the empire. Yet, since every empire in history has committed this sin, including the now declining American empire, are we not already doomed to witness a repeat of what happened before? Are we not sure to see some other empire rise, while alongside it we witness the destructive chaos of our collapsing empire, which has always been an ugly chapter in human history? Will it be China, Russia, or some other as-yet-unknown new empire? #### The United States: The Accidental Empire America never set out to be an Empire. It was formed in a rebellion against the British Empire and promised “No More Kings!” It did not contemplate world conquest in any of its founding documents. Yet, history had other plans. At the end of World War II, America, armed with the atom bomb and the only intact navy on Earth, found itself drawn into the role of the “world’s policeman.”  But it turned out to be a much more significant role than the word “policeman” suggests. It made America the first superpower – and, yes, that’s the same word we use to describe superheroes’ abilities.  Peter Zeihan’s book “[The Accidental Superpower](https://www.amazon.com/The-Accidental-Superpower-audiobook/dp/B00P2QB8M6/ref=sr_1_1?crid=MLJM1OBSUCC0&keywords=the+accidental+superpower&qid=1647948123&sprefix=the+accident%2Caps%2C80&sr=8-1)” does an excellent job of explaining the rise and predicting the demise of this global American Empire. ### To Function Within an Empire, You Must Use the “*Coin of the Realm”* But what actually is an empire? As we often do, let’s begin by turning to the dictionary.  **em·pire** /ˈemˌpī(ə)r/ n. an extensive group of states or countries under a single supreme authority, formerly especially an emperor or empress. For my purposes, I would like to define empires as vast geographic territories under common laws enforced by one authority.   I would also like to add one much more important observation that the dictionary overlooks. Empires are vast *economies* that almost always use a *common currency* throughout their territory.  Once we [invented coins](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-empire&utm_campaign=bitcoin-empire) in around 600BC, you could always tell which Empire’s territory you were in because everyone there used *“the coin of the realm.”* Of course, today, to transact in the United States, you must use the US dollar, which is the coin of the realm for the United States. But, because there is also the American Empire, the US dollar can be used *almost anywhere in the world.* Here is an [infographic](https://www.titlemax.com/discovery-center/money-finance/ancient-currency-coin-standards/) showing the coins of various empires or realms that came before the great American Empire, [courtesy of Titlemax.com](https://www.titlemax.com/discovery-center/money-finance/ancient-currency-coin-standards/): ### An Invulnerable Empire? The ancient Greek legend of Achilles says that his mother dipped him in the River Styx, thus making him invulnerable except for that part of him which she held him by – his heel.  All empires throughout history have demonstrated the same Achilles’ heel - succumbing to the temptation of money printing. When their money lost its power, they lost their power to pay for their defense and infrastructure, and, either gradually or suddenly, they collapsed. We are now in a time when a new empire is poised to rise, since the old one has already committed the irreversible and self-destructive act of endless money printing.  But perhaps the fall does not need to be as ugly as past ones. And, even more importantly, maybe this new empire can be constituted in a manner unlike any that came before – **an empire without an Achilles heel.** ### The Rise of *“The Empire of the Coin”* - Bitcoin Let us recall that throughout history, you could always tell which Empire you were in based on the coin used. In disputed territory, more than one coin might be used.  ##### Whatever Empire you are in, you utilize the *“coin of the realm.”* And wherever a coin is utilized, you are in the *“realm of that coin.”* ![](https://www.datocms-assets.com/56652/1652193588-15.png?auto=format) Where is [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-empire&utm_campaign=bitcoin-empire) used? It has no homeland. Yet it exists, at once, *everywhere* on Earth. Its operators, accountants, or scribes, who track its ledger operate in almost every country. Perhaps it even already operates in every single country on Earth. Anyone who runs a Bitcoin node anywhere in the world is maintaining Bitcoin’s currency, Bitcoin, in that country. There are tens of thousands of such people spread out across the globe. Even more are trading their Empires’ money for this new coin because they see something special in it. They see that it is invulnerable to debasement, which is also known as money printing.   Bitcoin is not printed onto paper on a press. It is not forged or stamped out of metal at a mint. It is made from mathematical formulae expressed as computer code, requiring energy. This creation process, for which there was no word at the time of Bitcoin’s creation, is often called mining. But it is not like mining for coal, nickel, or gold. The mathematical formulae ensure that only 21 million Bitcoin will ever be created. They ensure the timeframe over which these coins will be issued. They provide anyone in the world with the easy ability to verify the authenticity and genuineness of any coin offered to them in exchange for their services.  And nobody, not now, and not in many generations, can debase the coin by making more of it or making it ‘less pure.’   Bitcoin is the unprintable coin. It is the un-dillutable coin. It is un-debaseable.  We must, after all, either create new words for this new phenomenon or attempt to apply old words imperfectly. As Bitcoin spreads to more people worldwide, it establishes a new type of Empire. I wish I had a word for it, but it is the first of its kind – and possibly, since it could last forever, the last as well. Like other empires before it, Bitcoin establishes a coin for an economy covering a vast geography. But Bitcoin does NOT spread as other Empires before it have. Bitcoin does not take over nations by military conquest. It does not force any individual to accept it. It does not seize and destroy, or make illegal the use of any other coin. Bitcoin spreads peacefully, through earning the choice of those who choose it. And those who choose it, choose it for themselves also, for the value it gives to them.   Unlike all empires before it, Bitcoin does not have leaders. All people are equals in the Empire of Bitcoin. The same rules apply to all, and they are simple rules: First, you may only spend coins that are *unspent.* That is, you may only spend them if you can prove ownership of them by providing a digital signature corresponding to encrypted spending instructions. Second, you may only add a block of transactions to the ledger if it meets the conditions of doing so. (Technically speaking, those conditions are that it adds a block to the highest proof-of-work chain, satisfies the proof-of-work requirements for that block, claims only the mathematically permitted amount of newly issued coins and fees, and all the transactions in it satisfy the first rule).   These are the only rules. There are no other rules. But unlike the laws of previous empires, these rules are not open to human interpretation, or violation. They are designed to be scrutinized only by the operations of mathematics. And each transaction and block either passes or fails, objectively, mathematically, according to all participants in the Empire. No emperor will someday become decadent and decide to print more Bitcoin to finance a war or build himself a monument. There is no emperor in this Empire. It is an Empire whose citizens choose to be in it because they do not want to be ruled by the whims of some ‘ruler’.   Bitcoin’s unique construction protects this Empire from ever being able to commit the deadly sin or become victim to the act that destroyed every empire that has come before – the inflation and debasement of its coin.   This Empire is neither naive about nor vulnerable to those who seek power over others. It has no Achilles heel.  There is nowhere that you can strike it and kill it.  If you take out nodes anywhere on Earth you have done nothing to harm the operation of Bitcoin. If you withdraw energy from its process of adding blocks it will adjust itself in short order to ensure its ongoing process of adding valid blocks of valid transactions returns to its targeted rate of one block every ten minutes.  If you try the opposite, to flood it with energy, it will adapt to this as well. Make any attempt to inflate the supply and your attempt will be mathematically rejected by every node in the world. Try to pass off anything that is not 100% pure Bitcoin as a transaction and your attempt will also be mathematically rejected by every node in the world. Nobody can stop the operation of this *“Empire-of-the-Coin.”* So the choice then is simply to accept it or reject it.  And that is a free choice for every person on the planet. The Empire of the Coin invites all to choose to join. It rejects nobody who obeys its simple rules. And it forces nobody to join.  It is the first Empire in history to expand entirely through the voluntary participation of its citizens. > The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime. > > — Satoshi Nakamoto #### The Price Also Rises Today, many people focus on the investment opportunity that Bitcoin represents over a relatively short time when measured against the lifespan of empires. But what they implicitly are acknowleding in doing so is that what drives this opportunity is this: Bitcoin is not some flash-in-the-pan or Johnny-come-lately that will soon be replaced by the new *“new thing.”*  Bitcoin may be the *“new kid on the block”* as far as empires go, but it defines what the *block* is better than any empire before it.   The more people recognize this, the more this Empire rises - in both users and economic value. Nothing in history has grown more quickly than Bitcoin to a value of $1 trillion. And Bitcoin did this without hiring a single employee and without spending a dime (or a satoshi) on marketing.  It did so by offering itself to the world and letting those who saw its value in it join it, work on it, and tell others about it. #### A Forever Empire  At this moment in history, [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-empire&utm_campaign=bitcoin-empire) is truly the dawn of a new Empire. It is an Empire of peaceful expansion, voluntary participation, reliable promises, freedom, and an un-debase-able coin. It offers a provable solution to the problem that led to the collapse of all empires before it. It is a tremendous gift to all humanity. And, all we have to do to preserve our civilization and thrive for many generations is accept this gift. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # 3 Easy Ways to Run Your Own Bitcoin Node - Swan Bitcoin URL: https://www.swanbitcoin.com/education/3-easy-ways-to-run-your-own-bitcoin-node/ To further improve your Bitcoin self-sovereignty, it’s essential to learn how to use operate a Bitcoin node. Learn how to best run your own Bitcoin node in 2024 with Swan Bitcoin below! --- **Stephan Livera** · May 1, 2024 · Updated August 2, 2026 As part of the journey of learning about [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=3-ways-to-run-node&utm_campaign=3-ways-to-run-node), it's typical that new and no-coiners start by buying Bitcoin but end up leaving it on the exchange or broker platform. The next step is generally learning self-custody, which means withdrawing Bitcoin into a wallet where you hold the private keys. This is typically a phone wallet for small amounts or a hardware signing device (aka '*hardware wallet'*)...  But to further improve your Bitcoin [self-sovereignty](https://www.swanbitcoin.com/sovereignism-part-i-digital-creative-destruction/), it's essential to learn to use Bitcoin with your Bitcoin node. ### What is a Bitcoin node?  Think of it as a fake Bitcoin detector. A Bitcoin node validates Bitcoin blocks and transactions according to rules that define what Bitcoin is and how it exists. It is also how you interact with the Bitcoin network, receiving and sending transactions. You either rely on somebody else's node or use your own node to use Bitcoin.  [Video](https://www.youtube.com/watch?v=F_d6vtjdW_8) ### Why should I run my own Bitcoin node?  You [no longer have to trust](https://www.swanbitcoin.com/byzantine-generals-problem/) that your service provider is telling you the truth about whether you received Bitcoin. Your node is doing all of that validation instead. Your privacy will also be better when using your own Bitcoin node, as you are sharing less transactional data with third parties.  ### Is running a Bitcoin node just for technical people? Some people shy away at this point, thinking that running a node is only for developers and highly tech-savvy enthusiasts. And no, it's not. Running a Bitcoin node is [for everyone](https://www.swanbitcoin.com/looking-out-for-the-little-guy/). There are lots of tools making it easy to do nowadays. The more people who take an active part in running and using their Bitcoin node, the better it is. [Bitcoin is decentralized validation](https://stephanlivera.com/episode/260/). [Video](https://www.youtube.com/watch?v=fEEtKFMGO1E) Instead of millions of users relying on one central service provider's node, Bitcoin becomes more robust when more users are validating. Think of it as more participants keeping each other honest and having influence in the direction the protocol goes.  ### How do I run my Bitcoin node? Below, I'll spell out three relatively easy ways to run your Bitcoin node (Bitcoin Core) and connect your [Bitcoin wallet](https://www.swanbitcoin.com/best-bitcoin-wallet/) with your Bitcoin node. Merely running a Bitcoin node is of limited value. The real value comes when you ***use*** that node to validate your incoming transactions and broadcast your outgoing transactions. You can do this by connecting your software wallet with your Bitcoin node.  ### Method 1: Specter Desktop & In-built Bitcoin Core Specter Desktop is software you can conveniently install on the laptop or desktop computer you already use, and the convenient part is it comes bundled with Bitcoin Core. It also works using your existing computer hardware, which costs you $0 additional outlay. Let's walk through some of the high-level steps.  - Download and install [Specter Desktop](https://www.swanbitcoin.com/specter-desktop-relaunches-with-new-ui-and-improved-user-experience/) from [specter.solutions](http://specter.solutions). - Enable the in-built Bitcoin Core installation.  - If you want to save hard drive space, download time, and set up time, you can also enable the '*QuickSync*' feature. QuickSync will download a pruned blockchain snapshot to get started faster with some trust assumptions.  - Wait until your computer has completed the initial sync. **This will depend on your download speed and your computer's processing power.**  - Add your hardware signing device - Create a Wallet (single signature is OK to get started). - Use the '*Receive tab*' to generate a Bitcoin address to receive coins. Or spend Bitcoin use the Send tab inside your chosen Wallet.  - Every time you close and reopen Specter Desktop, you must wait for your Bitcoin node to re-sync up to the blockchain's chain tip. - This is because the blockchain adds a new block every 10 minutes on average, and unless you leave your computer on all day, your node will fall out of sync while it is offline. Don't worry; this is not something to worry about in this context.  When your Specter in-built Bitcoin node is up and running correctly, it will look like this: ![](https://www.datocms-assets.com/56652/1652711044-unnamed.png?auto=format) ### Method 2: SBC node & connect a laptop or desktop software wallet You can operate a Bitcoin node on an SBC (Single Board Computer) such as a [Raspberry Pi](https://www.raspberrypi.com/) or RockPro64. These are small devices that use less power and can be left on all the time cheaply. Various software node packages will help make this process easy. Some vendors even sell a pre-built node device that makes it even easier. **Example**: [Umbrel](https://getumbrel.com/), [myNode](https://mynodebtc.com/), [nodl](https://www.nodl.it/), [Ronin Dojo](https://ronindojo.io/), [RaspiBlitz](http://raspiblitz.com/), [Start9 Embassy](https://start9.com/latest/) Check out this node [guide](https://bitcoiner.guide/node/diy/) from Bitcoiner.Guide. While this kind of setup will cost roughly $400 more than Method 1, the benefit is that your device will be on all the time, staying in sync with the Bitcoin network. You will also benefit from viewing your transactions in your *own* mempool explorer, using Lightning, Coinjoin and privacy features, running self-sovereign Bitcoin payment processing, etc.  With this method, you will either buy the device outright or build it yourself and flash a microSD card with the Bitcoin node software. If you buy the device outright, it will be a simple process of plugging it in to power and your router for the internet. Then, you can access the node from your laptop or desktop (or even your phone in some cases), and you can connect your desktop/laptop software wallet to your Bitcoin node. **Example**: You can download and install [Sparrow Wallet](https://sparrowwallet.com/) on your laptop, and in the setup connection dialog box, you can copy-paste the information relating to your Bitcoin node.  In Sparrow Wallet on Windows, click ‘*File*’, ‘*Preferences*’, then ‘*Server*.’ You can then paste in your [Private Electrum Server](https://electrum.org/) address and port (e.g. 50001), which you should be able to find in your SBC node web interface. **Example**: On [Umbrel](https://apps.umbrel.com/app/bitcoin) you will find this Tor URL in the ‘Connect Wallet’ dialog box area.  ![](https://www.datocms-assets.com/56652/1652711000-unnamed-1.png?auto=format) Once you’ve done this and clicked ‘*test connection*’, you can see if Sparrow is able to successfully connect to your own Bitcoin node for transacting. After you create or load up a wallet, you will then be checking your transaction history on your own Bitcoin node, rather than your service provider’s node. When transacting, your Bitcoin node will be the one to broadcast the transactions. backs your software wallet such as Sparrow. With Sparrow Wallet, you can easily plug in your hardware signing devices (aka hardware wallets) directly via cable, or use air-gapped wallets via QR code or microSD. So similar to above, you will have achieved the goal of transacting using your own hardware signing device, backed by your own Bitcoin node.  ### Method 3: VPS node for those looking to set up Bitcoin merchant payment processing, or possibly for digital nomads This option is not for everybody, but it can be the right choice depending on what you want to achieve. In this case, it works well for people living nomadically or those who want to quickly set up an always online Bitcoin payment processor such as [BTCPay Server](https://btcpayserver.org/). You can use services such as [Voltage.cloud](http://voltage.cloud) or [LunaNode](https://www.lunanode.com/) to host your Bitcoin, Lightning or BTCPay Server node.  Using this setup, you are using someone else's computer, so note there is a sovereignty trade-off. However, it does make it easy to get started using a node that you control, rather than being entirely dependent on somebody else for Bitcoin payment processing services. **Example**: If you are a merchant and want to set up to take payment without trusting somebody else. [BTC Sessions walks through a quick example of using Voltage](https://youtu.be/KqsM-n-e4aY) to spin up a BTCPay node and accept payment over Lightning. You can create a webshop or set up to take bitcoin donations using the [crowdfunding app](https://docs.btcpayserver.org/Apps/#crowdfunding-app). Another example feature when selling services for Bitcoin is BTCPay Server's [payment requests](https://docs.btcpayserver.org/PaymentRequests/). **Example**: You might want to bill somebody $1,000 equivalent in Bitcoin, but they might be in a different time zone to you. You can create a payment request on your BTCPay Server, a persistent web link that you can send to your customer. When your customer is ready, they can go to the site, and it will automatically do the USD to BTC conversion on the spot and show the correct amount of [satoshis](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/) to pay. Once paid, it goes into the wallet you specified, and this is all backed by the node you control. **Easy!** Stephan hosted a panel with Swan CTO Yan Pritzker and Bitcoin Educator Anil Patel at Pacific Bitcoin Festival 2023. They share and discuss elegant graphical slides to help explain the many facets of Bitcoin using simple language and accessible analogies. Great to share with beginners! [Video](https://www.youtube.com/watch?v=wnliKyZaTxM) ### How to setup a Lightning node Interested in setting up a Lightning Node, but you have a ton of questions! 1. *How many channels do I need?* 2. *Who can I set up channels with?* 3. *How do I back up and manage my private keys?* 4. *How can I check on the status of my node?* 5. *Do I need to be a command line wizard?* The video below from Lightning Labs walks through the basics of Lightning Node management and node management tools. [Video](https://www.youtube.com/watch?v=R50OxMBfWSI) ### Next steps None of this is so tricky that a motivated individual can't figure it out. Once you achieve some of these steps, you will be amazed at the [self-sovereignty](https://www.swanbitcoin.com/sovereignism-part-i-digital-creative-destruction/) you can achieve with Bitcoin if you take the time to learn. Other aspects of learning include: - *Verifying signatures.* - *Building from software from source.* - *Manually controlling or configuring elements of your node.* You can also learn about customizing your Bitcoin node with command-line operations... **Example**: See the node box video guide series by k3tan [here](https://youtu.be/9Kb7TobTNPI). Bitcoin is about using tools to give yourself [financial freedom](https://www.swanbitcoin.com/satoshi/?gc=3-ways-to-run-node&utm_campaign=3-ways-to-run-node), regardless of what other governments, businesses, or individuals say. Using your own Bitcoin node on your existing PC, a dedicated node computer, or a VPS gives you additional functionality. It reduces the trust you have to place in other people or companies. Whether you want assistance setting up your own Bitcoin node, [buying Bitcoin](https://www.swanbitcoin.com/signup/), or about how to open the [ultimate asset](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) for your retirement portfolio, a [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/real-bitcoin) - Swan is here for you. Learn more on the [Swan Signal](https://www.swanbitcoin.com/signal/) blog and [Swan Media](https://www.youtube.com/@Swan_Bitcoin) YouTube channel. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Coinbase and the Insider Exchange Dump - Swan Bitcoin URL: https://www.swanbitcoin.com/education/bitcoin-vs-altcoins/ Bitcoin is very different from all other cryptocurrencies. In fact, it shouldn’t even be considered the same asset class. --- **Sam Callahan** · May 19, 2022 · Updated June 27, 2024 *This report was originally published in Swan Private Insight from May 2022. Submit your information* [*here*](https://www.swanbitcoin.com/private/?gc=bitcoin-vs-altcoins&utm_campaign=bitcoin-vs-altcoins) *if you're interested in reading future reports.* A common phrase you’ll often hear from someone getting into [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-vs-altcoins&utm_campaign=bitcoin-vs-altcoins) is, *“I’m going to diversify across cryptocurrencies because I don’t know which one will win.”* This mindset comes from traditional finance where the commonly-held belief is that it’s wise to spread your bets out across an asset class to improve risk-adjusted returns. The reason that this mindset fails when it comes to Bitcoin is that Bitcoin is very different from all other cryptocurrencies. In fact, it shouldn’t even be considered the same asset class. It has a different value proposition, different assurances, a different use case, different engineering, and a different history from all other cryptocurrencies. Only Bitcoin has shown the ability to maintain its value over a long period of time due to its unique properties: its hard-capped supply, decentralization, and censorship-resistance. The graphic below displays this reality beautifully. It shows the top 10 coins by market cap from 2013 to 2022. ![](https://www.datocms-assets.com/56652/1652917388-screen-shot-2022-05-18-at-4-03-28-pm.png?auto=format) Whereas other cryptocurrencies come and go, Bitcoin has remained the largest, most liquid, most used, and most secure cryptocurrency for its entire existence. This fact has not stopped opportunists from creating cryptocurrencies of their own for their own personal gains. The total number of cryptocurrencies has skyrocketed over the last two years. Over the past year alone, the number of cryptocurrencies has doubled. There are now over 10,000 active cryptocurrencies in existence. ![](https://www.datocms-assets.com/56652/1652917784-screen-shot-2022-05-18-at-4-03-50-pm.png?auto=format) Most of these cryptocurrencies are classic examples of illiquid pump-and-dump schemes manipulated by insiders for short-term profits. However, this is not the narrative retail investors will hear from popular cryptocurrency exchanges. A perfect example of this is Coinbase, the largest cryptocurrency exchange in the United States, with 98 million verified users. Coinbase generates most of its revenue through trading fees, listing fees, and custodial fees. Because of this, Coinbase is incentivized to list more cryptocurrencies, promote speculative trading, and discourage self-custody. To put this into perspective, in 2017, Coinbase only listed 4 coins: Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. Today, Coinbase has over 160 different cryptocurrencies available to trade in the US. Despite the fact that the data clearly shows Bitcoin is the only long-term investable asset, Coinbase rarely speaks highly of it. For instance, on April 18th, 2022, Coinbase marketed its Top 10 cryptocurrency picks, and Bitcoin was not even included on that list! ### Coinbase's *"Top 10 Picks - April 18, 2022"* ![](https://www.datocms-assets.com/56652/1652917994-screen-shot-2022-05-18-at-4-04-15-pm.png?auto=format) Coinbase doesn’t make much money if everyone just buys and holds Bitcoin. But imagine being a newcomer and seeing this list of highly speculative cryptocurrencies as the *“top picks”* recommended by Coinbase. It is rather questionable why Coinbase promotes these cryptocurrencies when a majority of them lose value against Bitcoin over longer time frames. This Coinbase list inspired me to look closer into the data. I wanted to explore exactly how these cryptocurrencies performed against Bitcoin after they were listed by Coinbase and made available for retail investors to trade. The results…even shocked me. ### The Insider Exchange Dump Before we dig into the performance of these cryptocurrencies, it’s important to understand the game at play here. When a new cryptocurrency is created, early investors typically make investments, a development team is formed, and a percentage of the coins are issued to these insiders at extremely low prices. This is easy to accomplish because there is zero cost to creating a new cryptocurrency. This insider allocation usually occurs in the form of a *“pre-mine.”* This is an aptly named term to describe coins that are given to early investors and the team before the general public has the ability to mine or buy them. Below you will see a graph of some popular cryptocurrencies and the percentage of their total supply that was allocated to insiders at their public launch dates. ![](https://www.datocms-assets.com/56652/1652918654-screen-shot-2022-05-18-at-8-02-36-pm.png?auto=format) After the launch, if the coin gains in popularity and is listed on a large exchange, the VCs and other insiders then have the opportunity to dump their holdings on retail traders who are sold on the narrative that the coin is *“the next big thing”*, *“the next Bitcoin”*, or is *“better than Bitcoin.”* This strategy has been used under many different names over the years, such as ICOs, DeFi, and NFTs, but the outcome remains the same – the insiders get richer, and the outsiders lose their life savings. Proof of this is in the pudding. Let’s dive into it. ### Coinbase's Top Picks To begin with, let’s take a look at Coinbase’s recent *“Top Picks”* mentioned above and see how they have fared against Bitcoin since the recommendation was made. ![](https://www.datocms-assets.com/56652/1652918700-screen-shot-2022-05-18-at-8-02-49-pm.png?auto=format) Since Coinbase’s recommendation, every single cryptocurrency that was promoted to retail investors as *“Top Picks”* by Coinbase is down against Bitcoin, with an average drawdown of -40.6%. To add insult to injury, Axie Infinity made it on this list nearly one month after it suffered a $625 million dollar hack. How could any honest and knowledgeable party recommend something so obviously insecure and flawed as a top cryptocurrency? Yet, Coinbase promoted it and other massively risky assets to retail investors that underperformed the safer bet, Bitcoin. These retail investors would have been better off simply buying and holding Bitcoin. But Coinbase would have generated less fees, so... ### The Older Altcoin Listings Next, let’s look at a couple of the older altcoin listings on Coinbase – Ethereum, Litecoin, XRP, and Bitcoin Cash. Back when these coins were first listed, they were marketed as threats to Bitcoin. Rival cryptocurrencies that could one day unseat Bitcoin as the largest and most liquid digital assets. Litecoin was marketed as a faster, cheaper Bitcoin and was described by many, including its non-anonymous founder who later sold all his Litecoin at the market peak, as the *“silver to Bitcoin’s gold.”* Bitcoin Cash was a hard fork of Bitcoin that was supposed to make Bitcoin obsolete due to alleged superior traits that would allow it to scale better than Bitcoin. XRP was promoted as a faster decentralized cryptocurrency with lower fees that would revolutionize the payments industry. Ethereum was marketed as a *“world computer”* that would revolutionize the entire internet as we know it. Here is how these cryptocurrencies performed after they were listed on Coinbase. ![](https://www.datocms-assets.com/56652/1652918907-screen-shot-2022-05-18-at-8-03-05-pm.png?auto=format) Those that were marketed as investments, Litecoin, XRP, and Bitcoin Cash, have each lost >80% of their value against Bitcoin since they were listed on Coinbase. XRP was eventually delisted from Coinbase after the SEC charged Ripple and its co-founders with conducting a $1.3 billion dollar Unregistered Securities Offering. This was an unfortunate ending for all the Coinbase users who bought XRP for nearly two years on the platform. During that timeframe on Coinbase’s platform, XRP lost 90% of its value against Bitcoin. Ethereum is the only older cryptocurrency that has outperformed Bitcoin since it was listed. However, it’s important to note that ETH was not marketed as an investment initially but rather as gas, or *“digital oil”,* that would power different things that could run on top of it. Demand for Ethereum was driven by the marketing for various use cases, all of which turned out to be disastrous in the end. Let’s take a closer look at how these use cases that drove Ethereum’s demand have performed for investors against Bitcoin. ### The ICO Craze In 2017, the cryptocurrency market ballooned as Ethereum became a platform that allowed for the creation of countless Initial Coin Offerings (ICOs) which were marketed as great investments. At that time, ICOs were all the rage as investors were sold stories on how each token would revolutionize the [fill in the blank] industry. Most of these tokens were able to raise obscene amounts of capital with only a white paper describing all of the wondrous things the team would build with the funds. Of course, many of these teams were more interested in pumping the price of the tokens they had created out of thin air rather than delivering on their promises. These ICO teams marketed Bitcoin as old and slow technology to entice retail investors to buy their pre-mined tokens instead. Despite most of these ICO coins having little to no liquidity or even working products, Coinbase listed them on their platform anyways. Coinbase looked past all of these red flags and instead saw this as an opportunity to collect listing fees and expand its product offering. Once the coins were listed on Coinbase and the early investor lock-up periods ended, these insiders had a large platform to dump their positions on unsuspecting mom-and-pop investors and walked away with massive profits. Let’s check back in on ten popular ICOs of that era and see how their performance has stacked up against Bitcoin after being listed on Coinbase. ![](https://www.datocms-assets.com/56652/1652919085-screen-shot-2022-05-18-at-8-03-17-pm.png?auto=format) As you can see, every single one of these ICOs have underperformed Bitcoin since they were listed on Coinbase. **A majority of these hyped ICO tokens are deeply negative against Bitcoin, with an average drawdown of -58%.** This chart paints the picture of how retail investors were left holding the bags after they were told to buy these ICO tokens. Instead of buying the least risky cryptocurrency for long-term investing, Bitcoin, retail clients instead lost their money buying ICO tokens on Coinbase. ### The DeFi Craze The more recent speculative wave to hit the broader cryptocurrency industry was that of Decentralized Finance, or *“DeFi”.* The stated goal of DeFi is to disintermediate several functions of the financial system through a combination of smart contracts and stablecoins, on top of public blockchains, like Ethereum (despite these having a host of their own security and scaling issues). While many retail investors were sold the dream of open financial markets and massive APYs on yield-farming tokens, DeFi proved to be filled with risks. These risks have manifested themselves in many large hacks with substantial loss of funds, countless network crashes, along with a general downward price action since its peak in Q2 2021. The most accurate description of DeFi probably came on a recent episode of the Odd Lots podcast from FTX CEO Sam Bankman-Fried, whose description of DeFi’s *“yield farming”* caused fellow guest, Bloomberg Opinion columnist Matt Levine, to respond with, > I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like,‘Well, I'm in the Ponzi business and it's pretty good.’ > > — Matt Levine Life was indeed good in the Ponzi business – for a while. But like all Ponzis, once the interest waned and the funds dried up, the bubble collapsed. Coinbase was quick to offer these tokens to the public despite the heightened [operational, security, and regulatory risks](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3866699) that came with them. Since the date that each DeFi token was listed on Coinbase, not a single one of them has outperformed Bitcoin. ![](https://www.datocms-assets.com/56652/1652919403-screen-shot-2022-05-18-at-8-03-34-pm.png?auto=format) **Since being listed on Coinbase, the average loss against Bitcoin for these DeFi tokens is -61.6%.** Just like the ICOs that came before them, these DeFi tokens only served to harm retail clients who were sold a narrative that these were the next big thing. Anyone who fell for Coinbase’s DeFi advertisements over the last couple of years is deeply underwater on their positions against Bitcoin. ### Digital Penny Stocks When looking at the performance beyond the more popular cryptocurrencies that were closely associated with the various hype cycles built on Ethereum, it doesn’t get much better for any cryptocurrency not named Bitcoin. Jump Crypto recently performed a study that analyzed the performance of 3,759 tokens against Bitcoin over the eight years between 2013 and 2021. **The study concluded that 84% of the tokens analyzed were underwater against Bitcoin, with a median annual return of -78%.** ![](https://www.datocms-assets.com/56652/1652919553-screen-shot-2022-05-18-at-8-03-47-pm.png?auto=format) This study shows that a large majority of these tokens lose value when denominated against Bitcoin and are more likely to lose value over long time periods. They are not suitable long-term investments compared to Bitcoin. All of this data is evidence that Bitcoin and other cryptocurrencies should not be considered similar. Bitcoin has unique properties that allow it to hold its value over time. It is provably scarce, resistant to change, has no marketing budget, has no founders looking to exit, and thus can act as a quality inflation hedge within a portfolio. Every other cryptocurrency besides Bitcoin is better thought of as a digital penny stock. These digital penny stocks are full of operational, security, and regulatory risks that do not exist in Bitcoin. If investors want to gamble on high-risk/high reward VC bets, they can go right ahead. It’s a free market. But they should understand that **when an altcoin finally gets listed on Coinbase, a majority of the upside has already been made by insiders via backroom deals.** As George Carlin famously said, *“It’s a big club…and you ain’t in it!”* ### Fair is Fair - Ethereum vs. Bitcoin Ethereum is one of the older listings on Coinbase, and from its time of listing, it has actually outperformed Bitcoin. But the data above highlights how continued demand for Ethereum has been driven by its switching claims from being a platform for ICOs (which all underperformed Bitcoin), to DeFi (which nearly all underperformed Bitcoin), and then NFTs, which have seen devastatingly negative returns and scams. In the beginning, Ethereum was never marketed as a long-term investment but rather was promoted as a utility token. Most ETH holders traded their holdings for other cryptocurrencies that were spawned on Ethereum during these various speculative crazes. If Ethereum is, in the end, merely a platform for retail investors to lose money on other digital assets, I would expect its demand and price to eventually go the way of all things that don’t produce any real value for the world. ### Conclusion It’s important to understand what you own and don’t own when it comes to Bitcoin and the rest of the broader crypto industry. It’s about time we separate Bitcoin from other cryptocurrencies and call out the irresponsible, questionable marketing and coin listing practices of Coinbase and other cryptocurrency exchanges like it. **In total, out of the 161 cryptocurrencies (excluding stablecoins) trading on Coinbase in the US today, the median performance against Bitcoin after their listing is -67.3%, with a median days since listing of 274 days.** What retail investors desperately need in today’s macroeconomic environment is a digital sound money that can’t be inflated or censored. They need to be [saving in Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=bitcoin-vs-altcoins&utm_campaign=bitcoin-vs-altcoins) with a recurring buy plan to [preserve their wealth](https://www.swanbitcoin.com/private/?gc=bitcoin-vs-altcoins&utm_campaign=bitcoin-vs-altcoins) – not gambling on unregulated digital penny stocks using bucket shops like Coinbase. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Stop Fooling Around in Crypto - Swan Bitcoin URL: https://www.swanbitcoin.com/education/stop-fooling-around-in-crypto/ The Opportunity You Fear You Missed Still Awaits --- **Tomer Strolight** · May 20, 2022 · Updated June 27, 2024 ### Bitcoin, The Invention and Opportunity of the Century Bitcoin – Wow! What an invention that was. It came straight out of the blue. Nobody was expecting it. And for the *very* few people who mined it in the early days, and didn’t lose it, and never sold it, they got pretty rich.  But almost everybody missed out on that. Even the people named in the white paper missed it. Most of the early miners either abandoned their coins altogether, sold them cheaply, or traded them for some early altcoin that no longer even exists. And be honest – if you had mined or bought bitcoin in those early days do you really think you would have held it all when it first reached $1, or $10, or $100? You’ve probably also thought “Too bad I missed the boat on [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=stop-fooling-in-crypto&utm_campaign=stop-fooling-in-crypto).” And maybe that’s what led you to try to get in early on another *“boat”* by playing the *“crypto”* markets.  ### Stop Fooling Yourself and Others About *“Crypto”* Now, many people are trying to pretend that they are at the beginning of something by getting into the latest craze – in blockchain, DeFi, NFTs, or DAOs – which all fall under the heading *“Crypto.”*  But getting into something when there are already 20,000 other somethings like it is not actually getting in early. Stop fooling yourself. You simply can’t turn back the clock and you can’t recreate the invention of Bitcoin through buying a knock-off.  Calling something *“decentralized”* doesn’t actually make it decentralized. If it has leaders, a corporation or foundation, venture capital funding, or is controlled by *“stakers,”* then it’s not decentralized. Anything with one or more these characteristics that claims to be decentralized is not – it's a fraud: a fraud preying on people’s regrets that they didn’t get in early on something truly great; a fraud luring people towards something that’s neither early nor great. So stop fooling yourself – and stop fooling others.  Don’t use terms like *“web3”* and pretend that there’s something new there. Don’t pretend that  centralized, VC-backed corporations, with leaders and founders, who have given themselves lots of tokens, and who plan to dump those tokens on suckers are beneficial. Don’t pretend they’re democratic, peer-to-peer, or decentralized innovations in a *“new world of finance.”* They are nothing of the sort. They are destined-to-fail frauds. And you probably know it – or at the very least you suspect it. So stop fooling yourself. Look at the empty and broken promises of the crypto space. Look at the lies of the characters who *have* managed to get rich. They have not done so by enriching the world and others, but by selling something worthless on a false promise that got everyone who bought into it wrecked.  If you’ve been fooled, I'm sorry. You must hold yourself accountable to yourself for your mistakes. If you were naive, learn not to be the next time. If you were greedy, own up to it.  And, if you are still thinking *“I’ll find the next one and this time get out early enough”* admit that you’re trying to get rich by dumping something on someone else who will get poor from listening to you, and then ask yourself *“do I want to be such a person?”* Maybe you do. If that’s the case, there’s nothing more for you in here. Go on pretending and see if you can fool others before you get fooled yourself.  ### The Real Opportunity Still Is Bitcoin! But if you actually want to participate in something that helps you and your fellow human beings, I’ve got good news, but you’ll have to stop fooling yourself about one more thing. And that lie you need to stop telling yourself is that you missed the boat on Bitcoin. Because that boat has not even started to pull away from the harbor yet, let alone gone out to sea, or arrived at its destination.  *“Look at how expensive a whole Bitcoin is,”* you might worry. Well, for one, it takes 30 satoshis to add up to just one cent right now. That’s the base unit of Bitcoin. You can still buy 30 of those for a penny. However, this is only a minor point. Because do you know where the good ship Bitcoin is headed? It’s not to $100,000 or $1 million a coin – not even $10 million or $100 million. Where we’re going, they don’t have dollars. We’re going to the future. And you don’t have to look too far into the past to see that the dollar’s future is in big trouble, because the incompetent, corrupt, and dishonest people who administer that centralized shitcoin project are trying to fool you and to fool themselves with claims that everything is fine, when the house is actually on fire.  In the future, there truly are no people in charge of the money. It’s not a battle over who can seize power over some territory and then use that power to print money for their armies of soldiers, bureaucrats, and tax collectors to seize the wealth produced by those who do actual work.  Look around though. That’s not the present. So you haven’t missed the boat. But if instead of getting in that boat – way early still – you’re pretending that a jpeg of a rock or an ape is the future, or that some staking, algorithmic, yield farming, smart contract blockchains do anything besides fooling people into investing in them, well then, stop fooling yourself!  Bitcoin is here. It’s waiting. [It’s waiting for you](https://www.swanbitcoin.com/satoshi/?gc=stop-fooling-in-crypto&utm_campaign=stop-fooling-in-crypto). Come aboard and experience what it’s like to stop fooling yourself, and to stop fooling others, and to stop fooling around. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Market Headwinds Continue to Blow as the Fed Stands Firm URL: https://www.swanbitcoin.com/investing/market-headwinds-continue-to-blow-as-the-fed-stands-firm/ Swan Private Market Update #9 — The markets continued to experience turbulence over the last two weeks as investors grapple with rising risks of inflation, hawkish Fed, economic conditions, and the Russian-Ukraine War. --- **Sam Callahan** · May 26, 2022 · Updated July 3, 2024 ### *Swan Private Market Update #9* *This report was originally sent to Swan Private clients on May 20th, 2022.* [*Swan Private*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9) *guides corporations and high net worth individuals globally toward building generational wealth with Bitcoin.* [*Learn more and schedule a call with our team here*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9)*.*  *Benefits of Swan Private include:*  - *Dedicated account rep accessible by text, email, and phone* - *Timely market updates (like this one)* - *Exclusive monthly research report (Insight) with contributors like* [*Lyn Alden*](https://www.lynalden.com/swan-bitcoin/) - *Invitation-only live sessions with industry experts (webinars and in-person events)* - *Hold Bitcoin directly in your Traditional or Roth IRA* - *Access to Swan’s trusted Bitcoin experts for Q&A* - *Get more information*[ *here*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9) The markets continued to experience turbulence over the last two weeks as investors grapple with the rising risk of recession due to inflation, a more hawkish Federal Reserve, deteriorating economic conditions, the continued adverse effects of the Russian-Ukraine War, and new COVID lockdown developments in China.  On Wednesday, stocks resumed their sharp selloff as the Dow and S&P 500 suffered their worst single-day percentage declines since 2020. Since our last market update, the S&P 500 is down -5.65%, and the Nasdaq is down -7.46%. Stocks are getting hammered as inflation fears and weak earnings continue to hit market sentiment hard.  This was never more evident than when the stocks of some of the largest retailers in the world, Walmart, Target, and Costco, all crashed after disappointing earnings reports. Both Walmart and Target saw their worst selloffs since 1987. On the week, Target is down -30.24%, Costco is down -17.03%, and Walmart is down -20.73%. ![](https://www.datocms-assets.com/56652/1653575002-screen-shot-2022-05-26-at-10-11-47-am.png?auto=format) These retailers cited rising fuel and freight costs, increased labor costs, and slowing sales growth as the main culprits of their earnings misses.  This can be interpreted as a sign that consumers are beginning to feel the pinch of inflation due to the rising costs of essentials like gasoline and food. According to Yardeni Research, households are now spending ~$5,000/yr on gasoline, up 79% YoY. This comes as consumer sentiment currently sits at its lowest level since 2011, according to the University of Michigan Consumer Sentiment Index. The Federal Reserve might actually see these developments as positive given their goal to slow down this overheated economy. Even with the stock market bleeding out, investors shouldn’t expect the Fed to come to the market's rescue anytime soon. The recent messaging from Fed officials has been clear…reducing inflation by tightening monetary policy is their top priority. > Inflation is clearly much too high, and monetary policy must be repositioned to address this. > > — Charles Evans, 5/17/22, Chicago Fed President > You’d still have a strong labor market if unemployment were to move up a few ticks,” he said. “I would say there are a number of plausible paths to have a soft, as I said, softish landing…Restoring price stability is an unconditional need. It is something we have to do. There could be some pain involved. > > — Jerome Powell, 5/17/22, Fed Chairman The Fed is sending the message that it’s committed to tightening financial conditions and bringing down inflation even if it means falling asset prices and rising unemployment. The US CPI increased at a slower rate for the first time in 8 months in April, coming in at 8.3% YoY, but the Fed wants to see that number much closer to their 2% target. **The big question becomes, what could make the Fed pivot on its policy stance?**  The first thing to consider is the Fed’s mandate of maximum employment. Today, the unemployment rate sits at 3.6%, a half-century low. However, we are beginning to see cracks in the labor market with increased news of layoffs from companies like Netflix, Wells Fargo, Robinhood, and increasing weekly jobless claims. When referring back to the low consumer sentiment mentioned above, this is usually a leading indicator of rising unemployment. Typically we see consumer sentiment drop before periods of high unemployment. If consumers reduce their spending, this impacts corporate earnings, leading to an increased risk of layoffs and recession. The chart below highlights how consumer sentiment typically moves inversely to the unemployment rate during recessions. ![](https://www.datocms-assets.com/56652/1653575315-screen-shot-2022-05-26-at-10-28-21-am.png?auto=format) If this pattern holds true, and the unemployment rate eventually moves inversely to consumer sentiment and spikes off its multi-decade lows, it could force the Fed to reverse course. The second thing to consider is the corporate bond market, which has been experiencing increased volatility of late. If the corporate bond market starts to have serious issues, this could spark contagion and a cascade of bankruptcies given how much debt is in the system today. The Fed is likely keeping a close eye on this part of the market as it raises rates to combat inflation. We’re starting to see signs of increased credit risk in both the investment grade and high yield corporate bond markets gauged by corporate credit spreads, which is the yield minus the risk-free rate (US Treasury bond). The higher the corporate credit spread, the more investors want to be compensated for taking on the added risk. Observe below how both the investment grade and high yield spreads are starting to creep up to levels not seen since November 2020.  ![](https://www.datocms-assets.com/56652/1653575386-screen-shot-2022-05-26-at-10-29-34-am.png?auto=format) Furthermore, we saw the amount of distressed corporate debt spike to $139.1 billion this week, up 67% from the week prior.  ![](https://www.datocms-assets.com/56652/1653575441-screen-shot-2022-05-26-at-10-30-32-am.png?auto=format) If the corporate credit market continues to roll over and show increased signs of distress, this could cause the Fed to pump the brakes on its aggressive rate hikes to prevent a deflationary debt spiral from occurring. All in all, we are in a challenging period in the market, and asset prices across the board have suffered in this uncertain, inflationary environment. The sector that continues to outperform is commodities, specifically energy. It further drives home the point that it’s critical for investors to have a well-diversified portfolio to endure the volatile market we find ourselves in today. The Fed is trying to navigate a *“softish”* landing for the economy as they raise rates to fight inflation in a period of slowing economic growth. We shall see if they will be able to handle the turbulence and successfully crash land, or if they will capitulate and provide a parachute for this falling market.  ***A “Stablecoin” Implodes and Drags Bitcoin’s Price Down With It*** It has been a memorable past two weeks in the Bitcoin world. Swan CEO Cory Klippsten has been [publicly warning](https://www.coindesk.com/video/recent-videos/its-a-confidence-game-swan-bitcoin-ceo-on-stablecoin-ust-briefly-losing-its-peg/?utm_campaign=Swan%20Private%20-%20Market%20Update%20%239%20-%205%2F20%2F22%20%28R8c47E%29&utm_medium=email&utm_source=MASTER%20-%20Swan%20Private%20Client%20Services%20-%20Insight%20distribution%20list%20-%20Updated%3A%205-13-22&_kx=FAUB4FjEgpsFMq9MMJVRXPUD37ZzQ49LwpY4MrmAhD6tyBqD88P_LPIlRyL1J1Jb.KzLKES) about the risk of the algorithmic stablecoin, Luna/UST, imploding since late March. The elaborate Ponzi scheme finally blew up last week in spectacular fashion when UST broke its peg. (read full post-mortem linked below) On May 5th, Luna/UST was a top 10 cryptocurrency with a combined market capitalization of over $50 billion. By May 13th, Luna/UST’s combined market capitalization had crashed to $1 billion, down -99%. Over $50 billion dollars worth of wealth – destroyed in days. ![](https://www.datocms-assets.com/56652/1653575508-screen-shot-2022-05-26-at-10-31-34-am.png?auto=format) During the collapse, the Luna Foundation Guard reportedly sold an estimated 80,000 BTC ($2.3 billion) from its LFG reserves in a failed attempt to save its peg, tanking Bitcoin’s price in the process. ​Due to the broader macroeconomic backdrop, the Luna/UST collapse, and general fear in the market, Bitcoin currently sits at $28,876, down -19.38% since our last market update. It has traded in a range of $29,000 - $31,000, which has shown to be a key support level the previous two times Bitcoin has seen heavy selling pressure.  ![](https://www.datocms-assets.com/56652/1653575565-screen-shot-2022-05-26-at-10-32-31-am.png?auto=format) With the Luna/UST fiasco alone resulting in billions of [Bitcoin being sold](https://www.swanbitcoin.com/satoshi/?gc=market-update-9&utm_campaign=market-update-9), it’s quite impressive that Bitcoin was able to absorb the heavy selling pressure and find a price floor of around $30,000 in that environment. During bear markets, it’s important to remember that blow-ups like this, of obvious frauds and scams, need to happen before we can continue onto the next bull run. This is true for leverage as well. During the seven days around the Luna/UST crash, the volatile price action liquidated a combined $2.69 billion dollars of Bitcoin long positions.    ![](https://www.datocms-assets.com/56652/1653576177-screen-shot-2022-05-26-at-10-41-00-am.png?auto=format) In the long term, it’s a good thing to wash out these overleveraged traders and have their bitcoin transferred over to long-term investors to build a healthy base of convicted holders to begin the next bull cycle. This has been the long-term trend of Bitcoin observed over the years. Bitcoin finds support and consolidates at higher levels than the previous yearly low.  Although Bitcoin technically wicked down below 2021’s low during the Luna/UST crash, it has now found support above it. ![](https://www.datocms-assets.com/56652/1653576415-screen-shot-2022-05-26-at-10-45-16-am.png?auto=format) Outside the price action, we continue to see steady news of building throughout the Bitcoin industry. Block Head Jack Dorsey announced Block’s new initiative to develop an open-source bitcoin mining ASIC chip. One of the reasons cited was *“to cut back on concentration around Chinese manufacturers of Bitcoin mining ASIC chips.”* Another product release occurred when CoinCorner announced the Bolt Card, a new NFC (near-field communication) card that works like the tap function of a VISA card but on the Lightning Network. It makes it easier to make in-person payments at stores using the Lightning Network.  In more exciting news, one of the largest landowners in Texas, Texas Pacific Land Corporation, and Bitcoin mining company JAI Energy have announced a strategic alliance to develop a 60 MW facility in West Texas. Texas Pacific Land Corporation owns around 880,000 acres of land in Texas. On the regulatory front, the Financial Accounting Standards Board unanimously voted to consider setting clear rules for companies that hold Bitcoin regarding accounting and reporting procedures. The current rule as it stands makes Bitcoin less attractive from an accounting perspective for companies who hold Bitcoin on their balance sheet. Currently, accounting rules cause companies to take charges when prices move lower but do not allow them to mark their holdings higher when prices rise. If accounting treatment becomes more clear and less onerous, it should make it incrementally easier for companies to hold Bitcoin on their balance sheets. Lastly, President Buykele welcomed 32 central banks and 12 financial authorities to El Salvador *“to discuss financial inclusion, digital economy, banking the unbanked, El Salvador’s Bitcoin rollout and its benefits in the country.”* We now have institutions from 44 different countries being educated by a President of a sovereign nation on why they should consider adopting Bitcoin for their respective countries.   Despite Luna/UST failing miserably and causing panic in the market, Bitcoin continues to truck along, working exactly as intended since day 1. It’s another example of Bitcoin’s antifragility in that it was able to function perfectly while a top 10 cryptocurrency went to zero within days. In many ways, we should be grateful that Luna/UST imploded before it grew to become an even larger systemic risk.  In the short term, Bitcoin’s price will continue to remain volatile as it weathers the same turbulent macro environment that every other asset is currently experiencing. In the medium to long term, the risk of Luna/UST blowing up is now behind us, the leverage has been cleared out, and Bitcoin remains an increasingly adopted asset that functions outside the traditional financial system with near-perfect 99.99% uptime.  ### Market Overview ![](https://www.datocms-assets.com/56652/1653576490-screen-shot-2022-05-26-at-10-47-52-am.png?auto=format) If you are interested in learning more about Swan Private to receive Bitcoin advisor services [click here](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9). *This report was originally sent to Swan Private clients on May 20th, 2022.* [*Swan Private*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9) *guides corporations and high net worth individuals globally toward building generational wealth with Bitcoin.* [*Learn more and schedule a call with our team here*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9)*.*  *Benefits of Swan Private include:*  - *Dedicated account rep accessible by text, email, and phone* - *Timely market updates (like this one)* - *Exclusive monthly research report (Insight) with contributors like* [*Lyn Alden*](https://www.lynalden.com/swan-bitcoin/) - *Invitation-only live sessions with industry experts (webinars and in-person events)* - *Hold Bitcoin directly in your Traditional or Roth IRA* - *Access to Swan’s trusted Bitcoin experts for Q&A* - *Get more information*[ *here*](https://www.swanbitcoin.com/private/?gc=market-update-9&utm_campaign=market-update-9) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Dark Moon: The Inevitable Collapse of Luna - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/dark-moon-the-inevitable-collapse-of-luna/ Luna/UST went from a collective market capitalization of ~$50 billion to now down 99%. The collapse of the Luna/UST Ponzi scheme occurred even faster than anyone expected, but this implosion was perfectly predictable. --- **Cory Klippsten and Sam Callahan** · May 27, 2022 · Updated June 27, 2024 Since late March, I have publicly warned our clients and the broader Bitcoin community about the impending collapse of the cryptocurrency Luna and its native stablecoin, TerraUSD (UST). [Post on X](https://twitter.com/coryklippsten/status/1509665801875255296?s=20&t=4p0Z2c94jRb17NByd79tAQ) [Post on X](https://twitter.com/coryklippsten/status/1513325251387486212?s=20&t=4p0Z2c94jRb17NByd79tAQ) Barely more than a month after I raised the alarm, Luna/UST went from a collective market capitalization of ~$50 billion to now down 99%. The collapse of the Luna/UST Ponzi scheme occurred even faster than I expected, but this implosion was perfectly predictable. This was not a Black Swan event. It was a White Swan event. Several market participants, including myself, Lyn Alden, Kevin Zhou, and Adam Back, identified critical flaws in Luna/Terra’s mechanism design that made it susceptible to a hyperinflationary *“death spiral.”* Anyone who has studied the history of currency pegs understood where this trainwreck was headed. Furthermore, anyone who has seen other algorithmic stablecoins implode in the past, [like Iron Finance](https://ciphertrace.com/analysis-of-the-titan-token-collapse-iron-finance-rugpull-or-defi-bank-run/) or Luna founder Do Kwon’s previous failed attempt, [Basis Cash](https://www.coindesk.com/tech/2022/05/11/usts-do-kwon-was-behind-earlier-failed-stablecoin-ex-terra-colleagues-say/), knew that this crash was inevitable given the intrinsic flaws of the Luna/Terra design. Decentralized algorithmic stablecoins are an oxymoron and an impossibility. As shown below, they have a history of being anything but stable, as they are always open to an attack. ![](https://www.datocms-assets.com/56652/1653675575-unnamed-2.png?auto=format) As we continue to receive many questions about this, I decided to write this explainer about currency pegs, stablecoins, and the related risks they have on the broader cryptocurrency market. I hope it will clarify how and why the Luna/Terra Ponzi collapse happened, and what it means for Bitcoin moving forward. But before we get into the Luna/Terra debacle, let’s start by looking at traditional currency pegs, why countries turn to them, and what risks can arise. By studying currency peg failures of the past, we can better understand how Luna/UST collapse was all but assured.  ### What's a Currency Peg? A currency peg is a policy where a nation pegs its currency at a fixed exchange rate to a foreign currency, a basket of foreign currencies, or an asset like gold to stabilize a local currency and promote the free flow of trade.  Currency pegs are common in emerging markets where local currencies are more likely to be unstable, making it more difficult for local business planning, investment, and trade. Currencies are primarily pegged to a more stable currency, such as the dollar or the euro, to create stability between trading partners and allow investors from developed countries to access smaller capital markets with decreased risk. Furthermore, a pegged currency can reduce volatility and exchange rate risk, allowing individuals and businesses to focus on their pursuits instead of worrying about the stability of their local currency.  Today about 20 countries have their local currencies fixed to the US dollar, with a famous example being the Hong Kong Dollar. Countries peg their currencies to the dollar because it is the world reserve currency, is widely used in international trade, and is the most stable compared to other fiat currencies. These currency pegs help import some of the stability of the dollar and also help to promote trade, but the hard part is not pegging the local currency; it's maintaining the fixed peg as market dynamics change.  ### The Problem with Fixed Currency Pegs When a central bank commits to a currency peg to a foreign currency, they use foreign exchange reserves (FX reserves) to back the peg. FX reserves consist of assets denominated in a foreign currency such as deposits, bonds, Treasury bills, and other government securities.  If demand for the currency falls and the peg drops, then the central bank will buy its local currency by selling its FX reserves to support the peg. Suppose the peg rises as demand for the local currency increases. In that case, the central bank will release more of its currency into the market, increasing the supply and reducing the exchange rate. This is how a central bank maintains a fixed exchange rate in response to fluctuations in the supply and demand of its currency.  One important caveat with a fixed currency peg is that a pegging country must give up its monetary policy autonomy in order to stabilize its local currency and increase trade. This is often referred to as the Mundell-Fleming Trilemma or *“the Impossible Trinity”*. This trilemma explains a central bank’s options when it considers its monetary policy, it can 1.) set a fixed exchange rate, 2.) allow free flow of capital without a fixed exchange rate, or 3.) have an independent monetary policy.  The trilemma here is that you can only have 2 out of the 3 at any one time. **Mundell-Fleming Trillema** ![](https://www.datocms-assets.com/56652/1653675728-unnamed-3.png?auto=format) When Emerging Markets suffer from inflation and instability, many decide to peg their currency to a more stable currency (e.g., dollar, euro), while allowing for a free flow of capital, sacrificing their monetary policy autonomy in the process. This becomes a problem when the economic conditions of the two countries in the currency peg scheme are not in sync. For example, if economic conditions in the US and a pegging country deviate, then applying US monetary policy can exacerbate the problems in the pegging country, exposing it to a currency peg that is too high or too low. **In other words, in a fixed rate environment, a pegging country cannot independently dictate its monetary policy to respond to domestic economic conditions without threatening its currency peg**. If a country has pegged its currency to the dollar, its interest rate policy has to follow the Federal Reserve’s policy, even if it harms its domestic economy.  This trilemma leads to inherent risks when a country has a fixed exchange rate with a foreign currency and then experiences deteriorating economic conditions domestically. They are limited in their tools to both protect the currency peg and respond to domestic economic shocks. To make matters worse, when a peg comes under pressure and the currency begins to depreciate, it opens the doors for opportunistic speculators to short the currency, which adds more inflationary pressures to the already weak currency. This dynamic can lead to a scenario where a currency peg breaks, the central bank runs out of its FX reserves to support the peg, the local currency depreciates rapidly, and a full-blown currency crisis ensues. ### When Currency Pegs Fail... This is precisely what we’ve seen play out throughout history with fixed currency pegs. When asymmetric shocks and disparities between the economies of the currencies involved with a currency peg occur, we’ve seen the pegs fail spectacularly.  One of the most well-known examples of a currency peg failing is when George Soros *“broke the Bank of England”* in the early 1990s. The BOE had recently changed policy regimes and had fixed its currency at a new high rate. George Soros thought the British pound was overvalued and that the BOE didn’t have sufficient bank reserves to defend the new peg, so he built a massive $10 billion dollar short position on the British pound.  Soros was right. The BOE tried to support the currency peg and drained its FX reserves, but the FX reserves were insufficient. By the end of the ordeal, the British pound would devalue 25% against the dollar, and Soros would make over $1 billion on the trade. Another example of a currency peg failing was the Thai baht in 1997, which sparked the Asian Debt Crisis. After four decades of economic growth, Thailand’s economy started to slow considerably. Due to the deteriorating economic conditions, the Thai baht faced pressures to depreciate. The central bank tried to defend the peg it had maintained for nearly a decade, but it was eventually abandoned. The baht would go on to lose 60% of its value against the dollar, leading to a rampant wave of currency speculation across Southeast Asia.  Those were two famous examples, but over the last several decades there have been many more instances of currency pegs breaking followed by rapid currency devaluations. The charts below show 16 times from 1995 to 2016 when currencies broke their pegs and suffered severe currency devaluations shortly after. **Most Fixed Currency Pegs Meet the Same Fate** ![](https://www.datocms-assets.com/56652/1653686632-screen-shot-2022-05-27-at-5-23-15-pm.png?auto=format) The main takeaway here is that it’s extremely difficult, if not impossible, to maintain a fixed currency peg when the economies of the two linked currencies experience different challenges and asymmetric shocks. **Central banks have struggled to maintain fixed currency pegs for decades, and have mostly failed. It’s folly to attempt to create artificial stability through a fixed currency peg in a world that is inherently unstable. It’s not a question of if a fixed currency peg will fail, but when.** Despite this long track record of failure, some cryptocurrency founders think they can succeed where central bankers have failed – with stablecoins. ### Stablecoins: What Are They? Stablecoins are best thought of as digital bearer assets that run on public blockchains that aim to peg their price to sovereign fiat currencies to inherit their price stability.  Over time, stablecoins have grown in both their usage and variety. According to Messari and Coingecko, the global stablecoin market reached nearly $175 billion dollars in March 2022, before UST imploded.  ![](https://www.datocms-assets.com/56652/1653676263-unnamed-5.png?auto=format) In the beginning, these stablecoins were primarily used by traders to take advantage of their lack of volatility when trading in/out of volatile native digital assets. Now stablecoins are used in emerging markets for people to gain access to dollars, and within various crypto protocols to facilitate leverage schemes disguised as financial innovation.  Stablecoins have experienced explosive growth over the past couple of years and from that growth, three different forms of stablecoins emerged: 1. **Fiat collateralized** - these are backed 1:1, typically by dollars or dollar-equivalent assets in a bank account. You can redeem these coins for dollars held in a bank account and vice versa. (ex: USDC, USDT)  2. **Crypto overcollateralized** - another digital asset backs these over the dollar amount of the stablecoin, and in return for depositing, a trader gets a minted stablecoin back. (ex: Maker DAI, BitUSD) 3. **Algorithmic non-collateralized**  - no collateral backing; instead there is a stabilization mechanism in which the supply is expanded when the peg is too high, and the supply contracts if the peg is too low. (ex: UST, FRAX) Stablecoins like USDT and USDC are theoretically fully backed 1:1 by assets in a bank account, so their pegs are much more stable. Other forms of stablecoins are not backed by fiat, and as a result, they are much less stable, and their pegs are more challenging to maintain. Algorithmic stablecoins are the most experimental and risky of the group because the peg is not backed by anything at all but is rather actively managed by an algorithm that reacts to market forces (changes in supply and demand). This is the stablecoin category that Luna/Terra falls into.  ### The Luna/UST Mechanism Design The Terra algorithmic stablecoin system was designed as follows: Luna was the governance token of the Terra system and acted as the collateral for the TerraUSD (UST) stablecoin. Terraform Labs (was the centralized foundation responsible for bootstrapping the system and providing liquidity when needed. UST was designed to be redeemable for $1 dollar worth of Luna and vice versa. This was the mint/burn mechanism that would manage the supply of Luna/UST to maintain the $1 peg. For example, if UST rose $0.10 above its peg, then market participants would be incentivized to burn $1 worth of Luna and mint 1 UST, collecting $0.10 profit, inflating the UST supply, and bringing down the peg back to $1 in the process. This also reduced the Luna supply, bolstering its price. If UST dropped $0.10 below its peg, then market participants would be incentivized to burn 1 UST and mint $1 dollar worth of Luna. They then could choose to hold the redeemed Luna or sell it for $1 to collect the $0.10 profit. This would reduce the supply of UST and raise the peg back to $1. These arbitrage opportunities are what incentivized market participants to maintain the Luna/UST peg…for a while. ### The Problem with Luna/UST Problems start to arise when the market cap of Luna does not keep up with the market cap of UST. If demand for UST outpaces Luna, and the price of Luna falls, then UST could become less *“backed”* by Luna, and the peg would be put at risk. In response to this design vulnerability, Terraform Labs had to incentivize UST holders to not redeem their UST for USD because, in that scenario, the peg would drop below $1, and arbitrageurs would be incentivized to defend the peg by burning more UST and minting more Luna, which would crash the price of Luna even more as its supply inflated. This dynamic would further put the Luna/UST peg at risk. It would create a feedback loop where UST and Luna investors begin selling in concert, creating a death spiral. To overcome this, Terraform Labs created artificial demand for UST by offering a 20% yield on UST in the Anchor Protocol, which was also built by Terraform Labs. This yield was primarily funded by Terraform Labs through sales of their Luna token treasury. To avoid collapse, Terraform Labs would need to continually provide funds to the yield reserve to pay the 20% yield to UST holders so they wouldn’t burn their UST for Luna or USD. This occurred in mid-February when the yield reserve was topped off with a fresh $450 million dollars to continue the charade. ![](https://www.datocms-assets.com/56652/1653676500-unnamed-6.png?auto=format) Before the attack, the peak total value locked inside the Anchor Protocol was over $14 billion. This was obviously not a sustainable operation. The yield reserves continually were being drained to fund the 20% Anchor UST yield to create demand for UST. To make up for the rapidly expanding UST supply and the inherent fragility of the pegging mechanism, Terraform Labs created the Luna Foundation Guard (LFG) when it donated $4 billion dollars worth of Luna and [raised $1 billion dollars in a private token sale led by Jump Crypto and Three Arrows Capital](https://jackofalltechs.com/2022/02/23/luna-foundation-guard-raises-1-billion-to-safeguard-ust-dollar-peg/). LFG’s purpose was to buy large amounts of bitcoin as a defense mechanism in the case of an emergency. If market instabilities occurred and the peg became at risk, they would sell these bitcoin reserves to support the price of UST if the peg broke downwards, much like an Emerging Market central bank sells its FX reserves to support its currency peg if it breaks below the fixed exchange rate. According to the Luna Foundation Guard, these were the assets in their reserve before the crisis began.  [Post on X](https://twitter.com/LFG_org/status/1526126703046582272?s=20&t=4p0Z2c94jRb17NByd79tAQ) This Ponzi-like system was the perfect setup for an opportunist short seller who identified the weakness of the pegging mechanism and made a bet that Terraform Labs would not be able to defend the peg if it broke with substantial volume. ### The Crash From April 7th to May 7th, things started to break down for Luna/UST when the general market took a downturn, and the price of Luna had dropped ~30% from $108 to $76 per coin. ![](https://www.datocms-assets.com/56652/1653676702-unnamed-8.png?auto=format) Due to the UST supply rapidly expanding from investors attracted to the 20% yield on Anchor Protocol, concerns emerged around Luna effectiveness as a collateral given its downward price action. This doubt led to investors selling UST due to fear that they would not be able to get full redemption value due to Luna’s price action. The peg initially broke on May 8th but was briefly restored. This set the stage for an epic short opportunity. Similar to how George Soros bet against the Bank of England in the 1990s, a short seller bet that Luna/UST Ponzi was unsustainable and started to attack its peg. They first borrowed 100,000 BTC from a large exchange and went short. They then made a $1 billion UST deal OTC and systematically began selling UST, further putting pressure on the Luna/UST peg. ![](https://www.datocms-assets.com/56652/1653676746-unnamed-9.png?auto=format) This led to a classic bank run in the Anchor protocol as investors all began trying to withdraw their UST from Anchor at once. Investors panicked, and billions of UST deposits were withdrawn from the Anchor Protocol in mere hours. ![](https://www.datocms-assets.com/56652/1653676777-unnamed-10.png?auto=format) These panicked users withdrew their UST from Anchor, sold their UST, and redeemed it for Luna. Each user who sold then had a choice to make: 1) Hold onto their Luna, whose supply was rapidly inflating as the price was crashing, or 2) sell their Luna for dollars. Most chose the latter. At this point, that same short seller began selling the rest of their UST holdings, some $650 million dollars worth. This caused the Luna/UST peg to break significantly, inciting even more panic. The result was a rapid decline in the price of Luna to the point where UST was now no longer fully collateralized by Luna. A classic death spiral then ensued as investors ran for the exits and the price of Luna and UST fell simultaneously. It was here that LFG stepped in by allegedly selling their Luna and Bitcoin reserves to buy up UST in an attempt to stop the bleeding. However, as the price of Luna and UST fell, so did the price of Bitcoin as the [LFG allegedly sold tens of thousands of their bitcoin](https://twitter.com/LFG_org/status/1526126703046582272). (Note: It is still unknown if they actually sold the bitcoin).  [Post on X](https://twitter.com/LFG_org/status/1526126716388749313?s=20&t=4p0Z2c94jRb17NByd79tAQ) In the end, LFG’s efforts were a lost cause. Like emerging markets that drain their reserves when trying to support their fixed currency peg, LFG drained its funds, but it was not enough, and the peg still collapsed. As investors continued to sell UST in droves, this minted more and more Luna. This led to a hyperinflation event where the Luna supply increased rapidly in one day. Jimmy Song wrote [this thread](https://twitter.com/jimmysong/status/1524778755947896838) that reported on Luna’s hyperinflation in real-time. As a result, the supply of Luna went from around 725 million to 6.9 trillion, or almost a 1,000,000% increase, in one day. ![](https://www.datocms-assets.com/56652/1653679957-unnamed-13.png?auto=format) At this point, the gig was up. Luna had suffered a hyperinflationary event for the ages, the peg had collapsed entirely, and ~40 billion dollars worth of market value was destroyed in days. ![](https://www.datocms-assets.com/56652/1653676901-unnamed-12.png?auto=format) New details surrounding the Luna/UST crash continue to come out every day. There are reports of [retail investors losing life savings](https://www.wsj.com/articles/terrausd-crash-led-to-vanished-savings-shattered-dreams-11653649201), [firms reporting massive losses](https://www.coindesk.com/markets/2022/05/19/terra-backers-delphi-digital-and-hashed-lick-their-wounds-after-ust-and-luna-collapse/#:~:text=Delphi%20says%20the%20LUNA%20tokens,have%20lost%20over%20%243.5%20billion.&text=The%20collapse%20of%20the%20tokens,clean%20and%20detailing%20their%20losses.), founder Do Kwon is being [fined $78 million for alleged tax evasion](https://www.financemagnates.com/cryptocurrency/news/south-korean-agency-fines-terraform-labs-for-tax-evasion/), and there are multiple ongoing investigations alluding to evidence of large whales who dumped their positions on retail investors. Also, many unknowns still remain around whether or not LFG actually sold the bitcoin in their reserves, or if management retained possession of the bitcoin. [This Twitter account](https://twitter.com/FatManTerra/status/1528632478604349443) is currently digging into investigations around the Luna/Terra crash. I suggest following along for updates on the situation. I do not think we have heard the end of this story, and I believe more allegations will emerge about the operators and major investors of this giant Ponzi scheme. Meanwhile, the founders of Terra Luna are at it again. They are currently attempting to resuscitate the failed project by [launching Terra 2.0](https://twitter.com/terra_money/status/1530047587709067264). Why anyone would invest their money with these people again is beyond me. Unfortunately, the mom-and-pop investors are usually the ones left holding the bag in these events. Many of the large firms that invested in and marketed this coin were able to exit before the crash occurred, escaping with massive profits. Strangely, some of these whales felt the need to share this in their comments following the crash. Pantera Capital CIO Joey Krug [admitted that they had sold 80% of their Luna position](https://www.theblockcrypto.com/post/147668/terra-pantera-capital-cashed-out-80-investment-before-ust-crash) before the crash. Furthermore, Pantera Capital partner, Paul Veradittakit, seemingly bragged that they had turned their $1.7 million dollar Luna investment into around $170 million dollars. Galaxy Digital CEO, Mike Novogratz, wrote [in a letter](https://s27.q4cdn.com/973063916/files/doc_news/2022/A-Letter-From-our-CEO-Mike-Novogratz_5.18.2022.pdf) that Galaxy had “*booked profits along the way*” before the Luna collapse happened. They pumped an obvious Ponzi, and got out before the collapse. Either they knew it was a Ponzi and booked hundreds of millions of illegitimate profits, or they were too ignorant to see the obvious Ponzi dynamic and shouldn’t be managing anyone’s money. There’s no third option. From their own commentary, it appears they knew exactly what game was being played here, but simply did not care about the retail investors who would be burned in the process. We will see what investigations reveal down the road regarding these major investors and insiders involved with the Luna/UST crash. In the end, the short seller who played a significant role in collapsing the Ponzi scheme is rumored to have walked away with [over $800 million dollars](https://twitter.com/OnChainWizard/status/1524123935570382851) in profits from the trade. ### Conclusion This White Swan event is precisely why we actively warn the public about risks associated with other cryptocurrencies like Luna/UST that are marketed as promising by their promoters. A vast majority of these other *“cryptos”* have increased operational, security, and regulatory risks, and have centralized teams that control them. This becomes evident in the event of a catastrophe when their *“crypto”* turns out to be decentralization theater. Sophisticated investors involved in private token sales buy tokens at dirt cheap prices, advertise them as decentralized and secure to retail investors, pump the price up, and dump the tokens on them, making massive profits. This unfortunate event further highlights the fundamental differences between Bitcoin and every other cryptocurrency. There are no private token sales or complex yield schemes involved in Bitcoin. Only Bitcoin is decentralized. Only Bitcoin is leaderless. Only Bitcoin is secure. Only Bitcoin has proven to maintain its value over the long term. [Post on X](https://twitter.com/coryklippsten/status/1529581283637989376?s=21) The ramifications of the Luna/UST blowup will likely have long-term consequences for the broader crypto and stablecoin industry. The SEC already doubled its crypto enforcement team last month and specifically [mentioned the risk of stablecoins and DeFi](https://www.sec.gov/news/press-release/2022-78) as part of the reason. > With stablecoins, we see run risks, which could threaten financial stability, risks associated with a payment system and its integrity and risks associated with increased concentration if stablecoins are issued by firms that already have substantial market power,...We definitely see significant risks. > > — [Janet Yellen](https://blockworks.co/terra-turmoil-adds-fodder-for-secretary-yellens-concerns-over-stablecoins/), US Treasury Secretary This Luna/UST fiasco will likely bring the industry under regulatory scrutiny in an effort to protect retail investors. It's important that regulators create a responsible regulatory framework that does not stifle innovation or conflate Bitcoin with the rest of the broader cryptocurrency industry. The truth is the history of currency pegs foreshadowed what would occur with Luna/UST. From the Bank of England to the Bank of Thailand to now Luna/UST, fixed currency pegs are nearly impossible to maintain in this highly complex and rapidly changing world. It was a mixture of hubris, arrogance, greed, and ignorance that led this doomed idea to get off the ground in the first place. We are fortunate the scheme blew up before it grew larger and became more of a systemic risk. [Post on X](https://twitter.com/coryklippsten/status/1520803922926981120?s=21) Hearing the stories of retail investors losing their life savings has left a bad taste in the mouths of many people, both Bitcoin supporters and critics alike. As a member of the Bitcoin industry, I will continue to warn people of the risks of the broader cryptocurrency industry to help preserve their wealth and help them avoid these outcomes. The risk of a major stablecoin blowing up is now behind Bitcoin. It has survived another exogenous threat, and it will continue to do precisely what it was designed to do since its very first block.  Swan Bitcoin provides recurring buys, savings plans, [instant buys](https://www.swanbitcoin.com/satoshi/?gc=Dark-Luna-Moon&utm_campaign=Dark-Luna-Moon), [Private Client](https://www.swanbitcoin.com/private/?gc=Dark-Luna-Moon&utm_campaign=Dark-Luna-Moon) services for businesses and HNWI, Advisor services for financial advisors, and world-class [Bitcoin education](https://www.swanbitcoin.com/canon/?gc=Dark-Luna-Moon&utm_campaign=Dark-Luna-Moon). ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Beware of Ponzi Tokens: A Hex On You - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/when-investing-in-crypto-beware-of-ponzi-tokens/ Of the 19,000 listed crypto projects, 99% of them are scams to enrich the person who created them. The Hex token, and Richard Heart, are no different. --- **Ryan Maestro** · June 2, 2022 · Updated June 6, 2024 ### Why Do So Many Crypto Tokens Exist? Here’s a bold statement: of the 19,000 crypto projects listed on CoinMarketCap.com, 99% of them are scams to enrich the person who created them. There are even token-generating websites out there that can create one for you for only $40. Of the remaining 1% that are not technically scam projects because they actually provide some service or have some utility to other crypto projects, often the project’s token itself is useless to an investor. This is because revenue the protocol generates doesn’t accrue to the token holder (a few do, of course). These tokens exist, again, to compensate the team’s developers and early venture capitalists unloading onto the retail *“*[*Coinbase crowd*](https://www.swanbitcoin.com/bitcoin-vs-altcoins)*.”* ### Ponzinomics: When Supply Meets Demand The most blatant [scam tokens](https://www.swanbitcoin.com/dark-moon-the-inevitable-collapse-of-luna/) rely on *“Ponzinomics.”* Advertised with a high APY in like kind, but with no revenue generated from the project itself where your return depends solely on a continuous flow of newly minted tokens. In other words, the token is constantly inflated. At some point, to collect one’s winnings, one has to take their original tokens plus the newly minted ones back to the exchange to sell them to the next buyer. Now imagine that scenario happening by the thousands. It can work for a while, but eventually the inflation catches up if token printing is its only feature.   It becomes a classic exercise every student learns the first week of Economics 101: supply and demand. If there are too many tokens that overwhelm buyers, the price will decrease. If the project has a good marketing or a shilling campaign, they can increase demand with a steady stream of buyers ready to lap up these excess tokens for a while. Eventually though, the token will run out of fresh buyers and the end result is always the same: the token goes to zero and the last set of buyers are left holding the bag.  ### Not Technically Ponzi Schemes The crafty thing about these new Ponzi projects is that they don’t legally qualify as technical Ponzi schemes as specified by the SEC because new investor money isn’t directly flowing to another investor with a 3rd party asset, such as the U.S. dollar, as it was with, say, Bernie Madoff. Instead, these Ponzi tokens are created out of thin air, then sold to the masses, and the only thing that changes is the story behind it. With the now infamous Bitconnect, returns were supposedly backed by a trading bot. OneCoin was marketed as an alternative to Bitcoin and token packages came with educational trading materials. With Wonderland and the Ohm forks, they were marketed as centralized bank reserve assets where one exchanged a valuable asset for a token that supposedly earned 89,000% APY. And with Hex, it is marketed as a ‘certificate of deposit’ that earns 38% a year.  ### Hex Crypto Hex is a great example of a Ponzi project that hasn’t gone to zero yet and I’ve written extensively about its underlying mechanics in detail on [my website](https://wantfi.com/richard-hearts-hex-token-is-a-brilliant-scam.html). What follows are the distilled major points that have led to a longer shelf life for it than most.  ### Figurehead The founder, Richard Heart, is a very colorful person. He’s a master marketer (prior to crypto he was in the spamming business) who uses various social media platforms to market Hex and his eternally delayed subsequent project, the PulseChain Ethereum fork.  You’ll see him wearing outlandish outfits with top hats and sitting on a throne surrounded by Louis Vuitton automatic watch winding cases filled to the brim with Rolexes while he debates crypto influencers on why Hex is not a scam. You’ll see videos of him driving around in his Ferrari and a mini documentary showcasing the crafting of his ruby enshrined Hex ensemble that cost who knows how many hundreds of thousands of dollars to procure. You’ll also see the 555 carat black diamond that he recently bought at auction. Of course most seem to miss the point that all those luxury goods that Richard shows off and attracts viewers with weren’t obtained from *investing* in Hex, but from *selling* Hex to others. It’s hard to find a better example of a person who seeks as much validation from total internet strangers as he does, but it seems to work and his followers worship him and will buy whatever he’s selling — twice.  In fact, he came up with the concept of a *“sacrifice”* where it says right on the website that when you donate your crypto to an address he controls, that you are to expect nothing in return. He has done this twice now and thousands of people gleefully dumped their Ethereum and other crypto assets into his wallet. In reality, donors are scheduled to get more worthless tokens on the new forked chain, but he *is* at least being honest about their value!  ### Community His social media strategy developed over many years before he came up with Hex, so he already had tens of thousands of followers ready to buy it when launched. These early entrants knew that their bags would fill faster if they were to *“onboard”* new users into it after them, so therefore the Hex launch came with its very own shilling army. It’s hard to come across a cryptocurrency topic on social media without one of these foot soldiers shilling it into the conversation about how great it has been for them whether it has or not. The earliest entrants who got in on the ground floor became part of the marketing effort and proudly submitted pictures of their lambos and other luxury goods purportedly paid for with Hex winnings.  ### The Key Hex Feature Usually Ponzi projects don’t last more than a few years, but Richard Heart put a lot of thought into Hex’s design. He realized that selling is the enemy of a Ponzi project because when supply overwhelms demand and the price plummets, buyer interest fizzles out and the token never recovers. Crypto speculators want the token that *“moons”* and there is no shortage of speculators ready to jump on the next project headed to the sky. Therefore if he could figure out a way to reign in those pesky sellers, the project could have more longevity. His solution was to market his project as a *“certificate of deposit”* where to get the rewards in the form of additional tokens, one has to lock up their funds for a period of time. Of course, the longer the lockup period one chooses, the more yield one receives. If they unlock early, they are heavily penalized and can lose much of what they put in. With the maximum lockup period being over 15 years, he’s probably just hoping you’ll just forget about your tokens entirely, but likely the project will be a distant memory well before then anyway and it won’t even matter. He has bamboozled thousands into thinking that they can have a lifestyle similar to his with buzzwords that Hex can create *“generational wealth”* through *“delayed gratification.”* The only generational wealth being created here is for Richard Heart who managed to convince thousands of people to buy a digital token created from nothing. It’s hard to find that elusive product with a 100% profit margin, but Richard Heart managed to figure out a way to sell air and it doesn’t have the legal strings attached to it like his spamming business did.  ### Centralized Ownership Even though he received tens of millions of dollars in Ethereum selling Hex through the rolling year long initial coin offering, he still decided to use a loophole engineered only for himself, to take those same assets used in the purchase and turn around and buy millions of Hex tokens for himself. He did so much of this that today he holds almost 90% of the entire supply of Hex. Instead of denying it, he plays a lateral that Satoshi Nakamoto also owned a large portion of Bitcoin in the beginning and that it therefore makes Hex similar to Bitcoin in some roundabout, non sequitur way.  ### The 38% *"Interest Rate"* All those superfluous tokens that Richard Heart owns is key for keeping the purported interest rate at 38%. If you click around on the website you will see that it is mentioned that the inflation rate of the Hex supply is *only* 3.69%, so how does a 3.69% inflation rate translate to 38% APY? It’s a sleight of hand because only tokens locked up get to earn interest. So, by keeping his 90% stash unlocked, all the inflation interest that would accrue to him instead flows to all the other holders. He could have doubled his token stash and then doubled the purported interest rate, it’s not magic. As a result, the circulating supply controlled by the retail investors is growing by the same 38% (delayed until the time lock ends), which is a lot of newly minted tokens for the market to absorb. ### The Hex Ponzi Is Already Fizzling Out The problem with Ponzis is that usually by the time they come to your attention, even if you wanted to jump in and jump out before it collapses, it’s usually too late and you are one of the last buyers. Hex is already down 90% from its peak price back in September with no signs of slowing down so anyone who decided to jump in since then likely lost money in providing exit liquidity to earlier entrants. It could still pump up from here if the marketing engine revs up, but with the retail supply growing 38% (on average) each year, more and more participants are necessary to be brought into the scheme to even keep the price level.  And with the Pulsechain fork set to launch sometime soon, the count of the Hex tokens will double again, which will further negatively affect the price as Ponzi partcipants decide between the Ethereum or Pulsechain version.  The key takeaway from this is that if a token’s only utility is generating more tokens to compensate investors who’ve bought in, it’s a Ponzi and you’ll likely lose money in the end.  ***Update: On July 31st, the*** [***SEC charged***](https://www.sec.gov/news/press-release/2023-143) ***Hex Founder Richard Heart with Misappropriating Millions of Dollars of Investor Funds from Unregistered Crypto Asset Securities Offerings that Raised more than $1 Billion.*** Swan provides Bitcoin recurring buy plans, [instant buys](https://www.swanbitcoin.com/satoshi/?gc=Hex-On-You&utm_campaign=Hex-On-You), [Private Client](https://www.swanbitcoin.com/private/?gc=Hex-On-You&utm_campaign=Hex-On-You) services for businesses and HNWI, Advisor services for financial advisors, and world-class [Bitcoin education](https://www.swanbitcoin.com/canon/?gc=Hex-On-You&utm_campaign=Hex-On-You). ### Ryan Maestro Ryan Maestro is an investment strategist at WantFI.com and writes about using traditional investing and the new cryptocurrency frontier to achieve financial independence. He holds a bachelor's degree in mathematics, a master's degree in economics, and a master's degree in computational finance and has worked in the financial services industry for over a decade. # Bitcoin and the One-Hit Wonder Altcoins - Swan Bitcoin URL: https://www.swanbitcoin.com/education/bitcoin-and-the-one-hit-wonder-altcoins/ Don’t get stuck holding the bags of the one-hit wonders of each Bitcoin bull cycle. Instead, hold onto the asset that you know will be a top player in this cycle, the next cycle, and every single cycle to come: Bitcoin --- **Sam Callahan and Cory Klippsten** · June 14, 2022 · Updated June 26, 2024 Bear markets have a way of separating the cream from the crop. > When the tide goes out, you see who is swimming naked. > > — Warren Buffett, Berkshire Hathaway This phrase has never been more true than it is today when it comes to the broader cryptocurrency industry. Everything was going great for altcoins when liquidity was flowing like water, due to ultra-low borrowing costs and stimulus checks, causing speculation to run rampant. It’s easy to sell a narrative in good times but it’s not so easy in hard times. Now that the Federal Reserve has started tightening financial conditions and stimulus checks are long gone, economic conditions have deteriorated, and altcoin speculators have either left crypto altogether or are licking their wounds from the recent downwards price action. As the conditions for financial assets have worsened, altcoins have suffered significantly or have blown up altogether. A perfect example of this was the recent Luna/UST crash that destroyed nearly $40 billion in value in a matter of days. When liquidity and new buyers dried up, the Luna/UST Ponzi scheme was left bare for all to see. It’s times like these when speculators begin to have doubts about their risky altcoin investments. Unlike [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=one-hit-wonder-altcoins&utm_campaign=one-hit-wonder-altcoins), these altcoins lack the fundamental properties that would enable them to be good long-term investments like scarcity, decentralization, and censorship resistance. Many were simply beneficiaries of the easy money environment. They were able to amass large market capitalizations without any real product-market fit or use cases. The classic *“a rising tide lifts all boats”* aphorism comes to mind. No matter how fervent a believer is in a project or token, people tend to question their investment decisions when they see a bright red number staring back at them of -70%, -80%, or -90%. They begin to ask themselves questions like, *“Am I missing something here?”*, *“Is there really any long-term potential in this token?”*, and *“Will this token ever go back up to its previous all-time highs?”* Well – I hate to be the bearer of bad news, but if history is any indication, many investors will be waiting a long, long time for their altcoins to reach their previous USD all-time highs, and they will be waiting until the end of time for them to reach their previous BTC all-time highs. In order to provide some context, let’s take a look back at some of the altcoin darlings of past Bitcoin bull markets and see how they’ve performed since reaching all-time highs against Bitcoin in previous cycles. ### Methodology For this analysis, we will take a closer look at how the top 20 coins by market capitalization in each major Bitcoin bull cycle have performed against Bitcoin in the following cycle. There are three major bull cycles that have occurred so far in Bitcoin’s history. These are: 1. 2011-2013 - Bitcoin ran up 56,700% from around $2 to $1,100 at its peak. 2. 2016-2017 - Bitcoin ran up 8,595% from around $230 to $20,000 at its peak. 3. 2020-2021 - Bitcoin ran up 1,625% from around $4,000 to $69,000 at its peak. ![](https://www.datocms-assets.com/56652/1655223726-26.png?auto=format) Tradingview For this piece, I obtained historical snapshots of the top 20 altcoins each week when Bitcoin made its cycle all-time high. I analyzed when the top 20 altcoins of each cycle made their all-time high exchange rate against Bitcoin. I then revisited these same coins in the next bull cycle and looked at the highest exchange rate they made against Bitcoin in the subsequent cycle. Because I decided to use the highest exchange rate these altcoins made against Bitcoin in each cycle, you can consider this analysis as being generous to altcoins. Due to their low liquidity, many altcoins briefly made higher Bitcoin exchange rates in subsequent cycles when being pumped with low trading volume, only to fall significantly lower when priced against Bitcoin. Keep this in mind as we dig further into the data. ### 2013-2017 Altcoin Darlings The first major bull cycle peaked in 2013 at a little over $1,100 a coin. Back then, the idea of alternative cryptocurrencies to Bitcoin was a new idea. These altcoins were experimental and many were not thought of as serious projects.  Many of these altcoins gained in popularity for a brief moment and then slowly faded into obscurity. After making an all-time high against Bitcoin in 2013, here is how the top 20 altcoins of 2013 performed against Bitcoin in the next bull cycle. ![](https://www.datocms-assets.com/56652/1655224039-screen-shot-2022-06-14-at-12-27-00-pm.png?auto=format) Coingecko From above, one can see how a majority of these altcoins never made another all-time high against Bitcoin again. **The average return against Bitcoin for these coins after making an all-time high in 2013 was -73.1% during the 2017 bull run.** Only two of the top 20 altcoins ended up ever making an all-time high against Bitcoin again, XRP and Infinitecoin. Infinitecoin briefly made an all-time high against Bitcoin in 2017 when the illiquid coin randomly had a spike in trading volume on one single trading day. After that pump and dump, Infinitecoin went back down -93.6% against Bitcoin since it first made an all-time high in 2013. XRP was the only altcoin from the 2013 bull cycle to make a subsequent Bitcoin all-time high in the 2017 bull cycle. It found its second wind in making entirely false announcements about partnerships with global banks. Today the corporation that runs it, Ripple Labs, and its top executives are being charged by the SEC for conducting an unregistered securities offering and the XRP token has been delisted from all American exchanges, leaving any Americans who held it in the unfortunate position of being forced to sell at prices 80%-90% down from its all-time highs against Bitcoin. This data goes to show that it is very rare for any altcoin to make a new Bitcoin denominated all-time high in a second cycle. Most of them get pumped up initially and then their value drops precipitously against Bitcoin. Nearly all of the altcoin darlings of 2013 were completely unknown to market participants by the time the 2017 bull cycle came. They had been replaced by new altcoins with the same old promises of being a *“better”* cryptocurrency compared to Bitcoin. ### 2017-2021 Altcoin Darlings The next bull cycle began in early 2017 and saw Bitcoin soar to $20,000 a coin. During that bull cycle, we also saw an explosion in the number of altcoins as Initial Coin Offerings (ICOs) became all the rage. Altcoins became more popular than ever before during this cycle. Many marketed their tokens as improvements on Bitcoin’s perceived flaws like its scalability and functionality. The altcoins of this cycle marketed themselves as better options than Bitcoin because they were *“faster”* and could allow for things like smart contracts and DAOs. These altcoins promised that they would revolutionize entire industries but in reality, a majority were either pump and dump schemes or centralized projects with inferior technology compared to Bitcoin. Despite this, money flowed into these inferior technologies as speculators rushed in to profit from the rapid rise in the price of cryptocurrencies. What ensued was a massive speculative bubble that eventually popped in December 2017. Let’s take a look at how the top 20 altcoins by market cap of 2017 have performed against Bitcoin since making a Bitcoin all-time high in the 2017 bull market. ![](https://www.datocms-assets.com/56652/1655224144-27.png?auto=format) Coingecko This graph highlights how every single top 20 altcoin of 2017 has underperformed Bitcoin since making a Bitcoin all-time high in 2017. **The average drawdown for these altcoins against Bitcoin since making their 2017 Bitcoin all-time high is -78.2% during the 2021 bull run.** Not one of these altcoins has made a new Bitcoin all-time high again since the speculative mania of 2017. This includes *“blue-chip”* altcoins like Ethereum. Notice also how XRP failed to replicate its magic from the 2013-2017 bull cycle. XRP is down -82.9% against Bitcoin since making its Bitcoin all-time high in 2017. Although it was able to achieve a rare second Bitcoin all-time high from 2013 to 2017, it has woefully underperformed Bitcoin since then. 99% of these altcoins underperform Bitcoin from cycle to cycle, but there are always outliers in a given data set. After analyzing all the altcoins in the top 100 from 2017, I could only find two cryptocurrencies that went on to make another Bitcoin all-time high in the subsequent 2021 bull market: Dogecoin and Binance Coin. Dogecoin became a meme in the spring of 2021 as celebrities, influencers, and entrepreneurs like Elon Musk and Mark Cuban began promoting Dogecoin to retail investors. As a result, the price of Dogecoin spiked against Bitcoin to an all-time high of 0.00001190 BTC in May 2021. Since its Bitcoin all-time high, Dogecoin has gone the way of most altcoins, it is currently down -77.1% against Bitcoin. Those retail investors would have been better off simply holding Bitcoin. Binance Coin (BNB) was the other cryptocurrency to make a subsequent all-time high against Bitcoin from 2017 to 2021. BNB benefitted from the rapid adoption of the broader, centralized Binance Smart Chain ecosystem. Along with being the centralized token of one of the largest cryptocurrency exchanges in the world, this helped pump the price of the token to new Bitcoin all-time highs in 2021. Binance is now under investigation from the SEC for potentially BNB being an unregistered security. Since making its Bitcoin all-time high in the spring of May 2021, BNB is down -15.2% against Bitcoin. Like XRP, we will see if Binance will be able to recreate the magic again in the next bull run or if it will end up aging like milk against Bitcoin like all of these other cryptocurrencies. However, also like Ripple Labs, Binance now has to deal with an SEC investigation into its token. This did not pan out well for XRP investors, and we will see if it will end similarly for BNB holders or not.  Once again, an overwhelming majority of the altcoins never broke all-time highs against Bitcoin again. Investors would have had to bet correctly on two altcoins out of thousands to outperform Bitcoin’s returns. They probably would have had better odds (and a better time) simply playing roulette in Las Vegas. ### What’s Next for the 2021 Altcoin Darlings? Similar to the one in 2017, when the 2020-2021 bull run came along, many of the popular 2017 altcoins were completely forgotten as new, trendy altcoins replaced them. These altcoins went on to outperform Bitcoin in the short term as speculators and insiders pumped their prices up while selling promises and dreams of decentralized finance to retail investors. Due to their illiquid nature and smaller market caps, these altcoins serve as a beta to Bitcoin and typically outperform Bitcoin in the short term to the upside, and then underperform Bitcoin in the long term to the downside. These altcoins can be thought of as the same broken, inferior technologies as the altcoins of 2013 and 2017, just with shiny new wrapping paper and new marketing buzzwords. Instead of being sold on the dreams of ICOs and the Internet of Things as in 2017, retail investors were sold the dreams of DeFi and NFTs in 2021. If history is any indication, nearly all of these altcoins that made an all-time high against Bitcoin in the 2021 price run-up, will never make a new Bitcoin all-time high again. Due to the recent downward price action, we are already seeing signs of this altcoin death cycle playing out once more. Here’s how the top 20 altcoins of 2021 are performing against Bitcoin since making their Bitcoin all-time highs in the midst of the recent bull cycle. ![](https://www.datocms-assets.com/56652/1655224752-28.png?auto=format) Coingecko As you can see, these altcoins are following in the footsteps of the altcoins that came before them. **The average drawdown since these altcoins made Bitcoin all-time highs in the recent bull run is currently -68.5%.** I expect, just like in previous altcoin cycles, that many of the altcoin darlings of 2021 will be completely forgotten about once the next Bitcoin bull cycle begins, never to surpass their Bitcoin all-time highs ever again. ### One Hit Wonders vs an All-Time Classic Anthem There are two major takeaways from this analysis: 1. Only Bitcoin has proven to have any kind of staying power when it comes to holding its value over multiple bull cycles. 2. During each Bitcoin bull cycle, a new crop of altcoins emerges but they always end in the same bloodbath when priced against Bitcoin over the long term. Throughout Bitcoin’s history, there have been 3 bull cycles. In each bull cycle, centralized altcoins came along promising outsized investment returns and revolutions by marketing their token as a superior technology to Bitcoin. Many of these coins made Bitcoin all-time highs as they introduced their narrative to retail investors and benefited from the speculation and euphoria of the bull run. However, nearly all of these altcoins ended up being one-hit wonders. They never reclaim their glory from the past cycles and eventually fade into oblivion with nothing more than an old top 20 market cap to point to.  Whereas all of these altcoins can be viewed as pretenders with one-hit wonders desperately trying to remain relevant, Bitcoin can be seen as an all-time classic. Only Bitcoin has managed to maintain its value over multiple cycles. It has held onto the top cryptocurrency spot by market capitalization for its entire existence. It does this because it is much more than just promises and marketing. It has fundamental properties that every other cryptocurrency lacks. These are what allow it to maintain its value over the long term. If you are an altcoin investor reading this and you are having some doubts about your altcoin investment, don’t ignore that feeling, explore it. Given the data provided in this piece, it is likely that your doubts are well-founded, and it's time you learned why Bitcoin has held its value while all of these other altcoins seem to fade away with time. Don’t get stuck holding the bags of the one-hit wonders of each [Bitcoin bull cycle](https://www.swanbitcoin.com/satoshi/?gc=one-hit-wonder-altcoins&utm_campaign=one-hit-wonder-altcoins), instead hold onto the asset that you know will be a top player in this cycle, the next cycle, and every single cycle to come. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Why Bitcoin is the Path to Economic Stability - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/why-bitcoin-is-the-path-to-economic-stability/ Bitcoin’s reliability is leading the world on a path towards greater economic stability. --- **Tomer Strolight** · June 21, 2022 · Updated October 21, 2026 ### There is No Reliable Stability in National Currencies In 2021, the Venezuelan Bolivar lost 99% of its value against the U.S. dollar. Even the British Pound experienced 17% volatility in ups-and-downs relative to the U.S. dollar in the same period. In fact, when it comes to how they function, national currencies offer very little security, usability, predictability, and, indeed, stability: - None offer much predictability of their supply — and many, including the dollar, have seen massive supply increases in recent times. - None are entirely resistant from theft by crooks, or seizure from authorities. - None are fully permission-less — regulations exist that require owners to identify themselves and declare their intended uses. - All of them operate only within specific jurisdictions. - And none can have their supply verified independently — it is doubtful if even the authorities in charge of them know what supply exists. In summary, national currencies are not very stable at all. ### Yet, Bitcoin is Accused of Being Unstable *"Bitcoin is extremely volatile"* claim journalists, economists and bankers. It is no wonder that they draw these conclusions when judging Bitcoin by the standard of unstable national currencies. Consider, however, if you were on a boat that was being tossed about by rough seas and were looking at a lighthouse on the shore. That lighthouse's position would appear *"extremely volatile"* — despite the fact that the lighthouse was perfectly stable. Here is why [Bitcoin](https://www.swanbitcoin.com/?gc=bitcoin-path-to-economic-stability&utm_campaign=bitcoin-path-to-economic-stability) is actually like that lighthouse. ### Bitcoin is Profoundly Stable Every detail in Bitcoin is the very essence of stability. No matter what the world has thrown at it, Bitcoin has kept all its promises: - It has issued a precisely predictable supply exactly according to schedule. - Its security has never been breached. - It has allowed anyone in the world to use Bitcoin. - It has allowed owners to spend their coins without restrictions. - It has allowed anyone in the world with a basic computer to verify its supply for themselves - without having to trust anybody else. There have been no exceptions. Bitcoin is therefore extremely stable. ### Bitcoin's Adoption is a Migration Towards Stability When critics call [Bitcoin](https://www.swanbitcoin.com/?gc=bitcoin-path-to-economic-stability&utm_campaign=bitcoin-path-to-economic-stability) volatile, it is not mean to be a compliment. They are implying that stability is preferable to volatility. This much is correct. They are just mistaken about what stability is. Bitcoin's incredible stability and reliability is precisely what is attracting ever-growing numbers of people, corporations, institutions and governments to adopt it to ever-greater degrees. As Bitcoin's adoption increases, its value, as measured in dollars, rises profoundly — albeit with wild short-term fluctuations in its dollar-denominated price. But there is nothing about Bitcoin's actual nature that is fluctuating. Just like a lighthouse, Bitcoin remains perfectly stable. In light of all this, it is no surprise that Bitcoin is increasingly being chosen in place of national currencies. Bitcoin's steady and unbreakable assurances give the world a standard upon which we can trade with each other - across any distance, in any amount, and over any period of time. Bitcoin's reliability is leading the world on a path towards greater economic stability. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Fact Check: DARPA Funded Report on Blockchain Centralization URL: https://www.swanbitcoin.com/analysis/fact-check-darpa-funded-report-on-blockchain-centralization/ In this analysis, we examine and fact check the claims in the recent DARPA blockchain report which claims that Bitcoin’s blockchain is susceptible to centralized control. --- **Yan Pritzker and Tomer Strolight** · June 22, 2022 · Updated July 3, 2024 On June 21, 2022, a DARPA-funded [report on blockchain centralization](https://assets-global.website-files.com/5fd11235b3950c2c1a3b6df4/62af6c641a672b3329b9a480_Unintended_Centralities_in_Distributed_Ledgers.pdf) was released by Trail of Bits, a security research firm.  In this analysis, we will examine and fact check some of the claims in the report. We will focus primarily on [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=darpa-blockchain-fud&utm_campaign=darpa-blockchain-fud), as that is the only blockchain that has demonstrated true resilience to attack in real world conditions. We will also contrast the academic findings in the paper with real world tests of these theories.  There is constant research into attacks in Bitcoin space, and much of it is interesting, relevant, and worth considering. As Bitcoin’s fundamental purpose is resistance to state-level attack, the premise of new attack vectors is exciting and worthy of discussion. With the system transmitting more than a trillion dollars of value yearly, it is also constantly subject to real world conditions for attack as one of the biggest financial honeypots in the world. We concur with the report that most blockchains are centralized to varying degrees, ranging from *“decentralization theater”* to being fully centralized without any pretense of decentralization. Unfortunately, we find many significant problems with the paper’s analysis of Bitcoin. Below we will address most of the major claims in the report.  ### Claim 1 Every widely used blockchain has a privileged set of entities that can modify the semantics of the blockchain to potentially change past transactions [...] There are currently four active contributors with access to modify the Bitcoin Core codebase, the compromise of any of whom would allow for arbitrary modification of the codebase. **FALSE**. This is simply not true in practice in Bitcoin due to the fact that users running nodes, not developers, decide which code to run. There have been numerous examples of this in the past, including users who [chose to run code put out by a pseudonymous developer because they wanted a particular upgrade faster](https://bitcoinmagazine.com/culture/bitcoin-independence-day-how-this-watershed-day-defines-community-consensus) during the blocksize wars of 2017, which went against the opinions of some [highly respected Bitcoin core developers who spoke out against running it](https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2017-April/014152.html).  The code chosen by the users was run by many nodes, despite that the change was not implemented by the *“four active contributors”* claimed by the authors. Even if we focus on the most popular Bitcoin client, bitcoin-core, the claim that four people control the source code is also FALSE. A more in depth look at how changes happen in Bitcoin is available [here](https://blog.lopp.net/who-controls-bitcoin-core-/). Many other blockchains employ a forced-upgrade mechanism such as Ethereum’s difficulty bombs. In those cases, we find the claim to be largely TRUE because nodes are forced to upgrade in order to remain operational. ### Claim 2 The number of entities sufficient to disrupt a blockchain is relatively low: four for Bitcoin, two for Ethereum, and less than a dozen for most PoS networks. **MISLEADING**. The claim that Bitcoin can be disrupted by attacking the top four mining pools is flawed for several reasons: 1. Mining pools aren’t miners. Miners are a globally distributed workforce, often located in remote regions where power is cheap. Miners can (and do) easily switch pools. In fact in 2014, miners voluntarily [switched away from a pool that was gaining too much hashrate](https://www.coindesk.com/markets/2014/01/09/bitcoin-miners-ditch-ghashio-pool-over-fears-of-51-attack/). 2. The attack has to last forever. As soon as the attack is stopped, mining can continue unabated.  3. If the attack on specific pools is indeed lasting a long time, it is easy for miners to regroup on still honest pools by changing a single line of configuration. We find the claim MOSTLY TRUE for other blockchains, especially those running staking systems, as most of the stake is typically sitting at large centralized exchanges or datacenters, is in the hands of founders and [insiders who granted themselves large token distributions](https://twitter.com/messaricrypto/status/1394298624906047491), and can be used to compromise[ vote-based systems](https://www.coindesk.com/business/2022/06/20/solends-whale-liquidation-crisis-prompts-second-vote-to-reverse-emergency-powers/). ### Claim 3 For a blockchain to be optimally distributed, there must be a so-called Sybil cost. There is currently no known way to implement Sybil costs in a permissionless blockchain like Bitcoin.  **MISLEADING**. A Sybil attack (pronounced sih-bill and named after the first person diagnosed with multiple personality disorder) is one where someone may create many nodes that pretend to be honest nodes, but are actually malicious, in order to trick an honest node into accepting invalid or untrue data, or otherwise coerce its behavior by misleading it. The invention of Nakamoto Consensus (i.e. Bitcoin’s reliance on proof of work for source of truth) was literally designed to prevent Sybil attacks. Satoshi wanted any participant to be able to add a block, but choosing one user at random would be open to individuals pretending to be many users. But work cannot be faked, and this is one reason Bitcoin uses Proof of Work. Sybil attacks cannot trick a Bitcoin node into accepting a false copy of the blockchain. The node needs only a *single* connection to an honest node to be resilient to this attack due to the consensus of Bitcoin being based on the heaviest/greatest [proof of work chain being the true copy](https://bitcoinmagazine.com/guides/what-is-nakamoto-consensus-bitcoin). It does not matter if attackers take over 99.9% of the network.  There is a strong sybil cost in Bitcoin as far as mining goes: producing valid blocks requires burning real world energy. A malicious miner would have to consume significant real world energy to produce (still valid) blocks to starve the chain of transactions. A miner producing invalid blocks simply burns energy and loses money. ### Claim 4 A dense, possibly non-scale-free, subnetwork of Bitcoin nodes appears to be largely responsible for reaching consensus and communicating with miners. **MISLEADING**. The word “consensus” is not applied in this paper in the same way that Bitcoin defines consensus: i.e. that the rules of Bitcoin are followed. This causes the authors to reach conclusions that are simply not relevant to the functioning of the Bitcoin blockchain. Again, it does not matter if nodes maliciously modify traffic because the economic nodes that receive transactions verify the rules of Bitcoin, such that modified traffic will be considered invalid and thus ignored.  Consensus from this perspective is maintained at the edges (i.e. on each node that receives coins). It does not matter what happens in the middle. More on this topic is covered in the article [Bitcoin Miners Beware: Invalid Blocks Need Not Apply](https://hackernoon.com/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b).  The authors imply that attacking the network layer can allow the attacker to tamper with data transmission, but censorship (omission of data) is the only feasible attack. If a node finds that its transactions are not being included in the blockchain, it can trivially connect to other nodes that are honest/functioning. Any attacks that attempt to starve the network of data transmission must control vast areas of the Internet, and last forever to be effective.  ### Claim 5 The standard protocol for coordination within blockchain mining pools, Stratum, is unencrypted and, effectively, unauthenticated. **MIXED**. It’s true that the current Stratum protocol has a less than ideal design. Still, in real world conditions, these flaws do not impact the functioning of mining pools by and large. While someone could use the flaws of the current protocol to perform denial of service attacks on mining pools, the ultimate question must be asked: to what end? As addressed above, miners can and do switch pools on a whim if their pool is having problems. The paper also fails to mention that [work on Stratum v2](https://bitcoinmagazine.com/technical/stratum-v2-bitcoin-mining-progress) is quite advanced and includes a solution to many of these problems including encryption, authentication, and pushing more decisions about block composition to the end miners rather than trusting the pool to select and order transactions.  ### Claim 6 When nodes have an out-of-date or incorrect view of the network, this lowers the percentage of the hashrate necessary to execute a standard 51% attack **TRUE/IRRELEVANT**. The authors fail to demonstrate real world scenarios under which this matters. If a node has been eclipse-attacked (surrounded by dishonest nodes) to the point where they do not have the most up to date copy of the true blockchain, this attack has to be sustained forever until the miner is able to connect to one other honest node, at which point it will recover. This attack also implies that the blockchain has been rewritten by a malicious actor, and that this malicious blockchain is being propagated to honest nodes. The real world costs of such an attack must be taken into account. It is not enough to handwave that nation states have unlimited resources. A nation state would have to commit a significant portion of their national energy output to such an attack and sustain it in perpetuity to fight against the rest of the world’s honest miners. ### Claim 7 Bitcoin traffic is unencrypted—any third party on the network route between nodes (e.g., ISPs, Wi-Fi access point operators, or governments) can observe and choose to drop any messages they wish. **MIXED/IRRELEVANT**. Some Bitcoin traffic is encrypted (i.e. on Tor), while some is cleartext. Dropping traffic in and of itself is not an attack on Bitcoin functionality as you’d have to have sustained control over the entire network in order to prevent the propagation of every single transaction. A single connection between an honest node and an honest miner would allow the transaction to propagate. Any attack must be sustained forever to be effective. Transactions can even be sent by methods outside of the Internet (i.e. [satellites](https://blockstream.com/satellite/), [mesh networks](https://txtenna.com/), and [QR codes](https://hackernoon.com/completely-offline-bitcoin-transactions-4e58324637bd)). As soon as a transaction reaches an honest miner, the attack has been subverted. ### Claim 8 The Bitcoin Core client has a hard-coded delay of two minutes before it gossips new verified blocks to a peer.  **FALSE**. This statement is so obviously false on its face that it’s surprising that it passed review by 9 authors without anyone pointing it out. If nodes were deliberately delaying block propagation, it would increase the chance of orphaning blocks, and you would never have two blocks built on top of each other from different miners across the world less than two minutes apart. This is debunked by [real world block propagation data](https://twitter.com/murchandamus/status/1539565690205650944?s=20&t=k1wHR4tU6GxkZ6gDVTeibg). There is speculation that the authors confused block propagation with [a condition in mempool propagation which has nothing to do with this at all](https://twitter.com/OneSirMeow/status/1539526032985927681?s=20&t=k1wHR4tU6GxkZ6gDVTeibg).  ### Claim 9 Over the past year, a malicious actor (widely believed to be from Russia) used a Sybil attack to gain control of up to 40% of Tor exit nodes. The attacker used the nodes to rewrite Bitcoin traffic. **EXTREMELY MISLEADING**. There was indeed an attack on Tor exit nodes, however rewriting “Bitcoin traffic” was not part of the attack. In fact, the attack rewrote websites to change bitcoin addresses published on them. The authors provide a citation, but the [author of the report they cited](https://nusenu.medium.com/how-malicious-tor-relays-are-exploiting-users-in-2020-part-i-1097575c0cac) clarifies: “...they are primarily after *cryptocurrency related websites* — namely multiple bitcoin mixer services. They replaced *bitcoin addresses in HTTP traffic* to redirect transactions to their wallets instead of the user provided bitcoin address.” The claim that Bitcoin traffic can be rewritten is impossible based on the design of digital signatures. Bitcoin transactions are digitally signed with ECDSA signatures. It is not possible to *“rewrite Bitcoin traffic”* without making transaction signatures invalid, and thus unacceptable to the receiving nodes. It is impossible to tamper with blocks without making them invalid. ### Claim 10 The two countries with the highest percentage of non-Tor nodes, the United States and Germany, have the highest aggregate consensus influence in Bitcoin. **EXTREMELY MISLEADING**. The paper again uses a different definition of consensus from the Bitcoin protocol. It is not true that any country, or even a majority of all miners can make changes to Bitcoin consensus rules because the rules are enforced by nodes that receive payments. What the paper actually means is that a large enough actor can try to drop transactions, thus censoring them, but it only takes for that transaction to reach a single well behaved node for it to propagate properly. Case in point, the paper states “we would like to quantify the extent to which a country that unilaterally blocked all Bitcoin traffic could affect the system,” yet fails to address how Bitcoin continued to function just fine during many bans in China, which famously has an all powerful firewall. Furthermore, many nodes may be using VPNs, thus their true location may not be obvious from network analysis. ### Claim 11 21% of Bitcoin nodes are running an old version of the Bitcoin Core client that is known to be vulnerable. **EXTREMELY MISLEADING**. First, there is no way to measure the total number of nodes, because the authors can only crawl nodes that are openly listening. Second, it doesn’t really matter. The vulnerability in question would only crash the out-of-date node, after which the node operator would presumably upgrade. It is more likely that these nodes that haven’t patched a critical vulnerability are not actually economic actors (i.e. do not really receive coins regularly) and thus aren’t really part of the system per se. Many could be testing nodes, for example, run by experimenters.  As a thought experiment, if we spin up a million nodes in a cloud datacenter running an old version of the software, nothing at all about the health of the network would change. However, using the methodology in the paper, the authors would conclude that 99.9+% of the network is centralized in a single datacenter and vulnerable to being crashed. Bitcoin network topology analysis is thus largely an academic exercise with few real world implications. Companies in the Bitcoin space regularly spin up large numbers of nodes for experimentation. ### Claim 12 The majority of Bitcoin nodes have significant incentives to behave dishonestly. **FALSE**. Miners have incredible incentive to behave honestly, because otherwise they’re wasting energy which is real world expensive. For other economic nodes, e.g. those that process payments, there is no definition in this paper of what dishonestly means or how it actually affects the Bitcoin network. Nodes act in self interest to validate Bitcoin transactions that they receive.  If the definition of dishonesty is to fail to transmit data (i.e. transaction censorship), why have we not seen this in the wild, especially with state-level actors like China, which have desired to suppress Bitcoin activity in their country?  The Bitcoin system, which transfers over $1T dollars annually offers a significant honeypot for successful attacks. There are few systems of this financial magnitude, and all of them are attacked constantly, including Bitcoin. If an attack was possible, it would be tried, which we are not seeing today. Again, it is important to remember that censorship attacks are trivially defeated by transmitting a signed transaction to only a single honest mining node, no matter how many nodes the attacker controls, and this could literally be done on a handwritten piece of paper if necessary. ### Claim 13 In this report, we identified several scenarios in which blockchain immutability is called into question not by exploiting cryptographic vulnerabilities but instead by subverting the properties of a blockchain’s implementation, networking, or consensus protocol. **FALSE**. The authors have not achieved a successful description of an attack that would be able to rewrite Bitcoin history or change its consensus rules, the only two conditions that could reasonably be described as breaking “immutability.” At best, they have demonstrated incredibly improbable conditions for temporary attacks that starve the chain of blocks or otherwise censor transactions, which do not appear to be possible to sustain forever due to the real world energy costs of doing so, and are trivially thwarted. ### Summary At face value, the paper elaborates on many already explored attack vectors in Bitcoin, some of which Bitcoin was literally invented to solve (sybil attacks), but fails to give context to the attacks and their achievability and consequences in the real world. In particular, *“eclipse attacks”* and *“sybil attacks”* which force a node to make connections to malicious nodes are not effective against Bitcoin. The node requires a single connection to another honest node to see the true blockchain.  Even if fully eclipsed, the node will not accept invalid transactions because it enforces the rules of Bitcoin consensus using its local software. The most damaging types of attack here might be a double spending attack, in which the attacker tries to exchange Bitcoin for some other currency and get away with it, as well as censorship attacks.  In practice, double spending is attempted on centralized exchanges and is very difficult to impossible to get away with in real life – especially on Bitcoin where it is easy to run a full node. In order for such an attack to be practical, you’re going to need to control enough of the internet to trick an exchange to connect to *only* malicious nodes, and that you’re going to sustain this long enough for nobody to notice and to steal funds without leaving an identifying trail in the traditional banking system. The authors claim that Bitcoin could be attacked at the network layer to achieve censorship. Again, the authors have failed to demonstrate this in real world conditions, and have failed to mention that a connection to a single honest node with connectivity to the honest partition of the network defeats the attack. Finally, the authors fail to clarify the significance of a 51% attack. Such an attack does not allow the attacker to create coins from thin air, spend coins that aren’t theirs, steal user funds, or really do anything of value other than censor transactions or starve the chain of blocks. Additionally, such an attack must be maintained literally forever and is very expensive to even launch, let alone sustain, because as soon as the remaining honest miners of the world have a majority hashpower, they can continue producing normal blocks.  Any attack that wasn’t able to last forever would ultimately restore functionality to [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=darpa-blockchain-fud&utm_campaign=darpa-blockchain-fud), thus only proving its strength. Rewriting the history of the blockchain is an even [more daunting and unachievable goal](https://www.swanbitcoin.com/satoshis-white-paper-explained/) due to the exponential energy costs required to do so, and to do so in perpetuity against an honest group of miners. A further exposition of 51% attacks is available here: [Is Bitcoin mining centralization a threat? ](https://medium.com/bitcoin-not-blockchain/is-bitcoin-mining-centralized-and-what-does-that-mean-for-my-coi-1fc1bc379601) We conclude that the DARPA funded paper on blockchain centralization by Sultanik et al. contains many false or misleading claims and cannot be treated seriously. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # A Fed Hike for the Ages, But Can the Economy Handle it? URL: https://www.swanbitcoin.com/industry/a-fed-hike-for-the-ages-but-can-the-economy-handle-it/ Swan Private Market Update 6/17/22. There’s no need to mince words when describing the markets over the last two weeks, it’s been ugly. --- **Sam Callahan** · June 23, 2022 · Updated June 6, 2024 There’s no need to mince words when describing the markets over the last two weeks, it’s been ugly. Things started to fall apart last week when CPI inflation surprised many market participants to the upside when it came in at 8.6% YoY, the highest reading in 40 years. This led to a sell-off in equities and bonds as investors connected the dots and realized that this inflation reading would mean more aggressive interest rate hikes from the Federal Reserve, and they were not wrong. On Wednesday, the Federal Reserve raised the federal funds rate 0.75% to 1.50-1.75%, the largest single increase since 1994. Federal Reserve Chairman Jerome Powell also hinted at an additional 0.50%-0.75% rate hike at the next July FOMC meeting. Federal Reserve officials expect the benchmark rate to be at least 3% by year's end and are currently expecting interest rates to not be cut until 2024. These same officials also revised their 2022 growth estimates downwards. When asked about the worry of these aggressive rate hikes causing a recession: > We’re not trying to induce a recession now. Let’s be clear about that. We’re trying to achieve 2% inflation with a strong labor market — that’s what we’re trying to do. > > — Jerome Powell, Federal Reserve Chair It seems highly optimistic for Fed officials to expect a *“softish landing”* when they choose to combat inflation by raising rates at the most aggressive pace in recent memory in an economy that’s up to its eyeballs in debt. One has to wonder how effective raising rates will be in beating back inflation. Does a 75 bps hike fix broken supply chains and years of underinvestment in the energy sector?  The stock market has continued to sell off sharply amid this environment of tightening financial conditions and high inflation. Over the last two weeks, the S&P 500 is down -11.32%, and the Nasdaq is down -12.86%.  Furthermore, Treasury bond yields continue to rocket higher. Since the start of the year, interest rates across the entire yield curve have exploded upwards. On Monday, the 2-year Treasury yield had its largest single-day increase since 2008. ![](https://www.datocms-assets.com/56652/1655994003-screen-shot-2022-06-23-at-10-15-36-am.png?auto=format) Tradingview The 10-year Treasury yield spiked earlier this week to 3.39%, its highest since March 2020. The 2-year and 10-year Treasury curve also inverted for the first time since early April, a historically accurate indicator of a recession on the horizon. Yield curve inversion aside, signs of recession seem to be emerging everywhere. Yesterday, the Atlanta Fed revised its Q2 GDPNow real GDP estimate downwards to 0.0% from 0.9%, evidence that the U.S. is on the brink of an official recession (two consecutive quarters of negative GDP growth).   ![](https://www.datocms-assets.com/56652/1655994895-screen-shot-2022-06-23-at-10-18-02-am.png?auto=format) Blue Chip Economic Indicators and Blue Chip Financial Forecasts The slowdown in economic growth in 2022 is finally starting to show up in consumer spending data as well. For the first time this year, nominal retail sales declined, coming in at -0.3% for the month of May. Consumers’ struggle with inflation is beginning to show up in the data. Signs of reduced consumer appetite are also starting to hit the real estate sector. Existing and pending home sales have dropped for 3 consecutive months since January. ![](https://www.datocms-assets.com/56652/1655995001-screen-shot-2022-06-23-at-10-20-30-am.png?auto=format) Y Charts ![](https://www.datocms-assets.com/56652/1655995066-screen-shot-2022-06-23-at-10-20-42-am.png?auto=format) Y Charts This could be a reaction to rapidly rising mortgage rates and the U.S. housing market being at its most expensive level ever. According to the Case-Shiller National Home Price Index, average home prices are at an all-time high and are currently up 20.54% YoY. The average 30-year mortgage rate recently spiked above 6%, the highest level since the Global Financial Crisis in 2008. Both the sky-high prices and the high mortgage rates make this housing market unaffordable for many. Average mortgage payments as a percentage of median household income now sits at the highest reading in the last 22 years.  ![](https://www.datocms-assets.com/56652/1655995124-screen-shot-2022-06-23-at-10-21-13-am.png?auto=format) Bloomberg DoubleLine Due to the decreased affordability of housing, we have seen mortgage applications and refinancing fall off a cliff as interest rates have risen. According to the Mortgage Banker’s Association, total mortgage application volume is down 52.7% compared to this time last year, the most significant contraction since 2006. Mortgage refinances have also fallen to its lowest level in two decades. This decreased demand for housing could result in falling home valuations, which would have a negative impact on the broader economy and add to the recessionary pressures.  The other area of the market that is flashing recession signs is the labor market. Weekly initial jobless claims for unemployment benefits have been rising, up 37.95% since it bottomed in mid-March. It is now at its highest level in the last five months. Over the last couple of months, we have also had several announcements of hiring freezes from the likes of Amazon, Walmart, Meta, and others. On top of that, company announcements of layoffs have increased significantly for the first time since the pandemic began, primarily in the tech and startup sectors shown below.  ![](https://www.datocms-assets.com/56652/1655995236-screen-shot-2022-06-23-at-10-21-34-am.png?auto=format) layoffs.fyi With cracks in the labor market and the real estate market starting to emerge, one can see why growth estimates are being revised downward by many financial institutions. The Fed is set on reducing inflation and proved it with this recent 0.75% rate hike. Chairman Powell said, “*The worst mistake we could make would be to fail to bring down inflation...It’s not an option. We have to restore price stability.*” Cracks in the economy are already starting to appear, and bond and equity investors alike are feeling the pain of this stagflationary environment. We will see just how much pain the Fed can stomach as they continue on their mission to rein in this damaging inflation. ### Bitcoin Falls as Crypto Contagion Spreads Bitcoin has had a bloody week along with nearly all assets considered risk-on in this tumultuous macroeconomic environment. [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=private-market-update-061422&utm_campaign=private-market-update-061422) is down -31.64% over the last week and currently sits at $20,440. The price is consolidating right above its previous cycle all-time high of $20,000. Bitcoin’s recent downward price action can be in part blamed on happenings in the broader cryptocurrency market. A couple of market updates ago, we wrote about [the Luna/UST crash](https://www.swanbitcoin.com/dark-moon-the-inevitable-collapse-of-luna/?utm_campaign=Swan%20Private%20-%20Market%20Update%20%2311%20-%206%2F17%2F22%20%28VvZKDv%29&utm_medium=email&utm_source=MASTER%20-%20Swan%20Private%20Client%20Services%20-%20Insight%20distribution%20list%20-%20Updated%3A%206-17-22&_kx=FAUB4FjEgpsFMq9MMJVRXPUD37ZzQ49LwpY4MrmAhD6tyBqD88P_LPIlRyL1J1Jb.KzLKES) that wiped out around $50 billion dollars in value in a matter of days. A month has passed, but we are only now discovering which entities were badly exposed to that debacle. Some market participants were beginning to think that Luna/UST was an isolated event, but it turns out the knock-on effects were merely delayed. Celsius, a large crypto lending platform, has long been criticized for how it uses its customers’ funds to make high-risk bets on DeFi yield-generating tokens. In the past, Celsius had lost funds on multiple DeFi hacks including Stakehound (~$120 million), BadgerDAO (~$50 million), and narrowly escaped becoming a victim of the Luna/UST crash themselves when they had an estimated $500 million in the Anchor protocol before withdrawing the funds just in time. Celsius was essentially a risky hedge fund masquerading as a lending platform that provided liquidity (its own clients’ funds) for many DeFi protocols. Swan CEO Cory Klippsten had been warning about the risks of Celsius for the last month and once again was proven correct. This past week Celsius halted all trading and withdrawals on its platform due to apparent liquidity issues causing panic in the market. ![](https://www.datocms-assets.com/56652/1655995418-screen-shot-2022-06-23-at-10-43-18-am.png?auto=format) Celsius Celsius has now hired restructuring lawyers, and rumors continue to swirl around their possible insolvency. As of May 17th, Celsius managed $11.8 billion dollars in assets so this was no small fish. Celsius’s native token is now down -76.48% over the last two months alone. ![](https://www.datocms-assets.com/56652/1655995477-screen-shot-2022-06-23-at-10-23-23-am.png?auto=format) Tradingview These big intermediaries, like Celsius, have relationships with other entities, so when one defaults, it leads to another one being at risk of default, and another, and so on. The contagion from Luna/UST and Celsius continued to spread with the recent news that prominent crypto hedge fund Three Arrows Capital now faces possible insolvency after incurring at least $400 million in liquidations. This has led to margin calls and forced selling, putting pressure on Bitcoin, Ether, and all the other cryptocurrencies the hedge fund owned. The crypto hedge fund was estimated to be managing around $18 billion as of March 2022. These cascading liquidations and insolvencies are par for the course in bear markets, but an unfortunate side-effect is they add increased selling pressure on Bitcoin as these risk-takers are forced to sell their positions to cover their losses. In many ways, crypto is the canary in the coal mine for traditional markets. Crypto firms like Celsius and Three Arrows Capital were playing around in the riskiest parts of the market with obscene amounts of leverage. When the Fed started to tighten financial conditions and liquidity dried up, the first ones to blow up were these overleveraged crypto entities and blatant Ponzi schemes. We will see if this contagion continues to spread and whether it stays contained within the crypto industry or if it spills over to traditional markets. On a more positive note, earlier in the week, Senators Cynthia Lummis and Kirstin Gillibrand introduced the first major piece of cryptocurrency legislation, the *“Responsible Financial Innovation Act.”* This bipartisan bill aims to provide some regulatory clarity to the broader cryptocurrency industry. Like all first drafts, there were many positive and negative takeaways from it. Two strong components of the bill are the *de minimus* tax exemption it provides for Bitcoin transactions less than two hundred dollars and the removal of miners from the *“broker”* definition. The bill grants the CFTC with exclusive spot market jurisdiction over Bitcoin. It also has wording that protects consumers by requiring virtual asset service providers to make clear disclosures to customers and requires higher standards of disclosure of these providers to reduce market manipulation and fraud. It also requires stablecoins to be fully backed 1:1 with dollars or dollar-like equivalents and/or be FDIC insured to operate in the U.S. This will help clean up some of the Ponzi schemes and manipulation we have seen in recent months (Luna/UST). Lastly, the bill also codifies a person’s right to keep and control a digital asset they own, an important inclusion for private key ownership. One of the biggest drawbacks of the bill is that it clearly states ETH is fully decentralized and is, therefore, a commodity which we thoroughly disagree with at Swan. It also fails to define how a digital asset is determined to be *“fully decentralized”* or not. The bill also directs the Federal Energy Regulatory Commission to conduct a study looking into *“energy consumption”* in the digital asset space. This alludes to Bitcoin’s energy usage being a problem when in fact, Bitcoin’s energy usage enables sound digital money and can help drive innovation in the energy industry. It’s important to note that this bill is highly unlikely to go anywhere in Congress, but it is an important first step in providing a regulatory framework for this burgeoning new asset. It is more likely that this bill will be improved upon and that parts of it may be used in future pieces of legislation that are more likely to be voted on into law. All in all, we have seen all the tell-tale signs of a Bitcoin bear market this past month. We have had large Ponzi schemes like Luna/UST blow up, entities like Celsius and Three Arrows Capital are teetering on the brink of insolvency, large crypto firms like Coinbase and BlockFi have announced major layoffs, and the price of Bitcoin has, of course, been in a steady decline. However, it’s times like these where one must focus on Bitcoin’s long-term value proposition. Bitcoin still remains an undebaseable and uncensorable money that can’t be controlled by any single person or group of persons. Bitcoin’s use case was on full display last week when a group of 20 human rights activists from 20 different countries penned a letter to Congress urging for responsible Bitcoin regulation. A powerful excerpt from their letter is shared below: ![](https://www.datocms-assets.com/56652/1655995530-screen-shot-2022-06-23-at-10-45-16-am.png?auto=format) This is why Bitcoin matters. When the price is down like this, one needs to ask the question of whether Bitcoin’s value proposition has changed or not. Despite the downward price action, Bitcoin remains a functional lifeline – today – to many individuals in countries across the globe who do not have the privilege of a stable financial system or government.  Bear markets are historically the best time for long-term investors to accumulate Bitcoin. The Mayer Multiple takes the current price of Bitcoin and divides it by its 200-day moving average. Historically, this metric has been useful in signaling when Bitcoin is overbought or oversold. Whenever the Mayer Multiple is <0.60, it has marked major Bitcoin market bottoms in the past. Today, it currently sits at 0.55, levels not seen since the 2018 bear market bottom.  ![](https://www.datocms-assets.com/56652/1655995578-screen-shot-2022-06-23-at-10-23-47-am.png?auto=format) charts.woobull.com Although the price of Bitcoin will continue to fluctuate in this volatile and uncertain macroeconomic environment, when the Mayer Multiple is lower today than it has been in 97.8% of its history, and human activists are providing concrete evidence of Bitcoin being used to help empower marginalized groups of people, it’s hard to not like Bitcoin at these discounted price levels. Regardless, Bitcoin will continue to function perfectly as Satoshi intended regardless of what the Fed does, what the stock market does, what the real estate market does, or what the bond market does…and that’s kind of the whole point. ![](https://www.datocms-assets.com/56652/1655995636-screen-shot-2022-06-23-at-10-24-05-am.png?auto=format) Tradingview ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Re-Run the Numbers - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/re-run-the-numbers/ How Today’s Higher Rates and Lower Prices Impact the Case to Borrow to Buy Bitcoin --- **Cory Klippsten and Wicked Smart Bitcoin** · June 30, 2022 · Updated June 27, 2024 With 30-year mortgage and refinance fixed rates nearly doubling over the last year, is Michael Saylor’s advice to *“go mortgage your house and buy Bitcoin with it”* still a good idea? Was it even a good idea in the first place? Saylor actually mentioned mortgaging your house to buy Bitcoin very early on, before the 2020 bull run had really gotten started, during an [episode of Swan Signal Live](https://www.pscp.tv/w/1vAxRrkNbPgxl) on October 13th, 2020. At the time, the price of Bitcoin was around $11,400 and the average 30-year fixed rate mortgage in the United States was only 2.81%! I think we all wish we had listened to Saylor back then. But, what about the now famous interview released later on and near the first ATH in March 2021 where Saylor again spoke about this strategy? Around this time, Bitcoin had just experienced 5 solid green monthly candles of gains and was well into its 6th with the price cruising through $50,000. The bulls were out in full force and Saylor had become a Bitcoin celebrity, emboldened by the gains on Microstrategy’s newly acquired Bitcoin. Saylor made this statement on March 10th, 2021 when Bitcoin was trading around $57,800 and the average 30-year fixed rate mortgage in the United States was still relatively low, at 3.05%. After 30 years, Bitcoin would need to appreciate in value by 56%, to $90,000 or more, for this loan to break even in total paid costs versus the value of the Bitcoin bought with it. Most people who believe in Bitcoin’s long-term outlook would probably laugh at the idea of Bitcoin only being near $90,000 by 2051 so this may have seemed like a no-brainer to them. In today’s environment, with all of the macro uncertainty, rising rates, and a falling Bitcoin price, you might be interested to see what it looks like now to mortgage your house to buy Bitcoin. With Bitcoin’s price hovering around $21,000 and the average 30-year fixed rate mortgage in the United States at 5.81%, Bitcoin would only have to appreciate in value to $45,200, well below its all time high, before the year 2052 for this loan to break even in total paid costs versus the value of the Bitcoin bought with it. In other words, Bitcoin would only need to increase 115% over the next 30 years for someone to break even using this strategy. So, even with the much higher interest rate, and higher percentage gains needed, this strategy may look appealing on the grounds that Bitcoin only needs to retrace to about 65% of its all time high, within the next thirty years, thanks to its now drastically lower price. There are a few warnings, however. It’s always important to note that there are risks associated with borrowing that may affect more than just the entry and exit costs.   We are in a period now where there is a lot of uncertainty about the economy – in particular, consumer prices are rising rapidly for many reasons, businesses are confronting solvency issues, and central bank policy aims to reduce demand for jobs. If you enter into greater mortgage obligations, you will be required to make monthly payments on it. Your ability to find the cash for these payments may be impacted if higher prices eat into the money you were planning to use to make those payments, or if your income is impaired.  You are not only exposed to the starting and ending prices of Bitcoin – you must also make payments on the borrowed money the entire time.  The table below illustrates the monthly payment and total costs to finance the borrowing of one Bitcoin back on October 13, 2020, on March 10th, 2021, and now, on Jun 30, 2022. ![](https://www.datocms-assets.com/56652/1656603026-screen-shot-2022-06-30-at-11-29-22-am.png?auto=format) Methodology: This analysis uses the formula below to calculate the monthly payment for each pair of historical Bitcoin prices and historical rates. The monthly payment is then multiplied by 12 and by 30 to estimate the total 30-year cost of the loan. Please note, I’ve included a one time 3% closing cost in the formula. ![](https://www.datocms-assets.com/56652/1656603375-screen-shot-2022-06-30-at-11-35-51-am.png?auto=format) ![](https://www.datocms-assets.com/56652/1656603391-unnamed.png?auto=format) Data: 30-Year Fixed Rate Mortgage Average in the United States (FRED) [https://fred.stlouisfed.org/series/MORTGAGE30US](https://fred.stlouisfed.org/series/MORTGAGE30US) BTCUSD Daily Close Exchange Rate (glassnode) [https://studio.glassnode.com/metrics?a=BTC&category=&m=market.PriceUsdClose](https://studio.glassnode.com/metrics?a=BTC&category=&m=market.PriceUsdClose) Github (Python scripts): [https://github.com/w-s-bitcoin/github-bitcoin-scripts/blob/main/30-Year%20Fixed%20Rate%20Mortgage%20Analysis/30-Year%20Fixed%20Rate%20Cash-Out%20Refi%20%26%20Bitcoin%20Lump%20Sum%20Analysis.ipynb](https://github.com/w-s-bitcoin/github-bitcoin-scripts/blob/main/30-Year%20Fixed%20Rate%20Mortgage%20Analysis/30-Year%20Fixed%20Rate%20Cash-Out%20Refi%20%26%20Bitcoin%20Lump%20Sum%20Analysis.ipynb) References: [https://www.bankrate.com/mortgages/cash-out-refinancing/](https://www.bankrate.com/mortgages/cash-out-refinancing/) [https://www.thebalance.com/calculate-mortgage-315668](https://www.thebalance.com/calculate-mortgage-315668) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. ### Wicked Smart Bitcoin Wicked Smart Bitcoin is just an apple who loves art, math, programming & orange pills. He believes that Bitcoin will go to ∞ as fiat goes to 0. "Hyperbitcoinization will be hyperbolic." # Bitcoin and the True Meaning of Inflation - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-and-the-true-meaning-of-inflation/ Bitcoin is often described as an inflation hedge, so why hasn’t it worked? --- **Steven Lubka** · July 11, 2022 · Updated June 27, 2024 Bitcoin is commonly presented as a hedge against inflation. Since Bitcoin has a fixed supply of 21 million, and fiat is a mind-numbing bacchanalia of printing and excess, it simply makes intuitive sense that Bitcoin would protect people, investors, and portfolios from the ravages of inflation. So, **why hasn't it?** This is a fantastic opportunity to untangle one of the most pernicious myths that have ever beset modern economic dialogues. ### Defining Inflation It starts with defining inflation. Inflation is the price of things going up, right? Wrong, do not pass go. Do not collect two hundred continuously inflating U.S. dollars! When the term inflation was used for the first time it referred to an increase of paper currency against the supply of fixed collateral (gold, silver) that backed the paper notes. It meant that each paper note was worth less in terms of it's actual backing. However, there is *no* backing for our contemporary currencies. Today, people use inflation to refer to *two* separate things, and whenever you hear someone saying inflation it's not always clear which definition they are referring to. One definition is *“the prices of consumer goods increasing”* and the other is *“dilution of the money supply”*. So which is it? Let's see if we can determine the answer to that question using two examples. Which of these scenarios **should** we expect Bitcoin to protect investors from? Example 1 *The made-up country Randia produces 40% of global copper production. One day, their government is overthrown by anti-industrial rebels who believe that humankind can only achieve salvation by returning to a pre-industrial lifestyle.* *Overnight, all of the copper mines are shut down outside of a few that humans continue to operate with picks and shovels.* *The price of copper soars on global markets since 40% of supply went offline within 24 hours. Consumer electronics increase rapidly in price. Electrification becomes exorbitantly expensive. Countries panic and increase fossil fuel-driven energy production. Manufacturing and construction are all impacted.* *CPI in the US goes above 15%.* *Example 2* *The United State government is overthrown by Modern Monetary Theory rebels who believe humankind can only achieve salvation by giving every man, woman, and child $5,000 of freshly printed dollars every month.* *Because this rapid increase in the supply of money is not accompanied by an* ***increase*** *in the supply of goods that people actually want, (e.g. food, energy, houses, electronics) there is just more money in a system chasing the same amount of goods.* *Consumer goods increase rapidly in price. Electrification becomes exorbitantly expensive. Countries panic and increase fossil fuel-driven energy production. Manufacturing and construction are all impacted.* *CPI in the US goes above 15%.* Which of these scenarios should Bitcoin protect investors from? A disruption in the actual supply of goods and commodities or a rapid increase in the money supply? **The answer is clearly scenario 2.** The first example represents a tangible disruption to the non-abstract world of real goods and things. The abstract world of financial assets is subordinate to this real world, it does not have primacy over it.  (We will explore later on which financial tools if any, stand to benefit from disruptions to the real world). The second example is a crisis on the level of the abstract world of finance. It is a manipulation of abstract instruments, which can itself be hedged against with other abstract instruments. Demanding that a financial instrument appreciate in value against concrete real-world disruptions is expecting to own something which makes you wealthier in a world that just became dramatically poorer. Becoming richer in a world that is becoming objectively poorer is not sustainable and cannot be available to all. Outside of directly owning the production and sale of disrupted commodities this isn't a realistic goal. You don't suddenly gain a larger percentage of the wealth of the world solely by holding hard money when, for example, copper mines go offline. Bitcoin exists to provide users an alternative to irresponsible and fatalistic central bank monetary policy. After all, the headline cited in Bitcoin’s genesis block is *“Chancellor on Brink of Second Bailout for Banks,”* not *“Supply Chains Face New Obstacles.”* So, is a dilution of the money supply the definition of inflation? > Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. > > — Milton Friedman I agree. ### Analyzing True Inflation Inflation is solely the dilution of the money supply, the creation of more money. Consumer price increases are either caused by supply factors that no *“inflation hedge”* can or should protect investors from, or they are a **lagging indicator** of money printing. Measuring monetary dilution via increases in the prices of goods is a fool's errand. Why should we monitor the price of bread and cars to try to determine how much money has been created?  Aren’t there countless factors that influence those prices? Couldn’t advances in bread-making cover up actual inflation by driving prices down while monetary dilution drives them up? And doesn’t newly printed money spread through the economy in an obfuscated and uneven way? Depending on how the money is printed, where it is spent, and who received it monetary dilution can have radically different influences on consumer prices. Eventually, we will see an impact on consumer prices, but it will be asymmetric (generally affecting the goods the Cantillion class desires more) and will manifest itself on an uneven time scale as the newly printed money interacts with the wide variety of real market forces. All of this comes together to suggest, that measuring inflation via consumer price increases is like determining if you got punched in the face by how many teeth you have left.  No lost teeth? No punch to the face! ### Measuring Inflation If we are only concerned with monetary dilution and not consumer price increases, isn't it a simple matter to determine the *“real”* rate of inflation, i.e how much money supply was added into the system? Actually, it turns out not to be easy at all. To understand why we need to first explore what counts as *“Money”.* We clearly agree as a society that currency is money, and creating more currency is clearly adding more money to the system. What about Treasury Bills? High-quality short-dated corporate bonds. These are actually commonly referred to as *“cash equivalents”.* Most financial institutions and corporations don’t literally hold dollars, they hold these cash equivalents. In essence, bonds are claims on future dollars. Investors spend real dollars today to buy future dollars. This scenario is effectively net neutral on increasing the money supply (unless those dollars were printed from thin air via a Central Bank). However, if those bonds get utilized as collateral for future borrowing, and if they get infinitely rolled over and never extinguished, they do in fact represent an expansion of the total amount of money in the system.  A bond is essentially an abstract legal promise to make certain payments. I give a company $10,000 dollars today and they pay me back $10,500 in two years. There is no expansion of the money supply in this deal. However, if we now treat the abstract legal promise of the bond as an *"asset"* it can then be used as collateral.  We now have two things: $10,000 which was transferred from party A to party B (net neutral) and an abstract asset we are valuing at roughly $10,500! This is pure alchemy! Newton would be proud (if he wasn't rendered penniless from financial speculation ). By valuing the bond in today dollars at its value in future dollars, we have literally created more collateral (money) from thin air! This ***IS*** expansion of the money supply. Anything which can function as *indefinite collateral* is in essence money. Any money substitute which is close enough in function to money is itself money. It is money because it can function in the exact same way as actual money. So in specific circumstances, it's clear that bonds can expand the total amount of *“money”* in the system. But what about other assets? Are assets (stocks, housing, etc) *“money”?* More importantly, do assets increasing in value represent an expansion of the *“money”* supply? Traditional economists say *“absolutely not!”* In fact, traditional economists say the *only* way money is created is when commercial banks engage in lending because that actually puts more *currency* into the economy. However, if we define money as money plus any *close-enough substitute* then we are faced with a different predicament. What money and *money substitutes* have in common is they both represent a form of *abstract* value which is distinct from the tangible value that, for example, a barrel of oil intrinsically possesses. Stocks increasing in value clearly means there is more *abstract* value in the system. In classic economic theory, this occurs because those stocks have actually *added more real tangible value to the system***.** Is this classic theory actually true? Is every dollar that stocks increase representative of more real, tangible value added to the system? More cars? More oil? More computers? More efficiency in producing these? Absolutely not, stocks can be driven up purely by monetary dilution. Welcome to QE baby! I would make the argument that most growth in stocks over the last few decades is driven by monetary expansion, not an increase in tangible value. And because the growth in stocks is driven by monetary expansion, the growth in stock prices *IS* monetary expansion. It is the expansion of the total monetary value in the system against the supply of real, tangible, value which has in fact not grown in proportion. This is a fundamental truth of assets functioning as *monetary substitutes*, but it doesn’t include the fact that people can *borrow* against the current market price of the stocks/homes and that owning appreciating assets increases consumer spending of actual dollars. People spend more currency when their assets are worth more, mimicking a scenario where they simply have more currency. These both create the same effects as *“more money in the system”.* Measuring the expansion of the money supply is no simple affair. It can be expanded in multiple ways, some hidden, some obvious. The end result of all monetary expansion is an increase in the total monetary value that people can possess. As a result, the total dollar value in the world massively exceeds the total number of dollars by orders of magnitude. This endless monetary expansion is a fundamental reality of our fiat system and is particularly needed in a system that is highly levered.  Let's be clear, in theory, we could operate a fiat system without expansion. However, this only works if everyone is willing to pay their debts in full!  It is not an ***inherent*** quality of fiat that the money supply must constantly be expanded. It is an inherent quality of governments that want to constantly issue more debt to finance spending, and who have no intention of or plan as to how to actually pay back those debts. When the system reaches a sufficient level of indebtedness, the only way out is monetary expansion. This is compounded by the amount of leverage in the system. ### Bitcoin and True Inflation Does the increase in the price of bread, cars, oil, or Netflix adequately capture this broad growth of money? Absolutely not. CPI is a useless tool for measuring monetary expansion in anything but an extremely noisy way. If CPI doesn’t actually reflect monetary expansion (which *is inflation*) why should Bitcoin provide a hedge against rising CPI? It shouldn’t, and it doesn’t. What Bitcoin **does** do is provide a hedge against **actual** **inflation**, i.e- monetary expansion. When the Fed engages in QE – Bitcoin goes up When the Fed tightens – Bitcoin goes down When the government engages in fiscal spending via stimulus checks – Bitcoin goes up When the government reduces fiscal spending – Bitcoin goes down When assets go up expanding the money supply – Bitcoin goes up When assets fall sharply, contracting the money supply – Bitcoin goes down Bitcoin responds consistently and predictably to *actual inflation*. It is a *true-inflation* hedge when we define inflation correctly. Now some readers may complain that this means Bitcoin behaves similarly to all other assets which respond similarly to expansion and contraction of the money supply. I understand that critique but think it has two major flaws. The first is that while Bitcoin is directionally similar to most other assets when the money supply is expanded or contracted, it outperforms all other major assets in environments of monetary expansion. Bitcoin is the *purest* inflation hedge because it is *just money.* Yes, tech stocks go up as liquidity floods the system. Yes, houses go up as interest rates drop. But stocks have idiosyncratic risks like debt loads, bad product decisions, competition, risks of obsolescence, and other real-world challenges. The same is true for real estate which suffers sufficient maintenance costs, jurisdictional risks, and illiquidity. These assets function as *indirect liquidity proxies* in a system so awash with money it doesn’t know where to put it. Bitcoin is *pristine, pure,* and *un-impacted* by the idiosyncratic risks other assets face. The value of Bitcoin is theoretically infinite because money has no ceiling (it is obviously practically limited). Additionally, why should the dollar-denominated price of *any* asset go up when liquidity is rapidly removed from the system? Monetary expansion is an alteration of the unit in which everything is priced. If you removed 50% of all dollars from existence in one day, is there *any* asset that would actually go up in such a liquidity contraction? No. The second critique of this complaint lies in the very asking of what sort of asset would actually purely hedge against CPI increases and not monetary expansion. It would need to be an asset that buys more things when there are ***fewer*** of those things. Huh? How could any asset, besides those raw goods and their producers, ever go up because the actual real stuff in an economy becomes suddenly more expensive in real terms? How could such events ever be good for any asset? Only two assets can reliably increase in this environment: The actual price of commodities, which can be speculated on via derivatives, and any company that is involved in the actual production or sale of those commodities or goods. Is that what we want Bitcoin to be? A strange defensive asset that only works during times of supply disruption and dysfunction? Or do we want Bitcoin to be an asset that can pull our financial livelihoods, out of the swirling complexity of a system awash with liquidity, a system that is trying to cram that money into every money substitute available even though none of them are perfect? Do we want a defense from central bank policy or do we want something which trades cyclically during commodity disruptions? The goal of Bitcoin is clearly something that stands in opposition to central banks and their policy errors. We have to accept that bitcoin will not provide a hedge against CPI increases and that to hedge against central bank actions is to be in a directional relationship with those actions. Bitcoin is **money.** The value of money is in direct proportion to a given money's acceptance as money. Money lacks any fundamental value, it is a virtuous bubble. It just so happens that our preferred money, Bitcoin, is in a tug of war with all of the other money in the world.  For now, the performance of Bitcoin is intimately tied to central bank decisions, it is not uncorrelated to them. For some, this is perhaps disappointing, but I think that disappointment falls away upon closer inspection. It has always been exactly this. Bitcoin has always been a tool for the end game. An escape hatch for the inevitable dysfunction and failure of central bank monetary policy. In order to do that, it must possess a consistent relationship to the actions of central banks. Inflation is monetary expansion. Bitcoin protects us from losing value due to monetary expansion. At the end of the day, you either believe central banks will be forced to continuously expand the money supply or that they won't. If that is the inevitable fate of this debt-driven, overly-financialized world we inhabit, then all Bitcoin needs to do is respond to that monetary expansion better than any other asset. And that my dear friends, is what Bitcoin does better than any other asset known to man. ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # Digital Assets are Useful Today Despite What the Naysayers Say URL: https://www.swanbitcoin.com/analysis/digital-assets-are-useful-today-despite-what-the-naysayers-say/ If Bitcoin protects even one family, one person, or one child from the ravages of hyperinflation, then it is worthy of our time, and a useful technology for the world. --- **Sam Callahan** · July 12, 2022 · Updated July 3, 2024 Back in 2018, similar to the bear market we find ourselves in today, I saw Andreas Antonopoulos speak about Bitcoin. I had heard online about a free talk he was giving in my city, and I randomly grabbed a ticket. I didn’t know much about Andreas, only that he wrote a book on Bitcoin. I remember almost bailing on it because it was storming outside, but for whatever reason, I got in my car, and off I went. At the time, I had bought some Bitcoin before the run-up in 2017. Back then, my view of Bitcoin was very superficial. I didn’t care about the potential use cases. I didn’t care about the technology. I saw Bitcoin as nothing more than an investment opportunity to get [rich quickly](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins). It was just another speculative bet that could bring me more fiat riches and perhaps [allow me to retire early](https://www.swanbitcoin.com/crypto-iras/). When I arrived at the venue, there were only a couple dozen people in a half-empty room (it was the bear market, after all). I grabbed a seat, and little did I know it would be one of the most impactful nights of my life. After listening to Andreas speak that night, my whole mindset around Bitcoin changed. I’ll never forget one thing he said on stage. It impacts me to this day and continues to motivate me here at Swan. I’m paraphrasing Andreas here, but he said something along the lines of… > If Bitcoin protects even one family, one person, or one child from the > ravages of hyperinflation, then it is worthy of our time, and a useful > technology for the world. > > — Andreas Antonopoulos After the talk, I got back in my car and sat in the parking lot, digesting what I just heard, listening to the raindrops pattering my windshield. I realized right then and there the magnitude of the invention I had stumbled upon. Ever since that night, I now recognize Bitcoin not as a speculative asset but as a tool to protect individuals less fortunate than me from the harmful effects of central bank and government policies worldwide. I share this story because it’s been about four years since that night, and yet a majority of people around the world still view Bitcoin the same way I did before I heard Andreas speak. They see Bitcoin as a useless technology and a symbol of speculation. They view it as a waste of energy and a misallocation of resources. A perfect example of this thinking came one month ago when twenty-six technologists penned a letter to Congress titled *“*[*A Letter in Support of Responsible Fintech Policy*](https://concerned.tech/)*.”*  In the letter, these self-proclaimed *“experts”* make sweeping statements with zero evidence to support their claims about the [uselessness of Bitcoin](https://www.swanbitcoin.com/fact-check-darpa-funded-report-on-blockchain-centralization) and other *“crypto assets.”* The purpose of the letter was to implore Congress to take a responsible approach to regulate the industry, aka to stop it. Here are two excerpts from the letter that I’d like to highlight here: 1.) “We strongly disagree with the narrative—peddled by those with a financial stake in the crypto-asset industry—that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans.” 2.) “By its very design, blockchain technology is poorly suited for just about every purpose currently touted as a present or potential source of public benefit.” My goal with this article is to dispute these technologists’ claims that ***“crypto-assets”*** are not solving any financial problems or acting as a source of public benefit. I will share data on the current challenges in the global economy, how Bitcoin and stablecoins are helping people around the globe today, and how Bitcoin can continue to be used to help those less fortunate than the technologists who signed this letter. Let’s begin… ### A Big Inflating World If we focus on the first quote from the abovementioned letter, it reads how ***“crypto-assets”*** are not solving Americans' financial problems. While I would argue that this is not true, it highlights how these critics think. They seem to believe that the world starts and ends at the borders of the United States of America. These authors display what Chief Strategy Officer of the Human Rights Foundation, Alex Gladstein, calls ***"financial privilege."*** They don't seem to be aware of or lack the empathy to appreciate the struggles facing billions of people in Emerging Market economies today. Bitcoin is a **global** asset that cannot be inflated, censored, or seized. In America, we have the privilege of having access to the most stable financial system in the world, backed by the most reliable fiat currency, the dollar. For the citizens of less fortunate countries, the American financial system seems like a dream. Many countries worldwide have banking systems run by unstable governments and central banks. Regrettably, the people in many emerging markets are all too familiar with inflation, confiscation, and censorship when it comes to their savings. The problem is, given the amount of debt in the system, rising inflation, and a newly hawkish Federal Reserve, Emerging Market economies face even more challenging times ahead. Just this past week, the Bank of International Settlements released its 2022 Economic Report. In the report, the BIS offers a stark warning, ***"The risk of stagflation looms over the global economy as the threat of a new inflation era coincides with a weaker outlook for growth and elevated financial vulnerabilities."***  They write, ***"The world is at risk of entering a new era of high inflation."*** In the report, they highlight how there has been a [sharp rise in inflation](https://www.swanbitcoin.com/the-inflation-deflation-tug-of-war/) over the past two years. The number of countries with inflation over 5% today has increased to over 150 countries. ![](https://www.datocms-assets.com/56652/1657638488-screen-shot-2022-07-12-at-11-06-12-am.png?auto=format) BIS Furthermore, the inflation rate in Emerging Market economies is, on average higher than in Advanced economies. According to the World Bank, the average inflation rate across Emerging Market economies stands at ~8% compared to ~5% in Advanced economies. ![](https://www.datocms-assets.com/56652/1657638611-screen-shot-2022-07-12-at-11-09-41-am.png?auto=format) The World Bank This is especially concerning, given that inflation tends to be more disruptive in emerging markets. The BIS writes: > “Since inflation expectations are less well anchored in some of these countries… Larger nominal policy rate increases are required to control inflation. Surging food prices are also more disruptive. Sharp rises in food prices have been associated with social instability and the imposition of export controls in the past...” When inflation hits the economies of these countries, it hits them hard. If we shift our attention to another report, the World Bank released its Global Economic Prospectus in June, and in it, we hear a similar message. The World Bank warns that rises in CPI inflation are particularly pronounced in Emerging Market economies and that there’s an increased risk of currency depreciation. > Should inflation turn out to be more persistent or higher than currently > anticipated, advanced-economy central banks may tighten monetary policy > faster, or over a longer period, than currently expected. In the past, > unexpectedly rapid policy tightening has tended to put downward pressure > on asset prices and led to capital outflows and currency depreciation > pressures, with especially adverse consequences for Emerging Market > Developing Economies (EMDEs). > > — The World Bank They go on to say that EMDEs are also more sensitive to inflation than Advanced Economies (AEs) due to past inflation experiences. Most AEs have not experienced significant inflation in many decades, but that’s not the case for these EMDEs. These people are sensitive to price changes because they have lived through periods of damaging inflation before. As a result, when inflation arrives, they change their spending behaviors rapidly to protect their savings, further accelerating inflationary pressures. You can observe this trend in the chart below. In EMDEs, long-term inflation expectations jump nearly double the amount in response to high inflation prints compared to AEs. ![](https://www.datocms-assets.com/56652/1657641053-screen-shot-2022-07-12-at-11-50-36-am.png?auto=format) The World Bank The IMF also warned of the risk of currency depreciations in emerging markets in January, citing a new Federal Reserve tightening cycle as a potential primary driver. They reported: > “Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally. These developments could slow U.S. demand and trade and lead to capital outflows and currency depreciation in emerging markets.” Since the IMF’s warning, the Federal Reserve has increased the federal funds rate at the most aggressively since 1994. As a result, foreign currencies have depreciated rapidly over the last several months. Said differently, the citizens of these countries are seeing their savings devalued at an accelerated pace. This is the result of a strong dollar that is hurting Emerging-Market currencies. The U.S. Dollar Index (DXY) measures the dollar against a basket of 6 major foreign currencies and is used as a general measure of dollar strength against other fiat currencies. The WSJ Dollar Index (BUXX) is a similar metric but measures the dollar against 16 foreign currencies. The DXY is currently at its highest level since 2003 and is up 13.6% YoY, and the BUXX is up over 12% YoY. ![](https://www.datocms-assets.com/56652/1657641202-screen-shot-2022-07-12-at-11-52-59-am.png?auto=format) Dow Jones Market Data (BUXX); FactSet (DXY) A stronger dollar hurts Emerging Market economies by weakening their currencies and spurring inflation in those countries. There are no signs of this trend abating soon as investors flee to the safety of the dollar as fears of a global recession grow. To give you an example of the current rate of foreign currency depreciation, here’s how seven selected foreign currencies have performed against the dollar since early May. ![](https://www.datocms-assets.com/56652/1657641269-screen-shot-2022-07-12-at-11-54-03-am.png?auto=format) Tradingview, prices as of 07/04/22 For the citizens of these emerging markets, few alternatives are available to protect themselves as their local currencies depreciate. With EmergingMarket debt currently sitting near all-time highs, these economies being more sensitive to inflation spikes, and a Federal Reserve continuing to tighten, this is bound to get worse for emerging markets before it gets better. For citizens of these emerging markets, the fruits of their labor are disappearing. What are they supposed to do to protect their savings? Well… One trend we are seeing emerge over the past couple of years is some of these people are finding refuge in digital assets in these precarious times. ### A Relatively Stable Safe Haven As the risk of inflation and currency depreciation increases for individuals in emerging markets, many are looking for ways to protect their savings. One way they can protect themselves is by saving in more stable fiat currencies, like dollars, which are more likely to hold their value than many emerging-market currencies. However, getting access to dollars can be difficult for a person in these countries, so they are increasingly turning to stablecoins. Stablecoins are easier for these people to access than dollars because all you need is a phone and internet connection. This is why so many individuals are turning to dollar-backed stablecoins to protect themselves against currency devaluation. All one needs to do is look at the explosive growth of stablecoins in recent years to see a clear demand for stablecoins abroad. The total fiat-backed stablecoin supply has increased from $12 billion to $132 billion over the last two years, an 11x increase. ![](https://www.datocms-assets.com/56652/1657641426-screen-shot-2022-07-12-at-11-56-50-am.png?auto=format) Coinmetrics Updated Jul 1, 2022 Furthermore, we see that countries with higher inflation rates in developing countries are more likely to have greater cryptocurrency adoption. In a report published earlier in the year, Gemini surveyed 30,000 adults across 20 countries about the likelihood of purchasing cryptocurrency. The results showed that respondents in countries with 50% or more devaluation against the dollar over the last ten years were more than 5x more likely to purchase cryptocurrencies in the coming year compared to those who experienced less than 50% inflation over the same period. ![](https://www.datocms-assets.com/56652/1657641533-screen-shot-2022-07-12-at-11-58-15-am.png?auto=format) Gemini This survey provides evidence that supports the idea that individuals who live in countries with [historically higher inflation rates](https://www.swanbitcoin.com/tracking-bitcoin-rally-after-the-cash-injection-of-2020/) are increasingly viewing cryptocurrencies, like stablecoins, as a way to protect their savings from devaluation. If we look at Chainalysis’s 2021 Global Crypto Adoption Index, the countries that are seeing the most cryptocurrency adoption are countries with more unstable currencies. ![](https://www.datocms-assets.com/56652/1657641629-screen-shot-2022-07-12-at-12-00-03-pm.png?auto=format) Chainalysis The overlap on display here of cryptocurrency adoption and emerging markets with substantial currency depreciation speaks volumes. Many emerging markets face significant currency devaluation in the future, which should continue to drive the residents of these countries to cryptocurrencies to preserve their life savings. As the outlook for these emerging markets continues to look grim, given the global macroeconomic picture of slowing economic growth, rising interest rates, and increasing inflation, we should continue to see the adoption of cryptocurrencies grow as citizens seek refuge from the depreciation of their local currencies. ### Stablecoins are an Option, But What About Bitcoin? > Even cryptocurrencies such as Bitcoin have been channels > for capital flight when a country’s currency is collapsing > and domestic investors lose faith in their country’s > banking system. > > — IMF Stablecoins are a good option for residents of jurisdictions suffering from currency debasement. They are relatively more stable than many Emerging-Market currencies and are especially helpful for people when they need to protect their purchasing power in the short term. Bitcoin’s volatility doesn’t make it the best option when these individuals are trying to protect their savings to pay their monthly bills or to buy necessities like food and fuel, but are stablecoins something someone should hold for the long term? Since most stablecoins are pegged to the dollar, they are still susceptible to the same risk as all fiat currencies, debasement at the hands of the central bank that issues them. With U.S. CPI inflation currently sitting at 8.6% YoY, the risk of debasement hasn’t been this high since the 1970s. If people in emerging markets decide to hold their wealth in stablecoins long term, their savings will steadily lose purchasing power over time. This is guaranteed to happen. The only question is, at what rate? The meme to the right highlights this risk beautifully. The little guy holding dollars may feel safe, but his wealth is trending steadily downwards, and that slope downwards is only growing steeper as the rate of inflation rises. Notice the little guy holding bitcoin though, he has a much more volatile road, but over long periods of time, his purchasing power has increased. If a citizen in one of these emerging markets is lucky enough to have some disposable income to invest, then Bitcoin would be the better option over stablecoins to protect their wealth from currency debasement over the long term because Bitcoin is impossible to debase ![](https://www.datocms-assets.com/56652/1657641914-screen-shot-2022-07-12-at-12-05-00-pm.png?auto=format) Despite its short-term volatility, Bitcoin is a better option for people going through a true currency crisis, like in Venezuela and Turkey, where the inflation rates currently sit at 167% and 78.6% YoY respectively. Even the IMF, in a recent article, sees why Bitcoin may be preferred by people whose local currency is going through a crisis. > Even a volatile cryptocurrency such as Bitcoin might, in addition to enabling > capital flight, be preferred to the local currency during economic turmoil, > > — IMF As a country's currency collapses, the people's savings are diluted forever. They will never get their purchasing power back. On the other hand, Bitcoin may fluctuate in price over the short term, but given its properties, Bitcoin can increase in value over the long term, something none of these fiat currencies can say. Therefore, Bitcoin can be viewed as a long-term 'Safe Haven' for these people suffering from currency crises despite its short-term price volatility. Bitcoin has proven to be able to maintain its value over long periods. Therefore, it is a good long-term option for people in emerging markets trying to escape their failing local currencies. By holding Bitcoin for five years or more, these people will be able better to afford essentials like food, water, and fuel than they ever could if they held fiat currencies instead, including the dollar. Earlier this month, the Federal Reserve posted charts to its website that inadvertently highlighted how [Bitcoin's deflationary nature](https://www.swanbitcoin.com/bitcoin-halving-dates/) allows it to protect purchasing power better than fiat currencies over the long term. The charts were meant to show how Bitcoin's volatility makes it unsuitable for investors, but when you zoom out, Bitcoin's strengths are clear as day. When you lengthen the timeframe to five years, these charts show how the price of food, fuel, and shelter has gotten substantially cheaper for anyone who held Bitcoin over that timeframe. Bitcoin helps investors afford the things they need far into the future. Here's how cheap eggs have become for Bitcoin investors over the last five years: ![](https://www.datocms-assets.com/56652/1657642031-screen-shot-2022-07-12-at-12-06-50-pm.png?auto=format) FRED Here’s the average price of ground beef: ![](https://www.datocms-assets.com/56652/1657642096-screen-shot-2022-07-12-at-12-07-37-pm.png?auto=format) FRED Here’s the average price of chicken breast: ![](https://www.datocms-assets.com/56652/1657642150-screen-shot-2022-07-12-at-12-08-57-pm.png?auto=format) FRED Here’s the average price of gasoline: ![](https://www.datocms-assets.com/56652/1657648637-screen-shot-2022-07-12-at-1-57-01-pm.png?auto=format) FRED Here’s average rent of primary residence: ![](https://www.datocms-assets.com/56652/1657648710-screen-shot-2022-07-12-at-1-58-18-pm.png?auto=format) FRED Nearly every chart for any food, shelter, or fuel metric shows the same pattern when priced in Bitcoin. In fact, here’s Bitcoin priced against the global price index of all commodities over the last five years. ![](https://www.datocms-assets.com/56652/1657648761-screen-shot-2022-07-12-at-1-59-08-pm.png?auto=format) FRED These charts display how Bitcoin helps people better afford the things they need, like shelter, food, and energy, when it is held long-term. **Bitcoin holds its value over time, whereas fiat currencies, including the stablecoins that are pegged to them, are continuously losing purchasing power at an increasingly rapid pace.** Although stablecoins are helpful for short-term needs, Bitcoin remains the superior hedge against currency debasement over longer time frames. This makes Bitcoin a great alternative for people worldwide suffering from the ill effects of inflation and currency devaluation. Bitcoin can be easily purchased with a phone and internet connection. It is proving to be a valuable technology to help people protect their savings from the harmful policies of central banks and governments worldwide. ### Bitcoin is Useful Beyond Protection from Currency Devaluation Thus far, we have focused on how Bitcoin and stablecoins together are helping people across the globe protect their savings from inflation and currency devaluation. In my opinion, this evidence already disproves the technologists’ claims in their letter to Congress that this technology is *“not a source of public benefit,”* but it should be said that Bitcoin is providing utility well beyond protection from currency devaluation. One big difference between Bitcoin and stablecoins is Bitcoin’s resistance to censorship and seizure. With a stablecoin, an individual still needs to trust that the centralized issuer of the stablecoin is managing its balance sheet appropriately, will not censor their transactions, and will not seize their funds. If a centralized stablecoin issuer is tapped on the shoulder by a government or regulator and told not to allow people from specific jurisdictions to transact, then that issuer could easily accomplish this. This is where Bitcoin’s traits of decentralization and censorship resistance shine. It’s another reason Bitcoin should be the preferred long-term option over stablecoins. The risk of confiscation and censorship is substantially reduced when using Bitcoin over stablecoins. Unfortunately, our world continues to see more censorship and financial warfare in the forms of sanctions, capital controls, and seizures than ever before. Many Westerners woke up to this risk during the Canadian Trucker Protest when civilian bank accounts were frozen with the click of a button to support the protest. Regardless of how someone feels about the protest, they should be extremely concerned about the response from the Canadian government and the financial sector. This is all new for Canadians, but censorship, asset freezes, and capital controls are the norm for the civilians of emerging markets worldwide. In this environment of increasing financial warfare, countless stories have emerged over the years of how innocent civilians have turned to Bitcoin as a tool of freedom. There have been many examples of how Bitcoin has been used as a tool of freedom to overcome tyranny, censorship, and control in countries worldwide. Bitcoin has been used by people trying to escape authoritarian regimes or war-torn countries with their wealth. We heard many stories like this coming out of the Russian-Ukriane conflict. Bitcoin has been used by human rights protestors, such as those in Belarus in 2020, who turned to Bitcoin as a way to transfer funds because ***“Other ways are under the total control of the government.”*** In countries where civilians are cut off from the outside world due to a collapsing and broken local financial system, Bitcoin is providing a lifeline due to its open and permissionless nature. In stark opposition to the technologists’ letter, twenty-one human rights advocates from twenty different countries wrote a letter to Congress to challenge the premises and conclusions of that original letter only one week after it was published. In the letter, these activists urge for responsible regulation and explain how Bitcoin had helped them and countless others worldwide when all other options failed. These human rights advocates write: > “We can personally attest — as do the enclosed reports from top global media outlets — that when currency catastrophes struck Cuba, Afghanistan, and Venezuela, Bitcoin gave our compatriots refuge. When crackdowns on civil liberties befell Nigeria, Belarus, and Hong Kong, Bitcoin helped keep the fight against authoritarianism afloat. After Russia invaded Ukraine, these technologies (which the critics allege are “not built for purpose”) played a role in sustaining democratic resistance — especially in the first few days, when legacy financial systems faltered.” They write: > “To claim that the practical value and future potential of cryptocurrencies “do not exist” denies the lived experience of millions of people like us and our colleagues who have depended on Bitcoin and stablecoins in times of crisis and autocracy.” This letter is a consequential contradiction to the technologists’ claims that Bitcoin has no public benefit. Critics may gawk at the number of these stories and say a vast majority of people still do not use these digital assets for these purposes, but that misses the point. Bitcoin can provide refuge to these people. Bitcoin allows people to transact free of censorship or government control. Bitcoin does protect people from currency devaluation. These are simply facts. Millions of people have figured this out, and because this technology works, millions and millions more will soon discover the utility of Bitcoin and stablecoins. ### Conclusion Over the last five years, many critics of this technology have chastised Bitcoin and stablecoins as useless and a waste. They have written countless articles in mainstream media about its uselessness and have even called for an outright ban on them. I believe these critics: 1. *Do not understand the dangers that billions face today regarding censorship and confiscation.* 2. *Do not understand the precarious state of our rapidly inflating global economy, especially in Emerging Market economies.* 3. *Do not understand how people use this technology as a tool of freedom and protection today.* The IMF, World Bank, and the Bank of International Settlements have all recently issued stark warnings echoing the same message.  We are possibly headed into an era of slow growth and high inflation which could result in further currency devaluations across emerging markets. Emerging Market economies are entering a very challenging time.  The critics who wrote that disparaging letter about ***“crypto-assets”*** should be more thoughtful of those less fortunate than them and learn more about how these technologies are helping people today before deriding them. I, too, once only saw Bitcoin as a speculative asset. Luckily, I saw a presentation that changed how I viewed this innovative technology. This piece may have a similar effect on a critic reading this. However, it is essential to note that an individual suffering from rapid currency devaluation in Argentina, Venezuela, or Turkey does not need an analyst like me to convince them why Bitcoin and stablecoins are important. They understand it intuitively because [Bitcoin and stablecoins meet their needs as better money options than their collapsing local currencies](https://www.swanbitcoin.com/bitcoin-price-prediction/).  They understand the usefulness of Bitcoin’s open and permissionless nature because Bitcoin worked for them when everything else failed. Critics of Bitcoin and stablecoins would be wise to consider this before pleading with Congress to cut off one of the only lifelines these people have to transact freely and preserve their life savings. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # CPI Inflation Hit a 40-Year High, but the Dollar is Still King URL: https://www.swanbitcoin.com/analysis/cpi-inflation-hit-a-40-year-high-but-the-dollar-is-still-king/ Swan Private Market Update 7/15/22. Investors currently fear a coming recession as the Federal Reserve continues on its mission to tame CPI inflation. --- **Sam Callahan** · July 22, 2022 · Updated June 27, 2024 These days, we seem to get news that in any other year would be the story of the year, but in 2022, it’s just another day. In the last week alone, we had the longest-running PM of Japan, Shinzo Abe, killed by an assassin, UK PM Boris Johnson abruptly resigned, Italian PM Mario Draghi offered his resignation, Sri Lanka divulged into country-wide protests amidst economic collapse, and Europe continues to deal with an energy crisis as a result of the Russian-Ukraine conflict. On top of all that, the world continues to struggle with consumer price inflation that is sweeping the globe as the price of food and energy continue to be impacted by geopolitical events. Investors currently fear a coming recession as the Federal Reserve continues on its mission to tame CPI inflation. This is all occurring as we close out the worst first-half returns for stocks and bonds in history. In 2022, there have been few places for investors to hide. ![](https://www.datocms-assets.com/56652/1658411344-1-stocks_bonds.png?auto=format) CPI inflation exceeded forecasts once again when it was reported Wednesday at 9.1% YoY, the highest reading since the end of 1981. When taking a closer look at the data, it gets even more troubling. Grocery prices have increased 12.2% YoY, and gasoline prices have increased nearly 60% YoY. The cost of essentials is getting much more expensive for everyday Americans.  The high CPI print caused the market to immediately shift its focus to the Federal Reserve. Given that the unemployment rate still remains historically low, and recent July data showed job openings currently at record-highs, this red-hot CPI number gives the Fed even more of a green light to be aggressive with its policy to stabilize prices.  The market now shows a 27% probability of the Fed hiking interest rates a full 1% at its next July meeting. Two weeks ago, this was given a 0% probability by the market. If it turns out to be the case, it would mark the first time the Fed has raised a full percentage point in one meeting since 1981. ![](https://www.datocms-assets.com/56652/1658443729-countdown_to_fomc-cme_fedwatch_tool.png?auto=format) Furthermore, federal fund futures markets are now implying a peak federal funds rate of 3.68% in December 2022 followed by a pause in rate hikes in January 2023, and then a return to rate cuts in late 2023 - early 2024. Said differently, the market is expecting the Fed to raise rates til the end of the year, pause when markets start to react, and then turn around and start cutting rates again around 2024.  It’s always important to point out that CPI is a lagging indicator. The bond market, on the other hand, is forward-looking, and it’s already flashing signals that it sees a recession in the near future.  The 10Y Treasury yield has risen rapidly most of the year but has been in a steady decline since it peaked at around 3.5% in mid-June. It is down 55 bps since that time. As a result, since the 10Y yield peaked, we have seen stock prices finally begin to stabilize. The S&P 500 is up 1.32% and the Nasdaq is up 3.92% since the 10Y yield topped out in June. ![](https://www.datocms-assets.com/56652/1658417241-3-10y-yield.png?auto=format) If the 10Y remains under its 3.5% peak, this could be interpreted as the market thinking the Fed tightening cycle is close to over and is sniffing a coming recession and already looking ahead to potential Fed rate cuts. Founder of NorthmanTrader, [Sven Henrich](https://twitter.com/NorthmanTrader?utm_campaign=Swan%20Private%20-%20Market%20Update%20%2313%20-%207%2F15%2F22%20%28XpFwba%29&utm_medium=email&utm_source=MASTER%20-%20Swan%20Private%20Client%20Services%20-%20Insight%20distribution%20list%20-%20Updated%3A%207%2F8%2F22&_kx=FAUB4FjEgpsFMq9MMJVRXPUD37ZzQ49LwpY4MrmAhD6tyBqD88P_LPIlRyL1J1Jb.KzLKES) was recently interviewed by Preston Pysh on an episode of the Investor’s Podcast, and in the conversation, he brilliantly explains why the 10Y yield is of particular importance, > This debt-laden system cannot handle higher rates. 3.2%, by the way, is what stopped it in 2018. In the fall of 2018, the 10Y hit 3.2%, markets fell apart, the Fed flip-flopped, and that was the end of it. That was with $8-9 trillion of less debt! So we cannot be in a situation where the 10Y continues to hover around 3.2% for an extended period of time. > > — Sven Henrich If the 10Y breaks above this key 3.5% level, then asset prices could continue to suffer as the Fed’s tightening cycle continues.   Another recessionary signal coming from the bond market came in the form of the 2s10s yield curve inversion. The 2-year Treasury yield first topped the 10-year yield back in the Spring, and now it has inverted to the steepest level since 2000, with the spread currently at -0.22%. ![](https://www.datocms-assets.com/56652/1658417333-4-2s10s.png?auto=format) This has historically been a sign that investors foresee an economic downturn in the future. Banks make money off the spread between short and long-term interest rates. If banks can’t make money borrowing and then lending over longer time periods, then lending activity drops, and economic activity falls along with it.  This recession indicator has been a reliable one in the past. It has preceded nearly all recessions since the 1970s. However, it doesn’t necessarily mean a recession is coming next week. The average lead time of the 2s10s inversion to the start of a recession is 12 months. ![](https://www.datocms-assets.com/56652/1658417370-5-times.png?auto=format) This 2s10s inversion only serves as another sign that the bond market is not really buying this whole belief that the fed funds rate will peak around 3.7% by December. Instead, the bond market appears to be sniffing out a recession and potential Fed pivot, but when that happens exactly is anyone’s guess. The dollar is another chart of particular importance to keep an eye on today. Given the amount of US-dollar denominated debt in the system, a strong dollar would make it more expensive to service that debt, increasing the risk of defaults across the globe. The dollar has been strong and getting stronger year-to-date. The DXY is a measure of dollar strength against a basket of 6 foreign currencies. The DXY is currently sitting at its highest level since 2002, up 12.5% YTD. ![](https://www.datocms-assets.com/56652/1658419598-6-dxy.png?auto=format) A strong dollar that is continuing to strengthen like this has many interpretations. First off, it is a sign that investors are going risk-off as they fear a recession looming and are fleeing to the safety of the dollar. Secondly, it can be viewed more as weakness in the currencies that the DXY compares the dollar against, mainly the euro and the yen. The euro and yen constitute over 70% of the DXY index, and both of these currencies have come under severe pressure of late. The euro has been sliding as investors worry that continued high consumer price inflation, primarily due to high energy prices, will push Europe into a recession. Eurozone consumer price inflation hit a record-high of 8.6% YoY in June. As a result, the euro has been depreciating against the dollar at a rapid rate. The euro has depreciated by -10.93% YTD against the dollar and briefly dropped below dollar parity for the first time since 2002. Today, it sits squarely at dollar parity.  ![](https://www.datocms-assets.com/56652/1658419631-7-euro.png?auto=format) A contributing factor to the yen’s downfall has been the monetary policy of the European Central Bank, which has been slow to raise rates to combat rising prices as the Federal Reserve hikes at the most aggressive pace in decades. The ECB has already held an emergency meeting in response to rising yields across Southern European countries like Italy and Greece. From the meeting, they introduced a new *“anti-fragmentation”* tool that sounds awfully similar to Quantitative Easing. In other words, the ECB is still performing accommodative policy in the face of a rapidly depreciating euro and record-high CPI inflation prints.  The other major currency that has experienced significant pressure over the last month is the Japanese yen. The yen is down an astonishing -16.9% YTD, a 24-year low.  ![](https://www.datocms-assets.com/56652/1658419678-8-yen.png?auto=format) The yen started coming under pressure when the Bank of Japan needed to print billions of yen to purchase their own bonds to maintain the peg of their 10Y yield at 0.25%. The result has been the rapid devaluation of the yen relative to the dollar. Given the amount of debt in Japan’s economy, they are particularly sensitive to increasing interest rates, so one can understand their desperation to maintain their interest rates at low levels. However, with a hawkish Fed and a rapidly depreciating yen, they now find themselves in a dilemma. Do they continue to peg rates at the expense of their own currency, or do they abandon the peg to stop the yen from bleeding out?  The good news is Japan might get some help from their friends in America. US Treasury Secretary Janet Yellen met with her Japanese counterpart to discuss the recent currency exchange rate volatility. From the meeting, Yellen stated that the US would be willing “*to cooperate as appropriate on currency issues, in line with our G-7 and G20 commitments.*” This statement could be foreshadowing a scenario where the US has to intervene in currency markets and devalue the dollar to take pressure off their allies in Europe and Japan in the name of global financial stability.  In the face of rising consumer price inflation seemingly everywhere, there have been some signs of demand destruction in the economy, which is exactly what the Fed wants to see. Copper has historically been viewed as a key leading economic indicator due to the demand for the base metal being closely tied to multiple sectors across the economy. When looking at the copper chart, demand for copper has fallen off a cliff this month. It is currently down -23% in the last 30 days. Oil can be thought of similarly, given that it is an input for nearly all economic activity across all sectors, and it too is finally starting to roll over. WTI oil fell below $100/barrel in early July and is now at $95/barrel, down -17.7% in the last month. ![](https://www.datocms-assets.com/56652/1658419756-9-copper_oil.png?auto=format) The fall of oil and copper prices can be seen as indicators of slowing demand throughout the economy, which is yet another sign that an economic downturn is coming.  Whether it's the bond market, foreign exchange markets, or commodity markets, they are all telling the same story: a deflationary impulse is on the horizon. Although the 9.1% CPI inflation print shocked many market participants, it is vital to remember it is a backward-looking metric. All these other areas of the economy help paint a different picture of economic weakness and demand destruction as the Federal Reserve continues on its mission to rein in consumer price inflation.  Given a recession will likely cause the Fed to revert back to the more accommodative policy that markets have grown so fond of over the last decade, this can strangely be viewed as a tailwind for risk-on assets. This is the upside-down market in which we currently find ourselves. A recession is good nowadays because it will help reduce some of this consumer price inflation that disproportionately hurts the poorest in our society the most, and it increases the probability of a Fed pivot, which is a boon for asset prices.  Nobody knows for sure what will occur in these unprecedented markets. At the moment, the Fed must be pleased with the falling asset prices and the signs that demand in the economy appears to be slowing despite what the lagging CPI data says. We will continue to keep a close eye on Europe and Japan as their economies and currencies continue to be significantly impacted by the current macroeconomic backdrop. These jurisdictions will likely give us clues as to what central banks and governments might do next to try to return some stability to the global financial system.  ### *All Eyes On Bitcoin Miners and Long-Term Hodlers* Bitcoin continues to trade in line with the rest of the assets considered risk-on. It has continued to trade sideways in a range of $19,000-21,000 over the course of the last month. At the time of writing, the price of Bitcoin currently sits at $20,938, up 2.8% over the last two weeks. Bitcoin is trading in a range around its 2017 bull market high of $20,000 as more developments come to light around the contagion that’s spreading throughout the broader crypto market. Over the past couple of months, we have experienced a major deleveraging event as many investors and cryptocurrency platforms turned into forced sellers during the market turmoil. This daisy chain of risk really began with the Luna/UST crash, which caused the Three Arrows Capital Ponzi scheme to be exposed, which led to the significant stress on many centralized cryptocurrency lending platforms such as Celsius, Voyager Digital, and BlockFi.  Since our last market update, BlockFi narrowly escaped insolvency when it struck a deal with FTX to acquire them for up to $240 million, and both Voyager Digital and Celsius have filed for Chapter 11 bankruptcy protection. The drama around the embattled hedge fund, Three Arrows Capital, also continues. They too filed for bankruptcy last week, but there are rumors that its founders are not cooperating with lawyers in the liquidation process. News continues to trickle out about new firms that had exposure to Three Arrows Capital, with Blockchain.com being the latest to emerge after they announced a $270 million loss. We believe reports of contagion from this mess will continue to come out in the coming weeks.  Another area of the market that has experienced some forced selling is Bitcoin miners. Bitcoin miners have been in a precarious situation since general market conditions turned in 2022. Due to a combination of tightening credit conditions, higher energy prices, the downward price action, and the level of Bitcoin’s hash rate, miners’ profit margins are being compressed across the board.  One can see this quantified when looking at the decline in Hashprice over the last year. Hashprice refers to the expected value of 1TH/s of hashing per day, and it can be used to estimate how much dollar-denominated revenue a miner can expect to earn per unit of hashing power per day. Hashprice is currently sitting at $0.085 USD/TH/day, down ~80% since it peaked in October 2021, and under $0.10 for the first time since October 2020. ![](https://www.datocms-assets.com/56652/1658419837-11-hashprice.png?auto=format) Luxor Operations are less profitable for these miners. To make matters worse, during the raging bull market, many public miners took on debt and held onto the Bitcoin that they mined. Based on the financial statements from some of the largest public or private Bitcoin mining companies, it’s estimated that ~$5.8 billion was raised by these entities during 2021 alone. Now these miners are becoming forced sellers of their Bitcoin reserves to service their debt obligations and pay their operational costs. A perfect example occurred when Core Scientific announced they sold 7,202 BTC in the last month at an average price of $23,000 to raise $167 million for “*payments toward ASIC servers, capital investments in additional data-center capacity, and debt repayments.”* Core Scientific isn’t alone, ~13,000 BTC have been sold by the top 28 public miners in 2022.  ![](https://www.datocms-assets.com/56652/1658419941-12-miner-sellers.png?auto=format) The real question then becomes…when will these public miners stop selling their Bitcoin?  Well, no one can know for sure, but one metric that has served as a useful indicator of miner capitulation in previous bear markets is the Hash Ribbon Indicator created by [Charles Edwards](https://twitter.com/caprioleio?utm_campaign=Swan%20Private%20-%20Market%20Update%20%2313%20-%207%2F15%2F22%20%28XpFwba%29&utm_medium=email&utm_source=MASTER%20-%20Swan%20Private%20Client%20Services%20-%20Insight%20distribution%20list%20-%20Updated%3A%207%2F8%2F22&_kx=FAUB4FjEgpsFMq9MMJVRXPUD37ZzQ49LwpY4MrmAhD6tyBqD88P_LPIlRyL1J1Jb.KzLKES). This metric takes the 30-day and 60-day moving averages of the Bitcoin hash rate, and when the 30-day crosses above the 60-day moving average, historically, this has accurately marked times of the end of miner capitulation. One can think of this metric as a signal that a turning point has taken place where miners are starting to plug back in after a period of time when many miners have been unplugging their machines amid the bear market. This turning point is highlighted in the chart as periods where the light red shaded areas turn to dark red.  On July 4th, we saw the Hash Ribbon Indicator flash for the second time in the past month, but then the 30-day moved back below the 60-day, indicating that miners are still in capitulation mode. ![](https://www.datocms-assets.com/56652/1658419994-13-hash-ribbons.png?auto=format) This indicator is still showing that miners are in the middle of capitulation. The difficulty adjustment confirms this as we just had the largest downward difficulty adjustment since July 2021 of -5.01%, signaling that miners are unplugging their machines. This is the third consecutive downward adjustment. We will continue to track the Hash Ribbon Indicator and difficulty adjustment to get a sense of when this mining behavior begins to reverse trend. As miners continue to get squeezed and are forced to sell their Bitcoin holdings, there was some positive news in miner land that gained some recognition. Texas’s ERCOT grid is currently under enormous stress as a heat wave has rolled through. In response, all industrial-size Bitcoin miners shut off their machines, and this allowed for over 1,000 MW of power to be pushed back onto the grid for retail and commercial use. This event highlights how Bitcoin miners can provide a unique flexible load demand that can improve the resiliency of electrical grids by shutting down with a flip of a switch in periods of peak demand like we are seeing in Texas today. Outside of mining, there have been a couple of bright spots under the hood in the Bitcoin industry amidst the broader market turmoil. The first is that we just saw the largest monthly outflow of Bitcoin off exchanges on record.  ![](https://www.datocms-assets.com/56652/1658420024-14-exchange-withdrawals.png?auto=format) Since the crypto contagion began and multiple crypto platforms have declared bankruptcy or experienced significant stress, we have seen a new urgency from investors to learn how to self-custody their Bitcoin. This is not only a good thing for investors to own their own private keys, but it is also a good thing for the Bitcoin network as it becomes less centralized when not as much Bitcoin is held on these centralized exchanges. One caveat is that we don’t know what percentage of these Bitcoins are being sent to third-party custodians, but the general trend is encouraging to see.  The second positive development is that we are not seeing any selling from long-term holders showing that this large price drawdown has not changed their conviction in Bitcoin as a long-term investment. Since July 2021, when the price of Bitcoin neared $35,000, we have not seen 65% of Bitcoin’s supply move.  ![](https://www.datocms-assets.com/56652/1658420068-15-hodlers.png?auto=format) Given that Bitcoin is down ~70% from its ATH, and we are seeing that 65% of the supply has remained inactive 1+ year ago, this is a sign that long-term Bitcoin holders are unphased by this drawdown. More Bitcoin is being retained by long-term holders with strong conviction in Bitcoin’s long-term value proposition. This is good to see because it is a sign that the speculators are leaving, and what remains is a much more stable, convicted investor base. Overall, the forced selling from both miners and the crypto contagion continues to impact the price of Bitcoin. These dynamics, along with broader macroeconomic conditions, will likely continue to affect short-term price movements. However, long-term holders have not been phased by this, and miners may be close to capitulation. Regardless of the price action, Bitcoin continues to act as a money that cannot be debased, censored, or seized in a world where fiat currencies are falling victim to all three. It’s times like this when long-term investors can sleep well at night knowing their Bitcoin holdings are protected against dilution and confiscation. ![](https://www.datocms-assets.com/56652/1658420100-16-table.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # 5 Reasons to Focus on Bitcoin Only - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/5-reasons-to-focus-on-bitcoin-only/ Unlike other cryptocurrencies, over the long term, Bitcoin has provided exceptional returns, peace of mind, and security for HODLers, their families, businesses, and employees. --- **Brandon Quittem** · December 5, 2023 · Updated June 25, 2024 Like other cryptocurrencies, Bitcoin is highly volatile. Unlike other cryptocurrencies, Bitcoin has [provided exceptional returns](https://www.swanbitcoin.com/bitcoin-price-prediction/), peace of mind, and security for hodlers, their families, businesses, and employees over the long term, especially for those using a recurring buy strategy.  *“Crypto,”* on the other hand, brings more volatility and a much greater likelihood of losses – even for experienced traders. There’s no need to take on these added risks and costs of *“crypto”* and *“crypto exchanges”* since you can just buy Bitcoin from a Bitcoin-only company like Swan. Here are five reasons to support Bitcoin only. ###### 1. Bitcoin ≠ Crypto There are currently over 2 million cryptocurrencies on the market. Thousands more have died, leaving investors with nothing. Some claim to be pseudo-equity, governance tokens, yield-bearing tokens, gas for smart contracts, and more. These coins are **DEPENDENT** on a leader or foundation to build, maintain, and promote the coins. **Ethereum DAO Hack (2016)** The DAO (Decentralized Autonomous Organization) was a complex smart contract on the Ethereum platform that raised significant Ether through a token sale. However, a vulnerability in its code was exploited by a hacker, leading to the theft of about $60 million worth of Ether. To address this, the Ethereum community decided to execute a hard fork of its blockchain. This hard fork effectively reversed the transactions that led to the theft, returning the stolen funds to their original owners. It's important to note that this was a controversial decision, as it went against the principle of immutability that many in the blockchain community hold dear. As a result of this hard fork, Ethereum Classic (ETC) was created, a continuation of the original Ethereum blockchain where the transactions of the DAO hack were not reversed. No team of developers can do this on the Bitcoin blockchain. There is only one fixed supply digital commodity, and that is Bitcoin. Unlike other cryptocurrencies, Bitcoin is **INDEPENDENT** and fully decentralized, the monetary policy can be trusted, and it has no counterparty risk, CEO, or foundation. In a world where fiat money is rapidly devaluing, Bitcoin is a unique long-term savings vehicle that deserves a spot on every balance sheet. In October 2023, Fidelity released a follow-up report titled: [Bitcoin First Revisited](https://www.fidelitydigitalassets.com/research-and-insights/bitcoin-first-revisited): about why investors need to consider [Bitcoin separately](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/) from other digital assets. In it, they double down on why Bitcoin is unique from all other digital assets and belongs in its own category for many of the same reasons discussed in this article. ###### 2. Bitcoin Offers Better Risk-adjusted Returns History shows that cryptocurrencies are, on the whole, terrible investments. While some coins have a wild run-up when they initially get attention, the hype is short-lived, and most fade away. As [this analysis](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfauUr1W2rnZw5JkdF2PS-2Fdc7q0F6QsGdC2lQ2GRb5q80333-2B3gEOiBTvgfUyo46NepsvX2iKJAjgWGuiP5enf8IeJ8hXCHQaVqftICHtEaWRyCPUq0-2FKr0Vi1lLYyz-2BSN17S0luQa1Xdw5ikif-2BjaCeEtQuHkz2O4t3Zb5zcwBMPbw-3D-3DRbTD_n1NEb1SFfe-2BrASpV35AOn1ouMEilIMhIroTzPzhiUie3FvUNkY6t1cxpNu3-2BkJhUknBKOv6p4HAddMymv9jhxvyrEFe3zegj98tt5LRTNCCIiDQSGqN7EHf5QDeULShOcbanRvuAC1th-2BB21Kx9CN5fr23t-2FFZE81foaudUQbsffC73v9NXKF7NyodO0kgAkYZpcVW-2BjBnOR2BThRG-2BXFpkfL-2B1Vapme-2Fh-2Fc4O9rMlS9eD0lK7XV9cNFoDmFnK6Nkav1wJnsctc7g6pqk-2FmNiPCh0b47oCTmIdt7ziMWv4KoyWdY2XEamfjSq6a9QOtAfoIAUBD0TNSF8tQ7WcupaaxjRTiHYcwrdzRUYXq7H2mShpBOrQiZxVWtcWyGPFNbOZ3iEUjWGFcrvNdTUgE3OFbkj0ZBSIdh377y6xmc9NA-3D) shows, they rarely regain their previous all-time high in BTC terms. ![](https://www.datocms-assets.com/56652/1708371142-king-btc.jpeg?auto=format) Bitcoin Talk Forum On the other hand, [Bitcoin has the best brand](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1ACXhiYURTWrRWudziE52-2BqKvET-2B79A2YZhLihuI1QSw-2Bd-2BC6kGWMURDO0DWhRC7jIh63mFLmhGeEDDh2JSe-2F-2FLcPSygMHL4Odaf52OEqmub4GBUB9OIvipdco3LkpE5hnLViBTnu578RzJBBKjP99rLJvaiUG98jY2Yj0WjzG4319xIcwyQewR8b-2FPcvsNXHg-3D-3DCST3_n1NEb1SFfe-2BrASpV35AOn1ouMEilIMhIroTzPzhiUie3FvUNkY6t1cxpNu3-2BkJhUknBKOv6p4HAddMymv9jhxvyrEFe3zegj98tt5LRTNCCIiDQSGqN7EHf5QDeULShOcbanRvuAC1th-2BB21Kx9CN5fr23t-2FFZE81foaudUQbsffC73v9NXKF7NyodO0kgAkYZpcVW-2BjBnOR2BThRG-2BXFpkfL-2B1Vapme-2Fh-2Fc4O9rMlT86XTp-2BmpnJHSZ4gNjxq3V9oaiVgv-2BjnTllogKwxONTZfu3C1wfGnvAbLtLYZRePlFtlt7wFosdEdnmYawhtrHEVCvFNCp-2BLtzhWRP3wWj4aTlpSDoqOr-2BwSbyA3vTNkliV7i3GYm8JdUYoumR-2FFpZL6eqaYBiePk6WbJWd-2Bs-2B8A9NO7RC7UHWs94R0BiMRrw-3D), is the longest lasting, most secure, and performs best in the long term. It is less volatile than other tokens, most losing 95% or more of their value against Bitcoin. Looking at risk-adjusted returns, Bitcoin is the clear winner.  ###### 3. Aligned Incentives For the Win  The business model for cryptocurrency exchanges is to lure customer funds onto their platform and then either (1) get users to trade between coins or (2) lend customer funds to (risky) counterparties to earn interest.  Unfortunately, this incentivizes companies like Coinbase and Celsius to act against the interests of their customers. How?  - *Promoting the latest overhyped token to profit off trading fees (see:* [*Coinbase promoting a Ponzi scheme Luna*](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1PszZrPDzSK2JC5Tj3f2zTaqMaxKIWfNfLmVR8Iw-2BtSBNJeVT-2BPyJ-2BmIau3hXAErNeuJZNYrPJhZR-2BQP1nl15-2Fd9W7vUPrD7HYddvAxVOtuaAn4qd4IYmrCqZz-2BzmBX0tzqCt-2B-2B9nIMymB9OZMxA3iomM1PZuOiUf2YHg6l-2B8cojQIMsH2LcYQXzvaJ3jWLx-2FrqJ7f6lJKMkJ7qLmKbEsOBCpn-2FrHFkaD72j3KwiVaPdRZg9_n1NEb1SFfe-2BrASpV35AOn1ouMEilIMhIroTzPzhiUie3FvUNkY6t1cxpNu3-2BkJhUknBKOv6p4HAddMymv9jhxvyrEFe3zegj98tt5LRTNCCIiDQSGqN7EHf5QDeULShOcbanRvuAC1th-2BB21Kx9CN5fr23t-2FFZE81foaudUQbsffC73v9NXKF7NyodO0kgAkYZpcVW-2BjBnOR2BThRG-2BXFpkfL-2B1Vapme-2Fh-2Fc4O9rMlS-2FvfPfSEDVwrt1ejrAr6LHS11MlVq8Sa-2FQVGDCArgf-2B8sOhh7Z9-2FfMp90-2Fah0RAdma1mJnFRp-2BZhbkIWz-2FRV0xexytWSMb5186WUOBBKRbEwBXfCLE6a7IRcg83ydzLzf7fKK7srqt-2FaDfl8VuYyTIrhNneju3-2BqO5ZRzqWu7SJ6ub7Etba8qTm4oVPQmzaqQ-3D)*, or promoting the dog coin, SHIB)* - *Discouraging self-custody because that means less revenue for them (see: high withdrawal fees and* [*marketing campaigns against self-custody*](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1IQeZDu9-2BT-2BVD-2FZcF7z0GgB8GI-2BZLhEQd3gJRmaBK7G2-2BFvdNdpe7k59EJtKsOgl5XQPMwIiOyJxh-2FiR5OUGfZeVqjkO3BYWNygf3SojX2H4zisdngdqkdZMEM-2Budzag1sDaFHAhpX4oweH9u4zSEb-2BbN-2FFBgfCXAPIEAUHmeHBESqRNjQPRV0WiOowstiy5Ig-3D-3DbIq3_n1NEb1SFfe-2BrASpV35AOn1ouMEilIMhIroTzPzhiUie3FvUNkY6t1cxpNu3-2BkJhUknBKOv6p4HAddMymv9jhxvyrEFe3zegj98tt5LRTNCCIiDQSGqN7EHf5QDeULShOcbanRvuAC1th-2BB21Kx9CN5fr23t-2FFZE81foaudUQbsffC73v9NXKF7NyodO0kgAkYZpcVW-2BjBnOR2BThRG-2BXFpkfL-2B1Vapme-2Fh-2Fc4O9rMlRcwQU6-2FnYH-2BW17-2FDG9jE6-2BDAaMgooFxNcniNFxQErBVArMpW1eBHq-2Fbc32SFD6rlMuNohyXhlnHm8WOlSOvYJTM6-2Bw-2BmTyzk9nr0ibcfx8h9bCqw9oH2XzosGaApFGUGQXVUgqXykRm3BnUKC2xZqlnnod3Er-2FgMVv1XUbGtz9yxQC5d-2BlTtbfAPp9f8Xasks-3D)*)* Why patronize a company that doesn’t have your best interests in mind? Bitcoin-only companies like Swan are aligned with their customers’ success. Our business model is simple: we only get paid when you buy (or sell) Bitcoin. We have no incentive to convince our users to trade into risky tokens, and we have no incentive to custody your coins.  In fact, we promote self-custody and make it as easy as possible for our users by offering FREE and AUTOMATED Bitcoin withdrawals.  ###### 4. Focusing on Only Bitcoin Provides a Better Experience For Clients Crypto exchanges must incur massive overhead to support hundreds or thousands of often insecure, risky tokens. To compensate for the higher cost structure, crypto exchanges charge higher fees and monetize their users with predatory methods like promoting speculative tokens and offering extremely risky *"yield"* products... Not to mention notoriously awful customer support. *"If you try to please everyone, you'll end up pleasing no one."* ![](https://www.datocms-assets.com/56652/1708370857-swan-coinbase-together.png?auto=format) Trustpilot Focusing only on Bitcoin provides a competitive advantage. Swan can offer lower fees than Coinbase due to reduced overhead. By having a singular focus, the entire company is aligned on the same mission, which increases employee retention and productivity. Focusing enables us to hire staff that specializes in Bitcoin specifically. Our customers LOVE this. Our team gets on calls with our clients, something the Coinbases of the world could never do. ###### 5. Bitcoin is the Only Cryptocurrency With Regulatory Clarity Cryptocurrencies and crypto exchanges have regulatory uncertainty hanging over them. In fact, [the SEC is investigating Coinbase](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1HN6c8tsepLnjllbfqc-2Fq2ciUYAwBecmgodN2hFCrzeazfkUPEhQOd2GCvrFjrZDYKzoR5FCi5khCWtDHKFVwSdco-2BhtEZ5SaH0fPROdlRh3FZGQgKDrK4VBZyOOlx30uEOBNr1RacvtRy13o4Fs3jCPQLs9Yqu64gJLMZlb02pa-2FzSjxB9fEVvajLrD-2BNmwv9FI-2BrpTt-2FWbMaKuJqWO2-2BjzuHsS-2FvhWWUgTyZpIALjtNWPmLuzNw4VNS93DCu4cww-3D-3DLsXM_n1NEb1SFfe-2BrASpV35AOn1ouMEilIMhIroTzPzhiUie3FvUNkY6t1cxpNu3-2BkJhUknBKOv6p4HAddMymv9jhxvyrEFe3zegj98tt5LRTNCCIiDQSGqN7EHf5QDeULShOcbanRvuAC1th-2BB21Kx9CN5fr23t-2FFZE81foaudUQbsffC73v9NXKF7NyodO0kgAkYZpcVW-2BjBnOR2BThRG-2BXFpkfL-2B1Vapme-2Fh-2Fc4O9rMlR5MUNVc-2B7U86GmCvbLu1U4eO-2BAWaou3-2BbRApnJFScZGvZapbNGUXuszwSHsU5VOYkhactKjHS0btjI3Nc79ALnpKbDfVEusYfDT0UuUPnnUrYdT8sno0rM-2FqIazFjJ9XpCXDHmBlg33hs2PDKe1zokKyLflaM-2BGw91zC-2FvaqePmvaBm1rymQFGStMGdcZ167Q-3D) for listing potentially unregistered securities. SEC Chairman Gary Gensler has publicly stated that Bitcoin is the only cryptocurrency with commodity status (which implies other tokens are unregistered securities).  ***** UPDATE: It was***[ ***reported on July 31st***](https://www.ft.com/content/1f873dd5-df8f-4cfc-bb21-ef83ed11fb4d)***, ahead of initiating legal proceedings against the exchange, the US Securities and Exchange Commission instructed Coinbase to halt trading in all cryptocurrencies except for Bitcoin.*** As the regulatory landscape shifts, it's wise for investors to consider safeguarding their holdings by moving them from Coinbase into secure [cold storage](https://www.swanbitcoin.com/bitcoin-cold-storage/). While free-market competition is preferable, this reality poses a major risk for crypto exchanges and most tokens.  Meanwhile, Bitcoin has regulatory clarity as a commodity rather than a security. Bitcoin-only exchanges can confidently sell BTC to their clients without the risk of a regulatory crackdown. In the end, the old *"****KISS****: Keep It Simple Stupid"* adage applies. Avoid expensive and risky strategies that are likely to lose money. Employ a superior strategy, simply buying Bitcoin from Bitcoin-only companies.  We're here to help with that. Head to your [Swan Dashboard](https://www.swanbitcoin.com/?gc=email_newsletter_0722&utm_campaign=email_newsletter_0722&_kx=FAUB4FjEgpsFMq9MMJVRXPUD37ZzQ49LwpY4MrmAhD6tyBqD88P_LPIlRyL1J1Jb.KzLKES) to smash buy, or sign up below! ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # The Problem with NFTs - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/the-problem-with-nfts/ NFTs are marketed as ownership, usually of some digital artwork, secured using “blockchain technology” and “crypto.” Are they a scam? --- **Nick Payton** · August 3, 2022 · Updated June 6, 2024 NFTs are a hot topic. They’re marketed as ownership, usually of some digital artwork, secured using *“blockchain technology”* and *“crypto.”* The acronym NFT actually stands for *“Non-Fungible Token.”* That’s a real mouthful though, and most people don’t know what fungible even means. And, if people were told they were buying a token instead of an artwork, they might get confused, or rather, not get confused in the first place, and not buy the thing. But here we are, with people buying NFTs for all kinds of money, mostly in the hopes of making more money by selling them for more money to someone else at some point in the future. And here we come to the main problem. Most of those people are not going to make money. They’re going to lose money. They’re going to lose most of it, if not all of it. Here’s the biggest reasons why. ### You Can't Actually Own Digital Files What is ownership? It’s the right to determine how a thing is used.  In the case of an original oil painting, the thing exists in only one place at a time and the owner gets to decide where that place is – whether it’s in a vault, hanging on a wall in their home, or on loan to a museum. They can even choose to burn it if they want. And, finally, it’s the right to transfer that ownership to someone else by selling the thing to someone else. However, this is not the case with any digital file – like a jpeg, gif, mp3, mp4 or any kind of digital file. Digital files are not one-of-a-kind like oil paintings, or scarce like limited edition prints. A digital file can essentially be copied, perfectly and indistinguishably from a previous copy of the file, for essentially no cost. Files are just information and computers are information copying machines. Presented with two identical digital copies of the same jpeg, there is no way to tell which is the original and which is a copy – they are identical, bit for bit, byte for byte. ### There's no scarcity in NFTs Anyone can mint any number of these NFTs. They always start with an initial *"minting"* of 10,000 editions. But, the founders of these projects inevitably seek additional marketing ammunition. Take BAYC for example: They have nearly tripled their original drop due to the countless variations of NFTs based on the original releases. Finally, numerous other project founders looking for a quick buck make carbon copies of popular NFT projects which leaves them indistinguishable in appearance from originals. ### The platforms claiming ownership enforcement probably won't be around for long anyway These often sit on centralized platforms created on centralized protocols, suffering outages and will go away if any of the dependent layers go away, which they easily can.  These are collectibles whose ownership records can vanish when the [excitement for them wanes](https://www.bloomberg.com/news/articles/2022-06-29/nfts-have-fallen-off-the-cliff-as-sales-sink-to-lowest-in-year#:~:text=On%20the%20world's%20biggest%20NFT,July%202021%2C%20Dune%20data%20shows.).   ### Collectible Fads vs Actual Art that stands the test of time Collectible fads come and go: Beanie babies, cabbage patch kids, tomagochis. You may not even have heard of these, but they once had liquid markets desperate to collect them.  They were simple and cheap to create and had big marketing budgets. But then interest waned and people forgot about them and the value plunged. Do you think people are going to be excited about digital rocks, apes or cats for the ages? ### Summary Investing in expensive collectibles is a very high risk undertaking. NFTs don’t even offer the guarantee of exclusive control over the collectible itself. And these are not genuinely rare, nor particularly good collectibles. You can’t actually own and fully control a digital file. There is zero scarcity, so your NFT properties can be reproduced an infinite number of time. You are constantly exposed to an increasing number of platforms coming under scrutiny due to their unregistered security status. History shows us that actual art stands the test of time, and not collectible fads that go through a boom and bust cycle in such a short period of time. The only investable digital asset is [Bitcoin](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins). It is scarce, divisible, verifiable, portable and censorship resistant. In 2022, when many of our assets and freedoms have come under attack, it is both the safest asset with the most exposure to upside in a generation. ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # A Look At the Lightning Network - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/a-look-at-the-lightning-network/ Examining the scaling method of the Bitcoin network and its evolution from a store of value to a medium of exchange. --- **Lyn Alden** · August 6, 2022 · Updated June 25, 2024 This article examines the relationship between a monetary asset being a store of value vs. being a medium of exchange. Specifically, it focuses on the scaling method of the Bitcoin network as its main example. It also takes a broad look at the history of trade-offs in the cryptocurrency space to see why a layered approach makes the most sense. The primary goal of this article is to examine how Bitcoin has evolved as a medium of exchange and, more broadly, to analyze the order in which new monetary assets can be accepted as a store of value and a medium of exchange. As a big part of that, I'll include an analysis of the Lightning network, a small but fast-growing payments layer interwoven into the Bitcoin network. ![](https://www.datocms-assets.com/56652/1659740631-picture1.png?auto=format) Arcane Research, The State of Lightning Volume 2 ### Summary Points This article is long, so I'll summarize the main points up front here, and then spend the rest of the article diving into the details. - A truly decentralized and permissionless payment network requires its own underlying self-custodial digital bearer asset. If instead it runs on top of the fiat currency system or relies on external custodial arrangements at its foundation, then it is neither decentralized nor permissionless. - In order to create a truly new digital bearer asset that is useful for payments in the long run, it must also be an attractive store of value, so that a meaningful percentage of the population begins to persistently hold it as some percentage of their liquid net worth and be willing to accept it for goods and services. - In other words, in order to create a decentralized version of Visa, beneath that you must first create a decentralized version of Fedwire, and along with that you must first create a decentralized version of digital gold. It's hard to envision any other path succeeding. - Bitcoin started with a smart design from the beginning. It created an underlying digital gold and settlement network, with a credible degree of decentralization, auditability, scarcity, and immutability that no other network currently rivals. On top of that foundation, Lightning as a payment network is being developed, and has reached a critical mass of liquidity and usability. - Many cryptocurrencies that followed in Bitcoin's wake put the cart before the horse. They optimized for throughput and speed on their base layer, at the cost of weaker decentralization, auditability, scarcity, and/or immutability of the underlying bearer asset. As such, they failed to gain structural adoption as money and rendered their high throughput irrelevant, especially since they were brought into exist in the shadow of Bitcoin's larger network effect. - Volatility is inevitable along the path of monetization. A new money cannot go from zero to trillions without upward volatility by definition, and with upward volatility comes speculators, leverage, and periods of downward volatility. The first couple decades of monetization for the network as it undergoes open price discovery to reach the bulk of its total addressable market, should be different than the "steady state" of the network after it reaches the bulk of its total addressable market, assuming it is successful in doing so. - Taxes on cryptocurrency transactions, as well as the lower supply inflation rate of bitcoins compared to fiat currencies, results in Gresham's law being applicable here. Most people in developed countries have an incentive to spend their fiat and hoard their bitcoin like an investment, at least in this stage of the monetization process. The exception is for the subset of people who specifically need Bitcoin/Lightning's permissionless nature for one reason or another, or for whom the majority of their liquid net worth is in it. - People in developing countries, with higher inflation and weaker payment and banking systems in general, have more of a natural incentive to use Lightning as a medium of exchange earlier on its monetization process. Indeed, adoption rates are rather promising in many of those regions. This isn't surprising, considering that more people in developing countries have smart phones than bank accounts, in aggregate. - An overview of how the Lightning network works in a basic sense, and why channel-based transaction systems make more sense than broadcast transaction systems for individual payments. - A look at other use-cases for the Lightning network, including its usage as a fast settlement system to move dollars and other fiat currencies around globally, through the core bitcoin liquidity of the network. - A response to various criticisms of the Lightning network, including an explanation of why comparing its small size to various larger DeFi projects is a category error, and an analysis of its scaling potential. - Concluding thoughts on the regulatory and enforcement hurdles governments face now that open-source peer-to-peer payments technology exists. ### Store of Value vs Medium of Exchange Humans in tiny groups don't need money; they can organize resources among themselves manually. However, groups that reach the [Dunbar number](https://en.wikipedia.org/wiki/Dunbar%27s_number) or larger usually start identifying and using some form of money, which gives them a more liquid, divisible, friction-minimized, and widely-accepted accounting unit for storing and exchanging value with people they don't know. What makes good money?  And how does new money get adopted by users?  I cataloged the history of this question from multiple points of view in my article, "[What is Money, Anyway?](https://www.lynalden.com/what-is-money/)" The short answer from thousands of years of history across multiple continents is that commodity money that is adopted organically needs to have a reasonably high stock-to-flow ratio and needs sufficient divisibility, portability, durability, fungibility, and verifiability while being desirable to hold for some reason. When different commodity monies come in contact with each other, often due to contact between cultures with varying levels of technology, the money that is harder to produce (i.e., able to maintain a persistently higher stock-to-flow ratio even in the face of improving human technology) wins out. Money in a society generally consolidates towards one or two, rather than many of them coexisting indefinitely. Precious metals, specifically gold, won the commodity money competition over thousands of years. Ledger-only systems, referring to paper and bank currency systems with flexible money supplies that are backed by nothing and have no cost to produce, have been tried several times in history. Each of those fiat currencies inevitably failed over a long enough timeline. The temptation by central policymakers to produce more, especially in times of crisis, is always there. To assume that such a system can last forever without a breakdown or reset of some sort is to assume that there will be an unbroken chain of competent and selfless centralized operators of that monetary system. However, with the development of telecommunications technology and global bank ledgers, fiat currencies eventually offered an actual improvement in long-range transaction and verification speeds compared to precious metals, which along with the taxation or sometimes outright banning of precious metals and other monies, is part of what lead to their widespread adoption for the first time in history. Precious metals as bearer assets were not divisible or portable enough to keep up with global commerce at the speed of telecommunications channels. They thus had to be abstracted with pegs, claims, and counterparty risk. Due to this speed mismatch and subsequent abstraction, policymakers dropped precious metals away from the process altogether, other than keeping them as opaque sovereign reserves. They created a ledger-only system around the world that is currently in its sixth decade of operation. The dollar has a lower stock-to-flow ratio than gold but does have a higher average stock-to-flow ratio than most other commodities and has the property that it can be sent around the world relatively quickly, while most of its scarcer competition (e.g., gold) is both slow and taxed. The dollar is not something you particularly want to store value in for decades. Still, it clearly has its use cases in terms of payments and near-term savings due to how the global financial system has been engineered. I do, however, think that this fiat system that has been in place since the 1970s is becoming more unstable and will end up undergoing longer-run devaluation and realignment to clear excess debt out of the system. That process has already been in place for over a decade in the U.S., and I expect it to continue both here and elsewhere in the world: ![](https://www.datocms-assets.com/56652/1659740696-2.png?auto=format) St. Louis Fed And when we look globally, there are dozens of countries with current or recent inflation rates over 25% and/or that have had currency resets or hyperinflations within our lifetimes. The Bitcoin network introduces faster payment and settlement speeds than fiat currencies. Still, its units also have a higher stock-to-flow ratio than gold. They can be used as self-custodial and peer-to-peer through the decentralized network. However, it's new and volatile, poorly understood, and certainly not without risk, so bitcoins often get criticized for being too volatile to be used as a medium of exchange. And outside of niche circumstances, bitcoins are only lightly used as a medium of exchange in their current early stage of monetization. ### Blockchain Trade-Offs Several cryptocurrencies market themselves as faster competitors to the Bitcoin network and thus better-suited as a medium of exchange. Putting aside smart contract platforms and proof-of-stake coins for the moment, we can do a cursory look through some of the notable proof-of-work monies that have sprung up in the wake of the Bitcoin network. It's natural for the market to explore multiple wrong answers to see in practice what the right answers are. Part of what allows me to analyze these concepts is the historical track record of why and how various projects failed to accrue value. Litecoin was invented in 2011 based on the design of Bitcoin but with a few changes regarding how it is mined and how long its block times are, and marketed as "silver to Bitcoin's gold." Specifically, it uses faster 2.5-minute block times compared to Bitcoin's 10-minute block times. It hit big highs in 2013 and then hit much bigger highs in 2017, at which point the creator [sold his position](https://www.cnbc.com/2017/12/20/litecoin-founder-charlie-lee-sells-his-holdings-in-the-cryptocurrency.html) at the top of the market. In 2021 during the altcoin season, Litecoin roughly matched those 2017 highs but wasn't able to gain traction to go up multiples from those highs. After a long stretch of being in the top ten coins by market capitalization, it's starting to stagnate and fall down the market cap rankings of cryptocurrencies and is no longer in the top ten. As one of the oldest coins that continue to operate as designed, Litecoin's price chart, denominated in Bitcoin, is a quintessential example of how most coins persistently degrade over time in Bitcoin-denominated terms after experiencing their initial price spike: ![](https://www.datocms-assets.com/56652/1659740778-3.png?auto=format) Dogecoin, created as a joke in 2013 based on the design of Litecoin, managed to hit notably higher highs in 2017 and then had a massive meme spike in 2021 thanks to pumping by Elon Musk, followed by a 90%+ crash. It has 1 minute block times and no supply cap. Numerous other dog-themed meme coins have come along in its wake, each having a brief spike before crashing. These joke coins tricked many retail investors into buying them at the top. Unfortunately, Several crypto exchanges marketed them aggressively to retail investors right at the top to make a quick buck. They, therefore, contributed to a bubble that sucked a lot of people in for major capital losses. Monero, created in 2014 as a privacy-themed coin, has yet to decisively surpass its 2017 highs and has fallen very deep in the cryptocurrency market capitalization rankings. Monero uses some interesting privacy mechanisms but relies on indirect proofs to audit the supply, which means there's a nonzero chance of an undetected inflation bug at any given time. Monero has 2-minute block times, and the way it is designed does not currently allow for a Lightning-like payment channel network to exist on top of it. I would like to see more privacy development within the Bitcoin ecosystem to make privacy techniques more automatic and easier to use. Bitcoin's hard forks, like Bitcoin Cash "BCH" and Bitcoin Satoshi Vision "BSV" have fared worse. Some went away, while others, such as these two, survived in a weakened state. They have in common that they increase block sizes so that more transactions can be packaged into each block. Both of them have gone down significantly in bitcoin-denominated terms. Bitcoin Cash, which was forked from the primary Bitcoin network in 2017, has yet to be able to touch its 2017 highs in dollar terms. Bitcoin Satoshi Vision forked from Bitcoin Cash in 2018, has been in a choppy sideways pattern since inception, is below the price it split at, and has been the subject of 51% attacks due to its low hash rate. If about 1% of Bitcoin miners want to make a 51% attack on either of these chains, they can do so since Bitcoin's hash rate is orders of magnitude higher, and they all share the same hashing algorithm. The main problem with having faster block times and/or larger block sizes is that if the network is heavily used, the bandwidth and storage requirements for running a full node become rather high, which makes it hard for the typical user to run a full node to audit the network. By extension, that makes the network rules less credible and immutable since the number of full nodes is tiny. Going too fast can also create problems with stability. When we look at the adoption pattern of the Bitcoin network and some of its failed forks and competitors, we can quickly see a basic problem that many of these forks/competitors encountered and why they failed. They tried to make a broad medium of exchange out of something that was not a store of value and without the government's power of fiat. And this was in addition to the fact that they had the big problem of existing in the shadow of Bitcoin's far more dominant network effect. They even went to sacrifice their decentralization, immutability, and audibility (a big piece of what could potentially make something like bitcoins a store of value) to advance their goal of being a medium of exchange. This path, however, leads to failure and irrelevance. In other words, to invent a successful decentralized peer-to-peer Visa-type network (fast transaction layer), one must first invent an underlying decentralized peer-to-peer Fedwire-type network (settlement layer), along with a reason why the underlying unit should be held for the long-term compared to other assets (digital gold). ### The Long Road to Monetization The fascinating thing about watching the Cambrian explosion of new private monies or "cryptocurrencies" since 2009, based on Satoshi Nakamoto's creation of the Bitcoin network, is that it represents a new test for economic theories on what makes good money vs. what does not. Everybody has a theory on what makes some monies better than others, but the market decides in the long arc of time. Even for government-controlled currencies, the international market decides between them. Any cryptocurrency can have success in the intermediate term. Still, the real test is which ones, if any, can stick around and gain structural adoption over many years and decades through bull and bear markets alike. So far, the Bitcoin network has gotten through four huge bull/bear cycles (2011, 2013, 2017, 2021 bull cycles) while gaining value and users in an exponentially compounding way. Each bull cycle reached a scale significantly larger than the prior bull cycle in terms of market capitalization and the number of users. Now, it is legal tender in a few regions of the world, and several large institutions hold it on their balance sheets in various ways. Simple "bubbles" don't survive through several 70%+ drawdowns over a period lasting thirteen years and counting; it looks more like [Metcalfe's Law](https://en.wikipedia.org/wiki/Metcalfe%27s_law) of network adoption at this point. That doesn't mean it is without risks. Still, it should be studied and understood rather than dismissed to see what it is about this network that allows it to keep growing through resistance. ![](https://www.datocms-assets.com/56652/1659740854-4.png?auto=format) YCharts And most notably, bitcoin did this without any central organization promoting it. The inventor disappeared by 2011, and then even his follow-up lead developer and several other early developers left in the ensuing years due to various technical disputes involving the block size. It has been a rather decentralized, open-source, self-sustaining network of rolling participation ever. Out of the other thousands of cryptocurrencies, the vast majority fail to successfully get through one cycle. They have a big bubble spike during a bull market, then crash, and never recover those bubble highs again. Founders, insiders, and others who bought super early can have spectacular gains on the back of the investors who came in late. Still, their coins don't lead to structural adoption and growth. Only a small handful of them have made it through two or three cycles of higher dollar-denominated network value. ### Store of Value Precedes Mass Medium of Exchange For the Bitcoin network, usage as a niche censorship-resistant medium of exchange came first, followed by its being used as a broader store of value, which became a much larger use case. From there, the more it is used as a store of value and the better its scaling solutions become, the more it can be widely used as a mass medium of exchange. Let's consider adoption patterns. Suppose you owned some bitcoins and other cryptos sometime in the 2011-2017 range when all of those various blockchain monies and forks were in the heat of their competition against the Bitcoin network as a medium of exchange and being marketed as such. Before the launch of the Lightning network, if you were a person with easy access to banking and payment services and were not de-platformed from anything in particular, why would you spend Bitcoins on anything?  If the number of dollars keeps increasing yearly, but Bitcoins have a hard supply cap of 21 million coins, why would you want to give your Bitcoins to others?  Unless you've been holding Bitcoin so long that it has become a meaningful share of your net worth, or you actively work in the industry and potentially even get paid in Bitcoin, you probably wouldn't. This problem is then magnified by the fact that Bitcoins have ten-minute average confirmation times, Bitcoin cash coins have ten-minute average confirmation times, and even Litecoins and Dogecoins, which are meant to be faster, have 2.5-minute and 1 minute average confirmation times, respectively, which is still too slow for convenient in-person transactions. The process is longer if you want to wait for several confirmation times to reduce the probability that the transaction will be reversed. These are crappy things to buy coffee in that form. It's like trying to buy coffee with a wire transfer. No thanks. That's what Mastercard is for. There are circumstances where the Bitcoin network's base layer payment options are ideal as a medium of exchange, but to try to force it in a situation where it could be better, doesn't make sense. As I described in my "[What is Money, Anyway?](https://www.lynalden.com/what-is-money/)" article, Bitcoin base layer payments are tank-like censorship-resistant. Owning Bitcoin represents the stored-up ability to make censorship-resistant global payments in the future and/or to portably bring wealth worldwide, even by just memorizing twelve words or holding a private key somewhere on your physical person or in your digital files. This transaction problem is further compounded by the fact that every cryptocurrency transaction is a taxable event. Governments don't want other monies to compete with theirs if they can help it, so they view your Bitcoins as commodities, and if you exchange them for something, you've now locked in a taxable capital gain. Assuming you don't want to break tax laws, you need to keep track of every bitcoin/crypto transaction you do for tax season. Furthermore, the number of people with any meaningful amount of their net worth in Bitcoin or other coins still needs to be higher. What is the immediate incentive for a merchant to accept Bitcoin or other coins unless they serve a niche industry where the percentage of Bitcoin or crypto users in their customer base is higher than normal? I've described this merchant acceptance problem in prior research pieces when discussing the credit card oligopoly. Four meaningful card networks in the U.S. extend globally: Visa, Mastercard, American Express, and Discover. These have been around for decades. Merchants accept them as payment because that's what all of their customers have in their wallets. Customers have them in their wallets because merchants widely accept them. These networks' flywheels were bootstrapped decades ago. Creating a fifth credit card in the U.S. would be nearly impossible. You'd have to convince merchants to accept it despite users not yet having it, and you'd have to convince users to get one even though merchants don't accept it yet. It's hard to bootstrap from nothing and compete with existing network effects. Bitcoins and various cryptocurrencies encountered the same problem. Some places accepted them as a novelty, and some people wanted to spend them here or there, but for the most part, the topic of cryptocurrencies as everyday payments was a dud during that whole 2011-2017 era, just like trying to launch a fifth credit card would be, except slower and more taxable. The primary users of Bitcoin for the medium of exchange purposes in those early years were people who were de-platformed in various ways. Cypherpunks were naturally attracted to Bitcoin's censorship-resistant payments. Wikileaks turned to accepting bitcoins when they were de-platformed from PayPal in 2010. A subset of early users bought drugs on the internet with bitcoins until those centralized marketplaces were shut down. Human rights advocates began using Bitcoin in authoritarian regimes with low banking access or vulnerability to arbitrary bank freezes. These use cases weren't for efficiency but for peer-to-peer censorship resistance. For mass medium of exchange usage, meaning far beyond niche censorship-resistant use cases, new money likely needs to become a store of value first if it is to arise organically rather than through government decree. And the payment experience needs to compete with various near-instant fiat payment methods. Many people need to have a lot of money and start asking merchants, "Why don't you accept this yet?" As it gets big enough or becomes perceived as offering better payment solutions than legacy systems, several jurisdictions can even remove the per-transaction tax on it. ### Where Most Cryptocurrencies Went Wrong Since store-of-value usage precedes mass medium of exchange usage, the fatal flaw of Litecoin, Dogecoin, Bitcoin Cash, Bitcoin Satoshi Vision, and most of these types of attempts at medium of exchange cryptocurrencies is that they put the cart before the horse. As previously described, these types of projects wanted to sacrifice some degree of stability, decentralization, immutability, or auditability to optimize themselves as a higher-throughput medium of exchange, even though only some people were using them as a store of value yet, with negligible adoption. They were just building fintech payments companies with tiny teams of people and expecting to compete with Visa, despite having a worse user experience, slower speeds, and way less transaction throughput. And yet, if we steelman their position, it's somewhat understandable why some of them tried to do that: Satoshi Nakamoto described his original design as a peer-to-peer e-cash system, and what exactly "cash" is can have a few different meanings. In 2010, Satoshi briefly wrote about how the network could gradually scale in terms of block size over time, even though he also put the block size limit into the code. After he left, however, some people wanted to scale too much and too early without broad consensus to do such a contentious hard fork. By jamming hard forks through and going in their own direction away from the Bitcoin network, users of these other protocols had to go through the difficult experience of seeing how powerful the widely-distributed network of node users had become and how pushing unwanted updates to them is impossible. I think too many people in those early years interpreted "e-cash" to mean quick-and-easy payments for everyday goods using the base layer when a better way to think of cash today is as a private censorship-resistant final settlement transaction method. Physical cash, after all, is not necessarily the easiest payment type or a medium of exchange that we need to use for everything, but it's the most private and the hardest to prevent from occurring. Therefore, when we think of "e-cash," we likely shouldn't think of it as optimizing for speed and efficiency right on the base layer for every transaction that we do, but rather we should think of it as optimizing for those same things that physical cash is great for private and censorship-resistant final settlement payments that can be used when it makes sense to do so. Plus, bitcoin was *already* well-optimized for early adopters who wanted to use it as a private medium of exchange online at the time. Some of them viewed privacy as a fundamental human right. They were aware of oppressive regimes where this type of technology could be useful to protect people. Others were dealing with real-world constraints of other means of payment, such as Roya Mahboob, who used it to pay women and girls in Afghanistan, where female bank account access is more restricted. Bitcoin was also used very early by people using online black markets, in a similar way that criminals were early adopters of pagers as a technology (which doesn't make the technology itself bad). There were various niches of people where Bitcoin was an ideal medium of exchange from the beginning, and Bitcoin scaled well enough for those niches. Satoshi picked his variables very carefully to ensure that cypherpunks like him had a working anonymous censorship-resistant peer-to-peer medium of online exchange. So, it was and still is a very useful e-cash. These types of people could and would wait 30 minutes for an online transaction to process with a few confirmations. They could and would run their own node. They could and would use private techniques to acquire and dispose of their coins. This was a utility network with a mild monetary premium. It offered money that a relatively small group of people at the time would desire to use and was recognized for its value by users and speculators. Like almost every commodity adopted as money, it had utility first. It gained a monetary premium second as a result of that utility. The utility was that it provided access to a tank-like medium of exchange network that could exchange value globally without centralized intermediaries to stop it and with a better combination of monetary immutability, censorship-resistance, and liquidity than the countless imitators that followed in its wake. After enough time had passed, this fluctuating monetary premium of bitcoin's price attracted speculators and investors that had no intention of using it for a medium of exchange any time soon, similar to why many people buy gold. A subset of Austrian economists, for example, began recognizing bitcoins as being interesting monetary goods; specifically, the finitude of the coin supply at 21 million stood out to some of them. When it became more broadly understood how immutable the Bitcoin network's ruleset was and how its security, liquidity, and decentralization dwarfed any other proof-of-work cryptocurrencies, many people began considering it hard money. Several human rights activists began to recognize it as an ideal anti-authoritarian technology for its censorship-resistant aspects and use it as such. The mistake of the Litecoin bulls and the Bitcoin Cash bulls and so forth was that they wanted to scale too early to a bigger group of people before there was a market for it, and even at the cost of weaker decentralization. Bitcoin's base layer is enough for tens of millions of people to use it occasionally when its specific properties are ideal. The Bitcoin network on the base layer is like the 60-ton armored tank of payment and savings systems: holding and transferring value globally in a censorship-resistant manner. A tank is ideal if you need to get from point A to point B through hostile terrain and blast through anything in your path. It's not ideal for commuting to work. Trying to force base-layer Bitcoin transactions to be used as a daily of medium of exchange by the general public is like trying to make commuting in tanks catch on. It's not going to because that's not what it's designed for. And to try to make it scale to everyone for all payments on that base layer makes it lose most of the properties that make it useful for what it does best. It would take over a terabyte of data storage per day to create a base layer system capable of supporting tens of thousands of transactions per second. The earliest analysis of the Bitcoin network, by Hal Finney and others, predicted that the network would likely evolve towards a layered approach. ### Bitcoin vs Dollars Example There are over 100 million people in the world who are estimated to own Bitcoin as of this past year. That's 1-2% of the global population, depending on the exact number since the number is reliant on exchange data, surveys, and other opaque assessments. In some countries, however, the adoption percentage is in the low double digits. However, most of that is pretty shallow. We can quantify adoption by both breadth and depth. Breadth would refer to how many people have a nonzero amount of Bitcoin. Depth refers to how much of their liquid money they have in Bitcoin. What I mean by this, for example, is that someone having $264.34 USD worth of bitcoin sitting in a semi-dormant crypto exchange account is not "adopting" bitcoin to any economically significant degree. As a thought experiment, imagine a world where people hold bitcoins and/or dollars as liquid money. And furthermore, let's assume (bear with me) that bitcoin continues to increase in dollar price over the long run, albeit with plenty of volatility along the way, as a result of bitcoin's much lower rate of new unit creation compared to the rate of new dollar creation, and more people learning about Bitcoin and wanting to hold a nonzero amount of it. If someone buys a bit of Bitcoin, even without further purchases, it will become a somewhat bigger share of their liquid money over many years if this thesis is correct. Now, only 1% of people own Bitcoin, and 99% do not. And suppose that those that own Bitcoin have just 3% of their liquid money in it on average. Total Bitcoin adoption is, therefore, 0.03% compared to 99.97% cash in that system. Bitcoin adoption in that context is negligible. There's little reason for merchants to accept it other than out of novelty or if they specifically cater to cypherpunks. - *If 10% of people own Bitcoin and have an average of 5% of their liquid money in it, then that is 0.5% total adoption compared to 99.5% cash. Still a rounding error, but nonetheless a niche market with millions of people.* - *If 30% of people own Bitcoin and have 10% of their liquid money in it, then that is 3% total adoption compared to 97% cash. That's a vocal minority, representing a lot of niche purchasing power.* - *If 50% of people own Bitcoin and have 20% of their liquid money in it, then that is 10% of total adoption compared to 90% cash. That is a huge market.* - *If 70% of people own Bitcoin and have 30% of their liquid money in it, then that is 21% of total adoption compared to 79% cash. That's enormous.* For many people to want to spend Bitcoin, it's more likely that they would have bought some long ago and perhaps kept buying, took the time to learn how to custody it themselves rather than hold it on an exchange, and after years of price appreciation it's a decent chunk of their liquid monetary value. They either want to sell some for cash to buy something, or even easier, just buy something with it directly. Of course, in reality, it is bumpier than that. Some early adopters in this scenario will reach very high levels of net worth in Bitcoin, and they become a wealthy cohort to cater to by niche merchants early on. So mass merchant adoption might take a while, but of course, there would be early merchants that want to cater to that early group or that sell products that many Bitcoin holders would specifically want to buy. ### Think of Developing Countries First If the numbers in the example above seem extreme ("How could Bitcoin possibly reach a 20%+ share of the dollar market?"), then re-run them for a developing country instead. Replace the US with Nigeria, and the dollar with the Naira, in the above example. Nigeria has [among the highest Bitcoin adoption levels in the world](https://bitcoinmagazine.com/culture/lessons-from-nigeria-bitcoin-adoption), even though their government has cut off the fiat bank onramps to Bitcoin/crypto exchanges to protect the Naira. When a currency looks like this, people can and will try to find others to use, even through resistance: ![](https://www.datocms-assets.com/56652/1659741136-5.png?auto=format) Developing countries with higher average inflation and weaker payment systems are where bitcoins, via the Lightning network, can scale quickly as a medium of exchange. Because for many of them, it could indeed solve an everyday payments problem pretty early on in its monetization process. That's why there is often a [huge mismatch in perceptions](https://youtu.be/hrRy05w2rNc?t=4635) about Bitcoin between privileged commentators and actual users. To the extent that the Bitcoin network continues monetizing and growing, it's not because it eats the U.S. dollar or the Swiss franc first. It's eating periphery currencies with high inflation, weak property rights, and/or bad payment systems first, and then it moves inward from there. Bitcoin is already bigger than the broad money supply of any developing countries and is accepted at more points around the world than many developing country currencies (generally only accepted within their issuing country or at a small number of specific exchange points internationally). Bitcoin merchant acceptance doesn't have the density of any specific currency within that currency's issuing country, but it has a wider international reach than most currencies. The bigger the Bitcoin network gets, and over a longer period, the more rational it becomes for merchants to accept it. The more merchants that accept it, the stronger the network becomes because then Bitcoins don't need to be converted back into fiat currency on one of a handful of centralized bank-connected exchanges for people who want to use them. In this sense, wide merchant acceptance is a form of censorship resistance. When thinking about this, think of merchants in developing countries more-so than just merchants in developed countries. And over time, several companies have been created that allow a merchant to easily accept it and then either hold the Bitcoins or exchange them for fiat currency immediately so they don't deal with the Bitcoins directly. The technical friction for accepting bitcoins as payment keeps decreasing. ### The Lesson of Gresham's Law Gresham's law is the principle that "Bad money drives out good." If people have a good money and a bad money, they would rather spend the bad money and keep the good money. Ironically, the bad money tends to circulate with high velocity while the good money is hoarded with low velocity. This trend revealed itself multiple times under bimetallic standards. When gold and silver were fixed relative to each other by government decree, but this "fix" was slightly off the global supply/demand ratio balance, which could change over time. One of the metals would start to disappear from circulation. For example: > The United States began with a bimetallic standard in which the dollar was defined in terms of both gold or silver at weights and fineness such that gold and silver were set in value to each other at a ratio of 15 to 1. Because world markets valued them at a 15½ to 1 ratio, much of the gold left the country and silver was the de facto standard. > > In 1834, the gold content of the dollar was reduced to make the ratio 16 to 1. As a result, silver left the country and gold became the de facto standard. > > — [Brief History of the Gold Standard in the US](https://sgp.fas.org/crs/misc/R41887.pdf), Congressional Research Service, 2011 There are a couple processes for how that happens. The first process is simply that the better (undervalued) money gets hoarded, so it stays in the country but gets removed from everyday circulation. People will not usually part with what they perceive as being undervalued. The second process is that international entities can observe this and arbitrage it. For example, if the global ratio of gold to silver is 15.5 to 1, Americans have it fixed by government decree at 15 to 1 (slightly undervaluing gold vs. silver). A European entity can keep selling silver to the Americans and buying gold from the Americans. As years or decades pass, there will be a lot less gold in the United States and a significant amount of silver instead. The U.S. broad money supply has grown at more than a 7% annualized rate since 1970. Most developed countries have a similar rate to that, and emerging markets tend to have a much higher rate on average. ![](https://www.datocms-assets.com/56652/1659741325-6.png?auto=format) St. Louis Fed Meanwhile, the Bitcoin supply is growing at less than 1.8% per year, which will fall to below 0.9% in a couple years and to around 0.4% four years after that. The Bitcoin network is programmed to asymptotically approach 21 million Bitcoins in total by halving its supply inflation rate every four years until it has 0% supply inflation. And unlike most other blockchain monies, the wide node network helps ensure that no centralizing force can change this distribution pattern. It has the dominant network effect among proof-of-work blockchain monies, which makes it more protected against 51% censorship or transaction-reversal attacks. ![](https://www.datocms-assets.com/56652/1659741367-7.jpg?auto=format) Coindesk It's natural for people to want to hoard something like gold or Bitcoin and spend their dollars, pounds, yen, euros, yuan, pesos, naira, and rupees. Money that depreciates in value tends to circulate. In contrast, scarce money that tends to appreciate in value gets hoarded with much lower spending velocity. This becomes especially true if a jurisdiction treats the harder money like property and taxes each transaction, which most jurisdictions do. If you try to use things like gold or Bitcoins as medium of exchange, each transaction is a taxable event compared to your initial cost basis when you originally bought that asset. The incentive, therefore, is to hoard the taxable gold or the taxable bitcoin, with their lower levels of supply inflation, and spend the non-taxable fiat currency on consumption, unless someone strongly desires Bitcoin's censorship-resistant payments properties. For example, bitcoins have been used as a medium of exchange by [girls in Afghanistan](https://www.reuters.com/article/crypto-currency-afghanistan/feature-salaries-to-remittances-afghans-embrace-crypto-amid-financial-chaos-idUSL8N2QU39A), by [Russian political opposition when their bank accounts get frozen](https://www.reuters.com/article/us-russia-politics-navalny-crypto-curren/bitcoin-donations-surge-to-jailed-kremlin-critic-navalnys-cause-data-idUSKBN2AB2GR), by [Nigerian merchants and protesters](https://www.theguardian.com/technology/2021/jul/31/out-of-control-and-rising-why-bitcoin-has-nigerias-government-in-a-panic), by [people getting capital out of China](https://www.cnbc.com/2020/08/21/china-users-move-50-billion-of-cryptocurrency-out-of-country-hinting-at-capital-flight.html), by [people getting their money out of Venezuela, Iran, Palestine, and elsewhere](https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoins-international-impact-w-alex-gladstein/), by [under-banked people in El Salvador](https://medium.com/ziglumoney/how-bitcoin-could-bank-the-unbanked-of-el-salvador-917c3588857c), and more. It's also used in developed markets for natively-online services, [such as Substack](https://www.prnewswire.com/news-releases/substack-is-now-accepting-bitcoin-payments-on-the-lightning-network-powered-by-bitcoin-payment-processor-opennode-301360039.html) or [buying VPNs](https://www.vpnmentor.com/blog/best-vpns-buy-bitcoin-crypto/), and many others. And yes, in the early years, people bought drugs online and occasionally for things like ransomware attacks. I've met a number of these human rights advocates in person. One of the most powerful moments was hearing [Ire Aderinokun](https://en.wikipedia.org/wiki/Ire_Aderinokun), co-founder of Nigeria's Feminist Coalition, speak in Norway's parliament building earlier this year about how when they protested police violence in Nigeria, they had their bank accounts frozen and resorted to using bitcoins instead, for their self-custodial and censorship-resistant properties. I was familiar with that story from the news, but it's always more interesting and clear to hear first-hand accounts of it from them in person. In this sense, although Gresham's Law initially applied to fixed exchange rates, it applies more broadly any time there is transactional friction of some sort, including a tax. The weaker, lower-friction currency will be spent first unless there is a strong practical reason to do otherwise, meaning a use-case that specifically needs Bitcoin's unique properties. So, a self-custodied store of value and payment system like the Bitcoin network is great for many people, but its exact usage pattern depends on context. It'll tend to be adopted as a medium of exchange by people who need it a lot more quickly than people who don't really need it. ### The Volatile Process of Monetization An asset cannot monetize without volatility. By definition, an asset can't go from being worth zero to having a market capitalization of a million dollars, to a billion dollars, to a trillion dollars, to several trillions of dollars, without upward volatility. That upward price move due to user adoption *is* volatile. With that being the case, any upward volatility of this magnitude will attract speculators, leverage, and surges of demand. These speculators eventually get caught up and forced to sell for one reason or another, resulting in periods of sharp downward volatility. When Bitcoin was held by 0.001% of people, it was extremely volatile and risky since the future was very unknowable, and a few individuals could massively affect the price with buy/sell decisions. When it became held by 0.1% of people, its volatility and risk decreased somewhat but remained high. Now that it's likely owned in some way by over 1% of people, the risk and volatility keep reducing over time. However, they still are both at a significant level. If it gets to a stage where it is held by 10% or more people, then the volatility and risk would be further reduced. So, early adopters mainly buy it because they analyze the qualities and consider it a useful network to access. They're willing to accept the volatility for the long-run potential upside and self-custodial peer-to-peer access it provides. As more people come in, the asset becomes increasingly monetized. Some ask, "What happens once the network runs out of new buyers?  Doesn't that make it a Ponzi scheme?" I addressed the Ponzi scheme comparison [in this article](https://www.swanbitcoin.com/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/) and showed why it didn't fit the characteristics of one. But more broadly, one must ask, "At what point would someone want to permanently exchange their self-custodial scarce money (Bitcoin) that has a 1.8% annual supply inflation rate that is exponentially shrinking for a soft money (fiat currency) that typically has a 7% annual supply inflation rate or higher?" For many people, the answer is never, as long as the Bitcoin network is still working. Instead, they want to hold and accumulate bitcoins until enough merchants accept them. At this point, they could spend some of them, especially if there is enough critical mass for them to become legal tender in more jurisdictions by that point. To the extent that they earn more income in the future, they'd prefer to continue to save at least some of that income in something with a fixed supply rather than other things like fiat currency that have an unlimited supply and are growing by new supply far more quickly. In other words, if successful, the network becomes a self-sustaining global economy of people wanting to save in it, spend it, earn more of it, save more of it, and then spend it. Like, well... Money. That's why this meme has been one of the longest-running ones in the ecosystem: ![](https://www.datocms-assets.com/56652/1659741438-8.jpg?auto=format) When understood that way, risk analysis regarding the Bitcoin network should focus on questions like, *"What events could potentially derail its monetization process?* *What events could make the majority of users want or need to sell their Bitcoin, stop viewing it as good long-term savings, and instead hold something else?* *What threats could censor the network, disable it, or otherwise disrupt its ability to serve as a tank-like medium of exchange and self-custodial portable savings?"* Those are the right questions to ask, in my view. ### Bitcoin and Lightning: Scaling in Layers With the invention of Bitcoin, Satoshi Nakamoto put together several existing technologies and added some of his own touches to make a rather profound innovation. For one, the network serves as a decentralized transfer agent and registrar. Proof-of-work miners process transactions (without relying on circular logic like proof-of-stake systems), and the network of nodes enforce the network rules. The result of this is the ability to quickly and globally transfer value without the permission of any centralized third party, as long as no individual entity or coordinating group of entities can persistently control the majority of mining capacity on the network and use that majority to censor it. Secondly, due to the large number of validating nodes run by individual users, the network offers a credibly immutable set of 21 million units (each divisible into 100 million sub-units commonly referred to as "sats") because there is no central authority that can change the number of coins on the network. Unlike most forms of software, updates cannot be "pushed" to users by developers; they can only be accepted voluntarily. The result of this is a rather interesting (albeit currently volatile) type of money. ### Trade-Offs, and No Free Lunch It's often said that a blockchain is basically just an inefficient database. Users, in this sense, are willing to accept inefficiency to ensure decentralization. They have to broadcast every change to the network and keep track of broadcasts from elsewhere in the network. A blockchain, especially the truly decentralized variety, is a database that is small and tight enough that thousands of entities around the world can store it on their local devices and constantly update it peer-to-peer using an established set of rules. Each node provides validation to ensure that a new block is following the rules of the protocol, and they will only accept and propagate a new block to other nodes if the new block follows the rules. A large number of user-run nodes helps ensure that the ruleset is immutable. In contrast, if there are only a handful of nodes, it only takes a small quorum of people to rewrite the network rules. Plus, the easier a node runs, the more auditable the network is for a regular user. More specifically, nodes simply give each user financial self-sovereignty to privately verify their transactions rather than rely on any trusted third party. A fully-centralized database has fewer limitations because it doesn't need to be small and tight. A large service provider can have an utterly massive database in a server farm. That can make things run very efficiently, but unlike with a blockchain, outside entities can't directly audit it for content and changes and have no way to stop the owners of that centralized database from doing whatever they want with it. So, every blockchain network that claims to improve something compared to the Bitcoin network on its base layer makes multiple trade-offs to do so. - To increase the number of transactions that can occur over a span of time on the base layer, either the block size or the block speed needs to be increased. However, this increases the bandwidth and storage requirements of running a node and often puts it out of the reach of a normal person. And in particular, if the requirements to run a node grow faster than the rate of technological growth in terms of bandwidth and storage, it leads to a shrinking node-set over time, which centralizes the network. Trying to scale the network to perform as many transactions as Visa just turns the network into Visa, a centralized entity. - To increase privacy, some degree of auditability needs to be sacrificed. One of the key things about the Bitcoin network is that any node can tell you the exact Bitcoin supply and has the entire history of transactions and the full state of the ledger. That's not possible to the same degree in a privacy-based system. In addition, if a privacy-based system doesn't have a serious network effect, privacy is not necessarily as perfect as advertised because the anonymity set is very small and is, therefore, somewhat trackable. Privacy is largely a function of liquidity, and if liquidity is lacking in various privacy-focused ecosystems, then their privacy potential is limited. - To increase code expressivity (e.g., executing complex smart contracts right on the base layer), a network must also increase the bandwidth and storage requirements of full nodes, making running a full node harder and thus centralizing the network over time, as previously described. In addition, it increases the complexity and number of possible attack surfaces. Lastly, it makes the network a means to an end rather than an end in and of itself, which means that many users will go towards whatever smart contract blockchains are cheapest. - Replacing proof-of-work with proof-of-stake requires accepting a circular validation process. In a proof-of-stake system, the coin holders are determined by the state of the ledger and the state of the ledger is determined by the coin holders, a perpetual motion machine based on circular logic, which doesn't have high fault tolerance. It is nearly costless to make infinite copies of the blockchain with different transaction histories. If the network goes offline, there is no way other than governance decisions and centralized checkpoints to determine which ledger is the "real" one. It would be like a corporation serving as its own transfer agent and registrar for its shares, which is inherently circular. A proof-of-work system uses energy as that external arbiter of truth, which makes it non-circular and a true [timechain](https://dergigi.com/2021/01/14/bitcoin-is-time/) rather than merely a blockchain. - Bitcoin has been largely successful due to its widely-distributed node network and the concept of "monetary self-sovereignty." Anyone with an old laptop or Raspberry Pi and a basic internet connection can run a node and verify the whole system from Genesis. Decades from now, that will still be the case. The requirements to run a node increase more slowly than the technological increases in bandwidth and storage, which means that a node gets easier and more accessible to run over time. As a result, Bitcoin is inherently designed to get more decentralized over time, in contrast to most other cryptocurrencies that inherently get more centralized over time. If developers want to change something about the Bitcoin network, their changes cannot be forced onto users' nodes. The ruleset of Bitcoin is determined by the network of existing nodes. In practice, any changes to the Bitcoin network must be backward-compatible upgrades, which node-users can voluntarily upgrade into over time if they want to while still being compatible with older nodes. Any attempted upgrades that are not backward compatible with the existing node network are merely hard forks- they create separate new coins like Bitcoin Cash that lack a network effect and lack serious security. Trying to do a hard fork from the Bitcoin network is like copying all of the data from Wikipedia (it's actually not that much) and hosting it on your own website, and then getting very little traffic because you don't have the millions of backlinks that point to the real Wikipedia, or the volunteer army of people that constantly update the real Wikipedia. Your split version of Wikipedia would be inherently worse than the real one from the moment you copy it. If nodes had much more requirements to run, then only large entities could run a node, and the set of nodes would be much smaller. A consortium of miners, exchanges, custodians, and other large entities could agree to make changes to the network. And if that's the case, then immutability and decentralization are lost for the network. In particular, the 21 million finite supply could be changed, and the censorship-resistant properties would be threatened. What gives Bitcoin its "hardness" as money is the immutability of its ruleset, enforced by the vast node network of individual users. There's basically only a way to make backward-incompatible changes if there is a unanimous consensus to do so (e.g., for something like the eventual [2038 problem](https://tftc.io/martys-bent/issue-3/)). Some soft-fork upgrades like Segwit and Taproot make incremental improvements, are backward compatible, and node users can voluntarily upgrade over time if they want to use those new features. This software's self-sovereignty and monetary immutability have been lost on other cryptocurrency designers. Based on some of his actions and writings, even Satoshi Nakamoto himself may have yet to fully grasp the near-immutability of his own network. Instead, it's a property of the network that may have emerged and become realized over time, during and especially after he departs from the project. It's certainly something I had to experience and research several times before I understood it. Adam Back, whose 1990s development regarding proof-of-work was cited by Satoshi Nakamoto in the Bitcoin white paper, had this to say about it: > There's something unusual about Bitcoin. > > So, in 2013 I spent about 4 months of my spare time trying to find any way to appreciably improve Bitcoin, you know across scalability, decentralization, privacy, fungibility, making it easier for people to mine on small devices, a bunch of metrics that I considered to be metrics of improvement. And so I looked at lots of different changing parameters, changing design, changing network, changing cryptography, and you know I came up with lots of different ideas, some of which have been proposed by other people since. > > But, basically to my surprise, it seemed that almost anything you did that arguably improved it in one way, made it worse in multiple other ways. It made it more complicated, used more bandwidth, made some other aspect of the system objectively worse. > > And so I came to think about it that Bitcoin kind of exists in a narrow pocket of design space. You know, the design space of all possible designs is an enormous search space, right, and counterintuitively it seems you can't significantly improve it. > > And bear in mind I come from a background where I have a PhD in distributed systems, and spent most of my career working on large scale internet systems for startups and big companies, security protocols, and that sort of thing, so I feel like I have a reasonable chance if anybody does of incrementally improving something of this nature. And basically I gave it a shot and concluded, "Wow there is literally, basically nothing. Literally everything you do makes it worse." Which was not what I was expecting. > > — Adam Back, CEO of Blockstream So if every improvement makes an unacceptable trade-off, how can it get bigger? With only a few tens of millions of payments possible per month, how can Bitcoin potentially scale to a billion users? The answer is **layers**. Every successful financial system uses a layered approach, with each layer optimal for a certain purpose. If one layer is attempting to be used for all purposes, it makes too many sacrifices to be useful for almost anything in the long run. But if each layer of the system is optimized according to certain variables to serve a specific purpose (throughput, security, speed, privacy, etc.), then the full network stack can optimize for multiple use cases simultaneously without making unacceptable trade-offs. For example, in the U.S., we have Fedwire as a gross settlement system between banks. It currently does under 20 million transactions per month (~200 million per year) but settles over $80 trillion in value per month (nearly $1 quadrillion per year) because the average transaction size is massive. Each of these settlements represents a batch of many smaller payment transactions. ![](https://www.datocms-assets.com/56652/1659741646-9.jpg?auto=format) FRB Services We, as consumers, don't directly use that system. Instead, we use payment methods like credit cards, debit cards, PayPal, electronic checks, and so forth, and our banks record those transactions on their ledger and then settle with each other later. Each Fedwire transaction represents a batch of tons of smaller transactions from higher layers. In other words, there is the underlying core settlement system and layers on top of it for more throughput, capable of settling billions of transactions per month. Bitcoin's ecosystem has evolved similarly, except in an open and peer-to-peer manner. Bitcoin's base layer can process up to 400,000 transactions per day. However, each transaction can have multiple outputs, resulting in up to 1 million or more individual payments per day. That's a few tens of millions of payments per month, or a few hundred million payments per year, around the same ballpark that Fedwire currently handles. ![](https://www.datocms-assets.com/56652/1659741694-10.jpg?auto=format) Coin Metrics From there, layers can be built on top of it to give it more throughput or capabilities. For example, the Liquid Network is a federation of dozens of entities that wraps bitcoins in tokens called L-BTC. From that point, L-BTC is faster to move around, has somewhat better privacy, and can support smart contracts, including various other types of security tokens that run on top of it. A large number of L-BTC transactions can therefore be contained within two BTC transactions (one to peg in and one to peg out). The trade-off is that the user has to trust the federation, which is more decentralized than trusting a single entity but less decentralized than trusting Bitcoin's raw base layer. The majority of Liquid's functionary federation entities would need to collude against the system to violate user trust. As another example and the focus of the rest of this article, the Lightning Network is a series of 2-of-2 multi-signature smart contracts that run on top of the Bitcoin base layer. These channels are peer-to-peer or peer-hub-peer and can support many transactions over time for each base layer transaction. The trade-off is that the channel must be kept online to protect the funds and receive payments. Additionally, the network has taken a few years to build up to usable levels of channel liquidity. And from there, custodians can operate in layers above that for people that want them. Exchanges, payment apps, banks, chaumian mints, and so forth can all provide services to users willing to trust them with a portion of their funds. This can scale Bitcoin usage to any arbitrary level, including connecting with the Lightning Network. Each node on the Lightning Network doesn't necessarily need to be one person; it could be a custodian with thousands or millions of users. In that sense, each user interacts with the network in the layer(s) that makes the most sense for their specific needs. ### How the Lightning Network Works The Lightning Network consists of a series of smart contract channels that run on top of the Bitcoin base layer. And if you think about it, individual consumer payments make a lot more sense with channels, rather than being broadcast to everyone. If we do an in-person physical cash transaction, it's directly peer-to-peer. We don't shout our transaction to the whole world. Lightning replicates that cash concept on top of the Bitcoin base layer. The result is a much faster, more scalable, cheaper, and more private global payment system, albeit with some trade-offs and limitations compared to directly using base-layer transactions. Channel-based payments for the Bitcoin network have been [explored since the early innings of the network](https://web.archive.org/web/20220127192236/https:/lists.linuxfoundation.org/pipermail/bitcoin-dev/2013-April/002417.html). The [white paper on the Lightning Network](https://lightning.network/lightning-network-paper.pdf) was written in 2015, and its first implementations came out in early 2018. Developers purposely restricted their channel size early on to grow cautiously and test things out safely in those early years (specifically to avoid the common problem of user funds being exploited, which we often see in DeFi). The network has been functioning and growing ever since. By late 2020 the network reached a level of liquidity, usability, and critical mass that became quite interesting to me from a macroeconomic perspective. ### The Limitation of Broadcast Networks Using a broadcast network to buy coffee on your way to work daily is a terrible idea. A blockchain is meant to be an immutable public ledger. Do I really need to broadcast my coffee transactions to tens of thousands of nodes around the world to be held in a distributed database for the foreseeable future? What if I want to buy something more personally or politically sensitive than coffee? Shouldn't I use peer-to-peer payment channels for that instead? Imagine, for example, if every email sent on the internet had to be copied to everybody's server and stored there rather than just to the recipient. That would be grossly inefficient. And yet, that's how various high-throughput blockchains try to work regarding money. Instead, I can open a channel on top of the broadcast network, pay for things that only me and the merchant know about (subject to some privacy caveats that will be mentioned later), and then close the channel with no immutable public record of those individual payments having occurred. Any network that tries to scale transaction throughput on the broadcast-oriented base layer by radically increasing the block size and/or block speed makes no sense. The node requirements become absurdly high, which turns the network into a centralized Visa-like enterprise-scale database with just a handful of massive nodes. Changes can be made to the fundamental rules of the system at any time with the agreement of a handful of major node-running enterprises, and thus all future aspects of the system, including the supply of coins or who to censor the transactions for, becomes changeable. Privacy becomes very hard; various entities could track your net worth and payment history, which is bad enough in a benign environment and terrible in an authoritarian environment where half the world lives. Additionally, a channel transaction will generally be faster than a broadcast transaction since it inherently requires propagation time to go through a broadcast network, even among the blockchains with the fastest block times. That's why every blockchain that attempts to scale transaction throughput too much on the base layer is inherently flawed. Bitcoin Cash, Bitcoin Satoshi Vision, Litecoin, Dogecoin, and other coins like this all sacrifice too much and become too centralized to do something that needs to make more technical sense in terms of scalability or privacy. In the long arc of time, they offer nothing of value. The only way scaling makes sense and avoids sacrificing decentralization is to use a layered approach. Users can then pick their own solution, the layer(s) that make sense for them, depending on their specific needs. Want to transfer a sizable amount of value permissionlessly or hold coins for a long time in self-custodial cold storage with the highest-possible security and immutability? Use the Bitcoin network base layer. Want to make a lot of instants, cheap, private, permissionless payments using a self-custodial solution, albeit with occasional on-chain transactions to open or close a channel? Use the Lightning Network self-custodially. Various technologies, including Blockstream's Greenlight and mobile applications, make this increasingly easy to do by abstracting most of the technical details away from the user while still having the user retain their own private keys. Or if they want to be hands-on, they can be. Want to make super easy permissioned payments for free and potentially get other perks but at the expense of giving up custody? Use a custodial service like Cash App, which uses the other two layers. And maybe in the future, there will be more private custodian solutions in the Bitcoin network ecosystem, like federated chaumian mints that use blind signatures. Federated custody options will potentially be more available, which spreads out custodial risk. Each layer builds upon the lower layer without reducing the qualities of that lower layer. A broadcast network on the base layer, a channel network on the middle layer, and a custodian ecosystem on the upper layer gives each type of user whatever they are looking for. If growing pains become apparent, other scaling technologies may come into play in the future to further increase the number of people that can interact self-custodially with the system. Bitcoin uniquely came into existence and is purposely hard to change, making it a decentralized digital commodity rather than a centralized digital equity. Instead of trying to create something separate, developers can build on top of it. ### Lightning Network 101 Explanation Suppose you and your friends are spending a long evening at a bar. Rather than get your payment method for every round of drinks, it's preferable to open a tab with the bartender and settle it at the end of the night. If the bartender doesn't know you, you can offer your credit card information ahead of time so they can charge it later that night. In a manner of speaking, you and the bartender open a payment channel with each other. There is a moment of friction when setting up the tab and a second moment of conflict when closing the tab. Still, between those moments, there is no payment friction for individual rounds of drinks because you just need to tell the bartender, "Another round of drinks, please" and it happens. That's how the Lightning Network works, conceptually. I can open a channel with someone else with a base layer Bitcoin transaction. This channel is a 2-of-2 multi-signature channel, meaning we both have to agree on it. It's designed so that we can unilaterally close the channel if we need or want to (although we should do a cooperative close). While the channel is open, we can transact any number of times, as long as we have sufficient liquidity in the channel, until one or both of us want to close the channel with another base layer bitcoin transaction. Unlike a bar tab, however, a Lightning channel is **not** based on trust or debt. Payments within the channel are updated instantly, and the ongoing tab can be enforced by either party closing the channel and reconciling with the base layer, with each side receiving its current balance. There is no debt, no promise to pay later, from one person to another. It's like instantly transmitting money to the bartender's account through the channel whenever you ask for another round of drinks. Let's take this a step further. Alice has a tab with the bartender at a bar, and another person, Bob, also has a tab open with the same bartender. If Bob wants to buy Alice a drink, he can tell the bartender to give Alice a drink and put it on his tab. Alternatively, if Bob forgot his wallet and needed money to get home, Alice can tell the bartender to give Bob $30 and put it on her tab. Alice can pay Bob through the bartender, even though Alice and Bob know nothing about each other and have no payment channels open with each other. The Lightning network does that, too, but without debt or trust. The following is an example diagram. If user A wants to send a payment to user Q, she can do it by routing the payment from A to C to F to K to L to Q. Each node in the middle might charge a tiny routing fee, like a fraction of a penny since it's easy to automate. She doesn't need to set up a channel directly with user Q. ![](https://www.datocms-assets.com/56652/1659741845-11.png?auto=format) Kierish, via Wikipedia Because it uses onion routing technology, the nodes in the middle don't necessarily know where the payment originated from or where it is going to its final destination. Node K is told "route this payment from F to L" without being told more than it needs to know. The end result of this network of channels is that one base layer transaction gives you access to a large number of individual payments to various separate entities. Thus the Bitcoin network can be scaled rather significantly. Imagine a global system with a massive number of interconnected nodes. Anyone can enter the network with a new node and start creating channels. Alternatively, many custodial services also give account holders access to the network through their nodes and channels. Here's a visualization of the public Lightning network at the moment. It's a growing network of interconnected nodes connected by payment channels, with those bigger dots representing exceptionally well-connected nodes: ![](https://www.datocms-assets.com/56652/1659741891-12.jpg?auto=format) LnRouter And here's a zoomed-in shot of the bottom left area to show a random sample of the shape of connections that is typical throughout the network: ![](https://www.datocms-assets.com/56652/1659741925-13.jpg?auto=format) Since the network is pretty efficient, transaction fees are often the equivalent of a penny or less. There is no hard limit to how big the network can get over time and how many transactions per second the network can handle other than the fact that opening and closing channels result in base-layer transactions. The Lightning Network, if it gets to the size of having millions of open channels in the future, can theoretically handle an almost unlimited number of peer-to-peer transactions per second. Still, there's an upper limit of tens of millions of new channels that could be opened per year (depending on what percentage of base layer transactions are channel openings). Although it has some constraints, especially in this early development phase, this type of network makes a lot of sense from a payments perspective. Peer-to-peer channels are better than broadcast networks for small individual transactions. They're fast, cheap, and relatively private. Plus, the network can do micropayments much smaller than what Visa and Mastercard can do. With Lightning, you can send payments worth a fraction of a penny. This opens up new use cases that aren't possible with credit cards, such as machine-to-machine payments, the streaming of micro-payments, or the usage of micro-payments as a spam-prevention technique. All of this is global and permissionless. Users can do it without asking the permission of a bank or other central entity. To prevent it, governments need to actively tell their citizens that it's illegal to use certain types of free, open-source software and then figure out how to actually enforce that. ### Liquidity Advantages and Limitations Liquidity is the biggest limitation of a network that relies on individual routing channels. If there are only hundreds of participants, it could be pretty hard to find a route that connects any two arbitrary nodes and has enough liquidity on each channel in the path to pass the payment through. A lot of attempted payment routes will fail. The funds won't be lost, but the transaction will fail to initiate. The network will be limited, and the user experience will be poor. Once there are tens of thousands, hundreds of thousands, or millions of participants, and with larger average channel balances, routing a payment from any arbitrary point to any other arbitrary point on the network becomes exponentially easier and more reliable. There is a very large number of possible paths between most points on the network. In the Lightning Network, the larger the payment you want to send, the harder it will be to find a set of channel paths that collectively have enough liquidity to handle that payment. For example, it's pretty easy to send the equivalent of $25 between two points on the network because your software merely needs to find a set of interconnected nodes that end up each with at least $25 worth of liquidity in the direction you want. However, sending the equivalent of $2,500 to many destinations is harder because there are fewer channels with that much liquidity. Instead, your payment may need to be sent in parallel through multiple paths. So there must be many possible paths between your node and the target node. Additionally, the target node may simply not have enough total inbound liquidity to receive a payment of that size. The more channels exist, and the bigger the channels are, the more reliable it becomes to route larger payments. Due to this dynamic, the Lightning Network isn't a light switch that could just be turned on and work perfectly from day one. Over the years, it had to be painstakingly built, channel by channel. The early users were high-conviction developers and early adopters working their way through a difficult-to-use network, and only after they spent years working on it did it become relevant for a typical user who just wants cheap and fast payments. Initially, they limited channel sizes and payment sizes for user safety. Think of them as slowly hacking raw paths through the jungle with machetes so that one-day roads may be built for civilization. Furthermore, tools had to be built along the way to make it easier for node operators to manage liquidity optimally. Those have gotten better, but it's still a work in progress. Many critics said the network would not work, and once it was implemented, many people for the first couple of years said it was a dud. Most of them, however, needed to understand how it grows. The Lightning Network is like one of those giant freight trains with miles of cars behind it; it takes a ton of work to get up to speed from a standstill, but then it's practically unstoppable once it gets going with tremendous momentum. ![](https://www.datocms-assets.com/56652/1659741997-14.jpg?auto=format) Pixabay As the Lightning Network becomes more usable, the companies building implementations or applications for it can raise more capital from interested investors. For example, Lightning Labs raised a $70 million series B round in 2022 to continue building the Lightning Network infrastructure. Zebedee raised $35 million (including from game giant Square Enix) to continue building solutions for games to incorporate Lightning micro-payments. There have been hundreds of millions in total capital raised over the past few years for wallets, apps, infrastructure, and more. Then, entities with a large number of users can connect to it. Bitfinex and River Financial integrated Lightning for their users in 2019. Bull Bitcoin and Okcoin integrated Lightning for their users in 2021. Cash App and Kraken integrated Lightning for their users in 2022. Tens of millions of people now technically have access to the Lightning network if they want it. A lot of merchant software accepts it now too. By January 2021, I noticed that the network was starting to reach a critical mass of liquidity and usability. Lightning was becoming truly usable, meaning that payment routing was becoming more reliable. The initial capacity of the network was bootstrap liquidity and wasn't efficiently allocated. For a while, the network looked from the outside like it wasn't growing when that liquidity was slowly spreading out to become more usable and efficient. And then, boom, liquidity, and payments started to take off, and some excellent mobile apps came to market. ![](https://www.datocms-assets.com/56652/1659742035-16.png?auto=format) Look Into Bitcoin ### Implementations and Apps No company controls the Lightning network. It's an open-source set of participants. The basic foundation of the network is an agreed-upon minimal protocol, which makers of Lightning node software adhere to if they want to operate with each other and the network as a whole. These standards are like basic email standards or basic internet standards for various applications to communicate with. Lightning node software is referred to as a [Lightning implementation](https://bitcoinmagazine.com/technical/tradeoffs-of-bitcoin-lightning-implementations). Lightning Labs, Blockstream, and Block Inc are the businesses responsible for the three biggest Lightning implementations or implementation tool sets that various developers use. If you want to be hands-on, you can choose which implementation to use, customize an implementation, or even build your own implementation from scratch. No gatekeeper stops anyone from building their own lightning implementation and using it to interface with the rest of the network; it's an open protocol. From there, many companies can incorporate these Lightning implementations into easy-to-use apps. An end-user won't directly use a Lightning implementation; they will use a mobile app that allows them to connect with the network and obscure most of the technical details from them, including the details of the Lightning implementation under the hood. Some apps can be custodial, meaning you trust a company with your money. Cash App and Strike are examples of this. This comes with specific amounts of regulatory compliance in various jurisdictions. Other apps can be self-custodial, meaning you have complete control over your coins. They are just using their open-source software and connecting with highly-liquid nodes. Muun and Breez are examples of this. ### Merchant Acceptance When the initial network implementations were launched, few merchants accepted Lightning payments. Over time, it became easier. BTCPay Server and OpenNode, for example, allow merchants to easily accept Lightning payments. When El Salvador made bitcoin legal tender, large companies like McDonald's and Starbucks could quickly integrate Lightning payments using third-party software. NCR Corporation and other point-of-sale companies have expressed interest in becoming interoperable with the Lightning network. Square is a large point-of-sale software and equipment provider for small and medium-sized businesses, and its parent company Block Inc is one of the most pro-Bitcoin companies. Their Cash App already integrates with Lightning, and they have multiple Bitcoin-focused development units. Over the next several years, it will be increasingly common to have Lightning as a payment method. Some merchants will convert to dollars immediately upon sale (which is easily implemented by many point-of-sale software providers). At the same time, some will choose to directly accept Bitcoins over the network and keep them. ### Taro Assets For a couple years now, interest has increased in using the Lightning Network to transfer dollars or other currencies. The idea is that Bitcoin is an increasingly liquid asset that trades in most large currencies. Someone can exchange dollars for Bitcoin, send Bitcoin over the Lightning Network to another custodian in some other country, and then exchange it back into dollars, all within a couple seconds. This allows someone to use Lightning's payments aspect separately from Bitcoin, the volatile asset. This can be done with other currencies as well. Someone can exchange pound sterling for Bitcoin, send the Bitcoin over the Lightning network, and then exchange that Bitcoin for euros within seconds. This is a very cheap and fast way to send global payments, and businesses like Strike and Bottlepay have been using the network for these purposes. That fiat-to-Bitcoin-to-fiat method can eliminate tax issues associated with Lightning payments for the end user while using the fact that Lightning is more cost-efficient than most payment networks, such as Visa and Mastercard. This month, the European Central Bank even [published a report](https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2693~8d4e580438.en.pdf?972bbc119868c193467dc86f4a7cf706) that examined the Bitcoin/Lightning stack among several potential methods for global cross-border payments and took the network pretty seriously in their analysis. Due to the November 2021 Bitcoin soft fork upgrade called Taproot, the Bitcoin network, particularly the Lightning Network, can theoretically be used to send other types of assets using the Taro protocol. The Taro protocol was announced in April 2022 by Lightning Labs and is being tested and eventually implemented. For example, when this is active, a USD collateralized stablecoin asset can be issued, which can then be sent nearly instantly and nearly for free across the Lightning network. This means that a user can pay for things nearly immediately and for free in an asset with less volatility that doesn't trigger taxable events. *"Imagine Alice and Bob have a Lightning-USD (L-USD) channel with $100 of capacity, balanced such that they both have $50 worth of inbound liquidity, and Carol and Dave have a L-USD channel with $100 of capacity, balanced such that they both have $50 worth of inbound liquidity.* ![](https://www.datocms-assets.com/56652/1659742171-17.png?auto=format) *If Bob only has a BTC channel with Carol, Alice can still send $10 of L-USD to Bob, who charges a small routing fee in BTC and forwards $10 of BTC to Carol, who charges a small routing fee in L-USD and forwards $10 of L-USD to Dave, the final destination. Taro interoperates with the existing BTC-only Lightning Network as-is, only requiring the first hop and the second-to-last hop to have L-USD liquidity.* *This structure taps into the network effects and liquidity of today’s Lightning Network to route any number of assets, avoiding the need to bootstrap an entirely new network for new assets and ensuring that bitcoin underpins all transactions on the network. It also incentivizes the growth of BTC liquidity within the Lightning Network to serve a broader multi-asset Lightning Network.”* *-* [*Announcing Taro (Lightning Labs)*](https://lightning.engineering/posts/2022-4-5-taro-launch/) Notably, the network's core remains focused on Bitcoin channel liquidity. In contrast, specific Taro assets would generally be on the network periphery. This avoids fracturing overall network liquidity since it's all moving through Bitcoin channels for most of its path through the network's core. Various point-of-sale technology providers can eventually integrate this as well, so stablecoins can be used to pay for things over the Lightning Network in addition to Bitcoins. Paolo Ardoino of Bitfinex provided a [good summary](https://www.youtube.com/watch?v=K94bVYiMBCU&ab_channel=SaifedeanAmmous) of the technical limitations of incorporating super-fast payments on a broadcast network and why stablecoins on Lightning should significantly improve. A user could have either a custodial or self-custodial mobile wallet, where they hold bitcoins and stablecoins in one app and use them to pay for things as desired. With various multi-signature implementations, time locks, and other programmable surfaces, there are plenty of novel ways to move money around and use the network for multiple purposes. ### Other Potential Use-Cases In 2021, a company called Impervious released an API allowing people to make applications that run over the Lightning network. In addition to sending value instantly and cheaply, the Lightning Network can be used to send non-monetary information. This has potential use cases for social media messages, video calls, file sharing, identity verification, content monetization, social networks, and other applications. In 2022, Impervious is working on a browser that brings a lot of this together in one place. Lightning can also be used for spam resistance. Adam Back developed proof-of-work money in the 1990s in the form of Hashcash, an anti-spam technique. Some analysts are now pointing towards Lightning as an effective way to reduce online spam. There are social networks and websites where commenting requires one sat (0.00000001 Bitcoins) and where users tip each other with sats. This impedes the economics of spammy social media bots because each account and post comes with a micro-price. With a browser plugin, many websites could implement something like this if the network grows. Similarly, Strike CEO Jack Mallers [implemented a micro-cost](https://twitter.com/jackmallers/status/1521253419318710272?lang=en) for people that want to send emails to him. With the full stack of Bitcoin, Lightning, and things like Taro and other things, it's hard to predict what this network could be used for a decade from now. Some things will likely flourish, and others will be duds. It's a programmable set of building blocks for money and information that moves instantly, permissionlessly, and nearly for free. It's not controlled by any one company but is open source and can be built upon by any number of companies. Sometimes this openness creates friction between competing visions for how the network is best used or how to agree on a set of open protocols. Still, it also gives it a lot of power and flexibility. When the iPhone was introduced in 2007, few people thought, "Wow, this could really disrupt the *taxi* industry a decade from now."  A few technologies had converged to that the point where everyday people could have a pocket supercomputer with a big touchscreen and a high-bandwidth mobile internet connection, and this served as a set of building blocks that could exponentially eat into many other industries, including allowing Uber to come along and change how we move across cities. All individual hardware electronic devices became obsolete as they became applications on a smartphone. The Bitcoin/Lightning stack is similar. The network is still tiny and has a lot of development work to do, and everything is still being determined. But to me, it looks like a robust monetary network with a ton of upside potential over the next decade. ### Lightning Network Critiques Lightning has faced several criticisms, mainly from proponents of other blockchains. For many of them, the success of Lightning Network could imply the irrelevance of their own project. There is still a ton of development work to do on the Lightning Network, so some criticisms are fair, and the network does have limitations. The number of developers is pretty small, and the network is only in its fifth year in operational terms, with only the past two years really being at a critical mass of highly-usable liquidity. But after years of space research, I view Lightning as very promising and generally underestimated. It requires looking out for the next several years to see the potential. Here are my responses to some of the common criticisms of the network I have seen. #### 1. It's Small and Trivial The Lightning Network is growing quickly but still has under 5,000 Bitcoins in public channels. Depending on Bitcoin's price at a given time, that represents only hundreds of millions of dollars at most. Due to high velocity, quite a lot of transaction volume is being done relative to that tiny amount. Still, ultimately it's small compared to the global payments industry. Arcane Research published a great analysis of the Lightning Network's current scale back in April 2022: ![](https://www.datocms-assets.com/56652/1659740631-picture1.png?auto=format) Arcane Research, The State of Lightning Volume 2 This small size is often compared by detractors to various DeFi applications. For example, Wrapped Bitcoin on Ethereum has over 230,000 Bitcoin custodial. Lightning, therefore, looks very small, outmatched, and even trivial by comparison. However, that comparison is a category error. The overall market for actual crypto medium-of-exchange payments, in Bitcoin or otherwise, is still tiny. As discussed earlier, the widespread use of Bitcoin as a medium of exchange should not be expected until later in its monetization process, especially in developed markets where every transaction is a taxable event. People have access to much more established payment systems. DeFi, on the other hand, is mainly used for trading and leveraging. Many of these blockchains and Defi protocols have strong crypto VC incentives to issue a coin, market it and pump up the price and exposure, and then get fast exit liquidity on retail investors. Chainalysis found back in that DeFi is mainly used by institutional-sized traders. ![](https://www.datocms-assets.com/56652/1659742396-19.png?auto=format) Chainalysis It makes more sense to compare the amount of Wrapped Bitcoin (which is held by a centralized custodian) to the amount of Bitcoin on centralized exchanges. There are more bitcoins wrapped on Ethereum DeFi than on Kraken or Gemini, for example, but fewer than on Coinbase, Binance, or Bitfinex. That's a more appropriate comparison; Ethereum is basically the fourth largest Bitcoin exchange and leveraging service, and trading+leveraging is a *much* larger Bitcoin market than Bitcoin merchant payments at this point in time. Lightning, on the other hand, has no separate coin. Nobody is getting super rich quickly off of Lightning. There is no huge set of marketing incentives to get people on Lightning. It's a rather boring payments network, frankly. It has a very low speculation-to-utility ratio, meaning that it's almost all utility. I personally consider it to be rather exciting, but that's because of the utility that it offers and the elegant way in which it works. Additionally, Lightning developers purposely limited payment and channel sizes in the early years to reduce the potential for people to lose significant amounts of money from potential bugs or exploits in its nascent state. Developers' goal was never to grow quickly at all costs; the goal since the beginning was to build responsibly for the long run. Lightning's growth, including through a bear market, is mainly due to organic utility and the need for it, rather than primarily for speculation, trading, leveraging, or for any sort of pump-and-dump VC-funded incentivization scheme that relies on using retail investors as exit liquidity. Some catalysts, such as Taro (e.g., dollar stablecoins on Lightning), could accelerate the network's growth at some point. Either way, it's a growing network for people who want to transact using the Bitcoin network. #### 2. It's Too Centralized The Lightning Network can be challenging to use at a deep level, especially if you intend to be a high-volume routing node. Your node has to be on all of the time, you tie up a lot of capital, and it can be tricky to balance your liquidity. As a result, the network naturally developed many super-nodes that serve as hubs for network traffic since they have significant capital and spend a lot of time building and maintaining liquid channels. Some people refer to this as a hub-and-spoke model, which is only somewhat true in this context. This seeming centralization is often used as a criticism of Lightning, but that criticism is misplaced. For a hypothetical example, suppose you only have one or two fiber optic internet service providers in your area, and those two companies are the only possible ways to access the Internet. That's a major centralization problem; you're completely at the whim of those one or two companies to let you use the Internet, and you have no recourse otherwise unless you move. You're limited to the one or two hubs that serve your area in a monopoly or duopoly fashion. Instead, suppose hypothetically that you could choose to use hundreds or thousands of satellite-based internet providers. In this thought experiment, they can connect you to the global Internet wherever you are via a fleet of orbiting satellites. This removes any centralization problem; you can pick any of them from around the world, and they are nearly countless in number. You're not limited to a specific hub linked to your location; you can pick from the entire global set of hubs, and you can even pick more than one hub simultaneously for additional redundancy. In the Lightning network, there are all sorts of super nodes that you can connect with for routing liquidity, and they are based in various jurisdictions or can operate privately. Since it's all software, it scales rather significantly. Additionally, you can avoid directly connecting with any of the super nodes if you don't want to and instead connect directly peer-to-peer with other small nodes (including internationally), who are themselves connected to any number of other peer nodes or super nodes. There are online groups, [such as Plebnet, with 6,000+ members](https://t.me/plebnet), that focus on building channels with each other and supporting each other. This makes it not really a hub-and-spoke model, even if there are many particularly well-connected super nodes throughout the system. Importantly, entities in Lightning are not enforcing the immutability of the money supply or enforcing other consensus rules; they're merely routing individual payments. If certain super-nodes are perceived as problematic in terms of privacy or in terms of censoring transactions, users can build channels around them. That optionality is the key to decentralization. The Lightning Network involves an evolving set of nodes and channels, with old channels being removed and new channels being built as needed by its participants. Market forces dictate where the liquidity goes. This was how the Internet looked back in 2005: ![](https://www.datocms-assets.com/56652/1659742619-20.jpg?auto=format) Opte Project, via Wikipedia And here's that zoomed-in snapshot of part of the Lightning Network that I showed earlier, which shows how similar its structure is to the Internet, except that Lightning is more decentralized because any individual node can directly connect to many other nodes, in addition to routing payments through super-nodes if they want. ![](https://www.datocms-assets.com/56652/1659741925-13.jpg?auto=format) LnRouter #### 3. It's Easy to Replicate Lightning need not be unique to Bitcoin. Much like how the Bitcoin network can incorporate potentially useful technology developed on other blockchains, specific blockchains can incorporate Lightning-like technology on their stack. In fact, some Lightning-like networks exist on some other blockchains, but they are tiny compared to what exists on the Bitcoin network. This is because, as previously described, Lightning relies on liquidity. Liquidity (in the form of many well-funded channels) is one of the key limitations for it to work smoothly. When the network was first launched on the Bitcoin network, it could have been more usable. There were very few nodes and channels, and finding a payment route to send payments through or to get inbound liquidity so that other people could send payments to you was challenging. A lot of payments would fail and need to be re-attempted. It was a work in progress, basically in alpha development. However, it gradually built up more and more channels for years, which made it increasingly reliable to send and receive payments. Liquidity is a major network effect variable; it's why certain stock and commodity exchanges remain the primary stock and commodity exchanges for decades or even centuries. People go to where liquidity is, which creates more liquidity, which brings more people, and that creates more liquidity. Lightning has a self-reinforcing network effect that is extremely hard to replicate, and it's growing month by month. This is why the Lightning Network is like one of those mile-long freight trains. It takes a lot of work to start and accelerate it. But once it's going, its momentum is huge. The Lightning Network took years of channel building and cautious development to reach a critical mass of liquidity and true usability. It did so largely because it was built on Bitcoin, which has the biggest combination of liquidity, scale, and decentralization of any cryptocurrency. Lightning is a network effect built on top of a network effect, and both reinforce each other. #### 4. It's Not Private Enough The Lightning Network generally offers better privacy than the Bitcoin base layer, especially for the sender. Still, it could be a more perfectly private network. As previously mentioned, the network uses onion routing so that each node along the payment path only knows the directions that apply to them rather than the full set of directions for where the payment originated and where its final destination is. It's a series of directions, but each participant only has a small subset of the total directions. For example, using this diagram again, if I send a payment from A to Q through nodes C, F, K, and L, those nodes don't necessarily know that Q is the final destination and that A was the initial sender. Node K, for example, is just being told to receive payment from F and send payment to L in exchange for a tiny fee. ![](https://www.datocms-assets.com/56652/1659741845-11.png?auto=format) Kierish, via Wikipedia An entity trying to spy on transactions can set up multiple Lightning nodes around the network and serve as a payment router. Usually, an individual node doesn't know the original source or destination of payment, only the node where it came from and where they are sending it to. However, if an entity has enough nodes across the network, it might be able to get a good idea of where certain payments are coming from and going. So, only some payments absolutely guarantee perfect privacy, although the sender usually has good privacy in practice. Knowledgeable users have significant ways to maximize their privacy, both on the Bitcoin network's base layer and the Lightning network, but these do take some [know-how](https://www.swanbitcoin.com/canon/privacy/). There is still development happening in this early stage of the network to expand privacy options for users and to make privacy more natural. The Human Rights Foundation has a [Bitcoin Development Fund](https://hrf.org/devfund) that, among other things, funds various privacy developments. #### 5. We Have Other Payment Solutions Most people living in the U.S., Europe, or Japan do not have problems making payments or getting bank accounts regularly. They may wonder why Lightning is relevant at all. However, a significant portion of the world is unbanked. At the same time, a free, open-source software app that uses the Lightning Network can give them payment capability. Many of the developing world suffers from persistent double-digit inflation, and most people in developing countries have experienced major currency devaluations/resets in their lifetimes, eradicating savings. Additionally, approximately half the world lives in countries classified as authoritarian or semi-authoritarian. They face arbitrary bank account freezes for basic things like protesting or speaking too freely. Technology like the Bitcoin/Lightning stack is an asymmetric technology for them. Even in relatively free countries, individual people, companies, or industries can be de-platformed from the common payment networks despite not doing anything illegal. Therefore, the Bitcoin/Lightning stack is a backup option open to all. When imagining the potential addressable market of the Lightning network or similar solutions, we need to think globally rather than just about our own comfortable lives. People who suffer from high inflation, corrupt banking systems, de-platforming, and other monetary problems, are the more natural prospective users of peer-to-peer money that can't be debased or frozen by a centralized third party. They're more likely to get on the Bitcoin/Lightning network than any given person in a developed country. Sure, some bad actors can use that technology as well, but that's like saying that bad actors can use the Internet. Of course, they can; it's an open set of protocols. Any powerful piece of technology can be used by good or bad people. However, the number of people needing improvements in this area for legitimate purposes is orders of magnitude larger than prospective criminals. It's not shocking, then, that 19 out of 20 of Chainalysis' top countries by cryptocurrency adoption are developing countries. In many of these countries, there is a much higher penetration of smartphones than bank accounts: ![](https://www.datocms-assets.com/56652/1659743895-23.png?auto=format) Chainalysis Even in developed countries, Lightning can make payments cheaper and be used for micropayments or machine-to-machine payments more seamlessly than the current fiat payment methods. #### 6. It Has a Scaling Ceiling for Self -Custodial Users Lightning greatly increases the transaction volume that is possible on the Bitcoin network. However, opening and closing a Lightning channel still requires an on-chain transaction, which means that in its current form, the Bitcoin/Lightning stack still can't scale to billions of people using it self-custodial. Specifically, there are block space limits to how many people can use it fully self-custodial regularly unless certain base layer forks allow for more throughput. For any network, there are inescapable technical trade-offs. To ensure the widespread auditability and immutability of the base layer, some constraints are hard to overcome. Many other blockchain designers are trying to over-engineer their systems. Any solution needs to have a product-market fit. Not everybody wants a fully self-custodial experience. Some people want the convenience of using a custodial service of some sort. Bitcoin/Lightning gives optionality to people around the world. Still, people can see fit to use whichever portion of the stack they want. To quantify it, the Bitcoin/Lightning stack can be semi-regularly used by tens of millions of people self-custodial (or more than that over time if many of them are just holding it in cold storage). Custodial services can scale that to higher numbers. For example, all of the tens of millions of accounts on Cash App technically have access to the Lightning Network through nodes and channels operated by Cash App. The same is true for people on Strike, River, and similar apps. At the current time, the Bitcoin network is being criticized by some opponents for low fees and thus supposedly low long-term censorship resistance as the block subsidy winds down (meaning there is not overwhelming demand for its block space at the current time, which if that state were to persist indefinitely could eventually result in a low cost to control half of the mining share). In contrast, it is simultaneously criticized for being unable to scale self-custodial to everyone in the world (meaning its block space is not nearly big enough to fulfill such enormous potential demand). These are mostly mutually exclusive concerns. If the combination of the Bitcoin/Lightning stack eventually reaches severe growing pains against the number of people that want to interact with it fully self-custodial (a good thing), then there are still some areas of development that can potentially increase it's scaling potential, via ways to allow more users to share a given channel, which is beyond the technical scope of this article. On the other hand, if the network doesn't grow much and its block space does not increase in value (a bad thing), then its scaling limitations are a non-issue. Currently, the Bitcoin/Lightning stack provides tremendous scaling potential compared to the number of people that currently use the network. The network doesn't need to overbuild for market conditions that don't exist yet. Of course, it's good for developers to think about long-term scaling options. As the saying goes, "Necessity is the mother of invention." If/when the network encounters persistently high base layer fees, tons of base layer transactions being used to open lightning channels, and an inability to onboard all of the users that want to onboard to the network self-custodial, then that would spark more interest in developing further scaling solutions, including the possibility of new broad-consensus soft forks and other changes. ### Concluding Thoughts For thousands of years, commerce and money moved at the same speed: the speed of foot, horses, and ships. People's ability to do transactions, and the bearer assets they transacted with (mainly gold and silver), had no inherent difference in speed. With the invention of the telegraph and then the telephone and undersea cables throughout the 1800s, commerce increased to nearly the speed of light. People could transact across continents by updating each others' bank ledgers over telecommunication systems. However, gold and silver, as bearer assets, still moved slowly and thus had to be increasingly abstracted to keep up. Before this, gold and silver were already sometimes abstracted with paper claims due to divisibility limitations. Still, once telecommunications technology was invented, their slow speed made it even more necessary to abstract them. Eventually, governments dropped gold and silver backing from their bank ledger and physical paper abstractions entirely. The difference in speed between commerce and bearer asset money gave governments a huge opportunity for custodial arbitrage. The invention of the Bitcoin Network, and especially the Lightning network that makes use of it, however, re-created a way for bearer assets to move at the speed of telecommunications, just like commerce does. People now have the option to store and send liquid value globally, peer-to-peer, without relying on claims or IOUs, by instead relying on decentralized code-enforced rules that immediately put the funds in the recipient's custody. The Bitcoin/Lightning stack is a decentralized ledger with peer-to-peer payment channels interwoven on top of it. It's programmable money in a decentralized cloud, connected to the real world via its proof-of-work consensus. It's hard to say exactly where this leads. Peer-to-peer global transfers of liquid value are Pandora's box that has now been opened. Certain governments do not want it open and pass various laws against it, but here it is, with free open-source software. It's much harder for governments to enforce payment rules on millions of individuals than on just thousands of highly-regulated banking institutions. If people don't need to go through banks to transact inside or outside of their local area, that opens a new set of possibilities. There's a race now between public and private developers. On one hand, things like the Bitcoin/Lightning stack are racing ahead with stateless monetary assets and cheap and instant payment channels. Since it's open source, developers around the world can work on various parts of it to any extent they want. Combined with how finite of an asset bitcoins are, this is leading to substantial adoption and development, even as the price fluctuates wildly based on leverage and big investors and all sorts of reasons. Individuals, startups, and even some large corporations contribute to development efforts. On the other hand, governments are working towards central bank digital currencies. Some of them, like China, got a head start and already have implementations in the field. Most other governments are way behind and are only in the research phase for how they might want to construct a digital currency. While governments are slower than the open source private sector and have a less attractive set of incentives (maintaining an inflationary system, maintaining seigniorage with the system, enhancing surveillance and control capabilities on the users of the system, and so forth), they do have the power of taxation and regulation over their open source private-sector competition. However, this power of taxation and regulation is limited by their rule of law, the will of the people, and their desire to encourage innovation-focused businesses to remain in their jurisdiction rather than go elsewhere in the global marketplace. At the end of the day, blockchains are information. Users are merely updating an open-source distributed public ledger amongst themselves. They can simply memorize a twelve-word seed phrase to interact with it. To outright ban the individual use of open-source blockchain software is basically to ban a form of speech and information. This is somewhat possible in authoritarian regimes (although underground usage of it continues) but is more challenging to do in a country with property rights and freedom of speech and expression, with democratic representation. Governments have to get rather authoritarian if they want to nearly completely deter the use of such open and decentralized technology and then maintain that deterrence perpetually. Instead, the main ways policymakers can control the industry are via on-ramps, taxation, and regulation. They can block fiat bank connections to digital asset exchanges or regulate their usage with strict KYC AML compliance checks in and out of large digital asset exchanges combined with blockchain surveillance to track addresses. They can make it hard to serve as a custodian for digital assets or make it hard for users to withdraw coins from custodians. There are ways around this, but all of these are frictions and control points for large pools of capital. In problematic jurisdictions like Turkey, with massive inflation, or Russia, with authoritarianism, they are more prone to say that it's illegal for merchants to accept Bitcoin or other digital assets as payment for goods and services and force people to try to use their fiat currency instead. But to the extent that they can even enforce such rules, they do so at the risk of cutting off their population from the rest of the world, using ever-stronger means of controlling information and open-source software, and deterring innovation from happening within their jurisdiction. In several countries with a failing currency, having and using cash dollars is illegal. And yet cash dollars are often accepted by merchants anyway. It's very hard to enforce a cash dollar ban when people need help using the local currency due to high inflation or transaction censorship. Similarly, it's rather hard to enforce a perpetual ban on open-source software and peer-to-peer digital transactions; the number of enforcement points is huge, and developers keep adapting it to make it easier and more private to use. The digitization of money is a key theme for the 2020s decade and beyond, both in bottom-up ways (e.g., bitcoins) and in top-down ways (e.g., central bank digital currencies). I am interested to see the directions that it goes in. The Bitcoin/Lightning stack, in particular, continues to be promising as a monetary network, with ongoing signs of user adoption and development and high levels of decentralization. It's not without risks, but it's certainly something to keep an eye on. ### Acknowledgements *Special thanks to Elizabeth Stark of Lightning Labs for answering so many research questions; this piece wouldn't be possible without her.* *And additional thanks to Dario Sneidermanis of Muun for answering questions about Muun and UX and scaling when I met him in Oslo, Alexander Leishman of River Financial for answering questions about liquidity, Roy Sheinfeld of Breez for publishing great research regarding the network, Kevin Rooke for interviewing a large number of Lightning experts on his podcast, Obi Nwosu of Fedi for educating me on the concept of federated Chaumian mints, Alex Bosworth of Lightning Labs for his social media posts about liquidity, the team at Arcane Research for putting out detailed reports on the state of the network, and of course all of the developers and financiers in the ecosystem for building the network out and providing articles or documents to learn from.* ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # How Legacy Finance Perceives Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/how-legacy-finance-perceives-bitcoin/ Observations from a 13-year career at Goldman Sachs. --- **John Haar** · August 15, 2022 · Updated June 6, 2024 [Post on X](https://twitter.com/john_at_swan/status/1552352543119925249?s=20&t=WIiwpijCtUgvDYQYnf_IMg) ### Orange-Pilled in Traditional Finance I happen to be one of the growing number of people who left traditional finance for the world of Bitcoin. That’s [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=legacy-finance-bitcoin&utm_campaign=legacy-finance-bitcoin), not *“crypto”*. Before joining Swan, I spent nearly 13 years on Wall Street at Goldman Sachs. I was in the Asset Management division, and held roles in institutional sales and fixed income portfolio management. Throughout my time at Goldman I had many conversations with coworkers about gold, sound money, fiat currency, Keynesianism, MMT, and Bitcoin. My conversations with colleagues about gold/money/economics began at the beginning of my career in 2009 — the same year Bitcoin launched. I was a college senior when the financial crisis was happening, which played a huge role in shaping my views and my study of economics. My conversations with colleagues about Bitcoin only began in 2017 after Bitcoin reached the mainstream, being discussed on platforms like CNBC and Bloomberg. I’d like to share the experiences I had when discussing these topics with people in legacy/traditional finance, including what I think are the commonly held views on these topics. Before sharing those experiences, I’d like to highlight Bitcoin’s multifaceted nature. Those who have fallen down the Bitcoin rabbit hole know that it takes an [understanding of various disciplines](https://www.swanbitcoin.com/a-look-at-the-lightning-network) to grasp Bitcoin. This includes economics, monetary theory, investor psychology, computer science, cryptography, energy, geopolitics, politics, game theory, history, privacy, and human rights. It is rare for anyone to be well-versed in most of these areas, let alone all of them. This helps explain why it’s uncommon for someone to hear about Bitcoin for the first time and immediately grasp the immense significance. This is also why the proverbial Bitcoin rabbit hole is so enticing — the concepts to be learned are virtually endless. It’s been said that many people have fallen down the Bitcoin rabbit hole, and no one has found the bottom. Jameson Lopp has written that *"*[*No one understands Bitcoin (and that's okay).*](https://www.coindesk.com/markets/2017/03/11/nobody-understands-bitcoin-and-thats-ok/)*"* While I mentioned several disciplines that Bitcoin encompasses (and I’m sure there are Bitcoiners who would point out additional disciplines), I believe they can be distilled down into two main elements: 1. Understanding what sound money is; and 2. Understanding how Bitcoin can succeed as sound money My experience suggests that people in legacy finance rarely ever make it to the second of these. This happens for a variety of reasons. ### Sound Money Principles - Not Taught in School, Not Discussed at Work Legacy finance firms hire from select universities, so it's worth discussing what students typically learn regarding these topics while in college. I can speak firsthand from my own experience and confirm that, as a finance major, at no point in my college experience was I asked to think about the questions *“what is money?”* or *“why did gold become money?”* No teacher, textbook, nor other part of our curriculum covered these fundamental questions. I cannot speak for all universities, but what I can say is that in my many discussions with others in legacy finance, not a single person ever said that these topics were covered at their universities. And of course, in the Bitcoin community there is general agreement on the observation that these topics are simply not covered in schools, whether that be graduate school, undergrad, or high school. Once you reach employment in traditional finance, there is certainly no discussion of these topics. You begin learning about far more complicated economic and financial concepts. In a weird way, it felt as if no one wanted to admit that they hadn’t thought about these foundational questions, because then they’d be forced to start back at square one in thinking about how our economy and financial system work. But what incentive is there to start back at square one? They made it all the way to Goldman Sachs where they now talk with savvy clients about sophisticated investments, so surely they must understand the fundamentals and history of money — right? They ignore the fact that they couldn’t tell you when or where they learned it, or tell you anything coherent about money’s key properties. But rather there is an unconscious assumption that the question of *“what is money?”* is simply too basic of a question to be asked by someone at an elite financial services firm. To the extent that those working in traditional finance have any opinions about the history or fundamentals of money, it’s almost entirely shaped by Keynesian economics, and perhaps by MMT in more recent years. Each of these schools of economic thought are in strong favor of central planning and they do not provide rational explanations for why gold ever became money. John Maynard Keynes called gold a *“barbarous relic”* and Ben Bernanke claimed that government and central bank ownership of gold could simply be chalked up to *“tradition.”* The reality is that throughout history, money has naturally arisen as a commodity in society without the action of any centralized government. Gold became the global predominant form of money because, among commodities, it best possesses the key characteristics of money – durability, divisibility, recognizability, portability, and scarcity. For the record, some people denote a longer list of money’s key properties, but the five listed here hit on money’s core attributes. The key point is that there is no discussion of money’s characteristics at the university level, nor in legacy finance. To be clear, it’s not as if sound money principles are taught, and then thoroughly debunked by Keynesians. That would be more honest. You might see a passing comment in an economics textbook claiming that the inelasticity of the gold standard causes depressions and hoarding, with no logical explanation as to why. It’s unfortunate, but sound money principles aren’t taught in any honest or comprehensive way. If you asked someone in legacy finance *“what do you think of sound money?”* they likely would not even understand the question. And if they did, this would be a relatively recent development, which could likely be credited to the Bitcoin movement that has inspired so many people to learn about money and the monetary system. Another example of this is the term *“fiat currency”*. Back in 2010, the only place you’d find the term *“fiat currency”* was on sites like Mises.org. Virtually no one in legacy finance even knew that the term existed. To the extent that legacy finance is now aware of the term, I believe it can be credited to the Bitcoin movement. (While of course credit for the term goes to Austrian Economics before that.) Many people scratch their heads and wonder why nothing is taught of the nature of money in schools. They may presume that those whose education specializes in learning about money must of course cover the history of money or an analysis of it from first principles. But as it turns out, this is not the case. Our best schools simply shovel pre-packaged economic theories onto their students who accept these as valid because of the prestigious nature of the schools they attended and the consensus around them by others who attended the same schools. The key questions are hardly ever asked. When they are, those who offer answers which require re-working one’s concepts of money are often pushed away, not on the grounds that they are wrong, but out of resistance to doing the hard work to learn the material. And unfortunately this material was never presented during the expensive schooling where it should have been taught in the first place. ### Six Drivers Behind Legacy Finance's Lack of Support for Bitcoin Bitcoin is sound money based on first principles, and therefore we see little support for it in legacy finance, where the principles of sound money are largely unknown. Delving a little deeper, I would suggest that people in traditional finance are generally not supportive of Bitcoin for some combination of the following reasons: 1. They do not understand the history or fundamentals of money; 2. They have spent almost zero time researching Bitcoin, and they simply repeat the objections they have heard in the mainstream media; 3. They’ve been conditioned to believe that government central planning, both fiscal and monetary, is necessary for an economy’s growth and stability; 4. They are high performing consensus followers rather than independent thinkers; 5. Their world view is entirely focused on developed countries which have not experienced a currency crisis or a totalitarian regime in recent memory; and 6. They want to keep the current system going, where simply saving money is not an option and it must instead be invested. Numbers 1-5 are incredibly common. Number 6 is less common, because it implies an understanding of sound money. As mentioned previously, number 1 stems from the fact that virtually no one spends time on these topics at any level of schooling. On number 2, it is a daunting task to begin learning how the Bitcoin network and protocol operate, and admitting you are ignorant about a topic is not commonplace in legacy finance. It’s much more common for one to pretend to be well-versed on a given topic and take a strong opinion regardless of one’s underlying knowledge — and this is especially true for a topic that touches the world of investing. On number 3, I would argue that those in legacy finance have become proponents of Keynesianism and central planning simply because this is the economic dogma of our time. It’s what they learn in universities and it’s what the average person repeats when they reach employment in legacy finance. But the vast majority of these people have never even heard of Austrian Economics, let alone do they understand both sides of the Keynesian vs Austrian debate. On number 4, the vast majority of people who work in legacy finance are high performing consensus followers. They are the people who generally followed the rules throughout their lives: They listened to their parents and teachers; they did well in school; they followed the steps that they were told would lead to success; and they generally trust authority and alleged experts. There is nothing inherently bad about these things. However, these behaviors do not lead them to becoming independent thinkers who will be early adopters of a new asset or technology. They are more likely to trust that a small group of people with Ivy League degrees can control our economy and monetary system. It doesn’t matter that weeks before the Global Financial Crisis unfolded, Ben Bernanke told us publicly that mortgage problems were contained to subprime, or that Fannie Mae and Freddie Mac were not at risk of financial losses. It doesn’t matter if Jerome Powell and Janet Yellen couldn’t foresee the largest increase in consumer prices that we’ve seen in forty years, even though this is exactly the type of thing that we trust them to see before anyone else. High performing consensus followers still trust the system in the face of all this. To the extent they admit that people like Bernanke, Powell, and Yellen were wrong, they still believe that if we just got the *“right”* people in power, and if they developed the *“right”* models, they’d be able to manage the economy properly. It’s worth giving a tip of that hat here to Croesus’s epic article *“*[*Why the Yuppie Elite Dismiss Bitcoin*](https://www.citadel21.com/why-the-yuppie-elite-dismiss-bitcoin)*.”* It’s an excellent read and delves into the concept of high performers who maintain trust in the system. Lastly, I’d say that I spent most of my life as a high performing consensus follower myself, until two things brought it to an end — the Global Financial Crisis and the food pyramid. After those, I was never able to unsee how incredibly wrong the *“experts”* could be when it came to understanding their respective fields. This doesn’t mean one should always distrust experts. Using any sort of blind rule like that would be foolish. However, it certainly does reveal that alleged experts can be wrong about critical topics. On number 5, they see only the local world around them. They cannot imagine the condition of high, persistent inflation, where the prices for basic goods increase by an order of magnitude from one year to the next; or a world where government decides to demonetize the currency overnight; or where government does not allow you to take your money beyond the country’s borders; or where it confiscates your wealth via a corrupt legal system. Many people in developed countries may feel that demonetization, persistent inflation, capital controls, and confiscation are rare. But when you look across the entirety of the globe, these things are anything but rare. This is why someone from Argentina, Turkey, Lebanon, Venezuela, or Nigeria (just to name a few) are able to much more quickly understand Bitcoin’s value proposition compared to a high performing consensus follower living in a Western developed country and employed in the finance industry. It’s no surprise when you look at Bitcoin and crypto adoption at the country level, nearly all of the top 20 are developing countries where these dynamics are at play. The USA is actually the major exception. This gives me some hope that Americans have not yet lost their ability for adversarial thinking. The USA was essentially founded on adversarial thinking. The Founders’ framework for a limited & defined federal government was chosen because they did not trust anyone to have unilateral power over the country. Perhaps Americans grasp this concept better than citizens of other developed countries. But I digress. On number 6, the people holding this view most likely hold senior roles and would never admit that they dislike Bitcoin simply because it means fewer clients and less capital needing to be invested by their company. If Bitcoin continues to succeed as a globally used store-of-value monetary asset, it would reestablish the line between saving and investing. It would mean that citizens would no longer be forced to invest their hard-earned money in an attempt to maintain the value they already earned. People who work at an investment firm or investment bank and understand this have no financial incentive to do or say anything positive about Bitcoin as long as they still work in legacy finance. Of course they would prefer the world’s capital to be forced into investments, which their companies just so happen to provide access to and earn juicy fees on! ![](https://www.datocms-assets.com/56652/1660896113-how-legacy-finance-perceives-bitcoin-table.svg) Chainalysis ### Views Are Changing, But Slowly To further support the idea that legacy finance has not arrived at their opinions of Bitcoin through research or understanding, consider how their consensus opinion of Bitcoin has changed so dramatically over the past 5-10 years, yet they don’t even seem to acknowledge this. Legacy finance has drastically changed their tune on Bitcoin over time, without recognizing the clear trend here. Bitcoin is becoming a more established asset with real uses throughout society. When your criticism changes from saying something is a worthless scam to saying it’s correlated with tech stocks, or to saying that it’s so significant and disruptive that the government is going to shut it down, then clearly your first criticism was wrong. And it’s okay to be wrong, but in legacy finance there’s neither awareness nor admission of this. Another thing to consider about legacy finance is that it is highly specialized. Specialization is not a bad thing on its own, but it can lead to a lack of understanding of the fundamentals of a system, because participants are focused only on their own specific task. As an example, I worked with many people who could tell you everything about the corporate bond market, such as the issuers, spreads, yields, relative value, trading volumes, new issuance, M&A rumors, legislation, and far more. But these people are spending exactly zero time thinking about the question *“what is money?”* I’m not saying I blame them or that they should act otherwise. They earn a living by knowing the specifics of their corner of the financial services sector. There is little incentive for them to examine the fundamentals of the system. ### Conclusion To summarize, people in legacy finance who have a negative opinion about Bitcoin have not arrived at that stance due to deep research or understanding. For multiple reasons, I sought out conversations on these topics with as many people as possible while I worked in legacy finance. As any Bitcoiner knows, once you become aware of the history and fundamentals of money you become eager to discuss it with anyone. This was my situation as I studied Austrian Economics and learned about the gold standard long before I had ever heard of Bitcoin. As I found out that Bitcoin was designed with all of this in mind and improves upon gold’s shortcomings I became even more enthusiastic. I wanted to better understand why most people in legacy finance were so against the gold standard and against Bitcoin. Was it because they had thought of something that I hadn’t? If I had coworkers who were aware of reasons why Bitcoin would fail, I certainly wanted to have a conversation with them. After many conversations, I can say that if there are people in legacy finance who have a well-researched stance on why Bitcoin is not a good form of money or why Bitcoin will not succeed, I was not able to find them. Considering everything discussed here, perhaps it is not so surprising that legacy finance is largely against Bitcoin. ### John Haar John is the Managing Director of Private Client Services at Swan Bitcoin. He previously spent 13 years on Wall Street, where he was a Portfolio Manager and Insitutional Investor at Goldman Sachs. If you'd like to learn more about the Bitcoin network and protocol function, you can download [Inventing Bitcoin](https://event.swanbitcoin.com/freebook/) by Yan Pritzker for FREE! # We Are All In This Together - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/we-are-all-in-this-together/ The state will come for all of us, low-hanging fruits first. Bitcoiners always knew this. --- **Gigi** · August 16, 2022 · Updated June 27, 2024 *"*[*We are all in this together*](https://dergigi.com/threads/harsh-truth)*,"* they say. If you think that maximalists are siding with the state, you are completely wrong. It's a harsh truth that you better learn now than later. For years now bitcoiners have been trying to warn you guys that: 1. Decentralization is actually important. 2. Good opsec is paramount. 3. The whole point is the separation of money and state, nothing else. This is not a game, as is hopefully becoming more evident by the day. It's not all unicorns and happy paths, it's velociraptors that will maul you to death at the first chance they get. What happened to the TC dev is absolutely disgusting, and no bitcoiner I know is cheering for it. To the contrary, many high-profile bitcoiners have spoken out about the insanity of the legal precedent it sets. Either code is speech or it isn't. Either free speech means something or it doesn't. Either peaceful civilians are allowed to send messages to each other or not. If not, the authoritarians show their cards clearly, and so be it. The whole point of bitcoin is that WHAT AUTHORITARIANS THINK DOES NOT MATTER, it is resilient from the ground up, censorship-resistant from first principles. This is why it is important that people can run full nodes, cheaply. This is why open-source and self-sovereign tools are essential. This is why decentralization actually matters. This is why PoW is used. Maximalists should absolutely be dunking on DeFi, because DeFi is CeFi and CeFi can be killed easily. When it comes to the separation of money and state, ONLY THE STRONG WILL SURVIVE. You guys have been building literal Ponzi schemes and house of cards on quicksand, as the recent *"yield"* disaster has clearly shown. You are, mostly, still playing games and acting as if everyone will play nice always in perpetuity, like the ignorant and naive fools you are. It's all tradeoffs, always, all the way down. Yes, currently, most Bitcoin devs are known. Some aren't, however, and as state-attacks increase people will be more nym going forward, hopefully. Also, bitcoin doesn't depend on devs. Bitcoin is getting more resilient over time, because the people that are working on it actually understand what is at stake, how sophisticated attacks could look like, and prepare for that. Shitcoins are becoming more efficient too, but only at separating fools from their money. I dunk on *"DeFi"* because it is centralized dogshit that can be shut down with a blog post or a phone call. I dunk on shitcoiners because they will throw Bitcoin (and Bitcoiners) under the bus first chance they get, all while claiming *"we're in this together!"* No, we are not in this together. The Bitcoiners I care about do not care about yield or fiat gains. They care about fixing the money, which means separating the money from the state, or anyone else for that matter. What I see in shitcoin land is the opposite of that. Everyone can print money, words don't matter (dEcEnTRaLiZeD), *"principals"* are worthless, and somehow, even though everything competes for liquidity, *"we are not competing with Bitcoin"* (until we are). Don't mistake my hate for shitcoins as *"Schadenfreude,"* because that's not it. The state will come for all of us, low-hanging fruits first. Bitcoiners always knew this. You are the guy who just had a corpse land on his windshield, waking up to what is happening. ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # Bitcoin is a Monumental Event in Human History URL: https://www.swanbitcoin.com/culture/bitcoin-is-a-monumental-event-in-human-history/ Bitcoin has the possibility of ending the financialization of state war by ending fiat money and restoring natural law and money to our planet. --- **Erik Cason** · August 17, 2022 · Updated June 27, 2024 Over the last decade that I have been involved with Bitcoin, much of my thinking about it and what it is has changed and evolved dramatically. Today I believe that Bitcoin is the most monumental event in the last two millennia of human history.  Here is why: Bitcoin can only be adequately understood after extremely deep contemplation. It is perhaps the most misleading object in human history, and this is for the explicit purpose of hiding, concealing, and protecting its essence, so that it could accrue the needed power for its extreme mission. This mission is to liberate all of humanity from the evil that is fiat money, and to return all of humanity to the radical truth that is honest and accurate accounting. It is only when we have a deep understanding of the historicism of the relationship between money and law, that we can come to understand Bitcoin. It is this relationship between money and law that we must investigate most critically. Only when we start to deconstruct these ideas can we start to see that we are deal with something that is not money or law, but something much more guileful.  Only through a historical study of money, law, and war can we understand that what we are told are *'money'* or *'law'* are anything but that. What we instead have today is something much more situational where only what governments decree to be *'money'* or *'law'* are considered as such. This means that the law and money are not something that is actually independent of a government’s say-so but are instead always situational. And that means that the 'law' can always be rendered impotent, and your money rendered useless by the emergency decree – that which suspends (and ultimately deposes) the law. If both money and law are always subject to any *'emergency'* then there will always be an emergency that can suspend either – or both. This may be the most important historical fact about money that there is: fiat money is borne out of a declared *“emergency”* and exists under constant and continued declarations of *“emergencies”* – all of which benefit the wealth and power of those making the emergency declarations. And this is why Bitcoin was created, and why it was built the way it was and has been cultivated as it has been. There is no way to have fiat money that is not subject to such whims. This is why and how the economies of the twentieth century were hijacked and directed to the purpose of war. It is also how giant sectors of the economy were wholly overtaken for the political purpose of killing, destruction, and murder. Today there is no exit from this hellscape we call reality. Governments today are magnitudes more powerful than ever before, and they hold at their fingertips the very real power to destroy all biological life if they choose to. This is only possible through fiat money. Only in this bleak context can we start to understand that Bitcoin is not just the saving power by which we can liberate humanity from the barbarism of fiat, but it is also the only hope we have in regaining control over our economies that have been mutilated for infinite war. This is just one of many facets of Bitcoin that makes it the most radical technology in existence today, and quite possibly messianic in the total context of humanity. It has the possibility of ending the financialization of state war by ending fiat money directly and thus restoring natural law and money to our planet. ### Erik Cason Erik is a committed researcher who is concerned with the long-term social, political, and philosophical issues that are at the heart of cryptographic blockchain systems like Bitcoin, and the personal sovereignty it can provide. # Traders Lose, Stackers Win - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/traders-lose-stackers-win/ Instead of trying to become a trader where you are up against highly capitalized professionals, for most people it is more productive to set up a savings plan to acquire pristine assets with a good risk/reward ratio. --- **Stephan Livera** · August 24, 2022 · Updated June 27, 2024 Most traders lose — especially in crypto. It’s a simple statistic that many people seem to ignore or underplay. It can be so tempting when viewing media online, particularly visual media showing the lavish lifestyles of supposedly successful traders. Perhaps these create a perception that financial freedom is easy or can come without risk. Why do most traders lose? Because they simply are up against very difficult odds, trading against highly skilled and capitalised opponents, and the house (aka the exchange) gets to take a cut too. And let’s not forget taxes. On top of it all, “crypto” is filled with grifts and scams designed to fleece traders and everyday people who don’t know any better. ### Who Exactly Are We Talking About Here? Of course, buying Bitcoin itself is a kind of trade. So to be clear, this discussion about traders is more about ‘day trading’ and those who regularly trade, rather than any trading at all. There are bona fide professional investors who may well be taking advantage of legitimate arbitrage opportunities, or some in the ‘crypto’ world may be taking advantage of insider knowledge or insider ‘family and friends’ deals. Genuine professional traders should be distinguished from those who are watching on social media and ‘click trading’. In my [December 2021 interview with Cory Klippsten, CEO of Swan Bitcoin](https://stephanlivera.com/episode/333/), we discussed his familiarity with actual professional traders and the tools they employ to outperform ordinary traders. Cory said: > I’m friends with a lot of these guys that are good at trading, because it was my professional and social circle in Chicago. The last time there was getting this good, it was options trading. Boom — when options went online and were open to retail, the people that really knew what they were doing were just doing it with black boxes, and they would make fun of click traders. A click trader is someone that actually, uses their hands to click a mouse. A good trader would never actually, be a click trader. They make fun of those people. [...] And they know what they’re doing because they’ve been doing it for 20 years. And they have incredible machines and AI scientists and ML people, and they’re setting up algorithms, and they’re ripping your face off. And if you don’t know any of what I’m talking about right now, and you aren’t friends with those people, you’re the mark. > > — [Cory Klippsten](https://www.swanbitcoin.com/), CEO of Swan.com A damning analysis to be sure. To be clear, it’s not that *“no trader can win.”* It’s that people should be clear-eyed and honest about their probability of success. You shouldn’t believe that watching some twitter TA *(“Technical Analysis”)* crayon drawer can make you a good trader. As I’ve said before, TA is horoscopes for men. Some of the TA and hopium posters on social media have massive followings, and these are likely people who are thinking of getting rich quick. ### Why Do People Get Sucked Into This? Perhaps it comes down to greed or some level of overconfidence and bias. Just like how if you ask people, most will answer that they are an *“above average driver”.* However, only half can be above the median average! ### Thinking You're Late to Bitcoin Many people feel late to Bitcoin, but the reality is that we are all still relatively early. Everyone feels late to Bitcoin. But don’t kid yourself into thinking that by levering up or trying to trade in and out of the market, that this will somehow create a time machine to becoming a Bitcoin OG who stacked Bitcoin in 2011, 2012 or similar. It won’t. It is the equivalent of playing with fire and can lead to massive and even total losses. I remember seeing multiple stories on some of the Bitcoin forums and r/bitcoin subreddit where individuals were trading and gambled, ‘running it up’ to hundreds or even thousands of Bitcoins, only to then lose it all with a few bad trades. ### What Do the Statistics and Studies on This Say? Some studies on day-trading yielded highlights below: This [study on Taiwan stock day traders from 1992 to 2006](https://www.sciencedirect.com/science/article/abs/pii/S1386418113000190) showed that *“Less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees”.* This study analysed 450,000 Taiwanese individuals who were day trading. And to abstract away from the luck factor, it was documented that less than 1% of the traders in the study were able to earn reliably positive returns net of trading costs in consecuitve years. Also, this study on Brazilian equity futures traders from 2013-2015 showed similar findings: > We show that it is virtually impossible for individuals to day trade for a living, contrary to what course providers claim. We observed all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world. We found that 97% of all > individuals who persisted for more than 300 days lost money. Only 1.1% earned more than the Brazilian minimum wage and only 0.5% earned more than the initial salary of a bank teller — all with great risk. Given the number of people selling courses on trading, or on ‘which coins to buy’, we can clearly see parallels in other markets historically. Or see this one on [Korean traders on the KOSPI 200 futures market](https://www.tandfonline.com/doi/abs/10.1080/10293523.2012.11082543): > The findings in this study indicate that day trading prevails in the KOSPI 200 index futures market and that most of the day trading activity can be explained by domestic individual investors' trades. However, **domestic individuals generally incur losses, and their losses tend to increase with their day trading activity (in terms of both trading frequency and trading volume)**. On the other hand, domestic money managers and foreign institutional investors make substantial profits through day trading, although their day trades account for only a small fraction of total day trading volume in the KOSPI 200 index futures market. So as above, amateur ‘click traders’ tend to get rinsed and lose money, while perhaps the top 1%, the professionals, money managers and institutional investors profit. ### Lump Sum & Auto-Recurring Buy Stacking Exercise Most of us want to stack more sats, and there is a way to stack with humility. Instead of day trading, one can start with an initial lump sum purchase of Bitcoin, and then continue to regularly accumulate with an Auto-recurring purchase plan. Importantly, holding Bitcoin in one’s own wallet where they alone hold the private keys greatly increases security. Now let’s compare this humble approach of stacking sats, avoiding day-trading, and HODLing Bitcoin on private keys you alone control with that of day-trading. You can run the numbers yourself with a calculator such as this one at stacksats.info. But here are some numbers based on the last 5 years. As an example, imagine if you started 5 years ago on 2017-07-31 with an initial lump sum of $5,000, and you did a weekly recurring buys of $100 up until 2022-07-31. You would have put in $31,100 and as of 31st July 2022, you would have ~4.44602 BTC. In fiat terms, this is $105,591, for an overall return of 240%. ![](https://www.datocms-assets.com/56652/1661364772-screen-shot-2022-08-24-at-2-12-23-pm.png?auto=format) ### Wanting to Feel Like You're *"Doing Something"* to Earn Another phenomenon I’ve noticed is that people believe that they need to be *“doing something with their coins”* to earn or increase their purchasing power. When actually the harder thing to do is have the right broad thesis, take a position with an automated Bitcoin savings plan, and stay the course. Perhaps it is more productive to reframe things and really think of having your Auto-recurring buys= as *“doing something”*. By regularly saving with Bitcoin, you are helping the ecosystem grow and not being a bagholder for the fiat system. ### What's More Productive and Should Be Done Instead? Instead of trying to become a trader, for most people it is more productive to figure out ways of improving your skills in the marketplace, or selling a product or service. By earning more, you are then able to save more. Those who want to contribute to Bitcoin in some way are able to do a range of things: - Contribute to open source bitcoin software or hardware projects; - Help organize or contribute at your local bitcoin meetup; - Invest in bitcoin companies or fund bitcoin developers; - Mine Bitcoin; or - Help family and friends understand what Bitcoin is and how they too can use it non-custodially *Please share this article with a friend who is new to Bitcoin so that they too can learn that most traders lose, but long term stackers can win.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # The Euro: A Train That’s Running Out of Track - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/history-of-the-euro/ The Euro was a poorly designed political construct from the beginning, and now we are seeing its vulnerabilities reemerge in a time of crisis. Can it survive? --- **Sam Callahan** · August 29, 2022 · Updated July 3, 2024 ### The Origins of the Euro In the late 1980s, a group of European central bank governors was asked by the Bank of International Settlements (BIS) to serve on a committee to study the future economic and monetary union of Europe. This committee would be named after its chairman, Jacques Delors. It involved 17 members, including the president of the Bundesbank, the governor of the Bank of England, and the BIS General Manager at the time, Alexandre Lamfalussy. At the BIS’s headquarters in Basel, Switzerland, the Delors Committee was tasked with determining the technical aspects of how European economic and monetary unity could be achieved. It was there, behind closed doors, that these central bankers would concoct a plan to create an economic union between European countries, tied to one currency, and run by one transnational central bank. The Delors Committee released its report to the international community in 1989, setting in motion the creation of the euro. The report was initially applauded and led to an additional 15 reports from the BIS over the next two years, all of which outlined the gradual process of how to bring European nations under one monetary policy in order to create price stability, improve trade, and reduce political conflict. These reports eventually led to the signing of the Maastricht Treaty in 1992 by twelve countries that formally established the European Union and introduced a new central bank system that planned to create one single European currency. The Maastricht Treaty also resulted in the creation of a new institution called the European Monetary Institute (EMI). This institution would be led by the now former BIS General Manager Alexandre Lamfalussy, who was tasked with constructing the euro along with a new transnational central bank that would remove governments from monetary policymaking. This bank would be independent of political control, would oversee monetary policy for all the member countries, and would be charged with ensuring price stability throughout the region. The EMI ultimately would serve as a precursor to the European Central Bank (ECB). As the EMI developed the regulations and policies around the ECB and the euro, questions began to arise about how a transnational currency would work when each participating country had differing fiscal policies, economic structures, and cultures. One such skeptic of the euro was the famed economist Milton Friedman who said, > Europe’s common market exemplifies a situation that is unfavorable to a common currency. It is composed of separate nations, whose residents speak different languages, have different customs and have far greater loyalty and attachment to their own country than to the common market or to the idea of Europe. The adoption of the euro would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. > > — Milton Friedman, 1997 Harvard Economist and President of the National Bureau of Economic Research, Martin Feldstein also chimed in on the drawbacks a shared single currency would have on European economies. > The shift to a single currency exacerbates unemployment by eliminating the possibility of national differences in interest rates and of changes in nominal exchange rates. The single currency, therefore, implies not only the government's inability to conduct a national monetary policy but also the absence of autonomous market responses of interest rates and exchange rates to exogenous demand shocks. > > — Martin Feldstein, 1997 The main critique highlighted by both men was that individual countries require independent monetary policy to respond to exogenous shocks to their unique economies. By giving up their monetary sovereignty to the ECB, governments would be unable to use flexible interest rates as a tool to combat economic shocks. In addition, because governments retained the rights to their own fiscal and tax policies, this created a dynamic where each country’s spending decisions would influence the other members of the European Union. In other words, member countries were always at odds with one another and had no mechanisms for dealing with a country if its sovereign debt came under stress. These flaws were inherent in the euro’s design from the start. However, the concerns from economists and central bankers were widely ignored by the EMI. This is partly because, at its heart, the move to the euro was not an economic decision but a political one. European leaders at the time felt that a unified Europe could challenge U.S. dollar hegemony, improve global trade, and reduce political tensions between European nations stemming from nationalist tendencies that had led to devastating world wars in the past. This reality was echoed by Rupert Pennant-Rea, deputy governor for the Bank of England in the 1990s when he stated in an interview, > It was completely misdesigned. You should not create monetary union of such disparate economies because it doesn’t work. There were a lot of economists saying that, but the politicians said we know better, we are creating history. > > — Rupert Pennant-Rea, 2012 Therefore, the warnings of many prominent economists and central bankers fell on deaf ears, and in June 1998, over 4 years after Alexandre Lamfalussy had established the EMI, the European Central Bank was founded, and seven months later, on January 1st, 1999, the euro was launched. ### Flashback to the European Debt Crisis of 2012 The change from 11 national currencies to one common euro currency was a monumental moment in economic history and European integration. The first decade of the euro was marked by growth, price stability, and expansion. EU member countries expanded from 11 to 27 member countries by 2007. Today, 19 of European countries use the euro as their national currency. To become a member of the EU, there are specific fiscal criteria that a country must meet. The Stability and Growth Pact, effected in 1999, requires that all EU member countries must keep their debt-to-GDP under 60%. This pact was put in place to prevent excessive deficit spending. The goal was to avoid the scenario where more fiscally responsible nations in the EU would have to bail out more spendthrift nations. Therefore, to deter excessive spending and reduce the risk of currency devaluation, rules were put in place where if a member country exceeded this 60% debt-to-GDP limit, they would be subject to a fine of up to 0.5% GDP and be required to develop an economic blueprint on actions they would take to improve their balance sheet. Public debt, as measured by debt-to-GDP, was not much of a concern for the EU in the 2000s, but it did start to accumulate throughout the decade. More importantly, it started to grow disproportionately in specific member countries of the EU compared to other more fiscally conservative member countries like Germany and France. The chart below highlights how public debt grew differently in each member country throughout the period from 1982-2011. ![](https://www.datocms-assets.com/56652/1661786013-the-evolution-public-debt-1982-2011.svg) First, notice how Greece and Italy both had debt-to-GDP above the 60% threshold since the late 1980s. They never even met the EU’s sustainability criteria. Second, note how the debt-to-GDP of peripheral countries like Greece, Portugal, Spain, Italy, and Ireland (better known by their acronym the PIIGS) grew at a much more rapid rate compared to France and Germany around the Global Financial Crisis of 2008. Although the 2000s were a period of good economic growth, EU expansion, and low inflation, it also marked a period where fiscal vulnerabilities were building under the surface. In the first decade of the union, the PIIGS experienced credit booms leading to high growth rates and elevated inflation. This reduced their economic competitiveness and led to large current account deficits that had to be financed through foreign borrowing. This credit boom mainly occurred because the government debt of the PIIGS was valued near the same price as Germany, reducing interest rate spreads between the nations, and persuading politicians that the monetary union was succeeding above expectations. This led to a lot of complacency and premature self-congratulations from euro proponents. The PIIGS took full advantage of this financial market mispricing and borrowed a lot of money at interest rates normally given to Germany despite large differences in their risk profiles and economies. Despite PIIGS deficits ballooning, European governments did not act to push any fiscal reforms to bolster the long-term health of the monetary union because things were going so well on the surface. Even though it made little sense why the interest rate applied to borrowing countries with large deficits was about equal to the most solvent country in the EU, Germany, foreign investors still bought the story, and purchased these PIIGS bonds hand over fist without fully understanding the risks involved. All of these vulnerabilities were laid bare during the Global Financial Crisis. With the European banking system struggling with massive loan losses from the subprime mortgage crisis, and liquidity drying up in the markets, this would set the stage for a European sovereign debt crisis, specifically in countries with high debt-to-GDP ratios, like PIIGS. The European debt crisis began in 2009 when Greece reported a deficit of 12.7% of GDP, which was more than double what was expected at the time. In response, to avoid a Greek default, government leaders, central banks, and the IMF established a temporary rescue fund worth $1 trillion for struggling Eurozone economies called the European Financial Stability Facility (EFSF). This was a very controversial action at the time because many felt the EFSF infringed on the *“no-bail-out”* clause of the Maastricht Treaty which prohibits states from assuming responsibility for each others’ debts. The EFSF allowed the EU to raise funds through the issuance of EFSF bonds and then loan those same funds to struggling nations, like Greece, to prevent default or further sovereign debt contagion from spreading throughout the Eurozone. Greece was bailed out in 2010 to the tune of $146 billion. However, to the chagrin of the ECB, this was not successful at stopping the credit contagion from spreading. From 2010-2012, Portugal, Ireland, Spain, and Greece (for a second time) all required bailouts through the EFSF. Notice below how the bond spreads between German bonds and the PIIGS stayed nearly flat before 2009. However, once the Greek crisis began, the bond yields of all the PIIGS compared to German yields began to widen before exploding higher in 2012 even after the EFSF bailouts occurred. ![](https://www.datocms-assets.com/56652/1661786179-government-yield-spreads-above-german-bond-yields.svg) Since all of these countries shared a common currency, the difference in bond yields from the more stable German bond can be thought of as the perceived risk of credit default for these countries. In other words, investors were worried about slowing growth and these sovereigns’ abilities to service their debt – thus the higher interest rates. This made it harder for these countries to roll over their short-term debt and created a feedback loop of negative investor sentiment leading to higher interest rates which increased the likelihood of default. Despite the bailouts facilitated by the EFSF, the PIIGS’s interest rates remained stubbornly high in 2012. Greece was a relatively small country, so its default was not too much of a concern for the ECB in terms of the overall health of the Eurozone. What kept them up at night was the risk of credit contagion spreading to larger Eurozone countries like Spain and Italy, which could be catastrophic. This risk of contagion is what ultimately led to the moment when ECB President, Mario Draghi, famously declared that the ECB would continue to assist struggling Eurozone nations to avoid the collapse of the European monetary union. In the speech at the Global Investment Conference in London, Draghi famously vowed, > Within our mandate, the ECB is ready to do whatever it takes to preserve the euro ... believe me, it will be enough. > > — Mario Draghi Draghi extended the EFSF in the form of a new, permanent bailout fund called the European Stability Mechanism, where distressed countries could acquire cheap loans from the EU, and also established a program where the ECB would purchase an unlimited amount of bonds on the secondary market of distressed eurozone members called Outright Monetary Transactions (OMT). An important caveat is OMT would be *“sterilized”* — that is, offset by removing equivalent liquidity from other parts of the euro system to counter inflationary risks. This is an important distinction from Quantitative Easing (QE), which prints money to buy bonds to inject new liquidity into the system to stimulate economic activity. The mere announcement of this unlimited bond-buying program immediately quelled investors' fears, and the bond yields of the PIIGS began to fall even though the OMT ended up never being used by the ECB. One can visualize this change in investor sentiment by looking at the Credit Default Swaps (CDS) of these sovereign bonds. CDS can be thought of as insurance investors can buy to protect themselves in the event of a sovereign default. Notice how the CDS of the member countries that were at risk of credit contagion dropped meaningfully after Draghi’s speech. ![](https://www.datocms-assets.com/56652/1661786379-default-insurance-drops-after-draghi-speech.svg) After the speech, the euro steadily rose as investor sentiment improved now that they knew the ECB would always be the buyer of last resort for sovereign debt. However this may have buoyed the short-term outlook, but it did nothing to improve the long-term growth and inflation picture of the Eurozone at the time. A nation with its own sovereign currency can handle such situations by devaluing its currency to make its exports cheaper and more competitive and encourage foreign investment. But because these Eurozone countries shared one common currency, they did not have this luxury. It was up to the ECB to find a way. Up to this point, all of these emergency facilities only served as bandaids. What the ECB really needed was to find a way to spur a strong economic recovery in these struggling, overly-indebted economies. To accomplish this, Draghi cut the ECB deposit interest rate and eventually dropped it below zero in 2014. ![](https://www.datocms-assets.com/56652/1661786456-ecb-deposit-facility-rate-for-euro-area.svg) If you look at the chart above, you’ll notice that the ECB was raising interest rates before Draghi was elected. That’s because Eurozone inflation started to rise above 2% as the recovery picked up in stronger Eurozone states, like Germany. This led to the ECB raising interest rates right as the PIIGS were still mired in deep recession. This is exactly what economists like Milton Friedman had warned about when the euro was first designed. The differing economies and balance sheets of its Eurozone countries posed enormous challenges for the ECB’s ability to effectively implement monetary policy. If they raised rates to combat inflation, it could cause the PIIGS economies to collapse. If they didn’t raise rates, the euro would lose purchasing power for all of its member countries. Despite this, once Draghi took over, he immediately cut rates for he feared deflation was more of a threat to the euro’s survival than inflation. The same thought process revolved around QE. Unlike the Federal Reserve, the ECB was hesitant to perform outright QE because they feared it would lead to inflation. But as the growth picture continued to deteriorate, the ECB eventually became convinced that the euro would not survive deflation and its third recession in a decade. Therefore, in 2015, Draghi implemented QE via the ECB’s Asset Purchase Programe (APP) and began injecting billions of dollars of liquidity into the Eurozone financial system every month, expanding the ECB’s balance sheet in the process. ![](https://www.datocms-assets.com/56652/1661786530-ecb-interest-rates-and-balance-sheet.svg) The ECB started its AAP programs right as the Federal Reserve eased its QE programs and began to raise interest rates in 2015. Both of these factors, along with continued fear around Greece’s economic recovery, led to the euro losing purchasing power against the dollar rapidly throughout 2014-2015. Despite their concerns, the chart below shows that inflation did not rise significantly as the ECB expected, and the euro eventually stabilized above U.S. dollar parity. ![](https://www.datocms-assets.com/56652/1661786607-consumer-price-index-vs-usd-eur.svg) In the end, this was a Goldilocks outcome for Mario Draghi and the ECB. By implementing negative interest rates and the ECB’s Asset Purchase Programe (QE), they prevented a deflationary crisis from occurring and kept the European monetary union together during the European Debt Crisis. They did this all without crashing the euro’s purchasing power or causing a major Eurozone sovereign default from occurring. As a result, Draghi was given the moniker *“Super Mario”* and was hailed as being the man responsible for *“saving the euro.”* But as we’ll soon see, Super Mario did nothing to fix the underlying issues that plague the euro system to this day. He was merely successful at kicking the can down the road until the next crisis. ### The Euro Crisis Today The reason why I think it's important to understand the European Debt Crisis in the early 2010s is that, in many ways, the European Union is still suffering the consequences of those events. There are many historical parallels between then and the current predicament the ECB faces. By studying the past and understanding the history of the euro, perhaps we can better estimate what actions the ECB will take to tackle the challenges they face today. Unfortunately for Super Mario, everything did not turn out how he thought it would for the EU. Many economies in the Eurozone saw a lost decade of economic growth in the 2010s due to a myriad of factors including stubbornly high unemployment, weak banking systems, large debt burdens, and harsh austerity programs attached to the bailout funds received during the European Debt Crisis. It took 6 years for the Eurozone to return to its 2008 GDP level, and some members did even worse: Spain and Portugal took almost a decade, and Italy and Greece have yet to get back to their pre-Global Financial Crisis growth levels. Eurozone countries clearly were lagging other countries when it came to their economic growth in the 2010s, as shown in the chart below. ![](https://www.datocms-assets.com/56652/1661786758-gdp-by-nation-since-2008.svg) This below-trend economic growth occurred despite ultra-accommodative monetary policy from the ECB throughout the decade. The ECB maintained its benchmark interest rate at negative levels from 2014 on and, outside a short period from 2018-2019, continued its QE programs the entire time. In fact, in 2019, before the COVID-19 pandemic even started, the ECB was still cutting interest rates further into negative territory due to low economic growth. Once the lockdowns began, the ECB went into hyperdrive. They introduced a new Pandemic Emergency Purchase Programe (PEPP), which was an extension of the Asset Purchase Programe that began during the European Debt Crisis. The total amount of government and corporate bonds the ECB was allowed to purchase through this new QE program amounted to €1.85 trillion! Dr. Edward Yardeni of Yardeni Research highlights below the explosion of the ECB’s balance sheet since the introduction of its PEPP program. ![](https://www.datocms-assets.com/56652/1661786833-ecb-balance-sheet-assets-in-euros.svg) The ECB used the same playbook that Mario Draghi used during the European Debt Crisis, except this time, interest rates were already negative. The ECB had no room to cut rates further. In addition, there are other important differences between the economic backdrop of the Eurozone today compared to then. The biggest difference is that CPI inflation has soared to 8.9% YoY in July, its highest level ever since the euro’s creation. This is in part due to sky-high food and energy prices resulting from major geopolitical events like the Russian-Ukraine War. ![](https://www.datocms-assets.com/56652/1661786900-euro-area-inflation-rate-all-time-high.svg) This has forced the ECB into a corner. Its mandate is price stability and traditionally, these high inflation prints would require them to increase interest rates. But an additional difference between now and the early 2010s, is that the debt-to-GDP levels of all Eurozone countries have risen significantly. Once again, Southern European countries like Italy, Greece, and Spain have by far the largest debt-to-GDP levels, but now even traditionally fiscally conservative members like Germany also have debt- to-GDP ratios that are higher than the 60% level that was agreed upon in the Stability and Growth Pact. ![](https://www.datocms-assets.com/56652/1661786997-debt-to-gdp-of-euro-countries.svg) The Stability and Growth Pact was suspended in May 2020 as an emergency pandemic measure, and it is unclear when these fiscal rules will be reinstated. What is clear, is these debt levels are unsustainable even by the European Union’s own standards and leave these economies highly sensitive to any increase in interest rate hikes. If the ECB tries to fight inflation, they risk causing a sovereign debt crisis. Similar to the European Debt Crisis, the ECB was slow to react to the changing conditions compared to other central banks and was still performing QE and maintaining its interest rates when the Federal Reserve began increasing rates aggressively and began Quantitative Tightening. This dynamic has resulted in serious pressure on the euro. It recently hit its lowest level compared to the dollar and briefly hit dollar parity for the first time in 20 years. The euro is currently down 13.89% against the dollar over the last year. ![](https://www.datocms-assets.com/56652/1661787091-usd-to-euro-2018-2022.svg) In response to these troubling currency developments, in its June meeting, the ECB announced that it would stop its bond-buying programs and raise interest rates for the first time in 11 years. The ECB's shift to attack inflation instead of supporting its economy raised concerns about the impact that higher interest rates would have on heavily indebted governments, most notably Italy. Just like the PIIGS in the European Debt Crisis, almost immediately from that news, the spreads between these bonds compared to German yields began to rise. ![](https://www.datocms-assets.com/56652/1661787176-spread-of-10-year-soverign-bonds-over-german-bonds.svg) This gulf in the bond yields between the region’s strongest and weakest economies led to an emergency ECB meeting where a new *“anti-fragmentation tool”* was announced. In addition, the ECB remodeled its PEPP program so it can use reinvestments of maturing debt more flexibly. Said differently, they are taking maturing debt from stronger economies, like Germany, and using the funds to buy the bonds of weaker economies, like Italy. In an attempt to keep these highly indebted nations’ borrowing costs low, since June, the ECB has injected €17bn into Italian, Spanish and Greek markets while allowing its portfolio of German, Dutch and French debt to fall by €18bn. ![](https://www.datocms-assets.com/56652/1661787232-net-purchases-under-pepp-during-june-july.svg) These actions merely shuffle euros around from stronger economies to weaker ones in order to shield the weaker economies from the negative effects of rising interest rates. It is akin to the ECB trying to plug leaking holes in a dam. It is obviously an unsustainable solution to the long-term problems the ECB faces. In July, the ECB went ahead with a 0.50% interest rate hike moving its interest rate off negative for the first time since 2014. It also shared more details about its vague *“anti-fragmentation tool”* which was formally named the Transmission Protection Instrument (TPI). The tool allows the ECB to buy any country’s bonds as they see fit at an unlimited scale. Many saw this as ECB President, Christine Lagarde’s *“Draghi moment.”* Back when Draghi announced OMT and its unlimited nature during the European Debt Crisis, just the mere announcement of OMT was enough to quell fears in the markets. Many believe the ECB hopes just the existence of the TPI will have a similar effect on bond markets. In an interview, ECB board member Isabel Schnabel gave her best Draghi impression when she said in a speech, > Our commitment to the euro is our anti-fragmentation tool. This commitment has no limits...and our track record of stepping in when needed backs up this commitment. > > — Isabel Schnabel To the ECB’s disappointment, even with the announcement of the TPI, the spreads between Italian and German bonds have decreased only slightly, and the cost of insuring against an Italian default (CDS price) still remains high, indicating that investors are not yet sold on this new unlimited bond-buying instrument. This comes as Moody’s recently cut their outlook for Italy from neutral to negative, citing increased political risks, sluggish growth, inflation, and higher funding costs as the main reasons. Despite all of the ECB’s tools and efforts, the risks around Italy and other peripheral Eurozone countries continue to rise, all while record-high inflation continues to ravage every country in the European Union. The ECB currently finds itself in a horrible conundrum. Only time will tell if they will be able to navigate these challenging times and hold this fragile European Union together or if, in fact, we are witnessing the gradual collapse of a monetary experiment gone terribly wrong. ### Conclusion The similarities between the European Debt Crisis and the current Euro Crisis are uncanny because both reveal the same issues of a monetary union that was flawed from the start. It is impossible to have a stable monetary union when it consists of countries with differing fiscal policies, economies, and cultures. Eventually, especially in times of crisis, nations abandon transnational monetary rules for their own government's self-interests. It is safe to say all the problems that led to the European Debt Crisis were only masked over by central bank monetary policy, bailouts, and massive amounts of fiscal stimulus. It should not surprise anyone to see the same structural problems of the euro remerge as the ECB attempts to tighten monetary policy and stop its bond-buying programs in order to reign in inflation. The euro was flawed economically from the get-go. These flaws have caused severe problems in the past, and now they are painfully rearing their heads again. Bitcoin’s main competition as money is fiat currencies. When a major fiat currency comes under pressure like this, it’s ultimately good for Bitcoin’s long-term adoption. The euro is the world’s second-largest currency by trading volume and is the second-largest holding of central bank foreign exchange reserves. The path of least resistance for the ECB appears to be that it will sacrifice the euro’s value in order to prevent a string of sovereign defaults from fracturing the European Union. We are currently watching one of the largest fiat currencies in the world devalue at a rapid pace, and all signs are pointing to this dynamic continuing in the future. The question becomes, what will the ECB do next? The ECB is currently trying to ride two horses at once. It wants to raise interest rates to bring down inflation, but it’s also attempting to continue with its bond-buying programs to keep the borrowing costs of its weaker economies from rising and causing a potential credit contagion event. These two policy choices are directly at odds with one another. Italy is the third largest economy in the European Union. This is no Greece. If Italy were to default, it would cataclysmic for the European Union. It’s too big to fail. Therefore, there’s an increased probability that a bailout similar to the ones we witnessed in the European Debt Crisis is on the horizon. In other words, more money printing, more bond-buying, more devaluation, and more economic stagnation for the Eurozone region. A recent interview with ECB President Christine Lagarde posed a question to her as she was shown a chart of the ECB’s balance sheet, *“This is going over €8 trillion now, don’t we see a giant bubble on your balance sheet with the euro, and isn’t this graph nerve-wracking?...How do we get it back down?”* Her answer, as she nervously laughed and shifted in her seat, *“It will come...In due course...it will come.”* Indeed, we shall see, President Lagarde, we shall see. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: From the Void - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-from-the-void/ How Bitcoin Uses Both Nothing and Chaos to Create Something the Likes of Which We Have Never Seen Before. --- **Tomer Strolight** · September 13, 2022 · Updated June 27, 2024 ### Existence and Creation How does existence come to be? The ancient Greek creation myth states that at first there was chaos — nothingness — a void. Then, somehow, order arose. The Judeo-Christian religions say the Genesis happened at a time that the Earth was formless, void and dark, until God said “Let there be light!” Modern science doesn’t try to explain how everything actually came into existence. It traces the history of the universe back to an event it calls the Big Bang — a time when everything in the universe already existed, but was packed together into a very hot and dense state. Then, suddenly, and still inexplicably to us, it went through a rapid and brief state change called inflation which led to the organized and lawful order of things we now observe. Meanwhile, we arrive at expressions like “You can’t get something from nothing” or “there ain’t no such thing as a free lunch.” And the laws of thermodynamics support such conclusions. There’s the first law of the conservation of matter and energy which says that it is neither created nor destroyed, just rearranged. And furthermore, the second law states that on the whole everything trends to entropy — towards chaos and disorder. The modern view is that the only way we can create anything is by re-arranging already existing things. ### Bitcoin: Making Use of Nothing When we look closely at Bitcoin, a peculiar pattern in its design and operation emerges. Perhaps rather, this observation comes when we don’t look too closely at the actual implementation details themselves, but rather, at what they lack — at what is not there. What we observe is that Bitcoin itself repeatedly creates something unprecedented — something valuable and unique — out of emptiness, absence, or a void. Let’s explore some examples. ### Where Should We Begin? How About Nowhere We can begin anywhere really, so let’s begin at that place called nowhere, which is actually not someplace, but no place. You’re somewhere. You occupy space. So do I. Whatever country you’re in is also somewhere. It occupies space. If something bad happened to the space you or your country occupied, you and your country would cease to be. But where is Bitcoin? Can we eliminate the location it is in, thereby eliminating Bitcoin? We all saw, for example, in October 2021 that Facebook and all its subsidiaries went down for many hours because something had gone wrong with their data centers — the locations they were in. We’ve seen something similar happen to every other major internet service, and for the same reasons. The destruction of the handful of data centers any web service is located in would spell the end of it. But not Bitcoin. If you yourself run a Bitcoin node, is Bitcoin in the node? Well, yes, it’s in there in one sense. But if that node ceased to exist, Bitcoin would not stop existing. So Bitcoin is not in there in any sense that Bitcoin would disappear if the node ceased to be. Bitcoin itself has no concept of location built into it. There’s no field in its database for address, city, state, or country. No Bitcoin node knows or cares where it is. The same data exists identically in every Bitcoin node. They’re each perfect replicas, staying in touch with each other to sync up, wherever they are. None has any primacy over any other. They’re all equals. Wherever these nodes are, Bitcoin is in each one, but Bitcoin, the network, is not in any one of them. Bitcoin, the network is what emerges from all those nodes running together, and it is not dependent on any one of them or even on any large number of them operating to survive. It is not actually in any particular place on Earth. “So what?” you might ask. Well, here’s the rub. By not being anywhere, Bitcoin can’t be stopped by “taking out” its location. Here’s the first hint at this design pattern: by being nowhere, Bitcoin manages to do something that can’t be done by anything that is somewhere. That is, it manages to eliminate its dependence on location to exist. It exists nowhere in particular, and because of this, it can survive the destruction of any place in particular. Internet outages in Canada? No problem. Electricity down in California? No worries. An outright ban in China? No big deal. A lightning strike on a data center? Who cares? All of these are just temporary unavailability for some people in some places, because something else other than Bitcoin is unavailable in that place. But Bitcoin itself does not exist anywhere in particular. It keeps ticking along no matter what happens in any particular place — because it’s not there, or anywhere else for that matter. ### Everybody from Nobody One of the most valuable things about Bitcoin is that anybody can use it. This is because nobody can be prevented from using it. What’s the magical engineering secret that Satoshi used to prevent anybody from ever preventing anybody from ever using Bitcoin? It’s not what he put in — it’s what he left out. Bitcoin has no concept of users. No field for first name, last name, middle name, profession, nationality, gender, credit score, criminal record, date-of-birth, email address, phone number. None of that. Bitcoin doesn’t know or care that people exist or that some of them might try to stop others from using it. Instead, to use Bitcoin — to receive, hold, or send its currency — you need only have a large random number, which can be used as the private key from which you can derive public keys and addresses. This number is not linked to your actual identity, and you can create as many addresses as you’d like. There’s nowhere to look inside Bitcoin’s codebase and say: > See, this is where it says everybody can use it. These are the lines of code that prevent anyone from preventing anyone else using it. Instead, it’s what isn’t there. Through the absence of code identifying anyone, Bitcoin eliminates the need for anyone to identify themselves to use it. ### To Use Bitcoin, Start With Chaos But what is the action someone must take to use Bitcoin properly? What are the precise, orderly steps? First, you too must reach into the void of chaos if you want to use Bitcoin. There is no private key with your name on it. There is just a vast range of huge numbers that can serve as private keys and you must pick at least one of them to get started. But you must be careful. If you choose a number someone else can guess, they will be able to spend your coins as if they were their own. There’s only one reliable method to generate a number nobody else can guess or figure out. That way is to rely on chaos — also known as entropy, indeterminism and disorder — so that nobody can backtrack your steps to recreate that number. Chaos. For you to enter the community of Bitcoin users, you too must first enter the void yourself — the huge space of never-before-written down numbers — and bring something back from there (and keep it secret). There’s no other way. Sure, you can have other people use Bitcoin on your behalf. But you’re not using Bitcoin then — they are. And you’d better hope they reached into the void with maximum chaos to get their number, or someone will steal the coins they are supposed to be holding for you. What other product or service has as the first step of its instructions : “Step 1: Generate entropy”? But when you create a wallet, that’s exactly what you’re doing. You’re first bouncing from random data point to random data point with such chaos that nobody will ever be able to retrace your steps, then writing down the number you’ve arrived at, and finally bringing it back to the orderly and sensible world we all inhabit. ### Trust No One Joseph Stalin famously said, “I trust no one, not even myself.” He was a monster, but he had a point. After all, how can you trust anyone besides the people you’ve come to know really closely? People can lie, break their promises, or cheat on you. There are so many ways to breach trust. Satoshi Nakamoto also famously said “The root problem with conventional currencies is all the trust that's required to make it work.” We have to trust the regulatory bodies, their employees, the politicians who can exert pressure on them, the banks and their employees, the people and companies who print money, and countless others who can alter records, debase the money, counterfeit it, and more. In Bitcoin, Satoshi figured out how to use Proof of Work, digital signatures, and peer to peer networking to eliminate the need for trust in the accounting records of the entire monetary system. He removed every single point of trust in people at every single step of every single operation of the system. Bitcoin is the most untrusting information system ever devised to track money. It’s completely without trust – “trustless.” So what’s the result of this ruthless, uncompromising, relentless trustlessness? For the first time in history, we have something we can actually fully trust! By eliminating every point of trust, Satoshi eliminated every point where trusting in others could be broken or betrayed, and the outcome is that at the system level of Bitcoin, trust cannot be violated. Because of this, you can actually trust it. If your node reports that you received some bitcoin and that the transaction has been confirmed on the blockchain, you can trust in the fact that you don’t need to trust anyone — not even yourself. This is a fact that cannot be altered by anyone, and yet, it can be verified by anyone. Stalin would have been quite impressed. **The most trust-worthy system the world has ever known was created not by finding the most trustworthy people and asking them to lend their credibility to it, but rather, by being so untrusting in each step of building it that there were no dependencies on trust left in it. A trustless approach to design created unimpeachable trust.** This of course makes Bitcoin an incredibly useful creation because now, with Bitcoin, absolutely anyone can exchange value with anyone else, no matter what that other person’s trustworthiness is. They can do so while being able to trust in the fact that the money paid is not going to be taken back and is itself not counterfeited. Think about that for a moment — the biggest liar in the world can come to you and offer to pay you in bitcoin, and if you receive a payment from him, even though he’s dishonest to the core, you can trust him in this regard. It provides safety for you from his lies and, to some degree, some redemption for that liar since he can operate in a realm where even those who know him to be a liar can trust him. ### Poor Bitcoin Has No Money or Property The bitcoins on the Bitcoin network are very valuable, but they don’t belong to Bitcoin. They belong to you and me and anyone else in the world who has the keys to spend them. Like any organization, Bitcoin needs resources to keep functioning. Every company, government, and not-for-profit entity needs money to pay its suppliers. Inevitably, they must negotiate with these suppliers, pay them, deal with the discrepancies and disputes that eventually arise, and protect their property from theft and seizure. This is known as *“overhead”* or *“the cost of doing business.”* What does it cost Bitcoin to do its business? Well, once again, nothing. It has no money to pay anyone and it has no assets to employ. Bitcoin’s critics look at this and say *“Bitcoin is worthless!”, “It’s nothing at all!”*, or *“It has no intrinsic value!”*, to recite just a few of the typical tropes. But Bitcoin has a (non-existent) ace up its (non-existent) sleeve. It doesn’t need any property or money for itself. It asks for nothing for itself. It does not negotiate. It does not listen to those who allege to have a dispute with it. It experiences no cost of doing business. It says to everyone in the world *“You can spend whatever you wish on operating Bitcoin. It’s entirely up to each of you. I, Bitcoin, will keep nothing.”* (It of course doesn’t literally *“say”* any of that because it has no ability to speak either.) Bitcoin never accepts any cost of doing business and cannot pay for any such cost. It is completely impoverished. And you know what can thus never happen to it? **Bitcoin can never go bankrupt.** After all, it never enters into any obligation to pay anyone anything. Bitcoin’s *“balance sheet”* is zero assets = zero liabilities plus zero equity. Ask any accountant the definition of bankruptcy and they’ll tell you it means being unable to pay one’s debts. Bitcoin has no debts and can never have any. But show Bitcoin’s balance sheet to any accountant, and they would be baffled if you told them it belonged to an organization serving millions of people, and operating non-stop, 24/7/365 for over a decade, and flawlessly accounting for and transacting hundreds of billions of dollars of value transfer. Finally, and also curiously, this thing that has no property for itself produces the most pristine property that has ever existed — but not for itself. Try telling that to the imaginary accountant we’re talking about: *“This organization, with no assets or equity, somehow operates flawlessly and non-stop, and as a result of its operation, it creates property the likes of which has never existed before. It creates property that is so sought after that billions of dollars are spent daily in trading it, and which countless knockoffs of are being created every day. In fact, billions of dollars are raised by venture capitalists to create imitations or alternatives, yet nobody has managed to create a knockoff that shows any signs of being an actual substitute. The more money and resources people put in to creating a replacement, the less it seems to function as a substitute for this thing that was created without any need for money or resources.”* It sounds impossible. But there it is. Only Bitcoin has managed to produce a massively valuable product with no financial investment in it at its inception — or since. ### The Best Run Organization Has Nobody Running It Leadership is really hard. How do you choose a leader? And what about their successor when the time comes? How do you depose a leader if they’re not doing their job well? How do you even determine if they’re doing it well? How do you even define the leader’s job correctly? What do you pay them? And then there’s the same issue with all other employees. And there’s the office politics; and all the other human issues that come up – people get sick, they mistrust each other, their chemistry is off, and the culture needs to be maintained. It all can be such a headache. Bitcoin’s solution, like with everything else we’ve discussed, is simply, once again, to have none of it. No CEO, no board, no shareholders, no employees, no human resource policies. *“Surely that can’t work,”* a professor of organizational design might complain. *“With no employees, no work would get done, no decisions would be made!”* And yet, Bitcoin works better than any company in the world. And all its imitators, which actually are companies that have copied its code and hired employees to modify it, promote it, and issue shares in their spin-off, do not work as well. It’s quite a revolutionary design principle in operating an institution. The most reliable operation on Earth comes not from hiring the best people, or paying them the best, or having the best directors – it comes from not having employees at all. We give employees way too much credit it seems. (I hope my boss doesn’t want to have a word with me after reading this.) ### No Foundation is the Best Foundation to Build On > If you wish to make an apple pie from scratch, you must first invent the universe. > > — Carl Sagan Whenever you’re constructing something, you want to make sure it is built on a foundation that will not crumble underneath its weight, taking your construction down with it. What is Bitcoin *“founded”* on? Well, legally, there is no foundation of any kind anywhere on Earth for Bitcoin. Bitcoin does not rely on the laws or authorities of any country or countries to acknowledge its existence, to provide legal protections for it, or to enforce its rights. And of course, there are no employees or assets of this non-existent foundation. Yet every other institution stands on some legally constituted foundation. And once again, by omitting the things other institutions have, Bitcoin demonstrates a superiority rather than a weakness. Bitcoin’s operation is invulnerable to the collapse or corruption of any aspect of any country’s legal system. Every government in the world could stop enforcing its nation's laws, or completely change them, or cease to exist and be replaced by new governments of new nations — and Bitcoin wouldn’t notice. Bitcoin is its own thing entirely and can continue to run as long as anyone in the world wants to run it. It can thus run forever, even as nations rise and fall, as empires crumble and as countless generations pass. Built on no foundation, it is thus built on a foundation that will never crumble. Bitcoin truly is generational wealth, forever. ### Conclusion By having no sense of location, of users, of employees, or even of assets, Bitcoin manages to create an asset invulnerable to weaknesses created by those very things, and thus generates an entirely unique and massively valuable existent that couldn’t exist before — something very special out of lots of nothing. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # 5 Top Bitcoin Wallets Review in 2026 (Ranked & Rated) URL: https://www.swanbitcoin.com/education/best-bitcoin-wallet/ Not Your Keys, Not Your Bitcoin! Which Bitcoin wallet is right for you in July 2026! --- **Brandon Quittem and Drew** · June 29, 2024 · Updated August 5, 2026 Alright, so you’ve [acquired some Bitcoin](http://swanbitcoin.com/). Now, what’s the best way to store it safely in 2026? **TL;DR**: Not your keys. Not your coins. If you leave Bitcoin on an exchange, it's legally not your Bitcoin. At any time, the exchange can freeze your account, disable withdrawal ability, or take several actions that mean you can't get access to your Bitcoin, like what we recently saw with [FTX](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/), [Genesis](https://www.swanbitcoin.com/gbtc-was-the-genesis-of-the-crypto-credit-contagion/), [GBTC](https://www.swanbitcoin.com/gbtc-credit-contagion-part-ii/), [BlockFi](https://www.wsj.com/articles/crypto-lender-blockfi-halts-withdrawals-citing-ftxs-problems-11668142538), and other third-party wallet services. We are here to help take you through the process of finding the right Bitcoin wallet for you. Although it seems like a straight­for­ward question, there is a surprising amount of nuance to consider.  - *How much Bitcoin do you have?* - *How often do you plan to spend it?* - *Are you confi­dent your keys are more secure with you than with a regulated custo­di­an’s* [*cold storage*](https://www.swanbitcoin.com/bitcoin-cold-storage/)*?*  Let's get into it! ### Bitcoin is a Bearer Asset Bitcoin is a bearer asset, meaning you can hold the keys to your Bitcoin yourself. When you maintain your own Bitcoin keys, you are in direct control of your money. It is not entrusted to any third party, like a bank. In cryptog­raphy, a public key is used to encrypt messages, and a private key is used to decrypt them. If someone wanted to send you an encrypted message, they would encrypt it with your public key. Your private key is the only way to decrypt that message, so as long as you are the only person who holds the private key, you are the only person who can read the message. ![](https://www.datocms-assets.com/56652/1705350656-paper-wallet.png?auto=format) **Understanding Bitcoin as a Bearer Asset: Master Your Cryptocurrency Security** - **Direct Control of Your Funds:** Bitcoin offers the unique advantage of being a bearer asset. When you hold the keys to your Bitcoin, you exercise complete control over your funds, eliminating reliance on third-party institutions like banks. **The Role of Cryptography in Bitcoin Security** - **Encryption and Decryption:** Bitcoin’s security is anchored in the use of cryptographic keys: - **Public Key:** Used by others to encrypt and send you Bitcoin. - **Private Key:** Essential for decrypting and accessing your Bitcoin, making its security paramount. **How Bitcoin Wallets Secure Your Crypto Assets** - **Generating Keys:** A Bitcoin wallet initiates your security by creating a private key that, in turn, produces public keys. - **Receiving Addresses:** These public keys are hashed to create addresses that can receive Bitcoin. - **Proof of Ownership:** The private key serves as your proof of ownership, enabling you to spend or transfer your Bitcoin. **The Risks of Not Holding Your Own Bitcoin Keys** - **Outsourcing Security:** Not controlling your private keys means essentially not owning your Bitcoin. Relying on third-party services like exchanges or banks can expose you to risks of loss or theft. **Deciding to Hold Your Own Bitcoin Keys** - **Risk Assessment:** Assess the risks involved in managing your keys versus the potential risks of custodian loss or theft. - **Empowerment Through Ownership:** Holding your own keys empowers you to safeguard your Bitcoin against unauthorized access, seizure, or theft. **Securing Your Bitcoin with Swan** - **Custodial Security:** Until you decide to manage your own keys, your Bitcoin is securely held in a Swan wallet by our U.S. custodial legal trust banking partners under robust security practices. - **Beneficial Ownership:** You remain the beneficial owner of the funds, fully protected under advanced security measures. Learn more about our security practices at [Swan Bitcoin Security](https://www.swanbitcoin.com/security). **Exploring Your Options for Bitcoin Key Management** - **Financial Independence:** Taking control of your Bitcoin keys is a significant step towards achieving financial independence and security in the digital age. - **Educational Support:** We provide the knowledge and tools necessary for you to manage and secure your Bitcoin confidently. Now, let's look at your options for taking control of your own Bitcoin keys. ### Bitcoin Custody Tradeoff: Security vs Convenience  The main tradeoff to consider when storing your Bitcoin is between security and conve­nience. Obviously, both security and conve­nience are desir­able traits when storing your Bitcoin; however, they are directly opposed to each other. Where do you sit on the security vs. conve­nience spectrum? Ask yourself these questions to gain a better feel for what storage method makes the most sense for you: - **Total Value** — Are you storing on the order of 0.1%, 1%, or +10% of your net worth in Bitcoin? The answer would neces­si­tate very different methods of storing your Bitcoin. Obviously, you would be willing to suffer more incon­ve­nience if it meant protecting 50% of your net worth.  - **Timeframe**/**Acces­si­bility** — When and how often do you need to spend your Bitcoin? Is this more of a checking account, a medium-term savings account, or is your Bitcoin more similar to a [long-term retire­ment account](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/)? ***Pro Tip:*** *Don’t make your custody setup so compli­cated that even you forget how to access the funds. Bitcoiners tell cautionary tales of people losing Bitcoin due to overcom­pli­cated custody setups resulting in the owner forget­ting how to access their coins.* ### Wallet Overview: Exploring Mobile, Desktop, Hardware, Paper and Multi-sig Bitcoin Wallets Now that you’ve decided to [acquire some Bitcoin](http://swanbitcoin.com/) (smart move), it’s time to choose where to store your Bitcoin. This can feel overwhelming when you’re getting started. [Video](https://www.youtube.com/watch?v=QdkTG5lcXf4) ### Mobile Bitcoin Wallets **What****:** Users store private keys on a mobile device.  **Pros****:** Simple to use, suitable for begin­ners, works for small amounts, conve­nient for spending even though most people rarely spend their Bitcoin right now (too much upside to holding for the long term!)  **Cons****:** Least secure option as private keys are on a device connected to the internet. If an attacker gains physical access to your phone, funds can be sent to their own wallets. Not suitable for long-term storage.  **Example****:** [Muun](https://muun.com/) ### Desktop Bitcoin Wallets **What****:** Users store private keys on their desktop computer. **Pros****:** [Good UX](https://www.swanbitcoin.com/on-bitcoins-ux/), conve­nient for spending. Most desktop Bitcoin wallets allow users to connect to signing devices for enhanced security.  **Cons****:** Not very secure as computers are connected to the internet and vulner­able to attacks. Not suitable for long-term storage.  **Examples****:** [Bitcoin Core](https://bitcoin.org/en/bitcoin-core/) and [Electrum](https://electrum.org/#home) (advanced), [Specter](https://specter.solutions/) (inter­me­diate), [Block­stream Green](https://blockstream.com/green/) (beginner). ### Hardware Bitcoin Wallets **What**: Users store private keys on a purpose-built piece of hardware called a signing device. These devices can connect with Bitcoin software running on desktop and mobile devices.  [Video](https://www.youtube.com/watch?v=EeRSOIr_v1Y) **Pros****:** Private keys never touch the internet, which reduces the risk of online attacks. Suitable for long-term storage. Since most signing devices require a PIN to access, if you lose your signing device, you can use the recovery phrase to regain access to your Bitcoin.  **Cons****:** Users must secure a recovery phrase which serves as a backup to their hardware, and requires a thoughtful strategy to protect.  - If your hardware wallet is stolen, your funds are at risk of being hacked. - Protecting recovery phrase backups is standard practice for self custody of Bitcoin.  **Example****:** [Blockstream Jade](https://blockstream.com/jade/) ### Paper Bitcoin Wallets **What**: A paper Bitcoin wallet is a way to store Bitcoin private keys offline. It typically involves printing out your Bitcoin public and private keys on paper oftentimes encoded as a QR code. **Pros**: If properly generated are immune to online hacking risks.  **Cons**: Vulnerable to physical damage and degradation, inconvenient for frequent use, and pose a high risk of irreversible loss if lost or stolen. Carry a risk of key interception during printing if the printer is not secure. ### Multi-sig Bitcoin Wallets **What**: User stores private keys in a unique wallet that requires multiple private keys to sign before your funds can be moved. A *“2‑of‑3”* multi-sig wallet, a user needs two out of three private keys to move funds. **Pros****:** One of the most secure ways to store your Bitcoin, reduces the effec­tive­ness of physical attacks and is suitable for long-term storage.  **Cons**: Hard to set up on and manage on your own, but several services exist to make it easier. Not conve­nient for spending, but that’s the point. **Examples**: [Swan Vault](https://www.swanbitcoin.com/vault/), [Unchained Capital’s Vault](https://unchained-capital.com/vaults/) (2‑of‑3), [Specter](https://specter.solutions/) (DIY), [Electrum](https://electrum.org/#home) (DIY). Guy Swann hosts "*Zero to Multi-Sig*" with BTC Sessions, Seth for Privacy, Trey Sellers. We discuss the best way to learn about self-custody, multi-sig benefits, and how to safely store your Bitcoin. [Video](https://vimeo.com/1029478726) ### Hot vs Cold Bitcoin Wallets: What’s the Difference? Understanding the differences between hot and cold Bitcoin wallets is crucial for managing your cryptocurrency securely. **Hot Wallets** - **Internet Connection**: Hot wallets are connected to the internet, making them easy to access for daily transactions. - **Security Risks**: Their constant internet connection makes them more vulnerable to hackers. It's recommended that they store only small amounts of Bitcoin in hot wallets. - **Use Case**: Ideal for frequent transactions, similar to carrying a physical wallet for daily spending. **Cold Wallets** - **Offline Storage**: Cold wallets are not connected to the internet, greatly enhancing their security against online threats. - **Accessibility**: Less convenient for frequent use due to their offline nature, but significantly safer. - **Recommended Use**: Best for long-term storage of Bitcoin, acting like a safe for your digital assets. **Bitcoin Wallet Backup Seeds** - **Backup Necessity**: Most wallets prompt users to write down a backup seed phrase, which is a crucial recovery tool if they lose access to their wallet. - **Security Importance**: These backup seeds must be guarded as meticulously as valuable physical assets since they contain all the necessary information to access your Bitcoin. **Seedless Bitcoin Wallets** - **Multi-signature Support**: Seedless wallets are typically used in multi-signature setups where no single backup seed is generated. - **Backup Handling**: Instead of user-managed seeds, these wallets often rely on a service to handle backups securely. **Bitcoin Multi-sig: How it Works** - **Multi-key Security**: Multi-sig wallets enhance security by requiring multiple signatures for transactions. For example, in a 2-of-3 setup: - **Key Distribution**: You would have three private keys but need at least two to authorize a transaction. - **Risk Minimization**: Keys are often kept in physically separate locations to mitigate the risk of theft or loss. ******Just don’t get too creative, or you might fool yourself and lose your funds (it’s happened many times).***  As mentioned above, here are a few examples of multi-sig­na­ture wallets: - [Swan Vault](https://www.swanbitcoin.com/vault/) (2-of-3) - [Block­stream Green Wallet](https://blockstream.com/green/) (2‑of‑2) - [Casa’s Keymaster ](https://casa.io/)(2‑of‑3 and 3‑of‑5) - [Unchained Capital’s Vault](https://unchained.com/vaults) (2‑of‑3) - [Specter](https://www.swanbitcoin.com/swan-specter-integration-announcement/) (Design your own setup) ### Benefits of Multi-sig Multi-signature (multi-sig) technology adds an extra layer of security and flexibility to the management of your Bitcoin. Here are the key advantages: - **Error Tolerance**: Multi-sig configurations, such as a 2-of-3 setup, allow room for error. If you lose one private key, you can still access your funds with the remaining keys. This significantly reduces the risk of total loss compared to a single-key setup. - **Mitigation of Physical Attacks**: Multi-sig can protect against physical threats to your Bitcoin. In a scenario where you might be coerced into transferring your Bitcoin, having a multi-sig setup complicates this process. - **Geographic Separation of Keys**: By distributing your keys across different locations (e.g., your home, office, and a safety deposit box), you decrease the likelihood of a successful physical attack. This geographic spread of keys deters attackers by making accessing all keys needed to transfer the Bitcoin significantly more challenging. - **Enhanced Security**: The need for multiple keys to authorize a transaction adds a layer of security that is absent in standard single-key wallets. This setup ensures that no single person or compromised location can control the entire wallet. ### Why Does My Bitcoin Wallet Address Keep Changing? Why Does My Bitcoin Wallet Address Keep Changing? Understanding why your Bitcoin wallet address changes frequently can be complex, but it's an essential feature designed to enhance your security and privacy. Here's a simple breakdown: - **Multiple Public Addresses**: Each set of private keys in your wallet can generate billions of public keys. These public keys are transformed through a process called hashing to create public addresses. - **Receiving Bitcoin**: You can receive Bitcoin at any of these public addresses. The capability to create numerous addresses from a single set of private keys ensures that you have many addresses under your control. - **Spending Bitcoin**: While anyone can send Bitcoin to these addresses, only the person holding the corresponding private keys can spend the Bitcoin from them. - **Think 'Email'**: Think of Bitcoin wallet keys like email services. Your private keys are akin to your email password, public addresses to your email address, and the wallet itself is similar to your email client (e.g., Gmail, ProtonMail). However, unlike email, each private key can access billions of potential public addresses. - **Privacy Protection**: Generating new addresses for transactions helps protect your privacy. This feature prevents others from tracking your financial activities on the public Bitcoin blockchain. - **Security of Funds**: As long as you control the private keys, you maintain access to Bitcoin sent to any address generated by your wallet. - **Safety Tips**: It's crucial to keep your private keys secure and private to protect your Bitcoin. ### Our Recommendation: Let % of Net Worth Guide Your Bitcoin Wallet Choice  The easiest way to approach Bitcoin custody is to focus on *“How much money is at stake?”* In other words, what percentage of your net worth is being secured. We understand each person’s situa­tion is unique. Below are our recommendations. *** Use this as a guide­line rather than absolute truth.* ##### Small Amounts (~0.1% Net Worth) — Use a Mobile Bitcoin Wallet - [Muun ](https://muun.com/)— It’s probably the easiest Bitcoin wallet for iPhone and Android. Muun is a hybrid Bitcoin and Lightning Network wallet known for its simplicity, security, and seamless handling of both on-chain and off-chain transactions. - It features an intuitive design and robust security measures, including an encrypted *"*[*Emergency Kit*](https://blog.muun.com/why-not-just-a-mnemonic/)*"* for fund recovery. It uses "[Submarine Swaps](https://docs.lightning.engineering/the-lightning-network/multihop-payments/understanding-submarine-swaps)" for easy transfers between networks. - Muun simplifies the user experience by eliminating the need for manual channel management and is partially open-source for increased transparency. It's designed for users at all levels. - [Phoenix](https://phoenix.acinq.co/) — A user-friendly Bitcoin wallet focusing on the Lightning Network for quick, low-cost transactions. It's non-custodial, offering full control over funds, automates technical tasks for ease of use, and features robust security measures. - It automates complex processes like channel management, making it accessible to newcomers while ensuring users retain full control over their funds through private keys. - Phoenix also features security measures like PIN and biometric authentication, supports easy backup and restoration, and is open source for transparency and community review. ##### Medium Amounts (~1% Net Worth) — Use a Hardware Bitcoin Wallet - [Blockstream Jade](https://blockstream.com/jade/) — A secure and affordable hardware wallet designed for Bitcoin and Liquid Network assets. - The wallet supports USB and Bluetooth connectivity, is compatible with the Blockstream Green software wallet, and features open-source firmware for enhanced security through community review. - Jade is user-friendly, with a clear display and physical confirmation button, and supports multi-sig transactions for added security. - [Passport](https://foundationdevices.com/passport/) — A hardware wallet focused on high security, ease of use, and durability. - It stores private keys offline, utilizes open-source firmware for community-driven security enhancements, and supports air-gapped operations via QR codes, eliminating the need for physical connections. - Passport features a user-friendly interface designed to resemble a passport for ease of carrying and durability. - It supports multi-signature transactions for added security layers and is compatible with various Bitcoin wallet software. - [SeedSigner](https://seedsigner.com/) — A DIY, open-source Bitcoin hardware wallet that allows users to assemble their device from widely available components, such as a Raspberry Pi Zero. - It prioritizes security by enabling offline storage and signing of transactions, enhancing user privacy and sovereignty over their funds. - The wallet is designed for affordability, making it a cost-effective alternative to traditional hardware wallets. - Its compatibility with various Bitcoin wallet software that accommodates PSBTs, offering flexibility to users. - However, it requires more user involvement in setup and operation. Its not an ideal choice for beginner’s. ##### Large Amounts (+10% Net Worth) — Use a Multi-sig Bitcoin Wallet - [Swan Vault](https://www.swanbitcoin.com/vault/) — A comprehensive Bitcoin custody platform that offers secure self-custody with a very user-friendly experience. - Features collaborative multi-signature security, requiring two of three keys to move Bitcoin, with two held by the user and one by Swan for recovery purposes. - Designed for Blockstream Jade hardware wallets, it offers easy onboarding, expert security backed by regular audits, and integration with the Swan ecosystem. - Advanced users can enjoy full [sovereignty](https://www.swanbitcoin.com/sovereignism-part-i-digital-creative-destruction/) with multi-sig wallet recovery into Bitcoin Core via [Specter Wallet](https://specter.solutions/). - Provides inheritance planning for [Swan Private](https://www.swanbitcoin.com/private/) clients. Learn more about Bitcoin basics for beginners [here](https://www.swanbitcoin.com/education/bitcoin-for-beginners/). ### Let’s Wrap Up That’s our summary of the 2024 Bitcoin self-custody landscape to date. The old adage rings true: ***“Not your keys, not your coins.”***  We understand self-custody can seem intimidating at first. [Swan Vault](https://www.swanbitcoin.com/vault/) aims to make it more convenient and accessible for everyone. Vault combines 2-of-3 multi-sig security with an intuitive interface. [Video](https://www.youtube.com/watch?v=0kdATsGuEoY) This removes the technical hurdles that often discourages beginners. Users also receive dedicated guidance from Swan team of experts. Together, the simplified platform and helpful support empower users who still retain sole authority over their funds. ![](https://www.datocms-assets.com/56652/1700934497-swan-valut-pic.png?auto=format) [See the press release here.](https://bitcoinmagazine.com/business/swan-seeks-to-boost-custody-offerings-with-blockstream-partnership) *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # 4 Initial Takeaways from the 2022 Global Crypto Adoption Index URL: https://www.swanbitcoin.com/analysis/4-initial-takeaways-from-the-2022-global-crypto-adoption-index/ The highest adoption rates continue to take place in countries with high inflation, increased capital controls, and where economic instability is the norm. --- **Sam Callahan** · September 17, 2022 · Updated June 27, 2024 This week, Chainalysis released some of its [preliminary findings](https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/#our-methodology) from its annual Global Crypto Adoption Index report. It is perhaps the most extensive report each year that attempts to measure what jurisdictions around the world are seeing the highest volumes of cryptocurrency adoption. Overall, cryptocurrency adoption has slowed slightly from last year, which is to be expected given the recent price action. But the most adoption continues to take place in countries where inflation is raging, capital controls are the norm, and economic instability reigns. After reading through the Chainalysis blog post that summarized the findings, I thought there were some interesting insights that could be gleaned from the data that I’d like to share with you. ### Methodology First off – a quick overview of what the Global Crypto Adoption Index is exactly. The Global Crypto Adoption Index calculates the adoption rate of 146 countries through a combination of five measurements: 1. On-chain value received at centralized exchanges, weighted by purchasing power parity (PPP) per capita 2. On-chain retail value received at centralized exchanges, weighted by PPP per capita 3. Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and number of internet users 4. On-chain  value received from DeFi protocols, weighted by PPP per capita 5. On-chain retail value received from DeFi protocols, weighted by PPP per capita The methodology used to calculate the adoption scores in the Global Crypto Adoption Index means that it should be taken with a grain of salt regarding Bitcoin’s adoption. This index includes broader cryptocurrency usage, which obviously includes tokens outside of Bitcoin. Having said that, a large percentage of global cryptocurrency usage, specifically in Emerging Market economies happens with Bitcoin and with USD-backed stablecoins. Therefore, this index remains one of the best resources available for us today to better understand global Bitcoin adoption rates, and where Bitcoin adoption is taking place geographically. First, let’s take a look at last year’s results. Below are the top 20 jurisdictions from the 2021 Global Crypto Adoption Index. ![](https://www.datocms-assets.com/56652/1663435640-unnamed-16.png?auto=format) Chainalysis And here are the updated top 20 jurisdictions from the 2022 Global Crypto Adoption Index. ![](https://www.datocms-assets.com/56652/1663435681-unnamed-17.png?auto=format) Chainalysis As you can see, there has been some reshuffling in the top 20 countries in 2022 compared to last year. Here are my four initial takeaways from the Chainalysis report… **1.) China has actually moved up in the rankings even after the CCP banned cryptocurrency usage in 2021** In my opinion, this signals how difficult it is to ban Bitcoin. It speaks to the censorship resistance and permissionless nature of the technology. Despite the threat of substantial fines and jail time (Individuals who sell cryptocurrencies can be sentenced to more than 10 years in prison), Chinese citizens are still defying their government by transacting with cryptocurrencies. This news comes as a substantial percentage of Bitcoin’s hash rate is still estimated to be located in China despite the ban. According to data from the Cambridge Digital Assets Programme (CDAP), as of May 2022, China still accounts for roughly 20% of the total Bitcoin hash rate, second to only the United States. These two data points should give critics pause who frequently say, *“Governments will just ban Bitcoin!”* It is further evidence of the resiliency of open source protocols. Like the Tor Project before it, open source software like Bitcoin is proving once again how difficult they are to stop. **2.) Turkey enters the top 20 for the first time amidst record-high inflation**  One difference between the 2021 index and this year’s index, was the inclusion of Turkey in the top 20. Turkey rose to the 17th country in the world in terms of crypto adoption according to this data. This is notable because the citizens of Turkey are currently suffering from one of the highest inflation rates in the world. Last month, the annual CPI inflation rate in Turkey hit +79.6%. ![](https://www.datocms-assets.com/56652/1663435773-unnamed-18.png?auto=format) The citizens of Turkey are watching their savings evaporate at an increasingly rapid pace. This Chainalysis data is evidence that the people of Turkey are beginning to turn more toward this technology as a way to protect themselves against their failing local currency. This corroborates reports from earlier in the year that showed signs of increased adoption as the cost of living soared in Turkey. Back in March, an Istanbul-based research company, Aksoy Research, [took a poll](https://ahvalnews.com/currency-crisis/turks-turn-deaf-ear-erdogans-call-sell-dollar-gold?__cf_chl_f_tk=6ivJUmM0x4xuM5udedSMIkMRWnUlKjFBgwNzGTmtoas-1642191848-0-gaNycGzNC30) and asked the people of Turkey, “*If you had an extra 10,000 liras, which one would you invest in?”*  14.3% of respondents said they would hold cryptocurrencies, the third highest asset class reported in the survey after dollars and gold. A [report from the Wall Street Journal](https://www.wsj.com/articles/turks-pile-into-bitcoin-and-tether-to-escape-plunging-lira-11641982077?mod=e2tw) earlier this year found that the dollar value of cryptocurrency trading volumes is up, and so too are online searches for *“Bitcoin”.* Turks are beginning to embrace Bitcoin and stablecoins, such as Tether, as hedges against inflation in their time of need. Bitcoin is offering some people hope as they search for places to store their wealth outside the faltering Turkish banking system. ![](https://www.datocms-assets.com/56652/1663435785-unnamed-19.png?auto=format) It was always the case that Bitcoin adoption would occur in jurisdictions with the weakest fiat currencies, and that is exactly what appears to be happening in Turkey today. **3.) Russia enters the top 10, up 9 spots from a year ago, during a time of sanctions and capital controls**  Russia is a new entry in the top 10 this year. I probably don’t need to rehash everything that is going on in Russia right now, but in case you have been living under a rock, Russia invaded Ukraine and G7 nations responded with severe economic sanctions. This led to traditional payment services like VISA and Mastercard blocking Russian financial services and banks from using their platforms. This suspension of their operations in Russia hurts the Russian banks, but it also harms everyday Russian civilians who can’t transact outside their borders. The civilians are collateral damage in this era of economic warfare. On top of that, in February, the Russian government banned Russian residents from transacting abroad in an effort to prevent capital flight from the country. Russian authorities also have prohibited its citizens from leaving the country with more than $10,000 in foreign currency.  Of course, these actions only serve to hurt ordinary Russian citizens. Because of this, it is encouraging to see that Russians appear to be turning more and more to cryptocurrencies as a way to transact value across borders without middlemen or permission from government authorities or financial regulators. One can infer from this data that these technologies are being used as lifelines by the people impacted by war to help them move funds in and out of the country, to help them afford essentials, and to help them flee the country with a greater portion of their wealth. Given their digital nature, these assets are much easier to travel with, and are much more resistant to seizure at the border compared to say physical cash or a bar of gold. I feel obliged to note that these dynamics apply equally to the people of Ukraine who have also faced similar struggles throughout this conflict. Bitcoin is neutral, apolitical technology that individuals can turn to on both sides of war when all other means of payment fail, and when other methods to store their wealth are taken from them. Ukraine wasn’t the focus here only because they were already high on the Index in 2021 (from 4th in 2021 to 3rd in 2022).  **4.) The United Kingdom finds a place on the list for the first time** The United Kingdom made its debut on the list this year, sitting at 17th in overall adoption. This is a sign that another powerful G7 nation is seeing increased signs of  adoption even during a bear market where Bitcoin’s price is down ~70% from its all-time high. This comes after a recent [Coinbase survey](https://cointelegraph.com/news/number-goes-up-a-third-of-brits-have-bought-crypto-says-coinbase-report) found that 33% of people in the UK own cryptocurrency assets, which is up from 29% in October 2021. Furthermore, among those UK  holders, 61% are planning to expand their portfolios in the next 12 months. This data arrives as a new UK Government takes office, one that has signaled that it wants to embrace the industry. New Prime Minister Liz Truss has made positive comments about the industry in the past, and with a reshuffling of the cabinet, perhaps we are entering an era of a more welcoming UK when it comes to Bitcoin and cryptocurrencies. When asked in the House of Commons about his thoughts on the industry, the newly appointed Economic Secretary to the Treasury responded with, > As crypto technologies grow in significance, the UK Government are seeking ways to achieve global competitive advantage for the United Kingdom. We want to become the country of choice for those looking to create, innovate and build in the crypto space. We are already the leading European fintech hub, second only to the US worldwide. By making this country a hospitable place for crypto technologies, we can attract investment, generate new jobs, benefit from tax revenues, create a wave of groundbreaking new products and services, and bridge the current position of UK financial services into a new era. > > — Richard Fuller, Economic Secretary to the Treasury Overall, it seems like the residents of the UK are fans, and with the right leadership in place, perhaps it can be a place of refuge for an industry that has faced opposition across Europe. This development speaks to the game theory of Bitcoin. As Bitcoin grows in relevance, some countries will choose to ban themselves from the technology, while others will seek to embrace it to help attract wealth, jobs, and innovation to their shores. ### Conclusion All in all, this data from Chainalysis only represents one study that uses one methodology to measure Bitcoin and cryptocurrency adoption at the nation-state level, but it does provide us with a better understanding of where adoption is happening around the world. From this data, it appears that adoption is most prevalent in emerging markets where individuals are more likely to suffer from increased economic instability, currency devaluation, high rates of inflation, and increased capital controls. Most of this adoption can be attributed to Bitcoin and USD-backed stablecoins. Bitcoin adoption continues to grow from the bottom-up, finding product-market fit in countries where the local currencies are no longer serving the needs of the people who live there. This is an encouraging development to see, and it goes back to the reason why Satoshi Nakamoto created Bitcoin in the first place. In addition, this data highlights how futile government bans are on decentralized, open-source technologies. Despite some form of a ban on cryptocurrency use in Indonesia, Colombia, Nepal, Turkey, Nigeria, and China,  usage in those jurisdictions still remains some of the highest in the world.  Bitcoin was always meant to be a tool of economic empowerment and freedom. A technology that gives the power back to the individual and allows them to store their wealth and do with it what they please. For the people of Russia, Ukraine, China, Turkey, and more, this is not a fantasy but a reality. The citizens of these countries appear to be discovering the value proposition of this technology not out of interest, or as a hobby, but out of necessity. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin and the U.S. Growth Problem - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/bitcoin-and-us-debt-problem/ Bitcoin and economic growth are the only reasonable ways out of this debt problem. --- **Sam Callahan** · September 22, 2022 · Updated July 3, 2024 ***Houston, we have a debt problem.*** The U.S. federal debt-to-GDP currently sits at 124%, after peaking at 136% in 2020. These are the highest debt levels in the United States since World War II.   ![](https://www.datocms-assets.com/56652/1663797165-federal-debt-total-public-debt-gdp.svg) OMB; St. Louis Fed This is a problem because when debt reaches excessive levels like this, it starts to become a drag on economic growth. In a recent literature review of 24 studies, half of the studies concluded that once debt exceeds 75-100% debt-to-GDP, the debt has a negative relationship with economic growth. Probably the most famous study on the topic was done by Reinhart and Rogoff (2012) when they considered 26 episodes in which developed country debt exceeded 90% of GDP since World War II. In the study, they concluded that economies with debt-to-GDP >90% averaged 1.2% lower annual growth than developed countries without large debt burdens. To be clear, debt is not inherently bad. Debt is a reallocation of capital from those who have a surplus of it, lenders, to those have a deficiency of it, borrowers. If used wisely, debt allows individuals and businesses to increase their spending, allocate resources efficiently, and become more productive, thus driving more economic growth and improving their standard of living. It is only when debt reaches excessive levels and is used unproductively, like it is today, that it becomes a problem. With high debt burdens, newly issued debt is used to pay entitlements and interest payments on existing debt obligations instead of being used to spur economic growth. In other words, the debt becomes unproductive.  So what happens historically when debt-to-GDP gets to the level we’re at today? According to another study by Reinhart and Rogoff, in the last 200 years, of all the countries that hit 130% debt-to-GDP, 51 out of 52 defaulted on their debt. Below is a chart that shows a few examples. ![](https://www.datocms-assets.com/56652/1663797215-government-default-study-examples.svg) The moral of the story is history shows us that excessive debt levels often lead to economic stagnation and calamity.  Now a debt default can come in a variety of different forms. When debt-to-GDP gets to these levels there are essentially five ways for governments to reduce their debt burden: 1. Economic growth 2. Cut spending (austerity) 3. Outright default or debt restructring 4. Currency devaluation (soft default) 5. Financial repression (soft default) So what’s the likely course of action for the United States today? Options #2 and #3 would be the most painful and politically unfavorable. Politicians are showing no signs of introducing austerity measures. The CBO estimates that the U.S. deficit will be around 4% of GDP this year, and that’s if 1) they don’t spend any more and 2) GDP growth doesn’t drop below the CBO’s expectations. An outright default would be deflationary, cause the unemployment rate to soar, and would likely result in a catastrophic global debt crisis that would make the Global Financial Crisis of 2008 look like a walk in the park. I think we can safely cross both of these options off the list. We could certainly try option #3 and print our way out of this by devaluing the currency. But with inflation already at multi-decade highs, the risk is this would cause a rapid decline in purchasing power of the dollar, people would lose faith in the currency, and a hyperinflationary event would unfold. Not ideal.  So instead what the Federal Reserve has decided to do is option #5 – keep interest rates relatively low to the level of growth and CPI inflation. This is called financial repression. CPI inflation has far exceeded the nominal Federal Funds rate even after the recent string of interest rate hikes. The real federal funds rate currently sits at -6.19%. ![](https://www.datocms-assets.com/56652/1663797269-federal-funds-rate.svg) OMB; St. Louis Fed As the real federal funds rate remains negative, this devalues the debt in real terms and effectively melts it away over time; however, this comes at a cost. Inflation is a tax felt by every business and individual in the economy, but it’s especially painful for savers and the lowest income brackets who are living paycheck-to-paycheck. Furthermore, inflation compounds, so the longer this financial repression goes on, the more painful things will get. The real risk of maintaining this financial repression for a prolonged period of time is it could lead to rising populism and civil unrest. But there is another option – option #1 – economic growth. I don’t know about you, but growing our way out of this debt problem sounds like the best option by far. But how realistic is it? Is it even possible for the U.S. with debt-to-GDP this high? Call me an irrational optimist, but I would argue yes – it is technically possible.  For evidence, look no further than the last time the U.S. debt was hovering around these levels. Although it was slightly below the 130% threshold mentioned above, U.S. debt-to-GDP was still very high at 119% after World War II. Yet by 1955, we somehow managed to cut the debt-to-GDP nearly in half to 64%! In only a decade, America had escaped its debt overhang. So how did we accomplish this?  ### The Post-War Miracle of Growth Well first, the Federal Reserve implemented the same financial repression playbook that it is using today, albeit much more explicitly. Upon the entry of the US into World War II, the Federal Reserve assisted the Treasury in financing its large debt expansion by implementing Yield Curve Control, capping short-term interest rates at 0.375% and long-term interest rates at 2.5%. The Fed performed Yield Curve Control from 1941 to 1951, keeping the interest rates pinned at those levels as CPI inflation ran higher. All told, consumer price inflation averaged about 6.5% annually from 1946 to 1951. During this post-war period of financial repression via negative real interest rates, the debt burden was gradually reduced by 2 to 4% per year. This, in turn, inflated away a decent chunk of the government’s debt. But it wasn’t only financial repression that contributed to the shrinking of the debt burden during this time. After 1946, the United States experienced the greatest boom in economic and productivity growth this country has ever seen. Not only was the growth explosive in magnitude, but the growth was also shared equally across income brackets. After the Great Depression of the 1930s followed by a world war, this explosion in growth took many by surprise and still baffles economists today. Many describe this recovery as an economic miracle. There have been many theories about the cause of this leap in growth in the decade after WWII. Some attribute it to the increase in household savings accumulated during the war often called the *“pent-up demand”* theory. This theory argues that these accumulated savings gave the middle class the ability to spend and purchase durable consumer goods, driving the economy forward. Others say that the post-war growth primarily came from an increase in the size of the labor force as the young men returning from the war entered the workforce. Another theory is that the environment of war became the mother of invention. War demanded efficiency and this resulted in improved production techniques and increased labor productivity. After the war ended, these new techniques and procedures were not forgotten. This wartime progress led to a high level of post-war productivity made possible by advancements in hand-held power tools and the quality and power of machines that were repurposed from wartime manufacturing to peacetime manufacturing. Said differently, the war drove innovation, which drove productivity, which drove economic growth. Regardless of how it happened, it did happen. After a decade of abysmal growth during the Great Depression and a large debt expansion to finance World War II, America did what many felt was impossible at the time, it grew its way out of its debt burden. The question is, can America do the unthinkable again? In many ways, our current growth picture has a lot of similarities to the 1930s and 1940s. The 2010s are considered the decade of a soaring stock market and low unemployment. Asset prices rose rapidly across the board, and people on Wall Street were having a great time. But under the surface, the economy never received the invitation to the party. In short, the debt keeps growing as growth keeps slowing. Real GDP growth since the 2008 Global Financial Crisis has been well below historical trends despite the rise in asset prices. It has led to some analysts referring to the 2010s as the *“Lost Decade”* or as Emil Kalinowski calls it the *“Silent Depression.”* In fact, Kalinowski’s work shows that real GDP per capita growth from 2007 to 2020 was below both of the previous economic depressions in the United States. ![](https://www.datocms-assets.com/56652/1663797305-us-domestic-product-per-capita-2011.svg) Emil Kalinowski Real GDP per capita has grown at an average annual rate of 2.0% from 1973-2007, but from 2007 to 2019 the growth rate has been well below the trend at 0.9%.  After the COVID-19 pandemic, the trend in real GDP per capita has gotten even worse. We have yet to reclaim the below-average trend line of 1.6% since 2009 despite massive amounts of fiscal stimulus.  ![](https://www.datocms-assets.com/56652/1663797396-real-gdp-per-capita.svg) BEA If the debt is the problem, well then this is the consequence. This growth trend should concern every American regarding the economy and living standards that future generations will experience if we do not figure out how to reverse it. So is it possible for the United States to wake up from its growth-hibernation and grow its way out of this debt problem? ### What is Economic Growth Exactly? Let’s start with the basics. Since real GDP is the most frequently cited measure of economic growth, we will focus on this metric for now. Real GDP is the total value of all goods and services that have been produced in an economy, adjusted for inflation. Real GDP per capita is real GDP divided by a country’s population, or the output per person. This is often used as a proxy for the prosperity of a nation or the rate of improvement in the standard of living. **Real GDP per capita = (size of the active labor force) x (labor productivity).** In other words, output per worker = (hours per person) x (output per hour) So when using this metric, economic growth can be broken down into two variables: the size of a labor force and the productivity of that labor force. That’s simple enough.  To determine the probability that we can experience a boom in economic growth in the future, let’s start by looking at the first part of the equation, the size of the labor force. ### A Shrinking Labor Force Some of the increases in economic growth after WWII are attributed to an increase in the labor force as young men returned from the war and entered the workforce. Additionally, these same men were responsible for the baby boom that occurred between 1946 to 1964. The baby boom generation would drive economic growth forward in the latter part of the 20th century and the early part of the 21st century. Another large addition to the labor force was the influx of women that entered the workforce after 1970. This nearly doubled the labor force, but this one-time event was effectively completed by 1995.  When people talk about demographic headwinds to growth what they mean is instead of large swaths of the population entering the U.S. workforce like in the past, we now have the opposite occurring. Baby boomers are starting to leave the workforce as they retire. Social security allows retirement ages at 62, 66, and 70, which means that the effects of baby boom retirement are spread out, starting in 2008 and extending to 2034. One in every four American workers is a baby boomer, and it is estimated that around 10,000 baby boomers retire daily. Furthermore, according to [Pew Research Center](https://www.pewresearch.org/fact-tank/2020/11/09/the-pace-of-boomer-retirements-has-accelerated-in-the-past-year/), baby boomers are retiring at a more accelerated rate since the pandemic, with almost 29 million boomers retiring in 2020 – compared to just over 26 million in 2019. This trend can be observed in the Labor Force Participation Rate (LFPR) which is the proportion of the working-age population to the total population that is either working or actively looking for work. LFPR estimates the economy’s labor resources available to produce goods and services. When looking at the LFPR, it has been in a steady decline since 2008, and ~50% of this decline can be attributed to baby boomers retiring. ![](https://www.datocms-assets.com/56652/1663797443-labor-force-participation-rate.svg) U.S. Bureau of Labor Statistics Because the working-age population represents ~250 million people, a decline in LFPR by 3.8% (66.2% to 62.4%) implies a loss of approximately 9.5 million workers from 2008 to 2022. This trend is obviously a negative regarding the U.S.’s economic growth prospects. I always appreciated demographic data because it’s set in stone, which is a rarity in the world of economics. We will not be making any more babies 20 years ago, and we will not change the fact that aging baby boomers are beginning to exit the workforce to enjoy their retirements. So what the future size of the U.S. labor force ultimately depends on is 1) birth rate and 2) immigration policy. U.S. birth rates have been steadily declining since 2007, dropping 20% from 2007 to 2020. ![](https://www.datocms-assets.com/56652/1663797507-trend-in-us-birth-rates.svg) CDC According to the NCHS, we did see a small tick-up in both the number of live births and fertility rates in 2021, the first annual increase since 2014 after both data points dropped to record lows in 2020.  ![](https://www.datocms-assets.com/56652/1663797569-births-general-fertility-rates-2000-2020.svg) National Center for Health Statistics, National Vital Statistics System, Natality The decline in birth rates in the U.S. has been ongoing for 15 years now and is correlated to the average total number of children a woman has. An average of 2.1 births per woman is widely considered the replacement rate that would keep the U.S. population stable, America is now well below that, at an average of 1.6 births per woman. If this rate continues to decline, it could lead to a smaller workforce and an older population which negatively impacts economic growth. This decline in U.S. birth rates cannot be explained by demographic, economic, or policy changes. Some say it’s due to a rise in infertility rates, while others say it results from changes in young people’s preferences compared to prior generations. Personally, I believe that a logical explanation is that many young people feel they cannot afford to start families due to the rising cost of living and stagnation in real wages. No matter the cause, it doesn’t bode well for the future economic outlook of America.  Immigration is another way to influence the size of a country’s labor force. The United States has had around 1 million immigrants enter the U.S. annually since 2000. Yet over the last decade, we have seen that number drop off as policy has become more restrictive with the United States government becoming more protective of its borders.  ![](https://www.datocms-assets.com/56652/1663797603-net-international-migration.svg) During the pandemic, immigration numbers understandably dropped 50% from the year before, its lowest level on record, +245,000. But when you observe the chart above, the net international migration has been declining every year since 2016 and this past decade’s average annual rate was below the 1 million/year historical trend. At a time when we need working immigrants more than ever to help increase the size of the labor force and boost economic growth, our policymakers are turning them away. Immigrants have been especially vital to U.S. population growth since 1970, and now that trend appears to be reversing too. One can clearly see the total drop in the U.S. population growth over the last decade when observing both net migration and the natural increase in population (births - deaths) highlighted in the chart below. ![](https://www.datocms-assets.com/56652/1663797642-annual-change-population.svg) U.S. Census Bureau, Population Estimates Program According to the Census Bureau, last year the U.S. population grew 0.1%, the slowest rate since 1776. In the last decade, the U.S. population grew at its lowest rate since the Great Depression and the second-lowest rate for any 10-year period since the country’s founding. Baby boomers retiring, declining birth rates, dropping life expectancy, and plummeting immigration have all contributed to a decline in the size of the labor force.  Overall, it looks like a boost in America’s economic growth is unlikely to come from increasing the size of its labor force unless we reform our immigration policies and young people start making more babies. That means that if we are to experience a boom in economic growth over the next decade, it will have to come from increasing our productivity.  ### Productivity is the Wild Card Thinking back to the equation of real GDP per capita, if we are not likely to see an increase in the size of the labor force any time soon, then that means any chance we have for a sustained increase in growth will come down to whether or not we can increase our labor productivity. If we can’t significantly increase the *quantity* of our labor force, then we need to improve the *quality* of our labor force. Increased productivity means getting more out of each worker than in years prior. In other words, you get more economic output for each labor hour worked.  To put it simply, productivity gains can happen when: 1. Workers become more skilled and educated. 2. When more capital is invested to improve their efforts. 3. When an overall increase in productivity occurs from innovative technology. Unfortunately, this year U.S. labor productivity sank -4.6% annually in Q2 after falling -7.4% annually in Q1, the weakest back-to-back quarter readings since the 1940s. ![](https://www.datocms-assets.com/56652/1663797706-nonfarm-business-sector-labor-productivity.svg) U.S. Bureau of Labor Statistics This drop in labor productivity growth in 2022 is a continuation of a trend that has been occurring over the course of the last century. From 1920 to 1970, labor productivity grew a whopping 2.8% per year. Since then, according to the Bureau of Labor Statistics, labor productivity has slowed, and overall it has grown at an average rate of 2.1% annually from 1947 to 2018.  One can observe below how labor productivity growth has been far below this average trend in the past decade. ![](https://www.datocms-assets.com/56652/1663797743-labor-productivity-growth-nonfarm-business.svg) BLS From 2009 to 2018, labor productivity has grown at a measly 0.8% annually. Education is one variable that can be used to improve this trend. A decrease in the value of the education impacts the composition of the labor force over time. We want a highly skilled and educated workforce that can solve the hardest problems and generate innovative ideas and technologies that push our economy to new heights. It starts with the quality and accessibility of our education.  The progress in America’s education has been lackluster at best. The OECD's Programme for International Student Assessment (PISA) measures the level of 15-year-olds’ reading, mathematics, and science knowledge and compares it to nearly 80 countries every 3 years. In the latest PISA results in 2018, the United States ranked 13th in reading, 37th in mathematics, and 18th in science. Learning has stagnated in America.  According to the National Assessment of Educational Progress (NAEP), for the nation’s 17-year-olds, there have been minimal gains in literacy since the 1970s, and minimal gains in mathematics since the 1990s. In addition, the NAEP reports that reading and math scores for both 9-year-olds and 13-year-olds saw unprecedented reversals since the pandemic began. These discouraging test results come as we are seeing a slow down in the number of Americans who complete high school, or some college. ![](https://www.datocms-assets.com/56652/1663797792-population-age-25-over-educational-attainment.svg) U.S. Census Bureau. 1947, 1952-2002 March Current Population Survey, 2003-2021 Annual Social and Economic Supplement to the Current Population Survey; 1940-1960 Census of Population.For more information on confidentiality protection, sampling error, nonsampling error, and definitions Education is an area that the United States can definitely improve on and should be a key policy focus moving forward to boost the productivity of its labor force. However, education and capital investment are not the most important factors in terms of increasing productivity growth, the most important variable – by far – is innovation. Economists have estimated that approximately 50% of the U.S. annual real GDP growth can be attributed to innovation. On a long time horizon, neither changes to the labor composition nor capital investment can drive labor productivity growth. Both fluctuate with the business cycle, and adding more machines, more education, or more training can only create so much growth. Innovation is what drives long-term, robust improvements in the standard of living and economic growth. Total Factor Productivity (TFP) is how economists historically have measured the amount that innovation is driving productivity growth. It is a metric that accounts for all the productivity gains after subtracting all the labor and capital inputs. In short, when you see “TFP” think “innovation.” Below is a chart that estimates the contributions of increases in labor productivity growth since 1948. One can see how TFP was the main contributor to the productivity boom that occurred after World War II. ![](https://www.datocms-assets.com/56652/1663807637-us-labor-productivity-growth-1948-2018.svg) BLS 2020c; authors' calculations. One can observe how we have not seen the same contribution from TFP in productivity growth in the recent decade. If we have any chance to grow our way out of this debt burden, we will need to harness the technologies we have at our disposal and support new ideas that will result in improved labor productivity. ### The Productivity Growth is Here - It's Just Been Stolen The fact that innovation has not contributed to productivity growth in recent years may surprise some readers. We have experienced an acceleration in technology and the digitization of our economy over the last 20 years. The World Wide Web has revolutionized the way we communicate and interact with one another, has made knowledge more accessible, and has made business processes more efficient across every sector of the economy. We have mini personal computers in our pockets with applications for seemingly everything, we can video call each other from halfway around the world, and we have Inspector Gadget-style watches, but yet, productivity growth has remained slow. Economist Robert Solow famously said in 1987 that, “*the computer age was everywhere except for the productivity statistics.*” This phenomenon became known as the Solow Paradox. **Entrepreneur and Author Jeff Booth argues that it is not that the productivity gains from these technological advances haven’t occurred, it’s that they have been stolen from a majority of the population via inflation.** One only needs to look at this chart that compares productivity gains and real median hourly compensation growth to see that this is true. Since 1980, these two metrics have completely decoupled from one another. ![](https://www.datocms-assets.com/56652/1663797925-gap-between-productivity-typical-workers.svg) EPI Notice how productivity and income growth grew in concert in the post-WWII era. One can argue that productivity gains were broadly distributed during this time period because that era was relatively free of central bank intervention in the currency. Since 1970, we have had central banks manipulating their currencies and printing money to create inflation to keep a credit-based monetary system alive that requires ever-expanding growth to prevent its collapse. This can also be observed by looking at the trend in wealth and income inequality that we have experienced over the last several decades. The share of U.S. aggregate income and wealth held by the middle and lower classes have been on a downward trajectory as the upper class share has sky-rocketed. ![](https://www.datocms-assets.com/56652/1663797971-us-aggregate-income-wealth.svg) Our workers have never been more productive and never had better tools to work more efficiently, but only a select few have benefitted from this. This is a result of man-made inflation that siphons productivity gains from the many and concentrates it into the hands of the few. The stagnation in median real wages and the widening gap in wealth and income inequality as productivity has soared are signs that the productivity gains are not being broadly distributed. **The problem is that our credit-based monetary system requires ever-increasing GDP while at the same time technological advancements decrease GDP. Technology decreases GDP because it reduces the number of goods we purchase, the time and workers it takes to produce them, and the labor required to deliver them.** This means innovation should result in decreased prices and more abundance for everyone. Instead, we have rising prices via inflation and scarcity in all of the things we need which only leads to more inequality and more civil unrest. The productivity gains are concentrated in the hands of the few as the standard of living gradually drops for the American middle and lower classes. Someone might ask, well why is real GDP below trend if we have all these productivity gains from innovation that supposedly are being stolen via inflation? The answer is that using real GDP tends to understate productivity growth from technology. It does not take into account the value that a new invention provides consumers. The excerpt below from economist Robert J. Gordon's landmark book, “The Rise and Fall of American Growth” explains this idea well: > mong the most important examples of improvements not valued in real GDP are the brightness, convenience, and safety of electric light; the improved variety and reduced risk of food contamination made possible by refrigeration; the removal of horse droppings and urine from city streets and rural highways as motor vehicles replaced horses; the dimensions of change in human activity made possible by the speed and capacity of the motor vehicle and commercial aviation; the value of instant communication made possible by the telephone, and the value of entertainment delivered by the invention of the photograph, radio, and motion pictures. > > — Robert J. Gordon Therefore, it’s important to be aware that new inventions provide value to households and businesses well beyond what is captured by real GDP growth. The other answer to the question is that these inflationary policies result in a redistribution of wealth away from middle and lower-income households to upper-income households. This reduces their ability to spend in the economy, which drags on economic growth as measured by real GDP. Furthermore, the worsening inequality results in underinvestment in education and health within low and middle-income households and leads to rising populism and civil unrest, which retards economic growth.  ### Bitcoin: An Innovation in Money There are many technologies today that have the potential to increase productivity and economic growth including 3D printing, self-driving cars, robotics, artificial intelligence, AR/VR, nuclear fusion, and more. All of these technologies will likely converge and contribute, but only Bitcoin has the ability to allow our society to move away from a monetary system that concentrates these productivity gains into the hands of the few at the expense of the many. Bitcoin is an innovation in money itself, and as a result, it could unlock more growth for our economy than all of the other technologies mentioned above. The key point to understand here is that a productive society does not require inflation – only the credit-based monetary system that relies on never-ending growth requires this. Currencies are manipulated to create inflation and artificial GDP growth to combat the natural deflationary forces of human progress. This results in inequality and civil unrest and tears at the very fabric of our society – discouraging people from being productive and pursuing large life milestones like starting a family. We need a new monetary system that is aligned with our technological progress so that productivity gains from innovation can be shared by all. Enter Bitcoin. A consequence of inflation is people are unable to save. Because inflation is used to keep GDP elevated and combat the deflationary effects of technology, this results in money losing its purchasing power over time. Inflation destroys individuals’ ability to save in money, so they search for money proxies like stocks and real estate to protect their savings from devaluation. The issue is roughly 50% of Americans don’t own any stocks, and approximately 40% of Americans do not own any real estate. This means returns from technology and the production of real value in the economy largely go to shareholders and the top 1% because these returns are concentrated in the stock market and other assets that are not easily affordable or accessible. However, Bitcoin changes the game. Bitcoin is an innovation that allows people to save in a money that is impossible to inflate, is easily accessible, and its divisibility makes it affordable for everyone. Bitcoin is money built for the current age not just because it is digital, but also because it is deflationary monetary technology, making it the perfect savings instrument for a naturally deflationary world driven by innovation.  **In a hard money deflationary world, people will save with money rather than with financial assets. Thus,  Bitcoin, not financial assets, will absorb much of our global productivity returns. Since anyone can hold Bitcoin, it essentially democratizes our civilization’s returns.** In our current monetary system, productivity gains go to entrepreneurs and existing asset holders. In a Bitcoin monetary system, productivity gains go to entrepreneurs and money holders. Assets are mostly held by the top 1%, but money is held by every economic actor. Bitcoin creates a much more equitable society where productivity gains from innovation can be shared which would create a world of abundance. An important point here is that Bitcoin allows individuals to save in money again. This leads to a far greater question: what is the best measurement of economic growth? Is it the amount of spending and production in an economy, or is it the huge amount of savings and investment in an economy? People do question whether or not real GDP growth is the best measure of economic growth. Does producing ever-more products and services really capture the level of real economic growth occurring in a debt and stimulus-fueled economy? Some would argue that something like real savings of households and businesses is a better metric to track because savings and investment are what ultimately drive innovation and thus long-term economic growth, not consumer spending.  I empathize with this viewpoint because by improving peoples’ ability to save, people can start to think more long term and think about how they can build the future they would like to see. This leads to individuals investing their savings in new ideas and long-term projects that can lead to increased productivity or new inventions that had never been considered before. Today, people have stopped making big bets with their savings because the money is broken and they feel they need to invest in passive indexes just to protect their savings. Bitcoin has the ability to increase the savings rate of households and businesses, which results in larger investments, which leads to more capital formation and a higher rate of sustainable economic growth. This is ultimately why Bitcoin’s ability to allow individuals to save, free of inflation, is so important to the future outlook of American economic growth. Bitcoin is what historians and economists would call a “General Purpose Technology” in that it will impact every industry in the economy. Bitcoin is a monetary innovation that will unleash all of the productivity gains from all other technologies equally across our society, potentially breaking America out of this period of below-average economic growth in the process. ### Conclusion America is at a fork in the road. The fiat currency regime of ever-increasing debt and inflation has made earning and saving the national currency a bad personal choice. This has led to workers becoming poorer over time and losing their motivation to work, to have kids, to fully apply themselves and more. This is what needs fixing at the most fundamental level. The old approach of trying to paper over reduced engagement and productivity through issuing debt has run its course. If we continue on this path our future looks bleak. However, we have an alternative – A path of innovation, productivity and hope. **By studying previous growth and productivity booms in the past, it is my conclusion that embracing innovation is the single most important thing we can do today as a country if we have any chance in growing our way out of this debt burden.** This will likely require a confluence of technologies to succeed including Bitcoin, which could provide a more accessible way for individuals to save free of inflation so that productivity gains can be shared by all classes of society instead of just the top 1%. Bitcoin could be the key to unlocking the productivity gains that technological advancements provide because it cannot be inflated and it is accessible for everyone regardless of socioeconomic class. America has seen hard times in the past, but we have always overcome. Now is not a time to concede defeat or take the easy way out through debasement or default.  It is the time to come together, build, and do the work necessary to pull our country out of this period of sluggish growth. It’s time for us to build. It’s time for us to innovate. It’s time for us to produce real value for ourselves, for our economy, and for the future American generations to come. “*The American is, by nature, optimistic. He is experimental, an inventor and a builder who builds best when called upon to build greatly.*”  - President John F. Kennedy ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Swan Acquires Specter Solutions URL: https://www.swanbitcoin.com/industry/swan-acquires-specter-solutions/ Swan has launched Specter Labs division focusing on open source, privacy, and self-custody. --- **Cory Klippsten** · September 28, 2022 · Updated June 6, 2024 We are extremely excited to announce our acquisition of [Specter Solutions](https://specter.solutions/), a leader in self-custody solutions for Bitcoiners. Today, alongside the Specter Solutions team, we are launching Specter Labs, a division of Swan that expands our alignment with Bitcoin principles by focusing on open source and privacy-oriented tools that help Bitcoiners secure their holdings in the best way possible. *“Do the best thing for Bitcoin and Bitcoiners,”* has always been Swan’s guiding principle. Our mission is to convert the next ten million Bitcoiners and walk with them on their journey to freedom, prosperity, and self-sovereignty.  In the last three years, Swan built one of the industry’s best education and product teams and grew a successful platform for onboarding individuals, corporations, trusts, IRAs, financial advisors, and employers to Bitcoin. Our free and automatic withdrawals encourage self-custody, our automated savings plans develop long-term thinking, and our ongoing education helps people understand the value of holding their Bitcoin keys.  The launch of Specter Labs will give Swan customers end-to-end services on their Bitcoin journey from complete beginner to self-sovereign Bitcoiner by providing deep integrations with Specter’s leading self-custody solution and other tools over time. It is important to us that the Specter project remains open source, so we are establishing clear guidelines and principles. Swan will provide engineering support and some product direction. Specter’s open source desktop project does not, and will not have any default network connections to Swan or customer identification (KYC) features. Specter does not and will not track users in any way unless they opt into features that are clearly labeled integrations. The Specter desktop client will continue to be usable with complete independence from Swan, or in conjunction with it, per the user’s preference. The Specter Desktop wallet shall remain an open source project under the existing MIT License.  We look forward to partnering with the Specter team to deliver the industry’s best end-to-end Bitcoin journey. Here’s to building a bright orange future, Cory Klippsten (Swan) and Moritz Wietersheim (Specter) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Capital Misallocation: Bitcoin Fixes This - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/capital-misallocation-bitcoin-fixes-this/ Fix the money, fix the world. --- **Steven Lubka** · October 3, 2022 · Updated June 27, 2024 ### The Importance of Capital Capital is how civilization happens. The development of capital, arduous and risky work, is the source of all societal progress. What is capital?  It is the productive resources of humanity. However, it's also a ***process*** which emerges from the intersection of money and physical resources. Developing, maintaining and growing capital is not guaranteed. It can easily go awry, and money can both support **or** distort our ability to form and grow more capital. The entire point of money (and finance) is to facilitate the tangible, real, growth of capital. Finance has no independent virtue apart from this. You can think of finance as an entity attached to the flesh of the real economy. Is it a symbiotic organism? Or is it a horrible parasite? In its best and most noble functions, finance and money accomplish an awe-inspiring increase in the growth of capital via a level of efficiency which would be impossible otherwise. However, in its worst form, finance turns into a blood sucking parasite, siphoning wealth out of the system while convincing its host that it is actually wealthier than before!  I'm sure an intelligent reader like yourself can guess which version we are currently dealing with…. ### Misallocation of Capital Capital **misallocation** is one of the most fearsome challenges that an economy and its people can face. It is one of the major ways a broken system of money and finance can distort the real economy. To understand how this happens, we will first discuss how the economy functions as an emergent machine that produces spontaneous order, and we will then discuss how money is a carrier of the condensed information that is necessary for this spontaneous order to arise. But most of all, we will discuss how the process of capital formation can be impaired, impeded, and otherwise disrupted by privileged insiders capable of manipulating the natural market forces governing money. In other words, when money is made artificially cheap (whether via low interest rates or monetary expansion) it fundamentally impairs the formation of capital.  Fools throughout history (for we have tried this before) figured that perhaps if we made money abundant, we could stimulate growth. This has failed whenever we have tried it (our illustrious central planners have been trying the *“cheap money”* approach for the last decade and more).  It always fails the same way: speculation, asset inflation, wealth inequality, the slowdown of actual productive growth, and the destruction and consumption of precious capital.  Ludicrous nonsense starts to happen. In the 1800s exporters started shipping ice skates to the equator because of artificially low interest rates (if you don't get the joke, think about how much ice there is at the equator!) Today, we have the Bored Ape Yacht Club!  And yes, finally, we are going to talk about how Bitcoin actually fixes this. ### Defining Capital Capital is the productive assets of civilization. It is everything we possess, know, or even are that is capable of producing a *“return”.* Let’s define a return as *“we get more out of the process than what we put in”*. This can be either through the creation of a more complex finished product, it could be quite literally an EROI (energy return on investment), or it could be via the prevention of sufficiently costly adverse effects (hurricane shutters preventing windows from breaking). When we use a tractor and fertilizer to grow a field of wheat, the total amount of human energy involved in that process is less than the total amount of energy contained in all of the wheat.  We have yielded a return! Hallelujah! So capital is everything that allows us to create more than what we already have. Let’s be perfectly clear:, this isn’t just fuel, machines, and factories. It is also **knowledge, skilled workers, new inventions, cities, infrastructure, education, and much more –** the list goes on and on. Money is a reflection, a mirror twin, of capital itself and is a critical part of the emergent process via which *"Capital"* happens. Money contains the potential to direct economic outcomes and produce returns. It is a literal claim to society's time and resources. It is the symbolic coordinator of capital, as well as an instrument that stores its unredeemed and future capacity for utilization.  There is an important caveat to mention, and it is this: **creating** more money is not **creating capital (**it doesn't matter how hard politicians wish this were true!).  Money and the physical resources which form capital are like two sides of the same coin – which is itself the ***process of*** Capital. Money denominates, stores the *"value"*, organizes, and coordinates capital.  Together, money plus the physical productive resources form the totality of the property of our economy which is the process of Capital. It’s important to think of capital broadly in this manner. The bottom line is: we want **MORE** capital. ### Money, Price and Spontaneous Order The beauty of markets is the spontaneous order they create – the order that emerges in the absence of formal design and communication. While markets can exist in the absence of money, the extent to which an appropriate money facilitates emergent order is astonishing and truly awe-inspiring when you contemplate it. This speaks to the practical reality of humanity's social constructs.  Yes, we create the concept of money and imbue it with reality. However, it results in a staggering growth in tangible, real-world, physical abundance. And not all forms and qualities of the money construct are equal in their ability to produce this outcome. Just because something is socially constructed, doesn't mean it doesn't have a pivotal real world role, and one which can be better or worse depending on the qualities you imbue it with. (The *"everything is a social construct so it doesn't matter what we do with it"* people are **down bad)**. Money plays a critical role in the emergence of spontaneous order mainly through the reduction of unnecessary information. In their book,*"Bitcoin is Venice,”* Farrington and Meyers discuss how contrary to the common belief that price “contains the sum of information” that went into calculating it, price actually renders down the fat of copious information into a refined (seed oil free) ghee of *“just what's necessary”*. Price discards and destroys everything which is unnecessary from itself. Let's use the example of a banana to illustrate this concept. When you see that a store is selling a banana for fifty cents, what information can you reconstruct from that price? Do you know how much rainfall the farm it was grown on and competing ones received? What about the humidity? The proliferation of mold species? The price of labor at the factory that manufactured the refrigerated trucks which transported the bananas?  Can you calculate what percentage of the farm's balance sheet was YOLO'd into GameStop calls? No, none of that information can be reconstructed from the price of a banana, even though that information **was relevant** to the final price. Even a hyper intelligent AI (something we are many decades away from - I know this because I asked an AI)  would not be able to deduce these factors based solely on the price of one banana.  Yes, rainfall impacted the price and so did labor costs, and maybe even humidity too (I'm no banana expert). ![](https://www.datocms-assets.com/56652/1664806162-original-648-1616701821-12.jpg?auto=format) But the final price of the banana discards that information, prioritizing instead what price market participants were willing to settle transactions at. The final price at which transactions were settled **matters.** It gives market participants everything they need, and nothing they don't need. Price provides a single, elegant point of information that synthesizes everything to a single piece of data, which is easily usable, while eliminating the need for every market participant to understand anything about banana production. Price is alot like the public key used in cryptography, and indeed, in BItcoin, to create addresses. It’s a one way function. A private key is used to generate an address but an address cannot be used to generate a private key. Information is used to generate a price, but a price cannot be used to generate the specific information that was its input. ### Money and the Formation of Capital Money facilities a system – the economy – that is too complex, too unpredictable and too uncertain to be modeled or reduced to neat quantifiable units. Expanding humanity’s productive resources – capital – requires the acceptance of complexity, uncertainty, unknowns and risk. It’s not a neat or tame process. It’s a wild one. It's a gang of risk takers spelunking the caverns of the unknown with nothing except their intuitions about future preferences and knowledge of current problems to guide their descent into the uncertainty and the unknowable. ![](https://www.datocms-assets.com/56652/1664806365-asdf.png?auto=format) The Goonies as a model of entrepreneurship and capital formation. It’s common that people think society has disintermediated the inherent wildness and unpredictability from the natural world. Nothing could be further from the truth. We have produced unimaginable order, yet the base conditions of all existence is uncertainty, incomplete information, risk and a healthy dose of that which is fundamentally unknowable.  This exists at both the individual and collective level. A given individual in any economic system lacks access to all of the information that all other participants have but the entire system and the sum of all participants also deal with countless fundamental unknowns and uncertainties. That’s where money comes in. In this sense money is a *“magical”* coordination tool in a system where no one can formally understand the system in its totality. Money (and price) enables an utterly astonishing level of coordination across multiple chasms of uncertainty and unknowability. The price of goods and the time value of money - interest - work together to coordinate vast quantities of capital and legions of people across vast durations of time. But since money is so *“magical”* and so spontaneous (read: organic, emergent, and naturally set) the qualities of a given money can radically alter its ability to function as a vessel of information, coordination, and as an organizer of complexity out of uncertainty.  Unfortunately, the qualities of money can be changed in such a way that interrupts and interferes with this process of spontaneous order. Distortion of the natural functioning of money, interest, and price is how capital formation is impeded and how widespread capital misallocation emerges. Capital misallocation driven by monetary distortion means that money is channeled to endeavors, investments, and assets which it would otherwise not be allocated to. Due to artificial pressures on price or availability of money (or political pressures), market participants start to take actions they would not otherwise take due to these altered monetary conditions. These endeavors, investments, and assets will be less productive and less sustainable in most instances since they are driven by such things as a race to avoid inflation, a lack of ability to earn meaningful yields, or a cheapness of credit that makes buying assets on credit the logical choice. Capital misallocation, for example, occurs when I can borrow at 0% so I buy up a hundred houses on credit because, well, *“Why not?”*. At a higher interest rate, capital allocators would be forced to contend with all of the risk inherent in this decision, but at zero percent artificial interest  rates drive financial engineering and excessive speculation.  Why wouldn't you borrow a depreciating currency, for free, to buy up scarcer assets that almost always go up in value? This is especially problematic because this level of credit is easily extended to the wealthy and well-connected but not to the average hard working person. Another way of putting this is, capital misallocation is when I can borrow money so cheaply I invest in Adam Neumann’s next company after WeWork. Capital misallocation driven by monetary distortion can take various forms, such as funding speculative ventures, forced investment to escape inflation, converting reliable assets (such as homes) into Stores of Value, and the increasing concentration of capital into the hands of large companies and away from vigorous new participants. All of this misallocation comes at the expense of the hard work of vetting and building productive ventures. There are two main ways (excluding overt political forced investment) by which alterations in the natural behavior of money lead to capital misallocation: Artificially manipulated interest rates and exogenous monetary expansion. ### Interest Rates > Interest is the Rent of Stock (capital), and is the same as the Rent of Land: The first, is the Rent of the Wrought or Artificial Stock; the Later, of the Unwrought, or Natural stock. > > — Nicholas Barbon, late seventeenth century What Barbon is saying is that there are two ways we interact with capital – , money and physical resources. Barbon cites land as the prime example of the rent of a physical resource, but today we would include factories, vehicles, and even potentially labor resources in this category. It is self-evident that someone would charge interest to rent their factory. However, the exact same logic applies to loaning money. Money is the right to capital – it is unredeemed work. It is the ability to account for the opportunity cost of utilizing society’s physical resources. With money you can rent a factory, a car, and pay for people's labor and time. It is obvious that those things are both scarce and valuable, and that therefore you should not have unlimited free access to them. It is money which both constrains and also provides access to these resources. Money, as a right to dictate what is done with capital for a period of time, must require an interest rate to borrow it, by the same reasoning that one must pay to borrow physical capital. But what happens when that interest rate is artificially suppressed? Does a 0% interest rate make any sense? What about a negative interest rate? Would you ever pay **me** to borrow **your** car, barring extraordinary circumstances? That’s what a negative interest rate is. Let me make a critical distinction here, if a market naturally arrived at an interest rate of 1% because capital was simply so abundant and society was filled with savant entrepreneurs - **that would be a good thing and fine.** I question the likelihood of this outcome, but if it solely occurred as a function of the availability of capital and entrepreneurship there would be nothing to object to. However, if interest rates are artificially lowered we run the risk of fundamentally distorting the pricing of capital and altering the behaviors of savers and investors. If we view money and physical resources as the twin sides of capital, it becomes immediately apparent that distorting the market’s ability to naturally set interest rates interferes with and distorts the ever uncertain, crucial process of capital formation. Capital is not simply formed, as if by magic, when a bank lends money. Our esteemed central planners only dream that it might be so! Capital is only formed via the messy, unpredictable, uncertain, and risk-filled process of entrepreneurship. It is formed by risk-taking, by speculation on what the future might look like and what future humans might desire. It is formed by the act of creation, the act of preservation, and even the act of destruction. New structures and formations of resources must be built, they must then be sustained by producing consistent profits, and old inefficient structures may even need to be disrupted or destroyed. (The fact that this lines up with the Hindu Trinity (Trimurti) of [Brahma](https://en.wikipedia.org/wiki/Brahma) the creator, [Vishnu](https://en.wikipedia.org/wiki/Vishnu) the preserver, and [Shiva](https://en.wikipedia.org/wiki/Shiva) the destroyer is surely something I will spare you any further discussion of, for now.) Capital formation is challenging, it takes place in reality (not in abstract models and theorizing), and relies on the intimate interactions of risk-taking entrepreneurs with the spontaneous manifest order of markets. When we disrupt the proper functioning of money by distorting interest rates (the time value of money) we can fundamentally impair, distort, and even **corrupt** the noble endeavor of civilizational advancement via capital formation.  One way to think of this:  Imagine a world where due to the realities of capital, talent, and borrowers, the interest rate is 5% to borrow money. This interest rate is not an arbitrary thing – it reflects the very real realities of the market. Now imagine a given borrower wants to build a new factory, but at an interest rate of 5% the realities of the market make his endeavor impossible. The numbers simply don't work. Luckily for our aspiring entrepreneur, the hedgemon smiles on his fortune and forces banks to lend at a maximum rate of 1% interest. Suddenly, he can build his factory! By lowering the cost of borrowing money, we simulate a world where capital is more abundant. However, **capital is not more abundant than it was**, capital still possesses the same constraints that caused the interest rate to naturally gravitate towards 5%. Yet, we have given our entrepreneur the signal that this is not the case. In this way, a project is started which **would not** have happened without the interest rate intervention. The artificial modification of interest rates **changes** what is produced.  And maybe this even works out for this individual factory, but looking across the entire system it is bound to result in projects (which could have afforded 5% interest) suddenly being unable to acquire the capital they need to finish because countless other endeavors consumed the capital they would have used. The artificially lowered interest rate transferred capital from prudent endeavors to ones who, like so many weeds, only spring up due to a low interest rate. The market requires an accurate price of capital to produce spontaneous order. Robbed of an accurate price of capital, it misallocates it. Bastiat’s debate with Proudhon is yet another perennial example of one more way that low interest rates drive capital misallocation: “*In your system, the rich will indeed borrow gratis, while the poor will not be able to borrow at any price. When a rich man presents himself at the bank, he will be told: You are solvent, here is the capital, we lend it to you for nothing.* *But let a worker dare to show his face. He will be asked: Where are your guarantees, your lands, your houses, your goods?* *I have only my arms and my probity.* *That does not reassure us, we must act with prudence and severity, we cannot lend to you gratis.* *Well, then: lend to us, to my companions and myself, at rates of 4, 5, or 6 percent, this will be an insurance premium whose product will cover your risks.*  *What are you thinking of? Our law is to lend gratis or not lend at all. We are too philanthropic to make anyone pay us for doing nothing; this applies to the poor man no less than to the rich one. That is why the rich man obtains gratuitous credit at our establishment, and why you will have none, whether you pay or not.”* In other words, when interest rates get too low, things can get **weird**. Wealthy individuals and established corporations are able to borrow the value of society's capital (indirectly from the savings pool) for (almost) free. However, the average person, the entrepreneur, and even more importantly the hungry young usurper startup is forbidden even a sip from the firehose of nearly free credit. When savings and capital are artificially priced at a time value of 0%, we pull forward the abundance of the future to subsidize borrowers in the present. The result is that *“today’s”* people pay nothing to borrow the money of *“future”* people. This is because the *“price”* of capital is its opportunity cost. By giving up your capital you surrender any economic gains you may have yielded from that capital.  Interest is what must be paid to you in exchange for your withholding of your consumption until a future date. ### Historical Failures of Artificially Low Interest Rates  In *"The Price of Time"*, Edward Chancellor provides numerous examples of how artificially lowered interest rates (either via decree or a sudden exogenous oversupply of money) resulted in economically destructive outcomes.  One example of the impact of artificially lowered interest rates was an export bubble which broke out in London in the summer of 1810. Interest rates at the time were artificially constrained by laws which limited the maximum interest which could be charged at 5%.  In the mid 1760s mortgage rates fell to a shocking low 3.5% which immediately led to a construction bubble where builders furiously built new residences. Bricks were delivered as soon as they were set. In 1825 London was struck by another banking crisis which was a result of low interest rates resulting from huge amounts of gold from abroad.  As rates declined from 5% to 3%, investors removed their money from banks in order to invest in various corporations or to fund construction. Numerous newly created banks sprung up all over the country, shocking onlookers. As newly issued money flooded the system, capital was funneled from formerly secure investments into risky speculation in newly established countries in South America.  The crisis culminated in the failure of a well-known banking firm Pole, Thornton & Company which due to the low interest rates, was forced into riskier investments than was suitable for a firm of its nature. Britain saw a canal construction mania in the early 1790s as interest rates plunged below 3% which ended in a banking crisis in 1793. In the early 1800s gold convertibility was suspended in response to a French invasion and Britain tasted their first experience of a true paper currency.  Real yields on government debt turned negative for the first time ever, which produced a speculative mania as countless banks were established along with many speculative schemes in the stock market. Shares experienced substantial speculative increases. As the easy access to money granted merchants excessive power to wield society's capital, huge export schemes came into being. The most notable of these schemes resulted in ice skates being shipped south of the Equator, where they would hardly do any good. Countless other examples abound, to say nothing of the post-2008 regime in the United States. ### Low Interest Rates, Asset Speculation, and Zombie Companies #### Low Interest Rates > It is a fact of experience, that when the interest of money is two percent, capital habitually emigrates, or , what is here the same thing, is wasted on speculations, which never yield any adequate return. > > — Walter Bagehot, 1848 When interest rates are set at 0%, or even 2%, it incentivizes the financial over the real. It also allows dysfunctional companies to live off debt, even though they naturally would have been consumed long before by the creative destruction of capitalism. It is intuitively evident to any observer that if I must pay 10% to borrow money, I will only borrow that money (if my intention is to invest in an endeavor or asset) if my conviction is strong and I have spent due time vetting the investment. I will also pay 10% for the privilege of speculating with the savings of other people. However, when I can acquire the savings of others at a rate of 0%, 1%, or 2.8% (my current 30y fixed mortgage rate), I will gladly borrow that capital to buy financial assets whose rate of appreciation will exceed that very low rate! This has become such a fact of markets today that we actually value companies, not based on their qualities or what we truly think of the future, but based on how much their cash flows can exceed the *“risk-free rate”* of a Treasury bill. If we decide to reduce the valuation of companies to a mere accounting trick, then by its very nature a 0% interest rate means you should absolutely shovel money into a company that can generate more than….. a zero percent return. This inherently drives up the prices of equity (which, remember, is liability-esque in the sense that eventually valuations must be justified by actual cash flows if they are to be sustained) and creates a *“bubble.”* While it may not be a *“bubble”* if we assume the interest rate **really is zero**, when if we step back from what CNBC is saying and recognize a **zero percent interest rate** is a *“scientific absurdity, involving antagonism to established interests, class hatred, and barbarity”* (Bastiat) we can realize we have entered the dangerous territory of make-believe, bullshit nonsense. So speculation is a certainty when it comes to low interest rates, and speculation competes with investment. Why would you take risk to fund a new generation nuclear reactor when you could buy the latest SPAC? Or even NFTs? NFTs don’t even have cash flows so they are probably worth infinity, right? If this wasn't enough, the brilliant financial engineers that run our valuable pools of capital and corporations came up with another trick, buybacks. #### Buybacks One day people realized that if they ran a large corporation and the banks would lend them money at next to nothing due to their size, scale and reputation, then they could just issue cheap debt and use the proceeds to buy back their own shares. The whole thinking behind low interest rates is always *“We are going to incentivize investment into producing more capital”*, but producing capital **is HARD**, while pumping cash into financial engineering schemes is **so easy and fun!** So instead many CEOs start issuing low yielding corporate bonds to do share buybacks, which pumps the stock price, and ensures they get a big bonus – especially if they were paid in options – and the CEO leaves the mess of a balance sheet (and company) to the next guy and the shareholders. A company could buy back its own shares using its profits, while this would signal the company has literally nothing better to do with the money (they don't know how to create capital), it wouldn't be inherently bad. However, when it is financed with debt, it's an entirely different monster. In [2016 and 2017](https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy) share buybacks as a percentage of total corporate debt issued reached **thirty percent.** This only represents part of the needless financialization going on which competes with capital to fund real investment and capital formation. This is basically **Anti-Capital**ism. No, I don’t mean its people who are **against** Capitalism and trying to replace it with Socialism or something else. I mean it is an **inversion** of Capitalism. If Capitalism is the pursuit of compounding and growing capital, this is the [process of consuming and depleting capital](https://allenfarrington.medium.com/the-capital-strip-mine-ec627e9fe40a). If Capitalism is growing capital, then **Anti-Capitalism** is consuming capital for a short term return. Share buybacks, in many ways, are peak capital misallocation if we take the view that the goal of system is to generate more actual capital. Capital is borrowed and spent on financial engineering instead of investment. Share buybacks additionally only make sense when the interest rate is pushed down artificially low. #### Zombie Companies > Free credit is socialism's final word, its final slogan, and its final effort. An inexhaustible paper money factory: that is your solution. > > — Bastiat Besides the giant diversion of investment capital into financial speculation and financialization, zombie companies are one of the most significant ways distortions in the price and availability of capital produce deleterious economic impacts. A zombie company is a company which can only survive by continually issuing debt to stay alive, and due to the way debt spirals, each successive round of debt usually needs to be even cheaper, and bigger. These companies are particularly bad because while they may produce a real product or service, they do so using a business model which is fundamentally broken. They don't produce a profit – a return on capital invested. That is, they destroy capital. You can think of this more concretely in that they use a MegaWatt of electricity to produce an energy equivalent of .8 MegaWatts on the other side. More energy goes in than comes out, there is no return. It’s broken, it doesn’t work. In a sane world these companies go under, and in the void left by their absence, hungry young usurpers swarm their corpses and feast on the abundant carrion. These newcomers hire the talent that was wasted at the failed company, they learn from its mistakes, and they win the business of its old customers. They dance on its goddamn corpse in a orgy of creative destruction. The startup is the Goddess Kali, emerging from the corpse of the failed corporation, bestowing freedom and liberation to the market as it restructures and reorders the misused capital into a new form. ![](https://www.datocms-assets.com/56652/1664821950-s-l1600.jpg?auto=format) A startup hiring the talent and buying the capital from a failed corporation You didn’t think I was going to try a Vedic metaphor again, did you? You clearly don’t follow me on Twitter (but you should). The natural lifecycle from failed zombie corporation to hungry, young startup is absolutely frozen by the availability of cheap debt which keeps these corporations in purgatory for longer than they would ever be able to stay solvent. ### The Fungibility of Money vs the Non-Fungibility of Capital One of the ways contemporary economists and financial commentators get around this bleak reality of useless companies propped up by artificially subsidized capital is through the modern view of GDP as the primary measure of economic well-being and growth. The proponents of modern finance might say *“Well, all of that money that the zombie company borrows is still used to pay people’s salaries, contractors, and to buy goods and services, therefore it still contributes to economic growth because the money circulates through the economy.”* GDP measures revenue, it measures how many goods and services were sold, and it assumes **more** is better. However, what it entirely ignores is that the civilizational imperative is not revenue, but the growth of capital – of our total productive capacity.  An example here would be that a company could easily generate **more** revenue by selling their product for 30% less than it cost them to produce it! All else equal, this would increase GDP assuming total sale volumes increased. This quite clearly says nothing about whether this process was accretive, sustainable, or whether it generated more total energy output than inputs. It says nothing about whether the company overworked all of their employees to the point of exhaustion to sell those goods at a cheaper price and lost all of their skilled workers.  In essence, it says nothing about whether capital was **produced** or if capital was **consumed and destroyed in the pursuit of revenue.** As such, this traditional view of GDP also utterly fails to take into account that while money is completely fungible and circulates, people's time is not. Neither are physical resources which are put to waste. Essentially, productive capital is **scarce, limited, non-fungible.** If you hire the smartest guy in the world and his ten best friends (also geniuses) to design an intercontinental missile carried by bald eagles….. you just wasted our valuable resources. That genius and his genius friends are doing nothing to advance human civilization. They wasted capital. This is part of the reason capital misallocation is such a critical issue. Our precious time isn’t fungible, and people's intellectual outputs aren't equal. Having a system which generally ensures our best talent, our best minds, and our capital gets allocated to the most significant and appropriate challenges for them is an enormous social good. While the qualities of money don't solely determine these outcomes, they play a critical role. As Hazlitt often said, the true art of economics is looking beyond the immediate impacts and understanding the long-term and second order consequences of any decisions. ### Money Printing and the Cantillon Effect We have discussed how distorting the price of time, capital, and money (i.e. interest rates) produces negative effects and causes investors to do increasingly unproductive things with other peoples savings. Another way you can distort the spontaneous order of markets is by arbitrarily creating more money, and then distributing it in a highly asymmetric way. Let's go back to the basic principle here. When markets and money are left to their own accord they produce this emergent, spontaneous order (emergent is the word people use when they have no idea how something happens but want to sound smart – *Deus Ex Machina* basically). This doesn’t just happen. It relies on accurate price signals and the free ability of market actors to make unencumbered decisions. If we completely distort the natural rate of interest, we have observed how that negatively influences the decisions rational actors make. Another way we can distort this emergent process of spontaneous order, is simply injecting huge sums of newly issued money into the system with reckless abandon. To make it even worse, we can give that money exclusively to a few insiders who get to spend it before everyone knows new money has entered the system. The creation of new money by insiders debases the savings ability of the existing money. It is critically important for money to maintain value, as it reflects work which was performed but not redeemed for goods and services. Is the value of your forty hour work week last month suddenly not worth as much because some feckless bureaucrat decided to fire up the money printer? Not in a system that has any integrity. It is important for work to be redeemable at the value that was assigned to it when it was performed. So, arbitrary monetary expansion distorts the value of savings, and interferes with the ability for market participants to hold their value in money. This then incentivizes them to rush to invest their money in whatever assets might return in excess of the inflation rate. This is by its very definition capital misallocation, at least insofar as we say this **is not** due to informed market participants lending capital because the terms and opportunities are fair and favorable. It’s just a race to avoid debasement. ### Bitcoin Fixes This  You’ve been patient. You clicked on this article because you like Bitcoin, and I have been rude to not even mention it yet. I will make it up to you here. It’s commonly said in the Bitcoin community that *“Bitcoin Fixes This.”* Stemming the tide of excess financialization and wanton capital misallocation is something that, well, Bitcoin **really** does fix. (Okay, I’m not **FULLY** sure that Bitcoin fixes modern architecture but I truly hope it does!) Let’s start with the most obvious part: monetary expansion. Bitcoin is fixed. Bitcoin is 21 million. Bitcoin is orange. You can’t make more Bitcoin, I can’t make more Bitcoin, **they** can’t make more Bitcoin. So this whole thing where they arbitrarily expand the money supply, debase your savings, force capital misallocation to speculative assets, and enrich Cantillon insiders – that thing goes away. It’s a bright orange future. That part is easy, but what about interest rates? What about the cost of capital? What's the borrowing cost of Bitcoin in a world where Bitcoin is widely used as money? In short, I don’t know. It would depend on the actual economic conditions of the markets the Bitcoin lending and borrowing was happening in. Interest rates should be set in the free market based on the availability of capital, labor, and capable entrepreneurs with viable ideas. What I can say for sure is they wouldn't ever be **ZERO** and they would likely be **significantly higher** than our low rates regime of the last several years. No one is going to risk their money which holds its value for a 2% return on a risky venture. It becomes significantly harder, or at least more expensive, to borrow capital. Both borrowers and lenders would become more selective. This might not sound like a good thing to you. Why is it good if capital becomes harder and more expensive to come by? It’s a good thing because what we are talking about here is **solely** allowing natural market forces to set the interest rates. The interest rates should **reflect the actual economic realities of capital**. Interest rates on money are not an abstract thing which has no connection to the actual world of goods, services, and production. Money, and the time value of money, are an abstract representation of **something real.** Not all formations of money are equally suitable to the formation of capital. A kindergartener can understand this. There is a reason you all don’t allow me to issue all of the money in the world. This money would not be nearly as good at being money. Qualities matter and they determine outcomes. Interfering in the market for money impedes capital formation. In order to believe that some central intervention in the supply, price or time value of money should be superior to allowing the emergent, self organizing, spontaneous order machine to continue its operation should be viewed with profound suspicion. As a civilization, we fundamentally lack the ability to possess and compute enough information to remotely believe we can outperform the emergent, spontaneous, order machine of the free market when it comes to setting the price or time value of money. It’s not possible, and it’s not ever going to be possible. The sheer level of computational omniscience required here is a disturbing fantasy. It’s a rejection of reality, and the very nature of being human. Reality means we operate within the boundaries of what is knowable to us, which is always an infinitesimal subset of what information exists. This inherently implies that we must take risks, and that risk taking is what capital formation is really all about. We don’t simply know what new forms of capital society would benefit from, because if we did know that those forms of capital would already have been created. We must stumble through the dark, taking risks and trying new combinations. This is the way, the only way, the only reality. We must reject the sheer arrogance of the councils of men who deign to set the price that an economy should assign to capital. It’s not just insulting and frankly, **bad vibes,** it’s suboptimal in terms of the functioning and performance of our precious economic machine. You see, I love the economic machine. I think it’s a miracle, and I don’t like people who try to whack it with sticks and drop rocks into its engine. Bitcoin, when adopted, protects the machine from this sort of meddling. I want to respect the machine, I want to honor the machine. I want to help the machine, which is far larger than myself, to operate in it’s unknowable machine-y ways. Ending the undeniable distortion of money is the best thing we can do to promote the rise of spontaneous order. Order is good, we all like order. Chaos is bad, **more bad vibes bro.** Stop supporting bad vibes. Since the financial crisis in 2008, the economy has become overwhelmingly financialized. Speculation and asset inflation has become the cornerstone of the US economy. This is antithetical to actual growth, to actual capital formation. The political economy meets the inflation economy meets Chimerica meets the subsidization of speculation. This isn’t an economy.  This isn't capitalism. It’s **Anti-Capitalism** and it’s why growth has disappeared. We aren’t producing new technologies and meaningful innovations at the same pace we did in the early 1900s, and while we can’t be certain why this is happening – I blame the distortion of the financial system and incessant monetary interventions discussed above for **breaking the spontaneous order machine!** Bitcoin fixes the machine. When you remove the centrality of monetary interventions and alterations, you allow the machine to do what it does – manifest spontaneous order and economic functioning. Bitcoin allows us to have honest money, honest capital pricing, honest interest rates, and honest savings yet again. It is absolutely essential that we start to innovate and expand human productive knowledge and resources again following the post-1970 slowdown. We need new technologies to face new global problems, and the people deserve a dose of optimism again. To get this growth and innovation, we need to get the spontaneous order machine working again. I truly believe Bitcoin makes this happen, because actually all that is required is that, once we have a good form of money, we step back and leave money alone. There are arguments to be made for organized order, for centralization, but they don’t succeed in markets and pricing money. Fixing the money will allow the machine to do what it does best, generate emergent spontaneous order. [Bitcoin: or how I learned to stop worrying, and love the machine](https://en.wikipedia.org/wiki/Dr._Strangelove#:~:text=Dr.%20Strangelove%20or%3A%20How%20I,Union%20and%20the%20United%20States.). ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # Bitcoin Privacy: Best Practices - Swan Bitcoin URL: https://www.swanbitcoin.com/education/bitcoin-privacy-best-practices/ There is a sacred realm of privacy where essential rights and liberties into which the law, generally speaking, must not intrude. --- **Gigi** · October 3, 2022 · Updated June 25, 2024 > There is a sacred realm of privacy for every man and woman where he makes his choices and decisions — a realm of his own essen­tial rights and liber­ties into which the law, gener­ally speaking, must not intrude. > > — Geoffrey Fisher, Archbishop of Canter­bury (1959) Not too long ago the default mode of the internet was unencrypted plain text. Everyone was able to spy on everyone else and not too many people thought much about it. The [global surveil­lance disclo­sures of 2013](https://en.wikipedia.org/wiki/Global_surveillance_disclosures_(2013%E2%80%93present)) changed that and today secure commu­ni­ca­tion proto­cols and end-to-end encryp­tion are becoming the norm. Although Bitcoin is entering its teenage years, we are — metaphor­i­cally speaking — still in the plain text era of the orange coin. Bitcoin is radically trans­parent by default, but there are meaningful ways to protect your privacy. In this article we want to highlight some of these ways, discuss best practices, and give action­able advice for newcomers and bitcoiners alike. ### Why Privacy Is Important “Privacy is neces­sary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selec­tively reveal oneself to the world.” With these powerful words Eric Hughes opened his [Cypher­punk’s Manifesto](https://nakamotoinstitute.org/static/docs/cypherpunk-manifesto.txt) in 1993. The differ­ence between privacy and secrecy is subtle, but impor­tant. Choosing to remain private does not imply that one has secrets or has something to hide. To illus­trate this just realize that what you do on the toilet or in the bedroom is neither illegal nor a secret (in most cases), yet you close the door and pull the curtains. Similarly, how much money you have and where you spend it is not neces­sarily a secret matter. It should, however, be a private one. Most would agree that your boss should not know how you choose to spend your salary. The impor­tance of privacy is recog­nized by many inter­na­tional bodies. From the *American Decla­ra­tion of the Rights and Duties of Man* to the United Nations, it is recog­nized that privacy is a funda­mental human right worldwide. > No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks. > > — Article 12, United Nations Decla­ra­tion of Human Rights ### Bitcoin and Privacy Although Bitcoin was often described as an anony­mous method of payment by early propo­nents and by the media, it is anything but. Bitcoin is pseudo­ny­mous at best and as of today making sure that your pseudo­ny­mous bitcoin identi­ties cannot be linked to your real-world identity proves diffi­cult for most people.  Bitcoin is an open system. Its public ledger can be inspected and studied by everyone. Thus every trans­ac­tion that is embedded in its proof-of-work chain will be exposed for as long as Bitcoin exists: eternity. Failing to follow privacy best practices now can poten­tially have negative reper­cus­sions in the future. Privacy, like security, is a process and it is diffi­cult, but not impos­sible. Tools continue to be devel­oped to help preserve privacy while using Bitcoin and fortu­nately most of these tools become easier to use over time. Unfor­tu­nately no panacea exists. One has to remain aware of the trade­offs and follow best practices as they evolve. ### Privacy Best Practices As with every­thing in Bitcoin, taking control of your privacy is a gradual, step-by-step process. Learning about and imple­menting these best practices takes patience and respon­si­bility, so do not be discour­aged if it seems overwhelming at first. Every step, no matter how small, is a step in the right direction. The following are action­able steps you can take to increase your privacy: - Self-custody your coins - Do not reuse addresses - Minimize exposure to KYC (Know Your Customer) - Minimize exposure to third parties - Run your own node - Use the Light­ning Network for small transactions - Do not use public block explorers - CoinJoin early and often **Self-custody your coins:** Not your keys, not your Bitcoin. If someone else is holding your bitcoin for you, they know every­thing there is to know about these coins: amounts, trans­ac­tion histo­ries, future trans­ac­tions, etc. Taking self-custody of your coins is the first and most essen­tial step. **Do not reuse addresses:** Reusing addresses destroys the privacy of both the sender and the receiver. It should be avoided at all costs. **Minimize exposure to third parties:** [Trusted third parties are security holes](https://nakamotoinstitute.org/trusted-third-parties/). If you can rely on yourself instead of trusted third parties, you should. **Run your own node:** Not your node, not your rules. Running your own node is essen­tial to use Bitcoin in a private manner. Every inter­ac­tion with the Bitcoin network is facil­i­tated by a node. If you are not in control of this node, whatever you are doing is seen by the node you are inter­acting with. This means whoever is in control of the node is able to see what you are doing. This [node guide](https://bitcoiner.guide/node/) is a great resource to get you started. **Use the Light­ning Network for small trans­ac­tions:** The off-chain nature of the light­ning network increases the trans­ac­tional privacy of its users without having to jump through too many hoops. While it is still early, the absolutely reckless days of the light­ning network are likely behind us. Using it for small- and medium-sized trans­ac­tions can help improve both your privacy as well as your fee footprint. **Do not use public block explorers:** Looking up addresses in public block explorers will link those addresses with your IP, which, in turn, can be linked to your real identity. Software packages make it easy to run your own block explorer. If you have to use a public block explorer, make sure to mask your IP by connecting to them via [Tor](https://www.torproject.org/download/), or at least use a [VPN](https://mullvad.net/). ### Conclusion Everyone should strive to use Bitcoin in a more private manner. Privacy is not secrecy. Privacy is a human right and we should all protect and exercise this right. It is hard to remove infor­ma­tion from the internet; it is impos­sible to remove infor­ma­tion from Bitcoin’s public ledger. While far from perfect, tools exist today that make following privacy best practices easier. We have highlighted some of these tools and — as new improve­ments such as Taproot and Schnorr get activated — these tools, as well as the privacy guaran­tees of Bitcoin, will undoubt­edly improve. Bitcoin’s opera­tion does not map nicely on to tradi­tional concepts. Questions such as “who owns this money” or “[where is it from](https://en.bitcoin.it/wiki/From_address)” become hard to answer in most circum­stances and absolutely meaning­less in others.  Satoshi designed Bitcoin with privacy in mind. On the protocol level every bitcoin trans­ac­tion is a “smelting” process leaving only heuris­tical bread­crumbs behind. The protocol does not care where the sats came from. Neither does it care about real-world identi­ties or owner­ship. It only cares about the validity of signatures.  And as long as speech is free, signing a message — privately or not — must not be a crime. ### Further Resources - [15 Methods to Acquire Non-KYC Bitcoin](https://sovrnbitcoiner.com/15-methods-to-aquire-non-kyc-bitcoin/) by Sovrnbitcoiner - [This Month in Bitcoin Privacy](https://enegnei.github.io/This-Month-In-Bitcoin-Privacy/) by Janine - [Hodl Privacy FAQ](https://6102bitcoin.com/faq-hodl-privacy/) by 6102 - [Digital Privacy](https://6102bitcoin.com/blog/digital-privacy/) by 6102 - [UseWhirlpool.com](http://usewhirlpool.com) by Bitcoin Q+A - [Bitcoin Privacy Guide](https://bitcoiner.guide/privacy/) by Bitcoin Q+A --- This article was co-authored by [Matt Odell](http://mattodell.com), an independent bitcoin and privacy advocate. Find his recommendations in regards to best practices on [werunbitcoin.com](http://werunbitcoin.com/).  ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # 5 Reasons Why All Bitcoiners Should Attend a Bitcoin Conference URL: https://www.swanbitcoin.com/industry/5-reasons-bitcoiners-should-attend-a-bitcoin-conference/ Meet your favorite Bitcoiners and make memories you’ll never forget. --- **Nick Payton** · October 5, 2022 · Updated June 6, 2024 Ever wonder why Bitcoin conferences are so popular? If you talk to someone who has attended one of these industry events, they all typically elaborate on the overwhelming sense community. Bitcoiners love meeting Bitcoiners. We are here to share our optimism for the future and the role of sound money. Here are 5 reasons why all Bitcoiners should attend a Bitcoin conference at some point on their journey…  **1) Make Connections (and get a job in Bitcoin)** There are countless examples of individuals meeting at a conference and making relationships that last a lifetime.  Whether you find your next business partner, employer, employee, or a life-long friend. You’ll leave a Bitcoin conference with more connections than when you arrived. Believe it or not, Swan was founded after some friendly conversations at the San Francisco Bitcoin conference in 2019. This is where Cory first met Yan, Brady, and Brandon. As they say, the rest is history.  If you’re considering working in the Bitcoin industry, attending a few conferences is a no-brainer. Bitcoiners hire people they know and trust. Quality of thought over credentials.  Conferences are how you get your foot in the door. In the meantime, check out [bitcoinerjobs.com](https://bitcoinerjobs.com/) for open positions. ![](https://www.datocms-assets.com/56652/1664911740-img_5785.jpeg?auto=format) **2) Expand Your Knowledge** Bitcoin conferences are an *all you can eat* buffet for the intellectually curious.    You’ll be exposed to new ideas that challenge you and enrich your understanding of Bitcoin and its place in the world.  From the presentations, panels, and workshops to the dinner parties and serendipitous side conversations, there’s no shortage of opportunities to better yourself.  **3) Meet your favorite Bitcoiners** While twitter is a decent way to connect with other Bitcoiners, there is no substitute for looking someone in the eye and shaking their hand.  Conferences give you the opportunity to meet your favorite Bitcoiners in person. Ask your favorite writer a question, learn about the latest technology from an engineer, or suggest ideas for a future episode with your favorite podcaster. Sometimes it feels like Bitcoin twitter in real life. And it doesn’t matter if you’re well known or brand new, most Bitcoiners are generous with their time and enjoy mixing it up with the community.  If you’ve never been to a Bitcoin conference, the energy is palpable. I guess that should be expected when you get thousands of people together who are all ON THE MISSION. ![](https://www.datocms-assets.com/56652/1664911635-img_4906.jpg?auto=format) **4) Sanity Check**  Falling down the Bitcoin rabbit hole is an exhilarating experience. It can feel like discovering the secret to the universe and the natural instinct is to share it with everyone you meet! Unfortunately, we can come off a little crazy when raving about Bitcoin to the uninitiated. Your family and friends are probably sick of hearing you talk about Bitcoin :)  Good news: you are not alone. But just because your peers aren’t receptive to the Bitcoin message doesn’t mean you’re crazy. Meeting other Bitcoiners in real life can be reassuring that you’re on the right path. Turns out there are tons of smart people with high integrity who share a similar view on Bitcoin and the world at large.  **5) Have Fun** We sometimes forget to put work aside and enjoy ourselves. Obviously Bitcoin conferences are full of educational opportunities, but they’re also fun! Besides the main event, most conferences are paired with some *“unofficial”* side events. Expect happy hours, group workouts, impromptu lunches, dinner parties, niche workshops, and some mind blowing late night conversations.  Some people even make a family trip out of it!  Attendees often report leaving the conference feeling fulfilled, reinvigorated, and optimistic about the future.  **Here at Swan, we believe getting Bitcoiners together in person is a BIG DEAL.** So we decided to host our own conference in Los Angeles this November! 🌴 Pacific Bitcoin brings together all your favorite Bitcoiners such as Michael Saylor, Lyn Alden, Jeff Booth, Robert Breedlove and more, for a week you’ll never forget. We focused on a combination of education, socializing, and unique experiences such as a surf simulator, an 80s arcade gaming lounge, and even an And1 basketball court with its own programming. Not to mention the weather is great in Southern California in November! 😎 Do not miss this opportunity to meet your favorite Bitcoiners and make memories you’ll never forget. [Head to PacificBitcoin.com and enter promo code *“SWAN”* for 20% off your ticket](https://www.pacificbitcoin.com/). ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # Parts 1-9 of The Timechain Codex Now Available in PDF Format URL: https://www.swanbitcoin.com/culture/the-timechain-codex/ A Graphic Novel by FractalEncrypt based on “Bitcoin Astronomy” by Dhruv Bansal. --- **FractalEncrypt** · October 7, 2022 · Updated July 3, 2024 The Timechain Codex is the first Bitcoin graphic novel illustrated entirely using Artificial Intelligence art.  *“I like to think this novel is made the same way bitcoin is made, using computational processing,”* said Fractal Encrypt. It is based on *“*[*Bitcoin Astronomy*](https://unchained.com/blog/law-of-hash-horizons/)*”* by Dhruv Bansal. [Post on X](https://twitter.com/FractalEncrypt/status/1575953238716661760?s=20&t=DycBCxlHVRjPSSF4tELpxQ) The entire nine-part series is being released gradually on [Twitter](https://twitter.com/FractalEncrypt/status/1575953238716661760?s=20&t=aadtfcxRnppblecjCxmooQ), with the first part having been released on Friday, September 30th, 2022.   The story imagines the long-term future of humanity following the discovery and adoption of Bitcoin and how it propels us upwards throughout the galaxy, and beyond. ### FractalEncrypt Cypherpunk Artist infusing software, math, art, tech, and chemistry into biological interfaces. # Swan Launches Fundraiser With Bitcoin Policy Institute URL: https://www.swanbitcoin.com/industry/swan-donating-to-the-bitcoin-policy-institute/ Our goal is to support best-in-class policy and academic research that properly assesses Bitcoin’s benefits and risks. It’s critical that the research on #Bitcoin is fair and accurate. --- **Steven Lubka** · October 7, 2022 · Updated June 6, 2024 For a long time, Bitcoin has been underrepresented in academic and policy circles. This is one of the challenges of a truly decentralized project. This gap has produced a large body of research that ranges from questionable to entirely FALSE. Some of the worst, most widely-discredited research ever produced about bitcoin helped form the basis for the White House's recent policy ideas. Swan thinks it's time to do something about this! That's why we are donating to the [Bitcoin Policy Institute](https://www.btcpolicy.org/), a think tank advancing a vision of an America strengthened by open monetary networks. [Post on X](https://twitter.com/SwanBitcoin/status/1578043004794933248?s=20&t=-5WpWkU3Hkj6RBwT_bdPZg) Our goal is to support best-in-class policy and academic research that properly assesses Bitcoin’s benefits and risks. It's critical that the research on Bitcoin is fair and accurate. Our support will help, but we need the community to rally together and join us on this mission. So today we are launching a fundraising campaign in partnership with the Bitcoin Policy Institute to support high-quality research and education. Our goal is to help a cohort of researchers from across disciplines study bitcoin and emerging monetary networks full-time. For this reason, Swan and [Pacific Bitcoin](https://www.pacificbitcoin.com/) are doing the following: Beyond our initial donation, Swan is allowing EVERY Pacific Bitcoin ticket holder to donate 20% of their ticket price to fund BPI research and you get an additional 10% OFF your ticket price. Bitcoiners can also donate directly to this effort [here](https://opensats.org/projects/bitcoin_policy_institute). Here are the donation goals and what will be done as we hit each tier: ![](https://www.datocms-assets.com/56652/1665152988-donation-goals.png?auto=format) We are especially excited to announce that one of BPI's all-star researchers, Troy Cross, will be joining us for a number of discussions over the next several weeks to discuss his past and upcoming research on Bitcoin and proof of work. So GET ON THE MISSION. To donate, go directly to the [Bitcoin Policy Institute](https://www.btcpolicy.org/), buy a [Pacific Bitcoin](https://www.pacificbitcoin.com/) ticket at and use code *"DONATE"* for 10% OFF. 20% of your ticket purchase will also fund the institute. ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # Easy Money - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/easy-money/ Money has gotten way too complicated. Bitcoin makes it easy again. --- **Tomer Strolight** · October 17, 2022 · Updated June 27, 2024 ### What Happened to Money Being Simply Money? There was a time when people took their paycheque to the bank, put what they didn’t need right away in a savings account, and carried the rest around to spend. To spend it, they physically handed it to a clerk at a store, and were handed back some change and the merchandise they bought. Pretty Simple. After all, since money is something that every single person in the world needs to use, it should be easy to use. It should be the easiest thing in the world to use. But money has become a [very complicated affair](https://www.swanbitcoin.com/bitcoin-and-the-true-meaning-of-inflation/). Today’s experts say that if you don’t invest your money in a diversified portfolio of uncorrelated instruments including equities, bonds, derivatives, and commodities, well then, apparently you’re doing it wrong. These experts advise that you hire more experts to manage it for you, because it’s a full-time job to manage money earned doing your actual full-time job, and you have neither the skill nor the time to do it. But the experts also warn that even the most expert of these experts can’t guarantee that they won’t lose your money while managing it. Something feels very wrong about this whole notion. Meanwhile, powerful appointed bureaucrats hold press conferences regularly to announce changes to the monetary policy they are in charge of, and cryptically hint at what changes might come next. Journalists, professional investors, and politicians hang on their every word carefully and markets swing wildly in reaction to what is said – or what isn’t. If you don’t catch on to their clues correctly, then you lose. Something doesn’t seem right about this either. As well, prices of goods and services have become unstable. Money is no longer easy to use. Money has become extremely complicated. An old famous line frequently used in movies and TV shows used to respond to the question *“Will you take his money?”* with a question as the response: *“Is his money green?”* Well, the money is still green, but with all that’s happened we have to remember the now famous line of Kermit the Frog who once said, > It's not easy being green. > > — Kermit the Frog ### What Does Easy Look Like? A lot of things may be very complicated behind the scenes, but are still very easy to use. I’m reminded of this little illustration of why Apple and Google have been so successful. They developed very powerful technologies, which was not easy to do. ![](https://www.datocms-assets.com/56652/1666026254-img_4586.jpg?auto=format) But most importantly, they made it incredibly easy for anyone to use that technology. There is a great quote from Antoine de Saint-Exupéry that states: > Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away. > > — Antoine de Saint-Exupéry And that illustration concretizes that idea of perfection – quite perfectly. Today, we all take it for granted that we can just google a term and instantly get back answers or highly relevant links. However, solving the problem of searching the entire internet in milliseconds and returning the most relevant results, based on nothing more than a single text input, was anything but easy. Google’s founders, Larry Page and Sergey Brin, developed the solution while earning their PhDs in Library Sciences at Stanford University. You can still read their seminal and reasonably straightforward to understand *“whitepaper”* explaining how they solved the problem. The paper is called *“*[*The Anatomy of a Large-Scale Hypertextual Web Search Engine*](http://infolab.stanford.edu/~backrub/google.html)*”* and its opening sentence begins with *“In this paper, we present Google, a prototype of a large-scale search engine...”* Do you remember, if you’re old enough, how we all used to do our research by going to libraries, searching through their card catalogs, and relying on the Dewey Decimal System to find the publications we were looking for? The Internet though became a huge library itself – accessible through cyberspace. But we needed a system to organize it that was far more sophisticated and automated than the Dewey Decimal System, and Google was it. And for anyone who remembers that old system of finding information in a library, none can argue that Google is not just faster and more comprehensive, but also, far easier. ### What Makes Money Easy? Google’s *“whitepaper”* may remind you of another whitepaper, one that solved an arguably even more challenging problem than organizing the Internet. I’m referring of course to Satoshi Nakamoto’s now legendary, *“*[*Bitcoin: A Peer-to-Peer Electronic Cash System*](https://bitcoin.org/bitcoin.pdf)*”.* Google made searching for information in the era of the Internet easy. It relied on complicated and advanced algorithms and data structures to do this, but it hid all of that complexity, instead presenting everyone with a simple interface that basically said *“What are you looking for?”* With that in mind, let’s now ask ourselves what would make money as easy as googling in the era of the Internet? What are the one, two, or at most, three features that need to be exposed to users of the money? What would liberate us from the complexity and risk that we all must endure daily that is making it so hard even for the most intelligent, dedicated, and expert managers of money to find ease, stability, and safety in it? ### Features of Easy-to-Use-Money Let’s begin by answering the human interface issues. What essential features must easy-to-use money have? And just as importantly, let us ask also what features must be removed, for perfection to be achieved? ### What Stays In? It seems simple to answer these questions. There’s only three things you do with money that are essential: 1. *Receive it* 2. *Hold it* 3. *Send or Spend it* If we’re designing a user interface for money, we really only need two buttons then: send and receive, since doing nothing, i.e. pressing neither button, is the equivalent of holding it. And for the basics – that’s it. For basic everyday use, that’s really all you need. ### What Goes Out? For basic everyday use, everything else is not required. ![](https://www.datocms-assets.com/56652/1666015437-1.png?auto=format) ![](https://www.datocms-assets.com/56652/1666015451-2.png?auto=format) All of the examples above are merely bells and whistles at best, and dangerous gambles more often than not. They are not required for a money that’s used for the basic and essential purposes of money. ### Putting It Together That fun little cartoon earlier in the article comparing an image of an Apple or Google product with a wildly complicated product really hits home now when you see how complex everyone is making everything about money seem in this day and age. But at the surface, for our every day interactions with money, we want it to be reliable for spending, saving, and receiving and **THAT IS ALL**. Welcome to the [Bitcoin Standard](https://www.swanbitcoin.com/why-bitcoin-is-the-path-to-economic-stability/). ### Keeping the Necessary Complexity Behind the Scenes To be sure, creating something as complex as google’s search engine isn’t easy beneath the surface of the easy user interface. The same is true of Bitcoin. Technologically speaking, the most complex part of Bitcoin may actually be all the behind-the-scenes inventions that support the user experience where you don’t do anything at all – where you just sit there and hold it, all while Bitcoin works to prevent anyone from taking away your Bitcoins or making more than the pre-determined amount, which would dilute your share of the Bitcoin supply. There’s so much complex, behind-the-scenes stuff that Bitcoin does. It is the only known practical solution to a mathematical problem that was proven to be theoretically impossible to solve. You may have heard of the Byzantine Generals’ Problem, which also goes by the name of the *“double-spend problem”*. Satoshi Nakamoto’s practical solution to this theoretically impossible to solve problem is to apply the use of energy to arrive at a good enough state of consensus between these *“Byzantine Generals,”* or, in the case of Bitcoin, everyone who runs the Bitcoin node software, so that it’s extraordinarily expensive and difficult to break with consensus. In addition to that, Bitcoin is architected to be unstoppable. Bitcoin has operated flawlessly without any downtime for well over nine years and only had two short interruptions in its entire history, in its earliest days. Not even Google, Apple, Facebook, any bank, or VISA, can claim that level of reliable uptime. The same architecture that prevents it from going down also prevents anyone from barring anyone else from sending or receiving a transaction. And other elements of this architecture also ensures nobody can tamper with the records of which Bitcoins belong to which people. It’s all really so intricate and detailed that many people (myself included) spend years studying the extraordinary aspects of Bitcoin’s architecture and continue to find fascinating nuances that surprise and delight. Bitcoin is so unique that we find more similarities in many aspects of its design to life itself than to other man-made organizations or inventions. ### You Don't Have to Look Under the Hood Just like Google, you don’t have to know any of the above to use Bitcoin. It will work whether you study it or not, whether you understand it or not. You are advised to take certain precautions to ensure you don’t do something that will lead to a loss of your Bitcoins, and, if you have a lot of wealth stored in Bitcoin, it is advisable to take precautions that themselves may require some complexity. But outside of those specific tasks, Bitcoin remains a simple protocol that is incredibly straightforward to use compared to what is actually happening under the surface. ### Getting Easier (and Better, and More Secure, and More Valuable) Do you remember a time when searching Google required that you enter your entire search criteria? This was when Google didn’t anticipate what it was you were trying to type and suggest the entire phrase you have in mind after you only typed two or three characters. Man, were those ever tough times. I’m glad we never have to go back there. What about when the Internet was so slow that it took ten minutes to download a single image? Remember that? Or when you had to connect to it using your telephone line, and disconnect when you were done so you could use the phone? And this was because you didn’t have a mobile phone because they didn’t even exist! Back then the word *“text”* was just a noun. Those were the early days of the Internet. And it was nothing like the easy to use interfaces and tools we have today But it’s actually hard to remember such times even though they weren’t really all that long ago. We’re kind of at the same stage with Bitcoin now. There are constant improvements going on, especially on the ease-of-use front. Everything is getting faster, easier, and even cheaper. Most importantly, all of these advancements are happening without users having to do anything at all really. In part, it’s because the Internet itself has gotten so good, fast, cheap, and reliable. But in larger part, it’s because there’s so much incentive for so many smart people to work on making Bitcoin better and easier. Whether that incentive is to make money, or to help usher in an era of easy-to-use, universally inclusive money, or some combination of both, it is drawing tremendous talent and capital into Bitcoin. The Bitcoin of tomorrow will feel very different compared to the Bitcoin of today. It will be much easier. ### Easiness We Take for Granted Is the Future The easiest to use things are the those that just work without us thinking about them. We often don’t realize how hard something was to use until we have the easier alternative. Today we don’t think at all about how long it used to take to get a weather forecast: that we used to have to occupy the phone line to get a desktop computer to connect to the Internet, to find a website that we would then have to type our city’s name into, and then wait for a page to load. Instead, we now just lift our mobile phone up to our face, and maybe swipe up with our finger, and the rest is taken care of. Or maybe we simply speak aloud, *“Hey Siri/Google, what’s the weather?”* and a voice responds appropriately (usually at least). We aren’t at that level of invisible easiness yet with money, but we’re on our way, thanks to Bitcoin. The world in which you have to change your money from one currency to another depending on where you are or where your counterparty to a transaction is, or where your money’s purchasing power dissolves while you store it, or where you have to hire experts to make bets on complicated instruments just so that it will be worth the same or more later than what it is today, or where you have to wait days for cheques to clear, or pay high fees, or consume investment media – that world is going to fade away and be replaced by one with easy-to-use money. This is all thanks to Bitcoin and its extraordinary ecosystem of technologies, people, incentives, and the unstoppable human spirit of making things better and solving problems we find ourselves facing by turning them into opportunities. It’s a bright future. And it couldn’t come at a better time. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Plastic Money - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/plastic-money/ What the History of Visa Can Teach Us About Bitcoin --- **Dante Cook** · October 18, 2022 · Updated June 27, 2024 #### As money went from metal to paper, and then to digital form, it had to pass through plastic along the way. In 1968, four Vice Presidents of modest regional banks emerged from the Altamira Hotel on the hillside of insignificant Sausalito, California, unshaved and unshowered, with a set of beliefs, ideas, and principles that would change the world of money. ![](https://www.datocms-assets.com/56652/1666104731-unnamed.jpeg?auto=format) Sam Johnson, a boisterous Boston Irishman, Jack Dillon, an eclectic World War II veteran, Fred James, a smooth-talking southerner from Memphis, and Dee Hock, a poor boy from rural Utah, battled for four straight days on the question, *“if there were no constraints whatsoever, what would be the nature of the ideal organization to create the world’s premier system for the exchange of value?”* After working in the credit card and financial services industry for over 75 years between them, the four knew all too well that the system was broken. They needed to analyze the problems from first principles, viewing the issues *as they were*, *as they are,* *as they might become*, *as they ought to be.*  They realized that a bank's essential function was to custody, exchange, and loan money.  But what **was** money**?** Money was not a coin, currency, or credit card. Those were simply forms of money that facilitated its movement, but not its essential function. Money was something entirely different.  Money was ***whatever was customarily used as a measure of equivalent value and a medium of exchange.***  Coins now only contained trace amounts of precious metals. The paper and currency, on which checks and banknotes were printed had become as abundant as air itself and could be printed into oblivion. So, it wasn’t the metal or the paper that was valuable. If the physical objects contained no real economic value, then what did? They concluded that it was the **alphanumeric** data expressed on the objects themselves that were the expression of value. Money had become *guaranteed alphanumeric data* expressed in the currency symbol of one country or another, and therefore, banks were institutions for the custody, loan, and exchange of ***guaranteed alphanumeric data!***  With the proliferation of computers, chips, and communication systems, these men envisioned a future in which money would become nothing more than *digital* information, manipulated, and stored in computers and networks, which could travel at the speed of light at minuscule costs, anywhere across the world.  They concluded, *“Any institution that could move, manipulate, and guarantee digital data transmittance in the form of arranged energy impulses, twenty-four hours a day, seven days a week, around the globe, in a manner that individuals customarily used and relied upon as a measure of equivalent value and medium of exchange would become the largest value exchange network in the world.”* This was the big idea that would fuel their vision that led to the creation of VISA. VISA became the world’s first Trillion dollar value network. Today, Visa is supported by 15,100 financial institutions, facilitating over $13 trillion in annual payment volume,  across 3.8 billion cardholders, accepted  at 100 million merchant locations in over 200 countries. Bitcoiners should take note of the legacy, the history, the successes and the pitfalls of Visa. ### A Bold Vision of Cooperation Dee Hock, VISA’s founder was driven by deeply held beliefs that the stranglehold of two-hundred-year-old banking oligopolies would be shattered by VISA. Nation-state monopolies would no longer control the world through the issuance and control of currencies. It would matter little that traditional banks or governments were the settlers of last resort. What would matter instead, he believed, would be adeptness at handling and guaranteeing alphanumeric value data exchange. He turned out to be right. This vision birthed from a small hotel in Sausalito, by four regional Vice Presidents with no capital, power, or authority, stood in direct opposition to the cartel of the current powers like Citicorp, American Express, Bank of America, Chase Manhattan, and even the Federal Reserve. To describe the creation and success of VISA as *“improbable”* would be a gross misrepresentation. *“Practically impossible”* seems much more fitting. The story of VISA should give us hope. Many principles instilled into VISA should serve as a moral compass and guidepost for Bitcoin, while other small but critical mistakes should serve as a cautionary lessons to avoid.  This is the story of a small network of voluntary participants who overthrew global corporations’ power through a passionate belief in principled ideas. This is the story of VISA. This is the story of when Plastic became Money. ### The World Before VISA In 1950, the Diners Club launched the first modern credit card when a New York lawyer left his wallet at home during lunch with a client. This spurred the idea of customers charging meals to a cardboard card, and afterwards the restaurant later sending the bill to the Diners Club.  Buy now, pay later.  ![](https://www.datocms-assets.com/56652/1666104925-unnamed.png?auto=format) But this concept is not new. Humans began recording transactions on Cuneiform 5,000 years before as a means to account for debts and debtors. In the civil war, stamped credit coins allowed merchants to identify customer accounts by matching the numbers stamped on them with the accounts at the store. In the early 1900s, Western Union and American Express created travelers' cheques and cards which allowed consumers to conveniently and more securely travel and redeem money for single purposes around the world. After the Diners Club launched the first modern credit card in 1950, American Express pioneered the first plastic card in 1958, effectively ushering in a new form of money beyond coins and banknotes. The rise of credit cards instituted a new gold rush in financial services. Up until this point transactions primarily consisted of transactions between two parties – the buyer and the seller. Now the system needed to become infinitely more complex with the stakeholders ballooning to consumers (cardholders), merchant banks (receiving banks), issuing banks (card issuers), merchants (service providers), and network providers (3rd parties who helped facilitate transactions). All this *convenience* came with a lot of middlemen. In 1966 after the launch of BankAmericard and the American Card, the frenzy to claim market share in this new and unpredictable market was on. At the time, there were no magnetic strips on cards and no electronic card readers on point-of-sale systems. To perform a transaction, cards were placed inside of a manual imprinter and a sales draft stamp was pressed on top to create an impression. The devices were called *“zip zap”* machines. There were no electronic systems for authorizing transactions. Every piece of data for a transaction required keypunching each digit of information by hand into a four-by-six inch piece of cardboard via a typewriter at the end of each day, which was then fed into a computer the size of a refrigerator, and printed out into huge binders to be manually submitted to a  bank at the end of each day to be cleared and settled across banks. ![](https://www.datocms-assets.com/56652/1666105368-1.jpeg?auto=format) Criminals of course saw the bonanza and sensed an opportunity to use credit cards to purchase items, and would flee to different parts of the state or country before those transactions settled days later, without a trace. By 1968, the industry was completely out of control, and needed a better form to transact, with greater certainty, security, and at greater volume. To create the premier system for the exchange of value, there needed to be major improvements. Innovations like the electronic point of sale terminal, electronic descriptive billing, magnetic strip technology, debit cards, check guarantee systems, redundant data centers, automated teller systems, Moore’s law with the decrease in data center costs, the expansion of the internet, the investments in radio and telecommunication lines. The list goes on and on. While those were essential, they were inconsequential to the most important innovation that Dee Hock and VISA brought to this world. VISA was born out of a committee of unpaid, volunteer bank executives and employees who were Franchise members of the BankAmericard credit card program. The committee members would convene to discuss the issues surrounding the circus, which was the credit card market at the time. Virtually every one of them had full-time jobs during the day, and each worked on different issues surrounding legal, marketing, operations, technology, and financials by night time.  Dee Hock was the only primary full-time member. As a principled and strongly convicted man, he convinced his boss, Max Carlson, to let him work on this concept full-time because if not, he would not idly sit back and continue to watch the disarray that it was in. He knew that this value exchange network needed to be more than just technological innovation. There needed to be innovation in the *type* of organization it was to bring this audacious idea to life. These were a few of the relevant principles that Dee believed needed to be true for this unprecedentedly collaborative organization to work: **IT SHOULD TREAT ALL PARTICIPANTS EQUITABLY**  No participant should have an inherently greater or lesser ownership position or be able to negotiate, buy, or sell their position. Every participant should be able to trust that it would not be subordinate to any other and accept that it could not be superior.  **PARTICIPANTS SHOULD HAVE EQUITABLE RIGHTS AND OBLIGATIONS** It must not attempt to impose uniformity. Equity would require many types of participation with differing rights and obligations, but within each type, they should be common and everyone should have the right to change their type of participation. **IT SHOULD BE OPEN TO ALL QUALIFIED PARTICIPANTS** While it must be able to create standards for eligibility, once those standards are established, all interested participants meeting the standard should be able to join.  **AUTHORITY SHOULD BE EQUITABLE AND DISTRIBUTED WITHIN EACH GOVERNING ENTITY** Governing entities should be composed only of affected participants and constituted to equitably represent the interests of all relevant and affected parties. No interest should be able to dominate deliberations or control decisions, particularly management. **TO THE MAXIMUM DEGREE POSSIBLE, EVERYTHING SHOULD BE VOLUNTARY** Persuasion, not compulsion, should be fundamental. Participants should have perpetual rights of participation, but be free to leave at any time without penalty or sanction. They should have the right to utilize any commonly held properties, products, services, or assets equitably at any time for any reason connected with the purpose, but should not be compelled to do so. **IT SHOULD BE INFINITELY MALLEABLE, YET EXTREMELY DURABLE.**  It should be capable of constant, self-generated modification of form or function without sacrificing its essential nature or embodied principle.  ### Getting Going 3,000 banks needed to be persuaded to surrender their licenses for membership in the new organization, National BankAmericard Incorporated (NBI), a Delaware, nonstock, for-profit, member corporation, which would later take the name of VISA.  ![](https://www.datocms-assets.com/56652/1666106014-unnamed-1.png?auto=format) This would be done by simply signing a document consisting of a few paragraphs, and agreeing to abide by bylaws, operating procedures, and membership principles *“as they now exist or hereafter modified.”* Never before had banks surrendered their rights, power, or privilege to any organization except the government. Never had the most powerful organizations in the world lost a public battle to an intangible entity not driven by profit, but by ideals, vision, and belief in community, collective *“co-opetition”* (the blending of cooperation and competition), and choice.  But, NBI would have no authority to command and control. What needed to be done was discussed upon and agreed to by each member, and driven to completion through trust and consensus. In 1970, Dee Hock and the executive committee set forward with the largest democratic voting crusade in Corporate history. They presented their BIP (Bank Improvement Proposal 😉) and asked the issuing banks for their vote. To their surprise, after just a few days, commitments came pouring in and after a month, they exceeded their 90% threshold goal, which would set the NBI membership initiative in motion. After hours on the phone, working through the disagreements with each bank, Dee convinced 100% of banks to get onboard. And with that, the impossible happened. Within a decade VISA transformed the wild west of the credit card industry into the most profitable consumer service in the world, while simultaneously reducing fraud, corruption, and costs of payments for merchants around the world. The organization had no political, economic, social, or legal agenda. It was purely an open-sourced organization solely focused on unleashing the ingenuity and creativity of thousands of member entities who could freely innovate on the system when the need and opportunity arose. Actual employees of NBI or VISA, although poorly compensated, and not compensated with equity, built the prototype for the modern electronic point of sale systems in less than 90 days and less than $30,000. Truly remarkable.  Visa had changed the nature of money. It eliminated the need for physical cash, for obtaining different nation’s currencies when traveling, for having to place blind trust in the authenticity and creditworthiness of a payment, and many other financial obstacles and frictions. It had achieved cooperation between countless competitive entities with no history of cooperating with each other. It was a remarkable achievement which grew and endured for decades under these founding principles. ### VISA's Ideals Abandoned. What happened? And why? However, five decades later, for all of its accomplishments, VISA had fallen short of its intended purposes and ideals in Dee Hock’s eyes. He lamented this, saying “by the standards of what VISA might have become and what it ought to be, it would be a lie to deny a strong sense of failure.” What happened? In the inception of NBI, a *“Proof-of -stake”* mechanism was slipped into its founding documents which would eventually allow those with the most revenue to begin slightly manipulating the system and using their position and power to their advantage. *Each member would have one vote for every thousand dollars of sales volume transacted by their BankAmericard customers in the preceding year. Service fees would be one-quarter of one percent of that same sales volume. A single at-large director would be solely elected by banks having less than a minimal percent of the volume. Any bank having more than 15 percent of the sales volume of the system could appoint a director.* As transaction volumes in the system grew, the most successful members began banding together and insisting they deserved greater benefits and were entitled to lower fees, and greater privileges. This case study should serve as a stark reminder that Power corrupts all and may be the greatest addiction there is. Bank of America, which was the leading and founding bank of the VISA network, was the chief antagonist among the big issuing banks that used their Sales Volume within the network to justify greater privileges, reduced fees, and eventually, greater significance within the network overall. What began as a decentralized, equal rights and opportunity membership organization has slowly shifted to a top-down command and control system that has recentralized power, wealth, and rights to those with the greatest power. Early VISA staff meetings and board meetings were openly held forums in modest circular style conference rooms, filled with wives and family members of key officials, hundreds of Directors from dozens of countries and translated into four languages, which represented the true democratic ethos of the network. Slowly, the powers that were, demanded privacy, secrecy, in closed conference rooms, in an effort to discuss confidential matters, which might sway the network and network participants. Against Dee’s natural inclination, he slowly began to relent and turn from the original ideals VISA was founded upon. The decentralized, modest, volunteer organization soon began to lease permanent office space, and look more like the corporations it despised rather than the ambitious network it initially sought to personify.  Proof of Stake is always deceptively and insidiously centralizing. VISA is no longer the chaordic (chaos-yet-ordered) and egalitarian entity it was founded as. It is now a for profit, quasi-governmental, quasi-political, publicly traded company that reorganized to this structure in 2006, after seeing the success of Mastercard’s IPO.  > In spite of my pride in all that VISA demonstrated about the power of a chaordic concept of organization and all the things it has accomplished, I do not believe that VISA is a model to emulate. It is no more than an archetype to study, learn from, and improve upon. > > — Dee Hock ### What can we learn from VISA as a case study?  With Bitcoin, like VISA, through a whitepaper, open-source code, and many members autonomously and collaboratively volunteering themselves to a cause, something extraordinary and unprecedented is underway. It is a set of beliefs and principles that have established and are growing the world’s first purely peer-to-peer version of electronic cash, allowing payments to be sent directly from one party to another without going through a financial institution. It aims to become the world’s premier system for the exchange of value. Bitcoin’s network is a physical conglomeration of autonomous people, energy, transactions, computers, and code, all working seamlessly through consensus, community, competition, and cooperation. But more than that, it is a belief system enforced via code. One that is open and freely available for all who choose to participate in its current or modified state. A system that was created to solve the glaring and obvious problems created by our global banking elite that plague us today. A system that was *born* from the creativity and ingenuity of ordinary people and not *imposed* by people through coercion or manipulation. The parallels are striking. The implications of failure are much more massive now than they ever were in 1968. The credit created bubble that began with the first credit card at the Diners Club in 1950 has set in motion a global black hole of debt around the world, whose energy sucks the life out of the middle-class and global poor across an event horizon of no return, back to the governments and wealthy on the other side.  In the preindustrial age, our economy was driven by hand-crafting. Men and women, utilizing muscle power to create economic flourishing. In the industrial age, we replaced hand-crafting with machine crafting. Removing the need for human labor, ingenuity, and creativity.  We are now squarely in the information age. Where economic flourishing is driven by *“mind-making”*. Software is the tool by which we shape information, which can be thought of as thoughtware, or a product of our thoughts, with computers acting as our employees, and we as their handlers. Dee Hock believed that the greatest antidote to the mass manipulation of minds through software was to create chaordic organizations, like his original intent for VISA: Organizations that can self-organize and self-govern in ways characteristic of nature itself, naturally blending chaos and order which allows our world to heal itself from the desire for certainty and control. Dee believed chaordic organizations are capable of restoring harmony between themselves, the environment, and the human spirit – able to withstand the enormous increase in societal diversity and complexity brought about by the explosion of the capacity to receive, utilize, store, transform and transmit information.  They would be able to more equitably distribute power and wealth.  They would be able to seek the health and well-being of all people, and the biosphere.  They would be able to resolve differences without recourse to economic, psychological, or physical violence.  I would like to think Bitcoin is the Chaordic code, with the principles and values that he always wanted VISA to be. ### Epilogue: What can we also learn from Dee? In 1984, at the height of his success, wealth, and personal fame, Dee left VISA to retreat to the woods of his youth, to his ranch in California. He was haunted by an inner voice telling him *“Business, power, and money are not what your life is about. Founding VISA and being its chief executive officer is something you needed to do but it was only preparatory.”* He left on a journey to explore new possibilities with family, nature, books, isolation, and privacy. After 9 years of becoming one with his tractor, and living off the land, he committed his life to teaching, giving, and sharing the concept of the chaordic organization to leaders around the world. He sought to only answer three questions: - Why are organizations, everywhere, political, commercial, and social, increasingly unable to manage their affairs?  - Why are individuals, everywhere, increasingly in conflict and alienated from the organizations of which they are part?  - Why are society and the biosphere increasingly in disarray?  We can all sense that something is wrong in the world, and something is fundamentally broken at the core of nearly all of our institutions. Like Dee Hock orSatoshi Nakamoto, will we have the courage to confront these challenges and dedicate ourselves to something bigger, more meaningful, and more important than ourselves? Money has changed shape from Cuneiform scripts to stamped coins, to travelers' cheques, cardboard cards, to plastic cards, cards with magnetic strips, to digital characters on a screen. Visa sought to do something more significant than simply change the form of money. It sought to change the mechanism to bring it about. It’s because of this, that Bitcoin changes everything about our money, and why it is our greatest hope.  Thank you Dee.  Dee Hock (March 21, 1929 – July 16, 2022) ![](https://www.datocms-assets.com/56652/1666106323-unnamed-2.png?auto=format) ### Dante Cook Dante is Managing Director of Swan Private. He is the host of The Bitcoin Athlete & Proof of Work Podcast. # The Great Miner Squeeze of 2022 - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/the-great-miner-squeeze-of-2022/ Bitcoin mining is truly a game of survival of the fittest, and right now, the creme is being separated from the crop. By the end of this squeeze, Bitcoin’s security layer will be more efficient than ever before. --- **Sam Callahan** · October 20, 2022 · Updated June 27, 2024 ### The Vicious Cyclical Nature of Bitcoin Mining At the end of 2021, CoinDesk published its first-ever year-end survey of Bitcoin miners and asked them for their predictions for 2022. When you read the predictions now, it is clear that the mining industry was caught up in the euphoria of the bull market. Most of the predictions involved a continuation of the good times of 2021, and many mining experts expected the hash rate to eclipse 300 EH/s as miners expanded their operations and increased the efficiency of their machines by upgrading to the latest generation of mining machines. It’s not hard to see why these miners were so exuberant in 2021. It was one of the best years ever to be a Bitcoin miner. When the price of Bitcoin was hitting historic heights, some miners’ profit margins were estimated to be as high as ~90%! Amanda Fabiano, the Head of Mining at Galaxy Digital, was cited as describing the mining scene in 2021 as a *“gold rush period”* due to the high profitability of these mining operations.  As the price of Bitcoin soared, miners benefited handsomely. As profits rolled in, more and more of these mining companies went public and made plans to expand their operations aggressively. At the start of 2021, there were only two Bitcoin mining companies listed on the Nasdaq. By the end of 2021, sixteen Bitcoin mining companies were listed on the Nasdaq.  This gave these publicly-traded miners access to capital that they had not been privy to previously. The result was a lot of these miners hoarded their mined Bitcoin and borrowed money to expand their operations and purchase more mining equipment at the height of the bull market. Some of these loans were even financed with the miners’ existing mining machines and infrastructure put up as collateral. But then 2022 came around, and these miners learned how vicious and fast this market could pivot. Capital has completely dried up since the price of Bitcoin has fallen. ![](https://www.datocms-assets.com/56652/1666617590-total-equity-debt-capital.svg) Due to a combination of the declining Bitcoin price, continued increases in network difficulty, higher electricity costs, supply chain disruptions, and worsened mining economic conditions, these miners’ profit margins have been compressed from all angles this year.  Long gone are the days of yesteryear when miners could easily find lenders and raise capital. Nowadays, mining companies are finding it much more difficult to raise cash. This comes at a time when these miners are becoming cash-constrained and find themselves with significant operating expenses and debt payments during a time of reduced cash flow. This puts these mining companies in precarious financial positions. As such, miners are struggling to keep the lights on in this challenging environment. Many are desperately trying to raise cash to service their debt obligations and cover their operating expenses by selling their Bitcoin, selling their machines, or raising more capital (if they can find it). Signposts of the predicament miners find themselves in today have been popping up in the headlines. A couple of weeks ago, Compute North, one of the largest operators of mining data centers, filed for bankruptcy and revealed that they owe as much as $500 million to at least 200 creditors. In more evidence of miner stress, Argo Blockchain announced strategic actions to strengthen the company’s balance sheet by selling 3,400 machines and raising $27 million via equity financing. Lastly, Greenidge Generation recently announced the sale of millions of Class A shares to raise approximately $22.8 million in cash. On top of that, the Greenidge Generation CEO resigned, and their expansion in Texas has been halted.  There is no way to sugarcoat it -- Bitcoin miners have been put through the wringer in 2022. There have, without a doubt, been countless smaller or private mining companies that have quietly gone under this year as their operations became unprofitable. But is the worst of it over? Are there reasons to feel optimistic about the future for miners?  Let’s dig into the various major inputs that impact miner profitability and look at some of the possible headwinds that miners face for the rest of the year.  ### High Hash Rate is Making Life Harder for Miners All of this comes down to the fact that Bitcoin mining is a highly cyclical industry. During bull markets, miners invest in new mining infrastructure that typically takes months before they become fully operational. This dynamic leads the hash rate to lag the price of Bitcoin. Much of the hash rate coming online today is coming from public miners plugging in machines as a result of decisions that were made 8-12 months ago. These miners spent funds and ordered machines but, in part because of supply chain disruptions, this hash rate didn’t start to come online until the summer of 2022. Another possible contributor to the recent rise in Bitcoin's hash rate could be a result of Ethereum's recent merge to Proof of Stake. Some industry analysts have proposed that Ethereum GPU mining farms are selling their now-useless Ethereum GPUs, and using the proceeds to purchase cheap Bitcoin ASIC machines on secondary marketplaces. They already have the mining facilities built, and now these mining farms have newly available rack space, so why not buy some ASICs and mine some Bitcoin? As the hash rate has soared from these developments, the price of Bitcoin has dropped precipitously. The price of Bitcoin is currently down -59% YTD at the time of writing. This creates a situation where the price of the commodity that miners are producing has fallen off a cliff while, at the same time, the hash rate is increasing, a *“double-whammy”* for these cash-strapped miners.  The Bitcoin network hash rate has recently hit a new all-time high of 258 Eh/s. ![](https://www.datocms-assets.com/56652/1666617613-bitcoin-mean-hash-rate-7d-moving-average.svg) This means that Bitcoin’s security has never been stronger than it is today.  Today, it requires more hash than ever before for a bad actor to perform a successful 51% attack. More energy than ever before, more specialized ASIC machines than ever before, and it still takes a lot of capital and fixed investment, operating expenses, etc. On the flip side, a higher hash rate means that these miners’ profit margins are being squeezed further. The big consequence of all this new hash rate coming online is it increases the difficulty for these miners to mine a block. The higher the hash rate, the higher the difficulty, which impacts miners’ profitability because it makes it more difficult to mine a block and collect the block reward.  The difficulty adjusts roughly every 2 weeks in response to the rise and fall in hash rate and average block times. Today, the difficulty is sitting near an all-time high, and the recent difficulty adjustment on Monday was +13.55%, the largest increase since May 2021 and one of the largest single difficulty adjustments of the last several years.   ![](https://www.datocms-assets.com/56652/1666617626-bitcoin-mining-difficulty-7d-moving-average.svg) This sharp increase in hash rate and difficulty can also be attributed to developments like new high-efficiency machines such as Bitmain’s S19XP finally getting delivered and coming online, cooler temperatures that improve the uptimes of the machines, as well as a recent decline in electricity costs in the U.S allowing less efficient machines to again be economical to plug back in. For the miners though, it doesn’t matter much what the cause is, the only thing that matters is it just got a whole lot harder to mine a block. The cost of power is one of the most important inputs that impact a mining operation's profitability, and electricity prices can vary across different geographic regions. The good news for miners is the average price of electricity in the U.S. has started to level off, the bad news is the price is still up massively over the last couple of years. The average price of electricity per kWh in the U.S. currently sits at $0.167 per kWh. This is up 17.6% over the last 12 months. ![](https://www.datocms-assets.com/56652/1666617644-average-price-electricity-per-kilowatt-hour.svg) Energy prices have been steadily rising, and this has been a huge headwind for the mining industry as a whole.  Another input that fits into the equation for miner profitability, albeit a smaller one, is the average transaction fee per block. The block subsidy is not the only portion of the block reward, transaction fees also play a role. Therefore, transaction fees impact miner profitability, although it only makes up a small percentage of the block reward today. When you look at the average transaction fees per block today, you can see how it has been in decline since Q2 of 2021. The average transaction fee now sits at just $0.80 over the last 2016 blocks.  ![](https://www.datocms-assets.com/56652/1666617656-average-transaction-fees-on-the-decline.svg) All of these factors combined, the rising difficulty, the falling Bitcoin price, the rising electricity price, and the falling average transaction fee per block, have negatively affected miners’ revenues and, thus, their profits.  Hashprice is a good way to estimate miners’ revenues based on the price of Bitcoin and the difficulty. It is a measurement of a miner’s daily revenue per TH/s of hash rate. Below one can observe how these miners’ revenues have plummeted over the course of the last year. Miner revenue, as measured by hashprice, is now down -79% in the last 12 months and currently sits near all-time lows. ![](https://www.datocms-assets.com/56652/1666617678-miner-revenues-plummeting-in-2022.svg) This is especially important when you consider that a lot of these miners have fixed costs that become tricky to afford when their revenues can fluctuate wildly with the volatile price of Bitcoin. If these reduced mining economics sustain themselves much longer, then miners will need to somehow figure out ways to continue to raise cash to survive this bear market. ### How Are Miners Raising Cash? We talked about how many of these miners gorged on debt when life was good in the raging bull market. Fast forward to today, and their revenues are near all-time lows, and they still have debt obligations and CapEx payments to make. Companies that overextended themselves by leveraging their Bitcoin stockpiles or their mining machines to finance new machines and equipment, now find themselves in desperate need of cash. One way they can raise cash is through equity financing. This is when a company sells shares to raise cash. In other words, they effectively sell ownership of the company in return for cash to service short-term needs. This is what both Argo Blockchain and Greenridge Generation recently did. The problem is that these public miners’ share prices have dropped heavily in 2022. Without getting into specific companies, below is the stock performance of 16 public mining companies to give you a sense of the general trend of how they have fared over the last 12 months. In short, it’s been a bloodbath. The average performance of these publically-listed Bitcoin mining companies is -86.8% YoY.  ![](https://www.datocms-assets.com/56652/1666617699-the-mining-stock-bloodbath.svg) The moral of the story, these companies cannot raise the same amount of cash through equity financing that they once could when their share prices were much higher during the bull market. Another way for the miners to raise cash is to sell their machines and equipment. This is also what Argo Blockchain recently announced when they sold 3,400 machines. The issue here is that the prices of these ASIC machines have also crashed over the last year. Below is a chart from Luxor that separates the ASIC prices by efficiency. The three efficiency tiers are 1) those over 68 J/TH which are the older generation models like the popular Antminer S9, 2) those between 38-to-68 J/TH, which includes mid-generation models like the Antminer S17 and MicroBT’s Whatsminer M20, and 3) the most efficient models under 38 J/TH tier, which includes the Antminer S19 and Whatsminer M30s. The prices of the machines that constitute the three efficiency tiers are all down >-65% over the last year. ![](https://www.datocms-assets.com/56652/1666617729-yoy-performance.svg) It’s logical to expect that the machines that make up the less efficient tiers will continue to fall in price as the difficulty continues to rise and new, more efficient machines come online, making less efficient machines no longer profitable to run. Due to these ASIC prices coming down rapidly this year, mining companies are now taking a loss when they sell them to raise cash on the secondary market. On top of that, some of the loans these miners took out with lenders were ASIC-backed loans. These loans are now at risk of being undercollateralized at the current market price of the ASIC machines. Due to all of these dynamics, there has been a lot of debt restructuring as lenders and miners work together and adjust the details of loans to reflect the changed market environment.  The miners can also try to borrow more money from lenders to help them get through this bear market. However, from talking with several individuals who work directly in the mining industry, the appetite for loaning money to these overleveraged miners has been minimal at best.  The last way miners can raise cash is, of course, by selling the Bitcoin in their treasury and the bitcoin they produce through their mining operations. June was the peak in miner treasury sales observed in the financial statements of publicly-traded Bitcoin miners. July and August saw elevated levels of treasury BTC sales, but nowhere near the peak observed in June.  The following chart shows the amount of Bitcoin being transferred directly from known mining addresses to several of the largest exchanges. You can observe how this peaked in June and then dropped back down, which coincides with the treasury sales from public miners noted in their financial statements.  ![](https://www.datocms-assets.com/56652/1666289942-btc-transfer-volume-from-miners-to-all-exchanges-2x.png?auto=format) It is important to note that there are some limitations to this data. First, there is an assumption being made that a miner sending Bitcoin to an exchange automatically means that they are selling it for fiat, and second, there are other avenues in which miners could be selling their Bitcoin that are not picked up by this metric. With those limitations in mind, I still find it useful as a broad insight into the on-chain behavior of these miners. One can clearly see a general trend where transfer volume picked up from miners to exchanges at a time when miners were confirmed to be selling BTC, as documented in their SEC filings. This on-chain behavior hints that maybe the worst of the miner selling is behind us. However, if these poor miner economics sustain themselves, there could be more spikes in BTC sales towards the end of the year. With that being said, it should be noted that a lot of the selling that took place in June from public miners is thought to be from public miners shoring up their balance sheets, covering their costs, and paying down their debts. Compared to Q2 2022, miners are in a slightly better financial position today, all things considered. While no one can know for sure if the worst of miner capitulation is ahead or behind, one metric that has served as a reliable indicator of miner capitulation in previous bear markets is the Hash Ribbon Indicator. This metric takes the 30-day and 60-day moving averages of Bitcoin’s hash rate. When the 30-day moving average crosses above the 60-day moving average, historically, this has accurately marked the end of periods of miner capitulation. One can think of this metric as a bullish signal that signals a turning point where miners are starting to plug back in after a period when many miners have been unplugging their machines amid the bear market.  While the hash ribbon indicator is not perfect, it can illustrate points in Bitcoin’s history where selling pressure starts to grind to a halt as miners finish capitulating. If you look closely below, this indicator has flashed (marked in purple) before several major upward price movements in the past.  ![](https://www.datocms-assets.com/56652/1666617783-bitcoin-hash-ribbon-1.svg) One explanation for why this has accurately marked price bottoms in the past is that miners are some of the most bullish Bitcoiners out there. They have invested all their time and money into building physical infrastructure that sometimes takes years to become fully functional and start producing bitcoin. These market players have proof of work and have real conviction in Bitcoin’s future. Typically, these hardcore Bitcoiners are some of the last to capitulate in a bear market after all the speculators and investors have already sold. As a result, this indicator has been a reliable indicator of bear market bottoms historically. If we zoom in on 2022, On August 19th, the Hash Ribbon Indicator flashed for the third time this year, when the 30-day moving average moved above the 60-day moving average. ![](https://www.datocms-assets.com/56652/1666617802-bitcoin-hash-ribbon-2.svg) Notice the difference between the first two times and the most recent flash. You can observe how in the prior two instances, the 30-day failed to stay above the 60-day for more than a few days, indicating that miners were still capitulating. But since this signal last flashed in mid-August, the 30-day moving average has been able to sustain itself above the 60-day moving average. This hints that Bitcoin’s hash rate is starting to recover, that the inefficient mining operations have given up, and that now efficient miners still online have stopped capitulating for the time being. This has historically been a bullish indicator.  ### Conclusion When you combine all this data together, you start to get the picture. This year has been a very challenging year for miners. It has been one big hangover after the party of 2021.  Many of these miners aggressively moved to built-out their operations and took on too much debt to finance their expansions. This put them in a precarious position when the price of Bitcoin fell dramatically with the broader markets. On top of that, their power costs broadly increased as the price of energy spiked across the world amidst rising geopolitical tensions. Meanwhile, hash rate and difficulty keep hitting new all-time highs, further squeezing these miners’ profit margins.  They are now scrambling to raise cash to avoid bankruptcy and are finding it more difficult than when the easy money was flowing in the low-rate environment of 2021. With ASIC prices falling, operating costs to pay, and debt payments to make, many find themselves in quite the pinch. If these mining economics don't improve soon or continue to deteriorate, then we should expect to see miners continue to sell their Bitcoin, sell their equipment, and raise cash in any way they can to avoid bankruptcy. This would continue to be a headwind to the price of Bitcoin.  However, the on-chain data is showing some green shoots that perhaps the worst is over. From the miner selling behavior and the Hash Ribbon indicator, it can be inferred that some of the most inefficient miners have closed shop and that selling from miners is exhausted for the time being. A decent portion of the Bitcoin held in publicly-traded miner treasuries has been sold, and some of the debt held by these public miners have been restructured or paid down compared to earlier in the year. All things considered, the public miners that have survived are in a slightly better position financially than they were in the Q2 of this year.   The one bright side to all this is that only the strongest, most efficient miners will survive. Only the very best operators, with the very best balance sheets, and the most efficient facilities, will live to tell the tale of how they made it through the Great Miner Squeeze of 2022. All the inefficient mining operations with high operating costs and poor balance sheets will either be wiped out, or acquired by other miners. Bitcoin mining is truly a game of survival of the fittest, and right now, the creme is being separated from the crop. By the end of this squeeze, Bitcoin’s security layer will be more efficient than ever before.  ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Proof-of-Work vs. Proof-of-Stake - Swan Bitcoin URL: https://www.swanbitcoin.com/education/proof-of-work-vs-proof-of-stake/ Proof of Work, at its heart, is the removal of trust from the system of money, and replacing it with something that can’t be faked: real work. --- **Tomer Strolight** · October 31, 2022 · Updated June 27, 2024 The claim that proof of stake is in any way at all an improvement over *"Proof-of-Work"* misses the entire point of what Bitcoin was created to do. Bitcoin pioneered an entirely new way of governing a system of money. It is called *“Proof-of-Work.”* Lately, the press and ‘crypto’ communities have made claims that they have a better alternative called *“Proof-of-Stake.”* We’ll be exploring what proof-of-work actually does in as easy a manner as we possibly can. But let’s begin by getting an explanation of proof-of-stake out of the way, because it is actually very easy to explain, and has in fact been around, in one way or another, for thousands of years. ### What Exactly is Proof of Stake? *“Hey there, I’d like to propose a system for governing all of finance all over the world,”* says the young, nerdy, and wealthy crypto-influencer. *“It’s called ‘proof-of-stake. Here’s how it works:* *“First, the rich get richer. To get richer they don’t have to do anything more than demonstrate that they’re already rich. This is because all transactions in this system must be approved by the wealthy, and they get to charge fees to anyone who wants to use the system.* *“Also, the rich get to make all the rules. If enough of them get together, they can outright burn or confiscate the wealth of the less rich. But they won’t bother to do this because they can change the rules to enrich themselves at anytime anyways.* *“In matters of voting, only the rich get to vote, and the richer they are, the more votes they get.”* *“Also, the technology to do this is far too complicated to explain to you. You simply wouldn’t understand it. So if you are rich and want to participate, but are not technically saavy, then send your riches to specialists who will attest that you’re rich on your behalf. You have to trust them, but why shouldn’t you?* *“Now, this may not sound completely perfect to you, but I think it will use less energy than a system where anyone who does good, honest, reliable, and verifiable work gets paid. So whether you’re rich or poor, whether you stand to make money or not, it doesn’t matter, because using less energy trumps any deficiencies you might complain about.* *“By the way, in this system, if you start off very rich, like me – then you get to stay rich.”* When you strip away all the technobabble, the jargon, and the low-energy nonsense of the advocates of *“Proof-of-Stake,”* the above is what you’re left with. Stake is just an indirect way of saying how much money someone has while trying to conceal that being wealthy is all there is to the system so as to avoid calling the protocol *“Proof-of-being-very-rich-already.”* When distilled to an honest summary, the critiques of Bitcoin by [Proof-of-Stake](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/) advocates simply boil down to the following: *“Bitcoin was invented to stop the already rich and powerful from exercising complete control over a financial system in which everyone has to trust elites who repeatedly betray that trust. By using Proof-of-Work, Bitcoin actually achieved that! We, the Proof-of-Stake advocates, propose abandoning Bitcoin and instead making ourselves the elites with complete control, where you will now have to trust us.”* Bitcoin’s Proof-of-Work has actually been so effective at preventing would-be elites from taking it over, that despite all their wealth and power, **none** have been able to take it over or even change anything about it **at all**. So instead, they’re trying to get the world to abandon Proof-of-Work. And, with the exception of Bitcoin, they’ve succeeded. Let’s now delve into what Proof-of-Work actually is, and why it’s an essential part of Bitcoin that cannot be replaced with anything else. We’ll do it here by directly taking on the criticisms that the doubters and skeptics frequently offer. **Claim:** "Proof of Work wastes energy." **Truth:** Proof of Work is an incredibly efficient use of energy – it only uses the most efficient technologies available and uses energy as efficiently as possible. ### Why Waste Energy When You Can Use It Efficiently? If you think for a minute about the claim that Bitcoin wastes energy, and even give it the benefit of the doubt as being true, you might then be inclined to ask *“Maybe there’s a huge business opportunity in doing ‘proof-of-work’, whatever it may be, efficiently rather than wastefully?”* You might ask, *“Why are the people who are doing this proof-of-work thing doing it in a wasteful manner in the first place?”* You might think, *“That doesn’t actually make any sense. People would do it efficiently to make higher profit, putting the inefficient operators out of business.”* And, if you investigated both the history and the present state of proof-of-work mining of Bitcoin, you’d discover that this dynamic is in fact unfolding. Bitcoin mining is currently being done with the most efficiency that our current understanding of both computing technology and of energy-generating technology allows! ### The Most Efficient Chip in the World Bitcoin mining uses the most energy-efficient computing technology that exists for doing proof-of-work computing – microprocessors called ASICs. ASIC stands for application-specific-integrated-circuit. These are microchips that can only do one thing, but they do it with near-perfect efficiency, wasting no circuits or energy doing anything else at all. That’s the trade-off. They can’t do anything else, but they’re very efficient at what they do. The alternative to ASICs are general-purpose computer chips like the ones in your computer, phone, or tablet (CPUs), or chips that sacrifice some general computing for somewhat more specialized improvements in speed and energy, like graphics processing chips (GPUs). GPUs are more limited in what they can do than CPUs are, but they can do a great deal more of what it is that they do much more quickly and energy-efficiently than CPUs. But way out at the extreme end of this spectrum are Bitcoin Proof-of-Work ASICs: chips that can actually only do one thing. And that one thing is to run the one and only, very specific, proof-of-work algorithm that Bitcoin relies on. (It’s called double-SHA256, if you’re curious.) In fact, ASICs are so efficient at doing this, and proof-of-work is such a competitive process (a little more on that later), that nobody can make any money running proof-of-work on the less efficient types of processors like GPUs or CPUs. Because of this, nearly nobody even tries. And that means that Proof-of-Work only runs on the most efficient computing technology that is known to us today. Hardly wasteful. ### Accessing the Most Efficient Energy in the World Once again, when faced with the claim that Bitcoin is wasteful, one must ask, *“why use inefficient, wasteful sources of energy?”* And once again, in investigating such a claim, one would discover that this is in fact not the case. Those involved in [Bitcoin mining](https://www.swanbitcoin.com/the-great-miner-squeeze-of-2022/) understand energy production and pursue the least costly, most efficient forms of energy. One great example of this is that, until China’s ban on Bitcoin mining last year (and likely still so, but just covertly outside the watchful eye of China’s authorities), Bitcoin miners would physically move their equipment with the change of the seasons – locating where efficient, abundant sources of hydroelectric power operated during the rainy seasons, and moving to other more efficient locations in dry seasons when those locations became more efficient than those now-dry hydroelectric facilities. Energy production, in particular electricity production, is a very complicated industry. Most electricity is generated in very large industrial facilities – called powerplants – that take many years to build and stay in operation for many decades. The overwhelming majority of the energy produced comes from plants that use some kind of fuel: either fossil fuels such as coal, gas, and oil, or the nuclear fission fuel, uranium. Solar and wind, the two technologies which do not require fuel, provide only a small fraction of the world’s energy, and are dependent, respectively, on the sun shining and the wind blowing. Fuel, on the other hand, can generally be consumed as and when it is needed. Below you can see how most of the electricity produced in the world today comes from fuels, not renewables. ![](https://www.datocms-assets.com/56652/1667305632-electricity-production-by-source-world.svg) Powerplants, however, come with a catch. Powerplants often need to operate at a certain range of output to be efficient. You can’t take a one-gigawatt plant and operate it at one megawatt (1/1000th of its capacity) efficiently – or even at all. That would be like operating your car’s engine, which peaks at about 6,000 RPM at 6 RPM – It can, at a minimum, operate at about 600RPM. And a powerplant is really just a very big engine that, instead of turning the wheels of your car, turns magnets wrapped in electric coils to generate electricity. All things considered, typically, the bigger the plant, the more efficient it is at its optimal generating capacity, which is usually near its maximum output. But also, importantly, a powerplant cannot operate at all below its minimum capacity. Because of this, if there’s no demand for its electricity within the geographic area that its power can be transmitted (500 miles is the furthest wires can carry electricity), it must reduce its production or it will overload the local electric grid and cause outages. Bitcoin miners that operate at an industrial scale are highly incentivized to find conditions where they can consume energy whose production increases the efficiency of the plants providing it. When plants are already at full capacity, the price they charge for energy is extremely high, because the demand exceeds their ability to supply it. No sane bitcoin miner would want to locate there. But where demand falls below optimal power generation, both miners and plant operators find incentive to work together – in fact, all consumers of electricity from a plant operating at suboptimal levels benefit from bitcoin miners moving in and raising the plant’s production to its most efficient levels, thereby lowering the average cost for everyone! The special thing about Bitcoin Proof of Work mining that no other consumer of energy in the world can do as well is that it is a service that can take place anywhere in the world, at any time. The energy to power the lights in your home must be generated when you want the lights to be on and within 500 miles of it. But the energy to confirm and secure the next block of Bitcoin transactions can be generated in Antarctica and Bitcoin wouldn’t care. So Bitcoin mining can be added and removed from areas where efficiency is suboptimal, and even turned on and off as needed to keep plants operating at peak efficiency. Hardly a waste. ### Usefully Using Energy That Would Otherwise Actually Be Wasted Bitcoin mining doesn’t just improve the efficiency of existing plants with existing customers, it can (and does) also consume energy that would otherwise be produced and wasted on doing nothing at all. This is especially true for the intermittent sources of energy, wind and solar, but also for fuel-based technologies like nuclear that must operate at rather high minimum production levels. You have probably already figured this out for yourself at this point. The demand for lighting is not as high when the sun is shining brightly, but solar cells produce more power when it’s light out than when it’s dark outside. How is this imbalance in production and demand managed? Well, a lot of power is simply wasted. It’s gets produced regardless of demand. That’s unavoidable. However, it produces zero revenue for the plant operator because there is no buyer of that power. But with a Bitcoin mining firm in the neighborhood, there can now be a customer for that wasted energy. In fact, that may make the difference between it being economically viable to build more capacity or not. Moreover, there’s a lot of energy that can be produced but isn’t because it’s source is too far away from any customer. This is where Bitcoin miners can be useful too. Bitcoin miners are mobile and can move to any location where the energy is being produced. They don’t care if there’s people nearby that need lighting in the dark or not. A great example of this was covered in last month’s article in Insight, “Green Money,” by Dennis Porter. It spoke of how Bitcoin mining could actually pay for carbon-negative activities like burning leaking methane from abandoned oil wells all over North America which would reduce greenhouse effects of those leaks by orders of magnitude. **Claim:** "Proof of Work Doesn't Do Anything Useful." **Truth:** Proof of Work Provides Many Valuable Benefits that Nothing Before it, or Since, Can Provide. Proof of Work uses energy for three intertwined purposes, none of which are [useless](https://www.swanbitcoin.com/why-bitcoin-is-the-path-to-economic-stability/). First, it uses energy to ensure that everyone knows and agrees on what the true state of the system is, without any person, group, government, or institution having authority over this conclusion. Second, it uses energy to protect the system against anyone’s attempts to alter its records. Finally, it uses energy to keep the system operating at a stable and predictable rate (both the progress of its processing of records and of its monetary issuance). It does this while making sure NOBODY is in charge of the system so that nobody needs to be trusted not to change it. With the rules of Proof of Work in place, participants in the free market decide for themselves if it is worth it for them to spend their money and energy on the rewards of doing the work required. Proof of work pays people to do real work, and to prove that they’ve done it. That’s why it’s called Proof of Work. If it’s profitable to do the work, because they’ve got sufficiently efficient equipment and inexpensive enough energy to put into it, then a miner will do it. If it’s unprofitable, they won’t. If someone wants to try to take over a Proof of Work system, they have to be able and willing to do more work than the work of all the other people in the system combined – work that comes at a **real** cost. That’s called a 51% attack. And to pull it off isn’t easy – not in Bitcoin at least. The attacker has to do a tremendous amount of real-world work! Work. Not sitting around on their ass and intellectualizing on why doing work is a waste of energy – they gotta do more work than all the other workers combined. Even if they are tremendously rich, they will have to consume their riches by paying for the specialized equipment and the energy required to attack Bitcoin’s proof of work mechanism. They can’t just show that they’re richer than everybody else and take over the system and get paid for that (which they can do in proof of stake). Not surprisingly then, the weak, lazy, misinformed, and/or corrupt architects of Proof of Stake systems don’t like Proof of Work. They’ve concluded they can’t take over Bitcoin because they’d have to work to do it instead of paying for it to get done. And since it’s so much easier to make up a lie about work being bad for the environment than it is to do actual work, that’s the route they’ve chosen. But it still is a lie. It’s also not surprising that the world’s central banks – the institutions that Bitcoin was invented to disempower – are desperately trying to persuade anyone naive enough to fall for it that *“Trust is the soul of money.”* It isn’t. If anything, money is a measure of value, and value is created by a combination of physical work, intellectual work, and innovative work – not by trusting people who say *“trust me.”* One final note about trying to actually attack Bitcoin using Proof of Work: even if you do more work than everyone else combined in Bitcoin, you still don’t get to change the rules. You get to roll back the ledger somewhat for some period of time. The rules themselves only change for each person who accepts proposed changes to those rules. We, the users, each have a veto over any changes to the rules. I do suppose that from the perspective of someone who wants to make up the rules as they go along, Proof-of-Work does waste energy, because no matter how much work they do, they cannot use it to change the rules to their benefit for exploiting or oppressing other participants in the network. But that’s the whole point – Proof of Work is a subset of the rules of Bitcoin; it’s not permission to change the rules. **Claim:** "Bitcoin's energy use is going to destroy the planet." **Truth:** Energy use does not destroy the planet, (neither Bitcoin’s nor any other industry’s). Energy use itself does not destroy the planet. And it isn’t going to destroy life on Earth, or even just human life either. In fact, it’s going to help us thrive in harmony with nature. There’s lots of ways in which humans have managed to extract energy from our environment. Humanity started by using fire. We also figured out how to catch the wind in sails. But since then, we’ve figured out much cleverer ways to capture energy, and lots more of it. Today, we can find very dense energy sources buried underground and we can even split uranium atoms to release more energy. And we can do this all quite safely. But that’s all besides the point. Bitcoin’s Proof-of-Work energy use largely doesn’t require the generation of increased energy. It only uses energy that’s economically profitable to use. This goes back to the *“wasting”* energy point. It’s irrational to use energy on Bitcoin wastefully and doing so will lead to bankruptcy for anyone who tries it, because nobody’s getting free handouts from the taxpayers for mining bitcoin. Bitcoiners, unlike elected politicians and appointed bureaucrats, aren’t pandering to popular misconceptions about energy (or spreading those misconceptions and then pandering to them). They are actually interested in the long-term sustainability of human civilization in harmony with nature. They don’t reject science, or pervert the concept of it; they embrace it, and want to use it to prevent harm to our planet, life, humanity, and civilization. A realistic, non-alarmist, non-catastrophizing view of energy is humanity’s way forward: we can better understand what impacts and dangers are true with each form of energy production, and we can take measures to minimize them. But predicting that the world will end if we continue using energy is neither accurate nor mentally healthy. Human beings are problem solvers. The reason we generate so much energy is that energy can be used to solve lots of problems. Want to get from New York to Los Angeles in under thirty years? Then instead of walking try flying on a jet. You’ll be there in under six hours, and you can watch a movie the whole time. But to accomplish this, you’ll need to use energy. Want to not freeze to death in the winter. Use a furnace. Want to not die of starvation? Use modern agricultural techniques, shipping methods, grocery stores, restaurants, and sound money. You can even enjoy a wide variety of otherwise unavailable foods if you do. For all of these solutions, you’ll need to use energy – lots of it. Abandoning these solutions because some other potential problem arises from them is not the way of humanity. Solving the other problems is. We may even find that solving environmental problems is best done by generating more energy. We can use energy to do so much after all – we can even use it to clean up any messes we make in producing it! And, after all, dying from harsh climate conditions while traveling, from the cold of winter, or from a drought-induced famine are actually some of the ways people used to die from climate problems that energy production has now solved. So let’s not throw out energy use, whether it is Bitcoin’s or any other valuable and useful industry for that matter. ### Final Claim Finally, let’s address the claim that is attempted to be used as a trump card when all the other claims against proof of work are exhausted: **Claim:** "Proof of Stake uses less energy than proof of work." **Truth:** Yes, but so what, since it doesn’t do the useful things proof of work does. Okay. Sure. A dead body uses less energy than a living one. A wrecked car at the side of the road that can’t go anywhere uses less energy than one in working condition that is taking people places. And a system that can’t be trusted to enforce the property rights of average people, because it relies on trusting other self-interested human beings, uses less energy than one that is secure and does depend only on reliable math and physics. So what? Like a body without life, or a car that can’t drive, you can take the energy requirements out of a thing, but you can’t leave its function intact. Proof-of-Work is no different. At its heart is the removal of trust from the system of money, and replacing it with something that can’t be faked: real work, which requires the use of real, costly, energy. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Why Selling Some Bitcoin at a Loss Can Maximize Your Hodling Potential URL: https://www.swanbitcoin.com/analysis/why-selling-some-bitcoin-at-a-loss-can-maximize-your-hodling-potential/ How to sell your bitcoin for tax advantages without interrupting your strategy to hold for the long term. --- **Steven Lubka** · November 16, 2022 · Updated June 27, 2024 In my latest conversations with private clients, the number one question I get asked is about tax loss harvesting (TLH). TLH is best thought of as purposefully selling an investment you bought that is currently below your purchase price to lock in a capital loss on your taxes. Due to Bitcoin’s regulatory classifications, there is a unique way to take advantage of tax loss harvesting that isn't possible with equities! One quick note, the following discussion of TLH strategy is solely based on U.S. tax laws, and this practice may or may not be possible in other jurisdictions. Additionally, this does not constitute advice, and make sure to talk with your own CPA [certified public accountant] before making any tax decisions! In the stock market, if you sell an equity and repurchase a similar instrument within 30 days any loss generated from the sale will be disallowed, meaning you can't use the loss to offset any other capital gains. This rule also applies in reverse. This is due to something called the wash sale rule, however, the wash sale rule only applies to securities. [Bitcoin is classified as “property”](https://www.swanbitcoin.com/bitcoin-is-a-new-form-of-property/) under the U.S. Internal Revenue Service (IRS) tax code and is exempt from the wash sale rule. What this allows you to do is instantly sell and repurchase your Bitcoin in order to lock in tax benefits. This is important because most investors don’t actually want to sell their Bitcoin at these prices, they want to hold their Bitcoin for its eventual recovery. Selling bitcoin and having to wait over 30 days to buy it back could cause investors to miss out on a substantial price increase if it was done at the wrong time. This is why Bitcoin’s tax classifications allow for a unique approach to managing any unrealized capital loss you may have on your bitcoin position. During the time I have managed the Swan Private team for Swan Bitcoin, we have helped investors perform hundreds of tax loss harvest transactions while prices have been low, generating highly meaningful tax savings. ### A Capital Loss Can Benefit So why should you lock in a capital loss? Capital losses are a versatile tax tool that can help you save a significant amount of money on your EOY [end of year] tax obligations. There are two main ways a capital loss can help you, and one important detail to be aware of. 1. A capital loss can be used to offset a corresponding amount of capital gains. These capital gains can include the sale of stocks, dividends from investments, the sale of real estate, the sale of rental property, the sale of startup equity and K-1 distributions. You can offset any amount of capital gains per year, up to the amount of the capital loss. The one restriction is long-term capital losses can only offset long-term capital gains, whereas short-term capital losses can offset either long term or short term capital gains. 2. A capital loss will allow you to offset up to $3,000 of ordinary income per year. Ordinary income meas W-2 income, rental property income, 1099 income and other sources. What happens if you don’t have enough eligible capital gains and ordinary income to use your entire capital loss? You can actually roll forward the capital loss to the next year – indefinitely. This means that even if you don't expect capital gains this year, but know you will have some capital gains in a future year, you can still take advantage of any capital losses this year to mitigate future tax events. On a basic level, all that is required is a sale and repurchase of the Bitcoin position. However, there are several other considerations to keep in mind. ### Choosing An Accounting Method Bitcoin investors can select three different accounting treatments for their Bitcoin. These are Specific ID (HIFO, or highest in, first out), last-in first-out (LIFO), and first-in first-out (FIFO). Each of these methods refers to the question of *“which”* Bitcoin was sold when an investor sells BTC. For example, if someone had purchased 1 BTC on two different occasions and they then sell a Bitcoin - which Bitcoin was it that they sold? The one they bought at $10,000 or the one they bought at $60,000. You can see this obviously makes a big difference. - FIFO: Any Bitcoin sold is sold chronologically in the order in which they were purchased. The first Bitcoin purchased is the first Bitcoin sold. This method is generally best for people who started buying Bitcoin when prices were high and kept buying as they fell. - LIFO: Any Bitcoin sold is sold in reverse chronological order. This method is generally best for people who started buying when prices were low and made their last purchase when prices were high. - Specific ID (HIFO): Specifically select lots that are the highest cost and sell those first. It will usually allow the investor to lock in the largest capital loss possible regardless of when coins were purchased. ### Why Tax-Loss Harvest Your Bitcoin? Generally, the reason most people would take advantage of performing a TLH transaction is that they have some portion of their total Bitcoin which is down more than 20%. Someone who is sitting on an unrealized capital loss of this magnitude or more, and who expects capital gains at some point in the future could benefit from taking advantage of the current low prices to lock in tax benefits for this year, or future years. Even if you don’t expect much in terms of capital gains anytime soon, the income deduction could also be one reason to perform a TLH transaction. This is particularly relevant for people who plan to hold their Bitcoin for a long time, and potentially borrow against the bitcoin in the future instead of selling it. If your goal is to sell your Bitcoin quickly for a profit, you will end up resetting your cost basis when you do a TLH transaction which will net out any benefits accrued. However, if you have a longer investment timeline locking in losses today can be a good idea. If you'd like to talk to Steven or a member of the team about tax-loss harvesting you can fill out [this form](https://swanbitcoin.typeform.com/to/pNiB943m?utm_source=xxxxx&utm_medium=xxxxx&utm_campaign=xxxxx&utm_term=xxxxx&utm_content=xxxxx#ref_code=xxxxx&submit_date=xxxxx&source=xxxxx&type=xxxxx) and we'll contact you directly. ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # The FTX Fiasco and the Fallout to Come - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/the-ftx-fiasco-and-the-fallout-to-come/ Expect the fires from FTX to continue to burn and claim more victims along the way. If anything, this event has provided a tough lesson on why Bitcoin is different and why self-custody is vital. --- **Sam Callahan** · November 17, 2022 · Updated June 27, 2024 As the world starts to learn the truth behind FTX and Sam Bankman-Fried, the collapse of FTX comes as no surprise to many of the analysts and industry insiders who follow these markets closely. ![](https://www.datocms-assets.com/56652/1668703137-unnamed.png?auto=format) No, I personally didn’t expect FTX to be revealed as a full-blown Ponzi scheme, but I did question their business practices and actively recommended that people not use FTX. The idea that this FTX fiasco was not foreseeable is simply not true. The signs were there. Many Bitcoiners, including Swan CEO Cory Klippsten, have been publicly critiquing both FTX and SBF for many months now. When CoinDesk reached out to Swan to comment on the now seminal story that revealed Alameda Research’s absurd balance sheet, to his credit, Cory was the only CEO in the industry who had the courage to be quoted [in the piece](https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/), brilliantly stating, > It’s fascinating to see that the majority of the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air token. > > — [Cory Klippsten](https://www.swanbitcoin.com/), CEO of Swan Bitcoin I, for one, was flabbergasted when I saw the leaked financials of Alameda’s balance sheet, which consisted of billions of dollars worth of illiquid, garbage cryptocurrencies. On top of that evidence, I watched [a debate](https://www.youtube.com/watch?v=Ytaa_5liwMA) between SBF and Erik Voorhees on October 28th, which left me with the feeling that something was deeply wrong with SBF and FTX. Here’s what I wrote in a Swan Slack channel after I watched the debate… > I watched that debate between Erik Voorhees and SBF last week, and I got some mad Do Kwon vibes watching SBF. SBF's behavior on that video was telling. The dude is hiding something. He looked unhealthy, avoiding eye contact, touching his face, resting leg syndrome, etc. > > — [Sam Callahan](https://www.swanbitcoin.com/), Lead Analyst at Swan Bitcoin I write this not to say, *“I told you so,”* I had no idea that FTX and Alameda Research was a Ponzi scheme and that SBF was a gigantic fraud. But rather, I make this point because mainstream media, *“crypto”* proponents, and TradFi people will act like no one could have seen this coming, and I don’t believe this is true. Individuals like Cory and others were warning people of a possible outcome like this because, unfortunately, Bitcoiners have become well-versed in the *“shitcoin playbook”* and can spot these scams from miles away. Here is another respected Bitcoiner predicting this very outcome back in June, after FTX was bailing out failing crypto lenders, and SBF was being hailed as the *“JP Morgan Chase of Crypto.”* ![](https://www.datocms-assets.com/56652/1668703496-unnamed-1.png?auto=format) Here’s another from nearly two years ago!  ![](https://www.datocms-assets.com/56652/1668703570-unnamed-2.png?auto=format) Bitcoiners consistently warn of the risks of crypto casinos, crypto lending products, and shitcoins because we have seen people get burned by them time and time again. Bitcoiners have zero tolerance for scammers and frauds, having witnessed people lose everything by putting their trust in the wrong lender, exchange, or project. It’s important to understand that a lot of this comes down to the fact that these scams are possible because shitcoins can be created out of thin air at no cost to the issuer. These shitcoins are centralized, worthless tokens that serve only to enrich the issuers and the early investors. New tokens can be created with a click of a button and deceptively promoted to enrich insiders before being dumped on naive and trusting retail investors who are sold a marketing story that the token is *“the next big thing”* or *“the next Bitcoin.”* This is a big reason why the FTX fraud grew to the size it did. Same playbook, different shitcoin. Bitcoin, of course, is different. It is a decentralized, censorship-resistant, leaderless, and scarce digital commodity. This is precisely why we only recommend Bitcoin to our clients at Swan and relentlessly educate people about [the importance of taking self-custody](https://www.swanbitcoin.com/bitcoin-wallets-not-your-keys-not-your-bitcoin/). To be abundantly clear, if you have any bitcoin with a lender or exchange, you should be taking self-custody of your bitcoin to remove counterparty risk. Please reach out to Swan if you need any assistance with this. I won’t go into too much detail here about what happened exactly with FTX and Alameda Research. If you would like to read a full post-mortem on the collapse, here are 5 pieces of content that I think did a great job of explaining the situation in detail for those interested in reading more about what transpired. 1. [Definitive Thread on FTX by Jason Choi ](https://twitter.com/mrjasonchoi/status/1592502785873825794) 2. [FTX Post-Mortem by Dan Oliver ](https://www.myrmikan.com/pub/Myrmikan_Research_2022_11_15.pdf) 3. [What Happened at Alameda Research by Milky Eggs](https://milkyeggs.com/?p=175) 4. [FTX’s Balance Sheet was Bad by Matt Levine](https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad) 5. [Speechless by Arthur Hayes](https://blog.bitmex.com/speechless/) **The TL;DR is:** FTX created worthless tokens out-of-thin air, like FTT, SER, MAPS, and OXY. It then used these tokens to make its balance sheet appear more robust than it really was by pumping the illiquid tokens’ values and then inflating its balance sheet with them. ![](https://www.datocms-assets.com/56652/1668703770-unnamed-3.png?auto=format) FTX then used its inflated balance sheet to raise copious amounts of money from VC investors who apparently did little to no due diligence before writing fat checks to SBF. In the end, FTX quickly became a company valued at $32 billion dollars in January 2022 after launching only two years prior. Matt Levine writes, “*FTX’s two largest asset balances, “before this week,” were $5.9 billion of FTT ($553 million at post-crash prices last Thursday) and $5.4 billion of SRM ($2.2 billion post-crash).* ***Something like two-thirds of the money that FTX owed to customers was backed by its own tokens that it had made up***.” This entire shell game came crashing down when Alameda got burned in the spring as markets started to take a turn. As the story goes, Alameda became insolvent during the credit contagion that began with the blowups of Terra Luna and Three Arrows Capital. Out of that mess, FTX had to lend nearly 10 billion dollars to Alameda for the trading firm to avoid insolvency. To make matters worse, FTX used customer funds illegally to loan this money to Alameda, with FTT as collateral to secure the loan. Things hit the fan when the price of FTT crashed after Binance CEO CZ publicly announced plans to sell Binance’s entire FTT position, totaling $584 million dollars. This action tanked the price of FTT and only attracted more speculators, which dropped the price of FTT even more. FTX tried to raise cash to stop the bleeding and pay its debt obligations, but it could not stop the implosion from occurring. It is now known that FTX had about an $8 billion hole in its balance sheet when all was said and done. As the crisis unfolded, FTX suffered a bank run when customers raced to withdraw funds (billions of dollars in days) from the exchange as rumors around its insolvency swirled. At that point, since FTX was essentially running a fractional reserve bank, FTX was toast. FTX and Alameda were both insolvent, and a few days later, FTX filed for bankruptcy. Since then, the story has become even more bizarre. SBF remains in the Bahamas, reportedly being held by authorities. Other FTX officials are rumored to be on the run, trying to escape to Dubai, where they do not face any extradition laws. There has been a hack of FTX where [hundreds of millions of funds were stolen and are now sitting in ETH](https://www.coindesk.com/business/2022/11/14/ftx-hacker-panicked-still-holds-339m-in-ether-cryptos-arkham-intelligence/). SBF [built a backdoor](https://www.theblock.co/post/186321/sbf-built-bespoke-backdoor-to-outwit-ftx-compliance-systems-reuters) to alter financial records without altering FTX compliance systems. And Alameda had an exclusive [API key that allowed them to front-run FTX clients](https://twitter.com/mrjasonchoi/status/1592502814378381312?s=20&t=4Y6solA1XSYMKYOSSYgRZA). There are more nefarious activities, which you can read all about in the post-mortems shared above. In addition, there is now a [consumer class-action lawsuit against FTX and SBF](https://www.reuters.com/legal/ftx-founder-bankman-fried-sued-us-court-over-yield-bearing-crypto-accounts-2022-11-16/) with Tom Brady and the Golden State Warriors named in the suit, and the FBI is currently mulling over extraditing SBF back to the US. Time will tell how this dynamic situation will play out, but it is now crystal clear that FTX and Alameda Research were outright fraudulent operations and that SBF should now be mentioned among legendary scammers like Bernie Madoff, Tom Petters, and Charles Ponzi himself.  The question becomes…what happens next? What will the fallout be for Bitcoin from this FTX fiasco? Below are 5 outcomes that I believe we should expect to occur in Bitcoin moving forward.   ### 1 - Contagion One thing that all Bitcoiners should expect is that there will be more credit contagion from this mess. Now being discovered is the ridiculous amount of leverage that was in the system between FTX and all these lending desks. In addition, we still don’t know how many hedge funds, institutions, and startups custodied their funds on FTX who can no longer access them. High levels of indebtedness in an industry can create vulnerabilities, amplify shocks, and increase instabilities. Increased levels of debt create greater interconnectedness and counterparty risk that leads to cascading liquidations that compound on one another. This can lead to contagion effects when one credit default leads to further falling asset prices, which leads to more defaults, and further falling asset prices, etc.  We are seeing this play out today with the FTX collapse. A perfect example of this can be observed within the Solana ecosystem. It was well known that SBF was a huge investor in the Solana ecosystem. Here is an infamous tweet where he publicly announced his Solana purchases: ![](https://www.datocms-assets.com/56652/1668703922-unnamed-4.png?auto=format) Not only that, but FTX created multiple tokens on the Solana platform that they then used to inflate their balance sheet, including Serum (SER), Oxygen (OXY), and Bonfida (FIDA).  Once the price of FTT started to tank, SBF and FTX began selling anything they could to meet their margin calls and remain solvent. This can be observed by looking at the price drops in all these illiquid Solana tokens.  ![](https://www.datocms-assets.com/56652/1668713453-tradingview_idea_image-tradingview.png?auto=format) The next question you should be asking yourself is, *“Who holds a lot of Solana on their balance sheet?”* Solana was a darling of institutional investors and hedge funds who all pumped this centralized token to the moon and now are caught with their pants around their ankles. We will most certainly see more funds become impaired from this price action. In that case, they will need to sell off assets to meet their own margin calls, and the contagion continues. It took over 6 months for the contagion to manifest itself from the Terra Luna and Three Arrows Capital blowups. I expect it may take several weeks or months before we see more bodies float to the surface from this FTX fraud. We have already seen major cryptocurrency companies announce bankruptcy since the FTX fiasco began. BlockFi sent out this tweet on November 11th and froze customer withdrawals.  ![](https://www.datocms-assets.com/56652/1668704001-unnamed-6.png?auto=format) According to the WSJ, BlockFi is now [preparing to file for potential bankruptcy](https://www.wsj.com/articles/blockfi-prepares-for-potential-bankruptcy-as-crypto-contagion-spreads-11668534824) after halting customer deposits and withdrawals Several other cryptocurrency lenders and exchanges, many owned by FTX, have begun halting withdrawals and deposits, which is never a good sign, including [Japanese crypto exchange Liquid](https://cointelegraph.com/news/ftx-owned-crypto-exchange-liquid-halts-all-withdrawals), [crypto lender Salt](https://www.wsj.com/livecoverage/stock-market-news-today-11-15-2022/card/crypto-lender-salt-pauses-withdrawals-citing-ftx-impact-qxslv8p3lgKakIFde5JZ), and large crypto lender [Genesis Global Digital](https://www.coindesk.com/business/2022/11/16/genesis-crypto-lending-unit-is-halting-customer-withdrawals-in-wake-of-ftx-collapse/).  ![](https://www.datocms-assets.com/56652/1668704050-unnamed-7.png?auto=format) SBF had a massive amount of investments and acquisitions that now will be impacted in various degrees of severity. We have not yet seen all the damage that has been done by this destruction of wealth. Here is a great graphic that shows the extent of SBF’s fingerprints: ![](https://www.datocms-assets.com/56652/1668713705-cursor_and_sam_bankman_fried_investments-google_search-1.png?auto=format) The other way that this calamity will impact the market is hedge funds and other entities that did not protect themselves properly from counterparty risk when it came to the custody of their fund’s assets. An example of this was when Ikigai, a crypto hedge fund, announced that a [majority of the fund’s assets are stuck on FTX](https://blockworks.co/news/ikigai-fund-caught-up-in-ftx-contagion/) and it may need to *“move into winddown mode.”* ![](https://www.datocms-assets.com/56652/1668704195-unnamed-9.png?auto=format) Galois Capital also announced it had [50% of its assets locked up on FTX worth $100 million](https://www.ft.com/content/726277bb-35a1-4d35-9df9-3e1cca587b77), and Multicoin Capital was another firm with [24% of its assets held on the exchange worth approximately $863 million](https://fortune.com/2022/11/15/multicoin-capital-ftx-bankruptcy/amp/). All of these entities were victims of SBF’s fraudulent operation. I have empathy for them, but it is honestly mindblowing that these firms held a significant portion of investor funds at a single counterparty with a shady operator of a mostly offshore business. But here we are. There are most certainly entities that we don’t know about yet that will reveal themselves over the coming weeks and months. Moral of the story – the fallout from this FTX collapse is just getting started. The second-largest cryptocurrency exchange, valued at $32 billion dollars doesn’t go bankrupt in days to only leave a little bit of damage. There will be more body bags. We will discover more exchanges, hedge funds, mining companies, startups, and other institutions that had exposure to FTX in some form or fashion. There will be more blood. Expect it. ### 2 - Self-Custody Probably the biggest silver lining from this entire mess has been that more people are understanding why it is so important to self-custody their bitcoin. At Swan, we are constantly advocating that people take self-custody because (1) it removes counterparty risk, (2) it is how bitcoin was supposed to be used in a self-sovereign way, and (3) it helps decentralize the bitcoin in circulation. ![](https://www.datocms-assets.com/56652/1668704268-unnamed-10.png?auto=format) Yet no matter how many times we say it, meme it, or write it, some people, unfortunately, need to learn the hard way before they understand why self-custody is important. This FTX event and the contagion that has followed has woken people up to the merits of *“not your keys, not your coins.”* With each entity that freezes withdrawals, individuals are realizing that they did not actually own any bitcoin when they gave it to a third party to hold on to. For the week of November 6th to November 13th, exchange users withdrew $3.7 billion worth of Bitcoin, $2.5 billion of Ether, and $2 billion worth of stablecoins, according to data provider CryptoQuant. ![](https://www.datocms-assets.com/56652/1668704307-unnamed-11.png?auto=format) We are now seeing record outflows of bitcoin across all exchanges as people are taking self-custody of their bitcoin. According to Glassnode, the total balance of Bitcoin on exchanges has hit a nearly 5-year low of 2.3 million bitcoin. ![](https://www.datocms-assets.com/56652/1668713827-glassnode-studio_bitcoin-balance-on-exchanges-btc-all-exchanges_png.png?auto=format) Below, you can see this trend playing out in the net position change of bitcoin held on exchanges as well. ![](https://www.datocms-assets.com/56652/1668713852-glassnode-studio_bitcoin-exchange-net-position-change-btc-all-exchanges-1-png.png?auto=format) Over the past 7 days, we have seen more bitcoin being withdrawn from exchanges than ever before. This is an excellent sign for long-term adoption. This is bullish for Bitcoin and Bitcoiners long term. Furthermore, we have seen reports from hardware wallet providers like Ledger report record sales since the FTX collapse. ![](https://www.datocms-assets.com/56652/1668704382-unnamed-14.png?auto=format) Another hardware wallet provider, Trezor, also reported a [300% surge in sales revenue since the FTX contagion](https://cointelegraph.com/news/trezor-reports-300-surge-in-sales-revenue-due-to-ftx-contagion). The firm is nearly certain that the uptick is due to investors seeking to take self-custody of their bitcoin after the FTX collapse. On top of that, I have spoken with numerous collaborative custody companies throughout the industry who have all reported increased demand over the past two weeks. This is the biggest silver lining of all this. More people taking self-custody of their bitcoin is very bullish. Many of these investors have learned this lesson the hard way, but it is vital that individuals use bitcoin in a self-sovereign manner to avoid calamities like this that can occur with *“trusted”* third parties. The best time to take self-custody of your bitcoin was when you first bought it, and the second-best time is today. ### 3 - Proof of Reserves Another potential silver lining to all of this is that the industry as a whole will likely move to adopt standards and practices to increase transparency and help prevent situations like this from occurring again. Proof of Reserves is the idea that centralized exchanges can cryptographically prove the assets they hold on their balance sheets by providing wallet addresses or regularly signing transactions or messages with the corresponding public keys. However, this disclosure would be incomplete without also knowing an exchange’s liabilities. Users need to know whether the assets the exchange holds match the outstanding liabilities on its balance sheet. This could be achieved by the exchange aggregating all of its liabilities, concealing user identities via splitting up individual user accounts and publishing them strategically in Merkle Trees and then having users verify that their deposit is included. Showing both sides of the balance sheet would also be more reliable if an independent auditor was involved in the process. This would give cryptographic proof that an exchange is solvent with the added reassurance that an auditor was involved. Perhaps this would help prevent fraud and some of these credit contagion events from occurring in the future. Although this is not completely trustless, it is better than nothing for users who choose to custody their bitcoin with a centralized party.  The hope is that Proof of Reserves becomes an industry standard. If you get every exchange agreeing to perform Proof of Reserves, then it becomes a red flag in the mind of users if an exchange does not do it. The only conclusion a user would have if an exchange did not do Proof of Reserves is that they are being dishonest about their operations and would be exposed as insolvent if they did perform the procedure. This may become a self-regulating standard that has the potential to protect users from using shady exchanges moving forward. Since the FTX and Alameda collapse, over 30 exchanges have agreed to start performing Proof of Reserves, including Binance, the largest crypto exchange in the industry. To be clear, proving the liabilities side of the balance sheet requires some degree of trust. Auditors have been known to fail miserably at their jobs. Just look at Enron, Wirecard, or Archegos Capital Management. These were all audited entities…and these were all massive frauds. Therefore, Proof of Reserves does not remove counterparty risk and, thus, is not a viable alternative to taking self-custody of your bitcoin. There is no better solution to avoiding these kinds of blowups than taking self-custody of your bitcoin. Not your keys, not your coin. For this reason, exchanges should do better to make withdrawing bitcoin as easy and cheap as possible, and builders should continue to build tools and custody solutions that make it easier for users to custody their funds. Widespread adoption of Proof of Reserves would merely be an improvement that would increase transparency, mitigate counterparty risk, and elicit better self-regulatory practices throughout the industry. ### 4 - Regulatory Backlash This event will most surely result in a regulatory backlash against the broader crypto industry. There is a lot of blame to go around for why this occurred, but at least some of it can be placed on regulators who failed to provide regulatory clarity and pushed investors towards shady off-shore exchanges like FTX. Politicians now have all the fodder they need to bring down the hammer on the broader cryptocurrency industry after over one million users were burned in this fraud. Regulation will surely be pushed through more aggressively now in the name of consumer protection. Here is just a few notable headlines in the wake of the FTX collapse to highlight the tone in DC right now. ![](https://www.datocms-assets.com/56652/1668704541-unnamed-15.png?auto=format) The good news is that SBF’s Digital Commodities Consumer Protection Act (DCCPA) bill is, for all intents and purposes, dead in the water. This bill contained harmful language and was essentially SBF’s selfish attempt to create a regulatory moat around FTX. From here, it will be vital for Bitcoiners to educate policymakers on the nuances of this technology to ensure that overreaching regulation does not stifle innovation and result in regulatory capture. It’s important to understand that in the US, this industry is already heavily regulated. This FTX collapse was a result of fraud, not a lack of regulation. However, there are some possible regulatory responses that would make some sense. For instance, it was absurd that SBF owned and operated both a major exchange and a prop trading firm that acted as the main market maker for that exchange. This would be akin to Ken Griffin owning the New York Stock Exchange. The fact that regulators allowed this questionable business relationship to persist is in part to blame for what transpired here. Future regulation will likely focus on where many of these issues occurred – centralized exchanges. The end result will likely be more disclosure laws, more transparency, and more legal assurances around the separation of operational and client funds. Another area of focus for future regulation will likely revolve around tokens as a construct. All of these events would not have been possible if SBF couldn’t create these centralized tokens out of thin air and play paper shell games to create the illusion of a robust balance sheet and obfuscate the reality of the liquidity conditions on his platform. Furthermore, there could be registration and disclosure standards around early investor and founding team token holdings and vesting schedules to improve transparency and protect retail investors. In a recent interview with Natalie Brunell, Michael Saylor responded to a question about the regulatory outlook for the broader crypto industry, > If regulators act progressively and provide a path to registration of a digital commodity, digital token, digital security, digital exchange, and digital currency…then what you would see is a collapse of all the true scams. You would see the VCs that had been trying to launch these other things, they would need to go through a registration process, and now you would have full disclosure and transparency…You would see 99% of the tokens go away. > > — Michael Saylor, CEO of MicroStrategy There have already been proposals for how to go about regulating this industry responsibly, like SEC Commissioner Hester Peirce’s [Token Safe Harbor Proposal 2.0](https://www.sec.gov/news/public-statement/peirce-statement-token-safe-harbor-proposal-2.0). Maybe now that blood is in the streets, regulators will start to take proposals like this more seriously to help prevent these shitcoin scams from proliferating and harming consumers. That said, an example of bad regulation would be one that conflates Bitcoin with all of these other centralized cryptocurrencies. Bitcoin is a decentralized digital commodity, whereas a vast majority of other cryptocurrencies can be better thought of as centralized digital securities. Bad regulation would be using the collapse of a centralized crypto casino Ponzi scheme as an excuse to pass laws that hinder Bitcoin’s adoption. Such regulations could, for example, hinder individuals' ability to run a node or hold bitcoin in a wallet. This collapse was not Bitcoin’s fault, this was the result of human greed and deception. It is going to be an uphill battle for the industry in Washington DC, but now is the time to get credible proponents in DC to advocate for Bitcoin and educate policymakers on why Bitcoin is different from other cryptocurrencies. I already know of multiple industry insiders who have been on the ground tirelessly lobbying policymakers on how to regulate this industry responsibly since the FTX collapse began. If done correctly, regulation could be a boon for Bitcoin adoption as it provides regulatory clarity for institutional investors and helps rid the industry of bad actors and scam artists.  ### 5 - Bitcoiners are Born in Fire The last outcome of all of this is I believe we are starting to see a trend where people are starting to understand why Bitcoin is different. Only Bitcoin is decentralized, scarce, censorship-resistant, and verifiable for anyone that runs a node. Only Bitcoin has a fixed supply, a perfectly predictable issuance schedule, and is fully transparent.  The root cause of all these collapses is the trust that is required, and that trust has been breached repeatedly. This is exactly what Satoshi Nakamoto said long ago. Every one of the victims of the FTX fiasco could have avoided hardship had they simply bought bitcoin, held their own keys, and taken self-sovereignty of their wealth. Bitcoin enables them to do that. None of this would have been possible if SBF wasn’t able to create centrally-controlled tokens out of thin air and pump the price of them to inflate the balance sheet of FTX and Alameda. With Bitcoin, no one can control it, and no one can print more of it. It is digital sound money. Fraud can’t change this, and it never will. I am beginning to see cryptocurrency influencers and other mainstream pundits stating that they are starting to understand why Bitcoin is unlike the rest and why self-custody is important. This terrible event only served to create more Bitcoiners who now get why there is Bitcoin, and there are shitcoins. Out of this fire will rise more self-sovereign Bitcoiners. ### Conclusion Despite this crypto carnage, Bitcoiners will continue to move forward in a principled fashion. We will continue to push people not to trust but verify; to take responsibility for their wealth; to hold their own keys; and to support an ethical, fair, decentralized, and transparent monetary protocol. Here at Swan, this is our mission. To create 10 million Bitcoiners who understand and use Bitcoin as it was meant to be used. Expect the fires from FTX to continue to burn and claim more victims along the way. If anything, this event has provided a tough lesson on why Bitcoin is different and why self-custody is vital. Hopefully, this message will be better received in the future now that so many have been burned by shitcoins and centralized third parties. Today, leverage is being cleared from the system in a painful fashion. The grifters and bad actors are being exposed for what they are. In the short term, the road will be rocky for Bitcoin, but in the long term, I believe this will be a healthy cleanse that will further drive home Bitcoin’s uniqueness and create countless new Bitcoiners in the process. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Swan Product Principles and the Third Rail URL: https://www.swanbitcoin.com/industry/swan-product-principles-and-the-third-rail/ Swan products are where humans meet Bitcoin. --- **Jeremy Showalter** · September 24, 2022 · Updated June 6, 2024 > We shouldn’t delay forever until every possible feature is done. > > — Satoshi Nakamoto > No margin, no mission. > > — Sister Irene Kraus Satoshi’s quote is a reference to how product, and Bitcoin, is incrementally developed over time, and infers how multiple features and entire products are prioritized and released. Like Bitcoin’s open-source community and consensus protocol, Swan’s Product Principles builds on these ideas and applies them in a private company context. Sister Kraus’ quote comes from the nonprofit world, emphasizing the forever tension of mission and margin. We work for a mission — a change in the world — and need margin for the time and activities to make progress toward that mission. It’s been nearly a year since I started at Swan, so I am taking time to share more about our product direction and approach. From the first conversation, Cory’s guiding principle has been to *“do what’s right for Bitcoin and Bitcoiners.”* In addition, we also believe that *“*[*Bitcoin is for everyone*](https://www.swanbitcoin.com/bitcoin-is-for-everyone/)*.”* These two principles are the foundations for product discussions, trade-offs, and decisions. From a business and product approach, we link our mission of [10 million new Bitcoiners](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/) with margin from profitable services, so we can reach new Bitcoiners for the long-term. ![](https://www.datocms-assets.com/56652/1668734162-1_nwmtabnwr_0nfkgwkppbja.webp?auto=format) **Together, this means Swan products are where humans meet Bitcoin.** How does one become a Bitcoiner? How does one become part of the 10 million intransigent minority? The two elements are 1) understanding Bitcoin and 2) having a *“meaningful”* amount of savings in Bitcoin. An important factor that drives Swan’s uniqueness is its strength and depth of Bitcoin education. The Swan team invests in and produces an incredible amount of original content that helps diverse audiences understand Bitcoin more deeply *and* share that information with others. Swan’s unique content is integrated into all of Swan’s product experiences. What is a *“meaningful”* amount of savings in Bitcoin? On this point, Cory’s article identifies $2,500 as a numerical starting point, others use a percentage of net worth, but it’s important to note that this varies by person and over time. Thus, we work towards Bitcoiners setting individual goals, working hard to stack sats, and identify new ways to save Bitcoin. ![](https://www.datocms-assets.com/56652/1668734208-1_73vi9xwetf74bb_fnti4wq.jpg?auto=format) At Swan, we believe we are in the [long arc of Bitcoin adoption](https://twitter.com/MustStopMurad/status/1022169639386836992). Today, we are [still early in a Store of Value phase](https://twitter.com/coryklippsten/status/1461102945685192717), while we see the first iterations of the Medium of Exchange phase emerging. In the short-term, we will continue to prioritize SoV products and services, while also building the infrastructure and initial services for Medium of Exchange scenarios. Building services in both categories provides Bitcoiners the Bitcoin financial services that are needed throughout their Bitcoin adoption journeys. In our product work to bring our principles and mission to life, we use many of the tools and practices that others in software and services use. At Swan, we think about product as the intersection of User Experiences, Business Models, and Technology. We bring together various methodologies, frameworks, and processes where we think it will be helpful. We approach User Experience in a broad sense. It includes frameworks like Jobs to be Done and various Service Design approaches to bring user design to life and analytics as a feedback loop to learn how products are being used. In Business Models, we may use a Lean Canvas or a [Value Prop Design](https://www.strategyzer.com/books/value-proposition-design) framework, and with Engineering we work organically in small teams, some of which adopt a [Shape Up](https://basecamp.com/shapeup) approach. Finally, we continue to learn from others in the industry, like [GitLab](https://about.gitlab.com/handbook/product/), as we grow and evolve. In the [Ten Million Bitcoiners: The Intransigent Minority](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/), Cory identified the most threatening attack vector left to Bitcoin is a concerted effort by the U.S. government to stamp out Bitcoin. During the few years that I lived and worked in the Washington, DC area, I learned about the expression ‘the third rail’. In politics, it means something that is too dangerous or too charged to discuss without suffering politically. The expression originally comes from the electrified third rail in some train systems. ![](https://www.datocms-assets.com/56652/1668734247-1_abefwojt7em6ng-amqo8sg.png?auto=format) In politics, one third rail is retirement (and in fact, the term was [likely popularized in DC in relation to Social Security](https://en.wikipedia.org/wiki/Third_rail_(politics))). Given our focus to connect humans with Bitcoin in more Store of Value scenarios, one incredible opportunity is to bring Bitcoin to more Americans’ retirement accounts. This is particularly true for Swan Bitcoin to combine our unique education, provide significant stacking opportunities, and proactively position Bitcoin against future threats. By bringing access to Bitcoin in retirement accounts, we can proactively position Bitcoin into a ‘third rail.’ Within a short period of time and with focused adoption, **Bitcoin in Americans’ retirement savings will become an insurmountable political issue for any current or future political leader.** We have allies on this front. Fidelity’s move to [bring Bitcoin to 401k accounts](https://www.cnbc.com/2022/04/26/fidelity-offers-401k-investors-access-to-bitcoin-a-retirement-plan-first.html) is likely the single most significant development in recent time. This announcement from a large and established brand in retirement brings credibility and game theory to large retirement providers. The Swan Individual Retirement Arrangement (IRA) approach is both similar and different. It’s similar in that it positions Bitcoin in a long-term savings account aligned to Bitcoin’s low time preference. However, even with Fidelity’s progress in bringing more Americans individual opportunities to gain exposure to Bitcoin through their 401k accounts, these accounts are still inherently limited to an employer’s decision of provider, and to the employer’s decision to enable a Bitcoin option. The Swan IRA has no such limitation. Every American can make their own **individual** retirement decisions for Bitcoin with a Swan IRA in a tax advantaged account. Threats to Bitcoin will always be present. But each challenge it overcomes displays its resilience and builds more conviction in its long-term success. Bitcoin adoption grows from understanding and more ways to save. Bitcoin retirement adoption is likely the greatest defense for Bitcoin and a great long-term offense against inflation. ### Jeremy Showalter Jeremy is the Chief Business Officer at Swan. He founded Weave Savings and co-founded Pique (AI/ML personalization), acquired in 2021 by MoMo. Before startups, he spent 13 years at Microsoft in Ireland, Vietnam, and at HQ. # The Race to Avoid the War - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-race-to-avoid-the-war/ Let us proceed — together, united, yet decentralized — and win this race, for one and all, so that we may never have to fight the war. --- **Cory Klippsten** · November 21, 2022 · Updated June 27, 2024 We Bitcoiners are in a race. Perhaps the most important race we will ever run. We are racing against time to drive the adoption of Bitcoin as fast as we can. We are racing toward a future in which the U.S. Government never coordinates a concerted attack against Bitcoin and Bitcoiners. This is a race to avoid a war. Let’s be clear. Bitcoin is going to win no matter what. Bitcoin is the best money we’ve ever had. Its properties were purpose-built to enable it to function as the primary store of value, medium of exchange, and unit of account for every human and machine on planet Earth. It is designed to withstand and survive all attacks, and in fact, it gets stronger when challenged. Bitcoin is replacing money that is already in the process of collapse, money that would collapse independently of Bitcoin’s existence. Bitcoin is engineered to be the orderly, antifragile alternative to a chaotic collapse. How far into the future does Bitcoin’s victory reside as money for all of the world? It could be as soon as the 2030s, but only if we sprint hard. And what if we lose this race? Although Bitcoin is destined to win, if we lose the race to avoid the war, victory will be far more costly. This would be the long way – and the hard way. Instead of a sprint to a bright, orange future, we would be embroiled in a long, hard confrontation with a government desperate to hold on to the power of the monetary printing press. If we lose the race, the long, hard path will be a war in which hundreds of millions of people will suffer the decivilizing and impoverishing effects of hyperinflation. So, for those of us alive, for those of us ready and able now, it is vitally important to run this race as well as possible. How do we do this? There are many ways. First, we drive adoption forward. Nearly three years ago, we launched Swan with the mission to recruit [Ten Million Bitcoiners: the intransigent minority](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/) – people who store a meaningful amount of their net worth in the Bitcoin protocol AND who understand it well enough to want to fight for it. We are fully committed to both of these goals — enabling bitcoin acquisition and building Bitcoin comprehension. Together, these are what build the intransigent minority. Furthermore, when Bitcoiners develop privacy and scaling technology for Bitcoin, we make it substantially more challenging for anti-coiners to make the case that a war on Bitcoin is winnable. When more of us demonstrate the unmatched power of Lightning Network payments in small nations, influential legislators and bankers in the U.S. take note and are far less likely to support an adversarial strategy towards Bitcoin. When another bitcoiner writes a book, makes a video tutorial, or promotes a decentralized gamified stacking movement like Stackchain, they push Bitcoin that much further ahead in this race of races. When Bitcoiners excel in their fiat jobs, consistently pushing more and more of their weekly paychecks into their Bitcoin saving accounts with recurring buys, they push the **Number Go Up** technology to new heights, pulling in more grassroots adoption. All of these activities move us toward the inevitable success of Bitcoin on this rational, collaborative, and peaceful, yet revolutionary, path. However, when people lie about Bitcoin and Bitcoiners in order to line their pockets with altcoin pump-and-dump gains, like the *“crypto”* VC firm Andreessen Horowitz, or attempt orange-washing affinity marketing projects like STX, they make war on Bitcoin that much more likely. When they fund misinformation campaigns with millions of ill-gotten dollars, they increase the likelihood of a fight that can and should be avoided for the sake of all of human civilization. When others bury their heads in the sand and pretend that gold can still do what it has been proven to be unable to do in a modern, global, digital economy, they hold back others who understand the benefits of sound money but haven’t yet learned to distinguish gold from Bitcoin – a sound money that works exceptionally well in our physical and digital global reality. Bitcoiners must stand up and call out those who actively slow Bitcoin’s adoption because they risk knocking us off our path toward the peaceful adoption of a sound, global monetary standard, which the world needs as soon as possible. All these activities are parts of our historic, collaborative effort to guide civilization on the best of all possible paths – we write code, we educate, we help others, we donate, we stack, and we build – all to win the race against the war. As Michael Saylor declared so eloquently: > You don't want to be a martyr. > You want to be a winner. > > — Michael Saylor, CEO of MicroStrategy So let us proceed – together, united, yet decentralized – and win this race, for one and all, so that we may never have to fight the war. ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Green Eggs and Ham - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/green-eggs-and-ham/ Decentralized Finance: The Good, The Bad, And The Ugly --- **Allen Farrington and Anders Larson** · November 25, 2022 · Updated June 26, 2024 *What follows does not represent the views of either author’s employer and is* ***not financial or investment advice****. It is intended as a philosophical, technical, and economic assessment of a novel class of internet protocols. These protocols mostly happen to give rise to natively digital assets, which lend themselves to naturally emerging online and effectively public markets, and which present direct investment opportunities. Nonetheless the following is merely* ***and only*** *our opinion of how these technologies are likely to progress. Readers considering investing in any asset discussed herein should* ***do their own research and should not rely on our work****.* > I’m just here so I don’t get fined. > > — Marshawn Lynch testifying on behalf of Sam Bankman-Fried A common refrain in the wake of the collapse of FTX, as with Celsius, BlockFi, and Voyager before it, was that this was *CeFi*, not *DeFi* (centralized finance, not decentralized finance) and, if anything, only further demonstrates the need for *DeFi*. It has been said that pundits railing against *DeFi* should be doing better in their overbroad hostility. In our previous paper, [*Only The Strong Survive*](https://www.uncerto.com/only-the-strong-survive), we made each of the following observations: 1. Our main problem with *DeFi* is that it is not decentralized and it is not finance. 2. Nonetheless, we support the idea of *decentralized finance* in theory, even if *DeFi* isn’t it in practice. 3. We believe a variety of decentralized finance will emerge on bitcoin, and to some extent already has. In that paper, we could have explained what we deemed to be workable decentralized finance in theory or what constraints might limit how workable decentralized finance might develop. Tying all these threads together is the aim of this paper. We will distinguish between *“DeFi”* to mean what exists in crypto and has been done for the past three years or so and *“decentralized finance”* to mean an ideal, sensible, workable version. [[1]](#_ftn1) - In Part I, *Decentralized Finance, Conceptually*, we will investigate the conceptual characteristics a candidate *“decentralized finance”* would need.  - In Part II, *Decentralized Finance, Technically,* we will add some additional technical characteristics and turn these insights into a framework for evaluating workable decentralized finance. - In Part III, *The Short, Sad Saga of FTX,* we will recap the FTX debacle.  - In Part IV, *Let’s Play The Blame Game*, we will apply our framework to FTX and evaluate to what extent it is helpful to blame CeFi, DeFi, and whomever else.  - In Part V, *DeFi’s Fatal Conceit*, we argue that, as it stands today, we don’t think it is likely that crypto DeFi will become decentralized finance as it is both culturally and technically doubling down in the wrong direction. ### PART I: DECENTRALIZED FINANCE, CONCEPTUALLY > And then this protocol issues a token, we'll call it whatever, ‘X token.’ And X token promises that anything cool that happens because of this box is going to ultimately be usable by, you know, governance vote of holders of the X tokens. They can vote on what to do with any proceeds or other cool things that happen from this box. And of course, so far, we haven't exactly given a compelling reason for why there ever would be any proceeds from this box, but I don't know, you know, maybe there will be, so that's sort of where you start. > > — [Sam Bankman-Fried on boxes](https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned) We will start with the history of development in crypto DeFi to properly frame our analysis. After that, we will set up this analysis by doing our best to define both *“decentralized”* and *“finance”* so as not to assume they are well-defined and exhaustive. In Part I, we will focus on the conceptual criteria we would expect of *“decentralized finance.”* In Part II, *Decentralized Finance, Technically*, we will address more specific technical criteria. #### A Brief (and Generous) History of Crypto DeFi Crypto DeFi, at the time of writing, is far more sophisticated and complex than, for example, the majority of the output of the 2017 ICO bubble. Unfortunately, our feeling is that this sophistication and complexity only serve to mask its flaws. Hence the evolution of the state of the art is worth briefly recapping. The first iteration of token proliferation was not even described as *“DeFi”* necessarily - a term that came into vogue around 2019. The earlier period was based around ICOs and was focused on a handful of now more or less debunked theses: i) the fat protocol thesis, or what we might call *“native tokens": "I’m launching a blockchain, and you can buy pre-mined coins from me*,” ii) the utility token thesis: “*I am building a business, and you can invest in it by buying a token that rides on a layer-one blockchain*,” or, iii) the velocity of money thesis, or MV=PQ: “*my blockchain/application will settle a lot of transactions (stablecoin or otherwise) and the token will appreciate as it will be needed for gas fees*” - either native or utility tokens depending on the exact construction. [[2]](#_ftn1) After the failure of nearly all such projects, it was internalized by the industry that the reintroduction of borderline-barter, floating-value private monies is less than ideal. This would arguably be true for any economic exchange, never mind those with the fundamental premise of openness. But the idea of removing them immediately creates several problems. Native tokens and utility tokens defined interaction on the network. Without them, it isn’t clear what *“the network”* means. The only workable answer is a tokenless smart contract to be utilized by other tokens. [[3]](#_ftn2) But this is also unideal because, first, such a smart contract could never be updated and would have to be set up and deployed in its final form. Second, it is unclear how the development would be funded. An intermediate theoretical step would be to retain root control of the smart contract and attempt to monetize. However, this would somewhat defeat the purpose of automatic execution if *what is being executed* can be amended on a whim. Another approach for certain kinds of exchange applications would be to add fees and to distinguish between users and *“liquidity providers,”* who interact with the same smart contract in different ways.  Liquidity providers put up tokens that enable the application at the risk of loss (or *“impermanent loss”* to be detailed below), and users pay fees to access it, which go to liquidity providers.  The evolution of these applications, and in some sense the solution to some of these problems, was different varieties of the *governance token*: root access to the smart contract would be tokenized. This would, in theory, go a long way to protecting users from instantaneous governance abuses given the mechanism of implementing changes is *also* transparent and on-chain; it would separate the users of the smart contract from the token in which they aren’t necessarily interested; it would mean that the method of monetization (usually usage fees of some sort) can be distributed to governance token holders; where applicable, governance tokens could also be issued to liquidity providers, either at initiation, or as the rolling reward for enabling the service; this, in turn, would mean the token can be valued relatively accurately as *“application equity”* such that ownership can be dispersed and partial to the value of the service, making governance abuses even less likely, and enable price discovery around the true value of the service being provided by the smart contract in the first place. And finally, it would enable funding of development by the straightforward channel of investment in these tokens.  As of 2022, we propose the following taxonomy: [[4]](#_ftn1) *“native tokens”* are the likes of ETH, SOL, BNB, ADA, MATIC, etc., as well as Bitcoin. “Governance tokens” are as just described, although we will further dissect this category further down. [[5]](#_ftn2) Stablecoins, including wrapped Bitcoin and even wrapped ETH, represent tokenized exposure to an asset with no native existence on that blockchain. Some *“utility tokens”* still exist, and it is arguably the case that many so-called governance tokens are just bolt-on utility tokens, which we will discuss further. There is a final, miscellaneous category that typically has no smart contracting abilities, whether at the protocol or governance level, but is more like gift vouchers for the business that issues them. We will call these *“voucher tokens”* for lack of a better name.  With this in mind, let us now investigate the characteristics both *“decentralization”* and *“finance”* would need to be credible, starting with the latter.  #### Finance, Defined *Finance* is not just the movement of money. This is imprecise. For example, gambling is not finance. Nor are payments if they don’t involve a *financing* component. Finance is the use of money to facilitate the pricing of capital. Capital means factors of production that are not directly consumable but intend to produce goods or services at a profit, generating a return and compensating the capital contributors. This may also go for individuals rather than enterprises, in which case the goal is not as easily conceived of as *“profit”* but rather as *“affordability.”*  A range of activities constitutes facilitating the pricing of capital. Yet, they involve the use of money in quite different ways. A personal loan is quite different from a business loan. A personal loan may enable a customer to purchase something from a business they would otherwise not be able to, which in turn allows the business to be profitable, generating a return for their capital providers. A derivative is quite different but ultimately has the same purpose of reducing the uncertainty of the future and its possible effects on return-seeking capital already allocated or intended to be allocated. A crucial concept that goes a step further is that of security. Imagine we start with a contract [[6]](#_ftn3) entitling one counterparty to the rights to some flows of money to be provided by the other counterparty under future circumstances that may be specified, variable, contingent, down to that counterparty’s judgment, or some combination of these A security is a contract that gives these rights to its holder, such that they can be traded beyond the original counterparty. This means that the market can crowdsource what these future money flows are worth *right now* and hence allocate capital to a far wider range of capital-forming enterprises than holders of mere money could identify and exploit on their own.  Note that a loan, if tradeable, is a security, as is a derivative. In fact, every tradeable financial instrument that is not money is a security, even if it is merely the right to some asset: possessing an asset itself is not the same as possessing the right to claim this asset from a counterparty. In financial terms, native tokens are perhaps best thought of as an analog to a gift voucher, yet which is perpetual rather than ever truly redeemed (although there may be some more complicated mechanics such that it is partially redeemed, partially re-issued, and so on). It is a voucher for a network rather than a company. It is pseudo-money - money that can only be redeemed for one computational service – to whatever extent they were not centrally issued as securities! Voucher tokens are gift vouchers for a company, in a much more limited sense, given the company necessarily operates on the network on which the token is issued for the concept to make any sense. They tend to be burned when they are redeemed. Governance tokens, on the other hand, are clearly securities. As a working definition, a security is a tradeable contract exchanging money upfront for well-defined but uncertain streams of money in the future. [[7]](#_ftn1) We emphasize that we do not attach this label to suggest they *should be regulated*. That may or may not be the case, but it is irrelevant to our argument. All that matters is that *this is an accurate financial analysis*. Later, it will become relevant that they are not regulated, regardless of whether or not they should be. Finally, utility tokens are clearly securities as well, with an even more opaque avenue for returns and hence investment theses: the streams of money in the future are uncertain but *poorly* defined. In practice, most amount to the hope of selling for a higher price. As mentioned above, many so-called *“governance tokens”* are really bolt-on utility tokens providing simulated decentralization and governance with no fee sharing.  #### Decentralization, Defined Let us move on to *“decentralized.”* There is a subtlety here that we mentioned in a footnote above and will return to several times throughout the paper. The implication is one of removing centralized gatekeepers, which are prevalent in traditional finance. But what then?  Can *some* people interact without going through centralized third parties? Or can *everybody*?  This is not a trivial difference.   The former is arguably better captured by *“peer-to-peer:”* direct lines of communication between counterparties who wish to exclude third parties, centralized or not. Whereas the latter implies, *nobody can be excluded*. When we apply this understanding to *contractual rights to flows of money*, *“excluding nobody”* can only really be understood to mean that everybody can buy and sell these contracts if they want to.  In other words, they are tradeable, which means they are securities. But securities necessarily have counterparties - the party who *issued* the security and from whom the security is a contractual right to claim some flow of money - and every tradeable financial instrument besides money is a security. The idea is to represent money and securities with tokens on blockchains, given this is almost exclusively what happened in crypto DeFi. But we will note in passing, and return to several times, that the “peer-to-peer” understanding is just as valid. “*Contractual rights to flows of money*” as digital bearer assets needn’t take the form of tokens, even if this has been almost entirely ignored to date in crypto. We established above that to be considered *“finance”* at all, in a candidate *decentralized finance*: ***i) the flows of money have to be facilitating the pricing of capital and not just the movement of money for its own sake*** With the clarification that the instruments of decentralized finance need to be securities, we can add a second fundamental conceptual criterion for a security to be meaningfully *decentralized*: ***ii) the money used as a flow to facilitate the pricing of capital also has to be decentralized*** Let us recap the candidates for money: native tokens, governance tokens, voucher tokens, utility tokens, and stablecoins (including wrapped Bitcoin).  We can tick off governance tokens, vouchers, and utility tokens immediately as they are clearly centrally and costlessly issued and cannot be money, never mind decentralized money. Stablecoins are fascinating in that they can be thought of as simultaneously money *and* securities. Recall they are not literally the money they are supposed to represent, but a right to claim it. They *“work”* as money to the exact extent that they work as securities: if the claim of redemption for *“real”* money is widely believed to be credible, they will tend to be treated as viable money substitutes, or *fiduciary media*, to be more precise. This is worth bearing in mind whenever we reencounter them.  Stablecoins can importantly be split between issued and algorithmic. [[8]](#_ftn1) While far closer to credible *money*, issued stablecoins are, naturally, not decentralized. They are issued by a custodian who represents a single point of failure. Algorithmic stablecoins are a far subtler proposition. For the same reasons as centralized stablecoins acting as fiduciary media, it is fair to recognize them as credible money insofar as they are also credible securities. We acknowledge that in the best-designed cases, it is also fair to recognize them as credibly decentralized. We have a serious issue with algorithmic stablecoins, but as it is a technical one and not a conceptual one, we will save this critique for Part II, *Decentralized Finance, Technically*. For now, we are happy to say that algorithmic stablecoins can be credibly decentralized money.  This leaves us with native tokens. Are they money? Can they be?  To clarify the implications of the question, we are asking this of the native tokens of layer-one blockchains. It is not controversial to describe Bitcoin as money: it is designed to be money and essentially nothing else. What about ETH, SOL, BNB, ADA, MATIC, and so on?  It is not controversial to say that these are, at best, vastly inferior money and more akin to computational resources. The blockchains unanimously describe themselves as *“smart contracting platforms.”*  The native tokens as *“gas”* for paying for computation. [[9]](#_ftn2) Of course, we should look at how these assets are used rather than taking statements made by their creators at the time of their creation as gospel. Not only might they be used as money regardless of these statements and accompanying design decisions, but, as it happens, Ethereum developers have gone on to make centralized changes to optimize monetary policy to compete with Bitcoin as money (EIP-1559 and others). But we would argue the centralization that enabled this change is self-defeating. A similar problem in this regard is that all (not just ETH) were premined to a greater or lesser extent. This is a touchy and sometimes overblown point, given the purpose of a premine is typically to fund protocol development in exactly the same way as with a seed investment in a company. But this observation properly captures how these tokens came about and how they should be conceived: they are securities. Their issuance and control are far too centralized to constitute credibly decentralized money, as is the scope of what they are intended to be *“spent”* on. One counterargument might be that the de facto state capture of Ethereum is gradually becoming more and more OFAC compliant and could, at the same time, be said to give it practical grounds to become more accepted as money via state enforcement and more transparent than fiat currencies in traditional finance also. However, the cost is explicitly the loss of decentralization, so whatever kind of money it is, it needs to be decentralized and, therefore, cannot contribute to credibly decentralized finance. [[10]](#_ftn3) Conceiving of ETH, and similar, as first and foremost computational resources (i.e., gas tokens) which happen to have taken on vastly inferior monetary properties to Bitcoin strikes us as more appropriate. We described them above as “*pseudo-money - money that can only be redeemed for one computational service - that is, to whatever extent they were not centrally issued as securities*!” which we again feel is appropriate. #### Why So Serious? In Part I, we have covered the conceptual criteria necessary to credibly capture *decentralized finance.* The reader might wonder, are we just ruling out everything we dislike based on pedantic definitions and ignoring the reality of development in crypto DeFi? We understand this impulse, but we reject it. This is absolutely worth being pedantic about. If we are not pedantic about the necessity of pricing capital and we are willing to admit any flow of money for any reason, we invite entirely overlooking that the *pretense of capital formation* is the sole conceptual source of speculative value in these assets and the infusion of tens of billions of dollars worth of return-seeking *investment*. If we are not pedantic about the flows of money pricing capital, it is not really plausible that *capital* is being priced, given capital formation relies on market signals of likely profitability and returns. What is being *“priced”* is far more likely to be something along the lines of collectibles or commodities. In other words, if the flows aren’t in money, we aren’t talking about finance in the first place. And if we are not pedantic about this money being decentralized, we negligently invite the greatest rug pull of all time. In other words, if the money isn’t decentralized, then none of this is. Even so, we feel the relevant and necessary criteria don’t stop here. These criteria were merely conceptual. If the reader prefers, she can withhold judgment on whether or not crypto DeFi fits this conceptual framework and continue to Part II, *Decentralized Finance, Technically,* in which we will investigate further technical criteria we believe are necessary for credible decentralized finance. ### PART II: DECENTRALIZED FINANCE, TECHNICALLY > In the short run, the market is a voting machine, but in the long run, it’s a weighing machine. > > — Benjamin Graham on crypto Following the conceptual criteria set out in Part I, we assume a “decentralized security” facilitates the pricing of capital with flows of decentralized money. We will now be more specific about how such a security would have to technically operate to credibly capture a *“decentralized contractual right to claim from a counterparty:”* We list below some characteristics a security may have that would lend to it being sensibly described as *“decentralized”* also: 1. *There is a counterparty, but neither “the law” nor any credible enforcement mechanism of real-world contractual guarantees is a point of centralization. So the flow of money per the claim on counterparty commitments and holder rights operates on trust.* 2. *The contracts are enforced automatically, and the counterparty has no choice but to meet its commitments. This also avoids the “centralization” of the legal system required to enforce the contract as its ultimate backing, hence “smart contracts.”* 3. *There is a counterparty, subject to the centralization of “the law” or a similar credible enforcement mechanism. Still, custody, trading, and clearing no longer require centralization because the security takes the form of a freely, trustlessly transferable digital bearer asset.* #### 1. DeFi as Trust *There is a counterparty but neither “the law” nor any credible enforcement mechanism of real-world contractual guarantees is a point of centralization and so the flow of money per the claim on counterparty commitments and holder rights operates on trust.* Point 1 describes interpersonal credit, and points to the difference between *“decentralized”* and *“peer-to-peer”* as we have delineated the two. In a space in which *nobody can be excluded*, contractual rights to flows of money must be freely tradeable and hence must be securities. The purpose of securities is to scale capital formation beyond what this kind of backed-by-trust credit can support. Why would you need to construct a contract to be *freely tradeable and priced* exclusively between people who know and trust each other already?[[11]](#_ftn1) In addition, the point of a blockchain is (in theory) to engineer trustlessness, and so one wonders why blockchains would be a worthwhile means of achieving this *“decentralization”* in the first place, and we are once again back to pondering peer-to-peer applications instead … The point of the centralization of *the law* is to avoid governance abuses that are invariably likely to arise when counterparties do not know one another. This is a rather amusing point to focus on given ex-Bitcoin crypto’s faux-libertarian pretenses, disdain for securities regulations, and repeated insistence that issued stablecoins and native, governance, utility, and voucher tokens are not unregulated securities. Securities always involve handing over a definite amount of money now in exchange for the contractual promise of a usually indefinite amount of money in the future.  But promises can be broken. This is such an incredibly simple premise of human behavior it is surprising and unfortunate that it needs to be explained. Millions of dollars - billions even - will more often than not be taken in violation of *“promises made”* instead of given to strangers *unless* there is a credible enforcement mechanism to prevent this. FTX is a perfect example, which we will get to further down. Reputation may be such a mechanism in a free market, but it is really defaulting back to trust and can be very useful but will only get you so far: fraud is rampant in *“free markets for reputation”* *even when* there is the credible threat of legal action.[[12]](#_ftn2)  Issued stablecoins (including wrapped Bitcoin) clearly rely on trust. They are not *actual* dollars or Bitcoin, but IOUs for Bitcoin or dollars that are technically and legally unenforceable. As it happens, they may even be *illegal*, and hence in some sense *less than* legally unenforceable. Any actual Bitcoin or dollars exchanged for such a token may well never be returned. *“Holders”* of soBTC (wrapped Bitcoin on Solana) allegedly custodied by FTX, are discovering this at the time of writing.[[13]](#_ftn3) Voucher and utility tokens rely on trust even more obviously so, as their utility is entirely at the discretion of the issuer. In the case of governance tokens, on the other hand, the question is not as straightforward to answer. One response might be that they do not rely on trust, because claims are automatically enforced by the smart contract (so more in line with Point 2, which we get to just below) not by trust at all, and the terms of enforcement are open and transparent.  But this is not quite addressing the question. We must consider who has entered into a contract with whom, what promises around flows of money were codified, and what commitments are still live. The buyer of the governance token traded money upfront for the rights to some kind of nominal return generated by relationship with the smart contract, be it fee revenue, further token issuance, or by some other method. By this understanding, the smart contract *itself* is the counterparty, and we are firmly in Point 2 on automatic enforcement of commitments. In other words, this again seems like *“application equity.”* But if we investigate this analogy further, we realize that, if we have regular equity, there are two important differences to the above naive analysis: i) the commitments to which we are contractually entitled do not end with *“the company,”* as if it too were an autonomous entity, but with the management of the company and the board. In other words, those controlling the resources which generate the flows of money to which we are entitled. And ii) *there is* a credible enforcement mechanism of these commitments: securities law! The proper analysis here is that i) fellow governance token holders control the resources generating the flows of money and hence they, not the smart contract, are the counterparties, and, ii) in *this relationship*, there is no credible enforcement mechanism after all! We do in fact *trust* that they will not utilize their governance tokens in a way that alters the governance mechanism of the smart contract, or the smart contract itself, to our disadvantage. More simply, regardless of whether or not we trust them, we can’t stop them. An interesting corner case is where governance tokens are constructed so as to only be capable of amending certain parameters of the smart contract, the idea being that holders would want the flexibility to amend these based on differing market conditions in the future. For the sake of clarity, let us call governance tokens which collectively have the ability to arbitrarily amend the smart contract *“unrestricted”* and those that can only tweak predetermined parameters *“restricted.”* This acknowledgment introduces some subtlety here around the exact relationship between automated enforcement, per Point 2 that follows, and human decision making and trust. Hence, we will continue this discussion just below in the following subsection. Governance tokens aside for a moment, we would argue Point 1 therefore does not apply. Operating on trust is not a means of achieving credibly decentralized finance. #### 2. DeFi as Smart Contracts *The contracts are enforced automatically and the counterparty has no choice but to meet its commitments. This also avoids the “centralization” of the legal system required to enforce the contract as its ultimate backing, hence “smart contracts”.* What if the counterparty has no choice but to meet their liabilities because enforcement happens via smart contract execution? This at least has some potential, but we must immediately return to take issue with governance tokens and algorithmic stablecoins. There is a fundamental trade-off at play here that much of crypto DeFi seems not to want to address: if you employ immutable automatic enforcement, you are ruling out human judgment, hence most capital allocation, and hence most of finance. But if you allow human judgment, you *need* some form of enforcement other than automatic or you are operating solely on trust, which can’t scale, and hence can’t be credibly described as decentralized. The question is how best to deal with the trade-offs that are unavoidable given what finance *is and is for.*  That is not to say that those parts of finance that do not rely on human judgment are without value, however. Quite the contrary, the commitment to uncertain future flows offered by varieties of hedging and market making, for example, can almost certainly be enforced entirely with smart contracts given appropriate trustless information feeds. Unfortunately, very few smart contracts in crypto DeFi are truly immutable, because such a smart contract could never be updated and would have to be set up and deployed in its final form.[[14]](#_ftn1) This was exactly the problem allegedly *“solved”* by governance tokens, on which we can now resume our analysis. The distinction between restricted and unrestricted governance tokens is cucial. We will give some credit to the design methodology of restricted governance tokens in that they appear to be sincere attempts to address the fundamental trade-off just outlined. Yet, the immutability of restricted governance tokens creates governance pressures from the desirability of flexibility and inflexibility alike. *Which* parameters can be tweaked, by whom, and by how much, once decided upon, is still immutable by definition. While it may seem wise to introduce flexibility to changing circumstances, that flexibility cannot be open-ended or else the governance token becomes unrestricted and defeats the purpose of this subtlety. If flexible enough to *later change* what parameters can be tweaked, by whom, and by how much, the governance is unrestricted; if restricted, then the perfect decision needs to be made at the outset and we are once again in the conundrum of needing to deploy this smart contract in its final form. This enormously *restricts* our ability to involve human judgment in the allocation of capital.  At the same time, the introduction of *any* parameters that can be tweaked creates a trust issue that we are inadvertently making impossible to solve, given we are stipulating that these are the only tweaks allowed. In other words, it is entirely possible that these tweaks will encompass ways of abusing governance power. For example, the tweakable parameter could relate to the control of issuance of the governance token, in which different parties will naturally have different interests. If the governance is so restricted as to only tweak this parameter and not be capable of addressing *how parameters are tweaked*, then holders simultaneously have to trust each other *and* be subject to the automatic enforcement of whatever actions other holders take. To a large extent, unrestricted governance tokens are implicitly trying to overcome this tension. However, if the power to amend a smart contract beyond the restricted tweaking of parameters exists, it can be acquired, and once acquired, the smart contract can be amended to anything at all. A potential amendment, if not the likely one, would be to remove the governance rights of everybody else. Given governance tokens are securities, this violates the initial (real-world) contract with counterparties. If this is at all possible and cannot be credibly enforced against, then we are back relying on trust that it won’t happen. Theoretical commentary side, we must finally address the practical reality of the vast prevalence of bolt-on utility tokens masquerading as governance tokens. In this case, root access to the smart contract is not actually democratized, but a centralized team of developers retains control of the direction of the project, either by holding the keys or by driving upgrades to v2, v3, and so on. A generous interpretation of this setup would be that the developers and backers tackle the fundamental trade-off of human judgment in capital allocation and credible decentralization by raising capital with decentralization theatre while continuing to allocate it with human judgment. A more cynical interpretation purpose of such bolt-on utility tokens was and is transparently to skirt securities laws and banking regulations in raising this capital by moving from the model of, *you give me money, I give you tokens*, to, *you put money in this smart contract, it gives you governance tokens so long as your money stays in*.[[15]](#_ftn1) The other usage of smart contracts in DeFi we said we would get back to is that of algorithmic stablecoins. We believe that the unfortunate reality is that most algorithmic stablecoins are unsound in the long run.  The only way to *guarantee* redemption of a reserve of fiduciary media is to i) actually, physically have the reserve, and ii) have your promise to redeem be subject to a credible enforcement mechanism. Actual dollars in bank accounts have no crypto-native existence and so cannot be controlled by a smart contract. Bitcoin has a crypto-native existence but, at the time of writing, no way to trustlessly manipulate on other blockchains. Keep this in mind, however, as we will come back to the prospect of a trustless peg further down. Absent direct, *physical,* exposure, the only option is synthetic price exposure. If we are looking to automate this, we need to guarantee convertibility into some other priced asset. But you can’t guarantee the price of *any asset*, and so we end up issuing fiduciary media denominated in asset x, but backed by asset y, where the price ratio of x:y floats. Therefore, we immediately encounter a capital efficiency problem because the only way to guarantee protection against a z% drawdown in asset y is to overcollateralize the fiduciary media of asset x by z/(100-z) times.[[16]](#_ftn1) Arbitrarily high overcollateralization could in theory work, *if also paired with* having reason to believe that asset y will at least be relatively stable in price against asset x, if not likely to appreciate. But all approaches in crypto DeFi have driven in exactly the other direction on both counts: using native, governance, utility, or voucher tokens as the reserve asset(s), with no reason whatsoever to expect helpful movements in their prices relative to asset x (almost always USD), and advertising the *“capital efficiency”* of the low collateralization requirements.[[17]](#_ftn2) We end up in the bizarre situation of accidentally fractionally reserved fiduciary media, where the collateralization ratio is a function of a floating price of an unregistered security and the reserves aren’t really reserves at all because they will be liquidated per big enough movements in this price.  If (or when) the collateral stays under the value of the issued media for long enough, regardless of what ingenious mechanism of satisfying redemptions has been created with supposedly immutable smart contracts, secondary markets will begin to reflect the doubt that these redemptions can be met and either the peg will break, the reserves will drain completely (possibly near instantaneously in a novel digital spin on free banking-esque note duelling) or some mix of the two. As with all fractional reserve banking, everything is great so long as credit is expanding and prices are going up. But leverage bites both ways … To give credit where it is due, some algorithmic stablecoins have sophisticated mechanisms incentivizing holders to dynamically adjust their collateral, including adversarial positioning relative to other holders such that entirely selfish motives push all to protect system collateralization as a whole. While these incentives may work on a short-term, case-by-case basis, they cannot help in the long run if market panic in asset y lends itself to a simple calculus that liquidating and losing the reserve entitlement is cheaper than potentially endlessly committing more falling reserves to prop up a fixed face value of fiduciary media.  So, again, it will only work if we have reason to believe that asset y will at least be relatively stable in price against asset x, if not likely to appreciate. This *might* work with decentralized money as the backing, but do we believe this of native, governance, utility, and voucher tokens? We leave that up to the reader … There is an interesting parallel here to our critique of governance tokens. Although rooted in a smart contract, and hence the behaviors by which humans can interact with the system are precisely and transparently specified, this still can’t force humans to act in the desired way! Humans can think outside the smart contract and choose to ignore entirely the incentives it provides. Either the smart contract decides or humans decide, but the smart contract cannot make humans decide. This circle cannot be squared.  Algorithmic stablecoins are not fundamentally flawed in the same way, to be clear. With governance tokens, the *“smart contract”* is effectively an illusion of having designed away the potential for governance abuse. With algorithmic stablecoins we assume the smart contract is genuine,[[18]](#_ftn3) and the vulnerability is not one of *“governance abuse,”* as such, but that the incentives it provides may simply be ignored given real-world circumstances which the smart contract clearly cannot be said to *understand.* All this said, Point 2 does leave an opening for credible decentralized finance: *actual* smart contracts that manipulate decentralized securities or decentralized money natively or via a trustless peg. #### 3. - DeFi as the Network, Not the Asset *There is a counterparty, subject to the centralization of “the law” or a similar credible enforcement mechanism, but it is custody, trading, and clearing that no longer require centralization because the security takes the form of a freely, uncensorably transferable digital bearer asset.* In this case, we assume the security has some credible enforcement mechanism (most likely real-world legal registration) hence the question of rights and commitments of money flows is solved without solely trust in the issuer and without automatic enforcement, per Points 1 and 2. Instead, we consider decentralizing custody, trading, and clearing. This latter property exists in crypto, as well as in Bitcoin, and is often touted as one of the main benefits: that financial instruments can be directly controlled by the user without centralized gatekeepers for custody or middlemen for exchange and clearing. An obvious problem presents itself here in that the former property does not apply. Issued stablecoins, and native, governance, utility, and voucher tokens are unregistered securities, the governance of which relies on trust that cannot scale past people who already know one another. We have already made this point several times, however, and so will instead focus on two different and subtler problems: the censorability of the network, and the concept of *“Maximum Extractable Value”*, or MEV.[[19]](#_ftn1) To be clear, neither completely prevent workable decentralized securities, but they are strong vectors of (re)centralization. At the very least they are major inconveniences that ought to be avoided in decentralized finance if at all possible. We won’t go through every layer-one blockchain as similar arguments apply to Ethereum, Solana, and BSC, by far the largest by market capitalization of these native tokens and supported on these chains. Solana and BSC barely need any discussion as they are clearly centralized. It is not at all uncommon for *“validators”* to take the network offline for hours at a time. Ethereum is more complicated as it is notionally much more decentralized in terms of number of users and distribution of tokens. However, the shift in consensus mechanism has almost immediately led to [OFAC compliance in ~70% of blocks produced](https://www.mevwatch.info/).[[20]](#_ftn2) In other words, enough large and centralized entities are technically interdependent on each other and we can easily imagine them in time becoming jointly liable for each other’s behavior in validating blocks. The exact mechanics are outside the scope of this paper, but we would argue that the nature of Proof of Stake is such that this vector of recentralization is only likely to get worse over time.[[21]](#_ftn3) There is a subtlety here worth drawing attention to in emphasizing how dire censorability is for hoped-for decentralization. Blockchains are necessarily distributed global states. In and of itself, this is an enormously more centralized starting point than the reality in traditional finance of securities issuance, trading, clearing, custody, and, ultimately, *ownership*. Insofar as valid alterations to this global state are permissionless and pseudonymous, we can credibly claim decentralization. However, the ability to censor transactions destroys such a hope.  MEV is similar:[[22]](#_ftn4) in any network with privileged actors there will be asymmetries of access and information. In smart-contracting blockchains, there are necessarily such privileged actors because assembling transactions in the most profitable way requires a lot of expertise and enormous computational power. A market naturally arises in which (relatively unsophisticated) block proposers auction those slots to (sophisticated) block builders. This enables a range of trading behavior such as front-running and sandwich trading that would be illegal in traditional finance. It is estimated over $600m has already been extracted from DeFi on Ethereum alone. Hence this represents another vector of recentralization around the well-capitalized, who by definition have the best access to the single global state being proposed as the record of all securities ownership. The thread running through these concerns is the existence of a global state in which these securities are represented in the first place. It is worth asking why this would even in theory be needed? What do we achieve for which we must trade the centralized overhead of a blockchain, centralized censorability, and centralized visibility? What are transaction fees paying for if not hard-won trustlessness? We can only think of one worthwhile answer: global access. If there is an advantage to the issuer of a security of having effectively global price discovery and liquidity, this may well be worth it. But if not, we aren’t so sure. Again, there are other means of creating digital bearer assets that work within more restrictive trust regimes than a blockchain, and which are better described as *“peer-to-peer”* than as *“decentralized.”*[[23]](#_ftn1)  Let us now combine these theoretical insights into a framework for practically workable decentralized finance. #### Workable Decentralized Finance, A Recap To recap: Point 1 gets us nowhere: we cannot operate securities on trust alone in a meaningfully *“decentralized”* environment. Point 2 allows for smart contracts (without backdoor governance) that manipulate decentralized securities or decentralized money natively or via a trustless peg. Point 3 allows for registered securities which are decentralized insofar as seeking to take advantage of a blockchain network rather than a blockchain asset. It also provides two ideal characteristics of such a network - that it is not censorable and that either confidential or off-chain transactions can reduce and minimize MEV, if not remove it entirely - and one ideal threshold characteristic of the securities themselves - that their issuer truly requires global price discovery and liquidity. If we allow that Bitcoin is decentralized money, then this all pops out the following: Point 2 allows for the Lightning Network, DLCs, LBTC on Liquid, and RBTC on RSK. Point 3 allows for RGB or TARO assets (insofar as they are legally enforceable and hence do not operate on unscalable trust alone) given they are rooted in Bitcoin’s network and transferred off-chain; or for registered security tokens on Liquid, RSK, or Sequentia - as their transfer can be confidential. The combination of Points 2 and 3 allow for immutable smart contract execution of hedging contracts, automated market making, and more, between Bitcoin and decentralized securities on any of the aforementioned scaling layers in which this is technically possible. The caveat to Point 3 is more cultural than technical and could be thought to amount to: *are you sure you need blockchain-based tokens at all rather than other, more trust-dependent means of achieving digital bearer assets? Why not use a system like fedimint or Pear Credit?*[*[24]*](#_ftn2) As mentioned in the introduction, we believe a variety of decentralized finance will emerge on Bitcoin, and to some extent already has. Evidently, this narrowing down of worthwhile characteristics ends with fairly Bitcoin-centric criteria. It is worth considering what, if anything, could lend these characteristics back to crypto DeFi, and the answer isn’t quite nothing: if the native tokens of layer-one blockchains were credibly decentralized money then most of our reasoning around Bitcoin would likewise apply and most of the concerns outlined at length above would disappear.[[25]](#_ftn3) Otherwise, we see one feasible combination of factors by which decentralized finance could come to be on non-Bitcoin blockchains. First, there needs to be a way to manipulate decentralized money in these ecosystems while retaining custody and without counterparty risk. Second, real economic returns must be the root of subsequent layers of financialization. Note these first two points once again amount to: *it has to actually be finance and it has to actually be decentralized.* Third, securities involving human judgment in the deployment of capital need to have credible mechanisms of enforcement that do not rely on trust. If these first two factors are enabled, then automatic execution per Point 2 can become actually useful, whereas currently, it amounts to little more than complexity theatre and a velocity catalyst. In other words, either the code governs or the law governs, with no LARPy governance tokens muddying the water on the relevance of human involvement. Fourth, the transfer of these assets would ideally be enabled off-chain, confidentially, or some as-yet-undiscovered method for avoiding MEV, or at least minimizing it. Fifth, the networks *themselves*, as well as the native tokens of the networks, would need to be credibly decentralized and incapable of censoring valid updates to global state. Sixth, the case needs to be made that global price discovery and liquidity is worth the trade-off of a handful of centralization vectors that come with using a blockchain in the first place rather than some other method of creating more trust-restricted digital bearer assets.[[26]](#_ftn1) But frankly, while this may be feasible, we think it is unlikely for a simple reason: the culture in crypto focuses on moving in the other direction on almost all of these points besides the first.  There are toxic incentives to monetize by token issuance rather than putting capital at risk to provide a valuable service, which we analyze in more detail in Part IV, *Let’s Play The Blame Game.* Every effort is made to insist that stablecoins, native, governance, utility, and voucher tokens are not unregistered securities even though they are, and are automatically enforced even though they are not; as crypto base layers race ahead with proliferating complexity, both MEV and censorability via re-centralization are becoming worse and worse problems; and there appears to be little appreciation of the concept that this would likely imply a dramatic price decline in the native token of whatever blockchain achieves all the aforementioned. This is likely because, were this to happen, it could not be reconciled with the prevailing investment ethos and theses that relies on leverage and exit liquidity, amongst other unsavory factors - all of which are catalyzed by global price discovery and liquidity. True peer-to-peer is a non-sequitur in such an environment: it leaves retail out the market and money on the table. Most unfortunately of all, we would even argue that this rough direction *was once the norm and the aspiration*, even if the stage reached was questionable and incomplete. The evolutionary step touched on briefly in the very first subsection of adding fees and distinguishing between users and liquidity providers is an importantly different construct to the majority of what has been developed since and outlined just above. This involves putting capital at risk and offering a service users pay for.[[27]](#_ftn2)  This was *actually capitalistic*, but the problem was that hardly anybody used it or cared about it besides the developers. This was very probably because, without facilitating the underlying pricing of capital or manipulating decentralized money, it is not entirely clear what the use case was or whether it was worth the *real* risk. Nobody wanted 2% yield on stablecoins, especially not at the risk of *“impermanent loss,”* least of all VCs. So-called *“generalized mining”* (i.e. wash trading to simulate usage of the applications to try to honeypot wider adoption) was indulged in, for a time. But as it would shortly turn out, the catalyst for adoption was *precisely*: toxic incentives to monetize by token issuance, exaggerate via *“yield farming,”* and realize via immediate and total exit liquidity. In the end, these dwarfed every other incentive by which DeFi might have inched towards credibly decentralized finance.  As mentioned in the introduction, we approve of the idea of *decentralized finance* in theory, even if *DeFi* isn't this in practice. What DeFi *is* in practice leads naturally to FTX … ### PART III: THE SHORT, SAD SAGA OF FTX > 2+2=5 > > — Winston Smith auditing Alameda's balance sheet From the golden child of crypto to the pariah of the industry, the fall of FTX and Alameda is arguably the single largest failure in the history of the crypto space. Alameda came first. It was a trading firm, specializing both in arbitrage and directional trading strategies of crypto DeFi tokens of all stripes. These are common in all advanced markets, with crypto being especially lucrative due to the inefficiencies in information, and the ability to centrally and costlessly issue these tokens with no credible enforcement mechanism for the commitments attached.  Then came FTX, an exchange. In its truest form an exchange should have one simple task: pair buyers and sellers and take a fee for facilitating the trade. This can be a steady and profitable business. Zvi Moshowitz [puts it crisply as follows](https://thezvi.substack.com/p/sadly-ftx): “*FTX builds a pretty good product outside of the fraud and the insolvency and the stealing customer deposits, and does a lot of things very well. The competition really is pretty terrible so it doesn’t take much to offer a superior product.*”  FTX’s claim to fame was in offering the riskiest trading experience in crypto DeFi. It allowed for high leverage and futures products that were hard to find elsewhere - in particular the ability to use just about any stablecoin, native, governance, utility, or voucher token as trading collateral at risk of liquidation. Instead of a customer giving the exchange all the money they would like to trade up front, the exchange begins to lend to the customer in order for them to speculate on tokens. FTX was not the only exchange to offer this service but it was by far the most aggressive. Risk management is the foremost priority of any financial firm offering credit. From real estate on the one hand to crypto DeFi tokens that can be costlessly and centrally issued ad infinitum and then used as collateral for leverage on the other, the lender must manage this risk. We will not go into too much detail here, but essentially this task boils down to mitigating timing mismatches.[[28]](#_ftn1) Here is where it gets truly wacky. Like many in crypto DeFi, Alameda had the idea of creating their own DeFi token, FTT, in advance of launching FTX: a kind of ICO for both a token and a company. The alleged commitment to holders was derived from the promise that a portion of profits from FTX would be used to buy up the token. Of course, there was no credible enforcement mechanism, and so although we might think of FTT as pseudo-equity in FTX, it is really subordinate to *actual* equity and subject to the whims of its centralized issuers: FTX management. FTT was a voucher token that meant whatever FTX and Alameda decided it meant. With the exceptionally dubious premise for valuation of this costlessly and centrally issued voucher token in mind, consider that both FTX and Alameda at various points decided to use FTT as collateral for leverage. This added a ticking time bomb of truly insane risk. Insofar as it found any value in the market, FTT could only really be thought of as a bet on the success and health of FTX. By utilizing FTT as collateral, FTX made its balance sheet both more leveraged and, on top of this, as vulnerable as a whole as FTT was in particular. Although few outside suspected it at the time, especially as FTX was *“rescuing”* the likes of Voyager and BlockFi (i.e. bailing *in* their customer deposits), FTX’s balance sheet was mighty vulnerable … Although details are still emerging, the picture is becoming clearer that Alameda appears to have made *enormous* losses on directional bets on crypto DeFi, including VC-like investments, up to and around the time of the Terra/Luna collapse in May. By some accounts Alameda [may have lost over $15 billion](https://milkyeggs.com/?p=175), [much of it on leverage](https://archive.ph/jiLnC) that was then called in. It is suspected Alameda veered in this direction once its early edge in market making deteriorated as the overall crypto market began to mature. In order to prevent Alameda’s collapse (which likely would have immediately caused the failure of FTX also, given their often-illegal interrelationship)[[29]](#_ftn1) [The Wall Street Journal reports](https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732?mod=e2tw) that FTX lent Alameda over half its customer deposits to Alameda to plug this gap. It is plausible that FTT was used as collateral for this loan on the FTX side.  [Lucas Nuzzi at CoinMetrics has speculated](https://coinmetrics.substack.com/p/state-of-the-network-issue-181) that a September 28th transfer of $4bn worth of vested FTT may well have been Alameda paying FTX back for this initial loan. This is all rather amusing given FTX is the entity that creates, issues, and allegedly redeems FTT in the first place. In any case, the customer deposits were gone, and FTX ended up with a balance sheet leveraged to a voucher token it created and almost exclusively traded on its own exchange. Macro analyst Lyn Alden captured the absurdity of the situation nicely as follows: [Post on X](https://twitter.com/LynAldenContact/status/1590063257158811648) A November 2nd [CoinDesk article](https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/) leaked details of this precarious situation. This in turn prompted a tactical open market sale of FTT by Binance which was too large for the market or the team at Alameda to prop up (Binance held around 10% of the token supply after investing early in FTX and being bought out in 2021 for a combination of stablecoins and FTT). This led to the death spiral of self-fulfilling rumors as panic spread and depositors desperately tried to withdraw their (mostly non-existent) deposits. FTX took less than 48 hours to go from functionally but secretly to *actually insolvent*.[[30]](#_ftn2) As a kind of amusing epilogue, it is worth covering what happened with the Solana-based *“decentralized exchange”* Serum and its governance token SRM as FTX was beginning to wobble earlier in 2022. The situation wasn’t critical to the collapse but nicely demonstrates in practice several points we made above in theory.  In short, because FTX owned enough SRM to unilaterally alter the smart contract and *“unrestrictedly govern”*, in effect, [it was able to inflate the token supply by 60% in two huge mints on February 19th and May 25th](https://twitter.com/LucasNuzzi/status/1591595908239888384). The relevance of these dates is that the GBTC arbitrage trade was beginning to invert around February, causing issues at BlockFi and 3AC, while Terra/Luna collapsed in May, and hence the mints were almost certainly related to trying to offset Alameda trading losses. Nonetheless, some portion of these tokens went on the FTX balance sheet and were marked at $2.2bn at the time of the CoinDesk leak, despite the total market capitalization of SRM being $88m.  So, who and what do we blame? Is this the fault of DeFi? Of decentralized finance? Or of a centralized financial entity, riding the hype of *“crypto”,* deliberately operating in a jurisdiction with barely credible enforcement mechanisms, freeing it up to take actions that would be deemed illegal in most advanced market economies? The straightforward answer is the latter. There is no doubt that immense and potentially unprecedented fraud was involved in FTX’s collapse.  But we would also argue that DeFi masquerading as decentralized finance, and all the financial ignorance and misunderstanding this feeds on, had a crucial part to play as well. So too did the industry surrounding and promoting DeFi, exploiting financial ignorance, and requiring precisely the likes of FTX to facilitate cashing out while others were cashing in. Let’s play the blame game … ### PART IV: LET’S PLAY THE BLAME GAME > What bothers me isn't that fraud is not nice. Or that fraud is mean. For fifteen thousand years, fraud and short-sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did. > > — Steve Carrell as Mark Baum on Crypto VCs It is hopefully clear from our explanation above that pretty much nothing about FTX was *“decentralized.”* We might think of it as CeFi or *“centralized finance”* so as to distinguish it from DeFi. To reiterate the popular claim we identified in the introduction and which we intend to analyze:  *This was CeFi, not DeFi, and, if anything, only further demonstrates the need for DeFi.* Then again, FTX was predicated on the centralized access to and manipulation of DeFi, so what are we to think? Who are we to blame? With our framework from Part II, *Decentralized Finance, Technically*, we can more properly distinguish between DeFi and decentralized finance, and tease out the importance of the former to FTX specifically and crypto in general. #### Pricing Capital In Part I, *Decentralized Finance, Conceptually,* we outlined two conceptual criteria we believe are relevant and necessary for a candidate decentralized finance to be credible:  *i) the flows of money have to be facilitating the pricing of capital and not just the movement of money for its own sake* and, *ii) the money used as a flow to facilitate the pricing of capital also has to be decentralized* Recall *“pricing capital”* is only meaningful insofar as it enables capital allocation that generates a return. It is really the *return* that is being priced.  Throughout Part II, *Decentralized Finance, Technically,* we referenced point ii) several times in building out our framework, but we did not again allude to point i). This was quite simply because we would have needed to point out every other paragraph that the generation of real economic returns is not happening. This would have distracted from the entirely separate set of flaws we were analyzing. But it is now appropriate to bring it up again as the final nail in the coffin of crypto DeFi. As mentioned in the introduction, our main problem with *DeFi* is that it is not decentralized and it is not finance. Although covered at length in *Only The Strong Survive*, let us briefly review what DeFi has *actually achieved* in relation to capital, finance, and flows of money … #### But Where Does the Yield Come From? The absence of real returns on capital forces us to immediately question why these assets have any value. Returns can be, and often are, reframed as *“yield,”* and crypto has taken a liking to presenting its financial credentials with this terminology. But where does the yield come from? As we wrote in Section 3, *Crypto Is Not Finance*, of *Only The Strong Survive*: “*A yield is the generated flow above maintenance or depreciation of the carrying capacity of some* stock *of economically productive assets. Less the recouped seeds for the next year’s crop, a harvest is a* yield *from a sewn field. Less the financing costs, the interest on a bond is a yield. If the issuing business is solvent and profitable in unit economics-terms and hence the part value of the principal is relatively assured, the market will settle on a value that implies a probability of all the interest being paid as promised. The market assesses the productive carrying capacity of economic* stock *generating the ability to pay the* flow *of interest*. *So what yield is being farmed in crypto? There is transparently none. There are flows, but they are not generated by economically productive assets over time but rather appear near instantaneously as a result of speculative pricing across non-productive assets. The word “speculative” is not a denigration. There is nothing wrong with speculative value. But there is something bizarre and circular about discrepancies on the potential future value itself forming the basis of profitable arbitrage that is then mislabelled as a ‘yield’.”* Crypto DeFi engages in arbitrary and automatable combinations of seigniorage, securitization, rehypothecation, and leverage. It is the purest form of financialization ever conceived: the financialization of … nothing at all. To be absolutely clear, there is no link whatsoever to returns on capital employed, hence no link to any real yield. And yet *“yield farming”* was the largest so-called *“use case”* for crypto DeFi in the cycle leading up to the collapse of FTX and was the composable primitive of just about everything else. Promises of *“guaranteed yield”* blitzed the markets with a ferocity that was impossible to keep up with. The meme became so powerful that individuals and entire firms alike dedicated all their resources to chasing the freshest *“yield farming”* opportunity presented to the market. Where did this yield come from? The simple answer is it came from a combination of seigniorage and securitization and infusion from so-called *“venture capitalists”* and was then fueled by trading, leverage, and rehypothecation. #### The Yield is the Friends We Made Along the Way The more involved answer is that the false perception of yield emerges from the perverse incentives created by the absence of our two fundamental conceptual criteria for decentralized finance: i) no real economic returns, and ii) there being no decentralized money; combined with two novel properties of crypto to which we have alluded several times but on which we will now focus: iii) the ability to costlessly and centrally issue tokens, and, iv) immediate and total exit liquidity.  A concept that ties much of this together is that of a *“vampire attack”*: the forking of the open source code of a smart contract or protocol *without a token* so as to add a governance token or a bolt-on utility token masquerading as governance.[[31]](#_ftn1) The rationale to do this is as follows; a governance token can redistribute the fee revenue from the service provided by the smart contract to its holders, or a utility token can promise rewards of the application’s increasing popularity to its holders via later repurchase. Both strongly incentivize those holders to use and promote the service. Users getting in on something early before it becomes wildly popular and both contributing to and financially benefiting from that rise can give the newer project a bootstrapped momentum that becomes self-fulfilling in a way the (presumably useful) original service likely never would have, *even if it never had a fee in the first place*.  This approach incentivizes customers to become investors, and investors to find more customers. Because these mechanics are widely understood in the space, there is intense pressure on just about every crypto DeFi project to pre-emptively add a governance token to ward off such an attack. This pressure is only increased for those on the verge of becoming popular, or perhaps which already have. Given we have the ability to costlessly and centrally issue tokens, tokens proliferate, and we get rampant securitization.[[32]](#_ftn2) At the same time, given there are no real returns on which these securitizations are based, the easiest way to make a popular service in the first place is to create some means of financially manipulating tokens so as to produce the false perception of yield![[33]](#_ftn3) Hence DeFi projects proliferate and we get rampant trading, leverage, and rehypothecation. The final ingredients are the lack of decentralized money and immediate and total exit liquidity.  The lack of decentralized money has a subtle implication around how the false perception of yield, hence the securities, are priced. The funding provided in exchange for tokens is money (almost always USD, via primary offerings to crypto VCs and hedge funds) hence the tokens are most often quoted in this same denomination. But they do not generate fee revenue for holders in this denomination, but rather in the denomination of whatever tokens are being manipulated. This means the value of the governance token in question is, in practice, dependent on seeking to tactically boost the market price of the manipulated tokens (i.e. wash trade them) in order to create the false perception of yield for just long enough to cash back out into real money. It is therefore not dependent on improving the service or attempting to ground the entire edifice in real returns. Attempting to ground a project in real returns and gradually improve it as it proves its value in the marketplace is the essence of capital formation. But it takes a long time. Immediate exit liquidity ties together the toxic cocktail of poorly interlocking incentives. Any potentially good idea will be pressured into a positive feedback loop of token issuance and aimless velocity, and spiral out of control. Ironically, it will do so in a way that both introduces at least one security and possibly more, and yet deviates further and further from creating any real capital such a security might usefully price in the first place. Some of this might sound like a natural analogue to a VC investing in the equity of a company, but this comparison is actually revealing of several important differences: i) Per Part II, *Decentralized Finance, Technically*, there is no credible enforcement mechanism for the supposed commitments. ii) The hope in a VC investment is for an *eventual* return on capital to justify the price of the equity being bought. And, iii) founders and VCs do not have immediate exit liquidity in any start-up equity, never mind *all* start-up equity. Their equity will become valuable and tradeable (hence possible to exit) to the extent a return generating operation is successfully developed. None of this applies in crypto DeFi: given there is no prospect of returns, but only “yield” traceable to token issuance, the incentive is not to invest in long-term productive stocks of capital but in the short-term perception of flows of *other* money into *this* money. Given VCs have immediate and total exit liquidity, their incentives are to not to nurture a highly uncertain business for as long as it takes to stabilize its return profile, but to maximize i) the amount of tokens they are allocated for free *as early as possible* and, ii) the price at which they can unload it *as quickly as possible*. Given protocol developers (the equivalent of companies) are similarly directly exposed to the immediate price rather than the long-term value of the capital they are responsible for creating, their incentives are equally aligned with VCs and misaligned with buyers and holders of the token. And given there is no credible enforcement mechanism, even referring to a *“responsibility”* is naive as they can do whatever they want. Unsurprisingly, what they tend to do aligns perfectly with their own warped incentives. There are two main avenues by which these incentives are followed: fuelling and magnifying the short-term perception of yield and creating exit liquidity. While there are developers and investors in crypto *just trying to build useful things without a token,* this is the purpose of vast swathes of the crypto industry, and is enabled by VCs, hedge funds, and exchanges. Crypto VCs seed both the initial tokens and any higher-level protocols that in turn allow for leverage and rehypothecation to increase flows and inflate valuations. If these protocols throw off additional *“governance tokens”* - i.e. they throw securitization into the mix as well - all the better: yet more tokens to be priced, traded, leveraged, and rehypothecated! Crypto exchanges create an onramp for retail dollars to provide the liquidity necessary for superficial validation of price movements, which in turn gives VCs an offramp to cash out. Crypto hedge funds typically specialize in arbitraging the relatively inefficient markets typically found on crypto exchanges, especially in light of the opportunity for insider trading given the securities in question are unregistered. But they sometimes also take directional bets and even seed native, governance, utility, and voucher tokens in a similar manner to crypto VCs. Often, the line between crypto VCs and hedge funds is blurry. What is amusing, especially in hindsight, is that very little of this needs to be risky because, even if this is all done in perfectly good faith and belief in the potential value of the protocols and tokens created, it is functionally equivalent to extracting trading value from retail investors, just with a little wash trading thrown in as a honeypot. There is some timing risk for crypto VCs and hedge funds seeding the tokens, but given the exit liquidity is immediate, the period of directional exposure can easily be dwarfed by the size and immediacy of the pay-out. Running a crypto exchange needn’t be risky at all as it only requires facilitating trades without any directional exposure whatsoever. Likewise arbitraging inefficient markets as a crypto hedge fund. And yet Alameda and FTX managed to do this in about as risky a way as possible; so risky, in fact, that they resorted to fraud to try to cover it up. As we know, even that didn’t work … #### Alameda, FTX, FTT, and More … It is important to point out that the opacity of the mechanics just outlined is basically the entire idea. Fraud is easier to disguise when you create an allure of grandeur to mask a concept so basic a middle schooler can see it doesn’t add up. There were three core pillars to the story of the collapse: Alameda, FTX, and FTT. Alameda, was a crypto hedge fund which aimed to make money arbitraging and making directional bets on native, governance, utility, and voucher tokens. While not strictly speaking a venture capital firm, it fulfilled essentially the same role given the blurriness mentioned above. FTX was a crypto exchange that offered leverage and other bespoke products to customers looking to speculate on token prices. Lastly there was FTT, a voucher token created by FTX with the value proposition to buyers that some of the profits from FTX would be used to purchase this token at various points in time. All three of these intertwined with each other, building layers of unnecessary and unjustifiable risk into a gigantic house of cards. But key to appreciate is that none of this would have been possible without DeFi: Alameda arbitraged and directionally traded DeFi tokens of all stripes. FTX enabled this trading on an exchange explicitly encouraging leverage. Both entities *“invested”* in tokens, perhaps most notably having an important hand in getting Solana off the ground, an entire blockchain the entire purpose of which was to accelerate DeFi, including being amongst the largest holders of its native token, SOL. FTT was, of course, a DeFi token, as was almost everything else on FTX’s balance sheet at the time of collapse. Terra/Luna was DeFi, and kicked off the contagion leading to this debacle. And there is no incentive for anybody involved to try to base any of this on truly peer-to-peer technology because that would undermine the creation of a maximally liquid and global marketplace from which to extract trading fees. These institutions may have been CeFi, but their existence, operation, and failure was predicated on DeFi.  ### PART V: DEFI’S FATAL CONCEIT > And they’re like ‘10X’ that's insane. 1X is the norm.’ And so then, you know, X token price goes way up. And now it's $130 million market cap token because of, you know, the bullishness of people's usage of the box. And now all of a sudden of course, the smart money's like, oh, wow, this thing's now yielding like 60% a year in X tokens. Of course I'll take my 60% yield, right? So they go and pour another $300 million in the box and you get a psych and then it goes to infinity. And then everyone makes money. > > — Sam Bankman-Fried (Op. Cit.) on boxes While clearly all the parties involved in this scandal were centralized entities, it is important to realize that the *“investment strategy”* employed by the symbiosis of crypto VCs, exchanges, and hedge funds is utterly dependent on DeFi, and furthermore that DeFi, without real returns, has no avenue for appreciation or even much usage without this CeFi catalyst fuelling the fire. The idea that DeFi had nothing to do with this, or that the solution is *even more DeFi*, is little more than gaslighting. #### Do You Need a Token for That? For all the centralized machinations, for all the financial engineering to pump prices, and even for all the fraud, it is clear enough that the root cause of the chaos is the seigniorage of centralized and costless issuance of tokens. You cannot fund, lever, rehypothecate, securitize, exchange, and cash out on a token that has not been issued. In *Only The Strong Survive*, we repeatedly addressed the rhetorical question: *do you need a token for that?* Functionally, the answer is almost always that you do not, since tokens invariably capture one of: *“money for x, controlled by y,”* which will lose the fight for liquidity to *“money for everybody, controlled by nobody”*, or, unregistered securities the governance of which essentially runs on trust, as discussed at length above.   But conceptually, this points to an even bigger problem - what we might call *DeFi’s fatal conceit*:  *Token issuance* in crypto is about as centralized as can be. Typically, developers have preferential access to or even control of a protocol in which they sell some or other variety of *“application equity,”* a fee generating smart contract in which they sell *“governance tokens,”* whether with access to the smart contract or as bolt-on utility tokens performing decentralization theatre, or a related business for which they sell utility or voucher tokens. In all cases, this is always having first costlessly allocated a decent proportion of the tokens to themselves and their crypto VC and hedge fund backers.  This is a stark contrast to the *decentralized* token issuance of Bitcoin, which happens via mining and, therefore, Proof of Work. Hence it is not *“seigniorage”* at all, but rather the product of the costly enabling of a functioning decentralized network. Counterintuitive as it may be, and contrary once again to faux-libertarian pretenses, removing the apparent centralization of a credible enforcement mechanism of counterparty commitments is actually an *incredibly centralizing force*. Be it legal shareholder rights, free market enforcement, automatic enforcement, or however else it is achieved, credible enforcement levels the playing field between the sellers and buyers of securities by ensuring that promises are kept.  In other words, the principal-agent problem is real and serious. Removing a means of keeping it in check, whether in the pursuit of so-called decentralization or otherwise, inevitably has the effect of pushing agency costs unboundedly high. Ultimately, this is profoundly *centralizing* both in the costs themselves and in their aftermath. The already powerful reap illegitimate agency benefits while this is not yet widely appreciated, and once it is, the powerless cannot participate in the wealth creation and risk mitigation securities enable.  Insofar as it is predicated on centrally and costlessly issued tokens, DeFi is unavoidably and unforgivably centralized. True decentralized finance would use decentralized money, automatic enforcement where no human judgment is required, and credible real-world enforcement where it is. And let us not forget, the very first domino in the great crypto crash of 2022, and from which the eventual collapse of FTX can be directly traced, was the depeg of the UST “stablecoin,” programmatic hyperinflation in Luna, and sudden collapse of the entire Terra/Luna ecosystem. Terra/Luna was not CeFi in the slightest but classic DeFi. It was an algorithmic stablecoin of the more poorly designed variety. Its demise can be traced to this more insidious form of centralization in token issuance - in this case to construct an astonishingly stupid edifice capturing *all of*: funding, leverage, rehypothecation, securitization, exchange, and cashing out.  Present co-author Allen Farrington along with Nic Carter went into rigorous detail in [*All Falls Down*](https://niccarter.info/wp-content/uploads/All-Falls-Down-Whitepaper-2022-06-11.pdf), but the design of Terra/Luna can more or less be summed up with the following comparison, quoted from the paper: “*A bank that claims it literally cannot go bankrupt because it can always issue more equity will very soon discover it* can *go bankrupt because the market will take this claim as well-enough proof that the bank is utterly incompetent at capital allocation.* *Given a fractional reserve bank is fundamentally highly leveraged, the redemption of liabilities in these circumstances will almost certainly exceed the absolute value of the reserve assets* and *the equity base by many multiples. ‘Issuing equity’ is not creating new value, it is diluting the old value of existing shareholders. If a bank is having its liabilities called in at a higher value than there even is of reserves to liquidate and equity to dilute, it will collapse. This is more or less what just happened to Terra. The only difference was that the spiral of default was driven by an algorithm rather than by any social process. The ‘capital allocation’ was not the result of dumb humans but of dumb code. It was the dumbest ‘smart contract’ of all time.*” And so, we come full circle to the fundamental trade-off of automatic enforcement and the necessity of human judgment for capital allocation. Terra/Luna tried to have it both ways, and quickly ended up having neither. So much for DeFi - what then of decentralized finance? #### The Great Definancialization We believe the core of the cultural fissure between crypto and Bitcoin comes down to *financialization.* While the ethos of Bitcoin is to definancialize, the ethos of crypto is to financialize. We repeat our characterization of this tendency from above: DeFi engages in arbitrary and automatable combinations of seigniorage, securitization, rehypothecation, and leverage. It is the purest form of financialization ever conceived: the financialization of… nothing at all. At the time this was an observation, but we can now offer an *explanation*: without real returns on capital, without real yields, yet *with* the ability to centrally and costlessly issue tokens, financialization is really the only avenue not only for exit liquidity, but really for any activity whatsoever. The financialization of everything was absolutely behind FTX’s various shenanigans. We believe the cultural - in some sense, *structural* - commitment and impulse to financialization means crypto is likely to stray further and further away from decentralized finance. Peer-to-peer finance is impossible to imagine in crypto because it presupposes only decentralized money. As Steven Lubka [recently wrote for CoinDesk](https://www.coindesk.com/layer2/2022/11/19/understanding-the-ftx-fallout-from-the-eyes-of-a-bitcoiner/), summarizing the FTX debacle from a Bitcoiner’s perspective, *“Bitcoin is trying to definancialize an overly leveraged, financialized world. Crypto is trying to further financialize everything. Crypto wants art, music, games, login credentials and anything else they can get their hands on to become financialized. Bitcoiners think leverage, subsidization of risk and turning everything into a speculative asset is actually massively net-negative for civilization.*” Financialization is itself a product of easy and political money, a necessarily centralized phenomenon. In fact, crypto as a broader economic phenomenon is impossible to fully comprehend without appreciating the infusions of tens of billions of dollars into crypto exchanges, VCs, and hedge funds, as described above. This capital is allocated in the first instance in order to desperately chase yield for insolvent pensions funds due to worldwide monetary debasement and artificially low interest rates. We would argue it is fundamentally *misallocated* due to the drive of easy money to financialize everything it can. Yield chasing is egregious in crypto DeFi, but it is not unique. What is unique is the absence of any real yields being financialized. That said, the presence of real yields to financialize hardly fixes the overall problem.  One way to conceive of what a security *does* is that it crystallizes potential future value into an instrument that can be priced in the present. If price signals are honest because money is sound, this is an extremely useful method to enable the efficient allocation of capital. But if they are dishonest because money is easy and political, it amounts to little more than stealing from the future and consuming more than has been produced. If we do this solely because we have liabilities to meet in the present - i.e. yield chasing - but are indifferent to the effect on our liabilities in the future, we drive even more capital misallocation, make these liabilities even more unaffordable when they come due, and set up more and increasingly desperate yield chasing down the line. Under such circumstances, the proliferation of securities is not a good thing at all. It is a symptom of a broken system of money. As Parker Lewis writes in [*Bitcoin Is The Great Definancialization*](https://unchained.com/blog/bitcoin-is-the-great-definancialization/),  *At a fundamental level, there is nothing inherently wrong with joint-stock companies, bond offerings, or any pooled investment vehicle for that matter. While individual investment vehicles may be structurally flawed, there can be (and often is) value created through pooled investment vehicles and capital allocation functions. Pooled risk isn’t the issue, nor is the existence of financial assets. Instead, the fundamental problem is the degree to which the economy has become financialized, and that it is increasingly an unintended consequence of otherwise rational responses to a broken and manipulated monetary structure*. The key potential of Bitcoin is to return to sound money, proper pricing of capital, and *definancialization.* This would mean a reduction in the number and importance of securities, because securities would no longer have to play the role of de facto money while money continues to fail.  However, crucially, those that remain would be far more useful, functional, and true to their core purpose of enabling the proper pricing of capital. This is the root of our cultural concern for crypto DeFi. The cultural, and arguably even structural, commitment to financialization is extremely difficult to reconcile with this core purpose of securities. In a sense, none of this is surprising given the foundations of crypto DeFi. If you jump straight to *“decentralized securities”* without first nailing down decentralized money and peer-to-peer technology, the urge to financialize is obvious, because what other value or utility can you even attempt to provide?  The unfortunate reality for crypto is that most people have no need to ever interact with securities, or for that matter, with finance proper. If their money were truly sound, there would be no need to chase yield, no need to *invest* outside one’s intentionally risk-seeking expertise, and no need to trade upfront money for the rights to future flows of money outside the direct operation of a return-seeking business. Peer-to-peer digital bearer assets may be of use, but global price discovery and liquidity, not so much. This sentiment can be reframed in terms of *Defi’s Fatal Conceit*: in an ideal world, the human judgment necessary for real capital allocation is not something in which most people should have to or want to partake unless they actively seek out this risk. Decentralized money, insofar as it enables saving and spending - soundly and uncensorably - is a worthy goal. If we consider traditional finance to be exploitative, opaque, inefficient, and so on, we would posit that the ideal solution is not necessarily to democratize the ability to engage in finance, however more fairly, transparently, and efficiently we might hope to achieve that. The ideal solution is rather to remove any dependency on finance whatsoever for the vast majority of people who shouldn’t ever need to interact with it. We again commend stablecoins - *by far* crypto’s most worthy achievement and best provision of value and utility - for meaningfully extending the ability of millions to save more soundly and spend more freely all over the world and in a more decentralized manner than what for most is the alternative, if not perfectly so. But the idea, however implicit, that everybody should hold their own securities is profoundly misguided. Furthermore, the idea that this drive to financialization ought to be so thoroughly *“decentralized”* that we ought to securitize not only pseudo-financial flows but contrive reasons to securitize inherently technical projects as well, is even more regressive. The [*“Fat Protocol”* thesis](https://www.usv.com/writing/2016/08/fat-protocols/), oft-championed as a brilliant new incentive mechanism for the development of free and open-source software, is really better understood as a way of privately capturing the value of things that are naturally public, and providing an avenue to immediately realize this captured value before any real capital has been created.[[34]](#_ftn1) If Bitcoin can be understood as a way to *genuinely* decentralize public value transfer, crypto can equally be understood as a method of privately capturing and recentralizing some of this value leak: of *financializing* the commons. On the other hand, the cultural norm in Bitcoin development is to shirk tokens if at all possible and find ways to incorporate Bitcoin, both the network and the asset, into peer-to-peer projects as directly and trustlessly as possible; in particular, to find ways to enable users to monetize with decentralized money *and* *without financializing the projects themselves*.[[35]](#_ftn2) This usually requires real capital put at risk in order to offer a service users pay for. There are no privileged, centralized parties extracting rents from users hoping to overcome this cost with speculative gains. Thus applications can be meaningfully democratic and credibly decentralized. The Lightning Network fits this profile to a tee - as do circa-2019 liquidity pools in crypto DeFi, it must be said! It is hence instructive to compare the paths of each in the meantime as one impatiently veered into costless and centralized token issuance to further financialize this service, and the other on patiently building real tools with a peer-to-peer ethos, no token, no exit liquidity, and no centralized control. The aversion to tokens for intrinsically technical and nonfinancial projects strips the developers both of centralized control of the free and open-source software they are creating and of immediate and total exit liquidity in its value. The only way to realize this value privately is to utilize this commons tool within a return generating enterprise that compounds capital.  That is to say, the default assumption is that securities are not required. But if they really are, they tend to be predicated on pricing capital and utilizing decentralized money. Not DeFi but decentralized finance. #### Green Eggs and Ham > I do not like them in a house. > > I do not like them with a mouse. > > I do not like them here or there. > > I do not like them anywhere. > > — Dr Seuss on centrally and costlessly issued tokens Our core issue with DeFi is that it is not decentralized and it is not finance. Nonetheless, we support the idea of *decentralized finance* in theory, even if *DeFi* isn't in practice. We also believe a variety of decentralized finance will emerge on Bitcoin, and to some extent already has. These were the core claims of our previous paper, *Only The Strong Survive*, but we did not explain what we deemed to be workable decentralized finance in theory, or what constraints might limit how it might develop. In this paper, we have given a framework by which claims to *“decentralized finance”* can be assessed, and found, once again, that the vast majority of DeFi does not read favorably. While we admit there are some avenues for DeFi to approach decentralized finance, and that it is not quite a technical impossibility, we think they are highly unlikely to be pursued. We think culture is the more important driver, and as of this writing that the culture of crypto DeFi is actively pushing in the wrong direction. The FTX debacle, of which we gave a brief overview, is a perfect example of the consequences of this attitude. Claiming that FTX “*only further demonstrates the need for DeFi”* is misguided at best. DeFi enabled FTX to happen. The relationship between DeFi and the FTX debacle can be best described as, “*it takes two to tango*.” Decentralized finance as we hope to see it develop would have none of the properties we identified as key to crypto DeFi and inevitable in FTX: it would facilitate the pricing of capital, not the illusion of velocity and a valve for exit liquidity; it would natively interact with decentralized money, not centrally and costlessly issued tokens; and it would operate uncensorably, enabling truly *decentralized* participation in the wealth it is able to create. We see paths for *this* vision of decentralized finance to gradually be built, but DeFi ain’t it. *Thanks to Brad Mills, Lane Rettig, Eric Wall, and Edan Yago for edits and contributions.* *It should go without saying that not everybody mentioned above agrees with any or all of our theses or conclusions. In fact, some passionately disagree, in which cases we appreciate their input even more greatly. Several contributors preferred to remain anonymous as well.* A PDF is available [here](https://wixlabs-pdf-dev.appspot.com/assets/pdfjs/web/viewer.html?file=%2Fpdfproxy%3Finstance%3D1itwcu_DlKPPe2CJ-1HbSSV_dJWJX_hP8-KHU9ABOOQ.eyJpbnN0YW5jZUlkIjoiNjY0MTNhMmMtYzdmMS00NTNjLTlkZmItYmFlMjllNmE0NDMyIiwiYXBwRGVmSWQiOiIxM2VlMTBhMy1lY2I5LTdlZmYtNDI5OC1kMmY5ZjM0YWNmMGQiLCJtZXRhU2l0ZUlkIjoiMDY4Y2Q2YzctMGZlOC00OTU2LWExOTItNmI5MGQxYjk4NzU0Iiwic2lnbkRhdGUiOiIyMDIyLTExLTI4VDE4OjIwOjM4LjA1NFoiLCJkZW1vTW9kZSI6ZmFsc2UsImFpZCI6IjdkNjQwZWY5LTBmM2ItNGM4NS1iZGVkLTA4MTEwOTdmMjUxNiIsImJpVG9rZW4iOiI2MGNkZWNlYi1jODE5LTBjNmEtM2M2OS1kMTcyNGZkM2MzNjYiLCJzaXRlT3duZXJJZCI6IjNjMzZhNGNkLWE3ZDQtNDMyNS1iZDEzLTY0ZDc0ZmQ3ZDMxZiJ9%26compId%3Dcomp-lb147kas%26url%3Dhttps%3A%2F%2Fdocs.wixstatic.com%2Fugd%2F3c36a4_d95d1a9c178d42d08dc191a7723e0efd.pdf#page=1&links=true&originalFileName=Green%20Eggs%20And%20Ham&locale=en&allowDownload=true&allowPrinting=true) if you prefer. --- Notes [1]                We are wary that *“DeFi,”* as we define it, has been such a disaster as to irreparably taint the expression *“decentralized finance,”* and that perhaps something like *“peer to peer finance”* or *“open finance”* might be better branding at this juncture. The subtlety of the *“peer-to-peer”* vs *“decentralized”* distinction in particular is one we will pick up on at various points throughout the paper. Nonetheless, we also feel that sticking with *“decentralized finance”* better and more unavoidably makes point 1 above: that DeFi is not decentralized and is not finance. [2]                It is worth mentioning some examples of tokens that went to zero while the companies issuing them went on to be very successful or even get acquired. Doc.ai used ICO money to build the company and was then acquired by Sharecare and refunded ICO token holders just before the acquisition at a massive loss. Salt Lending also built a successful loan business but the token went below the ICO price and the SEC eventually forced it to refund holders. [3]                We will always refer to *“smart contract”* in the context of automatically executing code on a blockchain, and *“contract”* to mean a real-world agreement between parties subject to a credible enforcement mechanism. [4]                No taxonomy will be perfect but we have tried to strike a balance between thoroughness and clarity. Arguably the only *“correct”* taxonomy is an encyclopaedic listing of the properties of every token under the sun, which is rather beside the point of the analysis we will go on to offer. Mikey 0x provides a far more granular taxonomy than we do [here](https://medium.com/1kxnetwork/crypto-yield-sources-not-all-yield-is-created-equal-6a742db16be8) (and with a far more favorable analysis, it must be said!). [5]                *“Application equity”* is a useful expression to understand why they ought to have value, but we will stick to *“governance token”* throughout as it is widely understood in the industry. [6]                A *real-world* contract, not a smart contract. [7]                The Howey Test is commonly used as a simple yet widely understood gauge of whether or not a contract constitutes an *“investment contact”* - a subcategory of security in US Federal Law, hence even more specific. According to the test, an investment contract exists if: i) there is an investment of money, ii) in a common enterprise, iii) with the expectation of profit, iv) to be derived from the effort of others. It is indisputable that governance and utility tokens fit the test at the point of crypto VC funding and token allocation: i) VCs invest money, ii) that goes towards the development of the contract in exchange for a share of it, iii) valued based on the fees they expect the contract to generate, the potential to sell into a liquid market, or both, iv) based on the success of the development, the secondary market enthusiasm for the development, or both. And even if there is no VC investment, per step 1, if the token is premined and later realizes some market value, later sales constitute the realization of an investment contract. We cite it not to endorse it or claim it is objectively a correct or even the best such definition, but rather for familiarity’s sake in communicating the concept it attempts to capture. [8]                Note these are our definitions for the purposes of explanation. As was stated in a previous footnote, many taxonomies are possible and some will surely be more precise than our own. [9]                We refer the reader to Section 1*, The Innovation From First Principles* of *Only The Strong Survive* for an additional argument that the native token of a layer-one blockchain has to be money in order to have technical and economic coherence, although that argument is outside the scope of this paper. [10]                As an amusing side note, consider that the de facto state capture of Ethereum in gradually becoming more and more OFAC compliant could, at the same time, be said to give it practical grounds to become more accepted as money via state enforcement, and more transparent than fiat currencies in traditional finance also. [11]                This subtlety is exactly what is being exploited in both [fedimint](https://fedimint.org/) and Tether’s [Pear Credit](https://twitter.com/PearCred), which both feature *“digital tokens”* representing forms of financial contract. Their *“free tradability”* is created by instantaneous redemption and reissuance by the trusted counterparty in the case of fedimint, and recursively extending the chain of trusted counterparties in the case of Pear Credit, whereas *“price discovery”* is rather beside the point of their intended use. The fact these tokens are not *“on a blockchain”* - because they don’t need to be, because they transparently operate on trust - means in both cases there are no fees and instant transfer, a trade-off thought to be very much worth it. [12]                We don’t intend for this discussion to digress into a debate on the merits of anarcho-capitalism. We occasionally use *“the law”* as shorthand that everybody understands, but *“credible enforcement mechanism”* is both more precise and more general. This could easily be provided by private enterprise and it would make no difference to our argument. What we criticize in crypto is not an aversion to *the state*, per se, but rather enthusiasm for the absence of credible enforcement of any kind. [13]                It is worth pointing out, however, that stablecoins on their own, issued or algorithmic and not in relation to the construction of more involved securities or to the pricing of capital, needn’t pass this narrowing of criteria. Recall, payments are not *finance*, unless they are *financed*; the simple act of paying does not require a security. Stablecoins in crypto are clearly useful and are clearly widely used, but we consider this a useful application of these blockchains (and interestingly not of Bitcoin). It is not *DeFi.* [14]                We should note that this was the historical norm around 2019-2020 prior to more perverse methods of monetization becoming the standard. In some cases, it still exists, however. Tornado Cash is a topical example, which is interesting precisely because *it cannot currently be shut down*. Nobody controls the code. And yet, Infura, a centralized entity, accountable to US law and which at times accounts for the majority of access to the Ethereum blockchain, can and has blocked access. This raises some obvious questions about the extent to which the industry surrounding a given blockchain harms its claims to censorability, and hence to credible decentralization, which we will leave for now. It is also worth pushing this logic further in light of Ethereum trending towards OFAC compliance, as mentioned several times. There is a precedent of Ethereum rolling back changes (DAO exploit) and hard forking to change core features (delaying difficulty bomb, EIP-1559, the merge) so there seems to be a real possibility that regulators try to force developers and leading infrastructure companies to fork out offending applications, splitting Ethereum into 2 camps. Pirate applications would still run on the *“original”* fork but the liquidity on that chain would likely die of anaemia. [15]                We have done our best above to give the design of these tokens the benefit of the doubt in teasing out how they *could* work. But looking at the practical reality and building on this cynical interpretation, it is sadly undeniable that governance tokens have done very little to protect crypto DeFi users from governance abuses. There are many examples in which whale VCs vote at the last minute to change the governance against the wishes of the community (restricted or unrestricted governance abuse) or in which the developers just ignore what the community wants and make changes against its will (bolt-on utility token abuse). Governance tokens in crypto DeFi are a bit of a LARP that the community is now largely moving on from: for instance, Uniswap v3 was released with a business license: i.e. the credible enforcement mechanism of *the law.* [16]                For example, protection against an 80% drawdown requires 80/(100-80) = 80/20 = 4x overcollateralization. [17]                The biggest example being Maker DAO, which had to back DAI with USDC during the March 2020 drawdown in Eth. More recently, it capitulated and is now backing DAI with US Treasuries, [giving billions of dollars worth of USDC to Coinbase to yield farm](https://twitter.com/tier10k/status/1584591944549900288). [18]                We leave aside the possibility that an algorithmic stablecoin also has a governance token, in which case all of this is effectively complexity and decentralization theatre, and our critique of governance tokens dominates all else. [19]                Originally called *“miner extracted value”* until it was realized parties beyond just miners can extract value in similar ways. [20]                One might quibble that there is nothing in OFAC regulations that compels censorship at the base layer by validators currently. Some people don’t like the term *“compliance”* as nobody is complying with existing laws or regulations and the behavior is more like *complicity in overreach.* However, we feel [21]                Classic reads on this topic include Paul Sztorc [here](https://www.truthcoin.info/blog/pow-cheapest/) and Andrew Poelstra [here](https://download.wpsoftware.net/bitcoin/alts.pdf). More recently, Dylan LeClair and Sam Rule have a cautious take [here](https://bitcoinmagazine.com/business/centralization-risks-and-flaws-of-ethereum-merge). Lyn Alden has a more sceptical outlook [here](https://www.lynalden.com/proof-of-stake/). VItalik Buterin has a more positive outlook in general, but still bites the bullet on MEV, [here](https://vitalik.ca/general/2021/12/06/endgame.html). Adam Gibson gives a philosophical explanation of Proof of Work [here](https://reyify.com/blog/pow-a-pictorial-essay), which concludes with an effective dismissal of Proof of Stake’s ability to achieve anything like the decentralization of the former. Finally, Nic Carter and Lane Rettig explore the issue at some length on [this podcast](https://www.youtube.com/watch?v=L54YT6NGj_U). [22]                BIS has a [short but helpful writeup here](https://www.bis.org/publ/bisbull58.pdf). [23]                But consider again, our argument in Section 1, *The Innovation From First Principles,* of *Only The Strong Survive*, is what blockchains are really *for* in the first place. [24]                This is not an exhaustive list but covers only those with which the authors have some familiarity. [25]                That the narrative around Ethereum has gradually shifted from *“world computer”* to *“web3”* to *“DeFi”* and now to *“ETH is also money”* is symptomatic of this realization setting in. We highly recommend Ryan Gentry and Dhruv Bansal’s [talk at Bitcoin Miami 2021](https://www.youtube.com/watch?v=qlV5_udJkC0) for a thorough analysis of the folly of this line of argument (and note we also referenced this excellent talk in *Only The Strong Survive*). [26]                We addressed this possibility, as well as what might motivate its proliferation, in Section 6, *Why We Might Be Wrong,* of *Only The Strong Survive*: *“Crypto programmability is never truly matched on Bitcoin and the value spiral and Pfefferian holding period problem alike are nipped in the bud by provably enforceable atomic swaps such that Ethereum, Solana, Cardano, EOS, Tezos, Tron, etc., effectively become sidechains.”* [27]                *“Impermanent loss”* is a bizarre and basically euphemistic expression aiming to capture the following: if you put some amount of ETH in a liquidity pool, and ETH 10x’s relative to the paired token, then you will only benefit from a far smaller gain than you would have if you had just held your ETH because the pool will force you to sell for the paired token the entire way up, and that is nowhere near made up for by the fees generated. [28]                For a nice walk through all of this in FTX’s case, we recommend Matt Levine’s Money Stuff article for Bloomberg, [*FTX Had A Death Spiral*](https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal). [29]                [It appears that customers sending international wires](https://twitter.com/SiegeRhino2/status/1593124406121082880) to deposit with FTX were actually wiring to Alameda. [30]                In one final, hilarious twist, it also appears that [FTX US tried to access its customers’ bank accounts](https://twitter.com/mikemcg0/status/1591477400634023938) and was considered dangerous malware. [31]                i.e. it doesn’t matter whether or not this governance token really provides any *“governance”* capabilities to its holder. It just needs to look like it is capable of providing investment returns for this argument to hold. [32]                We can trace the chronology of so-called *“decentralized exchanges”* relying solely on funnelling fees to liquidity providers to issuing governance tokens in light of this pressure: as discussed at the end of Part II, *Decentralized Finance, Technically,* it never attracted much attention beyond the original developers and the VCs who attempted *“generalized mining”* to make the applications appear to have more activity than they did. The problem with this approach is that all the value needs to already exist to be manipulated. Centrally and costlessly issue a governance token, on the other hand, and the flywheel of the perception of yield is much easier to kickstart. [33]                Similarly to the immediately previous footnote, it is notable that before all this became normalized, almost exactly the inverse was true. Uniswap, one of the first automated market maker projects and considered *“blue chip”* DeFi, was initially created as a form of protest. The 2017 Bancor ICO created the concept of an AMM DEX on Ethereum, and the Uniswap founders forked it, removed the token, and relaunched. Fast forward 4 years and Uniswap is on developer-directed *“version 3,”* issued under a business licence, has a governance token, UNI, and a *“Chief Legal Officer”* (decentralized much?) [insulting industry rivals on Twitter](https://twitter.com/ammori/status/1594723244816404485) who dare to criticize his employer’s lobbying efforts clearly targeted at regulating other decentralized exchanges out of existence. *And this in turn* is surely in part explained by community disgruntlement with PancakeSwap, a fork of Uniswap launched on BSC that eventually overtook the original in volume, as if forking open source projects wasn’t rather the point of all of this... And note, the purpose of Uniswap as an application is to … trade other tokens … [97.7% of which have turned out to be rug pulls](https://arxiv.org/pdf/2201.07220.pdf) … [34]                Co-author Allen Farrington has written [here](https://allenfarrington.medium.com/crypto-is-peak-silicon-valley-b599ac24ec95) about how the drive to optically open but economically closed systems of user control is largely a symptom of crypto’s incestuous relationship with Silicon Valley, but this argument is somewhat outside the scope of this paper. [35]                Interested readers are encouraged to look into [LNURL-auth](https://github.com/lnurl/luds/blob/legacy/lnurl-auth.md), [Nostr](https://github.com/nostr-protocol/nostr), [TBD’s Web5](https://www.tbd.website/about), and [Synonym’s Slashtags](https://synonym.to/), amongst others, for some such attempts. The reader may recall from an earlier footnotes that [fedimint](https://fedimint.org/) and [Pear Credit](https://twitter.com/PearCred) do involve *“tokens”* of a sort to achieve more directly financial than technical ends. And yet, each go out of their way to ensure these tokens *are not securities*. They rely on trust for redemption and realization of value, and hence there is no prospect of speculative returns. That is to say, they have an actual use case. ### Allen Farrington Allen farrington is a writer and investor in the bitcoin space, co-author of Only The Strong Survive and Bitcoin Is Venice. ### Anders Larson Anders Larson works for a US-based hedge fund and is the co-author of Only The Strong Survive. # Ten Million Bitcoiners: The Intransigent Minority URL: https://www.swanbitcoin.com/culture/ten-million-bitcoiners-the-intransigent-minority/ Not too many years from now, the number of Bitcoiners in the United States of America will cross ten million. When we hit that milestone, it’s game over: Bitcoin wins. --- **Cory Klippsten** · February 21, 2020 · Updated June 27, 2024 Not too many years from now, the number of Bitcoiners in the United States of America will cross ten million.  When we hit that milestone, it’s game over: Bitcoin wins. My favorite writer and thinker, Nassim Nicholas Taleb, wrote about *“the intran­si­gent minority”* in his book [*Skin in the Game*](https://en.wikipedia.org/wiki/Skin_in_the_Game_(book)).  Here’s the concept at work: almost every packaged food product for sale in the U.S. has a tiny *U* inside a circle printed outside.  Very few U.S. residents require the kosher certi­fi­ca­tion indicated by that *U*, but it’s easier for food compa­nies not to have to make two separate lines for every product, so they gener­ally make every­thing kosher.  The rule, per Taleb: *“A Kosher eater will never eat nonkosher food, but a nonkosher eater isn’t banned from eating kosher.”* > For most observed complex systems, the minority contingent required to flip a population to comply with their intran­si­gent view is in the 3 – 4% range. With a U.S. popula­tion of 325 million, 3% is 10 million. > > — Nassim Nicholas Taleb A fintech fund that’s been in the Bitcoin space since 2012 recently ran intense analysis resulting in the best estimate I’ve seen for Bitcoin owner­ship.  Just 7 million people globally are storing $100 of value or more in the Bitcoin protocol.  For round numbers, let’s assume half of those people are in the U.S., and that one-seventh of those are above a more signif­i­cant threshold like $2500.  That’s just 500,000 U.S. citizens with a meaningful amount of Bitcoin.  And of those, what percentage actually under­stand and care about Bitcoin to the point where they would fight for it?  Let’s be generous and say 20%. There are approx­i­mately 100,000 Bitcoiners in the United States.  This means that *just to get to “intran­si­gent minority” levels*, we need a 100x increase.  This is why adoption dominates all other prior­i­ties for Bitcoin. > Bitcoiners have already knocked out so many potential attack vectors and handled so much FUD that there’s not much downside risk. > > — Cory Klippsten Another concept Taleb refer­ences throughout the five volumes of his *Incerto* is: Protect Your Downside.  Bitcoiners have already knocked out so many poten­tial attack vectors and handled so much FUD that there’s not much downside risk left for Bitcoin.  But there *is* some, whether you handicap it at sub 1%, sub 10%, or more.  And by far the most threat­ening attack vector, in my opinion, would be a concerted effort of the U.S. govern­ment at many levels attempting to stamp out Bitcoin in an effort to maintain dollar hegemony across the globe. Let’s be clear: Bitcoin would survive even the most concerted and vicious attack by the U.S. govern­ment.  It might even thrive, [*Antifragile*](https://en.wikipedia.org/wiki/Antifragile)-style (another Taleb book), with people around the globe snapping up sats *en masse* as they witness the erstwhile hegemon lash out.  But it could also play out differ­ently, with a massive drop in network activity and value, thousands of individual lives irreparably disrupted, and the delay of our bright orange future by decades or longer. This, to me, is unaccept­able.  That is why I have dedicated my life to recruiting the other 99% of our intran­si­gent Bitcoiner minority here in the United States.  There are 100,000 of us already.  Help us recruit the other 9.9 million. [Video](https://www.youtube.com/watch?v=8wpOfwEyt-k&t=0s) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Can Bitcoin Survive Without a Leader? - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/can-bitcoin-survive-without-a-leader/ Why Satoshi had to disappear. --- **Jonathan Leger** · November 30, 2022 · Updated June 27, 2024 When I talk to people about Bitcoin, one of the only details they seem to know about it (aside from it being *“magic internet money”*) is that *‘nobody knows who* [*invented it’*](https://www.swanbitcoin.com/satoshis-white-paper-explained/). A friend of mine brought it up yesterday as a reason why he doesn’t trust Bitcoin. In his mind, there must be somebody at the reins and *“backing it”*. He’d also read that Bitcoin filed for bankruptcy (🤦) but that’s a subject for another article. The things Bitcoiners must deal with thanks to media ignorance… **sigh** ![](https://www.datocms-assets.com/56652/1669847704-7bac56e3-340b-4275-b930-3e9c6bffebac_512x512.webp?auto=format) Bitcoin being a leaderless technology is a point worth consideration, however. Afterall, what successful movement of the past didn’t have a leader or group of leaders? Leaders are important. They provide vision and direction as well as authority and confidence. Humans are tribal, so these qualities matter. People want someone to look to for leadership, and someone to blame for failures. In hard times they want a strong figure to inspire them with confidence, and in good times to assure them they will continue. The great civilizations of the world were built because humans trusted in their leaders, for good or for ill. Every Tesla has its Elon Musk, every Microsoft its Bill Gates, every Apple its Steve Jobs. Bitcoin has its Satoshi Nakamoto, but nobody knows who he is (or *“she”* or *“they”*), so they look to other lesser leaders in the space. Bitcoin has thought leaders, but its community is fractured in a sense because those leaders don’t always agree with each other and there’s no final decision-maker to judge one right and the other wrong. An example of this is playing out right now between Jason Lowery, member of the U.S. Space Force and National Defense Fellow at M.I.T, who is arguing that Bitcoin is a non-lethal weapon protected by the 2nd Amendment that is critical for national security, and Marty Bent, founder of the Bitcoin media company [TFTC.io](https://tftc.io/) and Venture Partner at Bitcoin-only venture fund Ten31, who vehemently disagrees with that characterization. Infighting and arguments have erupted in the community between both camps, though a debate has been tentatively planned that will hopefully bring some clarity to the matter. The point is Satoshi can’t step in and settle the issue in the way Elon Musk could with a disagreement at Tesla. This kind of infighting creates some chaos that could hurt adoption. If you walked into a bank where the tellers were arguing over the right way to distribute funds to customers, you might immediately turn around and find another bank. The lack of civility in the disagreements surrounding Bitcoin can be off-putting to newcomers, and Bitcoin needs as many new adopters as it can get. I would argue, however, that Bitcoin *has to be leaderless* in order for it to succeed. There are five reasons for this. ![](https://www.datocms-assets.com/56652/1669847758-cce4b97e-ece8-4083-bc78-cd7808607ccd_512x512.webp?auto=format) #### 1. Projection The flaws, traits and politics of human leaders are usually projected onto the projects they run. Tesla is an example of this. Once the liberal darling for its image as climate saving technology, it has lost some of its appeal to the Left based on statements and actions taken by Elon Musk that had no material impact on Tesla (for example, his statements about Covid). It remains to be seen whether that loss of approval will impact sales long term, but the fact that it *could* makes the point. Bitcoin being leaderless is beneficial for adoption since it’s apolitical. People can only judge Bitcoin on its own merits and not on any personal traits or political positions of its unknown creator. Nobody will refuse to buy Bitcoin because its leader is too “*Left”* or *“Right”* leaning. ![](https://www.datocms-assets.com/56652/1669847793-1c12e478-fea6-43af-8dc2-a6151a7e9e36_512x512.webp?auto=format) #### 2. Head of the Snake Leaders can be attacked. Their personal safety, family safety, and financial security can all be threatened. Since they wield power over the movements they lead, they can be coerced into directing the movement in ways that aren’t good for its supporters. Or, in a more extreme case, if the leader is assassinated or otherwise silenced, it can throw the movement into disarray. Bitcoin was designed to replace the corrupt and broken fiat system of the world. There are countless powerful people who benefit from this corruption and do not want things to change. If the opposition to Bitcoin knew who Satoshi was and if he exerted great control over Bitcoin’s direction and community (i.e. if he was the Vitalik Buterin of Bitcoin), that would be an easily exploited attack vector once Bitcoin grew large enough to be a real threat to the current system. For his own safety and the security of Bitcoin, it’s good that Satoshi remained anonymous and then disappeared. ![](https://www.datocms-assets.com/56652/1669847826-3ebd8c09-1a72-4fce-80eb-2d2085616a1e_512x512.webp?auto=format) #### 3. Assumed Authority Leaders aren’t always right, and sometimes their mistakes can cause real damage. Evidence of this can be seen in Ethereum’s switch to Proof-of-Stake from Proof-of-Work, which fundamentally altered Ethereum in a way that caused SEC Chair Gary Gensler to [change his position](https://beincrypto.com/ethereum-transition-to-proof-of-stake-may-make-it-a-security-under-us-law/) on whether Ethereum is an unregistered security. Proof of Stake also weakens Ethereum by [removing its connection to the physical world](https://www.youtube.com/watch?v=ikPnr23h7qg) through the power required by mining. How much damage these changes will cause to the Ethereum landscape going forward remains to be seen, but the point is the decision for this change was pushed by Ethereum’s co-founder and de facto leader, Vitalik Buterin. Of course, the Ethereum community had to support Buterin’s desire for the change, but it cannot be underestimated how much his opinion has held sway over Ethereum’s direction, [even if that influence is diminishing](https://cryptonews.com/news/vitalik-buterin-says-his-influence-over-ethereum-diminishing-harder-to-make-things-happen.htm). That brings us back to the current debate between Jason Lowery and Marty Bent over Bitcoin’s classification as a non-lethal weapon and its role in national security. Not having a leader making unilateral decisions or holding majority influence over Bitcoin’s direction requires debate between the people who wish to impact it. Not that there’s *zero* cult of personality at play in the Bitcoin community. Bitcoiners are still tribal humans and look to influential people in the community for direction, but there’s no perceived single leader whose opinion is considered *“best”* by default. That makes it harder to push change without informed consensus.  Like Bitcoin itself, Bitcoin’s community leadership is decentralized. ![](https://www.datocms-assets.com/56652/1669847866-f9e3e3df-fd36-4694-9a31-46f0fafa5e41_512x512.webp?auto=format) #### 4. Scapegoats When projects fail, leaders get blamed. Politics are a perfect example of this. Despite the President of the United States wielding limited power over the laws and actions of the government as a whole, he is often blamed for every negative consequence in the economy or society while holding office. It’s an easy scapegoat. With Bitcoin, there is no scapegoat. If it fails, there’s nobody to blame. This encourages personal responsibility and critical thinking. If you’re going to swap fiat for Bitcoin, you better understand what you’re getting yourself into, how it works and what its principal attributes are. You can’t make yourself feel better by pointing at Satoshi and blaming him for all your woes. You also can’t expect Satoshi to do all the work to make Bitcoin successful, so you need to do your part if you want it to succeed for your own benefit. The advantage of this is that people who buy into Bitcoin often fall down the [rabbit hole](https://www.swanbitcoin.com/canon/) of why it was created in the first place. Understanding the truth about sound money versus fiat, the damage fiat has caused, and the debt spiral the world has entered because of it only strengthens Bitcoin hodlers’ conviction. This knowledge often gets shared to friends and family, further increasing adoption. ![](https://www.datocms-assets.com/56652/1669847895-d01a26f1-ba03-4bbe-b871-ce8c7ab37c61_512x512.webp?auto=format) #### 5. Personal Ownership If you don’t like a CEO’s politics or preferences, you might hesitate to buy the products created by the company because you don’t want to enrich its leader who will potentially funnel money into agendas you disagree with. You also may balk at the idea of making that person wealthy just on principle. With [Bitcoin](https://www.swanbitcoin.com/proof-of-work-vs-proof-of-stake/), the only person you’re enriching is yourself. There is no company, no foundation, no leader. Your Bitcoin is your own private treasure, and you’re trusting in that treasure’s inherent value to increase adoption and your own personal wealth over time. No single person’s foul-ups can derail that for you. Bitcoin succeeds or fails on its own merits. ![](https://www.datocms-assets.com/56652/1669847922-a8c99f35-c5e9-4dd2-9a39-0867a05cd153_512x512.webp?auto=format) #### Leaderless Network Effects The five points outlined above all help further Bitcoin adoption. With no leader to hate or whose politics you disagree with, there’s no ideological friction to buying in. With no attack vector against the leader, there’s no single point of failure that’s easy for the current corrupt system to exploit. With no person holding majority influence, changes must be made through debate and consensus. No leader to scapegoat engenders personal responsibility that leads to knowledgeable hodlers that view their stack as their own personal treasure and not as the means to enrich someone they may not like or trust. Unlike other crypto projects, Bitcoin seeks to dismantle the corrupt fiat system, not to build on top of it or profit from it. It exists *because* centralized power has proven detrimental to humanity, so it’s only fitting that the Bitcoin community also be decentralized and leaderless. Power corrupts, as the saying goes, and leaders of opposition movements usually become the thing they fought against once they succeed. Bitcoin cannot have this fate, for it has no leader. Yet another reason to be Bitcoin-only. ### Jonathan Leger Jonathan Leger is a software developer whose dual interests in technology and personal liberty inevitably led him to Bitcoin. With a desire to support the Bitcoin community coupled with a talent for explaining technical topics in plain language, he began writing about Bitcoin and created a [Substack](https://jonathanleger.substack.com/) devoted to it. You can also find him on [Twitter](https://twitter.com/jleger2023). # A Recap of the 2022 Pacific Bitcoin Conference URL: https://www.swanbitcoin.com/industry/a-recap-of-the-2022-pacific-bitcoin-conference/ By focusing on learning, entertainment, and social experiences, Pacific Bitcoin blurred the line between a conference and a festival. --- **Nick Payton** · December 8, 2022 · Updated June 6, 2024 As the crypto industry was reeling from the knockout punch delivered by the FTX scandal, 1,200 [Pacific Bitcoin](https://www.pacificbitcoin.com/) attendees gathered in sunny California to celebrate Bitcoin. > No joke, y'all who didn't come really blew it. Place is vibrating with pure signal. > > — [Steve Barbour](https://twitter.com/SGBarbour/status/1591107359904268288?t=Q3xtVoOJykbGV0LZjujQ1Q&s=19) Let’s recap the inaugural event, share some highlights, and talk about the future. ### Blurring the lines between a conference and a festival By focusing on learning, entertainment, and social experiences, Pacific Bitcoin blurred the line between a conference and a festival.  A typical attendee might watch an in-depth discussion about Bitcoin and Macro on the mainstage, catch a privacy workshop in the Swan Dome, play some games in the Lightning Arcade, then eat lunch outside while watching a 3-point competition on the Magic Money court, before closing the day with a fireside chat between Swan CEO Cory Klippsten and Michael Saylor. > All signal. All Bitcoin. No crypto. Calm and confident is how I would describe the attendees. Impressed with the size and content of the conf. > > — Lawrence Lepard ![](https://www.datocms-assets.com/56652/1670518177-pacific-bitcoin-202.png?auto=format) ### Calm confidence in the Air While “Crypto twitter” was having an existential crisis catalyzed by fraud at FTX, Bitcoiners at PB were full of love and optimistic about the future. The reasons for adopting Bitcoin have never changed and the outside turbulence only reinforces our mission. > There was this smell of inevitable victory. > > — AmericanHODL ### Highlights From Pacific Bitcoin Pacific Bitcoin was a two-day event spanning three different stages, each with their own brand of programming. Not to mention countless side events to round out the week.  > LA is Bitcoin central. I loved the energy at Pacific Bitcoin. > > — Michael Saylor ![](https://www.datocms-assets.com/56652/1670510099-pacific-bitcoin-293.png?auto=format) ### The Hard Money Stage The main stage featured the most influential Bitcoiners in the world discussing a wide range of Bitcoin topics: - [Bitcoin is Freedom](https://youtu.be/h7YAWhvFY9Y?t=2081) feat. Yan Pritzker - [All Your Models are Destroyed](https://youtu.be/h7YAWhvFY9Y?t=9214) feat. Preston Pysh - [Bitcoin, Not Shitcoin](https://youtu.be/h7YAWhvFY9Y?t=20785) feat. Lyn Alden - [A Chat with Michael Saylor](https://youtu.be/jGEvvoTahm0?t=23559) feat. Cory Klippsten You can watch the entire 14+ hours of main stage content from Swan’s YouTube channel [here](https://www.youtube.com/@Swan_Bitcoin). Don’t miss these talks. ### The Swan Dome Making its triumphant return, the Swan Dome featured a unique blend of programming. The discussion topics ranged from highly technical roundtables to light-hearted sessions allowing attendees to connect with the speakers on a deeper level. Shoutout to [Greg Foss](https://twitter.com/pacificbitcoin/status/1595458376078659585?) for his performance during Bitcoiner Speed Dating 🤣 Swan Dome sessions will be published to YouTube soon. [Subscribe to Swan’s youtube to be notified when they’re live](https://www.youtube.com/@Swan_Bitcoin). Some highlights include: - Thank God for Bitcoin feat. Robert Breedlove - Meme workshop w/ Lyn Alden & American HODL - 2022 Pitch Competition - Bitcoiner Speed Dating  ![](https://www.datocms-assets.com/56652/1670512082-pacific-bitcoin-357.png?auto=format) ![](https://www.datocms-assets.com/56652/1670512287-pacific-bitcoin-206.png?auto=format) ### The Magic Money Court The most unique and exciting brand of programming at Pacific Bitcoin took place on the Magic Money Court. This stage was a safe place to allow our competitive nature to take hold. Every hour seemed to produce a new highlight, including a kid who won $650 of BTC during the knockout round. It also included: - 3-on-3 Basketball Tournament - [3-Point and Free Throw Challenges](https://twitter.com/coryklippsten/status/1592227792170946560?s=20&t=mAZ73_exVENuNwEOGJ9ZnQ) (Cory’s game winner!) - 1-on-1 Competitions feat. The Professor - Compton Magic Showcase > The basketball was so cool. Cory’s out there and evidently he’s a 3-point monster. > > — Preston Pysh ![](https://www.datocms-assets.com/56652/1670515777-pacific-bitcoin-collage.png?auto=format) Pacific Bitcoin showed the world that the future is bright when everyone understands what is truly important for human flourishing. As the broader crypto market implodes and centralized altcoins fall, Bitcoin is proving in real time why it stands alone. Fix the money, fix the world. ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # GBTC was the Genesis of the Crypto Credit Contagion URL: https://www.swanbitcoin.com/analysis/gbtc-was-the-genesis-of-the-crypto-credit-contagion/ Learn how GBTC works, how it’s associated with the recent crypto contagion, and why buying spot Bitcoin and taking self-custody helps you avoid all of these risks today. --- **Sam Callahan** · December 14, 2022 · Updated July 19, 2024 This year has been a bloodbath in the broader cryptocurrency space. Leverage has carted off players from the field one after the other. One by one, we’ve seen crypto lenders and hedge funds, bodied and bloodied by the high-interest rate environment after taking on leverage like drunken sailors. We have seen multiple lenders, hedge funds, and exchanges like Voyager, Celsius, BlockFi, Three Arrows Capital, and FTX all implode as it was discovered that many were woefully mismanaged or nothing more than Ponzi schemes. You can read more about the recent collapse in [The FTX Fiasco and the Fallout to Come](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/). There were industry insiders out there who were publicly warning about the risks in the system… #### 1.) CEO of Digital Currency Group (DCG) Barry Silbert ![](https://www.datocms-assets.com/56652/1671134826-01-tweet.png?auto=format) #### 2.) Former CEO of FTX and Alameda Research Sam Bankman-Fried ![](https://www.datocms-assets.com/56652/1671129125-02-sbf.png?auto=format) In hindsight, it appears these men were working with some inside information because both of their companies have proven to be deeply ingrained in this daisy chain of risk. Genesis, with its poor risk management, and FTX, with its shady shell of a business. It is well-known by now how Sam Bankman-Fried is tangled up in this credit contagion. His Ponzi scheme, FTX, and Alameda Research is just the latest and largest victim yet of this overleveraged catastrophe. But now, this contagion has spread to one of the largest crypto prime brokers, Genesis Global Trading, which recently halted customer withdrawals and has hired advisors and lawyers to pursue all options to avoid bankruptcy. There are plenty of rumors about what the consequences of Genesis bankruptcy would be when it comes to DCG, which has its tentacles all over the broader cryptocurrency system. In a way, this contagion is coming full circle. Here, I will highlight a paper trail that, in my opinion, shows how this entire crypto credit contagion began with Silbert’s DCG conglomerate and the SEC. It appears to be nearing its crescendo right where it started. To begin with, we must go back and look at DCG. These companies comprise it, the investment products it offers, and its contentious relationship with the SEC. ### The GBTC Cash Cow Genesis falls under the umbrella of Barry Silbert’s crypto conglomerate DCG, which has invested in around 200 cryptocurrency companies and projects since its founding in 2015. Here is a snapshot of only a portion of DCG’s portfolio to give you some scale of the empire Silbert has built. ![](https://www.datocms-assets.com/56652/1671129155-03-dcg-portfolio.png?auto=format) However, the most important parts of DCG’s business come down to only a handful of its subsidiaries, Grayscale Securities and Genesis Global Trading. Below is a graphic that shows the corporate structure of DCG. ![](https://www.datocms-assets.com/56652/1671129434-04-dcg-chart.png?auto=format) The most important company that DCG owns, by far, is Grayscale Investments, which is an asset manager and the sponsor of the largest Bitcoin trust in the world, GBTC. ***At the current price, GBTC holds around $11.4 billion worth of Bitcoin. This equates to 635,235 Bitcoin, or around 3.3% of Bitcoin’s circulating supply.*** GBTC is an absolute cash cow for Grayscale and, consequently, DCG. It charges a 2% management fee on the underlying Bitcoin held in the trust.* According to its SEC filings, Grayscale earned $68 million from this fee in Q3 2022, and at its peak, it was bringing in ~$144 million a quarter from this fee alone. At Bitcoin’s current price, Grayscale brings in ~$230 million in revenue annually from the fee. This equates to a substantial portion of the $800 million in revenue Barry Silbert said DCG earns annually in a letter to shareholders on November 22nd. > Taking a step back, let me be crystal clear: DC will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system. We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger. DCG has only raised $25M in primary capital and we are pacing to do $800M in revenue this year. > > — Barry Silbert, CEO of Digital Currency Group GBTC is a closed-end trust that allows investors to gain exposure to Bitcoin without buying the underlying Bitcoin itself. It is a security and has become extremely popular over the last several years because, for a long time, it was the only way for investors to get exposure to Bitcoin in tax-advantaged accounts like IRAs and 401(k)s. Understanding how GBTC functions is important to comprehend how this led to all the crypto lender explosions we have witnessed this year. Accredited investors can create shares of GBTC at Net Asset Value (NAV) by giving USD or BTC to Grayscale. After a 6-month lock-up period, the investors can convert the trust shares into GBTC shares, which are then freely tradeable on the open market. Investors can never take the original BTC out of the trust. There is no redemption clause. They can only sell their GBTC shares at the going market price. There is no mechanism by which investors can redeem their Bitcoin. This is important because it creates a dynamic where the share price of GBTC can trade on the open market above or below the Net Asset Value (NAV) of the Bitcoin that underlies the trust. When GBTC is trading at a premium, that means GBTC shares are trading at a higher price than the value of the underlying Bitcoin. When it is trading at a discount, it means GBTC shares are trading at a lower price than the value of the underlying Bitcoin. This hurts investors holding GBTC because there can be wild fluctuations between the price of GBTC compared to the underlying asset. This is also why Grayscale has publicly stated that it has structured GBTC legally since its inception to convert into an ETF one day. With an ETF, an authorized participant can create or redeem shares to bring the ETF back to NAV. This would be an optimal investment product for investors because there would be no discounts or premiums, the value of the ETF shares would always track the underlying Bitcoin, and the management fees would be much lower, too. But, alas, the SEC did not approve Grayscale’s application to convert GBTC into a spot Bitcoin ETF, and this market inefficiency with GBTC persisted, offering an arbitrage opportunity for investors. This is where things started to get out of control. ### Paper Bitcoin… at a Premium For a long time, GBTC was the only game in town for individuals and institutions to gain exposure to Bitcoin in tax-advantaged accounts like IRAs and 401(k)s. Institutions were legally only allowed to buy securities. At the same time, demand for GBTC grew because people could gain exposure to paper Bitcoin conveniently without the challenges and security risks associated with taking self-custody. As the price of Bitcoin increased, investors flooded into the only Bitcoin investment product available to them in their brokerage accounts. This led to an explosion in assets under management (AUM) for Grayscale, and the fees rolled in. At its peak during the bull market, over $40 billion dollars worth of Bitcoin was held in GBTC. ![](https://www.datocms-assets.com/56652/1671129729-05-aum-grayscale-bitcoin-trust.svg) Due to the lag between shares of GBTC being created in the trust and these shares hitting the open market after the 6-month lockup period, the increased demand created a shortage of GBTC shares available on the open market, driving the price of the shares up to a significant premium to NAV as demand for Bitcoin soared in the bull market. One can observe below how GBTC traded at a premium for most of its history before 2021. ![](https://www.datocms-assets.com/56652/1671464586-06-daily-gbtc-prem-disc-nav.svg) One of the largest drivers of this GBTC premium was institutional investors, who began putting on an arbitrage trade to take advantage of the market inefficiency between the price of GBTC and the underlying Bitcoin in the trust. This became known in crypto circles as *“The Grayscale Trade.”* **Here’s the trade:** *Step 1: Short Bitcoin*  *Step 2: Give Bitcoin to Grayscale, either with their own BTC or borrow it from a lender like Genesis* *Step 3: Hold GBTC shares for the 6-month lock-up period* *Step 4: Sell the GBTC shares at a premium when the lock-up ends* *Step 5: Close the short position* *Step 6: Rinse and Repeat*   With the GBTC premium breaching 20% at the end of 2020, this trade was basically free money for accredited investors who could do it. It was especially popular among crypto hedge funds and lending institutions, like Three Arrows Capital and BlockFi. In many ways, much of BlockFi’s business model revolved around this one unsustainable Grayscale Trade. This was how BlockFi offered such high yields in its interest-bearing accounts. They would rehypothecate user funds into this GBTC premium trade and roll it over every 6 months. Since the premium was greater than the yield on its interest-bearing accounts, they could keep using this trade to fund their business. After consistently putting on this Grayscale Trade, Three Arrows Capital and BlockFi eventually became the two largest holders of GBTC shares, collectively owning 58,741,046 shares of GBTC as of Q4 2021. ![](https://www.datocms-assets.com/56652/1671130289-07-gbtc-us-equity.png?auto=format) To be clear, many other institutional investors were putting on the same trade, but BlockFi and Three Arrows Capital were the most well-known, and they were putting it on with size. As this trade became more popular, the price of GBTC and Bitcoin increased to the right. This can be observed in the tripling of BTC holdings in GBTC from 2020 to 2021. ![](https://www.datocms-assets.com/56652/1671130344-08-btc-holdings-grayscale-bitcoin-trust.svg) Things were going great for BlockFi and Three Arrows Capital as they rolled over this Grayscale Trade every 6 months. It was also going well for Genesis and DCG. Genesis was making a killing loaning out to these firms to put on the trade, and DCG was making more money than ever before from fees as GBTC’s AUM ballooned. ​​But the arbitrage trade wasn’t risk-free. It only worked if the GBTC premium was still there when your individual lock-up period ended. Without the premium, the whole money-making machine falls apart for everyone. A firm will actually lose money putting the trade on if there is no premium, especially if they borrowed to put on the trade in the first place, which a lot of these firms did. And that’s precisely what happened. ### A Premium Flips to a Discount February 24th, 2021 – a date that will live in infamy. This was the day the GBTC premium vanished, never to be seen again. Since that day in February, GBTC has been trading at a massive discount to NAV. ![](https://www.datocms-assets.com/56652/1671130759-09-daily-gbtc-prem-disc-nav.svg) Suddenly, the darling trade of these hedge funds and lending firms was gone. What made matters worse is that these firms had to hold these illiquid GBTC positions due to the 6-month lockup period. All they could do was sit there and watch the GBTC discount widen. So why did the premium disappear? The GBTC premium disappeared for a variety of reasons. Here are two potential factors: 1. Increased competition in the market with the arrival of the ProShares Bitcoin Strategy ETF on the Toronto Stock Exchange and the Valkyrie Bitcoin Strategy future ETF on the Nasdaq in October 2021. Also, other smaller competing products with smaller management fees were launched, like the Osprey Bitcoin Trust and the Bitwise Crypto Index Fund. These new products attracted capital and investors away from GBTC, reducing the premium in the process. 2. As demand for GBTC fell and the premium was arbitraged away, the trade became less enticing from a risk standpoint, and the premium became negligible. It was not worth the risk of holding illiquid GBTC during the 6-month lockup period, especially if the premium was only a few percentage points. The marginal demand from the largest GBTC buyers (institutional investors) was no longer there, and the premium fell. When the Grayscale Trade disappeared, these firms started to scramble to raise funds and search for yield in riskier endeavors. This was when things all started to fall apart behind the scenes. ### BlockFi ![](https://www.datocms-assets.com/56652/1671132714-10-meme.jpg?auto=format) As mentioned above, much of BlockFi’s lending model depended on their ability to rehypothecate user funds and perform the Grayscale Trade on the backend. BlockFi collected a premium above 15% for much of 2020 by performing this trade. They then turned around and offered retail investors 6-8% interest on their crypto holdings and then pocketed the spread. It was well known that BlockFi was performing this Grayscale Trade. This was one of its primary revenue sources, and the company even mentioned the GBTC arbitrage trade in a leaked slide from a fundraising deck in 2021, shown below. ![](https://www.datocms-assets.com/56652/1671130830-11-blockfi.png?auto=format) In February 2021, right before the GBTC premium disappeared, CoinDesk reported: ![](https://www.datocms-assets.com/56652/1671130867-12-headline.png?auto=format) This boosted their GBTC shares to 36.1 million shares. Around this time, BlockFi was also planning to launch a competing BlockFi Bitcoin Trust so that they would not have to rely on GBTC to put on the trade. This news started to cause an uproar across the cryptocurrency industry. People were not happy to find out that BlockFi was performing this GBTC arbitrage trade in the background, which led former CEO Zac Prince to respond with, > BlockFi’s position in GBTC “is substantially less than 20%” of total assets > > — Zac Prince, CEO of BlockFi When asked about the GBTC arbitrage trade, BlockFi's Chief Risk Officer, Rene van Kesteren, replied, "*Locking up Bitcoin in Grayscale could theoretically pose a liquidity risk. But BlockFi discloses the arrangement to users and takes steps to defuse any danger.*" - March 4th, 2021 As the premium trade vanished and interest rates increased, BlockFi started to gradually reduce the interest rates offered on its interest-bearing products. BlockFi initially advertised 6.2% APY on its interest-bearing cryptocurrency products. By its last days in business, the yield offered on its Bitcoin interest-bearing product was only 2% APY. When GBTC's premium disappeared, BlockFi also raised $350 million in a Series D round, giving the company a valuation of $3 billion. One has to wonder if the loss of revenue from the GBTC premium trade played a role in the timing of this raise. It was around this time that BlockFi made a rather large loan to a $10 billion cryptocurrency hedge fund with a sterling reputation, Three Arrows Capital (3AC). In [a leaked investor call in June 2022](https://www.theblock.co/post/154681/a-leaked-investor-call-revealed-morgan-creeks-bid-for-blockfi-here-are-four-more-big-takeaways-from-the-call), it was reported that BlockFi had loaned 3AC $1 billion dollars. During the investor call, it was discovered that two-thirds of the billion-dollar loan to 3AC was collateralized by Bitcoin. The remaining third were in shares of GBTC, worth a total of ~$430 million at the time of liquidation. According to the call, "*BlockFi was able to easily liquidate its position in Bitcoin but ran into problems with the GBTC because the discount had reached lows last week of nearly 34%. As BlockFi attempted to liquidate its GBTC position, Pompliano explained, the price went down.*" BlockFi's liquidity issues with GBTC foreshadowed what was to come for lenders with large GBTC positions during a liquidity crisis. ### Three Arrows Capital As the discount disappeared, Three Arrows Capital suddenly found itself in quite the pickle. It had put on a significant GBTC position with leverage provided by Genesis. 3AC now had to sell these shares at a discount to pay its debt obligations. With the GBTC share price and the broader cryptocurrency markets crashing, 3AC was effectively insolvent without the Grayscale Trade available to them. From [3AC’s bankruptcy filings in July](https://www.theblock.co/post/158167/crypto-lender-genesis-lent-2-36-billion-to-three-arrows-capital), we now know that Genesis loaned 3AC $2.3 billion dollars. This represented nearly 50% of Genesis’s entire loan book at the time! To make matters worse, the loans were undercollateralized with GBTC and other illiquid cryptocurrencies. The loans were collateralized with a Bitcoin IOU, an ether IOU, and two high beta centralized tokens, down an average of -88% year-to-date. ![](https://www.datocms-assets.com/56652/1671131835-13-genesis.png?auto=format) As the premium switched to a discount, 3AC could not afford to pay back its USD loan to Genesis and incurred large losses as the GBTC premium turned into a deeper and deeper discount. It was around this time when 3AC began desperately searching for anything to fill the hole that was once filled by the GBTC premium trade to avoid its downfall. They began taking out USD loans from any crypto lender that would lend to them. BlockFi, Voyager, and Celsius all gave out loans, often collateralized by 3AC’s crypto and GBTC holdings, just like its Genesis loan. 3AC then went searching for yield with the newly acquired funds, where they found it was a promising protocol called Anchor. The Anchor protocol was offering a 20% yield on the Terra stablecoin, which was being promoted by the now-wanted fugitive [Do Kwon](https://www.bbc.com/news/technology-63033262). Here is Zhu Su, Co-Founder of Three Arrows Capital, tweeting about Terra Luna and Anchor about a month before its collapse. ![](https://www.datocms-assets.com/56652/1671134970-14-tweet.png?auto=format) Of course, we now all know how this ended up. [Terra Luna crashed](https://www.swanbitcoin.com/dark-moon-the-inevitable-collapse-of-luna/) – wiping out ~$50 billion in value in a matter of days. 3AC had massive exposure to the Terra Luna collapse, likely partly because they were searching for yield to avoid bankruptcy and make up for the losses incurred by the GBTC premium flipping to a discount. Terra Luna’s collapse led to 3AC’s implosion in the early summer of 2022, and this, in turn, took down many of the crypto lenders, too. All the counterparties took massive losses on their loans to 3AC, which ultimately contributed to their respective downfalls.  ![](https://www.datocms-assets.com/56652/1671131919-15-headline.png?auto=format) ![](https://www.datocms-assets.com/56652/1671131961-16-headline.png?auto=format) ![](https://www.datocms-assets.com/56652/1671131976-17-headline.png?auto=format) ![](https://www.datocms-assets.com/56652/1671132003-18-headline.png?auto=format) Genesis incurred a massive $1.2 billion dollar loss in 3AC, effectively making it insolvent. It turns out that the counterparty risk Barry Silbert had been warning about in his tweet from June 2021 was actually right under his nose the whole time. ### Genesis This now leads us to Genesis, the largest crypto prime broker, which dished out a whopping $130.6 billion dollars worth of loan originations in 2021. Genesis has been hit by a plethora of losses related to bad loans, fraudulent counterparties, and a general decline in the price of GBTC and cryptocurrencies in general. First, Genesis presumably took a significant loss when Terra Luna collapsed after they swapped $1 billion worth of BTC for $1 billion worth of UST, which will probably go down as one of the worst transactions in history. This position has presumably been marked to zero after UST crashed. ![](https://www.datocms-assets.com/56652/1671132036-19-tweet.png?auto=format) The second event was the $1.2 billion dollar exposure to 3AC. This was the initial response after the 3AC collapse from now resigned CEO Michael Moro, with the *“large counterparty”* now known to be 3AC. ![](https://www.datocms-assets.com/56652/1671135039-20-tweet.png?auto=format) Lastly was the recent exposure to the FTX and Alameda Research Ponzi scheme. Here is Genesis' timeline regarding their exposure to FTX. **November 8th** - Genesis denies exposure. ![](https://www.datocms-assets.com/56652/1671135073-21-tweet.png?auto=format) **November 9th** - Genesis says they have $7 million worth of losses. ![](https://www.datocms-assets.com/56652/1671135109-22-tweet.png?auto=format) **November 10th** - Genesis says they have $175 million trapped on FTX. ![](https://www.datocms-assets.com/56652/1671135134-23-tweet.png?auto=format) **November 11th -** Genesis received a $140 million equity infusion from their parent company, DCG, to help provide some breathing room. ![](https://www.datocms-assets.com/56652/1671132070-24-headline.png?auto=format) **November 16th** - Genesis halts customer withdrawals and new loan originations, citing 3AC and FTX exposure. ![](https://www.datocms-assets.com/56652/1671135165-25-tweet.png?auto=format) **November 17th** - Reports surface that they are attempting to raise an emergency $1 billion. ![](https://www.datocms-assets.com/56652/1671132093-26.png?auto=format) **November 21st** - Genesis slashes its raise target in half and warns of potential bankruptcy. ![](https://www.datocms-assets.com/56652/1671135195-27-tweet.png?auto=format) Since then, it has been discovered that Genesis owes customers of crypto exchange Gemini $900 million dollars, as well as a second group of assorted creditors another $900 million dollars, [for a total of $1.8 billion dollars](https://www.coindesk.com/business/2022/12/04/genesis-creditor-groups-loans-amount-to-18b-and-counting-sources/), and that number is expected to grow. In addition, it has been reported that Genesis has hired restructuring lawyers to help find a way to prevent bankruptcy. In a Genesis fundraising document [leaked to the WSJ](https://www.wsj.com/livecoverage/stock-market-news-today-11-17-2022/card/crypto-lender-genesis-sought-emergency-loan-of-1-billion-by-monday-573TThK17Ke15FYwJzLR), we learned that Genesis attempted to raise emergency funds due to a “*liquidity crunch due to certain illiquid assets on its balance sheet*”…and… *“There is an ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity”* Later, it was revealed that the *“certain illiquid assets”* on Genesis’s balance sheet comprised ~39 million shares of GBTC pledged as collateral from the 3AC loans and multiple loans to its parent company, DCG. This leads us to the final boss of this whole labyrinth of leverage… DCG. ### Digital Currency Group When 3AC blew a $1.2 billion dollar hole in Genesis’s books, Genesis was effectively insolvent. In the wake of the 3AC collapse it led to this tweet from former Genesis CEO Michael Moro: ![](https://www.datocms-assets.com/56652/1671135228-28-tweet.png?auto=format) It was later revealed that by *“assuming certain liabilities,”* DCG took the bad 3AC loan on its books, took out a $1.1 billion dollar promissory note due June 2032 from Genesis, and proceeded to give the cash right back to Genesis for them to fill the hole in its books. If this makes you raise your eyebrows a little bit, then you are not alone. This kind of intercompany loaning to keep the company afloat is suspect, to say the least. Barry Silbert explained this loan in [his letter to shareholders](https://twitter.com/tier10k/status/1595140018871631873) on November 22nd: > You may also recall there is a $1.1B promissory note that is due in June 2032. As we shared in our previous shareholder letter in August 2022, DCG stepped in and assumed certain liabilities from Genesis related to the Three Arrows Capital default. As stated in August, because these are now DCG liabilities, DCG is participating in the Three Arrows Capital liquidation proceedings on the Creditors' Committee and is pursuing all available remedies to recover assets for the benefit of creditors. Aside from the Genesis Global Capital intercompany loans due in May 2023 and the long-term promissory note, DC's only debt is a $350M credit facility from a small group of lenders led by Eldridge. On top of that questionable loan to bail out Genesis from the bad 3AC loan, DCG also took out another $575 million intercompany loan from Genesis due May 2023 to *“fund investment opportunities and to repurchase DCG stock from non-employee shareholders.”* > In recent days, there has been chatter about intercompany loans between Genesis Global Capital and DCG. For those unaware, in the ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms. These loans were always structured on an arm's length basis and priced at prevailing market interest rates. DC currently has a liability to Genesis Global Capital of -$575 million, which is due in May 2023. These loans were used to fund investment opportunities and to repurchase DC stock from non-employee shareholders in secondary transactions previously highlighted in quarterly shareholder updates. And to this day, I've never sold a share of my DCG stock. > > — Barry Silbert, CEO of Digital Currency Group This $575 million dollar loan is most likely entirely deployed by now, as DCG has been purchasing GBTC shares in an attempt to stop the GBTC discount from widening more. The GBTC shares bought with this loan are likely down ~70% today. DCG aggressively purchased shares last year to reduce the discount to attract and raise capital. DCG publicly announced a [pledge to buy $1 billion worth of GBTC shares in November 2021](https://www.businesswire.com/news/home/20211020005366/en/Digital-Currency-Group-Announces-Plan-to-Increase-Purchase-of-Shares-of-Grayscale-Bitcoin-Trust-OTCQX-GBTC). 2 weeks later, DCG [raised $700 million dollars](https://blockworks.co/news/digital-currency-group-raises-700m-now-valued-at-10b) in an equity round at a $10 billion dollar valuation. The round was led by SoftBank, CapitalG, and Ribbit Capital. Below is a chart that shows the amount of GBTC shares owned by DCG. Today, DCG owns about 10% of the total GBTC supply. ![](https://www.datocms-assets.com/56652/1671132357-29-dcg.png?auto=format) You can see below how BlockFi liquidated all of its GBTC holdings by Q1 2022, right as DCG was accumulating shares. DCG is now the largest shareholder of GBTC, with 66,972,899 shares. ![](https://www.datocms-assets.com/56652/1671132376-30-gbtc.png?auto=format) From March 2021 to June 2022, [DCG bought $772 million of GBTC shares at an average price of $40 dollars per share](https://www.ft.com/content/6b0e81ad-effd-4e1c-ad9c-0b9f708dcdf5). With the GBTC price currently sitting at $8.98 today, that means DCG is down an average of -77.5% on those GBTC purchases (ouch). The real problem here is liquidity. Genesis needs liquidity now to fund its withdrawals and pay its creditors. Genesis has short-term obligations, and it appears a lot of its capital was deployed into illiquid long-term investments, like GBTC. It will go bankrupt if it does not get capital soon. It’s possible that Genesis has already begun selling GBTC shares to raise cash and make some depositors whole. This could be one reason why we have seen the GBTC discount has dropped to an all-time low of -50%.  DCG owes Genesis $1.7 billion and other creditors $350 million and has already exhausted its liquid capital by buying back GBTC shares and bailing out Genesis when it blew up from 3AC. Now, DCG is desperately trying to raise cash to control the fallout from [the FTX fiasco](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/) and help Genesis and itself avoid bankruptcy. As you can see, this is a total mess. The questions are: - What options does DCG have? - What could this mean for GBTC holders? - What could this mean for the price of Bitcoin? ### DCG's Options Although DCG finds itself in a tight spot, it does have several options available to them to avoid bankruptcy. Keep in mind that we are operating without all the information here. Here are six potential avenues DCG can take: #### 1.) Sell their GBTC shares to raise cash This could provide a buffer for cash-strapped Genesis, but it would not be enough to fix the problem. They also are not incentivized to do this because it would widen the discount even more and likely cause their AUM to drop, reducing their fees, their primary source of revenue. It’s likely we have already seen some of this selling as the GBTC discount has widened of late; however, DCG and Genesis cannot just sell their entire GBTC positions. GBTC is illiquid because there are legal restrictions concerning issuers of a security selling over-the-counter. This is called [rule 144A](https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html). It is explained on the SEC’s website below, *“The number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing of a notice of sale on Form 144.”* Due to this rule, Genesis and DCG would be legally required to provide notice of the sale. They would only be able to sell ~7 million shares every quarter. For this reason, it would take time for these entities to unwind their GBTC positions. All in all, selling its GBTC shares would only be a bandaid for a bullet wound. It would likely only widen the discount further and reduce DCG’s fee revenue, so this isn’t an ideal option for DCG to take. #### 2.) Raise equity to fill the hole The last time DCG raised funds, it was valued at $10 billion. This was near the top of the bull market when Bitcoin’s price was around $60,000. Now, they will need to try to raise a down round in a challenging environment with annual revenues down >50%. But there is still value in DCG beyond Genesis. As mentioned above, Grayscale is a cash cow that brings in annual recurring revenue of ~$300 million at today’s Bitcoin prices. They can leverage those future cash flows to try to raise capital. DCG also holds an extensive venture portfolio, including assets like CoinDesk and Foundry. DCG can even raise funds from the 10% of the outstanding GBTC shares they own instead of selling them. Lastly, they have bankruptcy claims in 3AC, FTX, and Alameda Research that could fetch some value. Still, the details around those claims remain unknown. If DCG can pull it off, it could raise funds to try to pay back the $1.7 billion it owes Genesis creditors by leveraging their assets. But even then, it’s hard to see how that would fill the hole. #### 3.) Sell off assets to raise capital DCG could also sell its assets, including its venture portfolio, to raise capital. One of the most valuable assets that it owns is CoinDesk. Semafor reports that people familiar with the situation state that buyers approached DCG [to purchase CoinDesk at a price of $300 million](https://www.semafor.com/article/11/29/2022/online-news-site-coindesk-attracts-suitors-amid-crypto-crash). It is estimated that CoinDesk brings in about $50 million in annual revenue, mostly from its Consensus Conference. They also could sell Grayscale to another asset manager to manage. Asset managers would need to seriously consider this offer, given the lucrative 2% management fee. This would not impact GBTC shareholders much either, which is a good thing, but it would certainly impact DCG. This would be selling their main revenue driver. It is estimated that DCG could sell Grayscale for ~$500 million to the right buyer. Yet, if DCG sold Grayscale, it would basically be kissing its business goodbye. And still, this would likely not be enough to fill DCG’s hole. #### 4.) Restructure loans with Genesis creditors Genesis could work with DCG to restructure its loans to give both parties more runway. Right now, DCG owes Genesis $1.7 billion. It’s in everybody’s best interest if DCG can negotiate and strike a deal with Genesis creditors, allowing both parties to avoid bankruptcy. If DCG can work out a resolution with Genesis creditors, perhaps they can survive to live another day. If DCG can’t come to a resolution, then Genesis will likely go into bankruptcy, and DCG will have to answer to its creditors in the bankruptcy courts. DCG could raise money and inject capital into Genesis so that they can fund some of their depositor’s withdrawals. Or maybe DCG could negotiate with Genesis creditors to roll their debt into DCG warrants. This would give them a senior claim on the cash flow from GBTC. This could be enticing to Genesis creditors, given GBTC’s annual recurring revenues. There are many different ways they may come to a deal, and I believe it is in the best interest of both parties to do so. If a deal was worked out, perhaps both DCG and Genesis could avoid bankruptcy. However, it’s hard to see how any investor could trust Genesis after all of this. #### 5.) Seek Reg M Exemption For GBTC shareholders – this would be a Goldilocks scenario. If the SEC approves this, Reg M will allow GBTC shareholders to redeem their shares for the underlying assets at a 1:1 ratio. So, if Reg M relief was approved by the SEC, the GBTC discount would practically disappear overnight as it would allow Grayscale to create and redeem shares simultaneously and return the fund back to NAV. The SEC would need to approve in-kind redemptions for shareholders to take custody of the underlying Bitcoin. This could pose challenges because a lot of GBTC shareholders hold the security in accounts that aren’t legally allowed to hold spot Bitcoin. However, shareholders could still redeem their shares for cash at NAV instead of the alternative of selling the shares at a 40% discount on the open market. This would be a positive outcome for GBTC investors, and the SEC would do right by shareholders to approve this relief and allow in-kind redemptions to protect investors. I’m skeptical about whether the SEC will approve this because they have already denied Grayscale’s application to convert to an ETF this year, which would have given Grayscale the Reg M exemption. By approving a Reg M exemption, the SEC would risk appearing supportive of the cryptocurrency industry in the wake of FTX’s collapse. Since they already rejected Grayscale’s application to convert GBTC into an ETF earlier this year, it’s hard to see them approving Reg M relief. At this point, it becomes a game of politics instead of a matter of protecting retail investors and GTC shareholders. #### 6.) Liquidate the Trust This is the nuclear option and appears highly unlikely, given that DCG would be killing its cash cow. By liquidating the trust, DCG would lose all that annual recurring revenue from the fee, essentially ending any hope for the business to continue. Shareholders of GBTC cannot vote to liquidate the trust after the 75% shareholder liquidation provision was amended in the GBTC charter back in 2018. ![](https://www.datocms-assets.com/56652/1671132404-31-screen.png?auto=format) Today, the liquidation of the trust is at the sole discretion of the sponsor, and the incentive for them to voluntarily do this just doesn’t add up. The one way that a liquidation of the trust can occur is in the event of a DCG bankruptcy or insolvency unless 50% of the shareholders vote to move the trust to a new sponsor instead. ![](https://www.datocms-assets.com/56652/1671132422-32-screen.png?auto=format) In the event of bankruptcy and subsequent liquidation of the trust, it remains unclear whether or not shareholders would be able to take in-kind redemptions of the underlying Bitcoin or if it would have to be distributed in dollars. I’m not a lawyer, but the language makes it sound like shareholders would be able to redeem the underlying Bitcoin at the sponsor's discretion, which is a potentially positive outcome. ![](https://www.datocms-assets.com/56652/1671132437-33-screen.png?auto=format) If that is not the case, dollars would need to be distributed to GBTC shareholders. This means that DCG would need to sell all 635,235 Bitcoin on the open market. This would crash the price of Bitcoin, and there would likely be a lot of price slippage as the sponsor sold the Bitcoin. This would result in less value being returned back to GBTC shareholders and would tank the price of Bitcoin in the process. This would not be ideal. All in all, a liquidation of the trust is a last-ditch option that DCG is unlikely to take voluntarily. In the event of DCG’s bankruptcy, there is language in the charter that makes it appear like in-kind bitcoin redemptions would be possible if the trust was liquidated. The real risk that GBTC shareholders need to consider is whether the Bitcoin underlying the trust is secure and accounted for. Coinbase is the qualified custodian for GBTC. They legally cannot rehypothecate or lend out the Bitcoin and have to keep the account segregated from other funds. Coinbase recently [announced in a public statement](https://grayscale.com/safety-security-and-transparency/) that all of the Bitcoin underlying GBTC was accounted for. ![](https://www.datocms-assets.com/56652/1671132464-34-table.svg) Investors were unsatisfied that Coinbase didn’t show proof of this cryptographically, and I understand that concern. But, excluding the non-zero possibility that DCG, Grayscale, and Coinbase are running a fraudulent operation, I have no reason to believe that the Bitcoin is not there. Coinbase is a regularly audited public company. GBTC is likely one of its largest clients for its Coinbase Custody product. If Coinbase somehow mismanaged the Bitcoin that underlies the largest Bitcoin fund in the world, no other entity would trust their custody solution ever again, especially now that other institutional-grade custody solutions like Fidelity and BNY Melon exist. It is in Coinbase’s best interest that the Bitcoin is there, and if they say it is, then I believe there is a 99.9% chance it is. In case you are someone who understandably isn’t satisfied without on-chain confirmation, then here is [Ergo](https://twitter.com/ErgoBTC/status/1595504799016841216)’s findings, a respected on-chain analyst from OXT Research. Ergo and his team tracked down all the Bitcoin on-chain that underlie the GBTC trust held at Coinbase, and all the Bitcoin were there. ![](https://www.datocms-assets.com/56652/1671132486-35-grayscale.png?auto=format) Ergo’s findings should provide a sense of relief for GBTC holders. The Bitcoin underlying GBTC has been independently verified on-chain and is accounted for in Coinbase Custody. ![](https://www.datocms-assets.com/56652/1671135379-36-tweet.png?auto=format) ### The Blame Game In this piece, I attempted to lay out evidence that a lot of this crypto contagion began and is now culminating with DCG. It all revolved around the Grayscale Trade that was present due to GBTC’s structure as a closed-end trust. Once the GBTC premium trade disappeared, hedge funds and crypto lenders went further out on the risk curve in pursuit of yield rights as the Federal Reserve started increasing interest rates. It was a recipe for disaster. Risk happens fast, and so began a wave of bankruptcies that spread like wildfire throughout the entire broader crypto industry. So, who is to blame for this complex web of leverage and speculation? Sure, you can blame the crypto lenders for their shockingly poor risk management. You can blame the hedge funds and institutional investors for putting on risky trades with obscene amounts of leverage, too. You can also blame scammers and criminals like Do Kwon and Sam Bankman-Fried for running Ponzi schemes and frauds. You can blame DCG for providing the leverage for investors to put on this Grayscale Trade and letting them roll it over every 6 months, ripping off retail investors in the process. You can even blame the Federal Reserve for creating this easy money, yield-chasing environment that encouraged and allowed speculation to run rampant. But to me... I think the one institution that could have actually prevented this from getting so out of hand, just by doing its job, is the SEC. According to the SEC’s website, its mission is to *“protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”* I would say the SEC has failed its mission in its refusal to approve the conversion of GBTC into a spot Bitcoin ETF. I think the damage speaks for itself. If the ETF conversion had been approved, then the premium trade would not have existed. If the premium trade would not have existed, these firms would not have grown to the size they had and taken on as much leverage as they did. A lot of this mess could have been avoided. In my opinion, the SEC failed in its mission by not approving a spot in Bitcoin ETF, resulting in countless retail investors needlessly being harmed and losing their life savings in this crypto credit contagion. ETFs are a safer, better investment structure for investors than a closed-end fund like GBTC because ETFs have no lockups, no premiums/discounts, lower fees, more transparency, and better tax treatment. Although Grayscale had selfish motives for wanting an ETF (to gain market share and attract capital to its product), you have to give them some credit. Grayscale has been doing everything it can to convert GBTC into an ETF. They became the first SEC reporting company in 2020 and thus have to adhere to a higher level of disclosure and financial reporting than other companies in the space. ![](https://www.datocms-assets.com/56652/1671132513-37-gbtc.svg) Despite this, the [SEC rejected their ETF application this year](https://www.wsj.com/articles/sec-rejects-grayscale-attempt-to-turn-bitcoin-fund-into-etf-11656617147) and instead [approved a CME Bitcoin Futures ETF](https://blockworks.co/news/sec-approves-bitcoin-futures-etf-filed-under-the-33-act). Grayscale is now [suing the SEC](https://www.coindesk.com/policy/2022/06/30/grayscale-sues-sec-over-bitcoin-etf-application-rejection/) for approving a futures ETF and not approving its spot ETF conversion. In response, Grayscale started a comment submission portal on its website where investors can submit comments about the SEC's rejection during the SEC's 240-day review period. Since June 19th, [11,609 comment letters](https://grayscale.com/spot-bitcoin-etf-comment-analysis/) have been submitted, many from GBTC shareholders. Grayscale writes, *"99.96% of comment letters were submitted in support of the conversion."* In the past, the SEC has denied dozens of similar spot ETF applications from other major players in the space, including Fidelity's WisdomTree Bitcoin ETF and NYDIG's Bitcoin ETF, mainly citing a lack of: 1. *qualified custodian solutions* 2. *investor protections and market manipulation and fraud* The qualified custodian concern is unfounded in 2022. Several qualified custodians operate today, including Fidelity, BNY Melon, State Street, and Coinbase. This problem has been solved for years. As for the spot Bitcoin market manipulation and fraud, how bad could it be if the SEC found it suitable enough to approve a CME Bitcoin futures ETF that's supposed to track the underlying spot market? Futures contracts are inherently more expensive to manage, don't track the underlying spot price as well, and are more subject to price manipulation. Fidelity performed a [lead-lag analysis](https://www.sec.gov/comments/sr-cboebzx-2021-039/srcboebzx2021039-250110.pdf) and submitted their findings to the SEC that empirically showed how the CME Bitcoin futures market leads price discovery in Bitcoin futures and spot markets. Fidelity's main takeaway from the analysis was, *"Our study's finding that the CME Bitcoin futures market leads Bitcoin price discovery across Bitcoin futures and spot markets means that an* ***actor trying to manipulate the ETP*** *would be reasonably* ***likely to have to trade in the CME Bitcoin futures market****."* Fidelity's analysis shows that if a bad actor wanted to manipulate the price of Bitcoin, they would have better success if they used the futures market rather than the spot market, but yet, still no spot Bitcoin ETF approval from the SEC. Even SEC Commissioner Hester M. Peirce is dumbfounded by the SEC's continued rejection of a Bitcoin spot product, "*The Commission's resistance to a spot Bitcoin ETP is becoming almost legendary."* > The reasons for this resistance to a spot product are difficult to understand apart from a recognition that the Commission has determined to subject anything related to bitcoin—and presumably other digital assets—to a more exacting standard than it applies to other products. > > — Commissioner Hester M. Peirce, June 2022 By rejecting spot Bitcoin ETF applications, approving Bitcoin futures ETFs, and allowing GBTC to persist as it's currently structured, the SEC has failed to protect investors. Lastly, regulators in many other countries, such as Canada, Australia, South Africa, and Europe, have all approved spot Bitcoin ETFs. These products have resulted in capital flight abroad as investors seek a better investment vehicle. The SEC's failure to approve the conversion of GBTC into an ETF not only hurt investors but has also negatively impacted American competitiveness. Ultimately, some of the blame for the wealth destruction we've seen across the broader cryptocurrency industry falls at the feet of the SEC for not allowing GBTC to be converted into a spot Bitcoin ETF. These regulators are in charge of protecting investors and creating fair and efficient markets; it's about time it got back on its stated mission. For all of these reasons, it's long past due for the SEC to approve a spot Bitcoin ETF. ### Conclusion If there are any lessons to be learned from this web of leverage and fraud, they are this: leverage and counterparty risk kill. As Custodia’s CEO Caitlin Long famously said on a panel with Sam Bankman-Fried at the Bitcoin 2021 conference, *“A fool and his leveraged Bitcoin are soon parted.”* All of these institutions tried to play fiat games on top of Bitcoin. Lenders tried to offer yield on a disinflationary asset and got REKT doing it. Investors tried to chase yield by leveraging up to their teeth, making riskier and riskier bets, and getting REKT doing it.  Swan’s Andy Edstrom said it best back in May, ![](https://www.datocms-assets.com/56652/1671135419-38-tweet.png?auto=format) Another big takeaway from this daisy chain of counterparty risk is ***"Not your keys, not your coins."*** What Celsius, Voyager, Genesis, FTX, and BlockFi should teach every investor is that there is no substitute for holding spot Bitcoin. When you hold GBTC, or Bitcoin, on an exchange or lending platform, you do not own Bitcoin. You own paper Bitcoin. You own a Bitcoin IOU. You are putting your trust in a counterparty, not an immutable ledger. The beauty of Bitcoin is that if you take self-custody, you never have to trust another exchange, lender, custodian, or Bitcoin trust ever again. If you never want to be caught up in bankruptcy proceedings, become a victim of a fraudster, or have to read the fine print of a trust charter, then take ownership of your Bitcoin. You can avoid all of these counterparty risks forever by withdrawing your Bitcoin into your own possession. That is why we recommend buying spot Bitcoin and taking self-custody to all our Swan clients. If you want to avoid all of this nonsense, then that's all you have to do. It's that simple. Don't trust, verify. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Assessing Risk in Bitcoin Custody - Swan Bitcoin URL: https://www.swanbitcoin.com/education/assessing-risk-in-bitcoin-custody/ Swan encourages our clients to withdraw their Bitcoin to self-custody by offering free and automatic withdrawals. --- **Yan Pritzker** · January 1, 2024 · Updated July 15, 2024 With the recent fallout from the [bankruptcy filings of the world’s second-largest crypto exchange](https://www.ft.com/content/c236d6f9-da5a-4da7-8dc8-5cd450dfe39d), [yield products](https://www.wsj.com/articles/blockfi-prepares-for-potential-bankruptcy-as-crypto-contagion-spreads-11668534824), [lenders](https://www.bloomberg.com/news/articles/2022-07-14/crypto-lender-celsius-files-for-bankruptcy-in-cash-crunch#:~:text=Cryptocurrency%20lender%20Celsius%20Network%20Ltd,individual%20investors%20to%20steep%20losses.), [stablecoin schemes](https://www.swanbitcoin.com/dark-moon-the-inevitable-collapse-of-luna/), and [crypto brokers](https://www.bloomberg.com/news/articles/2022-07-06/voyager-digital-holdings-files-for-chapter-11-bankruptcy), it is time to take a step back and understand the risks of letting someone else hold your Bitcoin. In this article, we will examine risk across the general landscape of Bitcoin custodians. ### Why do we need custodians at all? For Bitcoiners, self-custody of your Bitcoin is the best and least risky path. However, it is also true that, in most cases, the only way to acquire Bitcoin regularly or in size is to do so through an online service of some type. This necessitates taking some risk for the duration of the exchange process, even if your counterparty is another person. Some use cases may require the use of a custodian on an ongoing basis due to specific regulations, such as using a qualified custodian for [registered investment advisors](https://www.sec.gov/rules/final/ia-2176.htm), IRA accounts, and other entities that may be required to avoid self-custody. ### What risks are associated with custodians? We identify four broad categories of Bitcoin custodians:  - Investment Platforms. This includes yield generators like [BlockFi](https://www.cnbc.com/2022/11/28/blockfi-files-for-bankruptcy-as-ftx-fallout-spreads.html) and investment funds like [3AC](https://www.cnbc.com/2022/07/11/how-the-fall-of-three-arrows-or-3ac-dragged-down-crypto-investors.html). - Exchanges and Brokerages. This includes both casino-like exchanges like [FTX](https://www.cnn.com/2022/12/13/business/sam-bankman-fried-charges/index.html) and Binance, where practically anything gets listed and can be bet on, as well as bitcoin-focused broker apps. - Qualified Custodians. These companies meet the SEC’s Custody Rule criteria ([206(4)-2 of the Advisers Act](https://www.law.cornell.edu/cfr/text/17/275.206(4)-2)), which gives customers an enhanced level of protection from misuse or misappropriation.  These companies tend to operate under [state-level trust company regulations](https://twitter.com/PrimeTrustCo/status/1591154425376419840?s=20&t=hb5bpxvqXSU6OucU21BvSg), including Prime Trust and BitGo. - Self-Custody, including single-sig, multi-sig, or collaborative custody with the assistance of a trusted third party for one or more of your keys. We identify three broad categories of risk: - Custody Risk. This covers the risk of theft or loss of private keys due to mismanagement. - Bankruptcy Risk. This covers the likelihood of the counterparty going bankrupt, the likelihood that customer assets are earmarked and present at the time of bankruptcy, the complexity and expediency of bankruptcy proceedings, and the likelihood that the court will ensure depositors are made whole before other creditors. - Regulatory Risk. This covers state action against the custodian ranging from losing some or all of their business, being forced to shut down entirely, or assets in custody being frozen by the state. Below is a risk summary matrix. We’ll look into the specific categories and how to choose a custodian. ![](https://www.datocms-assets.com/56652/1671034649-screen-shot-2022-12-14-at-11-17-15-am.png?auto=format) ### Your Keys, Your Coins Let’s start with the obvious. Your keys, your coins. Not your keys, not your coins. If you send Bitcoin elsewhere, there is no guarantee that you will ever get it back. Nobody can offer this guarantee because the Bitcoin blockchain only recognizes private key ownership. That means that *the return of transferred Bitcoin to any third party, even if under a legal written contract to return your Bitcoin, cannot be enforced on the blockchain.* Please see our article on the [Best Bitcoin wallets of 2023](https://www.swanbitcoin.com/bitcoin-wallets-not-your-keys-not-your-bitcoin/) to find an appropriate self-custody solution. When it comes to real-world property rights, those are enforced by laws and courts. Putting your Bitcoin somewhere other than your own custody has risks. When you use a third-party service, even if you are using them to withdraw to self-custody immediately, your best bet is to find a service that is transparent with these risks, operates under a robust regulatory framework in a jurisdiction with strong property rights and rule of law, uses sound technology and business practices to secure it, and minimizes your time in custody if possible. Next, we’ll examine risk categories and how they may play out in real life. ### Custody Risk We will begin with the most obvious and highest risk category: ##### Investment Platforms These platforms are marketed as providing *“yield”* or returns on your investment. Such platforms generally have complete discretion over your Bitcoin. They may send it to another third party, which itself may lend it to any other parties. They may lock it up in some other blockchain to engage in *“DeFi yield farming,”* and this blockchain may have a bug or get hacked. They may park it with another fund that blows up. There are no returns without risk, and we believe the risk in most investment platforms is grossly underpriced. In other words, getting paid 6% for sending someone your bitcoin, never to see it again, seems like a pretty bad trade for the world’s fastest-growing asset class. > Given the gift of fire, a king will conquer the world, a chef will feed the world, an engineer will move the world. A jester will just try to juggle it. > > — Michael Saylor on Bitcoin Bitcoiners have warned about this for years, yet it took a few recent disasters to drive the point home. At this stage in its development, Bitcoin is best thought of as long-term savings. Yes, it will be volatile, but if you're reading this, you likely agree with our view that Bitcoin's purchasing power will rise over time. Setting aside investments, any agreement to swap fiat for Bitcoin will likely involve a step during which your fiat money sits with a counterparty before you receive the Bitcoin. This is where exchanges, brokerages, and qualified custodians come in. During this step, the Bitcoin keys are held by the custodian. Because Bitcoin is not FDIC or SIPC insured, you have no backstop if your custodian loses your Bitcoin. You likely also have no legal recourse, as you will typically sign a disclaimer with the understanding that there are no government backstops for digital assets. ##### Exchanges Exchanges are places where buyers and sellers meet to trade Bitcoin for assets like digital dollars and altcoins, most of which are scams that eventually collapse in price. Brokerages are like exchanges, though they typically sell you their own Bitcoin outside of a traditional order book. Exchanges and brokerages may vary widely in how they treat customer assets. Some exchanges may keep customer assets segregated from their own assets under some regulatory framework. It is likely that most exchanges, especially those domiciled outside the US, do not follow such asset segregation policies. The recent collapse of FTX drives that point home. Furthermore, exchanges may be very complex from a technical standpoint. The more functions an exchange performs (trading, staking, leverage, derivatives, etc.), the higher its surface area for security weaknesses or buggy code, and the more likely it is to be exploited and have your funds stolen. ##### Qualified Custodians Qualified Custodians are specialized entities that do not broadly perform the function of exchanges. They have a small attack surface because they specialize in custody services. They do not directly interact with end users, which means the surface area for social engineering attacks is significantly reduced. Finally, they operate under regulations that are often more strict than banks. **For Example**: Nevada trust companies must maintain legal segregation between customer assets and their own under [NRS 669](https://www.leg.state.nv.us/nrs/nrs-669.html). Qualified custodians spend a large portion of their budget on security and compliance. They do not have other *“distracting”* business lines like exchanges do. ##### Self-Custody Finally, we must touch upon the risks of self-custody. While we continue to recommend self-custody as the north star for every Bitcoiner, we must also understand that it is not without risk. Private keys for self-custody must be secured from theft, damage, and loss. Should the need arise, loved ones must be left with instructions and training on recovery. That said, we are excited to support and develop a growing segment of collaborative custody products, which we believe will offer a path to getting assistance securing a backup key.  ### Bankruptcy Risk Following the spectacular collapse of many cryptocurrency funds, exchanges, and investment platforms in 2022, the risk of bankruptcy should be evaluated carefully.  As before, platforms that offer returns are the ones that have the highest risk. Bitcoin and crypto investment funds will freely lend, rehypothecate, and lock your coins in various investment schemes and other blockchain protocols full of security holes. The cryptocurrency space is rife with mispriced risks and trades that seem to magically generate money for free for six months before ultimately blowing up. Remember, there is a finite number of Bitcoin in the world, making consistent Bitcoin-denominated yield generation on a long-time scale effectively impossible. Many strategies in 2021 were based on games of arbitrage, where traders would find exploitable holes in various DeFi platforms or between the real world and the digital world with products like GBTC (Grayscale Bitcoin Trust), where traders hoped to capitalize on the price difference between a fund that was not redeemable for Bitcoin and actual Bitcoin. These strategies [turned out to be completely unsound](https://protos.com/blockfi-severs-ties-with-gbtc-its-most-profitable-asset-ever/) and led to the [collapse of the parties that engaged in them](https://www.coindesk.com/business/2022/07/22/three-arrows-capital-founders-says-terra-gbtc-trades-led-to-fund-blowup-report/). The bankruptcy risk for any scheme purporting to generate yield on Bitcoin is exceptionally high – approaching near-certainty. When these inevitable collapses happen, there is also almost no chance you’ll ever get your money back. While an exchange or broker may not take the kind of risks that investment platforms and yield generators do, they may, in fact, have some operations that expose them to unnecessary risk beyond the risk of holding your coins correctly. Some exchanges may run lending and leverage operations, which may be affected by market volatility. Some have grown by [leveraging themselves on self-printed tokens](https://news.bloomberglaw.com/us-law-week/what-drives-crypto-token-value-and-how-the-sec-might-act), such as in the cases of FTX and Celsius. Many exchanges do not operate in a regulatory structure that requires them to segregate customer funds, especially in non-US jurisdictions. Given the complexity of most major exchanges' operations, a bankruptcy court would likely take longer to distribute customer assets, should such a distribution even be possible. A Qualified Custodian business tends to be dramatically simpler. Because they only engage in a few simple activities, such as digital asset custody and possibly connecting with trading desks and traditional banks, a qualified custodian has a relatively low risk of bankruptcy. They do not engage with or market to retail customers, are not generally affected by market moves in cryptocurrency, do not borrow/lend/take on leverage, and generate fees from basic services such as custody, API access, and financial rails. In a market downturn, such a business could likely downsize and weather the storm. In the case of bankruptcy proceedings, due to the robust regulatory framework that requires the custodian to maintain segregation of customer assets, the customers may be reasonably sure to get their investments back in whole and quickly. Note: That since no qualified custodians that custody of digital assets have gone bankrupt - until such a case is tested in court with digital assets, this statement is speculative. This statement is speculative until such a case is tested in court with digital assets. However, there is good reason to believe it is true based on how to trust companies are structured. ### Regulatory Risk The government is out to get cryptocurrency companies. The [alarm bells have been sounding](https://www.ft.com/content/b9f44f89-bc9c-4fc7-affb-f6e9b1f50323) in 2022 following the alleged fraud perpetrated by FTX and gross mismanagement of assets and risk by others. The more risky the behavior of your counterparty, the more likely it is to get shut down by the government. A complete shutdown isn’t needed for you to be impacted. For example, the state may order operations to be frozen and funds to be withheld. Investment Platforms are obviously the highest risk and target for the government. Following the collapse of BlockFi, many questions will be raised about how risk should be disclosed to customers and what responsibility such platforms have to their clients. Only send money to a yield-generating platform if you understand that you are at risk of a total and complete loss. Most exchanges can be seen as casinos that promote speculating or betting on what is likely to be [unregistered securities](https://qz.com/the-head-of-the-sec-says-most-cryptocurrencies-are-oper-1849513471). As the SEC begins to crack down on this behavior, many exchanges may (likely) find it necessary to delist the vast majority of their coins. This will, in turn, drive revenue to zero and wipe out their whole reason for being, leading to the possibility of having to wind down their business.  Qualified Custodians with state-level licensing have minimal exposure to government regulation. The biggest threat here is state-level regulations that may impede the functioning of trust companies that custody Bitcoin. We expect such laws to resolve over time, as jurisdictions that are friendly to trust companies will attract all business. ### How to Select a Counterparty While Minimizing Risk If you do decide that you require the services of a custodian or trading counterparty, even if it’s just for the short duration of exchanging dollars for Bitcoin, here are the things to look for. - Clear terms of service that indicate that you alone are the owner of the Bitcoin you are purchasing and storing with the custodian. If you see terms that indicate that the counterparty has ownership or is free to do what they want with your coins, avoid the service at all cost. - A well-understood and tested regulatory framework designed with safeguarding customer assets as its first priority. Trust company structures and other structures that clearly indicate segregation of customer assets and that the company cannot [rehypothecate](https://www.investopedia.com/news/how-commingling-and-rehypothecation-affect-bitcoin/) your assets are ideal. - Operation in a jurisdiction with a strong history of [property right](https://www.theglobaleconomy.com/rankings/herit_property_rights/) enforcement and rule of law. The US has a strong rule of law environment with courts that generally do a good job of enforcing property rights. - A large security and compliance budget. All things being equal, companies that focus almost exclusively on custody are going to devote more of their resources to security than companies that have many competing business lines. Look for well-funded and mature operations. - Battle-tested technology securing the storage of Bitcoin keys. Common technology for Bitcoin custody includes cold (offline) keys or MPC technology that avoids keeping a constituted private key online. - Security and procedural audits, including Soc 2 Type II reports that indicate that the company has a mature internal controls framework and is following it. - A mature and experienced management team that has demonstrated diligence and prudence in operations. - Incentive-aligned business models. Some companies like exchanges and investment schemes want to hold your coins to invest them or have you actively trade them. Others encourage self-custody and do not make money when holding your coins because they cannot rehypothecate or lend them. The risk of losing Bitcoin to custodians varies massively. Those that offer yield and are in [questionable jurisdictions](https://help.ftx.com/hc/en-us/articles/360056976411-Jurisdiction-regulations-licensing-and-practices) represent an extremely high degree of risk, as has been demonstrated numerous times. Those utilizing qualified custodians and operating in jurisdictions with strong property rights have thus far not betrayed the trust put in them. Of course, taking self-custody eliminates placing trust in others altogether. Still, it comes with the responsibility of not losing or disclosing the keys to your coins.  ### How Does Swan Offer an Industry Leading Custody Solution? At Swan, we have chosen a Nevada chartered trust company under [NRS 669](https://www.leg.state.nv.us/NRS/NRS-669.html), as our partner for qualified custody because we believe they are the best at ticking the boxes we have laid out above. Swan establishes a direct relationship between our clients and custodian, the client’s qualified custodian. Clients enter into this agreement when they sign up for Swan and make an informed decision about the risks of third-party custody. To further protect our clients from risks, Swan cannot disburse customer assets without the customer’s direct authorization. This is why when Swan customers withdraw their investments, they get an email confirmation directly to their inbox. Should Swan become unavailable or compromised, the client’s direct relationship with our custodian will offer their assets the highest degree of protection. Bitcoin at our custodian is secured using a geo-distributed quorum of [MPC](https://www.businesswire.com/news/home/20190808005294/en/Prime-Trust-Becomes-The-First-US-based-Qualified-Custodian-To-Secure-Digital-Assets-with-Fireblocks-Breakthrough-MPC-SGX-Technology) (multi-party computation) wallets. This technology [does not keep a key online](https://www.fireblocks.com/what-is-mpc/) that can be stolen, lost, or hacked. Instead, an attacker would have to compromise a large percentage of the human/device quorum across a large geographical area in real-time. The time they have to perform such an attack is limited, as the key shares are rotated frequently.  Our custodial management team is experienced, risk-averse, and comes from the world of banking and traditional asset custody. The team spends large amounts of its time and budget on security, controls, and compliance to ensure safe operation. Swan encourages our clients to withdraw their Bitcoin to self-custody by offering free and automatic withdrawals. A majority of the Bitcoin on our platform is withdrawn, providing an ongoing demonstration that the Bitcoin purchased on our platform actually exists on-chain.  [Click here to watch a FREE webinar teaching self-custody led by Stephan Livera](https://swanbitcoin.zoom.us/webinar/register/WN_hh2CClPTRQqjxeBAI2ogbg). Learn why self-custody is an integral part of your Bitcoin journey, how it works, and how Swan makes it easy for you. ![](https://www.datocms-assets.com/56652/1670972294-self-custody-webinar-email.jpg?auto=format) Clients who purchase Bitcoin using wires or direct deposit (push ACH) can withdraw coins within 24 hours of the purchase time. This lag is required to settle larger trades. For customers using ACH pull, additional lock times are designed to protect Swan from ACH reversals. These times range from 10-30 days but are actively being reduced through risk-based work. Customers purchasing large amounts of Bitcoin are encouraged to use wires to avoid such a lock time or may contact customer support to receive an early unlock. Finally, we choose a custodian because they have a simple business model that is incentive aligned, where Swan pays for the services they provide. We do not make money when we keep customer coins in custody, so there is no incentive for us to pressure customers to do so. Our business model is also simple, with most of our revenue generated from simple fiat to Bitcoin transactions, aligning our incentives with our clients - convert as much fiat to Bitcoin as possible, and take it into self-custody. As for the movement toward *“proof of reserves,”* this may be a misguided effort because it is [impossible to demonstrate liabilities in real-time](https://github.com/libbitcoin/libbitcoin-system/wiki/Auditability-Fallacy), making such a proof misleading at best and causing false complacency. If the qualified custodian does not have every digital asset they claim to have, they are acting fraudulently in violation of their regulatory framework. If you believe a custodian is committing fraud, then they could just as easily commit fraud by showing false proof of reserve attestation by hiding their liabilities or by borrowing the reserves off-chain.  There are two ways to enforce property rights in Bitcoin. You can either withdraw your Bitcoin to self-custody or delegate property rights enforcement to the state through a system of laws and courts. If you must leave your Bitcoin in custody, the best option is to pick a custodian that you believe is not fraudulent and is operating with a robust regulatory framework, and has demonstrated maturity and risk aversion, similar to how you would pick a traditional fiat bank. Our determination is that a qualified custodian offers the best combination of risk factors for a qualified custodian for our clients. Still, the relationship with this custodian is at the customer’s discretion. Each customer should weigh the risks of storing coins at a custodian against the dangers of self-custody, as appropriate. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Bitcoin and Crypto: A Simple Story vs. A Convoluted Yarn URL: https://www.swanbitcoin.com/markets/bitcoin-and-crypto-a-simple-story-vs-a-convoluted-yarn/ Bitcoin’s story is a simple one: it is money you can count on. Simply holding it until you need to spend it. The stories spun by the Crypto Industry are anything but simple, or even logical when examined closely. --- **Tomer Strolight** · December 20, 2022 · Updated June 27, 2024 In the wake of the recent [collapse of many crypto firms](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/) and tokens, there are many *“I told you so”* editorials and tweets going around. There are plenty of *“here’s what actually happened”* articles making the rounds too. There’s also even some *“who could have seen this coming?”* pieces. The further we get into the muck of all these scandalous blow-ups, the murkier the picture seems to become regarding how the collapses and scams were perpetrated. What then is the purest signal we can extract from all this information flying about? What can help us think clearly about the whole space so we can each chart a course for ourselves that avoids these dangers? One way to get down to essential truths necessary to do this is to begin at the very beginning – by looking back at the basics of Bitcoin – at a time before things got this complicated. So let’s start there. Before there was a *“crypto”*  industry there was only Bitcoin. As a concept, Bitcoin was a pretty simple idea.  Bitcoin was:  1. *Digital* money; 2. Which anyone could *hold directly* (without a custodian – there were none in fact); 3. That had no trusted third party maintaining records; 4. And where new coins were issued, in precisely predetermined quantities, as rewards for those who did the work of securing the integrity of its records. 5. It was quite easy to run but very hard, nearly impossible, to change anything about it. What’s just as important to remember is what was NOT there at the time: 1. There weren’t countless other tokens claiming some superiority over Bitcoin. 2. There were no big exchanges, and certainly no “exchange-issued” tokens. 3. There was no yield being offered or implied. 4. There was little to no hype of things like smart contracts, utility tokens, decentralized finance, or any of the other boom-and-bust, pump-and-dump ideas like ICOs, DAOs, NFTs, and other three-letter acronyms for ways to make money in crypto. **In those early days, Bitcoin represented a re-imagining of money in the digital age:** It worked like cash. There were no fractional-reserve institutions holding it for you, and thus, no risk of bank runs. You had to hold it yourself. It was actually a really simple idea. Pure Bitcoin remains exactly that to this day (mostly because of how hard it was and is to change anything about Bitcoin. **Nothing about that has changed. Bitcoin is still scarce, self-custodial, trustless, digital cash.** Moreover, anyone who uses Bitcoin in this native manner still functions in that rather simple world. And the message that Bitcoiners keep spreading is still a simple one. It’s a message that has been distilled down to a handful of short sayings and memes like: *“Get your coins off the exchanges”*  *“Not your keys, not your coins”*   *“Running Bitcoin”* *“Don’t Trust. Verify”* *“Be your own bank”* The idea is not only simple. It is also reliable, durable, unbreakable, unstoppable, and indestructible. Simplicity is its strength.  When you hold your own cash and that cash can’t be debased through money printing, you’re not vulnerable to the shenanigans of custodians or leaders whose irresponsibility could lead to your money disappearing or losing its purchasing power. That’s the power of simplicity. In light of the recent failures of many more complicated stories, that same simple message of holding your own digital money is now being echoed across the youtube channels, Twitter spaces, email newsletters, and TV broadcasts of many crypto companies, crypto influencers and other popular personalities who are *not* *“Bitcoin maximalists”* (those who are Bitcoin-only advocates).  These companies and promoters of the *“crypto industry”* have amassed large audiences, often through paid marketing campaigns and giveaways. Their message has not been the simple Bitcoin story.  The crypto industry they promote is based on very different ideas than the simple one behind Bitcoin.  And the wide range of complicated ideas and convoluted stories crypto has woven all turned out to be weak and fragile ones. So they find themselves in retreat, licking their wounds and trying to salvage their reputations. Their stories quickly became the simple one of *“take custody of your coins and tokens.”* But it will not stay that way. Their incomes are based on getting paid to promote alternative ideas – ones that hide their flaws behind obscurity, complexity and fancy jargon – and most of all, the appeal to greed: promises of easy money. However, when compared to Bitcoin’s simple idea, it suddenly becomes much easier to see just how, and why, these ideas come crashing down so quickly, and why *“crypto”* advocates suddenly find themselves desperately, but all too late, repeating the advice Bitcoiners have been giving for many years. Let’s look quickly at all the alternative messages peddled by the alternatives to Bitcoin.  Are their stories simple? Do they even make sense at all? Where do they fall apart? And, in the end, why is it that we keep finding ourselves coming back to Bitcoin’s simple story after each market cycle where these alternative narratives fizzle out and fail to stand the test of time.  These are the alternatives narratives we’ll discuss: - *Pre-mines and ICOs* - *Yield* - *Staking* - *Proof-of-Stake* - *Minting* - *Leveraging* - *DeFi* - *Programmability* - *Governance Tokens* - *Exchange tokens* ### Let’s begin: #### Premines and ICOs: The boom and bust cycle of 2017/2018 was primarily driven by *“Initial Coin Offerings.”* This expression is a one-word twist on *“Initial Public Offerings”* which is what happens when corporations list their shares as securities on stock exchanges. It’s curious that despite using such terminology, we now see so many projects trying hard to distance themselves from the label of being a security. (They’re doing it to avoid having to comply with investor protection regulations).  Nevertheless, unlike Bitcoin, which announced an issuance policy that would eventually lead to 21 million coins in circulation, all of it distributed through the act of proof-of-work mining, these other coins came into existence prior to the start of (and often without any) mining. The coins weren’t obtained through work, but were sold to pre-launch investors, often at hyped up online events called the ICO, where auctions were held for the tokens which were then immediately flipped at profit if they could be.   The result of hundreds, probably thousands of these in fact, was unsurprisingly that the overwhelming majority of them went nowhere. Crowds rushed to get in on the initial sales only to flip the tokens to those who missed out. And then tokens that were hot one day, got dumped the next to try to find capital for the next hot token about to be issued. Indeed, if a token didn’t keep its story hot (and very few did), it quickly became abandoned and lost its value and liquidity. Unlike Bitcoin’s simple story of *“there will only ever be a limited number, you can hold yours yourself, and you can verify this for yourself”* the pre-mined ICO story was quite different, and anything but simple. If it had a simple story like *“this is a coin to power a new social network,”* like, for example, STEEM, it quickly lost steam. ![](https://www.datocms-assets.com/56652/1671559058-steem.svg) CoinMarketCap Or if claimed it would power the *“Internet of Things”* through some new technology, like IOTA, interest quickly waned when something else popped up. ![](https://www.datocms-assets.com/56652/1671559230-iota.svg) CoinMarketCap The biggest ICO of all, EOS, debuted at a price of .001289 Bitcoin, shot up to .002 Bitcoin and then languished, abandoned and forgotten ever since as people moved on. It’s now priced at .00005517 Bitcoin, down 96% from its ICO price and 97% from its all time high when compared to Bitcoin.  ![](https://www.datocms-assets.com/56652/1671559245-eos.svg) CoinMarketCap The only pre-mined tokens that held on were those that managed to continue to promote a whole lot of changing narratives, supported by significant marketing. Truly, the only one of these was Ethereum.  Indeed its first narrative was that it could be used to create DAOs, decentralized autonomous organizations, but when the first of these collapsed and required a hard fork to return balances to those who got in early on its ICO, the narrative shifted to Ethereum being the platform on which these ICOs could take place. There was also lots of marketing about it being a *“world computer,”* – and when those stories lost their shine the story shifted to it being a platform for DeFi and yield, and then later for staking the native token, and being *“ultra-sound”* money, and minting NFTs. The story has been anything but simple, or even consistent, and each time the story changed, and then ran out of steam, Ethereum needed to come up with a new story.  What today is Ethereum’s value proposition? It’s actually very hard to tell. Is it gas for a world computer to run decentralized applications? I haven’t heard of anyone talking about decentralized apps in years. Is it a protocol for issuing DAOs and ICO tokens? Is it ultra-sound money – a term created when the story needed to pivot because Bitcoin’s sound money story was attracting attention? Is it a coin that generates yield if you stake it? Is it something that will, eventually, and given enough time, scale tremendously to do a bunch of other things? All of these stories are being *“thrown at the wall to see if they’ll stick.”* But there’s no guarantee any of them will stick. None have stayed stuck to the wall for very long before. As the story complicates further, it gets harder to tell, and fragments into different shards that are harder and harder to follow. In the end, it boils down to *“trust us",* (us being the Ethereum foundation and/or Vitalik Buterin) to keep coming up with new stories to keep the action hot and pump the price. #### Yield If you have one potato and instead of eating it, you plant it, and it successfully grows into a potato plant, when you dig it up at the end of the season, you might have four or five potatoes.  That’s yield. And since potatoes are useful, you’ve created value.   So why not simply replicate this with digital potatoes?  That’s actually how the whole crypto yield thing got started, except it was with digital yams instead of digital potatoes. They even called it yield “*farming*.” The problem of course was that a digital yam is useless, so having more of them did not create any more value, because more of something worthless is still altogether worthless. The long term price chart for digital yams. (Despite the obvious failure it did not deter crowds from continuously inventing new things to generate digital yield.) ![](https://www.datocms-assets.com/56652/1671559271-yam-v1.svg) CoinMarketCap Indeed, with most of these yielding tokens, aside from their own inflation through yield, there is nothing that the tokens actually do. Holders of these tokens are in a battle to outpace inflation with other holders and get out before enthusiasm for their token wanes as people realize there’s no actual use case for the token. Not all tokens simply generate yield. Bitcoin is one such example. But this didn’t stop companies from setting up shop and offering yield on Bitcoin deposits. *“Why hold your own Bitcoin and earn no yield?”* they asked, *“When you can give it to us and we will pay you yield on it.”*  Where would this yield come from? Nowhere, it turns out, and the companies that were promoting this proposition are mostly seeking bankruptcy protection now.   **The biggest warning in this story is that if someone is paying you yield on your Bitcoin, you should take your Bitcoin back while you still can.** #### Staking With simple yield not working for very long, a new twist on the idea came forward – staking. Staking essentially differs from yield on semantics. Staking involves *“locking”* tokens into contracts, which then increase the supply of the staked tokens until they are unlocked. Long lockup times make it so investors pursuing the largest returns must irrevocably surrender access to their tokens for a long period of time.  Meanwhile, as the supply inflates the price crashes and those with funds locked up cannot exit. A particularly sad example is *“Hex”* where users were encouraged to lock up their purchased tokens for ten years for maximum returns, but the price in one year alone fell by much more than the full ten years of staking rewards would generate. ![](https://www.datocms-assets.com/56652/1671559286-hex.svg) CoinMarketCap #### Proof of Stake Mixing and matching different narratives tells an even more complicated story, but it can be painted over with an attempt at a simpler explanation, even if it is wrong.  Enter *“Proof-of-Stake.”* Proof-of-Stake is a whole family of complicated techniques that provide yield for those who will stake their tokens and also adds the claims that this staking serves to secure the blockchain of the token being staked. This has been suggested to be as secure as Bitcoin’s Proof-of-Work, but that is highly debatable (and I’d argue wildly false). Worse, Proof-of-Stake is decidedly a centralizing protocol over time, undermining the simple claim you can do as you wish with your coins. Ethereum’s huge move from Proof-of-Work to Proof-of-Stake is already riddled with challenges. Over 70% of the blocks in their chain are now censoring transactions since the shift, and even worse, all staked Ethereum remains locked and unusable until some future hard-fork allows unstaking. No date has been announced and nobody knows what kind of selling pressure it will create when unstaking is made possible, as a full 13% of the Ethereum supply is currently locked up.  (It may be worth mentioning that although it is very complicated to understand all the mechanisms behind Proof of Stake, its proponents attempt  to distract from this by claiming that it uses considerably less energy than Proof-of-Work.) #### Minting Minting is yet another word for printing tokens, this time referring to the idea of non-fungible tokens. These are tokens each of which is unique, although many are very similar to one another. For example, take a look at these EthRocks each of which is a slightly different color: ![](https://www.datocms-assets.com/56652/1671559302-rocks.png?auto=format) Minting is the act of putting a pointer to some digital file on a blockchain so that custody of that pointer can be transferred on a blockchain transaction. There is no limit as to how many NFTs can be minted and each collection of similar files must maintain some story about its collectibility and value to remain tradeable and valuable.   There’s endless false marketing claims made about NFTs that are technologically incorrect. The biggest is the notion that digital files can actually be owned or that their ownership can be enforced by a blockchain.  #### Leverage Why hold your coins when you can give them to someone else and enjoy twice or even twenty or one hundred times the gains through leverage?  Well, you can also lose everything – which is called *“getting liquidated”*.  Or, it’s also possible that the exchange that was holding your coins might themselves disappear and you’ll lose access to your coins that way too. Leverage has been around on exchanges for a long time, and its appeal of high returns simply ignores the equally likely outcome of high losses, up to and including total losses which would only be temporary setbacks for individuals who simply held their coins. #### DeFi DeFi covers a broad range of things similar to many of the above schemes. It claims to do this strictly through *“smart contracts”* which are programs that run on allegedly decentralized protocols. These smart contracts are far too complicated for non-programmers to understand, and have also turned out to be notoriously difficult for programmers to actually write without exploits.  Well over $1 billion in hacks have taken place on DeFi this year alone. A [CNN article](https://www.cnn.com/2022/08/16/tech/crypto-hack-rise-2022) back in August reported that *“Some of the biggest crypto hacks of 2022 were on DeFi protocols, including (one single) $625 million hack of video game* [*Axie Infinity’s Ronin network*](https://www.cnn.com/2022/03/29/tech/axie-infinity-ronin-hack/index.html) *in March.”* #### Governance Tokens Governance tokens promise to give their holders a vote on how the protocol works. Which means that majority holders of the tokens can change the rules of the system. This means the rules of the system can’t be counted on not to be changed by those who own most of them, which is often the people who created them in the first place. There’s simply nothing decentralized or reliable about such tokens.  Even Vitalik Buterin, co-creator of Ethereum, upon which most of these things exist recently admitted as much (although he should have said something back in 2017 when many of these were first launched.) [Post on X](https://twitter.com/VitalikButerin/status/1597570120456769536) #### Exchange Tokens Some exchanges that sell many different *“cryptos”* have come up with a novel scheme to issue their own crypto token. It is marketed as something between equity in the exchange (although not explicitly) and also as some form of coupon, entitling its holders to discounted services from those exchanges.  These are always completely centralized tokens issued and recalled by the exchanges, where the exchanges can change the supply and also the terms and conditions.  Back in September of this year, FTX’s token, FTT was allegedly worth $9.4 billion and was what FTX was using as collateral for many of its trades. Today it’s worth $400 million, but has only $7 million of daily volume.  It’s hard to make sense of any story for this type of token to have any significant value, but the token of Binance is, at the time of writing, trading at a market capitalization of over $46 billion! That’s a huge red flag. ### Summary Bitcoin’s story is a simple one: it is money you can count on and don’t need to do anything fancier with than simply holding it until you need to spend it. The stories spun by the Crypto Industry are anything but simple, or even logical when examined closely. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Bitcoin is the Future of Money, Not Just Another Cryptocurrency URL: https://www.swanbitcoin.com/analysis/bitcoin-is-the-future-of-money-not-just-another-cryptocurrency/ We need an open, sound and scarce monetary system: Bitcoin. Accept no substitute. --- **Stephan Livera** · January 3, 2023 · Updated July 3, 2024 Bitcoin, Not Crypto. But why? Isn’t Bitcoin just another cryptocurrency? The answer is no: There are key real differences between Bitcoin and every other ‘Crypto’.  ### VC Premine Coins Premining a coin is giving yourself and your buddies some, or all of the early supply. Venture capitalists got bored and impatient of waiting 8-10 years for investments to pay off, so they naturally got interested in *‘crypto’* which effectively enables a quick exit and profit.  Most of the coins you hear hyped up have centralized foundations behind the coin, or perhaps a special admin key to control it. **These coins are what’s known as DINO - Decentralized in Name Only.**  Insiders joke about dumping on you. Just see for example Chamath & David Sacks publicly joking about getting Solana at a discount and then dumping their Solana bags [here](https://twitter.com/GooseOfCrypto/status/1456002541808807938). There’s a ‘Crypto’ game played where the insiders get coins at a very cheap price, say $0.003 and then hype the coin up, pay or convince a ‘crypto’ exchange to list it, and dump the coin while the price is pumping to say, $0.30. Meanwhile the actual liquidity on the order book is extremely thin, so it’s not possible for non-insider individuals to actually sell large quantities of the coin without also moving the price dramatically. So by the time the average person has heard about these coins, they are buying someone’s premined bags, hoping to dump the coin onto a ‘greater fool’. As MrHodl has [said](https://twitter.com/MrHodl/status/1331238049347407874), with shitcoins you’re looking for a greater fool to dump on. With bitcoin, you’re looking for the greater fool to buy from.  The other big red flag is that these altcoins are often valued on some tiny fraction of the possible supply. For example, In the case of Scam Bankster-Fraud of FTX/Alameda, they were valuing their pet *“cryptos”* (e.g. FTT, SRM, OXY, MAPS) based on a very tiny portion of the actual total supply. It’s easy to manipulate the value when it’s only a small amount that actually trades on the platform, while most of the supply is locked away or held back by insiders. In doing so, they were able to buy all kinds of sports arena naming rights, politicians, media and industry support.  > Sam counterfeited billions in tokens via securities fraud, inflated that by billions more via accounting fraud, seized billions from customers via banking fraud, corrupted the establishment with the dirty money, then panic sold billions in stolen bitcoin to crash the market. > > — Michael Saylor Now contrast this with Bitcoin which had: - A fair launch that was telegraphed in advance, with no premine - Satoshi specifically made the genesis block (the first ever bitcoin block) coins unspendable  - Satoshi didn’t dump his large stack of early coins - Satoshi did not try to aggressively mine as many coins as possible, rather the focus was more about supporting the network in its infancy - Bitcoin did not really trade with a specified price until much later on, in 2010 (after the network launched Jan 3 2009) - At the time Bitcoin was launched, there was no culture and industry around pumping and dumping these *“cryptos”.*  ![](https://www.datocms-assets.com/56652/1672766089-futuristic-informational-infographic.png?auto=format) ### Crypto Coins Don’t Have Genuine Grassroots Communities These ‘cryptos’ don’t have anywhere near the same level of real flesh and blood people on the ground organising meetups, building circular economies, doing education, providing services and helping teach people. Bitcoin does. Bitcoin has Bitcoinbeach, Bitcoinekasi, Bitcoinjungle, BitcoinbeachBR, Bitcoinisland and many more.  Instead, coins like Solana had [fake volume with fake people](https://www.coindesk.com/layer2/2022/08/05/the-fake-team-that-made-solana-defi-look-huge/) in an overleveraged ecosystem sponsored by a ponzi operator, SBF.  *“The developers, with names including Surya Khosla, Larry Jarry, 0xGhostchain and Goki Rajesh, succeeded in creating trading and staking services that attracted a claimed $7.5 billion in deposits, known as “TVL” or total value locked…. That $7.5 billion in deposits made up the lion’s share of all the money tallied on Solana services in early fall of 2021, when the chain’s DeFi deposits totaled roughly $10.5 billion.”* There is a sordid history of *“crypto”* coins or exchanges with fake volume so as to juice the metrics and drive hype. It was rumoured for years that overseas exchanges had fake volume with wash trades to present an appearance of genuine liquidity and users, to attract more users and customers.  ‘GameFi’ is another example where the *“crypto”* VCs pushed very questionable coins that had little sustainable adoption. Consider the case of [Axie Infinity](https://sea.ign.com/axie-infinity/189292/news/axie-infinity-leaves-filipino-players-penniless-and-defeated#:~:text=Allegedly%20acting%20as%20a%20digital,players%20buy%20into%20the%20game.) which had a range of people shilling the future of ‘play to earn’ when really it was just altcoin-inflation-financed. After a while the ‘earn’ dried up and the usage dropped dramatically.  Contrast this with Bitcoin: which has many meetups and conferences all around the world, a vibrant online community of developers, educators, builders, advocates. There are numerous long standing Bitcoin publications, podcasts, many of which are created for the sake of educating people about why fiat currency is a scam and that they should upgrade to using Bitcoin.  ### They Don’t Focus on Making It Cheap to Verify Various altcoins are literally impossible for an average person to validate, being permissioned systems. Many others are highly costly or impractical. But even setting aside possibility or practicality, it also comes to *culture*. Bitcoin’s enthusiast culture prioritizes and praises verifying rather than simply trusting. Instead of supporting the practice of leaving coins on someone else’s platform, Bitcoiners instead discourage custodialism.  With Bitcoin, one distinguishing factor is its widespread, decentralized validation. When you run a Bitcoin node it is checking the rules of Bitcoin blocks and transactions, and only valid transactions will show up on your node. It will literally not show you invalid transactions, and this is how the ecosystem protects itself against fractional reserve scammers and fraudsters. Bitcoin developers have focused on keeping the costs of running a Bitcoin node cheap, and for this reason there are many who run Bitcoin nodes on old computers, cheap computers, or even single board devices like Raspberry Pis.  ### The Altcoins Come and Go Because there’s only so many people you can buy off, and there’s not really a sustainable grassroots community behind these altcoins, they tend to come and go very often. Only a few actually show some staying power for the longer term. Even from a price point of view, see Swan Lead Analyst Sam’s post, talking about how of the 20,000 altcoins, so many of them are essentially ‘[one hit wonders](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/)’ that rarely ever come back to prior cycle highs in the future.  ### Name Recognition If you even spend a few minutes browsing google trends data, you can see that Bitcoin dominates ‘crypto’ and is searched for far more often than altcoins. See for example this 3 way [google search trend](https://trends.google.com/trends/explore?date=2015-01-01%202022-12-15&q=bitcoin,ethereum,solana) between Bitcoin, Ethereum, and Solana from 1/1/2015: ![](https://www.datocms-assets.com/56652/1672759403-swan-feature-image-main-2.png?auto=format) Which do you think is more sustainably and comfortably growing regardless of bull and bear seasons?  Even in adoption surveys in various countries, it’s clear that Bitcoin is the brand that most people know and love. If people have heard of *“cryptocurrency”* it’s almost for sure they know about Bitcoin. For example see this [survey data from Australia](https://cointelegraph.com/news/bitcoin-is-the-king-of-crypto-brand-awareness-for-aussies-report) showing that 92% of Australians had heard of at least one ‘crypto’, with 90.8% of respondents having heard about Bitcoin. Bitcoin continues to grow in brand awareness because it was first and it represents the zero to one moment, like discovering fire or inventing the printing press.  ### Conclusion Bitcoin is the actually scarce, decentralized, open, verifiable, permissionless system. It’s common for newcomers to feel like they are *“late to Bitcoin”* but in truth, global adoption of Bitcoin is still in the early phases. What’s required is more people who know and understand why the fiat system is a poor fit for the needs of humanity. And the truth is, unless you’re an insider, you’re usually late to any other Crypto, because it is not designed to be long-lived, like Bitcoin. We need an open, sound and scarce monetary system: Bitcoin. Accept no substitute. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Fixed Supply Money Does Not Lead to Economic Collapse URL: https://www.swanbitcoin.com/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/ And why it is in fact the only intellectually and ethically defensible monetary system. --- **John Haar** · January 9, 2023 · Updated July 3, 2024 ### The Problem: Challenging a Widespread, but Flawed Assumption Will a fixed supply money lead us, as some warn, to economic catastrophe? Firstly, why is this question important, especially to Bitcoiners? To become a proponent of Bitcoin, one must believe that: 1. Sound money (particularly non-state, immutable, fixed supply, digital, censorship-resistant, self-custodial, peer-to-peer money) will bring about a better economy and society than expansionary money and credit; 2. Bitcoin is built and designed such that it is capable of continually functioning as sound money. To believe item number 2, one must have at least a basic understanding of cryptography, computer science, and game theory. But most people don’t spend any time even considering item number 2, because they believe the economic dogma of our time, which tells us that a fixed supply money leads to economic catastrophe. From my nearly 13 years at Goldman Sachs, I can tell you firsthand that the vast majority of people who work in legacy finance believe strongly in this dogma. This means that even if Bitcoin is built and designed to be exactly what it claims to be (non-state, immutable, fixed supply, digital, censorship-resistant, self-custodial, peer-to-peer money), AND even if every company/platform/app/device that supports the Bitcoin ecosystem is built to perfection, this economic dogma of our time tells us that none of that matters because sound money is something to be feared. If someone believes that sound money leads to economic catastrophe, they will never listen to a word a Bitcoiner has to say about distributed ledgers, proof-of-work consensus, nodes, miners, mempools, hashes, nonces, SHA256, private keys, seed phrases, signing devices, UTXOs, or layer two scaling solutions. They believe that the economic catastrophe brought about by sound money will lead to worse outcomes for individuals, families, and our systems of government, education, food, healthcare, science, architecture, etc. They will not be on board with the idea that Bitcoin fixes anything. Therefore, Bitcoiners are faced with a critical task: communicating, in clear language, why the current mainstream thinking on sound money is flawed. It is an imperative task which must be tackled to pave the way for mainstream Bitcoin adoption. ### Breaking Down the Opposition Let’s describe the beliefs held by proponents of expansionary money and credit: 1. **We must have expansionary money and circulation credit to achieve more economic growth.** 2. **Fixed supply money leads to prices declining over time, which leads to hoarding money, which means lack of spending/investment, which means high unemployment and economic recessions.** 3. **It is unjust that someone could see their purchasing power maintained or increased over time for “doing nothing” other than holding money.** 4. **We need an expansion of money and circulation credit to redistribute resources from the haves to the have-nots.** 5. **We need an expansion of money and circulation credit to “stimulate” our economy during times of recession.** We’ll need to start by addressing a few critical questions: - What is economic growth? - What is money? - What is credit? Particularly, what is commodity credit vs circulation credit? ### What is economic growth? Economic growth is the increased and/or more efficient production of real goods and services in the economy. Humans use capital to accomplish this. Capital is anything and everything that allows us to more easily produce goods and services. Key components of capital include human knowledge, skill, manual labor, innovation, machines, natural resources, specialization, and free trade. I would argue that property rights and a morally principled society are also forms of capital, which allow for better economic growth. If you’re interested in a deeper discussion on what constitutes capital, my colleague Steven Lubka wrote a fantastic article on the topic titled [Capital Misallocation: Bitcoin Fixes This](https://www.swanbitcoin.com/capital-misallocation-bitcoin-fixes-this/). For now, the point is that capital includes anything and everything that allows us to more easily produce goods and services. ### What is money? Money, when functioning properly, is simply a tool that facilitates multi-party trade which would otherwise be complex or impossible. Trade allows us to specialize and produce things more effectively. Money allows us to overcome what is known in economics as the *“coincidence of wants”* problem. Imagine you are a dentist, and you are in need of a new pair of shoes. Without money, you would need to find **not just a shoemaker**, but a shoemaker who is also in need of a teeth cleaning. Good luck with that! Without money, commerce would grind to a snail’s pace. Without money, trade would be limited to barter (direct exchange), and humans would likely only produce the things they need in life themselves. This is the opposite of specialization, and it would significantly hamper our ability to innovate and produce things more effectively. Money allows you to sell your dentist services to a **massively larger** pool of people. The impacts of this cannot be overstated. To be clear, prior to the existence of money, in order to receive something of value for your dentist services, you had to find a shoemaker who needed a teeth cleaning. With the existence of money, your dentist services can be exchanged for real value with **anyone** who is in need of a teeth cleaning who has produced a surplus of their own, which they can exchange with you (in the form of money). You can then use that money to exchange with anyone else who is willing to exchange a surplus that they have produced. This is why money, as a tool, is an absolute necessity for achieving human progress in the material world (i.e. economic growth). Money allows us to become wildly better and faster at trade and specialization, which allows us to produce things far more efficiently, bring down costs in real terms, and invent things that our ancestors couldn’t even think of. The idea that money allows for increased trade and specialization is profound. It means that many professions and industries we take for granted today would not even exist if it were not for our ability to use money. ### What is credit? Credit is a contractual agreement between two parties where one party exchanges something of value today, and the other party commits to provide their side of the exchange in the future. The terms credit, debt, or loan ultimately describe the same thing. Based on the above descriptions, it should be very clear that money is inherently different from credit. If you own a proper form of money, there is nothing else required for the money to have value. If you own a credit instrument, the value of that instrument is contingent upon repayment from the borrower. We also must distinguish between *“commodity credit”* vs. *“circulation credit”.* This is easiest to explain in the context of a gold standard, i.e. gold serves as the base layer of money in an economy. **Commodity credit** would be a loan of 100 ounces of gold from one entity to another. Clearly, only one entity can access the 100 ounces of gold at a time. Once the lender loans the gold to the borrower, the lender no longer has access to the gold because gold is a bearer instrument and can only be in the possession of one entity at a time. Therefore, lending commodity credit does not create additional monetary units in the system. **Circulation credit** would be when a bank is securing 100 ounces of gold in its vaults for its clients and the bank makes a loan of 90 ounces of gold, but they don’t lend the physical gold itself! Instead, the bank issues a paper (or digital) claim to a borrower that says the borrower now has 90 ounces of gold. But at the same time, the bank tells its customers who deposited the 100 ounces of gold that they have persistent access to all their gold. As a result, there are now effectively 190 ounces of gold (and claims to gold) in the system. The critical takeaway is that circulation credit is treated as money and therefore results in an expansion of the monetary units in a system. Now let’s respond point-by-point to the beliefs held by proponents of expansionary money and circulation credit. **We need expansionary money and circulation credit to achieve more economic growth.** If that sentence reads as immediately absurd, you most likely don’t have a degree in economics, and for that you should be thankful! You likely have a knack for engineering or the hard sciences which enables you to quickly spot a flaw in logic and design. You might be thinking: how on earth could the creation of new monetary units (whether they be metal, paper, or digital) lead to real-world economic growth? It would be akin to thinking that if we declare one foot now contains 20 inches, we will be able to build more houses. Unfortunately, modern economics has done so much damage to our ability to think clearly. Many people are firmly attached to the idea that more money and circulation credit is required for economic growth. The reason for this article is to help people unlearn the flawed ideas which have permeated the world of economics, finance, academia, central banking, and politics for the past 100 or so years. One way of highlighting the flaw in this idea is to understand that projects and investments are not actually funded with *“money”* (which is simply an abstract tool that facilitates multi-party trade) in the same way that houses are not actually built with inches. Projects and investments are funded with real-world resources, the same way that houses are built with real-world resources. Investment must come from the saving/surplus of real-world resources, regardless of the existence of circulation credit. This is not something we can change no matter what economic theory we subscribe to. Importantly, projects and investments **might appear** to be funded from circulation credit when a bank issues an out-of-thin-air loan to a borrower, but that appearance is merely an illusion. Let's say a borrower gets an out-of-thin-air loan from a bank, and they use the loan to buy machinery to create a business. The very fact that the machinery was in existence and available for purchase is savings/surplus. In order for anyone to have something to offer in exchange to someone else, by definition, that something **is their savings/surplus**. So if the creation of more money and circulation credit does not actually make more real-world resources available for investment or consumption, what exactly are the effects of creating more of it? The immediate result is a dilution of the value (aka confiscation of wealth) of all pre-existing money holders, i.e. savers. This is true because money is an abstract asset which is not directly consumed. For assets of this nature, **their value can only be understood in reference to the total supply**. Let’s consider assets which **are** directly consumed. These types of assets are clearly not subject to this same dynamic. If you own a five thousand square foot house on five acres with a swimming pool, and someone builds a new house somewhere in the world, which is ten thousand square feet on ten acres with a bigger pool, has your asset changed? To be clear, the question being asked is: if more houses and pools are created, has something changed about what you already own? No. The only reason this would start to matter is if you want to sell your house, but in that case your house is no longer an asset you directly consume. The only other reason it might matter is for signaling/social media purposes. But let's put aside that shallow human tendency which we are all better off ignoring. If you own ten thousand shares of equity in a company and the company subsequently doubles the amount of shares outstanding, has the value of your asset changed? Yes. This is because your asset's value is a direct function of the percentage of the total supply. This is why the act of issuing new shares in a common enterprise is so heavily scrutinized – because the current shareholders know that their ownership is being diluted. The process basically goes like this: a stakeholder of the company (could be the board, an executive, a large shareholder) makes the case that the company needs more funds to execute their business strategy. The other shareholders say *“WHOA HOLD ON, you better have a damn good business strategy because if you create a bunch of new shares and your strategy doesn't make the company more valuable, then you're just reducing the value of my property by transferring my value to these new shareholders.”* Again, this dynamic applies to ownership of shares in a common enterprise because **you don't directly consume your shares**. It does not apply to assets that you consume directly whether that be homes, food, cars, phones, clothes, etc. What's fascinating is that people in traditional finance understand the concept of ownership dilution of abstract assets when it comes to shares of stock. But they somehow don’t understand this when it comes to money! Regardless, the principle holds true – the value of the money you hold can only be understood in reference to the denominator (total supply) of the money. It’s that simple. When new money is created, either by direct creation of new monetary units, or the creation of new circulation credit, all pre-existing money holders see their value diluted as a result. Proponents of expansionary money and circulation credit will say that as long as those who received the new money/credit use it successfully to create more goods and services, then they have added wealth and created new value for society, so we end up better off than otherwise. Plus when the debt is paid back, the money supply is reduced back to what it was before the debt was issued. What’s there to complain about, right?! In reality, this presents both ethical and intellectual issues. As discussed, the immediate result of creating new money and circulation credit is a dilution of the value (aka confiscation of wealth) of all pre-existing money holders. If a bank creates a loan out of thin air and gives it to a presumably legitimate entrepreneur, that entrepreneur will immediately use the loan to purchase real world goods and services to help him build his business. Where did that purchasing power come from? The entrepreneur did not produce and save resources in order to fund his purchasing power, and nor did the bank who simply created the loan out of thin air! The purchasing power was extracted from the real savers in society – those who produced a surplus of real value – some of whom didn’t qualify for a loan of thin-air money, but also might have wanted to build a business, but are now priced out from using the money they had saved. Even if I have a really good business idea and I end up creating economic growth, does that make it morally acceptable for me to extract value from other people – who had no say in the matter – to fund my idea? And let’s keep in mind that if I’m wrong and my business idea does not succeed, this could cause the failure of the fractional reserve entity who lent me the funds, which would lead to one of two things happening: 1) Depositors of the fractional reserve entity, i.e. pre-existing money holders, cannot withdraw their funds because the funds are simply gone as a result of the bad investment, or 2) A central bank comes in as a *“lender of last resort”* and makes the fractional reserve entity whole by creating new monetary units out of thin air – a bail-out. In scenario 1, it’s obvious why this results in a bad outcome for pre-existing money holders. In scenario 2, pre-existing money holders also lose because their wealth is confiscated via monetary debasement, as a result of the fact that money is an abstract asset whose value can only be understood in relation to its total supply. Personally, I cannot see how one could claim this is a morally acceptable arrangement. The resources are extracted from others in society to fund the loan. The risk of loss is transferred – unknowingly and involuntarily – to the depositors and/or to society at large. Said another way, let’s say I counterfeit $1 million in my basement. I then use those funds to create a business. My business is successful, such that I generate well over $1 million of earnings after the first year. Then, out of those earnings, I make the choice to destroy $1 million (to offset the $1 million which I know that I created out of thin air). Would this be morally defensible? It would not be. No one else in society was consulted when I created the $1 million from thin air which I then used to purchase real-world resources to build my business. And the risk of my business being a failure was borne by society at large. So even if my business is a success **and** I destroy all of the money that I previously counterfeited, the question remains: where did I get the purchasing power to buy all the things to start my business? In other words, heads I win, tails you lose. Intellectually, the proponents of expansionary money and circulation credit might argue that we’re all better off if the entrepreneur created valuable goods and services and paid back his loan, and let’s just ignore that the purchasing power was actually funded by extracting resources – unknowingly and involuntarily – from society’s savers. However this ignores the defective incentive structure produced by a system of expansionary money and circulation credit, which leads to poor decision-making and economic destruction. In practice, we often don’t see well-intentioned entrepreneurs borrowing money to build great businesses and then returning the money. What we see are opportunists often taking advantage of access to this money to buy up already existing resources for their enrichment. We also see ordinary people borrowing excessively because they must in order to keep up with the opportunists. We all get caught up in the race of getting our hands on the expanding supply of money issued out of thin air – if we can. If we can’t then we are left behind. Lastly, ask yourself the question: who will more carefully and responsibly build sustainable projects/investments of real value? Will it be those who received the funds directly from either their own real savings or the voluntary contribution of real savings of others? Or will it be those who received the funds via cheap and easy credit which was issued out of thin air? There is an additional method by which the creation of money and circulation credit affects economic growth. It results in a distortion of the price signal, which is a critical component for directing economic activity and creating economic growth. A distortion of the price signal will almost certainly result in artificially exacerbated booms and busts, i.e. worse economic growth, or perhaps outright economic destruction. During the boom period, where circulation credit is expanding, we often do not see real growth, but the illusion of growth. If a borrower of an out-of-thin-air loan uses the funds to purchase machinery, the seller of machinery is given the signal that a new savings/surplus was produced in society which led to this new purchasing power for the machinery – recall that trade is simply the exchanging of savings/surplus. But in reality, there was not a new savings/surplus generated, because the loan was issued out of thin air. This dynamic causes confusion throughout the economy. Business owners are given inaccurate signals telling them that more savings/surplus exist in the world. This causes them to position their businesses for a world which does not actually exist. This leads to bad business decisions and eventually economic recessions when these bad decisions are revealed. Consider homes as another example of the illusion of growth. Just because the price of homes, or the GDP, is going up, does not mean that their value is. Consider a three bedroom home that sleeps and provides shelter for a family of four. Its real utility stays exactly the same whether it’s priced at $100,000 or $1,000,000. The price of this home, in our debt-based economy, fluctuates largely because access to thin-air money is expanded or contracted by the monetary system we currently use, which generally increases the money supply and makes houses available to those who can access credit. But the economy is not getting more valuable and serving more people when the prices of assets as measured in inflationary money increases. It merely means that those with access to the new money/credit can access more of the resources of the economy. Let’s describe how projects and investments can instead be funded in an ethically and intellectually acceptable way. In a world of commodity money and commodity credit, the system only allows for certain types of investment funding, by definition. Commodity money typically means that no one has the ability to create new monetary units out of thin air. Commodity credit means that you are simply choosing to lend your commodity money which you previously earned and saved. And during the loan period, no one considers the loan itself to be a form of money. Therefore the money supply is not increased, and investments are funded **directly, honestly, and voluntarily** by real savings. In a world of circulation credit, I do believe there could be a way for it to exist in an intellectually and morally acceptable way. The fractional reserve entity would need to be transparent regarding exactly what they were doing with customer deposits. The risk of loss would have to be placed on **only** those who voluntarily opted in to holding their money with the fractional reserve entity. There could be no government/central bank coercion for market participants to treat circulation credit from different issuers the same way. There could be no government/central bank bailouts which simply socialize the inevitable losses of a fractional reserve system. I personally believe that circulation credit would be small or non-existent in a truly free market, especially one where Bitcoin exists as an immutable, fixed supply, digital, censorship-resistant, self-custodial, peer-to-peer money. Leaving one’s money with a fractional reserve entity who issues circulation credit would be seen as disproportionately risky in comparison to its possible loss by rational holders of money. To state the obvious, our current monetary system does not even remotely resemble either of the above two scenarios. To summarize, economic growth is the increased/easier production of real goods and services. Money is an abstract tool that facilitates multi-party trade. Creating money or circulation credit does not bring about more real-world resources which are required to fund new investments. It is more likely that the creation of money and circulation credit leads to economic destruction as it distorts the price signal, and interferes with the incentive to invest resources carefully. Even if the new money and circulation credit does lead to real economic growth, it’s a morally unjust arrangement, because 1) it is involuntarily funded by real savers, 2) the risk of loss is involuntarily placed on real savers, and 3) it often relies on government intervention to prevent fractional reserve entities from collapsing. **Fixed supply money leads to prices declining over time, which leads to hoarding money, which means lack of spending/investment, which means high unemployment and economic recessions.** It is certainly correct that a fixed supply of money would lead to prices declining over time, assuming that our society becomes better at producing goods and services. But would declining prices lead to *“hoarding money”*? And if so, would this cause mass unemployment and recessions? The idea that declining prices leads to money hoarding is based on the idea that if people start to believe that prices will decline over time, they will defer their purchases because why would you buy something today when you can buy it a year from now at a lower price?! Firstly, this ignores the reality that people prefer to have goods and services today vs one year from now. Further, if this line of thinking were true, there would have been a grand total of zero TVs or laptops sold in the past 20 years. By this logic, everyone would be perpetually waiting for TVs and laptops to get cheaper (and better quality) and the point of purchase would somehow never arrive. For more examples that show how absurdly wrong the idea is that falling prices would lead to hoarding money and lack of spending, consider parents faced with the decision of buying their children anything. It could be new shoes, clothes, healthy food, piano lessons, a week at summer camp, a bike, etc. Can you imagine a parent saying *"I'm sorry honey, we're not sending you to summer camp this year because we expect it to be 2% cheaper next summer”?* Or how about *“Sorry bud, I know you want those new shoes for the school year, but we won't buy them for you because we expect them to be 5% cheaper next year. So we'll buy them next year, unless we expect them to be cheaper the following year, in which case you'll get them.. uhh... never.”* There is also the obvious reality of life that humans will purchase food, transportation, and shelter (among many other basic necessities) regardless of what their expectations are for future price declines. Sound money and declining prices do not lead to hoarding money, but rather to more thoughtful spending. The inverse of sound money – expansionary money and circulation credit – often results in prices increasing over time, which leads to frivolous, thoughtless spending as we realize our money will be worth significantly less in future years. **It is unjust that someone could see their purchasing power maintained or increased over time for “doing nothing” other than holding money.** This claim ignores how someone was able to hold money in the first place. Holding money requires that Alice produced something of value to others who were willing to compensate Alice with money. How did Alice find herself able to produce something of value? This can be done in many ways, but let’s say that Alice works for a company. How did she get there? Alice listened to her parents, she took her education seriously, she learned a skill, she marketed herself to productive companies, she competed for a job, she excelled at her job, and the company paid her for her work. And beyond that, in order to find herself holding money, Alice also must consume less than she earns. Those who support expansionary money and circulation credit gloss over the tremendous effort and achievement required to **earn and save money**. Instead, they want to add **yet another task** for Alice: she must become an investor in her free time. She must invest her hard earned money if she wants to even have a chance at maintaining her purchasing power. Importantly, deferred consumption is how capital and wealth accumulates in the first place! If everyone consumed in equal proportions to what they produced, there would be no available resources which could be used to grow our material wealth in aggregate. Deferred consumption is net positive for everyone in society, therefore we should absolutely incentivize people to defer consumption by offering a money which has the potential to appreciate and reward their positive choice. We want people to save because it provides more available capital to be used by entrepreneurs. Joe Weisenthal is a perfect example of someone who holds the view that Alice must become not just a producer and a saver, but also an investor. Per his tweet below, he clearly states that he believes people should be required to do more than simply hold money in order to maintain their purchasing power. ![](https://www.datocms-assets.com/56652/1673280836-screen-shot-2023-01-09-at-11-13-17-am.png?auto=format) Let’s take a moment to appreciate how rich it is that someone who works for Bloomberg and has constant access to the world’s most sophisticated financial data believes we should have a monetary system which requires people to become successful allocators of financial assets to protect their hard-earned purchasing power. Side note, for anyone who claims that Alice doesn’t need to invest the money herself, but rather she can pick a professional to invest her money for her, that logic does not work. This would require that Alice has the ability to pick a successful investment manager amongst all the available options, which also requires her to become a successful allocator of financial assets. Picking a successful investment manager is no easier than picking a successful investment directly. The claims of people like Joe Weisenthal also fail to acknowledge a difference between saving and investing. Saving is storing wealth for purchasing a share of civilization’s future productivity. Investing is trying to grow the actual productivity of civilization, and it comes with the risk of complete loss. Yes, successful investing should generate greater returns than savings due to the risk and work that goes into it. However, **that does not mean that savings should generate negative returns**. After all, saving money was historically and correctly seen as a prudent and responsible thing to do. People who hold Joe’s belief also neglect the fact that one’s money can only grow in purchasing power if we have sound money **and** an increase in the production of goods and services in society. **Someone** has to produce the goods and services. The person who holds money already did their job. As discussed earlier, in order to find oneself in a position where they hold and save money, they had to first produce something of value and consume less than they earned. They were a net contributor to society’s material wealth. Importantly, if we do not have sound money, we’re left with a system which results in continual debasement of our money, i.e. an extraction of purchasing power over time from those who hold money. Borrowers and recipients of the newly created money and circulation credit are rewarded at the expense of producers and savers. **We need an expansion of money and circulation credit to redistribute resources within society from the haves to the have-nots.** A discussion of redistribution often becomes quite subjective. And this topic is not meant to be the focus of this article. With that said, the point here is that some may claim it is **theoretically** possible to use the monetary system to redistribute wealth from the haves to the have-nots. I understand there is a part of our human nature that wants to see wealth redistributed in this way. But the reality is that redistribution via the monetary system would be centralized, coercive, economically destructive, and prone to capture by bad actors. It leads to far more harm than good. History has shown us time and time again that centralized actions with collectivist motivations have the best chance of succeeding when they are enacted within very small groups of humans. Alternatively, centralized actions with collectivist motivations often go horribly wrong when attempted on large groups of humans. Today’s monetary system is a real time example of this. It has become clear to many that **today’s system actually redistributes wealth to the haves and from the have-nots**. Owners of financial assets see their wealth grow substantially almost every year, while those who simply work and earn a salary find they cannot save and cannot keep up with increasing prices and continued currency debasement. *“We can use the monetary system to fairly redistribute wealth”* is another version of *“we just haven’t tried real communism yet.”* **We need an expansion of money and circulation credit to “stimulate” our economy during times of recession.** This is ultimately a claim that giving centralized entities (including banks and politicians) control of society’s resources will somehow end recessions faster than otherwise. As discussed earlier, the creation of money and circulation credit out of thin air does not change the amount of resources that exist, **but simply changes who controls them**. The argument ultimately boils down to *“Trust me bro, if we let the banks and politicians control our resources, we’ll get out of this recession faster.”* If that were the case, shouldn’t we always leave them with control of society’s resources, not just during recessions? Note that leading Modern-Monetary Theory economist Stephanie Kelton asks the same question, and her resounding answer is that we should. Furthermore, the last two decades have indicated that emergency bailouts from governments and central banks have created bubbles in alternating industries. First tech, then housing, then sovereign debt. Each *"stimulation"* of the economy ends up transferring the bubble to a new asset class and increasing the leverage in the system. By choosing increased leverage over natural economic contractions, the system becomes more volatile and fragile. A highly comparable analogy is forest fires. If you never allow forests to burn, you end up creating mega fires. If you never allow economies to contract naturally you end with increased leverage, volatility, and fragility. ### Transition to Sound Money One additional critique of sound money involves claiming that our current system is so dependent on expansionary money and circulation credit that it would be an incredibly messy transition to a world of sound money. This is another topic altogether. I am not making the claim that it would be beneficial for us to move to a world of sound money in a matter of days, with all short-term negative consequences being damned. But managing the transition is a secondary point which can only be discussed after there is agreement about which system we should be transitioning towards. The answer is clearly that sound money is the only intellectually and ethically defensible system. Once that becomes understood, we can discuss how the transition can and should occur. ### Summary Money is an abstract tool we use to facilitate multi-party indirect exchange. This allows us to experience significantly better production of goods and services than otherwise possible, including the creation of entirely new products and industries. The creation of new money/credit does not lead to more real-world abundance any more than a declaration of there being more than 12 inches in one foot would lead to more houses being built. The creation of new money and circulation credit is most likely to lead to economic destruction due to its distortion of the price signal, and the defective incentive structures that it creates. It’s **possible** that new money or circulation credit is created and given to people who ultimately use it to produce more real-world wealth. However, this does not change the fact that the creation of the money and circulation credit was funded by the confiscation of wealth of pre-existing money holders (i.e. savers) who did not have a say in the matter, and were made to bear the risk of something going wrong without being informed of the risk or being compensated for it. There is no getting away from the fact that **any purchasing power/consumption/ spending/investment must be preceded by production and savings**. This is true at a level of physical reality – you cannot consume that which has not been produced. It is either funded directly and honestly by savers who voluntarily contribute their savings, or it is funded indirectly and dishonestly by confiscation from savers via the creation of money and circulation credit. People do not hoard money simply because prices decline over time. And even if you felt that someone’s lack of spending should be deemed *“hoarding money,”* in order to have any money to *“hoard”* in the first place, it means they **already produced a surplus**. Seeing some sort of redistribution in society might feel like a worthy goal to many people, but doing this in a centrally planned and coercive manner via the monetary system keeps resulting in tremendous negative consequences, both economically and societally. With all this said, we can next turn our attention to an honest exploration of how real-world conditions would likely play out in a fixed supply money system, including how they would drastically differ from our current system – a topic for a future article I hope to write. ### John Haar John is the Managing Director of Private Client Services at Swan Bitcoin. He previously spent 13 years on Wall Street, where he was a Portfolio Manager and Insitutional Investor at Goldman Sachs. If you'd like to learn more about the Bitcoin network and protocol function, you can download [Inventing Bitcoin](https://event.swanbitcoin.com/freebook/) by Yan Pritzker for FREE! # Swan Announces Four New Senior Hires in January 2023 URL: https://www.swanbitcoin.com/industry/swan-announces-four-new-hires-in-january-2023/ Sheetal Ray joins as COO, Raphael Zagury as CIO and Head of Research, Gaurav Gollerkeri as GM of Swan Personal, and Guilherme Gomes as CRO. --- **Cory Klippsten** · January 16, 2023 · Updated June 6, 2024 Swan Bitcoin proudly announced four new senior hires this month, to help lead the company's continued growth through the current economic downturn. > The additions to our senior team set the foundation for the next stage of > Swan’s growth. Swan began as an app focused on making long-term Bitcoin accumulation safe and easy. We are now emerging as a large and diversified Bitcoin financial services company. Gaurav, Guilherme, Raphael, and Sheetal bring the deep experience and expertise we need for Swan to keep building a world-class organization. > > — Cory Klippsten, CEO at Swan Bitcoin ### Sheetal Ray, Chief Operating Officer Sheetal Ray joins as Swan's new Chief Operating Officer. She brings over twenty years of growth experience in Fortune 500 companies and startups. Sheetal previously assisted at Sequoia, NEA, and a Goldman Sachs-funded SaaS company with preparations for an IPO. She also ran the financial operations of a $45B relief program aiming to fix damage from the 2008 Mortgage Crisis, and ran finance and accounting for an energy storage startup that is now a $3B public company. > Bitcoin is the only incorruptible money in existence today, and Swan is the > company at the center of this space driving Bitcoin education and adoption. Can you imagine a world where your money doesn’t lose value every year? Incorruptible money will give humanity a chance at progress by truly leveling the playing field. > > — Sheetal Ray, COO at Swan Bitcoin ### Raphael Zagury, Chief Investment Officer Raphael Zagury has been hired as Chief Investment Officer and Head of Research at Swan. He was formerly the co-founder and CFO of Open Co, a leading lending fintech in Brazil funded by Softbank and Goldman Sachs. Prior to Open Co, Raphael founded One Partners, an investment banking and wealth management company in Brazil. Raphael also previously held executive positions in the New York offices of Goldman Sachs, Deutsche Bank, and Merrill Lynch, primarily focused on solutions for the ultra-high net worth market. > I’m excited to use my expertise in financial markets to help drive innovation and progress in the industry. As a passionate believer in the potential of Bitcoin to revolutionize the financial world, I’m eager to contribute my skills and knowledge to Swan. No company is better positioned right now. Swan is not only at the forefront of Bitcoin education but is also committed to high-principled growth and development within the Bitcoin ecosystem. > > — Raphael Zagury, CIO at Swan Bitcoin ### Gaurav Gollerkeri, General Manager of Swan Personal Long-time Silicon Valley payments expert and leader, Gaurav Gollerkeri, is now General Manager of Swan Personal, responsible for the growth of Swan.com and the Swan App. Previously, Gaurav was GM of Payments at BlockFi, responsible for the launch of the world’s first Bitcoin rewards credit card, which paid out over 1,000 Bitcoin to 90,000 cardholders in its first year. Gaurav also spent more than a decade at Visa in leadership roles, including running the Visa Direct real-time payments business for North America. > I'm excited to be joining Swan because we are a team of Bitcoiners, building for Bitcoiners, and doing what is good for Bitcoin. We have a unique, once-in-a-generation opportunity to expand the adoption and usage of Bitcoin by individuals, businesses, and organizations, ushering in a bright orange future for everyone. > > — Gaurav Gollerkeri, General Manager of Swan Personal ### Guilherme Gomes, Chief Revenue Officer Guilherme Gomes is now the Chief Revenue Officer at Swan. He brings over a decade of experience running strategy, business development, and growth initiatives for start-ups and large organizations. Most recently, he spent four years at Bridgewater Associates focused on market entry and business expansion in global wealth and insurance. > As an incorruptible form of money, Bitcoin will change the world as we know it. Although this breakthrough technology has been around for 14 years, we are still extremely early in the adoption cycle for Bitcoin. This is an inspiring mission, and I couldn't be more excited to join the team and help to drive it forward. > > — Guilherme Gomes, CRO at Swan Bitcoin ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # 10 Reasons to Be Bullish on Bitcoin in 2023 - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/10-reasons-to-be-bullish-on-bitcoin-heading-into-2023/ 2023 is shaping up to be an exciting year where the industry builds to deliver even more value for Bitcoin users and investors around the world. --- **Sam Callahan** · January 17, 2023 · Updated June 26, 2024 Bitcoin is an industry that knows no chill. Things move fast in this world, and if you aren’t paying attention, you may just miss an important development that could impact Bitcoin for years to come. 2022 was one of the most tumultuous years in Bitcoin and the broader cryptocurrency industry yet. It was the year when Bitcoin differentiated itself from the pack. After the demise of crypto casinos and centralized copycat cryptocurrencies, it’s becoming more clear to people than ever before why Bitcoin is the true innovation, not *“crypto.”* Despite this fact, Bitcoin’s price has not been immune to the challenging macroeconomic environment and the turmoil within the broader cryptocurrency industry. It has suffered a 59% decline over the last 12 months, but there are [plenty of reasons to remain bullish](https://www.swanbitcoin.com/bitcoin-price-prediction/) on the future of this technology. For those looking past the price and paying close attention to developments in the industry, 2022 was a year of cleansing and building in Bitcoin. It was a year where bad actors were exposed and cleared out, and where many cryptos were revealed for what they really are, nothing more than pump-and-dump schemes or outright scams. At the same time, in Bitcoin land, institutions and entrepreneurs delivered products and continued to build the infrastructure and tools that will continue to drive Bitcoin adoption forward. We saw some new innovations emerge, and we observed the continued adoption of not only Bitcoin itself but also in its second-layer scaling solutions like the Lightning Network. On top of that, we watched as Bitcoin miners both struggled and succeeded in ways they never had before over the course of the last year. In this piece, I will reflect on a wild year and highlight 10 reasons why investors should feel bullish about Bitcoin’s long-term outlook as we head into 2023. ### 1. The Crypto Contagion Cleansing This past year in Bitcoin exposed the weaknesses of centralized cryptocurrencies and crypto casinos for all to see. It began in May with the crash of the algorithmic stablecoin Terra Luna. $50 billion dollars of value was wiped out in days. From there, highly leveraged hedge funds turned Ponzi schemes like Three Arrows Capital imploded and took down many crypto lenders with them like Voyager, Celsius, and BlockFi. All of these centralized organizations were rehypothecating client funds into risky investments that blew up in their faces as the macro environment abruptly changed. This culminated in the exposure of one of the largest frauds of all time, FTX/Alameda Research. Although the contagion is still spreading to firms like DCG/Genesis, the hard lessons learned by many from all of these events cannot be overstated. People are beginning to understand how Bitcoin is different from all of these other cryptocurrencies that are inherently less secure, have founding teams that can manipulate them, and have risks that don’t exist in Bitcoin. Furthermore, from these collapses, market participants appear to now better appreciate the importance of self-custody. In the midst of all of this crypto carnage, we saw a fifth of all bitcoin held on exchanges withdrawn over the last 12 months alone. ![](https://www.datocms-assets.com/56652/1673981425-bitcoin-on-exchanges-last-year.svg) Glassnode This is an incredibly bullish outcome from this crypto contagion. The more that people take bitcoin off of exchanges into self-custody, the less concentrated the circulating supply becomes, and, thus, the more distributed Bitcoin becomes. Also, the more people self-custody, the more they are using Bitcoin in a sovereign, trustless manner, the way Bitcoin was meant to be used. Lastly, people are starting to understand that, if they do decide to leave their bitcoin with a third party, all custodians are not created equal. It’s important to do proper due diligence to ensure that the custodian you use is not commingling or rehypothecating user funds. If you have been following Swan closely this year, you know that our CEO, Cory Klippsten, and others have been consistently warning investors about these crypto casinos, lending platforms, and other cryptocurrencies. We consistently encourage our clients to take self-custody through education and by allowing free and automatic withdrawals into self-custody, and warn of the dangers of centralized tokens. At Swan, we are Bitcoin focused for a reason. If our clients are not ready to take self-custody, then we believe we offer an industry-leading custody solution that protects our clients against the risks that have plagued investors who have used these other platforms. In many ways, this is the year that Swan’s thesis of Bitcoin-only, no lending products, no rehypothecation, and pushing self-custody above all else, has been vindicated. Ultimately, that many bad actors, centralized cryptocurrencies, and fraudulent operations got wiped out this year, is a positive. It has resulted in a healing, cleansing effect on the industry and was necessary in order to move forward on a more solid foundation. ### 2. Major Oil & Gas Companies Enter the Fray This year we saw major oil and gas producers begin to get interested in Bitcoin mining due to its ability to help them make stranded energy resources productive and to help them comply with environmental regulations. Natural gas is a by-product of oil production that often gets stranded because there are no pipelines and infrastructure in place to take it to market. Often times the natural gas is vented directly into the air or flared (burned off). In other words, the natural gas is wasted. This process is not only uneconomical for the producer, but it also is harmful to the environment. According to the EIA, about 1.25 billion cubic feet of natural gas was vented or flared in the United States every day in 2018. That’s enough to power a large city for an entire year. ![](https://www.datocms-assets.com/56652/1673981603-us-vented-flared-natural-gas.svg) EIA It gets worse – over the next 20 years, the EIA predicts that 5 trillion cubic feet of natural gas is likely to be flared or vented in the US alone. This is an obvious problem without many viable solutions. Enter Bitcoin mining. Bitcoin mining is unique because you can take the mining machines directly to the stranded energy resource. It is a profitable use of stranded energy that’s location independent and does not need to be close to humans to operate. A big problem with these stranded energy resources is there are no expensive pipelines or transportation to get the gas to market. Now you can bring the (Bitcoin) market directly to the oil well. Bitcoin miners can be co-located at the stranded energy resources themselves and function perfectly, fixing this problem. On top of making stranded gas profitable for these producers, Bitcoin mining can also help them meet environmental regulatory requirements. The process of mining natural gas with Bitcoin miners reduces CO2-equivalent emissions by ~63% compared to regular flaring practices, according to Crusoe Energy Resources! Bitcoin mining is helping to make stranded/wasted energy profitable, can make renewable projects that are under construction more economical, and can help producers remain regulatory-compliant by reducing their carbon footprint in the process. Bitcoin mining represents a new way to monetize gas in a way that also lowers CO2 emissions. This is as close to a win-win as you’ll see in the business world. Oil & gas producers get all of the benefits mentioned above, and Bitcoin miners get access to extremely cheap energy considering the natural gas was going to be wasted anyways. This year we have seen major oil & gas producers start to understand how Bitcoin mining can help improve their business: **Exxon Mobil** – has been running a Bitcoin mining pilot with Crusoe Energy Systems since January 2021 to use stranded gas in North Dakota to mine Bitcoin and reduce emissions and is now considering expanding this program to other oil well sites in four countries around the globe. This was significant because Exxon Mobil does not expand pilot programs to four countries if they do not see potential in the program. Crusoe Energy Systems was [recognized by the World Bank](https://documents1.worldbank.org/curated/en/469561534950044964/pdf/GGFR-Technology-Overview-Utilization-of-Small-Scale-Associated-Gas.pdf) as a new innovative application in helping in the global gas flaring reduction initiative, and Exxon Mobil will likely expand this program as they continue to evaluate technologies that help them reduce flaring volumes across their operations. **ConocoPhillips** – announced that it has one Bitcoin mining pilot currently operating in the Bakken shale of North Dakota that uses natural gas to mine bitcoin and reduce its emissions, a first for the large energy company. A spokesperson for ConocoPhillips said, **“*****ConocoPhillips has one bitcoin pilot project currently operating in the Bakken, where gas that would otherwise have been flared is routed to a bitcoin processor owned and managed by a third party,*****”** This is another major oil & gas producer turning to this new technology to help them make their operations more efficient and profitable while complying with environmental regulations. **Shell** – announced a new Bitcoin mining initiative where it will sell lubricant and cooling solutions to Bitcoin miners, and it also signed a two-year sponsorship agreement for the Bitcoin 2022 and Bitcoin 2023 conferences in Miami. Shell highlighted that by selling its lubricant to Bitcoin miners, it hopes to cut the energy costs and carbon footprint of Bitcoin mining by nearly 50% through **“*****its high cooling efficiency, flow behavior, and excellent thermodynamic properties.*****”** Shell is one of the top five biggest oil companies in the world by revenues and profits, so their endorsement gives a lot of credibility to the Bitcoin industry moving into 2023. 2022 was the year that major oil & gas producers acknowledged the symbiotic business relationship that exists between themselves and Bitcoin miners, and I expect this trend to continue into the new year. ### 3. Institutional Bitcoin Interest Stays Strong One big difference between the bear markets of 2018 and 2022 is that institutional investors did not stop building and bringing products to market this past year. In 2018, institutional interest in Bitcoin ground to a halt, and Goldman Sachs even shut down its Bitcoin trading desk. Back then, institutions fell out of love with the asset completely, but things played out differently in 2022. In this bear market, we have seen the exact opposite reaction from institutions. They have continued to build and announce new products around Bitcoin, indicating that they still have long-term conviction in the value and utility of this new asset despite its recent price drawdown. Some of the big institutional developments this year were the following: **BlackRock**, the world’s largest asset manager with $10 trillion dollars under management, was busy during this bear market. First, BlackRock partnered with Coinbase Prime to offer its institutional clients of Aladdin, BlackRock’s popular investment management platform, with direct access to bitcoin. The giant firm then announced the launch of a spot Bitcoin private trust available to its institutional clients. The firm stated, *“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities. Bitcoin is the oldest, largest, and most liquid cryptoasset, and is currently the primary subject of interest from our clients within the cryptoasset space.”* **BNY Melon**, the world’s oldest and largest custodian bank, with $43 trillion dollars of assets under custody, announced the launch of their digital asset platform that will allow its clients to hold and transfer bitcoin. BNY Melon CEO, Robin Vince, said in a statement, *“Touching more than 20% of the world's investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets...We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey."* This dive into Bitcoin by BNY Melon was mainly driven by overwhelming demand from their clients for an institutional-grade Bitcoin custody solution. In a recent survey BNY Melon conducted, they found that 41% of their institutional investors hold digital assets, 75% of them are either investing or actively considering investing in digital assets, and 91% are interested in investing in digital assets within the next few years! **Goldman Sachs** made news in 2022 when it became the first large commercial bank to perform a bitcoin-backed loan. The lending facility lent cash to a client collateralized by bitcoin in a first-of-its-kind transaction that hints at what is to come in the future. **Fidelity**, one of the largest brokerages in the world handling $11.8 trillion in assets under administration, announced the launch of its retail Bitcoin trading service, Fidelity Crypto, this year, which allows their 40 million individual investors access to Bitcoin. The service allows for commission-free bitcoin trading with a 1% spread. Importantly, the service does not allow bitcoin withdrawals into self-custody, but it is a step in the right direction. Fidelity also made news when it publicized that it would allow investors to invest in bitcoin within 401(k) retirement plans. Under the new plan, Fidelity would let savers allocate as much as 20% of their retirement funds in bitcoin. Around 23,000 companies use Fidelity as a platform for their employee’s retirement plans, so this new offering now opens the door for these individuals to gain exposure to bitcoin in their retirement accounts. ### 4. The Growth of Bitcoin on Lightning In 2022, we saw the amount of bitcoin on the Lightning Network steadily grow, Bitcoin’s second-layer payment protocol. It was the year that Lightning proved itself as a viable scaling solution that allows peer-to-peer, cheap, and near-instant payments while simultaneously taking advantage of the security and settlement assurances of Bitcoin’s base layer. Lightning Network adoption increased rapidly in 2022 with more and more users turning to the payment protocol to send bitcoin payments fast and cheaply. The network’s liquidity capacity rose from 3,299 BTC to more than 4,830 BTC in 2022. ![](https://www.datocms-assets.com/56652/1673982755-lightning-network-capacity.svg) Glassnode Even though the amount of bitcoin locked in Lightning channels continued to increase, the number of publicly visible Lightning Network nodes dropped off from their all-time highs in 2022 after increasing substantially in 2021. ![](https://www.datocms-assets.com/56652/1673982848-lightning-network-number-nodes.svg) Glassnode You can see in the chart above how the decline in publicly visible Lightning Network nodes coincided with the decline in Bitcoin’s price. This drop in nodes is likely due to users running Lightning nodes losing interest in the bear market. Lightning channels held steady throughout 2022 after dropping precipitously in October. This occurred right at the time when a user removed 320 BTC from Lightning, representing >6% of the total Bitcoin capacity on Lightning. ![](https://www.datocms-assets.com/56652/1673983370-lightning-network-number-channels.svg) Glassnode As a result of this sudden drop in Bitcoin capacity, the number of Lightning channels quickly dropped to 68,193 channels to end the year. I expect the number of Lightning channels to recover soon as Bitcoin capacity on Lightning continues to grow. Where a ton of the growth in Lightning has occurred is in the broader Lightning Network Ecosystem itself. This rich ecosystem now consists of dozens and dozens of startups, all offering different products and services to help improve UX/UI and drive Lightning adoption forward. ![](https://www.datocms-assets.com/56652/1673983433-lightning-network-ecosystem.png?auto=format) All told, the growth of the Lightning Network ecosystem was astounding this year, driven by numerous wallets that were launched, better tools for users that were built, and more educational resources that were produced. Instant, cheap payments became widespread in 2022 as Bitcoiners looked to exchange value peer-to-peer over the Lightning Network, and I expect that trend to continue into 2023. ### 5. New Innovations Emerge on Bitcoin and Lightning Although Bitcoin’s base layer remained unchanging, secure, and functioned with perfect 100% uptime, there was a lot of innovation that occurred in 2022 on its second-layer scaling solution, Lightning Network, and at the application layer. Here are five of the developments that came to light this year that got me excited: **Taro Protocol** This year, Lightning Labs introduced a protocol proposal to Bitcoin and the Lightning Network that aims to allow for the minting, sending, and receiving of assets on the networks. [Taro](https://www.coindesk.com/tech/2022/09/28/lightning-labs-releases-software-to-allow-bitcoin-developers-to-mint-and-transfer-assets-on-the-blockchain/) utilizes Bitcoin’s latest protocol upgrade, Taproot, to enable the issuance of theoretically any kind of asset on the Bitcoin blockchain while still using the immutable verification of Bitcoin’s proof-of-work consensus mechanism. Unlike previous asset issuance protocol attempts on Bitcoin, Taro is a proposal that allows for the issuing and spending of various assets whose information is transferred and stored inside of Bitcoin transactions themselves. By utilizing both Lightning and Taproot, Taro could enable asset issuance with improved efficiency, privacy, and reduced censorship risk. ![](https://www.datocms-assets.com/56652/1673984018-flow-chart-layers.svg) A Theoretical representation of Taro within Bitcoin’s technology stack Taro could allow for all kinds of assets like stablecoins, stocks, and bonds to be issued on top of the Bitcoin protocol opening the door for more use cases and more functionality on the network. **Fedimints** FediMint is a new promising method to custody bitcoin by forming collaborative custody communities to help secure each others’ bitcoin and protect privacy. This form of custody takes advantage of the inherent fact that people trust those closest to them the most. It leverages technologies like federations and Chaumian e-cash mints to cryptographically maintain privacy between the individuals of a group while also allowing them to share custody of the entire group’s bitcoin. Fedimints represent a middle-ground between an individual taking all the responsibility of taking self-custody of their own bitcoin and leaving it with a trusted third party, like an exchange. ![](https://www.datocms-assets.com/56652/1673984135-spectrum-of-custody.png?auto=format) @pippellia This community custody solution offers the possibility to scale Bitcoin, improve privacy, lower on-chain fees, and can get more individuals to take self-custody of their bitcoin around the world. **Nunchuk** Last year, Nunchuk released the first (and only) Bitcoin wallet to offer end-to-end encrypted, multi-user multi-signature capabilities. ![](https://www.datocms-assets.com/56652/1673984258-unlocking-crypto-multisig.png?auto=format) Nunchuk This year, Nunchuk took it a step further when it announced the launch of the Honey Badger Wallet. This wallet attempts to make it easier to safely self-custody your bitcoin while also making inheritance planning easier through its time-locked 2-of-4 multi-sig feature. The way it works is one of the keys is controlled by the platform, and another key in the multisig scheme is labeled as the *“inheritance key”* and is *"time-locked."* By time-locked, it means that the inheritance key can only be used to claim your bitcoins on a future date chosen by the owner of the bitcoin. A beneficiary can then use the inheritance key in combination with the platform key to withdraw the inherited bitcoins. This is another example of the innovation that’s occurring at the application level to improve UX/UI and provide solutions to problems like inheritance planning in Bitcoin. **Impervious.io** Impervious Technologies launched the first peer-to-peer (p2p) web browser built on top of Bitcoin’s second-layer scaling solution, the Lightning Network. It offers a full suite of tools for communication, data transfers, and Lightning payments without any middlemen. This comes in the form of secure p2p messaging, p2p video calls, p2p workspaces, decentralized identity management, decentralized data storage, and direct user monetization of their data. All of these tools are fully encrypted, and they remove centralized intermediaries that collect and sell the user’s data. By utilizing the decentralized nature of the Bitcoin and Lightning Network, Impervious Technologies has given us a hint of what the Internet will look like in the future. ![](https://www.datocms-assets.com/56652/1673984504-impervious-enables.png?auto=format) **Machankura** This new service was coded by African developer, Kgothatso Ngako, who noticed a problem – most Africans have basic phones, but don’t have access to a reliable internet connection – so he created a solution. Machankura enables people in Africa to receive and spend Bitcoin via text messages without needing an internet connection. In a [report](https://us8.campaign-archive.com/?u=1671c6c9a92d3957099bacc89&id=54e33f39a3) from Caribou, 94% of financial transactions in Africa are made through text messages, and only 6% of these transactions are made via mobile apps. ​This new service allows individuals throughout Africa to use Bitcoin for the first time on technology that is already at their disposal. Given the high inflation rates and history of capital controls throughout Africa, projects like Machankura will help push Bitcoin adoption in regions that need digital sound money the most but do not have access to smartphones or reliable internet connection. ### 6. Ethereum’s *“Successful”* Merge to Proof-of-Stake 2022 was the year that Ethereum finally changed its underlying consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). They successfully moved Ethereum to PoS without any major network disruption, which in itself is an impressive accomplishment. Although this isn’t a specific Bitcoin development, it was still one of the most bullish events to happen for Bitcoin this year. Allow me to explain... Now that Ethereum has transitioned to PoS, it has left Bitcoin as the only large and functional PoW public blockchain, and it clearly draws a line in the sand between Bitcoin and Ethereum. The difference between Bitcoin and Ethereum is now clear as day. Post-merge, Bitcoin now consumes ~99% of the total energy used by all of the functioning PoW blockchains in existence today. In other words, Bitcoin has won the energy game. ![](https://www.datocms-assets.com/56652/1673984942-bitcoin-dominates-energy-game.svg) crypto51.app Not only did the Ethereum Merge result in more mining operations mining Bitcoin than ever before, but it has also helped highlight the benefits of PoW given the absolute dumpster fire that’s been Ethereum post-Merge. Since moving to PoS, Ethereum has objectively become more censored and more centralized. One of the reasons that Ethereum continues to become more centralized over time is the technical difficulty and high costs that are required to run a validator node. This has resulted in the rise of node-as-a-service providers, mainly consisting of large exchanges today. Most users choose the convenience of staking their ETH with these entities, so they don’t have to deal with the headache of running a validator node themselves and risk getting penalized for making a mistake. Staking-as-a-Service has been a great bear market revenue driver for exchanges like Coinbase, Binance, and Kraken. Another impediment to running a validator node on Ethereum for the average user is that they must deposit 32 ETH, which is too expensive for many. Lido DAO, on the other hand, is a staking service provider that allows users to bypass this requirement and earn staking rewards. Although Lido is not a single operator, the top 10 holders of LDO control >50% of the network and, thus, control what the DAO votes on. Therefore, it is better thought of as a centralized entity controlled by a small group of Lido oligarchs. In total, 79% of ETH staking validators are controlled by 4 entities today: Kraken, Binance, Coinbase, and Lido. ![](https://www.datocms-assets.com/56652/1673985243-eth-2-total-value-staked.svg) Glassnode This shows that validators are continuously becoming more centralized into these entities that need to be compliant with government and regulators to keep their doors open. This led to a risk of censorship or these entities colluding to alter the rules of the Ethereum protocol unilaterally. It didn’t take long for this risk to become a reality on Ethereum, but it wasn’t at the staking level, but rather the relay level. Tornado Cash, a currency mixer that lets users commingle their funds to improve privacy, was sanctioned in August by the Treasury’s Office of Foreign Assets Control (OFAC), which enforces U.S. sanctions. Since then, we have seen MEV boost relays throughout the Ethereum ecosystem censor blocks to be compliant with OFAC. This includes third-party relays and block builders like Flashbots, which are used by a vast majority of validators to increase their profits. The problem is that Flashbots and other third-party relays build blocks and decide what transactions are put in the Ethereum blocks. These are companies that need to comply with OFAC regulations. As a result, these third-party relays have been censoring transactions on Ethereum. Since the transition to PoS, 60% of Ethereum blocks have enforced OFAC compliance. As of today, 66% of Ethereum blocks have been OFAC compliant. This has been holding steady at around 70% since early November. ![](https://www.datocms-assets.com/56652/1673985335-post-merge-daily-ofac-compliant-blocks.svg) MEVWatch.info The fear is if a vast majority of blocks are running through a censoring relay like Flashbots, then realistically, it might as well be the Ethereum protocol itself that is censored. It’s important to note that an end user cannot choose which relay software an ETH validator uses at the application level. This means end users do not have the power to decide whether a validator is using a censoring or non-censoring relay or block builder. And since most Ethereum validating nodes are already centralized in four entities...you can start to see the problem here. The issue with blocks being OFAC compliant is that every country has its own rules as to where and who individuals can do business with. The original goal of Ethereum was to be a neutral world computer that would transcend nation-states and not adhere to any one nation’s laws like OFAC, aka the U.S. Treasury. The technology layer of the internet doesn’t adhere to any one country’s specific laws. It is an open and neutral piece of technology. Ethereum was supposed to be an apolitical smart contract protocol, but now it is essentially OFAC compliant at the base layer, with 66% of blocks now compliant with U.S. law. This is a slippery slope that can lead to more censorship down the road. Ethereum developers [proposed solution](https://writings.flashbots.net/the-cost-of-resilience/) to this new censorship problem was to basically make a plea to Ethereum validators to *“forfeit a small amount of profit in exchange for making the network more resilient.”* Developers are asking validators to incur an opportunity cost and download less profitable software in order to *“build open and decentralized infrastructure in line with Ethereum's goals.”* This is an explicit admission that the economic incentives in Ethereum are broken post-Merge. If developers need to ask staking validators to voluntarily take less profit to maintain the project’s decentralization, then they have already lost. Ethereum developers already expect they will have to make significant changes to both the Consensus and Execution clients to fix this censorship problem. What those changes will be exactly remains unclear. And so continues the story of Ethereum...with every upgrade comes new problems and more complexity, which requires more fixes, which creates more problems that need more fixes, which adds more complexity, and on and on it goes. Post-Merge Ethereum, for all intents and purposes, has been one centralized, censored mess. As Ethereum suffers from a self-inflicted wound, Bitcoin has remained unchanged and is stronger than ever before. It has functioned exactly as it was meant to since the Genesis block, with 100% uptime for nine years straight. Where one public blockchain appears to be moving fast and breaking, Bitcoin is ticking along like a perfectly synchronized decentralized clock. Ethereum’s move to PoS will prove to be a landmark moment for Bitcoin. One where Bitcoin’s unique traits, like its decentralization, censorship-resistance, and its immutable nature, all enabled by Proof-of-Work, will become more clear than ever before when contrasted against the ever-changing, ever-centralizing new PoS Ethereum. ### 7. FASB Prepares New Rule to Improve Bitcoin Accounting In 2020, Michael Saylor made headlines when his company Microstrategy purchased hundreds of millions of dollars worth of bitcoin and put it on its balance sheet. However, he noted that there was a big problem that made it difficult for companies to put bitcoin on their balance sheets. There are currently no accounting or disclosure rules specifically for Bitcoin. Businesses need to classify them as intangible assets, which means they have the mark the value of the asset once a year. If the price of bitcoin goes down, they have to mark the value lower on their balance sheet, and if the price goes up, they can’t record the gain unless they sell the bitcoin. This creates a huge balance sheet impairment for these companies if the price of bitcoin drops. It creates a situation where a company has to potentially list the bitcoin on its balance sheet at a lower value than the market price when it is simply holding it. This accounting problem was clearly explained in Block’s most recent quarterly filing: “*Investment in bitcoin is subject to impairment losses if the fair value of bitcoin decreases below the carrying value during the assessed period. Impairment losses cannot be recovered for any subsequent increase in fair value until the sale of the asset. The Company recorded an impairment charge on its investment in bitcoin of $1.6 million and $37.6$ million in the three and nine months ended September 30, 2022.*” At the time of Block’s quarterly report, after purchasing $220 million in bitcoin in 2020 and 2021, the cumulative impairment charges suffered by Block to date was $108.7 million, and the fair value of their investment in bitcoin was $156 million based on the current market prices. As you can see, with the current accounting and disclosure rules, if a business decides to invest in bitcoin, the potential impairment to its balance sheet can be substantial. The good news is that major positive developments towards fixing this accounting problem occurred in 2022. The Financial Accounting Standards Board (FASB) is preparing a [new rule proposal](https://frv.kpmg.us/reference-library/2022/fasb-takes-on-accounting-for-digital-assets.html) that would improve the accounting and disclosure rules for companies that invest in Bitcoin. In October, FASB said that fair-value accounting best captures the economics of Bitcoin and determined the method would be a requirement rather than an option for companies. In December, FASB [announced a plan](https://www.wsj.com/articles/fasb-lays-out-disclosure-requirements-for-companies-crypto-holdings-ahead-of-potential-proposal-11671052966) for new disclosure rules. These new rule changes would fix this impairment problem and would allow businesses to recognize losses and gains on their bitcoin positions at the end of every quarter, and treat digital assets as other financial assets like stocks and bonds. FASB expects to vote on whether to propose a digital asset rule early this year, which would be followed by a proposal sometime in the first half of 2023. This is big news for companies holding bitcoin on their balance sheets. What used to be a barrier of entry for companies considering placing some bitcoin on their balance sheets, is now close to becoming a thing of the past. For public companies that are currently sitting on historically large cash balances with CPI inflation at multi-decade highs, this could open the doors for them to invest in Bitcoin. ### 8. Only the Strongest Survive Amidst Record Hash Rate This year has been one giant hangover for Bitcoin miners. In 2021, we saw many mining companies go public after they were making money hand-over-fist during the bull market. After enjoying the profits in 2021 and taking advantage of cheap borrowing costs to expand their operations, many public miners discovered the hard way just how ruthless the Bitcoin mining industry is. Bitcoin miners suffered greatly this year as they saw their profitability plummet due to a combination of rising electricity and input costs, increasing hash rate, and a falling bitcoin price. This deterioration in mining economics has squeezed miner profit margins dry. As a result, we witnessed a slew of bankruptcies, M&A activity, and debt restructurings throughout the mining industry. Many of the public miners that took on too much debt in the bull market have paid the price in the bear market. This has been a source of bitcoin sell pressure as miners have been forced sellers to keep their operations running and to pay their debts. The bright side to this bloodbath we’ve seen throughout the Bitcoin mining industry this year is that only the most efficient mining operations with the very best operators will survive this bear market. All the inefficient mining operations with high operating costs and poor balance sheets will either be wiped out, or acquired by other miners. Bitcoin mining is truly a game of survival of the fittest, and right now, the creme is being separated from the crop. By the end of this challenging period, Bitcoin’s security layer will be more efficient than ever before. Bitcoin security is growing more efficient, but it’s also never been more secure. In the past year, Bitcoin’s hash rate has nevertheless increased by a whopping 50%! ![](https://www.datocms-assets.com/56652/1673985996-bitcoin-mean-hash-rate-7dma.svg) Glassnode This means that Bitcoin’s security has never been stronger than it is today. Today, it requires more hash than ever before for a bad actor to perform a successful 51% attack: More energy than ever before, more specialized ASIC machines than ever before, and it still takes a lot of capital and fixed investment, operating expenses, etc. Although the increasing hash rate impacts miner profitability, this was undoubtedly a good trend to see continue in terms of the health and security of the Bitcoin network. In 2022, we saw Bitcoin’s hash rate absolutely explode. ### 9. Power Companies Finding Utility in Bitcoin Miners This was the year that Bitcoin mining began to really show its utility to power grid companies. Bitcoin mining has unique properties that allow it to be a flexible load demand, which improves grid stability. Miners can turn on/off their machines with a flip of the switch during periods of increased demand. Essentially, they have the ability to give power back to the grid in times of stress. Mining companies such as Riot Platforms have contracts in place where the grid operators pay them to turn off their operations in order to prevent blackouts from occurring. This occurred in Texas during a recent arctic blast when 40% of Bitcoin’s hash rate dropped as miners throughout the United States turned off their machines, showcasing their ability to improve grid stability. That hash rate has now recovered as the storm passed, and miners turned back on to consume the excess load. ![](https://www.datocms-assets.com/56652/1673986093-estimated-network-hashrate.svg) @lopp This is unique to Bitcoin mining because it is very costly for other companies to turn off their operations and turn them back on. The flexibility of Bitcoin mining companies makes them a new innovation for power grid companies that will help them make the grid more stable and reliable. ERCOT, which manages the flow of electric power to ~26 million Texans, recently released a study stating, “*This report also identifies the aggregate amount of installed generation capacity for which Large Loads, such as crypto-mining facilities, are directly interconnected, and the expected peak reduction in available generation capacity attributable to these loads during hours with the highest risk of insufficient reserve capacity for the winter season.*” Duke Energy, the second-largest U.S. energy corporation, also announced this year that they are currently studying Bitcoin mining and its potential benefits to the grid. In a podcast interview, Justin Orkney, the lead rates and regulatory strategy analyst at Duke Energy, said, “*Bitcoin mining appears to be that really powerful demand response technology where they can be humming at a 100% power factor, or using the same amount of electricity all day long which is called flatline, and then within a matter of minutes they can decrease their usage at kind of a pinpoint precision level and hold it for however long they want to and then bring it right back up,*” Lastly, these developments aren’t just isolated to the United States. Tokyo Electric Power Company (TEPCO) Power Grid, the largest electric power company in Japan, announced that it is using Bitcoin mining on its power grid through its wholly-owned subsidiary Agile Energy X. They stated, *“We have started experiments to confirm the system behavior and the impact on the power grid when equipment is operated with a large amount of power on the scale of 1,500 kW, and have confirmed that the equipment can operate normally.”* The integration of power companies and Bitcoin mining was one of the most exciting developments in Bitcoin in 2022. Bitcoin mining is proving to be a breakthrough innovation in the energy industry. Bitcoin miners can provide a responsive, location-agnostic, and flexible load that could bring much-needed stability to power grids all around the world. ### 10. Bitcoin Shines as a Tool for Freedom 2022 was the year that Bitcoin really showcased how it is being used as a tool for freedom for individuals around the world. Bitcoin has unique properties such as its decentralization, censorship-resistance, and its permissionless nature that allows it to help people who are attempting to protect their wealth from confiscation, censorship, and debasement. We saw numerous examples of this as the world spiraled out of control at times throughout the year. We saw [refugees using Bitcoin during the Russia/Ukraine War](https://www.cnbc.com/2022/03/23/ukrainian-flees-to-poland-with-2000-in-bitcoin-on-usb-drive.html#:~:text=Many%20have%20turned%20to%20cryptocurrency,or%20about%20%242%2C000%20in%20bitcoin.) to escape their respective countries with some wealth, [elevated rates of Bitcoin adoption](https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/) in jurisdictions with high rates of debasement, and [Bitcoin being used to fund peaceful protests](https://bitcoinmagazine.com/culture/how-bitcoin-fueled-canada-trucker-convoy) like the Canadian Freedom Trucker Convoy after their bank accounts were frozen by their own government. Today, an estimated 2.2 billion people live under the blight of double-digit inflation. With this rise in inflation, we should also expect a rise in capital controls and censorship as governments and central banks attempt to close off all the exits to keep their citizenry in the local currency they control. It is encouraging to see that Bitcoin adoption continues to increase the most in jurisdictions with more political instability, higher rates of currency debasement, and increased censorship. A highlight of this year was when 20 human rights leaders wrote a letter to Congress over the summer on the global importance of Bitcoin as a tool for freedom as U.S. regulators consider new legislation. Here are some excerpts from the letter: "To most in the West, the horrors of monetary colonialism, misogynist financial policy, frozen bank accounts, exploitative remittance companies, and an inability to connect to the global economy might be distant ideas. To most of us and our communities — and to the majority of people worldwide — they are daily realities. If there were “far better solutions already in use” to overcome these challenges, we would know." "Ample evidence suggests that Bitcoin has and will continue to empower Americans and global citizens in the coming decade, and that—alongside stablecoins—this open and decentralized monetary network will help defy tyranny and strengthen democratic movements abroad." "To claim that the practical value and future potential of cryptocurrencies “does not exist” denies the lived experience of millions of people like us and our colleagues who have depended on Bitcoin and stablecoins in times of crisis and autocracy." This past year, we have seen Bitcoin being used by those who need it most when everything else has failed them. More and more individuals are beginning to understand that Bitcoin has a unique ability to enforce human rights all around the world. As governments and central banks continue to debase their currencies and censorship and capital controls increase, more people will turn to a permissionless, censorship-resistant, and decentralized monetary protocol to protect their wealth and send value peer-to-peer without any intermediary. ### What to Expect in the Year of the Rabbit: As you can see, there were a lot of bullish developments that occurred in 2022 that have us bullish heading into the new year. Bitcoin investors have overcome many challenges this year as Ponzi schemes exploded around them, miner bankruptcies caused forced bitcoin selling, and the Federal Reserve spiked interest rates, causing downward price action in risk assets, including Bitcoin. But despite all of this, Bitcoin hodlers have continued to hold throughout the tumultuous year. The percentage of Bitcoin circulating supply held by long-term holders (>6 months) is sitting at 72%, an all-time high. A majority of Bitcoin’s investor base remains unfazed by the recent price action. ![](https://www.datocms-assets.com/56652/1673986713-screen-shot-2023-01-17-at-3-18-20-pm.png?auto=format) Glassnode 2023 is the Chinese Year of the Rabbit. This is fitting because I expect that more people than ever before will fall down the Bitcoin rabbit hole this year and begin learning about this new technology, given the quantity and quality of free educational resources available today. As a result of this and the broader macroeconomic environment, I expect Bitcoin adoption to continue to increase, as measured by the number of addresses holding >$100, as demand for a digital sound money that can’t be censored grows. I expect that there will be regulatory backlash through more enforcement actions throughout the broader cryptocurrency industry in response to the FTX/Alameda Research fraud, but there will probably not be any major digital asset legislation passed in 2023. These enforcement actions are already well underway, with recent actions against [the founder of LBRY](https://www.coindesk.com/policy/2022/11/07/lbry-sold-tokens-as-securities-federal-judge-rules/), [the founder of NFT Mutant Ape Planet](https://www.justice.gov/usao-edny/pr/non-fungible-token-nft-developer-charged-multi-million-dollar-international-fraud), Gemini/Genesis getting [sued by the SEC for violating investor protection laws](https://www.wsj.com/articles/sec-sues-crypto-firms-genesis-and-gemini-over-lending-product-11673561423), and Coinbase just agreeing [to pay a $50 million fine for violating AML laws](https://www.coindesk.com/policy/2023/01/04/coinbase-will-pay-50m-fine-to-new-york-regulator-to-settle-background-check-charges-report/). The good news is that the only thing these regulators seem to be able to agree upon is that Bitcoin is a commodity. Whereas the legal status of all other cryptocurrencies – which look a whole lot like unregistered securities – remains uncertain, Bitcoin’s regulatory status is clear. I also expect the price to continue to chop around these levels throughout 2023. We could see Bitcoin’s price retest the lows if the macroeconomic picture deteriorates, but I believe that we are currently carving out a bottom. When taking into account the macroeconomic environment of tightening monetary policy and slowing growth, I assign the highest probability to a more drawn-out bear market similar to that of 2013-2015. Given that Bitcoin has dropped 76% from its all-time high, many miners have capitulated, bad actors have been wiped out, and speculators are mostly gone, looking back, I think this coming year will be viewed as a wonderful time for investors to accumulate and build long-term positions. This would coincide with previous bear markets, which saw periods of accumulation in the year prior to each halving event (2015, 2019), as shown in the chart below. ![](https://www.datocms-assets.com/56652/1673986928-halving-progress.svg) @therationalroot I predict we will continue to see consolidation in the mining industry as more mining companies merge or are acquired. I am anticipating more miner bankruptcies until the mining economics begin to improve. I expect Bitcoin’s hash rate growth will slow because the mining operations that are still functioning are too cash-strapped to expand their operations in any meaningful way. Lastly, I predict in the coming year that the Bitcoin base layer will continue to function just as Satoshi intended back in 2009. There will be no big change to the consensus mechanism, and it will continue to run with 100% uptime. This simple, but profound, fact will continue to help differentiate Bitcoin from the rest of the cryptocurrency industry. I expect the innovation to continue to accelerate at Bitcoin’s scaling and application layers as new wallets and tools come to market, adding new functionalities to the decentralized Bitcoin technology stack. 2022 is when the builders and educators put their heads down and stayed laser-focused on the mission of driving Bitcoin adoption. 2023 is shaping up to be an exciting year where the industry builds off those efforts to deliver even more value for Bitcoin users and investors around the world. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoiners, It’s Winning Time - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoiners-its-winning-time/ We believe that a global, Nasdaq-listed, Bitcoin-only financial services company will play a key role in winning the race to avoid the war, so we’re building it. --- **Cory Klippsten** · January 19, 2023 · Updated June 27, 2024 > You know why I love Swans? The most graceful bird on Earth, but underneath the water… paddling up a f*cking storm. > > — Winning Time, HBO ### Get On The Mission We are entering the most critical period yet in the history of Bitcoin. Beset on all sides by the inequities of the selfish and the tyranny of evil men, we Bitcoiners must nevertheless persevere and win [The Race to Avoid the War](https://www.swanbitcoin.com/the-race-to-avoid-the-war/). Nothing is more important to the Bitcoiners who make up Swan. Every single one of us is *“On The Mission”* (h/t [@AlexStanczyk](https://twitter.com/alexstanczyk), host of [Café Bitcoin](https://podcasts.apple.com/us/podcast/the-caf%C3%A9-bitcoin-podcast/id1607438100) on Twitter Spaces) to spread Bitcoin adoption. We believe this is why Swan immediately took flight despite launching into the crucible of the March 2020 pandemic, rising higher with the 2021 bull market and continuing to rise despite the collapses of the crypto industry in 2022. Over the past 12 months, the Swan team doubled, [filling key leadership positions](https://www.yahoo.com/now/swan-leading-bitcoin-financial-services-170000261.html) with talent from Bridgewater, Goldman Sachs, Merrill Lynch, and Visa. ![](https://www.datocms-assets.com/56652/1674145733-feature1.png?auto=format) ### 2025 Vision Now, with 100 full-time Swans across five continents, and rapid expansion into new products and markets, we are sharing how we plan to accelerate Bitcoin adoption over the next three years. First, let’s start with what Swan already does today: - Use [Swan.com](http://swan.com/) and the [Swan App](https://swan.com/app) for safe and easy Bitcoin buys, with recurring purchase plans, one-time buys, free custody in your own legally owned trust account, and free automatic withdrawals to self-custody. - [Swan Private](https://www.swanbitcoin.com/private/) is a trusted partner on your Bitcoin journey, with a dedicated Bitcoin expert, exclusive events, support for retirement, trust, and corporate accounts, and original Bitcoin and investment research. - [Swan Advisor](https://www.swanbitcoin.com/advisor/) helps RIAs and FAs counsel their clients about Bitcoin and allocate responsibly into the future of money while maintaining their full advisory responsibilities. - [Swan Business](https://www.swanbitcoin.com/business/) future-proofs businesses, nonprofits, and trusts with Bitcoin treasury services and the [Bitcoin Benefit Plan](https://www.swanbitcoin.com/benefit/), an exciting fringe benefit that dozens of companies are already using to recruit and retain employees. - Secure your retirement with the[ Swan IRA](http://www.swan.com/ira) by diversifying your savings with tax-advantaged Bitcoin in Traditional and Roth IRAs. - Join [Swan Premium](http://swan.com/premium) to receive exclusive research reports, educational content, Bitcoin books by some of the leading authors in the industry, huge discounts on Bitcoin products and services, and privileged access to many Swan events. - Swan Media produces world-class content to educate and entertain Bitcoiners, new and old. Our shows include *Café Bitcoin*, *Swan Signal*, and *Hard Money with Natalie Brunell*. Swan publications include *Swan Private Insight*, the *Swan Signal* blog, and *The Daily Bitcoiner*. Also, you might have seen us on social media here and there 😂. - To give your friends and family a pure Bitcoin signal, not *“crypto”* noise, send them to [The Bitcoin Canon](http://swan.com/canon). The Canon presents thematic collections of the best educational content from the history of Bitcoin and related topics, expertly curated by Bitcoiners. - [Swan Force](http://swan.com/enlist) is the strongest referral program in the Bitcoin industry, with more than 15,000 affiliates, large and small, helping to spread Bitcoin adoption. [Enlist today](http://swan.com/enlist) to help your friends and family discover the world of Bitcoin. - Love Bitcoin so much that you can’t imagine not working in the industry full-time? We built [Bitcoiner Jobs](http://www.bitcoinerjobs.com/) for YOU! Our favorite side project quickly became an indispensable resource for the Bitcoin industry, matching fantastic companies with incredibly talented Bitcoiners. - If you haven’t joined the Bitcoiner network, you’re missing out! Get to know Bitcoiners in real life with [Bitcoiner Events](http://www.bitcoinerevents.com/). With Swan having no headquarters, we built the site because of our strong desire to connect with fellow Bitcoiners. With thousands of event listings around the world, it’s clear we’re not alone. - After a [wildly successful debut](https://www.youtube.com/watch?v=qLQJHx4mphc) in 2022, we’re beyond excited for the second edition of the Pacific Bitcoin Festival, scheduled for October 5-6 in Santa Monica, CA. [Get your tickets now](http://www.pacificbitcoin2023.com/), before the price goes up, and enjoy two days of pure Bitcoin signal and celebration! - Swan Salon Monthly is a series of private events in exclusive Los Angeles and Miami locations, allowing members of [Swan Private](http://www.swanprivate.com/) to enjoy the company of guest speakers and well-known Bitcoiners. Wow, that was a lot of work packed into three short years! And with every single one of our products shepherded by Bitcoiners who care DEEPLY about the mission, we’ll keep making them better. If you have thoughts about any of them, email me directly at [CEO@swan.com](mailto:CEO@swan.com), or [DM me on Twitter](http://www.twitter.com/coryklippsten). NEXT! There’s no time to explain; just get on the Swan! Kidding, but sometimes it feels like the best advice. We have SOOOOO much more coming your way. Here’s a look at what we plan to bring to market over the next three years: **Global Bitcoin Onramp** — People around the world are waking up to the fraud that is non-Bitcoin *“crypto”* (the commonly used misnomer for altcoins). The success of crypto casinos like Binance and Coinbase is predicated on greater-fool gambling and pump-and-dump marketing of unregistered securities. Swan is helping nature heal, accelerating the spread of Bitcoin worldwide. We will open for business anywhere and everywhere crypto casinos prey on unsuspecting victims. Our first step is opening up Swan to new users in 160 countries this quarter, starting with purchases via debit and credit cards, followed soon after by SEPA and other bank transfers. As always, anyone globally who can send fiat via Fedwire or TransferWise can already use Swan. Hey CZ! [Caution: Swans Aggressive](https://hips.hearstapps.com/mac.h-cdn.co/assets/17/20/768x384/landscape-1494945969-swan.gif?resize=1200:*) ⚔️ **Low KYC** — We are dramatically improving our onboarding experience for our United States customers this quarter, letting people start buying Bitcoin with MUCH less friction, just name and last 4 of your social. **Target Buys** — Bitcoiners love to buy the dip, and they love it even more if they can do it automatically. You yelled loudly, and we listened! Swan is launching Target Buys in Q1 2023. Set a target price, and we’ll do the rest 😎. ![](https://www.datocms-assets.com/56652/1674135190-targetbuys.png?auto=format) **Swan Self-Custody** — The [Specter Labs](http://www.specter.solutions/) team joined Swan in 2022 to lead the development of simple self-custody and collaborative-custody solutions for Swan clients. The Specter team will continue supporting and developing the open-source Specter apps. We are excited about the technological advancements we’ll bring to market over the next couple of years, with dramatic improvements in user experience to help exponentially more people become self-sovereign. [Sign up now](https://www.swanbitcoin.com/custody/) to get on the list for early access to Swan Custody. It’s been said so many times: *“Not your keys, not your coins.”* We’ll help millions overcome the obstacles to getting there — easily, quickly, safely, and confidently. **Swan Lightning Wallet** — You said Jump, we said How high, and now we have BIG plans for the Swan lightning wallet⚡. Our roadmap calls for a simple-to-use experience with self-custody and no-KYC options. The Swan wallet will be a starting point for many new Bitcoiners, with a seamless journey of learning combined with Swan design delights throughout. **Swan Home Equity** — Many Americans have significant home equity and are looking for ways to diversify their net worth. [Swan Home Equity](https://www.swanbitcoin.com/homeequity/) enables Swan Private and Swan Advisor clients to convert a responsible portion of their home equity into Bitcoin. The product features a unique accrual structure to remove cash flow concerns, lengthy terms to reduce liquidation risk, and conservative loan-to-value limits. **BitList** — Building on the success of [Bitcoiner Jobs](https://bitcoinerjobs.com/) and [Bitcoiner Events](https://bitcoinerevents.com/), Swan’s next Bitcoiner community platform is a marketplace to promote and find services offered by and for Bitcoiners. Find an accountant or lawyer who cares about your issues and wants your business. Ready to build your citadel? Find that rockstar stone home builder on BitList, the global and local marketplace for Bitcoiner professional services. **Swan API** — Our API allows companies to connect apps to Swan’s Bitcoin services. API services will include: - Bitcoin onboarding and buying. - Bitcoin education content. - Lightning payments with streamlined Lightning onboarding. - Deeper integrations for our Swan Advisor and Swan Business services. - Self-custody wallet integrations brought to you by Specter Solutions **Platform Sovereignty and Optionality** — With plenty of cash in the bank and a couple centuries of experience across our leadership team, we’re dramatically accelerating our plans for increased redundancy and independence across compliance, settlement, and custody. We are actively working on MTLs, filing for the New York BitLicense, and determining appropriate regulatory paths in jurisdictions around the world. We are investing heavily in technology and partnerships to soon have options and redundancy across custody, liquidity, fiat payment providers, security, and hardware wallet support. This optionality will also enable support for new account types and scenarios for families, minors, tax-advantaged accounts, and integrations. **NASDAQ IPO** — While we don’t have any particular desire to run a public company, we think that what’s best for Bitcoin and Bitcoiners is for Swan to lead the charge as the first Bitcoin-only startup to go public. We will not do a backdoor listing on a foreign exchange. We plan to ring the bell on the NASDAQ. Increased analyst and media coverage of an education-focused company composed of 100% Bitcoiners will be a beacon call for the next thousand startup founders to get busy building our Bright Orange Future. ### Our Bright Orange Future We believe that a global, Nasdaq-listed, Bitcoin-only financial services company will play a key role in winning the race to avoid the war, so we’re building it. The adoption of Bitcoin as money will uplift human civilization for centuries to come. It will bring about a new era of increased freedom and prosperity. It will facilitate economic stability, fairness, mobility, and abundance. It will reduce corruption, deception, and crisis. And Bitcoin can bring about all of this change peacefully. Every single one of us is a participant in the race to avoid war, whether we realize it or not. As Michael Saylor said, *“I don’t want to be a martyr. I don’t want us to die for our country. I want us to be the winners.”* Bitcoiners, IT’S WINNING TIME. **Join Us on the Mission** — Here are some of the many ways you can connect with Swan and contribute to our efforts to help Bitcoin win the adoption race: - Join over 250,000 others reading our [monthly newsletter](http://swan.com/newsletter) - Give a copy of a great Bitcoin book to a friend or family member:  - [*Inventing Bitcoin*](https://www.swanbitcoin.com/inventing-bitcoin/) by Yan Pritzker - [*Why Bitcoin*](https://www.swanbitcoin.com/whybitcoin/) by Tomer Strolight - [*21 Lessons*](https://www.swanbitcoin.com/21lessons/) by Gigi - Follow us on [Twitter](http://twitter.com/swanbitcoin), TikTok, [Instagram](https://www.instagram.com/swanbitcoin/), and [LinkedIn](https://www.linkedin.com/company/swanbitcoin/) - Subscribe to our [YouTube channel](https://www.youtube.com/@Swan_Bitcoin)  - Join the [Swan Bitcoin community Telegram group](https://t.me/swansignal) - Join Café Bitcoin every weekday at 7am PT / 10am ET on [Twitter Spaces](https://twitter.com/swanbitcoin) - Join the [Café Bitcoin community Telegram group](https://t.me/cafebitcoinclub) - Subscribe to the [Swan Signal](https://www.swanbitcoin.com/signal/) podcast - Join the [Swan Force](https://app.swanbitcoin.com/enlist)! - Share a [Bitcoin Canon](https://www.swanbitcoin.com/canon/) Rabbit Hole - Apply to open roles at Swan and other Bitcoin-only companies at [Bitcoiner Jobs](http://bitcoinerjobs.com) - Join us October 5-6 for [Pacific Bitcoin Festival 2023](http://pacificbitcoin2023.com) in Santa Monica, California!  [Video](https://vimeo.com/790818793) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Why Bitcoin Exists - Swan Bitcoin URL: https://www.swanbitcoin.com/education/why-bitcoin-exists/ Bitcoin was not created so that some people could “get rich quick.” It was created to preserve the integrity of money — to make the most of your precious time, your energy, and your life. --- **Tomer Strolight** · January 24, 2023 · Updated July 3, 2024 *This article is the first chapter from the book "*[*Why Bitcoin?*](https://www.swanbitcoin.com/whybitcoin/)*"* ### What is the Purpose of Bitcoin?  Why did anyone bother to create Bitcoin? What problems were they trying to solve?  If you are new to the whole idea of a digital asset involving the mysterious field of cryptography, *these* are some questions that probably come to your mind.  Before you get caught up in asking if you can *“get rich quick”* from Bitcoin, you should be asking if it has a *deeper* purpose.  Bitcoin was *created* to serve a very *specific* purpose. If it did not serve that purpose, it would not be worth anything. Fortunately, it does. And, it was carefully and meticulously *engineered* to serve it *precisely*.  Bitcoin’s purpose is to provide reliable money that will serve all mankind — *forever.* That is a pretty lofty goal: [serving all of mankind](https://www.swanbitcoin.com/bitcoin-is-for-everyone/), forever!  ### Was There Even a Problem in the First Place?  *Is* our money *unreliable? Does* it really *fail* to serve all mankind? *Are* its days numbered?  The sad fact is that the answer to all these questions is *“Yes!”*  First, our money *is* unreliable: it [*loses* its purchasing power through inflation](https://www.swanbitcoin.com/bitcoin-and-the-true-meaning-of-inflation/). We also experience *volatile* economic cycles that *destroy* capital, jobs, wealth, and stability.  Next, our money does not serve *all* mankind — many middlemen charge *excessive* fees to store and send our money. It is expensive to use internationally since converting it to other currencies is costly. Many people in the world lack *any* access to reliable banking. Our money system serves *elites* far better than it serves *ordinary* people.  Finally, our money system is *doomed* to collapse. Currencies *world-wide* are rapidly losing purchasing power. In fact, throughout history, paper money *decreed* into existence by governments has failed every time that it has been implemented.  And sadly, we cannot turn back the clock and go back to a time when *gold* was money. Gold is simply not *secure* from seizure, and it is far too *slow, difficult* and *expensive* to transport in a global economy.  ### Bitcoin Fixes This Bitcoin was created through an ingenious and unprecedented combination of technologies. It provides, for the first time ever, money that is *reliable,* that serves *all* mankind, and that will last *forever.*  *Nothing* like this has *ever* existed before.  Bitcoin is free from inflation — its supply will *never* exceed 21 million coins. Each coin is divisible into 100 million units called satoshis. These will be issued on a fixed, unalterable schedule — taking over 100 years.  Bitcoin is for *all* mankind — there are *no* elites who can manipulate it. Unlike the currencies of our present money, nobody can create bitcoins effortlessly for themselves.  Nobody can be *prevented* from using Bitcoin — it will not *allow* anybody to stop someone else from using it.  Finally, Bitcoin is *forever —* its operation depends solely on the laws of physics and mathematics, and these laws will stay in effect *— unaltered —* for as long as the Universe exists.  Bitcoin was *not* created so that some people could *“get rich quick”.* It was created to preserve the *integrity of money* — to make the most of your precious time, your energy, and your life.  With Bitcoin you can [*keep* what you have earned](https://www.swanbitcoin.com/bitcoin-is-the-future-of-money-not-just-another-cryptocurrency/) — and use it however, whenever, and wherever you desire.  To *you,* Bitcoin is reliable money that can serve *you* for the rest of *your* life — and it offers you an escape from being the victim of an unjust, broken, dying, and failing monetary system.  ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # What is an XPUB? - Swan Bitcoin URL: https://www.swanbitcoin.com/education/whats-in-an-xpub/ “What’s in a name? That which we call a rose. By any other name would smell as sweet.” — William Shakespeare --- **Gigi** · November 23, 2022 · Updated July 17, 2024 Bitcoin’s technical details are notori­ously diffi­cult to under­stand. Concepts like [*digital signa­tures*](https://learnmeabitcoin.com/beginners/digital_signatures), [*peer-to-peer distrib­uted systems*](https://bitcoin.org/en/vocabulary#p2p), and [*public-private-keypairs*](https://ssd.eff.org/en/module/deep-dive-end-end-encryption-how-do-public-key-encryption-systems-work) are alien to most. Even though Bitcoin’s first decade is behind us, we still have to grapple with some of the more esoteric (and technical) concepts to appropriately interact with the Bitcoin network. This article will outline one of these concepts in partic­ular: *extended public keys*, or XPUBs. We discuss what XPUBs are, why they were intro­duced, how they evolved, and what problems they solve for Bitcoin’s users. ### What is an XPUB? As the name implies, an XPUB is a unique public key, namely an *extended* one. While the details are more compli­cated, public keys can essen­tially be thought of as the basis of your receiving addresses, similar to your postal or email address. However, unlike your postal or email address, the Bitcoin protocol is designed to use a new receiving address for every transaction. [Address reuse](https://en.bitcoin.it/wiki/Address_reuse), the practice of reusing the same bitcoin address for multiple trans­ac­tions, is discour­aged for several reasons, the most perti­nent of which is the reduc­tion of privacy for yourself and others.   However, using a different address for every trans­ac­tion leads to a problem: how do you keep track of your addresses, and how do you let others know which addresses are yours without revealing too much infor­ma­tion about yourself? After all, people must know your address to transact with you. To deal with these and other problems, a Bitcoin Improve­ment Proposal was made: [BIP 32](https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki), *Hierar­chical Deter­min­istic Wallets*. While the main motiva­tion was to fix the issue of wallet backups, the hierar­chical nature of these new wallets intro­duced another benefit: the ability to selec­tively reveal a set of addresses that belong to you. ![](https://www.datocms-assets.com/56652/1674931349-xpub-extended-public-key-2x.png?auto=format) Since extended public keys can be used to derive other public keys, they are also referred to as *parent* public keys (because the derived keys can be considered their *“children”*). In short: an extended public key is a special key that effec­tively repre­sents a group of public keys and, by exten­sion, addresses. For this reason, an extended public key can also be thought of as a ‘read only’ view into a wallet. ### XPUBs and Privacy Thinking of extended public keys as ‘read only’ keys of your wallet makes the privacy impli­ca­tions of sharing such a key obvious: 1. Everyone who has access to it can see all the addresses derived from it.  2. By exten­sion, anyone can see the trans­ac­tions associ­ated with these addresses.  For this reason, it’s advis­able that you do not share your extended public key lightly. At Swan, we focus on buying bitcoin securely, efficiently, and on a recur­ring basis. We believe [automatic DCA](https://www.swanbitcoin.com/swan-dca/) is the best and easiest way to acquire bitcoin over time. We also think that [educa­tion](https://event.swanbitcoin.com/freebook/) and self-custody are paramount, which is why we encourage our users to set up auto-withdrawal to a wallet of their control when they feel comfort­able doing so. To provide a seamless experi­ence and avoid address reuse, we need a list of addresses we can use to send funds to. This is where extended public keys come in. Starting today, you can connect multiple addresses of your wallet with your Swan account and set up your auto-withdrawal plan to use these addresses in order. ![](https://www.datocms-assets.com/56652/1674931413-swan-multi-address-trans3.png?auto=format) We encourage you to use a dedicated account for your Swan recurring purchase plan if your wallet supports it. Most modern wallets, including the [Ledger](https://support.ledger.com/hc/en-us/articles/360006410253-Add-your-accounts) and [Trezor](https://wiki.trezor.io/Account) hardware wallets, support the creation of multiple accounts. (If you have a [COLDCARD](https://coldcardwallet.com/docs/paths), we assume you know what you’re doing anyway). A dedicated account will have its own child-extended public key, meaning that anyone with access to this key can only derive a subset of your wallet’s public keys. ![](https://www.datocms-assets.com/56652/1674931457-xpub-parent-extended-public-key-accounts-2x.png?auto=format) We do not store your extended public key. We only maintain a relatively short list of addresses we derive from it — just enough to have a new address for every payout. If we ever run out, we can reach out to you to ask you to reconnect your wallet. ### The XPUB Zoo Over time, the way bitcoins are sent and received — or, to be precise: how bitcoins are locked and unlocked — evolved, and Bitcoin’s address and key-formats evolved along with it. As of this writing, a whole zoo of different extended public keys exists: *xpub*, *ypub*, *zpub*, *tpub*, *upub*, *vpub* — all of them are extended public keys, as are their *“big brothers”* *Ypub*, *Zpub*, *Upub*, and *Vpub*. The different kinds denote different purposes, indicating if the wallet that gener­ated the extended public key can use modern address formats or if the key relates to a single-signa­ture or multi-signa­ture scheme. ### XPUB Tools During the imple­men­ta­tion of this feature for our platform, we realized that the tools to interact with and derive addresses from XPUBs are far from ideal. While many excel­lent libraries exist already, most notably Unchained Capital’s [unchained-bitcoin](https://github.com/unchained-capital/unchained-bitcoin) and Daniel Cousens’ [bitcoinjs-lib](https://github.com/bitcoinjs/bitcoinjs-lib), we decided to give back to the Bitcoin commu­nity and broader ecosystem by open-sourcing large parts of the code that is powering our multi-address wallet feature. The following packages are avail­able on [GitHub](https://github.com/swan-bitcoin/xpub-tool) and via [npm](https://www.npmjs.com/search?q=swan-bitcoin): - [@swan-bitcoin/xpub-lib](https://www.npmjs.com/package/@swan-bitcoin/xpub-lib) — A JavaScript library derives bitcoin addresses from extended public keys. - [@swan-bitcoin/xpub-cli](https://www.npmjs.com/package/@swan-bitcoin/xpub-cli) — A small command-line tool to derive and validate bitcoin addresses from extended public keys. Supports xpub, ypub, and zpub extended public keys and their testnet equiv­a­lents. Support for legacy, SegWit, and native SegWit (bech32) addresses. ![](https://www.datocms-assets.com/56652/1674931581-xpub-cli-no-border-n3.png?auto=format) ### Future Developments As Bitcoin evolves, new features will become widely used, and best practices will contin­u­ously change. XPUBs are undoubt­edly imper­fect, as the growing zoo of different extended public keys shows. Trends we can expect ahead: 1. Increased use for HD wallets: XPUBs are a core component of HD wallets. They are becoming increasingly popular due to their ease of use and enhanced security features. As the use of HD wallets continues to grow, the use of XPUBs will likely increase. 2. Improved privacy: To better protect users' financial information, there may be further developments in privacy-enhancing technologies for XPUBs, such as Confidential Transactions or Taproot. 3. Expanded compatibility: XPUBs may become more compatible with different platforms and devices, making it easier for users to manage their funds across other platforms. In the future, most wallets and services might switch to [output descrip­tors](https://bitcoinops.org/en/topics/output-script-descriptors/) instead of extended public keys. We might also see a rise in [reusable payment codes](https://github.com/bitcoin/bips/blob/master/bip-0047.mediawiki), which are especially benefi­cial for privacy. And once the #reckless days of the Light­ning Network are behind us, we might even see a majority of services switch to higher layers when it comes to recur­ring payments. Whatever the future might bring, Swan will remain at the forefront of Bitcoin educa­tion. We will continue to offer services that let you stack sats safely and easily, improving both our customer experi­ence as well as the under­lying tools that make all of it possible. This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10. [Sign up or learn more here](https://www.swanbitcoin.com/signup/). #### More from Swan Signal Thoughts on Bitcoin from the Swan team and friends. Swan Bitcoin does not provide investment, financial, tax, legal, or professional advice. We recommend that you consult with [tax advisors](https://coinledger.io/guides/crypto-tax) and review tax guides to understand the risks and consequences of buying, selling, and holding Bitcoin. If you are interested in starting a [Bitcoin IRA](https://www.swanbitcoin.com/crypto-iras/), we can help! ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # Bitcoin: The Shipping Container of Money - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-the-shipping-container-of-money/ What the history of shipping containers can teach us about Bitcoin. --- **Dante Cook** · February 8, 2023 · Updated June 27, 2024 On April 26, 1956, fifty-eight metal shipping containers sailed aboard an old tanker ship from New Jersey to Houston while fifty-eight truck drivers waited patiently inside their trucks to take these metal boxes to their final destinations all throughout the United States. This seemingly uneventful moment changed the world as we know it. No one would typically consider a lifeless aluminum box held together with welds, bolts, and rivets as a disruptive technology. Like many innovations, the value of the object doesn’t come from what it is, but how it’s used. The shipping container made shipping cheap. It lifted poorly paid and ill-treated workers out of poverty. It allowed entrepreneurs with domestic constraints to become international titans. It made it practical for companies like Honda and Toyota to create just-in-time manufacturing to sell their products to America. It created global world powers like China. And it allowed you and I to order goods from anywhere in the world to our doorstep in 2-3 days. The shipping container created a new world. A world where a manufacturer in Mexico could source goods from China through the Panama Canal, distribute the final product to a warehouse in Kansas, to be sold by a fashion e-commerce entrepreneur in New York on Shopify to an end consumer in the UK. Today’s interconnected global economy wouldn’t be possible without it. Although the benefits were obvious, its inevitable adoption didn’t come without a fight against the old system. Which brings me to my first key lesson. The economic benefits of any innovation do not come from the innovation itself, but from the entrepreneurs who put that innovation to practical use. The irony is the entrepreneur who sparked this particular global shipping revolution knew nothing about ships. Malcom McLean changed the world for precisely this reason. As Jeff Booth likes to say, breakthrough innovations, discoveries, and entrepreneurs that change our world, come from outside the current system and force us to use a new lens to understand it. Malcom McLean made his fortune in the trucking industry through his company McLean Trucking. Ironically, he sold it in 1955, after it became one of the largest trucking companies in America by revenue and profit, to completely pursue the shipping container. It was an idea he couldn’t shake, but he realized he had to create an entirely new company to build an entirely new industry. The greatest innovations are all born out of an exponential leap into the unknown. Malcom McLean was an entrepreneur from the time he was a child. At an early age, he learned business skills by selling eggs out of a crate on the side of the road, for commission from his mother. He was from Maxton, North Carolina, a poor, rural township in with about thirty five hundred people total. Although not rich, he was afforded many opportunities to make his mark because he was related to half the town! Malcom naturally learned frugality and thriftiness by growing up through the Great Depression. He graduated high school in 1931, stocking shelves at a local grocery, and then as a gas station manager. Like every great entrepreneur, Mclean learned that he could earn more money by driving the truck to deliver the gas to the gas station than he could working in the station. In 1934, McLean Trucking was born. The company had humble beginnings. He would haul vegetables, dirt, and even trash to make money. There’s a story that he was once so poor that he couldn’t afford to pay the toll at a bridge on a trip to New York, and left his truck wrench as collateral to pick up after selling the load at his destination. By 1935 at 22, McLean owned 2 trucks, a tractor trailer and employed nine people. By 1940, his fleet grew to 30 and the business grossed $230,000 in revenue. In 1954, the company held $11.4 Million in assets and owned 617 trucks. But just like in 1934 at that gas station, McLean had a critical insight, this time, one that would change the world. Transportation’s fundamental value to a customer was moving cargo, in the cheapest and most efficient way possible. The medium itself was irrelevant. After the American economy boomed post world war 2, so too did traffic congestion up the east coast where McLean Trucking’s routes were. Trucks would expensively sit or be stuck in traffic on busy expressways as there were few developed highways or infrastructure to support the transportation needs of the growing American population. This sparked his next great idea: **What if they could put their truck trailers on ships, so they could ferry goods up and down the coast, instead of having the trucks do the expensive hauling?** This would circumvent the worsening traffic jams and improve margins for trucks, ships, and customers completely. For container shipping to become a reality, it required an entire ecosystem of infrastructure and dramatically new ways of doing business altogether. > Every part of the system — ports, ships, cranes, storage facilities, trucks, trains, and the operations of the shippers themselves — would have to change. However, it wasn’t until there was an ecosystem surrounding the container that it actually began to change the world. Like all disruptive change, the existing system was not going to lay down willingly to be disrupted. Major barriers to this obvious innovation stood in the way – The ICC (Insterstate Commerce Commission), port labor unions, and the shipping and railroad industry titans. The benefits of a new innovation may be obvious, but governments and existing powerful entities may delay the inevitable by imposing regulation to stifle adoption and protect the incumbents and their electoral base. Which brings me to my second key lesson. Entrepreneurs must push the boundaries of the current system technologically, legally, and socially to change the new system! The federal Motor Carrier Act of 1935 brought interstate trucking under the authority of the Interstate Commerce Commission, the ICC, which had been regulating and protecting railroad profits since 1887. If a trucker wanted to begin a new service, it needed to be approved by the commission. Once approved, they were only allowed to haul commodities that the ICC allowed them to haul, over ICC approved routes, at ICC approved rates. Their rules were not economically sound or efficient. They were simply there to impose order and maintain *“stability”* as they would say in public documents. All major changes required public hearings at which the major railroad companies would object, after lobbying politicians to gain favorable outcomes. This forced trucking companies to charge much more than railroad companies, and disincentivized competition. The ICC also had regulatory authority over domestic shipping, which had been in decline since the 1930’s. In an astonishing move to circumvent regulators who opposed his proposals of allowing truckers to move containers via ship, McLean sold his company in 1955 in the first LBO or Leveraged Buy-Out on record, and created McLean Industries. With the proceeds from the sale of the company he spent his life building. He purchased the Waterman Steamship Corporation for $42 million at a distressed valuation and gained access to 37 vessels, $20 million in cash, $0 debt, and 16 ports which he would lease to McLean Trucking to move cargo. Railroads protested the transaction, but the ICC could find no legal fault in the transaction and could not block it. After the transaction was complete, McLean knew that his existing fleet would need to be re-outfitted to match the vision he needed. So, he worked with the government to design a loan program to allow him to purchase seven new ships that could carry 288 truck trailers and reduce cargo handling costs by 75% overnight. But McLean thought that although this was a breakthrough, there had to be a bigger innovation. So he commissioned a study. What if costs could be further reduced by using specialized containers versus truck trailers? His inclination was right. The port analysts calculated that, for example, sending beer from New York to Miami through a traditional coastal ship would cost 94% more than the same goods sent through a container. And just like that, he needed to scrap his plan for the government funded ships. McLean knew what he had to do. He had to convince the top container expert in the country at Brown Industries to build a prototype of these specialized containers to fit on a traditional vessel. After some testing of two initial containers, McLean put his foot on the gas and ordered 200 containers on a hunch that if this could work for two containers, it could work for the whole world. His hunch was right. With his containers onboard his Sea-Land (a McLean Industries subsidiary) ships filled with Coke, his last hurdle was convincing the American Bureau of Shipping and the US Coast Guard that the containers were actually safe. After trips through heavy seas showed the containers were functional in nature, they convinced them, and got approval to begin shipping. Then there was yet another hurdle! How were they going to load the goods and the containers onto ships? The traditional wenches wouldn’t work. They needed to build their own specialized cranes, with trained crane operators to lift and move the cargo containers, without the need for workers touching the containers at all. This was revolutionary. This improved the lives of tens of thousands of men, who previously worked in dangerous conditions at sea ports around the world. Between December of 1955 and April of 1956, McLean Industries would complete 40 voyages and build the capability to hold 62 containers per ship. Think of the difference – a single ship carried 62 containers and encountered no hills, no stop lights, no traffic jams, and required far fewer crew than 62 trucks! Faster, cheaper, more reliable, and safer. By the late 1960’s, just ten years after it’s conception, the shipping container network became unstoppable – its advantages obvious to everyone, even to those whose businesses were disrupted by it. Unions fought it’s adoption, railroad titans protested, unelected governmental bodies came out of the woodwork to propose rules, regulations, standards, and taxes to thwart it’s ascent. But in the end, the innovation was too good to ignore. The containers were a major success for McLean Industries, who surpassed $94 million in revenue by 1964, it was still a small, niche business compared to the larger players. Mass adoption of containers would not be fully realized until America was in a crisis. A crisis that challenged fundamental assumptions embedded in it’s democracy and economy – the Vietnam War. Which leads me to my third and final key lesson. Despite the benefits, industries rarely change voluntarily. Most innovations are birthed when circumstances force it. Sea-Land was one of the few carriers able to complete international transatlantic deliveries. Their first transatlantic voyages were rumored to contain over 90% military freight. In 1965, the Vietnam war was in full swing when Lyndon Johnson order 65,000 soldiers to go to Vietnam. Every month 17,000 new soldiers were landing in Vietnam and the need for supplying the war reached a peak. There were two major problems, Saigon was Vietnam’s only deepwater port, and there was no way to track the offloading of cargo when supplies reached Saigon’s shores. Containers were the only feasible option that could help the U.S. military cheaply and efficiently deliver mass quantities of goods quickly. However, containers were only considered as a viable option when a lack of rations, ammunitions, and medical supplies had a major impact to the troops on the ground. The port logjams, lack of labor, and trucking options created mass chaos that saw supplies go missing or not be delivered at all at a critical time. In 1966 Malcom McLean finally convinced government officials to leverage containers versus their Navy-owned merchant ships. After just a year of containerization, operations began running smoothly and the US government began immediately saving hundreds of millions of dollars. The US government’s attitudes towards containers changed from an adversarial one to an optimistic one once they completely adopted the innovation and moved out of their own way. ### The Lesson for Bitcoin Why tell this story? What does this have to teach us about Bitcoin and its adoption over the next two decades? #### Conclusion: We Must Run The Race To Avoid The War Bitcoin’s benefits, to those who look closely, are obvious. Like the container, Bitcoin is a soulless, inanimate network, that allows the global economy to cheaply and efficiently move value. One Bitcoin transaction acts like a shipping container for money. It can contain thousands of individuals user payments (items in a container) to facilitate a value exchange for goods and services across time. For business owners, these benefits are significant. Bitcoin provides everyday business owners with the ability to reduce credit card fees, settlement delays, fraud, chargebacks, avoid inconvenient banking hours, and to reduce cash flow issues related to the timing of cash receivables and cash outflows to run their businesses. Why, for example, is a typical payroll cycle every two weeks? Why are we not paid when we deliver a service to an employer? Why is a company not paid immediately by a financial intermediary once they deliver goods or services to a customer who does pays immediately? No, I’m not talking about a notification of payment. I’m talking about actual money in their account. Like the expensive, slow, and error-prone warehouses that offloaded goods from ships and trucks before containers, and then loaded them onto trucks before the innovation of the shipping container did away with them, today’s financial system is an expensive and innefficient middleman that can be removed when Bitcoin is widely adopted. However, one of the key barriers to Bitcoin’s adoption is that there are currently too few entrepreneurs like Malcom McLean working to make this innovative technology practical for everyone. We need a mighty group of entrepreneurs working in Bitcoin. That is why the money currently funding all these silly Silicon Valley startup pump and dumps in Defi, Cefi, Wefi tokenomics is so badly misallocated. It builds nothing of value for actual businesses. Bitcoin needs entrepreneurs looking to take risks, and create new valuable innovations. We don’t need incomprehensible and useless techno-babble about crypto. We need to make doing business easier, more reliable, and cheaper. We need to take full advantage of the improvements Bitcoin can make possible. We’re grateful for the investors like, [Block](https://block.xyz/), [Bitcoin Opportunity Fund](https://www.youtube.com/watch?v=mF_EDtJBrtc), [Bitcoiner Ventures](https://www.bitcoinerventures.com/), [Trammel Venture Partners](https://tvp.fund/), [Ten31](https://ten31.vc/home), and others opening doors to fund creative entrepreneurs, solving novel challenges to scaling. If you’d like an introduction to any one of these firms please reach out to me personally - dante@swanbitcoin.com ### Perseverance Through the Inevitable Resistance Two additional things to recognize is that the existing system will try to block Bitcoin’s adoption with unnecessary rules, regulations, and laws. The current financial system has no incentive to see the rise of an open, decentralized, uncontrollable, payment network available for 8 billion people on the planet. They will pull out every trick in their book, from regulation to propaganda and disinformation, to outright banning Bitcoin to stop its ascent. Over a long enough time frame, these pursuits will prove themselves to be unsustainable as businesses and entrepreneurs embrace this technology that makes things better for them. It may not be until the US dollar begins a structural decline against an alternative monetary system like BRICS, backed by commodities, that the US government will fully see the value of Bitcoin as a strategic asset to be leveraged and not banned. Competition allows innovation to shine through. Regardless of what happens in the long-term, we must do our part today, as individuals, as entrepreneurs, and as small businesses to begin adopting Bitcoin as a tool for local and global trade. ### Doing Our Part At Swan Bitcoin, we’ve created [Swan Business Solutions](https://www.swanbitcoin.com/business/) as a one-stop shop for Business Owners to buy, store, and receive Bitcoin to begin transitioning to running on a Bitcoin Standard. I’ll leave you with a quote from Jeff Booth’s incredible article titled, [Finding Signal In A Noisy World](https://www.linkedin.com/pulse/finding-signal-noisy-world-jeff-booth/?trk=pulse-article_more-articles_related-content-card), > There will be incredible successes, failures, and learnings. Most importantly though, there will be enduring value to society that comes on top of a solid foundation that is incorruptible by a small group of people — decentralized and secure by its design. That emergent system, launched to the world by Satoshi in 2009, changes everything. > > — Jeff Booth One cannot perfectly predict the future. But by studying the past, we can discern patterns to give us hope for the challenging journey ahead. We’ve been here before. On April 26, 1956, the world changed forever with the shipping container. On January 3, 2009, the world changed forever with Bitcoin. The future is right in front of you if you’re willing to see it. Don’t miss it. ### Dante Cook Dante is Managing Director of Swan Private. He is the host of The Bitcoin Athlete & Proof of Work Podcast. # A New Separation of Powers - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/a-new-separation-of-powers/ We must realize that the original crafters of government separated powers because it was people who couldn’t be trusted. But in Bitcoin, we have separated power altogether from people! --- **Tomer Strolight** · February 10, 2023 · Updated June 27, 2024 It sometimes helps to understand something altogether new, like Bitcoin, by starting with something you understand well, and then showing how the new thing differs. This article examines how Bitcoin pursues incorruptibility by comparing its differences to that of our government’s branches and how they were set up separately in an effort to resist corruption. > Power tends to corrupt; absolute power corrupts absolutely. > > — Lord Acton, 1887 ### Why Separate Power? People are fallible. We make mistakes. Sometimes, for personal gain, we also deceive. For these reasons, if anyone has too much power over the lives of others they could do a lot of harm. America’s founders knew this. And for these reasons they did everything in their power at the time of its founding to prevent any one person, group, or institution from having too much power. They clearly separated the power to write laws, legislative power, from the power to pass laws, executive power, from the power to interpret and enforce laws, judiciary power. They called each of these compartments separate branches of government. If you think about it, that branching was an attempt at decentralization. It was an attempt at eliminating a single, central point of failure should any of these branches err, become deceitful, or be corrupted. No one of these institutions sits atop the other two. Each operates independently. This design was chosen to prevent corruption through having each branch serve as a check and balance on the others. This, coupled with the principles of individual rights spelled out in the Bill of Rights, led to the United States of America achieving unprecedented success, abundance, and stability. The idea of separation of powers was widely imitated throughout the free world, albeit with many variations and compromises. ### Erosion Over Time Does this separation of powers still protect us in the way it was meant to? We now have a very big government – much bigger and much more powerful than at the outset of the nation. At the federal level alone, government spends and collects trillions of dollars a year, with hundreds of billions of dollars of difference between what it spends and what it collects. The legislation we see put forward includes *“omnibus bills”* which are typically over 1,000 pages long and nearly impossible to be read in full by any member of either the legislature or the executive branches. These are often drafted hurriedly, under the auspices of an urgent need to get the legislation passed. The checks and balances get compromised. We see executive orders, which are not technically legislation, yet nevertheless, they do order individuals and the federal government to obey and enforce those orders. It was, after all, executive orders alone which confiscated gold in 1933 and closed the gold window in 1971. We see very powerful government agencies employ former executives from the industries they are meant to have oversight upon. And we also see the reverse – former regulators receiving powerful positions at these companies. This casts doubt on the incentives and goals of these individuals. Are they watching out for your interests, or theirs and the corporations they work for? We see politicians enter public service and become incredibly wealthy right after leaving office, or sometimes even while still serving. Again, doubts are cast about who they serve. We see campaign contributions in the tens of millions of dollars, and even higher total campaign donations for the most powerful positions in the land. Are we to believe that there are no strings attached to these donations? We see billions of dollars spent on lobbying politicians to craft and pass legislation. And we see many other questionable practices and outcomes that cause many of us to doubt if the systems meant to protect us from corruption are working as well as intended, or even at all. For many of us who are educating ourselves about the idea of sound money and the benefits and protections it brings, we see lots of other problems too, like the Cantillon effect, inflation, the Triffin dilemma, and more. All of the above problems have emerged over time despite the protections of the separation of powers and the Bill of Rights. It’s hard to say if these are getting worse, or if we are merely repeating cycles where they worsen and later improve. This is partly because the scale of government is now so large. At present, the situation is not good. Will it self-correct, or are we past a point of no return? Only time will tell. ### Bitcoin: A Different Approach to Separating Powers? Bitcoin isn’t trying to do everything a government does. However, in one sense, it is trying to prevent anyone from doing some of the things governments now do but perhaps ought not to do. Back when the nation was founded, the idea that the government itself (or some organization granted monopoly power by the government to do so) should be in control of the supply and price of money would have flown directly in the face of the idea of having checks and balances on power. Nonetheless, in 1913, by an act of legislation, The Federal Reserve System, America’s central bank, was founded. Only sixteen years later, in 1929, and lasting for a decade, America experienced an event known as the Great Depression. This was an event that saw total output drop by 30% and unemployment rise to 25%. Unsurprisingly, historians disagree about the role government and the Federal Reserve had in the creation, duration, severity, and length of the great depression. (This article will not attempt to settle that debate.) ### The Separation of Power from People Altogether Bitcoin’s greatest innovation may ultimately be seen to be a political one. The approach of the architects of our government was to limit and separate the power individuals could be granted. Unlike that approach, Bitcoin does not grant different powers to different individuals. **Bitcoin is a system in which no person has any power over anyone else.** The only powers Bitcoin grants to anyone, it grants to everyone. It distributes power equally, over everyone. What a strange form of governance. There is no leader. There is no governing body. Let us explore how Bitcoin’s governance model maps on to the familiar one of three branches – legislative, executive, and judicial. ### *“Legislative Power”* – Available to Anyone What are Bitcoin’s laws? You’ve likely heard the expression *“code is law.”* Bitcoin obeys the code that its programming executes. So who can propose new laws? That is, who can propose new code? It turns out the answer is anyone. You can. I can. People who have very deeply studied Bitcoin, cryptography, economics, and the history of money can. Bitcoin’s enemies can too. It’s important to be very vigilant. We’ve all heard that Bitcoin is very hard to change, but that’s not because it’s hard to propose changes. In fact, the opposite is true: Nobody can be prevented from proposing changes to Bitcoin. We are all granted that power. As Bitcoin is *“free open source software,”* anyone can propose, test, try, and explain any proposed change. But proposing something is very different than implementing it. Most people won’t bother proposing changes because they don’t have changes to propose. They’ve come in to Bitcoin because they like it as it is, including liking how hard it is to change. But for those who do propose changes, they quickly learn, if they didn’t already know it, that getting past the *“executive”* branch of Bitcoin is no simple task. It may in fact be one of the hardest tasks in the world. ### *“Executive Power”* – Available to Anyone, Yet Requiring Everyone If code is law, then it is running code that enacts that law, giving it executive approval. You’re literally having your computer *“execute”* code. Take a few seconds to think about that. You are executing code the entire time you run Bitcoin. You are passing the laws of Bitcoin through your node the whole time, just as others are executing the exact same laws, or code, as well. And who can execute code? Once again, it’s anyone (with a computer at least). You can run a node, and so can I, and so can everyone else listed in the example in the section above. And the same goes for running a wallet, or a miner, or even Lightning Network nodes and wallets. Any changes to Bitcoin’s foundational laws – known as its *“consensus algorithm”* – are changes that the entire network must agree on entirely. That’s what consensus means after all: *“Acceptance By All.”* That’s a very tall order – much taller than a majority. Not only that. If a change is to be made to the consensus algorithm, it must be activated simultaneously, by everyone, everywhere, all at once. It is for this reason that Bitcoin sees very little change. Only two of these consensus changes have happened since 2017. The first of these, known as SegWit (short for segregated witness) took years to agree on, and almost did not activate. Its activation – its execution – became a battle for consensus that wasn’t resolved until significant debate, negotiation, and finally, ultimatums took place. In Bitcoin’s history, the activation of SegWit is the most important event in what is known as *“The Blocksize War.”* An entire book has been dedicated to this event. I also wrote a personal, dramatized memoir of this event on its fifth anniversary for [Bitcoin Magazine](https://bitcoinmagazine.com/culture/block-size-war-soldier-freedom). The *“executive branch”* of governing Bitcoin is one where it is exceptionally hard to make any controversial change that will affect the network – and just about any change is likely to be viewed as controversial. This is because anyone executing a change for themselves that is not also executed by all the others will find themselves running something that others do not call Bitcoin. (Indeed, one result of the above-mentioned *“blocksize war”* was that something different forked off from Bitcoin. It was called *“Bitcoin Cash”* by those who endorsed it, and *“BCash”* by those who didn’t. But by any name, it was not Bitcoin, and where one of its coins was once worth as much as 23% of a bitcoin, they are now worth around 0.6% of a bitcoin – a loss of 97.4% of its value since those controversial times.) Let us now compare this approach to executive power with that of a nation such as the United States. Here in Bitcoin, we are each our own executive branch. We each can execute whichever code we choose. There is no one single president to whom we have all delegated executive power. Instead, if we choose to execute different laws, we live in a different system altogether. If that happens, it is like an alternate universe is created, with different laws of physics introduced at the time someone began executing the new laws – a universe completely and forever cut off from the one in which the original code is executed. Consider if you were in a chess tournament, and someone suddenly moved a pawn diagonally across the entire board knocking over all the opponents pieces and declaring victory while saying *“This is the real chess!”* They could try it, but hardly anyone would be calling it chess even if this person held tournaments. They simply would not be in consensus with what everyone else agrees to be the rules of chess. And they couldn’t come back later claiming to have been the world chess champion. This is why we haven’t had thousands of versions of Bitcoin fork off without anyone knowing which the real one is. There is a very fundamental consequence for executing different rules. That consequence is no longer being part of the system that others do execute and value. We’re either all running the same rules, and all in it together, or we’re not all executing the same rules. Those executing different rules are part of a different system. This has been tried, of course, as in the case of Bitcoin Cash, and it keeps on failing to hold any lasting value, so it does not get tried much any more. This tradeoff of being allowed to execute whatever you want for yourself, but being able to impose it on nobody else is a very different one than abiding by the results of intermittent democratic elections. The incentive to agree to the same rules in Bitcoin is massive. And the ability to change the rules requires consensus, not a simple majority. Also consider that every minute of every day starts with the rules that everyone agreed to the minute before, and to change the rules you need everyone’s computers to make the same rule changes at the exact same time. So again, it’s very hard to change the rules. Not impossible. But it is very, very hard. If we pause to think about it, perhaps one of the biggest problems with our current system of government is that it is in fact too easy to change the rules. Perhaps that’s what politicians do way too much of. It isn’t hard to make this case. Whereas very few proposals to amend Bitcoin come forward, at the time of writing, Congress put forth a 4,100-page long *“omnibus”* bill, with hundreds of new rules, costing $1.7 trillion dollars. And the president (the executive), said he would sign this bill into law the moment it hit his desk. Now that sounds like a much easier process to get executive approval than in Bitcoin – perhaps one that’s far too easy and doesn’t achieve what the separation of powers was meant to. ### *“Judicial Power”* – Executed Laws are Inviolable In government, laws must be both enforced and interpreted. We tend to separate these two powers as well. The police attempt to enforce the laws. If they see someone doing something they interpret as breaking the law, they lay charges and make arrests. Later, in a court, with legal representation in an adversarial system of prosecution and defence, a judge (or judges) rule on whether or not a law was violated and what the consequences of violating that law should be. However, whereas government-passed laws can be broken, the rules of Bitcoin cannot be violated. The execution of Bitcoin’s code – its rules – simply rejects any action which violates those rules. Running the rules on a computer prevents those rules from being broken. Put another way, executing code enforces the rules inviolably. Bitcoin is an extremely strict system. There is no looseness, no ambiguity, and no *“room for interpretation”* in its rules. You either obey them, in which case the system accepts your actions, or you fail to obey them, and the system ignores your actions. For example, if you want to transact bitcoin, your transaction must spend only unspent money; it cannot spend more than that unspent amount; it must spend to valid destinations; and, hardest of all, it must contain an unforgeable, cryptographically provable, digital signature (or something similar for other types of valid transactions). Similarly, if you are trying to add a block of transactions to Bitcoin’s records, then every one of the transactions in that block must adhere to the same rules above. Every block must contain, among a few other things, a header that contains the prior block’s fingerprint (its ‘hash’) and corresponds to Bitcoin’s proof of work threshold at the time it is submitted (i.e. that this new block’s hash is below a target value, which itself is determined by data in the prior blocks, so everyone arrives always at the same threshold). (If you want to learn more about these topics, there are lots of resources, and I’d recommend Yan Pritzker’s book, [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/), which you can get for free from Swan’s website.) Every piece of information that attempts to enter Bitcoin is first screened – i.e. judged – for 100% complete compliance with these rules by 100% of the nodes running Bitcoin. This is enforcement through careful judgment before any act is permitted to be *“committed.”* We, therefore, do not need large police forces in Bitcoin to *“walk the beat”* looking for rule-breakers. We don't need jails, we don’t need courts, and we don’t need human judges. The *“code is law”* principle means we can delegate the enforcement of these inviolable laws to computers. This brings me to my final point: The judicial branch of Bitcoin is not a human branch. It is based entirely on mathematical laws that can be judged quickly, strictly, and flawlessly by computers. And, let’s also recall the executive branch is a delegation to computers as well. The computers are executing the code that we have decided to let them execute. ### Putting It All Together The executive and judicial branches are inseparable in Bitcoin. So, has it failed to separate powers then, making the system more corruptible? No. In fact, what we must realize is that the crafters of government separated powers in the first place because it was people who we couldn’t trust. But in Bitcoin, we have separated power altogether from people! We do not need to trust people who might breach that trust, and so we do not need to create separations to serve as checks and balances. And, although Bitcoin has achieved this incorruptibility only in the domain of money, that is still a monumental achievement because of the importance and size of money. As I wrote in another article, [The Legendary Treasure of Satoshi Nakamoto](https://tomerstrolight.medium.com/the-legendary-treasure-of-satoshi-nakamoto-c3621c5b2106): > Bitcoin asks us to separate the idea of money from the institutions and people that have come to control money. In today’s world these happen to be governments, central banks, financial insiders, powerful multinational corporations, militaries, and other hugely powerful institutions. Bitcoin ... is money separated from all human control. > > — Tomer Strolight ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Why a CBDC Will NOT Promote Financial Inclusion URL: https://www.swanbitcoin.com/politics/why-a-cbdc-will-not-promote-financial-inclusion/ A CBDC would increase costs, reduce privacy, and create more barriers to financial inclusion, not less. --- **Sam Callahan** · February 14, 2023 · Updated June 27, 2024 Central banks around the world have been hard at work developing Central Bank Digital Currencies (CBDCs). According to the Bank of International Settlements, 114 countries, representing over 95% of global GDP, are currently exploring a CBDC. (1) A retail CBDC would be a form of digital money that’s a liability of a central bank and is directly available to the public. This is different than traditional commercial bank deposits or fast payment systems like Venmo and Zelle in that those are liabilities of the private institutions and hence have liquidity and default risk. These risks became evident during the Global Financial Crisis when several banks came under financial duress, and individuals’ savings were caught in the crosshairs. A retail CBDC would technically not have default or liquidity risk like a commercial bank deposit because it would be issued by the central bank itself, which happens to have access to a “money printer.” Thus, the rationale is, a retail CBDC would be a safer form of digital money than what is currently available to individuals in the marketplace and would lead to increased financial stability. Other purported benefits of retail CBDCs are more efficient payments, more effective, targeted monetary policy transmission, and improved financial inclusion. However, the reality is the risks imposed by a retail CBDC far outweigh any alleged benefits. A CBDC risks becoming a tool of surveillance and control that can be abused by central banks and governments against the populace. A CBDC infringes on the privacy and rights of law-abiding citizens. It could also disintermediate commercial banks leading to increased financial instability, and expose the monetary system to cyberattacks and data breaches. Lastly, a CBDC could result in a more inefficient and expensive payment system, and could lead to more financial exclusion. Despite these risks, central banks have been plunging forward with their CBDC development. CBDC momentum is gaining, and now nearly 60% of central banks say it’s more likely that they will issue a retail CBDC in the next 1-6 years, up from only 20% in 2018. ![](https://www.datocms-assets.com/56652/1676396008-changes-likelihood-issuing-cbdc.svg) 2021 BIS central bank survey on CBDCs and digital tokens. Due to this acceleration in CBDC development, it’s worth exploring whether or not claimed benefits from central banks are correct. One of the most common perceived benefit pushed by CBDC advocates around the world is the idea that a CBDC will promote financial inclusion. This perceived benefit is likely heavily advertised because promoting financial inclusion is a noble cause that few would argue against. Said differently, no one is going to refute that improving financial inclusion is an honorable goal, and if central bankers convince the public that a CBDC will help achieve this goal, then more people will be open to the issuance of a CBDC, regardless if the claim is true or not. This idea that CBDCs would promote financial inclusion is peddled frequently by central banks and international financial institutions: **The European Central Bank:** *"A digital euro should also benefit people who so far have limited access to digital payments and thereby support financial inclusion."* (2) **The Federal Reserve:** *"CBDC may be one part of a broader solution to the challenge of achieving ubiquitous account access. Depending on the design, CBDC may have the ability to lower transaction costs and increase access to digital payments. In emergencies, CBDC may offer a mechanism for the swift and direct transfer of funds, providing rapid relief to those most in need."* (3) **The Bank of England:** *"A well-designed CBDC may also help to boost financial inclusion in an increasingly digital world by being accessible to a broader range of people, potentially in different formats, than private sector solutions."* (4) **World Economic Forum:** *Retail CBDCs can establish a more inclusive financial ecosystem. They can decrease the cost of transactions, eliminate barriers to lending, and power microfinance initiatives. At the same time, CBDCs should aim to help unbanked and underbanked individuals create financial identities.* (5) **International Monetary Fund:** *This digital currency could satisfy public policy goals, such as financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments. Let me start with financial inclusion, where digital currency offers great promise, through its ability to reach people and businesses in remote and marginalized regions.* (6) In a recent survey performed by the BIS, financial inclusion was listed as one of the main motivations for issuing a retail CBDC, and Emerging Market economies specifically rated this issue as “important.” ![](https://www.datocms-assets.com/56652/1676396498-motivations-issuing-retail-cbdc.png?auto=format) 2021 BIS central bank survey on CBDCs and digital tokens. But would a CBDC actually help improve financial inclusion as these central bankers claim? To answer this question, we need to ask ourselves why people are excluded from the financial system in the first place. ### The Reasons Why Households Remain Unbanked Financial inclusion involves providing unbanked adults access to the financial system so that they can have access to basic financial services, which they can then use to improve their welfare. According to an FDIC survey, an estimated 4.5% of Americans are still unbanked today, comprising ~6 million households. In addition, 14.1% of U.S. households — representing approximately 18.7 million households — were considered underbanked. (7) The FDIC classifies households as “underbanked” as those that have a bank account but used money orders, payday loans, pawn shop loans, auto loans, or other products or services that are disproportionately used by unbanked households. From the same survey, the FDIC discovered the main reasons why households are unbanked, highlighted in the chart below. ![](https://www.datocms-assets.com/56652/1676396644-unbanked-households-not-having-bank-account.svg) This survey highlights the real reasons why Americans remain unbanked today. The top response from households was they do not have enough funds to meet the minimum requirements to open a bank account. The fourth and fifth most cited responses were households can’t afford to pay all the unpredictable banking fees. Note how a CBDC would do nothing to fix these underlying issues. The main reasons why American households remain unbanked today are not problems that can be solved with a new technology, like a CBDC. These are larger issues of high costs and wealth inequality worsened by harmful, inflationary monetary policies that would certainly be programmed into a CBDC. In fact, the introduction of a CBDC would likely result in even higher costs for consumers. The current leading design for a CBDC is an intermediated model where there remains a division of labor between the public and private sectors. In other words, this CBDC system design recreates the existing financial system that relies on private intermediaries. ![](https://www.datocms-assets.com/56652/1676399367-cbdc.svg) BIS In this design, the central bank would issue a CBDC, develop the underlying payment infrastructure, and provide oversight to the protocol, while the commercial banks and other regulated nonbank financial service providers would perform all the customer-facing roles like account openings, digital wallet custody services, managing CBDC holdings and payments, identity management, data security, and enforcing AML/KYC rules. The takeaway here is all of these new services that the private sector would need to provide in a CBDC system would not come without significant costs. Therefore, there is no reason to believe that there would not be fees associated with a CBDC system. Retail CBDC accounts would require compliance with AML/KYC rules and would significantly increase the burden and costs for the compliance and cybersecurity departments of these private financial institutions. There are also the operational costs of building and maintaining all of the technology to be interoperable with the CBDC payment infrastructure. There is the cost of creating wallets, maintaining the systems, and guaranteeing access to these new CBDC accounts. More importantly, there is no clear revenue stream to compensate the private sector for providing these new services. The logical conclusion is that these increased costs would result in higher fees and other costs that would be pushed onto consumers. It seems incredibly unrealistic to believe that a costly high-tech CBDC system that would depend on fees from wallets is the best way to promote financial inclusion. This would only exacerbate some of the main problems cited in the FDIC survey as to why American households remain unbanked today. This sentiment is shared by the Independent Community Bankers of America who wrote, *"Compliance functions are not costless – far from it – and therefore creating the technical and compliance infrastructure for CBDC wallets will require a compensation model that could include charging fees to users. The fees banks will be required to charge in order for CBDC wallets to be a viable business will significantly offset any potential benefit to financial inclusion presented by a CBDC. Currently, the price of deposit accounts to customers is subsidized both by a bank's ability to lend against deposits and to collect interchange fees on transactions. Neither of these business models will be available with a CBDC, so customers may likely be required to pay for access to wallets with an account maintenance fee to offset bank investments to provide and maintain these services."* (8) These community bankers do not like CBDCs, and it’s easy to understand why. Because of the cost and technological complexity of offering CBDC services, smaller financial institutions are less likely to have the technical capabilities or the profit margins to offer these services compared to larger banks and fintech companies. This would lead to further consolidation of the banking industry. This consolidation would limit competition and harm consumers and small businesses because they would have fewer choices and face higher costs and fees, leading to further financial exclusion. This consolidation would be a continuation of a trend that has been happening for decades in the banking industry. The number of FDIC-insured financial institutions peaked in 1984 at 17,811 and has been in steady decline since, with 4,897 institutions functioning in 2021. In addition, the number of bank locations peaked in 2009 at 92,394 individual physical branches, and 13,089 branches have closed since then. (9) ![](https://www.datocms-assets.com/56652/1676400191-fdic-insured-institutions-branches.svg) NCRC https: //banks.data.fdic.gov/docs/ retrieved on Dec 7, 2021 • Created with Datawrapper This consolidation accelerated rapidly after the Global Financial Crisis in 2008, after which institutional failures and emergency mergers and acquisitions ravaged the industry. What was left, was the complete consolidation of the banking industry into effectively 4 megabanks: Citigroup, JP Morgan Chase, Bank of America, and Wells Fargo. ![](https://www.datocms-assets.com/56652/1676400264-consolidation-banking-industry.png?auto=format) Federal Reserve, GAO While the Treasury and Federal Reserve bailed out the banks they deemed too-big-to-fail, other smaller institutions were left to fail. Of the 414 insured U.S. banks that failed in the aftermath of the Global Financial Crisis, 85% were small institutions (<$1 billion in assets). (10) This devastated the urban and rural communities that depended on them for critical financial services. This consolidation has disproportionately impacted small financial institutions that play an outsized role in providing financial services to underserved populations in the economy. Small banks make a majority of the loans to small businesses and farmers. According to an FDIC study, despite holding only 15 percent of total industry loans in 2019, community banks held 36 percent of the banking industry’s small business loans. (11) Also, farmers specifically depend on these community banks for financing. From the same study, community banks are an important source of financing for U.S. agriculture, funding roughly 31 percent of farm sector debt in 2019, with half of that total financed by community-bank agricultural specialists. They build relationships with these farmers and help finance the people and businesses that feed our country. The importance of community banks to underserved communities was never more evident than during the COVID-19 lockdowns. Community banks made 60 percent of all Paycheck Protection Program (PPP) loans—including more than 90 percent of PPP loans to communities with an average household income of less than $40,000 per year, and more than 75 percent of PPP loans to communities with a poverty rate of at least 20 percent. ![](https://www.datocms-assets.com/56652/1676400367-ppp-loan-originations-small-businesses.svg) Census Bureau. Bureau of Labor Statistics, United States Department of Agriculture, Johns Hopkins University These community banks, perhaps the most important institutions for expanding financial inclusion, are the institutions that have slowly been closing or getting merged and acquired by larger competition due to bank deregulation. In 1994, small banks were 84% of all banks in the US; however, today, that number stands at 48%. ![](https://www.datocms-assets.com/56652/1676400425-financial-institutions-by-asset-size.svg) Census Bureau. Bureau of Labor Statistics, United States Department of Agriculture, Johns Hopkins University This shows how a majority of the branch and bank closures over the last twenty years have been small banks. The FDIC published an 8-year study titled, *“Bank Branch Closures from 2008-2016: Unequal Impact in America’s Heartland,”* the authors wrote about how these small bank closures hurt the most vulnerable among us the most, *"Since bank branch closures occurred disproportionately in lower-income areas, especially in the new rural bank branch desert areas, low- and moderate income working families may have been impacted more by a loss of access to financial services. There appears to be a direct relationship between the lack of a nearby bank and the rate of unbanked families."* (13) The FDIC’s own study concluded that these small bank closures are directly related to the number of unbanked households, or in other words, to financial inclusion. A CBDC would lead to an increased regulatory burden and would create technological hurdles that would challenge small banks disproportionately to large banks. A CBDC would lead to increased costs and fees for the consumer, and put community banks at risk, harming underserved communities the most. Thus, a CBDC would NOT promote financial inclusion. ### CBDCs Bring More Costs And Drain Bank Funding To make matters even worse, a CBDC system would not only add compliance and operational costs to these community banks, but it would also drain these banks of their main source of cheap funding, bank deposits. A CBDC is a form of public digital money issued by a central bank. It doesn’t have liquidity or default risk like bank deposits. Therefore, it is logical to expect that users would prefer to hold their savings in a CBDC because there is less risk. The Philadelphia Federal Reserve’s own study concluded that CBDCs would compete with commercial bank deposits, and individuals would choose the central bank-issued money over other deposits, especially in the event of a bank run, which could impair bank lending in the economy. (14) There is a real risk of disintermediating the banking sector by introducing a CBDC because it would drain banks of their deposits, which comprise 71% of their funding. (15) This would, in turn, reduce lending in the economy, and threaten financial stability. The American Bankers Association warned of this risk in a joint letter to the House Financial Services Committee in May 2022, *"In effect, a CBDC will serve as an advantaged competitor to retail bank deposits that will move money away from banks and into accounts at the Federal Reserve where the funds cannot be lent back into the economy...Losing this critical funding source would undermine the economics of the banking business model, severely restricting credit availability increasing the cost of credit, and causing a slowdown of the economy."* (16) But central banks appear to be ignoring this risk and continuing with their CBDC development anyways. They seem to think they are smart enough to out-design the disintermediation problem by putting limits on how much funds individuals can hold in a CBDC account. Call me crazy, but launching a CBDC with limits right out of the gate seems like a bad idea. I also don’t know of a single consumer out there saying, *“Please, I want digital money with built-in limits!”* Having limits on money thwarts other purported benefits of a CBDC, like more efficient payments and financial inclusion. It would hinder global trade and payments by adding unnecessary restrictions and friction to money itself. Lastly, it is not hard to envision how this kind of power could be abused down the road. But this is exactly the plan that central banks around the world are moving forward with. The Bank of England’s Deputy Governor Jon Cunliffe recently came out and said in a speech, *"We propose a limit of between 10,000 pounds and 20,000 pounds per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound, A limit of 10,000 pounds would mean that three-quarters of people could receive their pay in digital pounds as well as holding pre-existing balances in the same account, while a 20,000 pound limit would allow almost everyone to use digital pounds for day-to-day transactions."* (17) The ECB recently announced that it will likely place a 3,000 to 4,000 euro limit on the Digital Euro, planned to launch in 2025. (18) The ECB stated in a recent Digital Euro progress report that it indeed intends to incorporate the limits, *"The intention is to incorporate limit and remuneration-based tools in the design of a digital euro to curb its use as a form of investment. On the one hand, quantitative limits on digital euro holdings of individual users could limit individual take-up and the speed at which bank deposits are converted into digital euro. On the other hand, remuneration-based tools could be calibrated to make large digital euro holdings above a certain threshold unattractive compared to other highly liquid low-risk assets."* (19) The ECB’s Fabio Panetta recently made this comment on the Digital Euro’s design, *"Quantitative limits on the holdings of individual users would limit the individual take-up or the speed of deposit conversion. Remuneration-based tools could be calibrated to make large digital euro holdings above a certain threshold unattractive compared with other highly liquid and low-risk assets."* (20) Let me translate central bank talk for you: Remuneration-based tools = negative interest rates Quantitative limits = censorship and control Personally, I struggle to see how the ECB having new “tools” for censorship and control would help build trust and improve financial inclusion given that trust is the second cited reason for why American households are unbanked. ![](https://www.datocms-assets.com/56652/1676400893-overview-possible-cbdc-tools.svg) ECB So the ECB is planning to cap limits on CBDC accounts and charge fees on accounts that go over the limit, or impose a negative interest rate on the funds. But the truth is, these tools will do very little to stem the flow of funds from bank deposits into CBDC accounts. The American Bankers Association ran the numbers. First, the ABA broke down what CBDC limits would be appropriate for the central banks to choose. They concluded that $2,500 would meet the needs of many lower-income households based on data from the Federal Reserve’s 2019 Survey of Consumer Finances. Furthermore, a limit set at $5,000 would cover average monthly household cash flows; and a cap set at $10,000 could be considered a reasonable ceiling, as it is the level at which banks begin to file suspicious activity reports. Table 1 shows the Median Checking Account balance based on income percentile. ![](https://www.datocms-assets.com/56652/1676400969-2019-median-checking-account-balance.png?auto=format) Fed Survey of Consumer Finances The ABA found that limits of $2,500, $5,000, and $10,000 on a CBDC would still drain a significant amount of funds from bank deposits. Table 2 illustrates that CBDC limits of $2,500, $5,000, or $10,000 would result in expected deposit losses of $445.7 billion, $720.9 billion, or $1.08 trillion, respectively. ![](https://www.datocms-assets.com/56652/1676401020-expected-checking-account-balances-converted-into-cbdc.png?auto=format) Federal Reserve, ABA analysis The banking industry held a combined $23.8 trillion in assets at the end of 2021. Therefore, deposit losses of $445.7 billion, $720.9 billion, or $1.08 trillion from a capped CBDC would result in aggregate funding gaps of 1.9%, 3.0%, or 4.5%, respectively. While these percentages may appear small, ABA analysis shows that this level of drainage on deposits would have a material impact on bank lending and, consequently, financial stability.15 And you best believe that small banks will have much more difficulty stomaching these deposit losses compared to larger banks. Prepare for more consolidation... To summarize, a CBDC would drain a significant amount of funding from private banks by cannibalizing bank deposits. This could impact lending in the economy and increase financial instability, regardless of limits placed on CBDCs by central banks. If a CBDC is launched, community banks will not only have more costs from the regulatory and compliance burdens of incorporating a CBDC, but they also will have their main source of funding drained. This would be a double whammy for small banks. This is why a CBDC disproportionately impacts community banks, the very institutions that primarily provide services for underserved populations. As a result, a CBDC would NOT promote financial inclusion. ### CBDC: The All Seeing Eye in the Sky The second and third most cited reasons for why American households remain unbanked today are privacy concerns and they don’t trust banks. A CBDC would require more trust in intermediaries and in the traditional banking industry in general. These intermediaries have blatantly breached the trust of the public over the last several decades. The financial services industry has paid over $347 billion in penalties since 2000. (21) It’s no wonder Americans don’t trust them. Satoshi Nakamoto said it best, *"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts."* (22) American households do not trust banks because the banks have shown they do not deserve to be trusted. It’s not hard to see why a CBDC would not address these underlying problems of trust and privacy. In fact, a CBDC would worsen them. A CBDC would concentrate power to the Central Bank-Governmental Complex and become a tool for surveillance and control. A CBDC would allow governments and central banks to track all financial activity in the economy at a much more granular level than today. A CBDC would have the ability to collect massive amounts of data on every financial transaction that occurs in the economy. This new technology would lead to government intrusion and threaten every American’s fundamental right to privacy protected by the 4th Amendment. This all, of course, depends on the design of the CBDC system, but central banks have made it clear that cash-like anonymity will not be incorporated in a CBDC, and their current leading design is an intermediated CBDC system that recreates the existing banking system with all the same problems as before, but now they are more empowered with more tools to censor and manipulate. ![](https://www.datocms-assets.com/56652/1676401678-the-cbdc-surveillance-system.svg) Major central banks have already made it clear in their publications and in speeches that full privacy would not be afforded to users in a CBDC system due to interfering with AML/KYC policies. The ECB has already taken a hard stance against privacy in their Digital Euro: *"Full anonymity is not considered a viable option from a public policy perspective. It would raise concerns about the digital euro potentially being used for illicit purposes (e.g. money laundering and the financing of terrorism). In addition, it would make it virtually impossible to limit the use of the digital euro as a form of investment – a limitation that is essential from a financial stability perspective."* (23) On the other hand, the Federal Reserve has stated it would leverage existing tools in the private sector concerning privacy with its CBDC: *"A general-purpose CBDC would generate data about users’ financial transactions in the same ways that commercial bank and nonbank money generates such data today. In the intermediated CBDC model that the Federal Reserve would consider, intermediaries would address privacy concerns by leveraging existing tools."* (24) In other words, a CBDC issued by the Federal Reserve would do nothing to address the privacy issues that persist in the financial industry, even though it’s the second most cited reason for why American households remain unbanked. The Bank of International Settlements General Manager, Agustín Carstens, went a step further and inexplicably tried to argue that identity-linked CBDCs (lack of privacy) would actually enhance financial inclusion. *"My own view is that CBDCs without identity (purely token-based CBDCs) will not fly. First, they would open up big concerns around money laundering, the financing of terrorism and tax evasion. Second, they may undermine efforts to enhance financial inclusion, which are based on good identification and building up an information trail for access to other financial services...For these reasons, we need some form of identity in digital payments."* (25) Apparently, Mr. Carstens is unaware of the literature around what actually drives financial exclusion today. In the end, a CBDC would only lead to more financial surveillance and require more trust in centralized institutions at a time when Americans are growing more distrustful of intermediaries by the day. A CBDC would reduce the privacy of financial transactions and would allow the Central Bank-Governmental Complex to collect and analyze more data on everyday Americans than ever before. This could lead to a growing surveillance state as all economic activity is monitored and controlled by central planners through a CBDC system. A CBDC will not address the underlying privacy or trust concerns that lead to unbanked Americans so, thus, a CBDC will NOT promote financial inclusion. ### Bitcoin Succeeds Where CBDCs Fail Whereas CBDCs have shown they would only worsen financial inclusion, Bitcoin shows great promise in its ability to address some of the reasons why American households remain unbanked today. Bitcoin is a form of private, non-State digital money that is not controlled by any person or group of persons. Households that don’t trust banks or intermediaries will have no problem trusting Bitcoin because it removes the need for intermediaries altogether. One can trust the Bitcoin protocol specifically because it is trustless. Bitcoin is an open monetary system that allows anyone with a phone and internet connection to send value to anyone, anywhere, without permission. There are minimal barriers to entry. There is no minimum account requirement to download a wallet and start sending or receiving bitcoin. There is no waiting for accounts to be approved. There is also no documentation required to start interacting with the Bitcoin protocol like in the traditional financial system. This makes it easy for underserved communities to use Bitcoin compared to the onerous, slow, and expensive process of opening a traditional bank account. Bitcoin’s fees are predictable and much lower than traditional payment options. If you run a node, you can check the mempool, and know exactly how much fees you will be charge to include your transaction in a block. There are no hidden fees in Bitcoin like with traditional financial institutions. This help build trust in the Bitcoin protocol as trust in banks continues to erode due to the predatory nature of their fees. Lastly, Bitcoin allows individuals to transact pseudonymously. Privacy is much more protected compared to a CBDC with built-in digital identification. Furthermore, the Lightning Network, Bitcoin’s second-layer payment protocol, offers even better privacy guarantees. I expect innovation to continue on Bitcoin and privacy to improve on the protocol over time. This addresses another underlying cause of financial exclusion. All in all, Bitcoin is our best hope at promoting financial inclusion, not CBDCs. Despite this, central banks continue to ignore the private-sector innovation of Bitcoin that solves many of the issues facing the unbanked today and are instead wasting their time and resources developing a CBDC system that would only cause more problems and exacerbate the current ones. This is what happens when a public institution tries to push a product in a top-down fashion that no one wants or asked for. The private sector has always been the best at innovating and responding to the needs of the consumers in the marketplace. Public institutions only drive out good innovation by introducing bad innovation. Luckily, the private sector has provided its own form of money that people are willingly using at an increasing rate. (Bitcoin – I’m talking about Bitcoin.) This research is evidence that a CBDC would do more harm to financial inclusion than good by adding technical barriers to money itself, disintermediating small banks that are critical for providing financial services to underserved communities, while threatening our freedoms and the economy at large. If central banks were serious about promoting financial inclusion, they would stop wasting their time and resources developing CBDCs, and start embracing Bitcoin as a working solution to the problem. ### Appendix Here are some notable organizations who echoed the notion that a CBDC would NOT promote financial inclusion: 1.) *“The creation of a CBDC, however, in and of itself does not solve financial inclusion, and it is not obviously clear that a CBDC would be any more advantageous for financial inclusion than existing financial products and solutions.”* (26) - Visa 2.) *“Overall, the IIF is skeptical that a retail U.S. CBDC itself would materially improve financial inclusion. Rather, a neutral effect appears more likely. A CBDC would neither be sufficient nor necessary to drive higher rates of financial inclusion.”* (27) - Institute of International Finance 3.) *“It is unlikely that a CBDC would meaningfully impact financial inclusion because the likely characteristics of a CBDC (e.g., a digital form, availability through intermediaries in accounts or wallets) do not readily address some of the most important reasons why consumers are unbanked today. Put another way, the causes of households’ unbanked status (i.e. lack of trust, privacy concerns, lack of broadband access, lack of documentation to fulfill KYC requirements) are varied, and complex, but not generally related to the absence of low-/no-cost digital payment tools or bank accounts.”* (28) - Clearing House Association 4.) *“We remain concerned that the issuance of a U.S. dollar CBDC as described in the Federal Reserve Board paper would not have a significant positive impact on financial inclusion given the documented reasons for individuals as to why they are underbanked or unbanked.”* (29) - JP Morgan Chase 5.) *“It appears that CBDC does not have a unique proposition with respect to financial inclusion. Why, then, do so many central banks place such high expectations on CBDC as a means to promote greater financial inclusion?”* (30) - The World Bank That’s a great question, World Bank. 6.) *“Increasing digitalization could create financial inclusion issues as barriers around trust, digital literacy, access to IT, and data privacy concerns create a digital divide.”* (31) - Bank for International Settlements, Federal Reserve System, Bank of England, European Central Bank, Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank You read that correctly, even the central banks’ own research states that a CBDC could create more barriers to financial inclusion, not less. This directly contradicts what these central bankers say publicly on the matter. ### References 1. https://www.atlanticcouncil.org/cbdctracker/ 2. https://www.ecb.europa.eu/press/blog/date/2022/html/ecb.blog220713~34e21c3240.en.html 3. https://www.federalreserve.gov/newsevents/speech/brainard20210524a.htm 4. https://www.bankofengland.co.uk/-/media/boe/files/paper/2020/central-bank-digital-currency-opportunities-challenges-and-design.pdf?la=en&hash=DFAD18646A77C00772AF1C5B18E63E71F68E4593 5. https://www.weforum.org/agenda/2022/10/4-ways-to-ensure-central-bank-digital-currencies-promote-financial-inclusion/#:~:text=Build%20financial%20identity,underbanked%20individuals%20create%20financial%20identities 6. https://www.imf.org/en/News/Articles/2018/11/13/sp111418-winds-of-change-the-case-for-new-digital-currency 7. https://www.fdic.gov/analysis/household-survey/2021report.pdf 8. https://www.icba.org/docs/default-source/icba/advocacy-documents/letters-to-regulators/comments-on-cbdc-consultation-paper.pdf?sfvrsn=1a421d17_0 9. https://ncrc.org/wp-content/uploads/dlm_uploads/2022/02/The-Great-Consolidation-of-Banks-and-Acceleration-of-Branch-Closures-Across-America-FINALc.pdf 10. https://www.gao.gov/products/gao-13-704t 11. https://www.fdic.gov/resources/community-banking/report/2020/2020-cbi-study-full.pdf 12. https://www.icba.org/newsroom/blogs/main-street-matters/2021/11/10/paycheck-protection-program-data-show-community-banks-served-those-most-in-need 13. https://ncrc.org/wp-content/uploads/2017/05/NCRC_Branch_Deserts_Research_Memo_050517_2.pdf 14. https://www.philadelphiafed.org/consumer-finance/payment-systems/central-bank-digital-currency-central-banking-for-all 15. https://www.aba.com/-/media/documents/comment-letter/aba-comments-on-fed-discussion-paper-money-and-payments-05202022.pdf?rev=f951926825b14ad9b6c901e68b36f22d 16.https://www.consumerbankers.com/sites/default/files/Joint%20Trades%20Hill%20Letter%20on%20CBDC.pdf 17. https://www.reuters.com/markets/currencies/consumers-face-20000-pound-limit-digital-pound-bank-england-says-2023-02-07/ 18. https://www.coindesk.com/policy/2022/06/15/ecb-would-limit-digital-euro-to-maximum-15t-euros-panetta-says/ 19.https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov220929.en.pdf 20. https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220929~91a3775a2a.en.html 21. https://violationtracker.goodjobsfirst.org/industry/financial%20services 22. https://p2pfoundation.ning.com/forum/topics/bitcoin-open-source 23.https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov220929.en.pdf 24. https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf 25. https://www.bis.org/speeches/sp210127.pdf 26. https://www.federalreserve.gov/files/cbdc-public-comments-8-20220624.pdf 27. https://www.federalreserve.gov/files/cbdc-public-comments-8-20220624.pdf 28. https://www.federalreserve.gov/files/cbdc-public-comments-9-20220624.pdf 29. https://www.federalreserve.gov/files/cbdc-public-comments-9-20220624.pdf 30. https://blogs.worldbank.org/allaboutfinance/cbdc-and-financial-inclusion-changing-paradigm-part-2 31. https://www.bis.org/publ/othp42_system_design.pdf ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Secure Your Retirement With Swan IRA URL: https://www.swanbitcoin.com/industry/secure-your-retirement-with-swan-ira/ … and advance Bitcoin adoption while doing it. --- **John Haar** The benefits of saving for your retirement in tax-advantaged retirement accounts are meaningful for almost anyone. But this is especially true when you own an asset with tremendous upside appreciation potential. Just ask Peter Thiel! Peter Thiel – American billionaire co-founder of PayPal and Palantir – [reportedly](https://www.marketwatch.com/story/how-peter-thiel-turned-2-000-in-a-roth-ira-into-5-000-000-000-11624551401) owns a Roth IRA, which contains assets valued at $5 billion. Thiel acquired a large number of shares of PayPal in 1999 in his Roth IRA when PayPal’s valuation was very low. Fast forward a couple decades, PayPal is valued in the tens of billions, and Thiel’s shares have grown in value to a comical extent. The kicker is that the gains on his shares are entirely tax-free because they occurred inside a Roth IRA! Not all investments have this potential for such significant returns over 20 years. But I would argue that early-stage startup shares and Bitcoin have this unique appreciation potential. In this article, we’ll discuss the tax advantages that come with US-based retirement accounts – particularly Traditional IRAs and Roth IRAs. We’ll also cover the differences between the two. Next, we’ll quantify these tax advantages with a few examples. And we’ll see how changing the inputs – such as contributions, number of years contributing, and annual return assumptions – can significantly change the outputs. But firstly, we’d like to point out that there is another reason to want to see the proliferation of Americans holding Bitcoin in their retirement accounts. As Jeremy Showalter, Vice President of Product at Swan, has [pointed out](https://www.swanbitcoin.com/swan-product-principles-and-the-third-rail/): > By bringing access to Bitcoin in retirement accounts, we can proactively > position Bitcoin into a ‘third rail.’ Within a short period of time and with > focused adoption, Bitcoin in Americans’ retirement savings will become an > insurmountable political issue for any current or future political leader. > > Threats to Bitcoin will always be present. But each challenge it overcomes > displays its resilience and builds more conviction in its long-term success. > Bitcoin adoption grows from understanding and more ways to save. Bitcoin retirement adoption is likely the greatest defense for Bitcoin and a great long-term offense against inflation. > > — Jeremy Showalter, VP of Product at Swan American politicians would be taking a significant risk by putting the retirement savings of their constituents at risk if they were to change how Bitcoin is currently treated in retirement accounts. Not only would it represent them coming after the hard-earned retirement savings of American citizens, but it would also signal that they, as politicians, are willing to change the rules in the middle of the game to the detriment of their voting base. This is not a recipe for garnering trust and favor with your constituents. ### Traditional IRA vs Roth IRA The short summary is that Traditional IRAs are funded with pre-tax dollars, and Roth IRAs are funded with post-tax dollars. Let’s explore what this means in more detail. In a Traditional IRA, your taxable income is reduced by the amount of your contribution in the year you contributed. The assets in your Traditional IRA grow tax-free until you take a distribution. Distributions from a Traditional IRA are treated and taxed as ordinary income. The idea is that when you expect to take distributions from your Traditional IRA, you will be in a lower tax bracket than when you were contributing to it. Let’s say you contribute $6,500 to your Traditional IRA in a particular year. If your employment income for the year was $100,000, your taxable income would be reduced to $93,500. So the first benefit of a Traditional IRA is that you lower your tax bill in the present day because you lowered your taxable income by $6,500. Going forward, the $6,500 in your Traditional IRA would grow tax-free until you decide to take distributions out of the Traditional IRA, which most people would do at some point after the age of 59 1⁄2. You could repeat this process each year for many years in a row. As mentioned previously, the tax rate on your distributions would be at the rate of ordinary income. If you took a distribution in a particular year of $100,000, representing all of your ordinary income for the year, you would be taxed at whatever your typical income tax rates are at that time. If your tax rate were 30%, your net distribution would be $70,000. In a Roth IRA, your contributions are from funds you already paid taxes on. Therefore, your contributions do not reduce your taxable income in the present day. But the benefit is that the assets in your Roth IRA would grow tax-free. You would incur no tax bill when you take distributions out of the Roth IRA, which most people would do at some point after 59 1⁄2 years of age. Please keep in mind that, in addition to federal tax rates, one has to consider the state and local taxes of your jurisdiction. In the examples below, for simplicity, we assumed one aggregate tax rate instead of breaking it out between tax rates for federal, state, and local. Additionally, one must be aware of [annual contribution limits](https://www.irs.gov/newsroom/401k-limit-increases-to-22500-for-2023-ira-limit-rises-to-6500). Also, one must be aware of [income limits before contributing to a Roth IRA](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023). Before we look at examples of Traditional IRAs and Roth IRAs, please note that there are additional types of U.S.-based retirement accounts. Several of these account types can be very interesting and beneficial, particularly for self-employed people. You can learn more about different retirement accounts beyond Traditional and Roth IRAs at [this link](https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people). ### Examples – Traditional IRAs We’ve now covered the nature and benefits of retirement accounts in conceptual terms. Let’s make this quantifiable by walking through a few examples. Our first example is a 30-year-old who sets up a Traditional IRA. She earns $100,000 of income per year. Her effective tax rate is 40%. She plans to retire at age 70. She contributes the max amount to her IRA each year – $6,500 until age 50 and $7,500 at age 50 and older. You can see other assumptions included below. ![](https://www.datocms-assets.com/56652/1676503683-01-traditional-ira-age-30-max-annual-contributions.svg) ![](https://www.datocms-assets.com/56652/1676503729-02.svg) While the account value at retirement age shows quite a large number, it is important to keep in mind that $3.5 million in the year 2063 almost certainly will not have the purchasing power of what $3.5 million has today. But this also means you would likely be able to contribute larger amounts to your retirement accounts in the future. Note we did not include an assumption for CPI here. Conceptually, if you believe that CPI will average 3% per year for the rest of your life, you would take the return assumption and subtract 3%, i.e., a 10% nominal annual return becomes a 7% inflation-adjusted annual return. In this example, you can see that our retiree maxed out her contributions yearly and earned 10% each year until retirement. As a result, she was able to grow her retirement account to ~$3.5 million by age 70 and withdraw $150k (before taxes) each year from the age of 70 to 90. At that point, she still had ~$2.3 million of assets in her IRA.— Now let’s adjust only one input in this example. We will change the annual contribution to $3,000 per year. ![](https://www.datocms-assets.com/56652/1676507496-03-traditional-ira-age-30-3k-annual-contributions.svg) ![](https://www.datocms-assets.com/56652/1676508961-adf.png?auto=format) Here, our retiree contributed only $3k per year. She also earned 10% each year until retirement. As you can see above, her retirement account grew to ~$1.5 million by age 70. Still, she was unable to withdraw $150k (before taxes) each year of her retirement because she ran out of funds around age 83. — Now let’s adjust a different input from the first example. We will change the annual rate of return until retirement from 10% to 7%. ![](https://www.datocms-assets.com/56652/1676507748-07-traditional-ira-age-45-max-annual-contributions.svg) ![](https://www.datocms-assets.com/56652/1676507800-06.svg) Our retiree in this example is contributing the max each year, but her investments are returning less each year compared to the first example. As you can see, this change also significantly affects the results. Per the above tables and chart, her retirement account grew to ~$1.5 million by age 70, but she was unable to withdraw $150k (before taxes) each year of her retirement because she also ran out of funds around age 83. Interestingly, the scenario of a 10% return on $3,000 annually and the scenario of a 7% return on $6,500 until age 50 plus $7,500 thereafter led to very similar results. It just goes to show how powerful compounding growth rates can be. — Let’s look at another example with the starting age changed. This time our retiree starts saving for retirement at the age of 45. ![](https://www.datocms-assets.com/56652/1676507878-07-traditional-ira-age-45-max-annual-contributions.svg) ![](https://www.datocms-assets.com/56652/1676507914-08.svg) As you can see, the person who begins saving for retirement at age 45 cannot grow their assets nearly as much as the person who starts at 30. As a result, they are limited to distributions of $50k (before taxes) during their retirement. — Let’s look at one final example to show how things change in a Roth IRA. ![](https://www.datocms-assets.com/56652/1676507951-09-roth-ira-age-45-max-annual-contributions.svg) ![](https://www.datocms-assets.com/56652/1676507984-10.svg) As you can see, all of the assumptions here are the same as in Example 1. The only difference is that Example 1 is a Traditional IRA, while Example 5 is a Roth IRA. This leads to two key differences. Firstly, in a Roth IRA, you do not save anything on your tax bill in your years while working. Secondly, you receive 100% of your distributions because there is no tax burden on distributions in a Roth IRA. You’ll notice that the chart showing the year-end value by age is the same as the chart in Example 1. This is because Traditional IRAs and Roth IRAs both grow tax-free. As mentioned, the key difference is that distributions from a Traditional IRA are taxed at ordinary income, while distributions from a Roth IRA have no tax burden. ### What To Do From Here For most people, the best time to start saving for retirement is the very first day you start earning money. The next best time is today. Better late than never, as they say. Given there are multiple assumptions at play, there are many different ways to adjust the assumptions and see how the results change. With that said, *the key variables are your annual contributions, the number of years contributing, and your annual return.* While no one has complete control over these variables, you likely have the most control over your annual contributions. Do your best to max out your annual contributions. Regarding your number of years contributing, unless you have a time machine, your only option to max out your number of years contributing is to start today. Not six months from now... not two years from now... start now! Regarding your annual return, few assets have as attractive a long-term appreciation potential as Bitcoin (this is also known as an *asymmetric return profile* if you are trying to sound like you work on Wall Street). It is our view that you are giving yourself the best chance for outsized long-term returns by holding an asset like Bitcoin. You’ll notice that in all of the examples above, the largest annual return that we assumed was 10%. While 10% annual returns lead to incredible growth in one’s assets over decades, some people believe Bitcoin will appreciate at a faster rate than that. Any scenario where one’s retirement assets appreciate at more than 10% per year for multiple decades results in numbers that look almost silly – quite like Peter Thiel’s situation! ### Swan Private Can Help You Plan For Retirement If you would like to have a conversation about your particular situation, including your assumptions and how they would impact your retirement assets and your retirement plan, please reach out to your Swan Private rep, who would be happy to discuss this with you! Additionally, if you’d like to play around with the inputs and immediately see how the results change, the retirement plan calculator at this website is a simple and helpful resource: [https://www.bankrate.com/retirement/retirement-plan-calculator/](https://www.bankrate.com/retirement/retirement-plan-calculator/) ### Transfers and Rollovers of Existing Retirement Accounts If you have existing retirement accounts that are invested in traditional financial assets, and you’d like to reallocate some or all of those assets into Bitcoin, you can do this via a transfer or rollover. A transfer is a like-for-like tax-advantaged movement from Traditional IRA to Traditional IRA or Roth IRA to Roth IRA. All transfers into your Swan IRA must be in the form of USD cash. We strongly recommend that you transition your investments to USD cash (rather than cash equivalents or money market funds) before initiating the transfer request. A rollover is a movement from an existing retirement account – such as SEP IRA, Solo 401k, 401k, 403b – to an IRA. A rollover is coordinated primarily by the customer with their existing retirement custodian. Before completing a rollover to your Swan IRA, you must liquidate your other retirement account to USD cash. If you would like to convert an existing pre-tax retirement account into a Roth, you can do a conversion at your existing financial institution, and then you can complete a transfer into a Swan Roth IRA. You can choose between setting up a Swan Traditional IRA or Swan Roth IRA and then transfer or rollover from an existing SEP IRA, SIMPLE IRA, 401k, 403b, TSP, etc., for both pre-tax and post-tax retirement options. See the graphic below, which we adapted from the original on the [IRS website](https://www.irs.gov/pub/irs-tege/rollover_chart.pdf). Please note that we (Swan) added the asterisks to indicate what type of account you would need to start with to have the ability to transfer or rollover into a Swan Traditional IRA or Swan Roth IRA. ![](https://www.datocms-assets.com/56652/1676996111-11-rollover-chart-2.svg) 1) Qualified plans include, for example, profit-sharing, 401(k), money purchase, and defined benefit plans. 2) Only one rollover in any 12-month period. 3) Must include in income. * These actions must be taken prior to moving funds into a Swan IRA. For example, if you have a Traditional IRA and would like to end up with a Swan Roth IRA, you would need to convert your Traditional IRA into a Roth IRA with your current financial institution. After the conversion, you would be able to transfer your Roth IRA into a Swan Roth IRA. Additionally, any conversion from a pre-tax account (such as a Traditional IRA), to a post tax account (such as a Roth IRA) would be a taxable event. Lastly, please note that there exists an option to set up something referred to as a Checkbook Self-directed IRA LLC structure. The idea here is to set up an LLC that buys and holds Bitcoin. You also set up an IRA, which owns the LLC. This structure is often used for owning real estate in an IRA, but some people have used this structure to own Bitcoin in an IRA. It can allow you to take self-custody of your Bitcoin in an IRA if you are comfortable with the current legal and regulatory uncertainties associated with this. Please speak with us if you are interested in pursuing or learning more about this option. ### Contact Us to Learn More [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan Advisor for client Bitcoin allocations, backed by world-class custody and educational content.* *Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.* ### John Haar John is the Managing Director of Private Client Services at Swan Bitcoin. He previously spent 13 years on Wall Street, where he was a Portfolio Manager and Insitutional Investor at Goldman Sachs. If you'd like to learn more about the Bitcoin network and protocol function, you can download [Inventing Bitcoin](https://event.swanbitcoin.com/freebook/) by Yan Pritzker for FREE! # Swan Bitcoin IRA is Live! URL: https://www.swanbitcoin.com/industry/swan-announces-a-new-bitcoin-ira/ Secure your retirement with the Swan IRA by diversifying your savings with tax-advantaged Bitcoin in Traditional and Roth IRAs. --- **Jeremy Showalter and Zane Pocock** · February 23, 2023 · Updated June 6, 2024 As the best store of wealth ever created, Bitcoin and retirement accounts are made for one another. We are excited that [Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/) is now available to all US clients [¹](#Notes). We believe bringing Bitcoin to retirement accounts together can significantly improve Americans’ retirement security and be a major driver for Bitcoin adoption, so we decided to build the best Bitcoin IRA on the market.  Here’s what makes Swan IRA special: ### Bitcoin-only First and foremost, Swan IRA is Bitcoin-only. The Swan mission is to educate about Bitcoin to encourage its further adoption. Swan IRA fixes this. Take advantage of real Bitcoin, tax-free [²](#Notes). Most IRA options are filled with crypto tokens or BTC proxies. These are risky investments, significant liabilities for IRA providers, and a danger to retirees. ![](https://www.datocms-assets.com/56652/1701547045-6-most-trusted-investment-related-reading.png?auto=format) ### Fast and Easy Setup  Planning for your retirement is already a lot of work. Setting up your IRA accounts needs to be as simple as possible. With Swan, you can add a Traditional or Roth IRA from your dashboard with just a few clicks. Seriously, opening your account and making your first contribution takes less than 60 seconds. [Video](https://vimeo.com/808901082) ### Seamless Transfers  Transfer funds into your new Swan IRA from an existing IRA via a simple request form or a rollover from a 401k or other employer retirement account. ![](https://www.datocms-assets.com/56652/1677125348-ira-transfer-custody.gif?auto=format) ### DCA ready Swan IRA wouldn't be Swan-ish without the ability to set up *Recurring Buy Contributions* just as easily as you created your Swan account, or set up deposits from Transfers or Rollovers! ### Simple Fees Swan IRA has simple and transparent fees, $20/month or 0.25% annually for balances above $100K.  ### Support and Education Throughout  The Swan team can discuss options and help throughout your retirement journey. As always, our educational content is easily accessible across all our channels. [![](https://www.datocms-assets.com/56652/1677126035-app-swanbitcoin-com_user-macbook.png?auto=format)](https://www.swanbitcoin.com/signal/) This is just the beginning of Swan’s tax-advantaged offerings. For an overview of what’s coming in the next few years, see Cory’s post, [Bitcoiners, It’s Winning Time](https://www.swanbitcoin.com/bitcoiners-its-winning-time/). We are particularly excited about the launch of Swan IRA, as Bitcoin held in American retirement accounts can potentially accelerate adoption in the United States. [![](https://www.datocms-assets.com/56652/1701546670-swan-product.png?auto=format)](https://www.swanbitcoin.com/swan-product-principles-and-the-third-rail/) As Bitcoiners, we will continue to design and build Swan products to be where humans meet Bitcoin. Check out where we rank in the industry across [Bitcoin and Crypto IRAs](https://www.swanbitcoin.com/crypto-iras). Connect with us on Twitter and Telegram, share feedback, and get on the mission together. If you plan to transfer or rollover over $50,000, one of our Swan Private advisors will assist you. [Get started today!](https://swanbitcoin.typeform.com/to/J9iiwpIs?ref_code=90311c0f&gc=email_newsletter_123&utm_source=MASTER%20-%20Customers%20(who%20have%20made%20any%20purchase%20ever)&utm_medium=email&utm_campaign=Swan%20IRA%20Annoucement%20(01GSY1K24DGDH22NE2S8Z6MQM6)&location=%2Fbitcoin-ira%2F&referrer_url=https%3A%2F%2Fwww.swanbitcoin.com%2Fswan-announces-a-new-bitcoin-ira%2F) [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan Advisor for client Bitcoin allocations, backed by world-class custody and educational content.* *Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.* ###### Notes ¹ Available to all US residents aged 18 or over (excluding HI, NY, SD, TX). ² Swan Roth post-tax. Please speak with your Swan expert for details & consult your CPA. ### Jeremy Showalter Jeremy is the Chief Business Officer at Swan. He founded Weave Savings and co-founded Pique (AI/ML personalization), acquired in 2021 by MoMo. Before startups, he spent 13 years at Microsoft in Ireland, Vietnam, and at HQ. ### Zane Pocock Zane is a software engineer at Swan Bitcoin. # A Sticky Situation - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/a-sticky-situation/ Swan Private Market Update #27 --- **Sam Callahan** · February 24, 2023 · Updated June 27, 2024 “*Welcome those big, sticky, complicated problems. In them are your most powerful opportunities.*” - Ralph Marston High levels of inflation continue to be the main concern for individuals, businesses, and policymakers in 2023. The recent CPI inflation did not do much to quell these worries as January CPI came in above expectations at +6.4% YoY, down 10 bps on the month. But, of course, there was nuance in this headline number.  Most of the disinflation continues to occur in goods, with core goods CPI rising +1.4% in January and core services rising +7.2%. The overall declines in the headline CPI number were isolated in goods like used autos, but wages remain sticky. This is notable because Fed Chairman Jerome Powell made it clear that Core CPI service ex-shelter was a metric that he was tracking closely to measure how much inflationary pressures have eased. This metric declined 10 bps MoM but remains sticky at +6% YoY. This increases the likelihood that the Fed will have to hike higher and for longer.  The market certainly took this CPI print as a sign that the vaunted *“Fed Pivot”* remains farther away than perhaps investors originally anticipated. The Fed funds futures curve is now showing that market participants expect a higher terminal rate at around 5.35% and for the Fed to not begin until the Fall of 2023. ![](https://www.datocms-assets.com/56652/1677268516-1.png?auto=format) It was also noteworthy that the shelter component of the CPI basket was by far the largest contributor to the monthly headline increase, accounting for almost 50% of the monthly all-items increase.  ![](https://www.datocms-assets.com/56652/1677268545-2.png?auto=format) This CPI print comes in as housing prices, housing sales, and rents have steadily declined in this new high-interest-rate environment. Rent growth has finally started to slow to begin the year.  ![](https://www.datocms-assets.com/56652/1677268569-3.png?auto=format) Home sales fell for a 12th consecutive month in January, the longest streak dating back to the 1960s. ![](https://www.datocms-assets.com/56652/1677268591-4.png?auto=format) It appears households that locked in a low, fixed-rate mortgage are not jumping at the opportunity to move to a new home when the average national 30-year mortgage now sits at 6.88%. Due to low demand, house prices are beginning to fall even though this has yet to show up in the headline CPI numbers. The median U.S. home sales price has declined 13% from its peak and now sits at $359,000.  ![](https://www.datocms-assets.com/56652/1677268618-5.png?auto=format) Due to the lagging effect of the shelter component of the CPI, this hints at the fact that the headline CPI is being propped up by shelter data that no longer reflects the present reality.  Given that the services sector continues to keep inflation sticky, we should expect the Fed to continue on its mission to bring inflation back down towards its 2% target by hiking rates further and holding them higher for longer. High rates should continue to put pressure on the housing sector, which eventually will show up in the CPI headline number.  Speaking of wages…although wages continue to increase nominally, adding to the inflationary pressures, real wages YoY have been negative for 22 consecutive months.  ![](https://www.datocms-assets.com/56652/1677268655-6.png?auto=format) BLS Household wages are not keeping up with the pace of inflation. This loss in purchasing power will never come back. It is permanent, and it highlights why inflation is often labeled a *“hidden tax.”* Despite CPI inflation remaining sticky, the growth rate has been declining for seven consecutive months. That brings us to the big debate that has been at the heart of the market for the last year or so, is this inflationary bout we are experiencing more structural in nature, or cyclical? In other words, is this inflation here to stay, or will we return to the pre-2020 trend of 1-3% inflation (at least based on the official CPI stats)?  To answer this question, we need to consider what the structural and cyclical drivers of inflation are. **Structural inflation** is driven by larger trends such as deglobalization, demographics (labor shortages), and slowing productivity due to underinvestment and falling education standards. These dynamics lead to supply-side constraints and increased scarcity in critical sectors like energy, food, industrial metals, and infrastructure. **Cyclical inflation** is driven by things like the short-term credit cycle, pent-up demand, stimulus checks, abrupt changes in consumer behavior, and temporary supply chain disruptions that lead to shortages of items like semiconductors, capital goods, and used autos. These factors result in temporary price run-ups, and then the prices fall back down when supply and demand come back into equilibrium.  ![](https://www.datocms-assets.com/56652/1677268690-7.png?auto=format) Horizon Kinetics We have recently seen the price of used autos and semiconductors spike, and now they are coming back down, which has contributed to this fall in CPI inflation, but this may not be the time to claim victory over inflation just yet. One only needs to look at a chart of the 1970s to see that there were years of disinflation where policymakers prematurely declared victory on inflation, only to see it come roaring back because of structural reasons. And keep in mind we are talking about disinflation here rather than outright deflation. As you can see in the chart below, the annual rate of CPI growth never fell below 2.5% for the entire 1970s decade.  ![](https://www.datocms-assets.com/56652/1677268742-8.png?auto=format) Could this coming decade prove to be similar? Let’s look at some of the potential structural drivers of inflation… Following decades of globalization, this trend is now reversing rapidly as global trade relations are breaking down, and now countries are beginning to rethink their supply chains. Globalization led to cheap labor, cheap raw materials, rising productivity, and low inflation. It is logical to expect deglobalization to have the opposite effects. Countries are now beginning to prioritize resiliency over efficiency in their supply chains, but this comes at a cost. Since the pandemic began, the U.S. has been hellbent on reshoring critical infrastructure and manufacturing, like semiconductors.  ![](https://www.datocms-assets.com/56652/1677268773-9.png?auto=format) ![](https://www.datocms-assets.com/56652/1677268793-10.png?auto=format) The problem is that the reshoring of supply chains leads to higher manufacturing costs and takes years to become fully functional. This reshoring will lead to increased costs for consumers and structural supply shortages. This deglobalization trend is one main argument for why inflation will be structural in nature in the coming decade.  **What about energy?** It is well known that the oil & gas sector has seen capital outflows and underinvestment in the last decade. Many energy analysts and industry insiders have been ringing the bell about the supply constraints that could lead to high energy prices for years to come, which would be inflationary.  The CEO of the largest oil producer in the world, Saudi Armaco, had a [dire warning for the world](https://finance.yahoo.com/news/world-worried-saudi-aramco-world-160000039.html) last month, *“Today there is spare capacity that is extremely low,..if China opens up, [the] economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity.”* - Saudi Aramco CEO Amin Nasser This warning comes as the Biden Administration recently sold 26 million barrels from the Strategic Petroleum Reserve after a 5-week pause to the selling. The SPR now sits at the lowest level since 1983.  ![](https://www.datocms-assets.com/56652/1677268870-11.png?auto=format) Not only is the available supply of crude oil apparently dwindling, the U.S. has also completely neglected to build out the infrastructure necessary to refine the oil into useable petroleum products like gasoline and diesel.  Here was Chevron CEO Mike Wirth last year on the matter, “We haven’t had a refinery built in the United States since the 1970s. My personal view is there will never be another new refinery built in the United States... You’re looking at committing capital 10 years out. That will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying, ‘We don’t want these products.”  This problem isn’t isolated to the U.S. either. It is estimated that global operational refining capacity won’t reach pre-pandemic levels until 2024.  ![](https://www.datocms-assets.com/56652/1677268900-12.png?auto=format) BP, IEA, IIR, Bloomberg, Goldman Sachs Global Investment Research The price of WTI crude oil has been in steady decline since it peaked in June 2022 at $120/barrel and now sits at $75/barrel. But according to Goldman Sachs, this relief should not be considered long-lasting when one considers that China’s economy appears to be reopening, which will likely add more demand to the equation. Goldman Sachs states that this decline in oil prices will be short-lived because of “*underinvestment, shale constraints, and OPEC discipline ensure supply does not meet demand.*”  Structural supply shortages in energy will likely be a huge contributor to whether or not inflation will prove to be sticky or transitory in the coming years.  **What about infrastructure?**  When we fail to invest in our infrastructure, we pay the price. For too long now, the U.S. government has neglected its roads, dams, bridges, airports, and electric grid. Aging, decaying infrastructure results in increased transportation times and decreased productivity, which translates to higher costs for businesses to manufacture and distribute goods and services. These higher costs, in turn, get passed on to households in the form of inflation.  According to the American Society of Civil Engineers (ASCE) recent 2021 report card on America’s infrastructure, America was given a *“C-.”* The ASCE also acknowledged a huge funding gap when it comes to our infrastructure and wrote that a *“failure to close that gap will have severe economic consequences.”* Today, the funding gap to bring our infrastructure up to a *“B”* grade is estimated to be $2.6 trillion dollars. ![](https://www.datocms-assets.com/56652/1677268962-13.png?auto=format) ASCE Lack of investment in infrastructure is a driver of inflation both because of the inefficiencies in commerce and trade that it brings about, but also because of the government spending that will be required to fix it. Just last year, a $1.2 trillion dollar infrastructure bill was passed to address these needs.  Spending can be aimed at long-term investment in productivity, enhancing infrastructure, and research & development. This eventually has a deflationary effect. As long as productivity exceeds wage gains, then there is no lasting inflationary impulse. If investment is done wisely, added productivity will subdue inflation. If investment is done poorly, then it will only lead to more problems. Time will tell whether or not the government will be able to allocate these funds effectively to reverse this trend. Historically, let’s just say the government doesn’t have a good track record when it comes to allocating capital. Our decaying infrastructure is another reason why inflation may prove to be stickier than many market participants believe. When you combine all of these trends – the deglobalization, the energy supply constraints, and the underinvestment in our infrastructure– it all supports the argument that inflation will be more structural in nature this decade. The recent disinflation we are seeing in goods and services reflects the cyclical drivers of inflation rolling over, but the structural drivers of inflation remain. It’s important to remember what happened in the 1970s and don’t miss the forest for the trees. These structural dynamics and big trend changes are likely to result in higher costs and higher prices for years to come. So what are investors to do to protect themselves? If inflation persists, investors would want to sell paper assets and buy hard assets such as real estate, gold, fine art, and Bitcoin, as well as allocate funds to equities with underlying hard assets such as oil and agriculture. But out of all of these options, only one has an absolute fixed supply and the asymmetric upside of an emerging technology. In addition, Bitcoin is the first *digital* hard asset, which gives it unique benefits such as portability and resistance to confiscation. These traits make Bitcoin an enticing opportunity for investors in this environment. Bitcoin has started 2023 with a bang, up +41% YTD, but we expect more chop as the inflation outlook remains volatile and uncertain. At Swan, we continue to advocate for long-term thinking and long-term saving. If inflation proves to be structural in nature, Bitcoin will likely be one of the primary beneficiaries as it continues to be adopted as a hard monetary good around the world.  ***Market Overview***  ![](https://www.datocms-assets.com/56652/1677268998-14.png?auto=format) Tradingview - Prices as of 02/24/23 If you are planning to transfer or rollover more than $50,000, one of our Swan Private advisors will assist you. [Get started here](https://swanbitcoin.typeform.com/to/J9iiwpIs?ref_code=90311c0f&gc=email_newsletter_123&utm_source=MASTER%20-%20Customers%20(who%20have%20made%20any%20purchase%20ever)&utm_medium=email&utm_campaign=Swan%20IRA%20Annoucement%20(01GSY1K24DGDH22NE2S8Z6MQM6)&location=%2Fbitcoin-ira%2F&referrer_url=https%3A%2F%2Fwww.swanbitcoin.com%2Fswan-announces-a-new-bitcoin-ira%2F). ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # The Implications of Open Monetary and Information Networks URL: https://www.swanbitcoin.com/analysis/the-implications-of-open-monetary-and-information-networks/ For proponents of privacy and open networks to win, the technology must be easy to use, too costly to stamp out, and well-understood by the public. --- **Lyn Alden** · March 2, 2023 · Updated June 27, 2024 Recent decades have been characterized primarily by closed systems, both financially and online. The financial system as we know it has been a rather closed system for ages, consisting of various silos. Banks and brokerages operate permissioned ledgers. Opening accounts with institutions is a permissioned activity. Sending assets between institutions is a permissioned activity domestically, and especially globally. The base currency itself has a central issuer. The internet had many open aspects early on and still does, but it largely consolidated into silos over time. Twitter, Facebook, Youtube, LinkedIn, and platforms like these are closed networks. Opening accounts with them is a permissioned activity, how you use them is a permissioned activity, and sending information between these platforms has generally not been possible. How exactly do their algorithms work? Since most of them are closed, we can't know. Today, open monetary protocols (e.g. Bitcoin), as well as the emergence of newer open information protocols (e.g. Nostr), challenge this state of affairs and/or present alternative parallel systems for which people globally can use, explore, and build on. This article examines some of the prospects and potential implications of their adoption. ### Closed-Source Money Bank accounts give users access to the traditional globally-connected banking system. A global network of interconnected banks allow for domestic and global money exchange, with varying amounts of settlement time for those transactions. In recent decades, various fintech companies have developed as layers on top of traditional banking rails, to modernize and quicken the process of sending money. Contrary to popular perception, these types of companies aren't going around banks or competing with banks; they are layers on top of the existing banking apparatus that still make use of various banks with central bank connections, but in a way that abstracts the experience for the user. With credit cards, PayPal, Venmo, Zelle, and others- an increasing number of methods to move around small or medium amounts of money have greatly decreased digital payment times from the user perspective. Behind the scenes, however, there is still a complex and slow backend financial handshaking process that occurs along the way, as various intermediate financial institutions take on temporary credit. In other words, when a small fintech payment seems instantly finished from the user perspective, the banks in the background are still spending hours or days finalizing it behind the curtain in larger batches, and thus holding IOUs to each other in the process. Reliably sending global payments is much more burdensome, slow, and expensive. Wire transfers often get caught up and delayed in opaque ways. Many fintech services are only available in one economic bloc, such as the United States, and have no ability to send foreign payments. To the extent that a bank or service allows for global payments, it can feel like a stressful event each time, as you wonder if it will go through or get blocked for some arcane reason and need to be re-attempted, thus wasting time. My local credit union used to offer international wire transfers (by piggybacking on Bank of America for the infrastructure, and for quite a hefty fee) but now no longer does. I have to use my Big Bank account now when sending global wires. There's an unfortunate problem for global payments: small transactions tend to have the highest percent fees, and their payees and recipients can least afford it. Many people in developing countries travel internationally for work and send money home to their families in small amounts, with intermediaries collecting high fees and not innovating quickly (or at all) to reduce them, and with little incentive to do so. [According to the World Bank](https://remittanceprices.worldbank.org/), the average fee percentage on a remittance payment is 6.3%. When sending remittance payments directly to banks, the fee percentage is 11.7%. Fintech companies and mobile payment solutions are responsible for lowering the average, but the average is still very high. Globally, only about [76% of people have an account](https://www.worldbank.org/en/publication/globalfindex) at a bank or at a fintech platform that connects to a bank. In many countries and regions, the numbers remain very low. In Nigeria, for example, only 45% of people have an account. In Palestine, only 34% do. Having a physical bank branch is expensive, and providing manual customer service comes with substantial overhead costs. If someone has a few hundred dollars, it is usually not worth the bank's time to give them an account. [According to the World Bank](https://blogs.worldbank.org/opendata/where-world-do-women-still-face-legal-barriers-own-and-administer-assets), 75 countries also still have restrictions on women's rights to manage assets. So, in addition to technical or monopoly-like problems with sending or holding money, there are some social bottlenecks as well. Furthermore, many people aren't aware of the problematic combination of refugees and banking. Banking is a centralized and permissioned activity, governed by a nation's central bank, with tight regulation. This almost always involves mandating that the banks collect identification on customers. However, many refugees from impoverished or war-torn regions don't have IDs and don't have a clear or convenient path toward getting one, depending on the jurisdiction they've fled to. The problem is further compounded if they don't have enough money or income for a bank to care. Meanwhile, over 86% of people ([over 7.1 billion people](https://www.radicati.com/wp/wp-content/uploads/2021/Mobile_Statistics_Report,_2021-2025_Executive_Summary.pdf)) have a smartphone globally, and the percentage is rising quickly. The proliferation and exponential nature of technology have allowed smartphone usage to leapfrog banking access in many areas. Phone and mobile internet adoption are expected to continue to spread into poorer and poorer areas over the next five and ten years. People who work in what society considers to be undesirable industries often have trouble getting banked, or tend to get de-banked (including by fintech companies) after already being banked. Even the mere process of spreading information can lead to de-banking, such as the well-known case of Wikileaks losing its fintech payment platform access in 2010. If a protest is considered unacceptable, whether it's in Nigeria or Canada or wherever else, protestors may have their bank accounts frozen, donations to protestors may be frozen or reversed, and even those making donations may find their financial access frozen. And we must consider this from a global perspective: [billions of people live in authoritarian countries](https://freedomhouse.org/report/freedom-world/2022/global-expansion-authoritarian-rule) and the number is not improving: ![](https://www.datocms-assets.com/56652/1677633940-picture1.png?auto=format) ### Open-Source Money For decades since at least the early 1980s, cryptographers and cypherpunks researched ways to build internet-native monies that go around the banking system. Many early implementations were centralized, and thus either failed to accrue a network effect and stagnated into bankruptcy or were actively shut down by the government. In 2009, Satoshi Nakamoto built on prior work and launched what has thus far been the most successful open-source monetary network: Bitcoin. For 14 years and counting, it has provided an open (yet still rather niche) payments and savings network to anyone with an internet connection, and in a way that has thus far been able to maintain decentralization and resistance to censorship. A subset of analysts around the world continue to examine it to determine 1) whether it will continue to exist and remain functional and 2) what implications it may have if it does. ![](https://www.datocms-assets.com/56652/1677633993-picture2.png?auto=format) Nobody can reverse or censor transactions by decree; the only way to do so is to gain 51% of the network's processing power and override the rest of the network. And since it's an open-source network with nobody in charge, anyone with the physical capability to do so can interact with it in various ways: - A user can run a free open-source node client and participate in running the network, sending permissionless payments, and auditing details of the protocol. - Without even using software, a user can generate a private key by flipping a coin 256 times and use it to receive bitcoin as payments. - A user can memorize twelve words, travel across the world, and be able to reconstruct their ability to access their bitcoin at a later date. - A programmer can make a non-custodial wallet application that interfaces with the network and makes interacting with it easier for a non-technical user. - A financial services company can operate as a custodian, or as a collaborative custody provider that holds a 1-of-3 backup key in a multi-signature arrangement while the user holds 2-of-3 keys. When we look at a closed monetary network such as the Federal Reserve system, it is strictly hierarchical. The underlying settlement networks, such as Fedwire, are only accessible to banks. To the extent that a user wants to make use of it, they can only do so indirectly, by being a customer at a bank or a fintech company that connects to a bank. To the extent that a fintech developer or a new bank figures out a way to make access to the network better, they can only do so with permission, by being granted access to a bank and following all regulations which vary by jurisdiction. The [recent denial of Custodia Bank's application](https://www.federalreserve.gov/newsevents/pressreleases/orders20230127a.htm) is a recent example to show how permissioned and hierarchical the system is. ![](https://www.datocms-assets.com/56652/1677634110-picture3.png?auto=format) An open monetary network works differently. Users can directly access the network if they want to. Or they can go through larger platforms that make various trade-offs for the sake of convenience. Furthermore, people can directly interact with whatever part of the stack that suits their specific needs at a specific time, such as the base layer or software layers on top of it (e.g. Lightning). Any developer can create a new way to interface with it, or a new layer on top of it, and offer it into the global marketplace without waiting for an application to a centralized authority to be approved. ![](https://www.datocms-assets.com/56652/1677634159-picture4.png?auto=format) ### Closed-Source Social Media On its surface, the internet seems reasonably decentralized. A consistent protocol stack built around Internet Protocol is used around the world, and on top of that protocol stack there are various websites or other types of servers, and there are multiple different methods to access them (e.g. different operating systems, browser applications, and so forth). The way that people tend to use it, however, has become quite controllable and siloed. The rise of major social media platforms like Facebook, Youtube, Twitter, LinkedIn, and others consolidated many users into big pools of connectivity. Rather than everyone making their own websites, most users create accounts on big platforms and thus subject themselves to the various rules and algorithms of that platform in exchange for the convenience and access that those platforms provide. Billions of people congregate around these pools of activity, which are offered for free in exchange for harvesting all of their data. Small and separately-run internet forum websites used to be popular, but these have tended to consolidate towards subsections of major social media platforms. To the extent that people search for new websites, it's dominated by Google's search algorithm. A Twitter user can't send a direct message to a Facebook user. A LinkedIn user can't bring their followers with them if they create a Twitter account. They all tend to be siloed. ![](https://www.datocms-assets.com/56652/1677634213-picture5.png?auto=format) Those platforms then use various private algorithms to determine what information gets shown to users and have discretion around content moderation policies to remove posts or entire accounts as they deem fit, or as required by their government. We can imagine this from a corporate, government, and user perspective, and see what each one is trying to maximize for. From a corporation's perspective, they need to be able to remove illegal activity or outright spam, so that they can comply with laws and so that their platform doesn't turn into a tragedy of the commons. They also need to tune their algorithm in such a way that it gives people the connections that make sense to them and keep them on the platform rather than going elsewhere. From a government's perspective, people act very differently online than offline. They are more impersonal, more aggressive, and easier to manipulate with fake data (including via foreign agents) when online. Algorithms, if improperly tuned, can feed a billion people more of what makes them emotional from people who are already in their digital tribe, and thus close them off from each other and repeatedly exaggerate public outrage in recurring waves. From a user's perspective, government and corporate power over moderation is prone to corruption. A government can demand a takedown of information that is inconvenient to them or that doesn't fit their preferred narrative. Corporations can exacerbate outrage and user emotions if it translates into more dollars at the end of the day. Much like the military-industrial complex that has been around for decades, there is a political-finance-media complex as well. India, as a very large but relatively mild example, has established a track record of telling Twitter, YouTube, and other platforms to [remove](https://techcrunch.com/2022/07/05/twitter-sues-india-government/) [information](https://theintercept.com/2023/01/24/twitter-elon-musk-modi-india-bbc/) that is unfavorable to their current administration, and those platforms comply. In many countries that are more restrictive, social media platforms are completely controlled or banned, leaving their population in the dark and disconnected from the rest of the world. Even private messages can be read by those in power. Some platforms use unencrypted direct messages. Other platforms claim to use encrypted direct messages, but there is no way for a user to prove that they really are encrypted. Unencrypted messages can be read by insiders at the corporation, by government agents requesting such information, or by hackers that can and often do get illegal access to them. A user cannot audit the way that a platform's closed-source algorithm works. A Facebook user cannot send a direct message to a Twitter user. If an account is frozen or removed, a user can appeal but otherwise has no recourse. If social media is not allowed in a country, people have their information and connectivity greatly reduced and controlled by centralized forces. ### Open-Source Social Media People have been trying to make more decentralized internet and social media experiences for a while, but it's hard to compete with the network effects that the big centralized ones have established. A centralized server tends to be very efficient and self-reinforcing, and so centralized solutions get deployed, get the initial users, and thus entrench themselves for decades. One of the ways to decentralize the internet is to normalize running a home server and make it easier to do so. As technology improves, basic server-grade computers have become more accessible, and a number of hardware and software solutions have come into existence that is geared toward a consumer server market. However, there are still long-term limitations on peoples' interest or financial ability to run a server. The financial and bandwidth constraints are particularly problematic for potential users in developing countries. On the other hand, some technologies enable more peer-to-peer information transfer. File-sharing, video calls, and things like that can allow people to connect to each other in high-bandwidth ways. Keet, for example, is far faster and higher resolution than Zoom for video chats involving modest amounts of people. A challenge with pure peer-to-peer models is that both users have to be online at the same time to coordinate. A middle-ground method that seems to be beginning to work at scale is the idea of distributed servers or *"relays"*. In this model, not every user has to run a server, but individual servers are relatively easy to run, are financially incentivized to be run, and are therefore numerous enough that there is no way to control or censor the network. The result is a rather decentralized web of servers that connect to each other, and users that connect to them. A good example of this is Nostr. It's an open-source protocol that stands for *"Notes and Other Stuff Transmitted by Relays"*. For the first two years of its existence, it was relatively unused, but in 2022 it started to get more traction. By the end of the year and into early 2023, thanks to efforts by Jack Dorsey and others, it started to gain some serious adoption. ![](https://www.datocms-assets.com/56652/1677634268-picture6.png?auto=format) Nostr Band On top of Nostr, anyone can build a client application for it. Users of different clients can see each others' posts and send messages to each other. A person can use different clients over time and still have access to their followers. One client might look kind of like Twitter. Another client might look kind of like Telegram. So far, clients that look like Twitter have been the preferred client type. The closest analogy is perhaps to compare it to email. People who use Gmail, Yahoo, Hotmail, AOL, and various individual webmail services, can all send emails to each other regardless of which service they use. This is because they are all built on the same underlying set of protocols, and are not closed/siloed systems. Similarly, Nostr is an underlying open-source social media publishing protocol that people can build clients for. People have made Twitter-clone clients, Telegram-clone clients, desktop clients, and mobile clients for Nostr, and they are all compatible with each other. ![](https://www.datocms-assets.com/56652/1677634331-picture7.png?auto=format) A nice attribute of this model is that if someone has a really good idea for a new type of social media platform, they don't have to worry about network effects. They can create a new experience, meaning a new client interface, connect it right into the Nostr protocol, and make it interoperable right from the start with every other Nostr user across existing clients. They can make use of the existing network effect, in a similar way that any new browser or new email provider makes use of the extensive network effect that already exists for those protocols. And it can extend beyond social media. Jack Dorsey has stressed this idea and pointed out for example that it could be used as a GitHub replacement. The anonymous computer scientist and author Gigi has referred to it as an *"identity and reputation layer"*. Willy Woo described it as everything Twitter wanted in its early years with an open API. Elizabeth Stark, CEO of Lightning Labs, pointed beyond Twitter clones and wrote that *"an open messaging protocol means you can build things that weren't previously possible in the old walled garden centralized paradigm".* To use Nostr, you generate a private and public key pair in one of multiple ways. Most clients can do this for you, and third-party applications like Alby can do this for you. You keep the private key secret, and the public key is like your username that you share with other people. There is no central server *(or “relay”)*, and instead, many individual users run relays. Users can pick which relays they connect to, and relay operators can ban certain users from their relay. Users publish material to multiple relays, and relays transmit and store that material, with discretion by relay operators about which material they choose to transmit and store on their particular relay. Nostr makes native use of the Bitcoin/Lightning network, without being built on it. Users can easily tip each other with Lightning transactions or pay premium relay operators with Lightning payments in order to use those relays instead of the various free ones. Other paid services can be offered over Nostr as well. The combination of public-key cryptography and distributed servers means that no central entity can censor anyone or ban anyone from the protocol, in a similar way that nobody can be *"banned from email".* A government can target and shut down individual relays in their jurisdictions, but there could be quite a number of them, and individuals around the world can run relays, and users can connect to relays in other jurisdictions. Individual relay operators can choose to exclude things, and if users want to exclude certain things they can stick with those more exclusive relays. Some relays can operate for free and other ones can charge a small fee. Different client applications can configure different settings or appearances, and users can determine which clients to use, and use multiple different clients. It also means that some of the user experience is a bit clunky at the moment. If a user doesn’t connect to good relays, the speed will be slow and some data will be incomplete, like seeing posts but being unable to see the posts that they are in response to. It's not easy to track how many followers you precisely have, or how many likes a particular post really gets. Users have to be careful about which clients to trust- if you insert your private key into a scammy client, they can use it to capture your protocol-wide Nostr digital identity. The bandwidth usage in practice is rather high, particularly for developing country internet infrastructure- there has been a priority on making things work more than making things efficient. I expect that some of the clunky aspects will be smoothed out over time; at the moment the ecosystem is basically devoid of capital with a handful of people working on it, and yet it’s already quite impressive as it is. It looks like a powerful set of individual building blocks coming together. It's really early. Even the bearish case for this technology is to say that it is something that will exist now but remain niche, and thus is a new tool that is usable by the people that need it. ### What Applications Require Global Consensus? For many years now there has been a fad around the concept of *"blockchain technology"* as it relates to decentralization. Some of the big themes have been along these lines: - *Internet-Native Money* - *Asset Tokenization* - *Decentralized Media* - *Digital Identity* All of those things, indeed, are important avenues of research. Bitcoin is a useful internet-native money. Stablecoins tokenize the dollar and make it more accessible to people around the world. Decentralized information protocols can give more people access to information and connections without centralized moderation or a centralized server to shut down. Digital identity gives someone the ability to prove themselves to be a continuous entity across different digital platforms and across time. However, in recent years, the idea of *"Web3"* has been used mainly as a marketing tool for the third and fourth items on that list. Anything with *"decentralized"* or *"blockchain"* as part of its claim has tended to get a lot of capital. Venture capital firms can deploy capital into a token project, pump up a lot of hype for it, encourage users to come into its ecosystem with ponzi-like financial characteristics, sell their tokens to retail investors after a couple of years, and walk away with big gains regardless of the fact that the project had no long-term staying power. In such an environment, user metrics are distorted due to there being so many financial incentives that are not necessarily in line with using the software for its own sake. The joke, therefore, is that *"Web3 has more investors than users"*. And the level of decentralization is often overstated as part of the marketing effort. A big issue here is that most platforms simply don't need tokens, don't benefit from tokens, and are made worse by having tokens. Sure, existing securities or assets can be tokenized, and that can be useful. Tokenized dollars, tokenized stocks, tokenized receipts for things, etc. These are centralized assets, but their peer side is expanded into a bearer asset and tradeable globally by anyone with a smartphone. That's a real use-case to people, although it does come with regulatory risks and counterparty risks. But many decentralized things, and particularly platforms, are stronger without a token. The purpose of a token is often to enrich a smaller number of early creators or investors rather than to enhance the actual product or solve an actual problem. The existence of a token is often unnecessary and deleterious to a project. It's often just a method of regulatory arbitrage to go around existing securities laws. Along these lines, way more things are advertised as benefiting from a blockchain than really do. A blockchain helps different entities come to a global consensus on something, and that's an expensive process that only needs to be applied to things that truly need it. ### Global Consensus and Money An example of something that truly needs global consensus is a shared global ledger, such as Bitcoin. In order to audit the supply of the Bitcoin network and validate all transactions, nodes need to agree on the full state of the ledger, globally and continuously. A blockchain solves this. Bitcoin is like a big decentralized spreadsheet that the world comes to an agreement on every ten minutes, using energy from miners and the rules enforced by the user-run node network as its arbiters of truth. This is an expensive process, but a valuable one that isn't solved by other means. ### Global Consensus and Assets Next down the line is tokenized assets, such a stablecoins. The centralized issuer needs to know how many claims for their assets exist, and likely needs to be able to freeze individual ones and re-issue them as needed. On the other side, the user needs to be able to prove their claims of ownership to the issuer. It's less critical (but potentially still desirable) for a user to be able to cheaply audit the entire supply of other user claims, since they are relying on a centralized issuer anyway. And then, issuers and users need composability: pieces need to be able to interact in many different ways relatively seamlessly for the ecosystem to be notably superior to the existing financial ecosystem. This gives users considerable flexibility over how they hold an asset, where they trade it, whether and where they leverage it as collateral, and so forth. So far, this type of activity has benefited from a blockchain and a global consensus, although there are research efforts that suggest other avenues may exist. These can be thought of as methods to improve the tech wrapper for existing security issuers, exchanges, collectibles, liquidity/leverage services, and fiat payment services. ### Global Consensus and Information From there, we get into decentralized communication and social media and see that global consensus is not needed *or even desirable*. We don't come to a global consensus on *"all emails"* for example. Email providers make use of global protocols and yet there is no entity that needs to or has the technical capability to catalogue the current state of all emails globally. In fact, it would be a problem for privacy if they could. Similarly, Nostr doesn't require a global consensus and thus is not a blockchain. Relays don't need to all communicate with each other and ensure they all agree. Users don't need to connect to every relay. The network is open source and interoperable, and users can figure out how much of the network they want to see based on how many relays they want to connect with, and how many people they want to follow. Attempts to use a blockchain as an underlying technology for social media or similar types of internet experiences don't make sense in my view, because the cost of coming to a global consensus is expensive, doesn't necessarily add to the experience, and may detract from the experience. ### Global Consensus and Identity Lastly, digital identity also does not require global consensus. The existence of a public/private key pair, for example, can be used to prove continuous identity (or at least continual ownership of the private key) across platforms and across time. Similarly, organizations or applications can provide more comprehensive identification services, and give the user the ability to selectively share part of that information with approved receivers of that information. Some of these applications may make use of a blockchain or a layer built on one. There need not be a global consensus of all identities, nor would it necessarily be desirable if there were. ### A Combined Example: Money and Information I transferred some Bitcoin from one of my old crypto exchange accounts to a mobile lightning wallet a while ago. If I was in a developing country, even one where the banks don't let me send money out to bitcoin brokerages or crypto exchanges, I could have earned the sats via [Stakwork](https://www.stakwork.com/) instead (Stakwork is a platform that, using the Lightning network, connects people who want microtasks done, to people able to do microtasks globally). Or, I could have acquired some with physical cash via [Azteco](https://azte.co/), a voucher system. I tend to play around with different wallets for research purposes, so I have both custodial and non-custodial varieties. One exercise I did to test different user interfaces is to quickly send some fractional bitcoin (commonly referred to as *"sats")* from wallet to wallet on my own phone. Each transaction would take about three seconds. Bearer assets were jumping from custodial wallet to noncustodial wallet to custodial wallet to noncustodial wallet. Fees were a fraction of a penny, and the process was automated and within my control. I've also helped people download a wallet and send them some sats in a couple of minutes. From there, I transferred some sats to my [Stacker News](https://stacker.news/) wallet, which took about three seconds. Stacker News is a Reddit-like website that requires paying sats to post, which helps prevent spam but is not actually expensive for human users. Users can tip each other with sats, and thus posting good content can earn you some sats. I transferred sats over to there so that I could post, and ended up receiving a bunch of tips on my posts. Recently, when trying out Nostr, I did something similar. I installed the [Alby plugin](https://getalby.com/) on my browser, and used it to create a new wallet. I transferred some of my Stacker News sats over to my Alby wallet, which took about three seconds. On my Nostr client, I listed my Alby wallet there. From that point, users could easily tip me some sats to my Alby wallet. I of course tipped some other people as well and could pay for access to a premium relay. At any time, I can pull sats out of these ecosystems and into deeper cold storage; these custodial and noncustodial lightning wallets can be thought of as like cash in a wallet, with similar trade-offs as it relates to convenience and security. The combination of an open monetary network and an open information network is pretty interesting. Programmable bearer asset money can move around frictionlessly across borders, and between platforms. Platforms can be interoperable with each other without directly working with each other to make it happen, simply because they are interfacing with the same underlying protocols. Server operators can be incentivized to maintain and enhance an information network via microtransactions. A set of protocols that globally connect people in terms of identity, information, and value can reduce a lot of frictions and create a lot of new opportunities. ### The Battleground of Privacy Open commerce requires the transfer of both information and value. Therefore, both open monetary networks and open information networks (and their actual usage rather than merely their existence) matter for the study of economics, geopolitics, and various long-range investment outcomes. In general, any jurisdiction that is attractive in the sense that people and capital want to come to it, and information can be shared freely within it and with the rest of the world, should welcome such technologies. Open monetary and information networks, especially if their usage spreads around the world in ways that are hard to prevent, enable and accelerate more value flowing into these freer jurisdictions from elsewhere. Borders become less relevant from an economic point of view. On the other hand, any jurisdiction that is unattractive in the sense that people and capital want to escape it, and information is restricted within it and with the rest of the world in order to protect the rulers, should fear such technologies. Open monetary and information networks create more leaks of capital and information into and out of their jurisdictions, empowering their people, or forcing more expenditure by their rulers to increase the existing restrictions to maintain their isolation. ### Financial Privacy on the Downtrend In older days, when the exchange of cash or coin was more commonplace, transactional privacy was the default. As the world consolidated onto bank ledgers, however, privacy began to go away. The 1970 Bank Secrecy Act, enacted into law by the U.S. government and still in effect, compels banks to file reports with the government if a customer's daily transactions exceed $10,000. When this law was enacted in 1970, the median American annual income was less than $10,000. So, the law only covered rather large sums of money moving within a day, worth well over $80,000 in today's weaker dollars. However, there was no inflation adjustment embedded into the law. As the value of the dollar eroded over time, banks effectively had to file reports regarding smaller and smaller levels of transactions, since $10,000 worth of transactions occurring in a day became more and more commonplace. Every year, the government effectively lowers the threshold regarding its automatic financial surveillance, simply through inflation, without passing further legislation. Over the next fifty years, if the rate of inflation averages the same amount as it has over the past fifty years, then the reporting threshold will shrink by another 8x or so in terms of purchasing power. When the law was enacted, the government granted itself the ability to keep tabs on house-sized transactions. Over time, inflation enhanced the law so that they can keep track of transactions the size of used cars. If this keeps up, it will enable them to keep track of transactions the size of lawnmowers or bicycles. This is an example of expanding a surveillance mandate continuously, without having to pass new legislation to do so. Inflation serves as the ever-expanding mandate. Of course, with other technologies and surveillance methods, or with court orders, or with new legislation, authorities can already see any-sized bank transaction that they want as well. ### Information Privacy on the Downtrend Privacy in communication, movement, and other aspects of life used to be expensive to violate. Prior to the widespread usage of the internet, smartphones, surveillance cameras, and other technologies, the only way to violate someone's privacy was to physically spy on them, search their person, or search their property. And for this reason, the person who had their privacy violated had a good chance of knowing that it was violated. In the digital age, it's increasingly easy and inexpensive for governments, corporations, or individuals to violate someone's privacy, and without that person knowing. For governments and corporations, a combination of public and private information on millions of people can be harvested automatically on all of the major digital platforms and portals. That data, once collected, can be organized by various Big Data techniques including machine learning, and then algorithmically monitored or made easily searchable to users of the database. In 2013, a U.S. National Security Agency contractor named Edward Snowden leaked information to journalists that revealed that the U.S. National Security Agency's surveillance capabilities extended far beyond what was previously known to the public. Specifically, the NSA was revealed to be able to directly tap into the systems of major telecommunications providers and large corporate software platforms to continually harvest information. In one of the [original reports](https://www.theguardian.com/world/2013/jun/06/us-tech-giants-nsa-data) on the leak, the Guardian revealed: *“The National Security Agency has obtained direct access to the systems of Google, Facebook, Apple, and other US internet giants, according to a top-secret document obtained by the Guardian.* *The NSA access is part of a previously undisclosed program called Prism, which allows officials to collect material including search history, the content of emails, file transfers and live chats, the document says.”* As our lives become increasingly digital, it has become easier for our information to be harvested by corporations and governments. Privacy can be violated automatically, at scale, inexpensively, and without the user knowing. In Western democracies, this has downsides but has so far been generally unfelt by the domestic population. Most of the human rights violations committed by developed countries these days tend to be international, either from colonialism in the past or from neocolonialism in the present. In authoritarian regimes, however, the consequences are more domestic. People can be arrested for criticizing their government. People can be executed for being homosexual. People can be put into camps for having a minority religion. Last year, a young Saudi woman and mother of two children, who was a student at Leeds University in the UK, [was arrested](https://www.theguardian.com/world/2022/aug/16/saudi-woman-given-34-year-prison-sentence-for-using-twitter) when she returned home to Saudi Arabia and sentenced to 34 years in prison. Her crime was that she followed and retweeted various activists on Twitter, while she was in the U.K. A couple of months later, a 72-year-old Saudi-American dual citizen living in the United States [was arrested](https://www.theguardian.com/world/2022/oct/18/saudi-arabia-us-citizen-prison-critical-tweets-regime) and sentenced to 16 years in prison when he returned to Saudi Arabia for what was supposed to be a brief trip. His crime was that he tweeted critically about the Saudi regime while in the United States. This also happens to people in countries that are popular tourist destinations. People have been given [25-year prison sentences in Thailand](https://www.reuters.com/article/us-thailand-politics/thai-man-jailed-for-25-years-over-royal-insult-posts-on-facebook-idUSKBN0MR13720150331) for posting pictures online that are deemed insulting to the country's monarchy. Ahmed Monsoor was sentenced to prison for a decade for advocating for human rights in the UAE in a way that was critical of the rulers. As [Human Rights Watch reported](https://www.hrw.org/report/2021/01/27/persecution-ahmed-mansoor/how-united-arab-emirates-silenced-its-most-famous-human): At his third hearing, the judge read out six charges against Mansoor, all entirely based on his human rights activism and advocacy. The court later convicted him of five of those charges, all based on simple acts of human rights advocacy, including tweeting about injustices, participating in international human rights conferences online, and (since deleted) email exchanges and WhatsApp conversations with representatives of human rights organizations, including Human Rights Watch and the Gulf Centre for Human Rights (GCHR). The court acquitted him of the sixth charge, *“cooperating with a terrorist organization.”* The court based its verdict, announced during the fifth and final hearing, on the penal code and the 2012 cybercrimes law, both of which make the peaceful expression of critical views of the authorities, senior officials, the judiciary, and even public policy a criminal offense and provide a legal basis to prosecute and jail people who argue for political reform or organize unlicensed demonstrations. Over 1.4 billion people have information suppressed in China and are subject to varying levels of authoritarianism. India, another country of 1.4 billion people is much less restrictive, but still gets information removed from social media and has a mixed human rights track record. Hundreds of millions of people across parts of the Middle East and parts of Southeast Asia are subject to authoritarian rule. Vladimir Putin's political opposition, [Alexei Navalny](https://en.wikipedia.org/wiki/Alexei_Navalny), was poisoned, and upon surviving and returning to Russia, was put in prison and remains there until this day. A subset of Latin American countries and African countries have an authoritarian rule. It's an extremely widespread problem. Meanwhile, institutions that are largely run by developed countries, such as the IMF, gladly work with authoritarian regimes, which can help keep them in power. One of the defenses that people have against authoritarianism is private, encrypted communication and information. This allows for the transfer of information and value, including in private ways. Technologies such as this will rarely be provided in a top-down way; instead, if they are to exist and be resilient, they must be built in a bottom-up and highly distributed way. Along the way, such technologies will be painted as tools of drug traffickers, sex traffickers, and terrorists by those who are in power. And what will complicate matters is that yes, just like pagers, just like the internet, and just like any powerful technology or network, criminals will be among those that use such tools. And yet, those tools are necessary and can help far more people than they can hurt. ### The Long Debate Authoritarian regimes have often turned to obvious anti-privacy techniques in order to prevent revolutions. Such regimes want to control the spread of information as much as possible. In Western democracies, anti-privacy crackdowns have instead been more gradual, and have generally existed on the institutional level rather than the consumer level. It's easier to get several thousand highly-regulated banks and a few dozen major internet platforms and telecommunication companies to comply with continuous financial and information surveillance than it is to get hundreds of millions of individuals to do so. We generally have a rolling set of reasons for why privacy needs to be violated in such a continuous, systemic, and automated way. Throughout the 1970s, 1980s, and 1990s, it was often argued that financial and information privacy must be restricted in order to restrain drug trafficking. Back in the 1980s, for example, pagers were a source of consternation: *“Although paging devices, or beepers, have grown in popularity throughout the labor force -- doctors, delivery people, and journalists often use them -- they also have become a staple in the drug business, posing fresh problems for law enforcement and threatening to tarnish the image of a booming high-tech industry.”* - Washington Post, 1988, *"*[*Message is Out on Beepers*](https://www.washingtonpost.com/archive/politics/1988/07/11/message-is-out-on-beepers/58840caa-523e-413b-9224-60ad94d7803f/)*"* Starting in the 2000s, it was terrorism financing that took center stage instead. The 2001 [Patriot Act](https://en.wikipedia.org/wiki/Patriot_Act), among other things, expanded surveillance capabilities by the U.S. government in the name of fighting terrorism. The NSA's programs in the 2010s, revealed by Snowden, further expanded and automated that capability by connecting with major internet messaging platforms and aggregating as much online communication as possible. More recently, the public messaging around restrictions on privacy has been about child imagery and/or sanctioned nation-states. Throughout 2022, the European Commission [proposed legislation](https://www.politico.eu/article/european-commission-propose-law-fight-child-sexual-abuse-online/) that would try to eliminate all private communications by mandating the automatic scanning of emails and messages, including encrypted messages, for certain types of illegal content. While everyone is of course against the existence and distribution of such dreadful imagery, the idea that every communication method of all citizens must be continuously scanned and made accessible to the government is argued by many to be an extreme overreach. Similarly, the [U.S. Treasury sanctioning of Tornado Cash](https://home.treasury.gov/news/press-releases/jy0916) was a crackdown on cryptographic privacy methods due to its association with DeFi hacks, including by North Korea. Any entity that handles funds on a commercial scale has done various identity checks, and so various centralized private custodians tend to be regularly shut down. In the modern era, unlike in the past, financial privacy is considered to be synonymous with money laundering. Another problem relates to tax collection. Back in older times when transactions were more inherently private, something like an income tax was relatively unworkable. Taxes tended to be placed on property and on exports/imports, and on income for large establishments or estates because all of that was quite visible and auditable. In contrast, taxing income at the individual level was generally a messy proposition due to the difficulty and expense of auditing it. Even today, accurately taxing cash-dominated businesses remains a challenge. However, with the widespread conversion towards bank ledgers and automatic employer paychecks, it became easier for governments to audit incomes and to tax them. Employers pay their employees, report the payouts to the government, and the whole process is auditable. Income taxes thus became a dominant form of taxation. Going forward, if a meaningful portion of the economy shifts towards peer-to-peer global gig work, and money and information in general become more encrypted and private, and money is able to be self-custodied and moved around globally, then what does that mean for governments' ability to audit incomes and impose taxation on those incomes at the individual level? Such auditing and assessment could become much more expensive, and for sophisticated users, potentially becomes impossible. One perspective would be that governments simply have to change their patterns of taxation over time, if indeed bottom-up open-source distributed privacy technology and open monetary/information networks become more widespread. In some sense, this would be a return to how things used to be, except in the digital realm. A greater portion of taxation would have to be on more physical, large, and visible things, such as property, major enterprise, and the logistics and sale points of physical products. The other perspective, generally from the viewpoint of the government, is that instead, all privacy has to be eliminated, then. Every transaction between every peer, globally, has to be monitorable so that it can be audited and taxed. Even if an open-source bottom-up emergent technology is developed to enable privacy, such technology must be outlawed and/or marginalized as much as possible to prevent its widespread use. It may even be necessary to place more restrictions on the developers of such technology, as the [Digital Asset Anti-Money Laundering Act essentially proposed](https://www.nobsbitcoin.com/the-digital-asset-anti-money-laundering-act-is-an-opportunistic-unconstitutional-assault-on-cryptocurrency-self-custody-developers-and-node-operators/). Unfortunately, this second perspective takes on a very different meaning when we remember that billions of people live under authoritarianism and that people can readily be arrested and sentenced to long prison terms for criticizing their government, organizing protests, having the wrong sexual orientation, having the wrong religion, or otherwise having some minority or disapproved aspect of their life. Over the long run, I view the outcome, one way or the other, more as a matter of technology than politics. From the top-down side, there is the development of Big Data and automated data surveillance capabilities. From the bottom-up side, there is the development of encryption tools and open monetary/information networks. Whichever direction proves more powerful will play a major role in how all sorts of things operate in the decades ahead, including various economic interactions. Therefore, for proponents of privacy and open networks to win becomes a matter of making the technology easy to use, too costly to stamp out, and well-understood by the public. For proponents of ubiquitous surveillance to win becomes a matter of convincing the public that privacy is undesirable and that these tools are not needed or are dangerous while enhancing their data collection and sorting capabilities. And from an analyst perspective, the challenge and the opportunity is to see where these trends are headed, which means monitoring the progress of both the bottom-up and the top-down approaches to see who is in the lead. *Editor’s Note: Have you created a Swan account yet? Join Lyn Alden and start stacking sats with us.* [Head to ](https://www.swanbitcoin.com/alden/)[Swan.com/alden](http://swan.com/alden)[ you’ll get $10 in FREE Bitcoin after you create a swan account.](https://www.swanbitcoin.com/alden/) [![](https://www.datocms-assets.com/56652/1678395341-screen-shot-2023-03-09-at-2-53-01-pm.png?auto=format)](https://www.swanbitcoin.com/alden/) ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Specter Desktop Relaunches with New UI and Improved User Experience URL: https://www.swanbitcoin.com/industry/specter-desktop-relaunches-with-new-ui-and-improved-user-experience/ Secure your bitcoin. Verify your transactions. Protect your privacy. --- **Moritz Wietersheim** · March 9, 2023 · Updated June 6, 2024 Looking to simplify self-custody and drive Bitcoin adoption, [Specter Desktop Wallet](https://specter.solutions/desktop/) releases two new features: a refined user interface and plug & play connectivity to the Bitcoin network via Electrum servers. These exciting updates provide an easy experience for managing your Bitcoin. [Video](https://vimeo.com/806393966) ### Improved User Interface The new look is both visually appealing and user-friendly while respecting the design of the original user interface. Securing your Bitcoin is now easier than ever with Specter Desktop. ### Plug & Play Connectivity Specter also introduces a new feature that allows users to easily and quickly connect to the Bitcoin network via public Electrum servers. This functionality was designed for new Bitcoiners who are just starting out, allowing them to easily hold their keys and manage their Bitcoin without the need to run their own Bitcoin servers. ### Control Your Journey As Bitcoin users learn more about the technology and the benefits of increased privacy and control, they can upgrade to running their own node or even their personal instance of an Electrum server. This additional step not only improves users' privacy by eliminating their reliance on the backend server infrastructure of a hardware wallet manufacturer but also makes them more sovereign by allowing them to run and control their own infrastructure. [Video](https://vimeo.com/806394561) ### Committed to FOSS One of the key principles of Specter is its commitment to the FOSS (Free and Open-Source Software) approach. The Specter and the Swan teams are dedicated to continuing to support the FOSS approach and doing their best for Bitcoin and Bitcoiners. With the new feature and refined UI, Specter continues to uphold these principles, providing a secure and reliable platform for managing Bitcoin. The Specter team would like to extend a special thanks to all their FOSS contributors and the Swan team for their support during the development process. Their contributions have been instrumental in bringing this upgrade to life. ### Enhance Your Bitcoin Security with Specter If you're looking for a reliable and user-friendly platform to manage your Bitcoin, Specter Desktop Wallet is a must-try. Its simple user interface, robustness, and flexibility have made Specter a popular choice not only among individual Bitcoiners but also among many companies and projects, such as the Bitcoin Beach Wallet, family offices, OTC desks, high-net-worth investors, and mining pools. [**Download Specter today and enhance your Bitcoin management**](https://specter.solutions/downloads/)**.** ### Moritz Wietersheim Moritz is the founder of Specter Solutions. He is convinced that Bitcoin will become the core payment and settlement infrastructure for the internet and that it will provide the incentives to rebuild the internet trust layer with cryptography and digital identities. # Silvergate Waves the White Flag - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/silvergate-waves-the-white-flag/ Private Market Update #28 --- **Sam Callahan** · March 10, 2023 · Updated June 6, 2024 Over the last year, the Federal Reserve has undergone one of the fastest rate hiking cycles in its history. As rates have soared and the proverbial tide has gone out, many companies in the broader cryptocurrency industry were discovered to be swimming naked. One by one, we’ve seen cryptocurrency companies like FTX, Voyager, BlockFi, Genesis, Celsius, and Three Arrows Capital shut their doors. Some of these firms were woefully mismanaged as they overextended themselves in the ultra-low interest rate environment, while others were revealed as outright frauds. The crypto contagion moved up to the banking sector this week when crypto-friendly bank, Silvergate Capital, announced it will voluntarily liquidate and provide full repayment of all deposits.  ![](https://www.datocms-assets.com/56652/1678481335-1.png?auto=format) Silvergate is the latest victim of the contagion that began last spring with the collapse of the algorithmic stablecoin Terra Luna as the Federal Reserve began raising interest rates. This news comes during a broader cross-agency regulatory crackdown on the cryptocurrency industry that began in earnest after the collapse of FTX. Silvergate was a relatively small bank that rose to prominence over the years as one of the primary banks serving the cryptocurrency industry. In the last 5 years, it saw its deposits explode upwards as it seized the opportunity during the cryptocurrency bubble fueled by ultra-low interest rates, peaking at over $14 billion in December 2021.  ![](https://www.datocms-assets.com/56652/1678481401-2.png?auto=format) Silvergate continued to grow rapidly after it launched its Silvergate Exchange Network (SEN), which allowed for 24/7 real-time, settlement of digital assets between investors and crypto exchanges. The SEN platform grew to become a critical piece of infrastructure for the broader cryptocurrency industry. The graphic below highlights how the SEN platform served as the central plumbing of the industry, connecting many of the largest cryptocurrency firms in the broader crypto ecosystem.  ![](https://www.datocms-assets.com/56652/1678481436-3.png?auto=format) Silvergate Capital Silvergate specifically catered its business to the digital asset industry, and as of September 30th, 2022, 90% of its overall deposit base came from crypto firms. Some of these clients included now-bankrupt firms such as BlockFi and FTX.  To give you an idea of Silvergate’s relationship with the crypto industry, below is a quote from disgraced former FTX CEO Sam Bankman-Fried gushing about Silvergate in Congressional testimony last year, *“Life as a crypto firm can be divided up into before Silvergate and after Silvergate…It’s hard to overstate how much it revolutionized banking for blockchain companies.”* - Sam Bankman-Fried As the crypto bubble popped at the end of 2021, interest in crypto started to wane and clients started to leave Silvergate. This trend only worsened when large firms began to blow up left and right. As a result, Silvergate experienced a significant outflow of deposits and revenues.  In its Q4 financial statement, Silvergate wrote, *“During the fourth quarter of 2022, the digital asset industry experienced a transformational shift, with significant overleverage in the industry-leading to several high-profile bankruptcies. These dynamics created a crisis of confidence across the ecosystem and led many industry participants to shift to a “risk off” position across digital asset trading platforms. In turn, the Company saw significant outflows of deposits during the quarter and took several actions to maintain cash liquidity.”*  This drop in business activity can be observed in the decline in usage of the SEN platform. SEN platform volumes were down 47% in the fourth quarter compared to the fourth quarter of the year prior. On top of that, digital asset customers started to leave the bank in droves. Sivergate had 1,620 digital asset customers on December 31, 2021, compared to just 1,381 a year later. This trend accelerated rapidly in Q4, as Silvergate clients rushed for the exits as they feared for the bank’s future as it came under scrutiny from regulators and politicians in the aftermath of FTX.  In December 2022, Senator Elizabeth Warren, Senator John Kennedy, and Congressman Roger Marshall [penned a letter](https://www.warren.senate.gov/imo/media/doc/2022.12.05%20Letter%20to%20Silvergate%20Bank%20re%20FTX.pdf) to Silvergate CEO Alan Lane asking for information about Silvergate’s operations, stating, *“The public is owed a full accounting of the financial activities that may have led to the loss of billions in customer assets, and any role that Silvergate may have played in these losses.”* During Q3, the average digital asset customer deposits stood at $12 billion, during Q4, that number stood at $7.3 billion, down 39%. Below are charts that show how the digital currency deposits of SIlvergate and Signature, another popular crypto-bank, fell off a cliff in Q4. Silvergate's digital currency deposits fell a whopping 68% Q/Q in Q4. ![](https://www.datocms-assets.com/56652/1678481672-4.png?auto=format) Morgan Stanely The problem here is that a majority of Silvergate’s deposit base came from digital asset customers. This deposit base is extremely volatile and is tied to the market sentiment of the broader digital asset industry. When the prices fall, these clients lose interest and withdraw their funds, which requires Silvergate to repay those deposits. It makes for an unstable, volatile source of funding that can disappear rapidly. This is what the FDIC, OCC, and Fed were warning about in a recent rare [joint statement](https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230103a1.pdf) when they urged banks to apply effective risk management when dealing with deposits linked to crypto entities. They stated, *“Significant volatility in crypto-asset markets, the effects of which include potential impacts on deposit flows associated with crypto-asset companies.”* To prepare for this scenario, Silvergate invested most of its funds in long-duration mortgage-back securities and Treasury bonds. It bought a majority of these bonds before the Federal Reserve went on its hiking tirade when interest rates were low. ![](https://www.datocms-assets.com/56652/1678481753-5.png?auto=format) As the Fed raised interest rates, the value of Silvergate’s bond holdings plunged, eroding the value of the bank’s assets. The catch here is that, per accounting rules, Silvergate didn’t have to mark their bond holdings to market (at the current market price) so long as they held their bonds to maturity. However, when depositors started to flee the bank, Silvergate was forced to sell these bond holdings to meet the withdrawals.  When this happened, Silvergate had to mark to market all the bonds on its balance sheet and report a realized loss. This ate int the bank's equity, which only spooked clients more, leading to more withdrawals. A classic bank run ensued. Suddenly, Silvergate was left in a liquidity crisis as it tried to meet withdrawals by selling its bond positions that were underwater due to the rising rate environment. Silvergate sold its bond positions at a large loss to fund withdrawals, inflicting a $1 billion hole in its earnings at the end of 2022. This is the problem entities run into when they borrow short and lend long. There was an interest rate mismatch where Silvergate owed money to depositors who wanted to withdraw their money now, but they had their assets in long-duration bonds that they couldn’t afford to sell without marking a large loss on their balance sheet.  The problems continued to mount for Silvergate as they continued to lose depositors amidst a slew of bad news in 2023. Depositors continue to flee, [its major business partners like Coinbase and Galaxy Digital left the bank](https://www.reuters.com/markets/currencies/crypto-exchange-coinbase-stops-initiating-payments-or-silvergate-2023-03-02/), and it [came under investigation by the DOJ](https://cointelegraph.com/news/silvergate-faces-doj-investigation-over-ftx-and-alameda-dealings-report) for its involvement with FTX.  These developments made Silvergate's stock a prime target for short sellers. According to S3 partners, its stock became the most shorted U.S. stock, with open short interest estimated to be at 22.6 million shares, or 82% of float. Silvergate’s stock price is now down -82.7% over the last month alone.  ![](https://www.datocms-assets.com/56652/1678481809-6.png?auto=format) Now that Silvergate has declared that it will wind down its operations, this has caused Senator Elizabeth Warren to come out of the woodwork and claim that this was a result of *“crypto risk.”* ![](https://www.datocms-assets.com/56652/1678481845-7.png?auto=format) But to call the fall of Silvergate a result of *“crypto risk”* is missing the big picture. In fact, Silvergate should be applauded for winding down operations in an orderly fashion that will make all depositors whole. This was a classic example of what can happen when banks do not have the assets on hand to fund withdrawals. This is what can happen with any fractionally reserved bank in the event of a bank run, regardless of if the bank was dealing with the cryptocurrency industry or not. CEO of Custodia Bank, Caitlin Long explains this well in the tweet below.  ![](https://www.datocms-assets.com/56652/1678481875-8.png?auto=format) This Silvergate development highlights a bigger risk within the banking sector as a whole. FDIC-insured banks are currently sitting on massive unrealized losses as their bond holdings have lost a significant amount of value as interest rates have soared. Below shows that there are currently over $600 billion in unrealized losses held by FDIC-insured banks today, mostly consisting of bonds that are deeply underwater. ![](https://www.datocms-assets.com/56652/1678481914-9.png?auto=format) This dynamic of the wide difference between the bonds’ book values and market values is not isolated to crypto banks like Silvergate. This became evident when the 16th largest commercial bank, Silicon Valley Bank Financial Group experienced a similar problem and saw its stock drop -35% on Thursday after it lost $1.8 billion selling $21 billion worth of bonds to fund withdrawals. ![](https://www.datocms-assets.com/56652/1678481943-10.png?auto=format) Shares of SVB were halted Friday morning as the shares sold off another -65% overnight as the bank desperately attempted to raise capital. Later that morning, it was announced that the bank would be closed and regulators would take control of its deposits. ![](https://www.datocms-assets.com/56652/1678481979-11.png?auto=format) The bank failure of Silicon Valley Bank marks the second-largest bank failure in history and the largest bank failure since the Global Financial Crisis.  ![](https://www.datocms-assets.com/56652/1678482033-12.png?auto=format) All of SVB’s deposits that are <$250,000 are insured by the FDIC, but it is estimated that over $150 billion, around 97% of its deposits, are uninsured, given that many of SVB’s customers are technology companies. This could pose a big problem to the thousands of companies that banked with SVB when it comes to their ability to make payroll over the next several weeks. We have not seen the end of this story.  On Friday morning, fear continued to spread to other regional banks such as First Republic Bank, PacWest Bancorp, and Western Alliance Bancorp as their share prices plummeted and were eventually halted by authorities. ![](https://www.datocms-assets.com/56652/1678482069-14.png?auto=format) The contagion in the financial industry was not just isolated to smaller regional banks. The four major U.S. banks lost an estimated $52 billion in market value on Thursday alone. ![](https://www.datocms-assets.com/56652/1678482100-15.png?auto=format) This carnage in the banking industry comes after Federal Reserve Chairman Jerome Powell testified before Congress earlier in the week stating that it is likely that the Fed will need to raise rates higher and hold them for longer.  Powell said, *“The ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we’re prepared to increase the pace of rate hikes.”* After Powell’s hawkish testimony, the market gave a 65% chance that the Fed would hike rates another 0.50% at the next FOMC meeting. Last month, this probability was only around 10%. However, given the recent turmoil in the banking industry, the odds of a 50 bps rate hike have declined. Many analysts have speculated that the Fed would eventually have to stop hiking interest rates to battle inflation *“when something breaks.”* Thursday was the first sign that there might be some cracks forming in the financial system due to this new high-interest rate environment.  If there is one thing that the Federal Reserve likes to bail out, it’s banks. Could this turmoil in the banking sector be the start of something bigger that could force the Fed Pivot that so many market participants have longed for?  Treasury Secretary Janet Yellen certainly seemed concerned about these recent developments. In a testimony today before the U.S. House Ways and Means Committee, she stated that the Treasury Department is *“monitoring a few banks amid SVB Financial's funding woes,”*  For this contagion to become systemic, either a lot more smaller banks would need to come under duress or a systemically important financial institution would have to come under pressure. One such large financial institution to keep an eye on is Credit Suisse, which has also seen deposits run out its door in record numbers. ![](https://www.datocms-assets.com/56652/1678482144-16.png?auto=format) Clients pulled around $120 billion in deposits from Credit Suisse in the last three months alone, and the bank reported a $1.3 billion loss in Q4 of 2022. The health of this large, important European bank is something to keep an eye on in the months to come.  The large U.S. banks are in a very different situation compared to Credit Suisse. Every year the Fed conducts a rigorous stress test to assess how these banks would perform under periods of distress. The scenario tested late last year was the unemployment rate peaking at 10%, real GDP declining by more than 3.5%, and steep declines in asset prices across stocks, bonds, and real estate. The results of the stress test showed that these large banks had sufficient capital to withstand these hypothetical adverse conditions.  Large U.S. banks have built up a large capital buffer due to regulations passed in the aftermath of the Global Financial Crisis, but small banks are not as protected. Their reserves continue to get drained, putting them at increased risk. ![](https://www.datocms-assets.com/56652/1678482190-17.png?auto=format) Deposits continue to flee these small banks, in part, because clients can now obtain higher interest rates in money market funds and treasury bills compared to the low rates of interest in deposit accounts. Small bank funding continues to dry up just as their bond portfolios have lost value as the Fed has hiked interest rates, a toxic combination for these institutions. We will be monitoring the banking sector closely in the coming weeks. As the bank stocks sold off, so did Bitcoin, with Bitcoin falling -10.6% in the last 5 trading days. ![](https://www.datocms-assets.com/56652/1678482218-18.png?auto=format) All of these developments across the broader banking industry highlight the need for investors to own an asset that has no counterparty risk in these uncertain times. We saw in the Global Financial Crisis of 2008 how quickly counterparty risk can spread in the highly interconnected traditional financial system during a credit crisis. It’s important for investors to protect themselves against this risk. When an investor holds Bitcoin in self-custody, there is no person or entity they have to trust to gain access to their savings. Bitcoin is sound money that you own when you hold your own private keys. No trust is required.  Bitcoin’s short-term price will continue to fluctuate with the global macroeconomic landscape and with changes in monetary and fiscal policy. But long-term, Bitcoin’s lack of counterparty risk is one reason why it remains an attractive asset to own in a diversified portfolio during these uncertain times.  ***Market Overview***  ![](https://www.datocms-assets.com/56652/1678482261-19.png?auto=format) Tradingview, Prices as of 03/10/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Monetary Debasement vs. Supply Shocks - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/monetary-debasement-vs-supply-shocks/ Price inflation, being a multi-faceted phenomenon, usually has multiple causes at once, and those individual causes become relevant over different time periods. --- **Lyn Alden** · March 13, 2023 · Updated July 3, 2024 Over the past few years, there has been considerable public debate on the topic of price inflation, where it's coming from, and how to best get it under control. What adds fuel to the fire is that the debate is political and is tied to people's worldviews. For some, it's supply chain problems and greedy corporations that are responsible for broad price increases. For others, it's the central bank printing too much new base money. For still others, it's the government's stimulus programs, and if multiple administrations were involved, then it's primarily blamed on whichever administration they don't like. Price inflation, being a multi-faceted phenomenon, usually has multiple causes at once, and those individual causes become relevant over different time periods. This makes it so that most explanations do have a grain of truth to them, and a chart can be made up to make any explanation seem true by focusing on the narrow aspect for which it might actually be true. At the end of the day, price inflation comes from too much money chasing too few goods and services. In a cyclical sense, improvements or losses in productivity, wars, supply chain problems, labor market constraints, and commodity supply constraints can result in higher or lower prices temporarily. In a structural sense, however, it's the increase in the money supply and long-term changes in productivity that drive aggregate price levels. This article looks at both monetary debasement and supply shocks to quantify some of the impacts between the two. ### Monetary Debasement vs. Supply Shocks Temporary price shocks with a specific catalyst (e.g. a shortage of a specific metal in a war, or a shortage of hand sanitizer in a pandemic) will retrace back to their pre-war price when the catalyst is over. These price increases aren’t primarily from new money creation; they’re from a temporary surge in demand or a temporary reduction in supply. On the other hand, if substantial new money creation is what primarily drove price increases in aggregate, then even after certain catalysts are finished, the equilibrium of most prices will remain permanently higher going forward, because the unit of currency that they are measured in has been permanently debased. We can apply to that test to each of the major inflationary periods of modern U.S. history (the 1910s, 1940s, 1970s, and the present). #### 1910s Inflation The second half of the 1910s decade was defined by World War I. And then as the war ended, the Spanish Flu also took its toll. When we look at price changes in rate-of-change terms (top panel below), the war seemed to be incredibly inflationary, followed by a post-war period of deflation, and then stable prices with no more inflation or deflation for a while. At first glance, this seems to suggest that price increases were temporary. However, when we look at the aggregate price levels in absolute terms (bottom panel below), we see that the inflationary period was much bigger than the deflationary period, resulting in post-war prices that averaged nearly 75% higher than the pre-war period. ![](https://www.datocms-assets.com/56652/1678715685-unnamed-1.png?auto=format) Plenty of new money was created to fund the war, and prices became permanently higher as a result after some of the temporary excesses and problems wore off. #### 1940s Inflation For the 1940s inflation spike, we see a similar outcome. There were waves of temporary inflation in rate-of-change terms, but prices eventually settled at a structurally higher level due to the substantial amount of new money creation that occurred throughout the period: ![](https://www.datocms-assets.com/56652/1678715734-unnamed-2.png?auto=format) #### 1970s Inflation In the 1970s we see the same thing again. Oil supply shocks and war led to temporary spikes of inflation, which eventually subsided. However, prices settled at permanently higher levels, and then continued growing from there, because a burst of credit creation led to a considerable amount of additional money existing in the system: ![](https://www.datocms-assets.com/56652/1678715771-unnamed-3.png?auto=format) The full 2020s story has yet to be written, but so far is playing out the same way. Prices march consistently higher, and with the latest surge of money creation during 2020 and 2021, we may have broken out from the prior trend: ![](https://www.datocms-assets.com/56652/1678715809-unnamed-4.png?auto=format) ### Sources of Money Creation Back in 1913, the price for a barrel of oil was $0.95. Today it is $79. Also in 1913, one gold ounce could buy you 22 barrels of oil. Today, one gold ounce can buy you 24 barrels of oil. In other words, oil priced in gold has been basically flat over the past 110 years. It just had volatile ups and downs along the way due to wars, recessions, and other things. Oil priced in dollars had similar ups and downs, but also had a 4.5% annualized upward price trend that compounded over the course of a century. In 1913, the broad money supply (M2) was $19 billion. Today it is over $21 trillion, which is more than a thousand-fold increase. The population was about 97 million in 1913 and is about 332 million today, so that's a 3.4x increase. Putting this together, in 1913 there were 196 dollars of broad money per American resident, while in 2022 there were 63,800 dollars of broad money per American resident. This is a 325x increase in the amount of broad money per resident. Fortunately, improvements in productivity (technology) have prevented most prices from rising by 325x. They've instead risen more like 80x-120x for relatively scarce things (oil, meat, gold, and things like that). They've risen much less than that for things that we got way better at making as a society that aren't really scarce at all, such as grains and electronics. The things that have truly risen 325x or more in price tend to be the scarcest things of all, like waterfront properties or fine art from famous deceased artists. If money creation is the primary driver of structural price increases (with the other being changes in productivity and other details around resource demand and supply), then we really need to know what specifically is causing money supply to rise or fall if we are to judge whether a given decade is likely to have above-trend or below-trend inflation. In my November 2020 article *“*[*Banks, QE, and Money-Printing*](https://www.lynalden.com/money-printing/)*“*, I discussed in detail how both base money and broad money are created or destroyed in a fiat financial system. The summary is that base money is mainly created or destroyed by central bank activity, and broad money is mainly created either from 1) bank lending or 2) fiscal deficits. When it comes to consumer price inflation, broad money is what we mainly care about. Here in 2023, we have some updated data. This chart shows the year-over-year percentage change in three numbers. The first number in blue is the fiscal deficit as a percentage of GDP. The second number in orange is the amount of new bank loans as a percentage of GDP. The third number, bolded in gray, is the amount of new broad money as a percentage of GDP: ![](https://www.datocms-assets.com/56652/1678715899-unnamed-5.png?auto=format) That chart is a bit messy, so here is a version that uses a rolling 3-year average to reduce noise, and zooms in a bit: ![](https://www.datocms-assets.com/56652/1678715922-unnamed-6.png?auto=format) During World War I (1910s), U.S. bank lending first had an uptick in order to finance allies like the United Kingdom without getting involved directly. And then by the end, the U.S. got involved directly, and fiscal deficits spiked. Both of these aspects caused an uptick in money creation. During the Great Depression (1930s), a significant amount of broad money was destroyed as bad loans were defaulted on and banks failed. There was an uptick in fiscal spending, but it was smaller than the amount of loan losses, and so money supply went *down* and price inflation was negative. During World War II (1940s), the rate of new money creation spiked due to war-related fiscal spending. There was not much bank lending during this time. Broad money was created in spite of banks and went around banks. The post-war years generally saw temporary fiscal austerity (surplus), and this contributed to a post-war recession as the economy digested what had happened and shifted back to a more normal baseline. During the 1970s, the baby boomer generation (the first of which were born in the late 1940s) began reaching their mid-20s homebuying years. This demographics surge caused a big uptick in demand for goods and services, and especially energy. While some money was created through deficit spending (the Vietnam War and Great Society programs), the majority of it was created via bank lending. A demographics-led boom in credit creation fueled a boom in consumption. During the Great Recession (2008 and into the early 2010s), there was negative loan creation due to widespread defaults, and an approximately equal amount of money creation from fiscal stimulus and bailouts. The result was generally neutral for the money supply and prices, like a less intense version of the Great Depression. During the COVID-19 shock and the first half of the 2020s decade thus far, the situation has been similar to the early 1940s. There was a huge spike in money creation due to large fiscal stimulus, while bank lending was normal. However, unlike the 1940s, the U.S. government today is set to run $1+ trillion fiscal deficits for the foreseeable future due to top-heavy entitlement programs and persistently large military spending. Moreover, the highly-financialized economy relies on ever-higher asset prices in order to fuel ever-higher tax revenue, and so even attempts at fiscal austerity would have a tough time reining in deficits at this point. ![](https://www.datocms-assets.com/56652/1678715971-unnamed-7.png?auto=format) ### The Big Picture As described above, price inflation can accelerate or decelerate for a variety of reasons. The rate of money creation, either primarily from fiscal spending (e.g. 1940s and 2020s) or primarily from bank lending (e.g. 1970s) plays a big role in structural price increases over time. In the current financial system, both the base money and broad money increase in supply over time. Around the margins, surges of demand or impairments to supply can affect inflation significantly in the cyclical sense. The more we zoom out, the changing nature of how money is defined and maintained at the national and global level plays a big role in determining whether the units that we use hold their value over time or not. This chart shows the purchasing power of the U.S. dollar since its creation in 1792, with dates of major definition changes annotated: ![](https://www.datocms-assets.com/56652/1678716014-unnamed-8.png?auto=format) Ian Webster From 1792 until 1913, the purchasing power of the dollar fluctuated in a sideways manner, with no estimated loss of purchasing power overall. It was defined as a fixed amount of gold. During the War of 1812 and then again during the Civil War in the 1860s, there were bursts of inflation but they were ultimately temporary, with deflation in the aftermath that brought prices back in line with the pre-war baseline. The Federal Reserve was created in 1913, which marked a change in how the country handles its base money, and how it handles its monetary policy more broadly. The redeemability of dollars for gold domestically was ended in 1933, and Americans were disallowed from owning gold under threat of imprisonment for the next four decades. The redeemability of dollars for gold for international creditors was then ended in 1971. This process represented a gradual decoupling between the process of currency creation and any sort of tether to physical constraints or supply limits, and so naturally that currency creation process accelerated and hasn't looked back since. Sometimes there are big disinflationary offsets that conceal the impact of this constant money creation, such as the rapid globalization of the 1990s through the 2010s, where a tremendous untapped labor pool in China end elsewhere was plugged into western capital markets and corporations, which kept prices and wages down broadly. Other times, such as in recent years, there are insufficient disinflationary offsets to conceal the ongoing money creation or certain crises that can accelerate the pace of money creation, and we begin to feel it more. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Recurring Buys vs. Lump-sum Investing - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/dollar-cost-averaging-vs-lump-sum-investing/ The best strategy is the one that allows an investor to hold through Bitcoin’s volatility and sleep well at night, whether it’s recurring buys or lump-sum. --- **Sam Callahan** · March 15, 2023 · Updated June 27, 2024 After a client has done their homework and concluded that they want to buy bitcoin, the next decision for them to make is *when* to buy Bitcoin to get the greatest return on their investment. We often get clients at Swan who ask us, *“Should I buy now?”* Or clients who tell us, *“I’m sitting on cash. I’m going to wait for the price to drop.”* Some clients decide to purchase their Bitcoin all at once at a price they feel is good value. This is called Lump-sum investing – the entire amount of available funds is invested immediately.  An example of this strategy could be an individual inheriting $10,000 and investing it all immediately. It could also be an individual who has $1,000 left over from each paycheck and decides to invest it all at once every month. The key here is that all *available* cash is invested at once. Other clients decide to use a different strategy. Instead of allocating all of their available funds at once, they buy a specified amount of bitcoin every day, week, or month until the available funds are fully invested. This is called Dollar-Cost Averaging (DCA) or recurring buys/purchases – the available funds are invested typically in equal-sized payments at regularly scheduled time intervals over time. For example – if an investor has $10,000 to invest, they could choose to purchase $2,000 upfront and then set up a recurring buy for $2,000 every week for 4 weeks. Given Bitcoin’s volatility, it can be difficult for investors to know when is a good time to buy and when is a good time to wait for a better entry point.  **It begs the question: Which investment strategy has historically performed better for Bitcoin investors? Have investors who invested their funds all at once (lump-sum) outperformed those that have spread out their buys over time (DCA)?** We wanted to find out the answer to these questions, so we ran the numbers. The results may surprise you.👇 ### Methodology  We began by analyzing the last 6 years in Bitcoin’s price history. To analyze the return on investment of both strategies, we ran a simulation in which we compared different recurring buy strategies at different time intervals compared to lump-sum investing.  We took a hypothetical scenario where an investor had $10,000 to invest.  We assumed that this investor would be buying a certain amount of bitcoin upfront, given human behavior. If an investor has already decided they want to buy bitcoin, it is highly likely they would buy at least some bitcoin upfront, even if they did plan to use a recurring buy strategy.   - 0% upfront means that they did not invest any funds to start, and then they recurring buy the entire $10,000 in equally weighted set intervals.  - 25% upfront means they invested $2,500, and then set up recurring buys for the $7,500 in equally weighted set intervals. - 75% upfront means they invested $7,500, and then set up recurring buys for the remaining $2,500 in equally weighted set intervals.  - 100% upfront is the same as lump-sum investing.  We then analyzed the different upfront strategies with various recurring buy strategies, including daily, weekly, and monthly time intervals.  Here are the recurring buy strategies analyzed: - *Daily (10, 15, and 30 days)* - *Weekly (4 and 8 weeks)* - *Monthly (6 and 12 months)*  We ran a simulation from every single day as the starting date until today. We then compared how the different investment strategies have performed historically over different time periods.  Here’s what we found.   ### Recurring Buys vs. Lump-sum (2017-Today) First, we looked at how the different strategies have performed in the last 6 years.  We compared the total amount of bitcoin accumulated by all of the recurring buy strategies vs. lump-sum since January 2017.  On the y-axis is the number of simulations that were run, and on the x-axis is how much the lump sum outperformed the recurring buy strategies. ![](https://www.datocms-assets.com/56652/1678913236-01-outperformance-lump-sum-over-dca-2017.svg) A value of 1.00 means that the two strategies returned equal amounts, in other words, a client accumulated the same amount of bitcoin whether they used a lump-sum or recurring buy strategy. A value above 1.00 means that the lump-sum strategy outperformed a recurring buy strategy. For instance, an outperformance of 1.03 means that the lump-sum strategy accumulated 3% more bitcoin during a given time period. On average, the chart above indicates that lump-sum has generally outperformed the recurring buy strategies since 2017. You can see this by observing how the majority of the simulations were greater than 1, sometimes significantly. ### Recurring Buys vs. Lump-sum (2019-Today) Second, we looked at how these different strategies have performed in the last 4 years.  A similar pattern emerges. Lump-sum generally outperformed recurring buy strategies.  ![](https://www.datocms-assets.com/56652/1678913321-02-outperformance-lump-sum-over-dca-2019.svg) ### Recurring Buys vs. Lump-sum (2021-Today) Third, we compared the performance of both strategies in the last 2 years.  This chart shows how recurring buy strategies had improved performance compared to lump-sum during this period, with more simulations scoring <1 than previous time periods.  ![](https://www.datocms-assets.com/56652/1678913418-03-outperformance-lump-sum-over-dca-2021.svg) This is to be expected during bear markets as recurring buy strategies allow for an investor to have cash on hand to accumulate more bitcoin as the price moves downwards or chops sideways, whereas lump-sum investors are already fully invested and have to stomach the drawdowns on paper, and don’t have additional capital to lower their cost basis.  So, in general, lump-sum strategies outperform recurring buy strategies, except for periods where an individual invested all of their money right before an extended period of downward price action. ### Which Recurring Buying Strategy Outperformed?  When we dig deeper into the data, we find that the longer recurring buy strategies underperformed the shorter recurring buy strategies, highlighting once again that sitting on the sidelines can be costly when investing in Bitcoin.  The chart below highlights how monthly recurring buy strategies drastically underperformed other recurring buy strategies from 2017-2023. In the figure below, a 10 Day (0%) strategy means a daily recurring buy strategy across 10 days, with zero percent allocate upfront. A 4 Week (25%) strategy means a weekly recurring buy strategy across 4 weeks, with 25% of capital allocated upfront.  ![](https://www.datocms-assets.com/56652/1678913475-04-dca-strategies-outperformance-compared-lump-sum.svg) This data shows that the average 12-month recurring buy strategy accumulated nearly 75% less bitcoin compared to the average lump-sum strategy, and the average 6-month recurring buy strategy accumulated around 25% less bitcoin.  This trend can be further observed when you look at each recurring buy strategy more granularly.  Here, the average 10-day daily recurring buy strategy outperformed the average 15-day and 30-day strategies, and all three slightly underperformed the average lump-sum from 2017-2023. #### Daily Recurring Buy (2017-2023) ![](https://www.datocms-assets.com/56652/1678913575-05-daily-dca-average-performance-vs-lump-sum-2017-2023.svg) #### Weekly Recurring Buy (2017-2023)  This chart shows how the average 4-week recurring buy strategy outperformed the average 8-week recurring buy strategy, while both underperformed the average lump-sum.  ![](https://www.datocms-assets.com/56652/1678913632-06-weekly-dca-average-performance-vs-lump-sum-2017-2023.svg) #### Monthly Recurring Buy (2017-2023) This chart shows how the average 6-month recurring buy strategy outperformed the average 12-month recurring buy strategy by a significant margin, and both drastically underperformed the average lump-sum.  ![](https://www.datocms-assets.com/56652/1678913659-07-monthly-dca-average-performance-vs-lump-sum-2017-2023.svg) One major takeaway from this data is that the longer an investor took to deploy capital, the more they underperformed compared to a lump-sum investment.  Moral of the story: when investing in Bitcoin, historically, the earlier an investor gets their capital in, the better. ### Why Has Lump-sum Consistently Outperformed? The results above tell us that historically an investor who decided to do lump-sum investing experienced a greater return on investment than one who had a recurring buy plan setup. The question is: why? The answer is: upwards volatility. When Bitcoin moves up, it explodes. It’s no secret that Bitcoin is a volatile asset. As it stands today, volatility is an inherent trait of Bitcoin. Here is a chart of Bitcoin’s 30-day rolling volatility that highlights the wild price swings that occur in Bitcoin.  ![](https://www.datocms-assets.com/56652/1678913796-08-historical-30-day-rolling-annualized-volatility.svg) This volatility makes it extremely difficult for investors to try to time when Bitcoin’s price is going to rise or drop.  For individuals who choose to a recurring buy strategy, it is not necessarily true that they are not timing the market. By not investing all of their available funds at once, they are implicitly choosing to hold cash, which means they believe that Bitcoin’s price will chop sideways or move down. These investors hope that by setting up recurring purchases, they will be able to lower their overall cost basis as Bitcoin’s price chops sideways or drops lower. This is corroborated by the data above, where recurring buy strategies typically outperform lump-sum strategies during bear markets. **The problem is that a majority of Bitcoin’s gains historically have occurred in short, explosive movements to the upside. There is a significant opportunity cost to sitting on the sidelines in Bitcoin, which is why lump-sum historically outperforms recurring buy strategies.** There’s an old saying on Wall Street that stocks climb up the stairs but come down on the elevator. But with Bitcoin, it appears to be the opposite. For the majority of the time, Bitcoin trades mostly sideways or grinds lower, only to have explosive movements to the upside. This is likely why holding Bitcoin can feel particularly challenging for investors, given its volatility and the historical behavior of its price movements. For long-term investors, holding bitcoin in their portfolio can feel a lot like this.  ![](https://www.datocms-assets.com/56652/1678913848-09-hodl.jpg?auto=format) There are far more red days than green days for long-term Bitcoin investors, but those few green days are massive. Therefore, it’s absolutely vital that investors do not miss these days to capture the gains from Bitcoin’s price appreciation. The data confirms this. The table below shows the top 15 three-day Bitcoin moves over the last 5 years. ![](https://www.datocms-assets.com/56652/1678913883-10-top-15-three-day-upward-price-2018-2023.svg) **If an investor had invested $100 dollars into Bitcoin on February 1st, 2018, by today, that $100 would be $227.**  **But if an investor had invested $100 dollars into Bitcoin that same day, but missed the top 15 three-day price movements, their original investment would be worth only $15!** In other words, if an investor had missed these 15 largest 3-day periods during this time period, their total return was -84.6%. This was during a period when the total return of Bitcoin increased by +127%! This is likely why recurring buy as an investment strategy has underperformed lump-sum investing in Bitcoin.  With lump-sum investing, an individual is sure to capture all the gains that occur in these periods of explosive price appreciation, whereas an individual recurring purchases risks having a portion of their funds still on the sidelines as they allocate over time.  One might scoff at this and say, *“Well, when you* recurring buy*, you also have a chance of missing big drawdowns, unlike lump-sum.”* But when you look at the data, that is not the case because the risk of missing down days and missing up days is not symmetrical. As we mentioned earlier, the price of Bitcoin tends to move sideways or grind most of the time downwards and then shoot upwards. If you miss these largest green days, the long-term impact on the performance of the portfolio is greater than not having exposure to the down days.  When you look at the drawdown risk between strategies, you will find that the drawdown risk actually increases from daily to weekly to monthly recurring buy strategies.  Below shows the drawdown risk for the different recurring buy strategies compared to lump-sum. The higher the drawdown at risk, the worse it is.  ![](https://www.datocms-assets.com/56652/1678913921-11-drawdown-risk-dca-strategies-vs-lump-sum.png?auto=format) Notice on the chart above how the monthly recurring buy strategies do not have exposure to Bitcoin during periods of low drawdown risk like the daily and weekly strategies. This means that monthly recurring buy strategies have more exposure overall to periods of high drawdown risk compared to shorter recurring buy strategies because they failed to be exposed to bitcoin during the bear market.  If investors are using a monthly recurring buy strategy, they will miss the best buying opportunities at the bottom of the bear market. In other words, their average cost basis will be higher compared to shorter recurring buy strategies, meaning they will have higher drawdown risk when the price falls. Thus, investors who recurring buy over long periods of time are more likely to see their wealth on paper drawdown more significantly, putting them at greater risk of making poor investment decisions. This is just another argument for why it might be better for investors to choose a lump-sum investment strategy or shorter recurring buy strategies compared to longer recurring buy strategies.  The same trend can be observed when analyzing annualized volatility across the different recurring buy strategies. The higher the annualized volatility, the more rocky of a ride investors experienced using that strategy.  ![](https://www.datocms-assets.com/56652/1678913947-12-annualized-volatility-dca-strategies-vs-lump-sum.png?auto=format) The chart above shows how, once again, monthly recurring buy strategies all had annualized volatility above 60%, but the other DCA strategies had annualized volatility below 60%. This highlights again how monthly recurring buy strategies are likely to not have exposure during the boring times when Bitcoin’s price is grinding sideways, which makes up a majority of the time. These time periods help dampened the overall volatility of the position. When using monthly recurring buy strategies, you are more likely to have exposure to highly volatile periods without having exposure during low volatile periods.  Most investors believe that with recurring buy strategies, they are protecting themselves from large downward price movements or high levels of volatility, but this data shows that DCA does not historically provide any significant protection against volatility or drawdown risk compared to lump-sum and that the longer the recurring buy strategy is, the more drawdown risk and volatility an investor is likely to experience.  ### Considerations Beyond the Data  This data makes a convincing argument for lump-sum investing when considering an allocation to Bitcoin. It shows that historically lump-sum strategies have outperformed recurring buy strategies and have resulted in lump-sum investors accumulating more bitcoin than their recurring buy counterparts. It also shows that the earlier an investor allocates to Bitcoin, whether that is lump-sum or by choosing daily recurring buy over weekly and monthly recurring buy, the better their return will be over the long term.  Not only that, but this data shows that recurring buy does not provide any substantial benefit when it comes to protection against downside risk or volatility risk. This is likely due to the nature of Bitcoin's price action in that it has sharp upward price movements and tends to grind sideways or downwards for long periods of time.  All of this data points to one fact, with Bitcoin, you should invest as early as possible. It hurts to wait because one might miss out on large, short-lived price movements that will make up a majority of their returns, and these price movements are impossible to predict.  One caveat is that this is all based on historical data. And there's no guarantee that the future will be shaped like the past.  But there is an even larger caveat…lump-sum only outperforms other strategies if the investor can hold their bitcoin long term. The main factor of whether or not an investment in Bitcoin is successful or not is the ability of an investor to hold long-term to take advantage of its Compound Annual Growth Rate (CAGR). Any strategy that makes holding more difficult for an individual investor will likely result in inferior returns.  Therefore, the best strategy is the one that allows an investor to hold through Bitcoin’s volatility and sleep well at night, whether it's recurring buy or lump-sum. The *“right”* strategy is unique to every investor regardless of what the historical data says. Every investor is different. It’s hard for investors to sit on their hands and survive Bitcoin’s volatility when they are in the wrong strategy for them. That’s why it’s vital for investors to tailor their Bitcoin strategy to their own risk toler­ance, their own finan­cial situa­tion, and their own convic­tion level to prevent a stressful situa­tion that could lead to emotional decisions and selling too soon.  In Morgan Housel’s fabulous book *“The Psychology of Money,”* he explains how Warren Buffett’s net worth as it stands today is around $84 billion. Of that, around $81 billion came after he was in his mid-60s. Housel goes on to explain, “*The real key to his success is that he’s been a phenomenal investor for three-quarters of a century…His skill is investing, but his secret is time.*”  Housel continues… “*But good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.*” Here is Bitcoin’s CAGR compared to gold and the S&P 500 over the last 10 years.  ![](https://www.datocms-assets.com/56652/1678917241-13-cagr-bitcoin-vs-other-asset-classes.svg) CaseBitcoin.com As you can see, the longer an investor holds Bitcoin, the more attractive the CAGR is.  Albert Einstein was once quoted as saying, *“Compound interest is the eighth wonder of the world.”* This quote holds true for investing in Bitcoin too.  To date, Bitcoin has provided extraordinary compounded returns for investors in its lifetime. Therefore, when an individual decides to invest in Bitcoin, they should do so with the goal of holding their investment for a long time to take advantage of this compounding and should consider an investment strategy that allows them to reach that objective, regardless of which investment strategy has historically performed better. In the end, holding Bitcoin for longer durations is the single biggest factor when it comes to whether or not an investor will succeed with their Bitcoin investment. Investors should choose the investment strategy that best suits themselves to maximize their chances of holding their Bitcoin position for the long term.  ### Bitcoiners run the numbers. Trust, but verify, below.  Visit this [Link to Github repo](https://github.com/pxsocs/allocator) where anyone can clone, modify and/or submit a PR to the models above. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # A New Age Dawns for Financial Advisors - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/a-new-age-dawns-for-financial-advisors/ A Blockbuster Moment --- **Ryan Flynn** · March 17, 2023 · Updated June 6, 2024 In 2000, Netflix co-founders Reed Hastings and Marc Randolph offered to sell their fledgling two-year-old DVD rental business to Blockbuster for $50m. Blockbuster turned them down. Ten years later, Netflix was a publicly traded video-streaming business with a $9b market cap while Blockbuster hemorrhaged $1 billion in losses, filing for bankruptcy in September of that year. How did this happen? When they turned the deal down, Blockbuster boasted a $6b market capitalization, 9,000 rental stores, and 60,000 employees. Netflix was sending rental DVDs through the mail and struggling to stay in business, booking a loss of $57m for the year. It’s a classic case study of disruptive innovation. The speed at which the bandwidth rate increased caught Blockbuster on its heels. In 2000, they investigated video streaming but concluded that since people were mostly using dial-up modems, the data transfer rate was too slow to support high-quality streaming experiences. In 2004, Blockbuster management realized the mistake and launched their own subscription service. But only four years later, it was already too late. Hastings admitted that had Blockbuster launched their service just two years earlier they would’ve put Netflix out of business. The internet itself wasn’t the disruptive innovation to the movie rental business. It was Edholm’s law and Moore’s law that posed the existential threat to Blockbuster. Semiconductor and transistor breakthroughs collapsed analog VHS tape distributed in brick-and-mortar stores into natively digital information packets, seamlessly streamed across TCP/IP. This changed everything about the way customers engaged with movie rentals. In fact, it obsoleted the idea of renting movies altogether. The business model was flipped on its head - the customer pays a flat subscription fee and can *“rent”* as much as they want. And not only can they *“rent”* movies, but also TV shows, video games, new entertainment genres, and formats that didn’t even exist prior. No late fees, and no returns. *“Be Kind, Rewind”* atrophied into a forgotten axiom. Twenty years later, financial advisors are staring down the barrel of their industry's Blockbuster moment. Bitcoin collapses analog value into natively digital money. The key components, Nakamoto consensus, and difficulty-adjusted proof-of-work have forged perfectly scarce digital money issued on a known and predictable schedule. It changes everything about how we interact with money and as a result, it is an existential threat to those who manage money professionally. It will turn financial advisors’ business models upside down just like the countless industries that have already digested the analog-to-digital shift. Fiat money is breaking under its own weight, in part, because it is rooted in our industrial economic past. Over the last 20 years, the internet has slapped a digital layer on top of the legacy financial system with online banking and brokerage, but under the hood, there has been no real innovation - just the hollowed-out vestige of what once was a gold-based-analog system. As Saifedean Ammous said, *“it is not​ possible to insulate yourself from the consequences of others holding money that is harder than yours.”* Bitcoin is the innovation - sound money made sounder because its nature is digital. The 60/40 portfolio is under assault, teetering on the edge of history’s dustbin. The good news for wealth managers is that money itself is not going away. It's becoming more powerful, more extensible, and more versatile. The need for professional money managers who understand and utilize this new money to its fullest extent will only grow. Bitcoin won’t necessarily obsolete professional money managers, only those who wait too long to leave the old way behind as Blockbuster did. ### A Swan at the Dawn We built Swan Advisor Services to empower those FAs who want to embrace this innovative disruption – those who want to interact with the protocol and the asset directly. At the center of it all is access to real Bitcoin. Not crypto and not Bitcoin proxy products. An open platform that allows the advisor and the client to implement the allocation and custody model that best suits their needs. To date, traditional brokerages have prevented FAs from interacting with real Bitcoin, which has forced their clients into suboptimal products, like GBTC, or over-levered public miner equities. This has created poor outcomes for clients and sacrificed access to a perfectly scarce bearer asset for the convenience of underperforming price-tracking proxy IOUs. The legacy mindset has missed the forest for the trees - mistaking BTC as just another ticker to gain exposure to price action instead of proactively holding sound money. Other *“crypto”* advisor solutions have distracted capital away from Bitcoin and restricted or outright prevented self-custody. We are taking the opposite approach. If the advisor and client decide that self-custody is the way, we’ll do all we can to help them. Eventually, Swan’s collaborative custody tools will empower advisors to more deeply integrate themselves as a trusted advisor supporting their clients’ bitcoin plans across generations. Our world-class content and research team is helping to educate and train firms on Bitcoin. We’re helping advisors upgrade their compliance and operational approaches. Our platform enables new business models for the advisor, including collaborative custody, lending, and likely others no one has yet conceived of. Swan Advisor Services is the trusted partner for advisors to build their Bitcoin strategy and embrace the necessary coming changes to remain in demand. From a technical standpoint, Swan Advisor Services consists of a new product layer on the base Swan platform built on the foundations of OTC brokerage and qualified custody. Advisor firms onboard an entity account and use our platform to open and manage client accounts either as a discretionary fiduciary or on a held-away, client-directed basis. The advisor dashboard provides advisors much-needed visibility into their clients’ bitcoin positions to streamline reporting, statement creation, and billing. It brings bitcoin into the overall financial planning and portfolio management conversation. ### Early Success Is Building Momentum for Swan and Advisors We are currently serving more than a dozen firms that manage well over $1b in total AUM across many thousands of client accounts. And we’ve only just started. Every week we onboard more advisors who are getting on the mission. It's still early days, but the industry is at the tipping point. It's no longer possible for financial advisors to ignore Bitcoin or ignore the systemic issues in the creaking traditional markets. Clients have a lot of questions these days and advisors need well-researched and informed answers. The crypto meltdown of 2022 provided tangible examples for advisors to understand the difference between Bitcoin and crypto. The resulting regulatory scrutiny increased the risk advisors face if and when they recommend crypto assets outside Bitcoin to their clients. There are approximately 29,000 retail, independent Registered Investment Advisors in the US managing $10.6 trillion in assets across 4.5 million client accounts. Bitcoin is a bearer asset that is trivial to self-custody without the help of a professional advisor or institutional custodian. The only way the industry can maintain (and grow) that $10 trillion in AUM is to understand all that Bitcoin has to offer and add value above and beyond commoditized passive investing and forced institutional custody. Bitcoin aside, the Financial Advisor industry has been under pressure from clients fed up with high-fee products and the increased uptake of robo-advisors and passive index investing. Swan Advisor Services provides the building blocks necessary to ride out the storm of innovative disruption in which advisors currently find themselves, and complete their journey to the new world of a Bitcoin-based system. We are helping advisors simplify and supercharge portfolio construction and reaffirm their position as trusted fiduciaries plying their trade through relationship building, long-term financial and tax planning, and multi- generational estate work. There is still time for advisors to avoid going the way of Blockbuster, but it's getting short. Only the strong will survive amongst the professional money manager class and Swan is here to help! If you work with a financial advisor and would like to see them upgrade their practice to incorporate real bitcoin, you can point them to swan.com/advisor for more information or put them in direct contact with me at: ryan@swanbitcoin.com [https://twitter.com/pricestable](https://twitter.com/pricestable) [https://www.linkedin.com/in/ryan-flynn-b486b46/](https://www.linkedin.com/in/ryan-flynn-b486b46/) ### Ryan Flynn Ryan is the Managing Director of Swan Advisor Services. He is working to make Bitcoin accessible to all financial advisors and their clients. Before joining Swan, Ryan was the Co-founder of Localstake, an investment crowdfunding broker-dealer platform. He started his career in investment banking and holds Series 7, 24, 28, 63 and 79 securities licenses. # The Bullish Case for Stratum v2 - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/the-bullish-case-for-stratum/ Stratum v2 is the missing piece of the decentralization puzzle for Bitcoin. --- **Pavlenex** · March 21, 2023 · Updated June 6, 2024 Every ten minutes or so the Bitcoin network creates a new block of transactions. Who decides which transactions go into those Bitcoin blocks? If your answer is miners, you’re wrong.  This article will bring a few more surprising facts that will help you understand the current status of Stratum v1, the industry-adopted mining protocol, and why a change in the bitcoin mining protocol is much needed. We will build a bullish case for Stratum v2 — a protocol upgrade that helps address all the concerns we’ll bring up. Today, Bitcoin is mainly controlled by a handful of centralized mining pools that decide which transactions are constructed in a block. This isn’t good for the decentralization of the world’s next reserve currency. When we consider recent events on other networks, having centralized decision-makers in a decentralized system is an attack vector that will eventually be exploited. Here’s another surprising fact. The last time we had a change in the Bitcoin mining protocol was in 2012. Hashrate, a measurement of the computational power miners, mining pools, and proxies contribute to the network, has snowballed since then, and Bitcoin mining has become a serious industrial undertaking.  While the hashrate growth as a sole metric may not mean much, it raises eyebrows. In a rapidly growing industry where things change daily, the last time we had a mining protocol change was over a decade ago! ![](https://www.datocms-assets.com/56652/1679417365-unnamed-10.png?auto=format) Are you ready for another one? Did you know that communication between mining devices, pools, and proxies that aggregate connections is unencrypted?  It’s 2023, and the entire mining industry isn’t even using basic encryption as a security mechanism. That means they’re vulnerable to a basic man-in-the-middle attack. Anyone able to intercept the connection could easily steal hashrate and point it to their farm. This attack has been proven, and it’s happening. However, mining pools don’t disclose it publicly because it’s a bad look for their business.  The current protocol everyone uses, Stratum v1, isn’t standardized. For example, it doesn’t include a proxy in the specs, so mining farms are left to improvise on implementing this important infrastructural component. Stratum v2 is a next-generation protocol for pooled bitcoin mining. It defines how miners, proxies, and pools communicate to contribute hashrate to the Bitcoin network. Compared to its predecessor, Stratum v2 adds layers of improvements, such as enhanced security, standardization, flexibility, efficiency, and, most importantly, censorship resistance for the entire network. #### Censorship Resistance Stratum v2 is the missing piece of the decentralization puzzle for Bitcoin. Currently, when a miner participates in pooled mining, the pool itself has the only say on which transactions go into blocks. This is a massive censorship problem. For Bitcoin to be fully decentralized, we must get rid of the centralization of power in a handful of mining pools. Stratum v2 does this by implementing what is called the Job Negotiator sub-protocol, which provides a block template that allows individual miners to run a full node and construct their own blocks. The mining pool must accept whatever miners propose. If they decline, miners will fall back to a different pool or mine on their own. The Job Negotiator can be run by a miner or an independent third party, allowing greater flexibility and outsourcing responsibility from a centralized mining pool to anyone wanting to run it. #### Security, Efficiency, Standardization Stratum v2 uses NOISE encryption and authentication. Communication between the participants is no longer susceptible to a man-in-the-middle attack or hashrate hijacking. The protocol is binary, which improves efficiency. For example, the binary protocol allows less bandwidth usage, meaning miners in remote areas could benefit from upgrading to Stratum v2. The protocol is clearly defined and standardized, so there’s no room for ambiguity.  #### Flexibility Stratum v2 is flexible. Multiple sub-protocol and configurations can satisfy any need and allow greater modularity to the setups. For example, we’ve implemented a Translation proxy that will enable miners running Stratum v1 firmware to connect to the Stratum v2 pool, so a sensitive thing such as a firmware upgrade isn’t needed to use Stratum v2. However, manufacturers could undoubtedly benefit from shipping their devices with Stratum v2 firmware, one such example is Braiins OS. ![](https://www.datocms-assets.com/56652/1679417395-unnamed-11.png?auto=format) #### Interoperability  The Stratum Reference Implementation puts interoperability as its highest priority. That’s why we’ve developed Message Generator — a tool that allows different implementations of the Stratum v2 protocol to test against each other and the reference implementation to ensure interoperability.   Currently, there are two implementations of the Stratum v2 protocol: - Braiins implementation - SRI (Stratum Reference implementation) Braiins understands the importance of having an independent, community-run, and completely open-source implementation. If you'd like to donate to Stratum V2, please visit the OpenSats page [here](https://opensats.org/projects/stratumv2). ### Pavlenex Pavlevex is a Product Manager in Bitcoin and open-source. He is a Spiral BTC grantee currently building the next wave of interoperability within the industry. # A New Peaceful Transition of Power - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/a-new-peaceful-transition-of-power/ In democracies we rely on elections — Proof-of-Votes — and hope all goes well. In Bitcoin power transitions peacefully through Proof-of-Work. --- **Tomer Strolight** · March 24, 2023 · Updated June 27, 2024 Last month’s Insight contained *“*[*A New Separation of Powers*](https://www.swanbitcoin.com/a-new-separation-of-powers/)*”* in which I wrote about how Bitcoin’s methods of defending itself against corruption differ with those of governments of democratic republics, particularly the United States. It explained how the US relies on a different and much more traditional form of separating powers to make corruption more difficult than Bitcoin does. While preventing corruption is very important, another crucial political process is the transition of power when individuals or parties must actually relinquish power and hand it over to successors. In this article, we’ll compare power transitions in governments with those in Bitcoin, and even explore the idea of which powers currently residing in the hands of government might themselves be transitioning to Bitcoin. ### Power Transitions in Government We take it for granted nowadays, but transitions of power were not always historically peaceful. In fact, it seems that it was much more common that they did not come about peacefully, nor that they were accepted peacefully when they did come about. Today, of course, in the west, we hold elections at regular intervals, and their results can lead to the transition of some seat of political power from one person to another. (Some seats of power, like becoming a supreme court justice, are made by appointment and last for life.) When someone new is elected or appointed to take office, we expect their predecessor to stand aside and peacefully accept that change. We expect clarity and fairness in the election or appointment process. We expect the bureaucracy that supports the functions of government to abide by and enforce the process, regardless of what outcome the individuals involved personally prefer. However, this process is far from perfect. Today, we see signs of controversy around the process, with many people questioning the legitimacy and fairness of elections, and others questioning whether those questioners represent a threat to democracy. Even politicians, who depend greatly on the peaceful transition of powers, have themselves cast doubts on both the integrity of some elections or declared that some block of voters are a danger to democracy. All of these developments are concerning, and remind us we should not be taking for granted the peaceful transition of power. Without a non-violent means of transitioning power we would be left with only two alternatives – either no transition of power, or transition only by violent means. Neither is desirable, or even tolerable, really. It is not within the scope of this article to discuss how democracy can or should be fixed. Rather, I intend to use this space to discuss what power transitions exist within Bitcoin, and how they are peacefully effected without elections and without anyone having to voluntarily agree to secede that power to anyone else. ### What Power Exists In Bitcoin? How Is It Transitioned? *“Hold on a second,”* you might interject. *“I thought nobody was in charge of Bitcoin!”* Well, if by “in charge” one means *“gets to make up new rules,”* then that is correct (and was the subject of [last month’s article](https://www.swanbitcoin.com/a-new-separation-of-powers/)). But although Bitcoin’s rules don’t change except for under exceptional circumstances, Bitcoin’s ledger – also known as the blockchain or the timechain – does change: It gets a new block of data added once every ten minutes on average. Who has the power to add that next block? Why can’t someone contest that power and add a different block? Since each block contains a mining reward – a payment in Bitcoin to the person who got to add it to the ledger – shouldn’t we expect there to be disputes about who gets to do it? ### Mining: A Peaceful Contest Democratic elections are contests – arguably *“popularity”* contests. The most popular contestant wins the election. After elections, there’s work for the winner to do, so they are given some time to do the work – usually around four years. Then they must run again in a new contest. By contrast, in Bitcoin, those who want to write to the ledger and get paid for it must do all the work beforehand. This is what is known as *“mining”* in Bitcoin. Like democratic elections, there can only be one winner for each block. But mining is not a popularity contest. It is a contest that combines doing real-world work, with perhaps a little bit of luck (in the short term). The contest goes like this: (I’ll elaborate on the points after listing them, so don’t despair if I use a word you don’t fully understand.) 1. First, all contestants (miners) accept the latest state of the ledger. 2. Next, they assemble a block of legitimate transactions that have not yet been added to the ledger, including also one special transaction paying themselves the legitimate rewards of adding the block to the ledger (known as the Coinbase transaction). 3. Then, they begin guessing, as fast as they can, various values which, when included in the description of the block, might result in the *“hash”* of that block satisfying the required value as set out by the protocol. Doing all this guessing is the work in Bitcoin’s *“Proof-of-Work”* mining. 4. Finally, when a miner doing all this work finds a valid result, they share it immediately with the network, and everyone in the network can easily verify for themselves whether or not the solution is valid. This is the proof that that miner did the work and got lucky enough to beat out everyone else competing in the contest. That final step is the conclusion of the contest – the winner’s block is added to the ledger, by everyone, and a brand new contest begins again from the first step. Let’s consider some aspects of this contest: 1. Nobody is in charge. 2. There is no ceremony on transitioning power. 3. There is no advantage to the *“incumbent”* who got to add the most recent block. 4. There is no promise to be kept, or broken, by the winner. 5. The work is done. 6. For one, brief instant, the winner had the power to add the next block to the ledger. 7. Then, they were once again on the exact same footing as everyone else, having to do exactly the same work as anyone else for their chance to win the next round of the competition. 8. **And it was all perfectly peaceful.** ### Does This Contest Work in Practice? Proof of Work works. What the last fourteen years of history have shown us, over 770,000 times, is that Bitcoin’s transition of adding data to the chain of its history from one entity to another occurs: - peacefully, - with complete agreement of all system participants, - at the intervals built into it from its inception - and issuing the rewards that were described at its inception #### Edge Cases Are Also Resolved Peacefully To work this flawlessly, Bitcoin does have to address edge cases where there might be ambiguity, or where someone might try to cheat. Here’s how it peacefully resolves all of these issues. #### Chain-splits and *“Orphaned”* Blocks Occasionally, and as fully expected in the scope of the rules of the contest, two miners find a valid block of the same block height (which is what the latest block’s number is called) at roughly the same time. When this happens, there is a temporarily disputed matter as to which of those two blocks should be the one everyone accepts. If this disagreement went unresolved and different miners kept on building on both of these blocks, we would end up not with a single chain, but with a split in the chain. If that happened, which would be the one we call true, and which would be the one we reject? Bitcoin peacefully settles this dispute in the same way it settles the contest in the first place. It does so by waiting until a next new block is found that builds on one of those two blocks. Of the two disputed blocks, the one that was used to build the longer chain is the winner, and all the miners move to work on that version of the chain, discarding the block that belongs to the now shorter chain. This type of event could be considered comparable to a tie in a democratic election. How do these get resolved in democracy? It's not always clear. Recounts are attempted in some cases. Sometimes special appointees or other bodies of power cast the tie-breaking votes. Sometimes it's not so straightforward. But in Bitcoin it’s simple. Just wait about ten minutes until someone finds another block and the dispute is peacefully settled. #### What Prevents Cheating? We hear accusations of cheating in politics all the time. But we never hear of them in Bitcoin. Why not? The reason is that the contest is set up in such a way that choosing any strategy but the honest one is always a losing one. Recall, when I listed the four steps in the contest above, I didn’t say they were the rules of the contest. I said that they were how the contest *“goes.”* The reason it goes that way is because it is the rational way for every participant to act in the contest, not because someone forces them to act that way. Let’s look at a few of the most common temptations people think might exist to try to compete differently, and why they’re not pursued by the miners: those entities who are pursuing the power to write Bitcoin’s history and receive the rewards of newly issued Bitcoins and fees paid to use the system. Why, for example, obey the first rule of the contest that says you must accept the latest state of the ledger? The reason is actually quite simple. If a miner ignores the latest block discovered by other miners, they’re going to have to do much more work than everyone else to find a block that anyone else considers valid. They’re going to have to discover two blocks before everyone else discovers one. As a result, they’d be doing work that they’re much less likely to ever get paid for than if they accept the latest block discovered by other miners. ![](https://www.datocms-assets.com/56652/1679676079-race.jpg?auto=format) Here’s a simple example to illustrate this: say the blockchain’s latest height is at 750,000 blocks, and a miner disregards the latest block found and tries to find it again. Meanwhile, every other miner is working on finding block 750,001. That first miner is running in a race that’s already been won to discover block 750,000. As soon as any one of the rest of the miners find block 750,001 they will all move on to working on block 750,002. Nobody is interested in hearing about a revision way back in block 750,000, because it would invalidate the now accepted block 750,001 and 750,002. So that miner who ignored block 750,000 would need to do all the work to find all three blocks in the time it took everyone else in the network to find only two. (Satoshi Nakamoto modeled the difficulty of doing this in the Bitcoin whitepaper back in October 2008. That modeling is the most challenging part of the whitepaper to understand. I wrote an article titled [Satoshi’s White Paper, The Hard Part Explained](https://www.swanbitcoin.com/satoshis-white-paper-explained/) trying to make it easier to understand.) The second and third points of the contest cannot be cheated. Nobody can pass off any invalid transactions or any block that cannot prove the necessary work threshold has been met. The unchangeable and uncheatable laws of math prevent this. Every node in the Bitcoin network enforces these requirements by executing the code, so it all falls under the *“executive and judicial”* enforcement branches of Bitcoin discussed in last month’s piece. However, the fourth point, which states that as soon as a miner finds a valid block they broadcast it, is entirely up to the miner. Why shouldn’t a miner hold on to their newly discovered block which nobody else knows about yet? Doesn’t this give them an advantage over all the other miners still working on what is a lower block height? Well, if a miner keeps their newly discovered block a secret they take a big risk of someone else discovering a block at the same height, and broadcasting that to everyone else. If that happens, everyone else would then begin using that other block to build the next block on top of. Thus, trying to keep a new block a secret so as to get a head-start on building the next one turns out to be a risky and losing strategy. It amounts to not claiming an earned reward and instead risking not ever being able to claim it! The only way to play successfully in this contest is to play by the strategy outlined earlier. These aren’t rules enforced by a referee, a court, or a police force. They’re just the only logical way to play the game. Nobody is in charge of Bitcoin, so nobody forces anyone to play by the rules. It’s just that the forces of nature punish anyone who plays differently. ### A Bigger Question #### Will Power Transition from Central Banks to Bitcoin? Central banks, especially the Federal Reserve Bank of the United States, are among the most powerful entities in the world. They can create money and raise or lower interest rates simply by decree. This indirectly gives them the power to raise and lower employment rates, inflation rates, economic activity, and other factors fundamental to our day-to-day lives. Their actions are unpredictable, by design. Within central banks, it is individual human beings who reach these decisions. These individuals are appointed to their roles, not elected. The seniormost position at the Federal Reserve, Chairman of the Board, is a position that is guaranteed for a four-year term and the Chair cannot be fired from the position! Many of us would like to see such great power transition elsewhere, or through some better process at the very least. By contrast, Bitcoin has no chairman or any group of people who can alter its policies. This fact alone is one major reason we see Bitcoin being taken so seriously by so many entities, including central bankers, politicians, ordinary citizens, and freedom advocates. Many people see the powers granted to central banks as being far too great. Those in power want to reassure others that they can be trusted with this much power. So, does Bitcoin represent a transition of power away from Central Banks? Will it be a peaceful transition? These are perhaps some of the most intriguing questions of our time. Bitcoin is a technology that is voluntarily adopted by those who choose to use it. It is inherently peaceful in that sense. Were everyone to choose Bitcoin, it would peacefully become the world’s money, and it would continue to operate peacefully according to the rules of Proof-of-Work described above. Will this happen though? How long will it take? Who might stand in its way – especially in a non-peaceful manner? One of the very first objections that often gets raised about Bitcoin when people hear about it being separate from the government is that *“The government will stop it.”* But one of the most uncanny things about Bitcoin seems to be that governments can not stop it. Bitcoin is spread out all over the world – outside the grasp of any single government. Moreover, governments turn out not to be very effective at stopping things anyways. They can ban things, but as we all know, that doesn’t mean everyone complies. Governments have not always had the powers that they now have through central banking. Will the invention of Bitcoin (or its discovery if you prefer) require that they eventually surrender that power back again, peacefully? There is good reason to be optimistic not only about the transition of monetary policy power away from unpredictable central entities to reliable, predictable, and fair Bitcoin but also of this happening peacefully. To a large degree, Bitcoin has already been normalized as something that is acceptable to own and use. It is already on a peaceful march of being seen as various things, including an alternative to gold, an insurance policy against currency debasement, a substitute for international payments and remittances, and more. Just as the Internet digitized and disrupted many industries, transforming them in both predictable and unpredictable ways, regardless of whether those industries embraced the Internet or fought against it, Bitcoin appears to be poised to do the same to the structure of the *“money industry.”* Newspapers used to own the printing presses which gave them a monopoly on timely, written news content. The Internet eliminated that monopoly and turned those presses into expensive, slow, liabilities. Consumers chose to get their news (and create their own) more quickly, cheaply, and from diversified sources as the Internet grew and digital information replaced information printed on paper. As adoption of Bitcoin grows, similar reasons become clearer as to why people would choose Bitcoin over the present-day dominant alternatives. As previously mentioned, the main concern voiced about Bitcoin’s ultimate success is that, unlike the Internet, governments will shut it down. But Bitcoin is built to not be able to be shut down by governments (or anything else for that matter). With that option eliminated, it removes the possibility of any protracted *“war”* on Bitcoin. Once accepted, Bitcoin relieves governments of the impossible task of centrally planning the economy through monetary policy. This would usher in a new age of governing responsibilities, constrained by the fair and honest economic realities that sound money is meant to reflect. And this dramatic shift can all happen perfectly peacefully. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # More Holes Than Suisse Cheese - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/more-holes-than-suisse-cheese/ There are lots of words to describe the last week when it comes to the traditional financial system, but orderly is certainly not one of them. --- **Sam Callahan** · March 24, 2023 · Updated July 3, 2024 The week began in dramatic fashion as the banking crisis spread overseas when the large European bank, Credit Suisse, came under severe distress after years of scandals and poor risk management finally caught up to the controversial bank. In our last market report, we warned that Credit Suisse was a bank to keep an eye on, and we didn’t have to wait long before the 167-year-old institution was on the brink of collapse. After clients had pulled around $120 billion in deposits from Credit Suisse in the last three months alone, the trend accelerated last week, with $10 billion worth of deposits leaving per day. We noted in our last update that a Credit Suisse failure would be one catalyst that could make the recent bank failures become systemic. This is because Credit Suisse was deemed a Global Systemically Important Bank by the Basel Committee on Banking Supervision, which means that it was determined that a Credit Suisse failure would trigger a wider financial crisis and threaten the global economy. Because of this, when Credit Suisse began teetering over the weekend, Swiss regulators and the Swiss National Bank (SNB) were quick to step in to try to lend a hand. Credit Suisse was given a [$54 billion line of credit](https://www.ft.com/content/adb74b25-ee03-4bdd-8c7a-4dcc6c95fcac) from SNB to help provide liquidity for the troubled bank. But this line of credit did nothing to quell market concerns. The 5-year Credit Default Swap (CDS) price for Credit Suisse, the cost to insure against its default, spiked. ![](https://www.datocms-assets.com/56652/1679691585-1.png?auto=format) This led to Swiss regulators [changing laws and circumventing shareholder votes](https://www.ft.com/content/5746165a-3a0c-42c7-9a2e-cb7cf5f33f46) and effectively forcing Credit Suisse’s rival UBS into acquiring the troubled lender on Sunday night to prevent the crisis from spreading across global markets Monday morning. If they didn’t find a buyer quickly, the Swiss authorities were even [considering nationalizing the bank](https://www.bloomberg.com/news/articles/2023-03-19/switzerland-weighs-full-or-partial-credit-suisse-nationalization?cmpid=socialflow-twitter-business&leadSource=uverify%20wall&sref=ieet9cdI) to safeguard the country’s financial system. In the end, UBS acquired Credit Suisse for pennies on the dollar. Last Friday, Credit Suisse’s stock was trading at $2.03/share for a market value of $8.06 billion. UBS acquired Credit Suisse two days later at $0.83/share at a market value of $3.25 billion, down about 60%. Under the terms of the deal, Credit Suisse shareholders received around $3.1 billion, while, controversially, about [$17.3 billion in bonds were completely written down to zero](https://www.wsj.com/livecoverage/stock-market-news-today-03-20-2023/card/here-s-what-is-happening-to-credit-suisse-s-riskiest-bonds-YwXpr4fzz6aV8tgpwgMP?mod=article_inline). This acquisition creates a new megabank, with the combined assets of UBS and Credit Suisse totaling to around twice the size of Switzerland’s GDP. Furthermore, UBS only agreed to this deal if significant government protections and guarantees are in place. Here are some of the government guarantees provided to UBS as part of the deal: - the Swiss National Bank offered UBS an emergency liquidity loan of up to $109 billion that’s protected in the event of a default - Another $109 billion liquidity facility that the bank can draw on that is guaranteed by the Swiss government - Swiss authorities agreed to protect UBS to up $9.8 billion in losses from Credit Suisse assets ![](https://www.datocms-assets.com/56652/1679691660-2.png?auto=format) In other words, this was a private acquisition of a bank with a pseudo-bailout attached that will be paid for by Swiss taxpayers. Bloomberg estimates that these [government protections will cost every taxpayer in Switzerland an estimated $13,500 each](https://www.bloomberg.com/news/articles/2023-03-21/swiss-brace-for-credit-suisse-bailout-costing-them-13-500-each). Once again, a troubled bank’s losses have been socialized. It’s important to note that just because Credit Suisse was saved in the nick of time, it doesn’t mean that the risk has disappeared. After the merger, the cost of the 5-year CDS of UBS spiked to the highest levels since 2012. The risk has only been transferred to a new, larger institution. ![](https://www.datocms-assets.com/56652/1679691713-3.png?auto=format) During this Swiss debacle on Sunday night, central banks and policymakers across the globe rushed to assure the public that the global banking sector was indeed strong and resilient despite the shotgun acquisition of a Global Systemically Important Bank that is deeply integrated into the global financial system. ![](https://www.datocms-assets.com/56652/1679691754-4.png?auto=format) ![](https://www.datocms-assets.com/56652/1679691779-5.png?auto=format) That same evening, [in a joint statement](https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm), the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, and the Swiss National Bank announced that they will be moving their dollar swap line arrangements from weekly to daily to *“enhance the provision of dollar liquidity.”* These arrangements haven’t seen much use since March 2020, and only get utilized during times of severe financial stress. ![](https://www.datocms-assets.com/56652/1679691817-6.png?auto=format) This can be interpreted as premeditated action from central banks to make sure that the pipes are in place if liquidity conditions continue to worsen for these troubled banks. It’s a sign that this is a liquidity crisis, not a credit crisis like in the Global Financial Crisis of 2008. This swap line announcement comes after the Federal Reserve announced a new one-year liquidity program, the Bank Term Funding Program, that allows banks to put up their underwater bonds as collateral for loans with the key caveat that the Fed will value these bonds at face value. This was done to help provide liquidity for these banks that are holding long-duration bonds, but need to service fleeing depositors now. This loan program prevents them from having to sell these bonds at a large loss, which would only spook depositors more, increasing the risk of the bank collapsing. (See: Silicon Valley Bank)  To further provide access to liquidity, the Federal Reserve eased requirements for banks to access its discount window, which is typically used as a last resort for banks that need liquidity due to the stigma associated with it. These loans carry a high rate of interest and must be paid back. For instance, the last time use of discount window spiked in 2008, every one of these loans were paid back in full, although one must remember that a key reason for this was the bailouts enacted by the Fed and Treasury during the GFC. Last week, a record $152.9 billion was borrowed by banks from the discount window.  ![](https://www.datocms-assets.com/56652/1679691873-7.png?auto=format) This historic discount window activity shows that liquidity is drying up in the system and these banks are desperate to get their hands on some dollars. Other metrics of liquidity in the system are hinting at the same idea of low levels of liquidity in the system. The MOVE Index, a measure of Treasury bond market volatility, and a gauge of implied bond market liquidity, spiked to its highest levels since the Global Financial Crisis last week. ![](https://www.datocms-assets.com/56652/1679691914-8.png?auto=format) In addition, another measure of liquidity, Other Deposits and Liabilities (ODL), a measurement of M2 money supply minus physical currency and money market accounts has been contracting rapidly this year, down over $1 trillion from its peak. ![](https://www.datocms-assets.com/56652/1679691951-9.png?auto=format) All of these data points together, along with the recent actions from the Federal Reserve, tell us that dollars are becoming hard to come by for banks. This low liquidity environment and subsequent banking crisis escalated right into the Fed’s FOMC meeting this week, where many market participants were anticipating a potential pause to the rate hikes. However, the Fed stuck to its guns and hiked the federal funds rate an additional 0.25 bps to continue its fight to bring down inflation. With this latest interest rate increase, the Fed is choosing to focus on price stability despite signs of financial instability developing domestically and overseas as a direct result of the rapid pace of interest rate hikes over the last year. With this recent action, the Fed is showing that it believes its liquidity facilities such as the new Bank Term Funding Program, reactivation of the daily USD swap lines, and easing access to the Fed’s discount window, will be enough to patch any cracks forming in the financial system while they continue to hike rates. Right now, the Fed is trying to ride two horses with one ass. On one hand, they are attempting to stabilize the banking sector by providing more liquidity for the system, while on the other hand, they are continuing to tighten financial conditions to try to fight inflation. This speech from Fed Governor Christopher Waller from last October is an interesting read and perhaps highlights the Fed’s thinking here as it continues to raise rates despite signs of financial instability. ![](https://www.datocms-assets.com/56652/1679692020-10.png?auto=format) And yet, even if Fed officials are right in their belief that its liquidity programs will be enough to fill the holes in these banks and keep them afloat, they do little to address the underlying dynamics of why depositors are fleeing these banks. The first dynamic is that the Fed’s decision to raise interest rates is making it more attractive for depositors to leave their banks in search of yield in Treasuries or money market funds that now provide much higher levels of interest compared to accounts at a bank. Below is a great chart from Jim Bianco that shows the huge difference between money market fund rates and bank deposit rates. ![](https://www.datocms-assets.com/56652/1679692070-11.png?auto=format) The Fed hiking an additional 0.25 bps on Wednesday only served to widen this spread even more, making it more enticing for depositors to continue to flee their banks for these higher-yielding investment vehicles. Jim Bianco continues to show here how bank deposits were already being drained at the fastest rate since the Global Financial Crisis BEFORE these bank crises even began. ![](https://www.datocms-assets.com/56652/1679692123-12.png?auto=format) The second dynamic is that these deposits are primarily flowing out of smaller banks into these investment vehicles for higher yields as well as into larger banks due to fears of continuing bank contagion. In a hearing last week, [an extraordinary exchange occurred](https://twitter.com/theemikehobart/status/1636494845144432643?s=20) when Treasury Secretary Janet Yellen was questioned by Senator James Lankford from Oklahoma on the [recent joint decision](https://home.treasury.gov/news/press-releases/jy1337) by the FDIC, Federal Reserve, and Treasury to insure all depositors of Silicon Valley Bank and Signature Bank. **Senator Lankford:** *“Will the deposits in every community bank in Oklahoma regardless of their size be fully insured now…every community bank in Oklahoma, regardless of their size, will they get the same treatment that SVB just got?”* **Secretary Yellen:** *“A bank only gets that treatment if a supermajority of the FDIC board, supermajority of the Fed board, and I, in consultation with the President, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”* **Senator Lankford:** *“So what is our plan to keep large depositors from moving their funds out of community banks and into the banks?”* **Secretary Yellen:** *“That is happening because depositors are concerned about the bank failures that have happened and whether or not other banks will also fail."* **Senator Lankford:** *“No, it’s happening because you are fully insured no matter what the amount is if you are in a big bank, you are not fully insured if you are in a community bank.”* What Senator Lankford is explaining above is exactly what we are seeing in the data. Large banks have [reported a surge of inflows](https://www.morningstar.com/news/marketwatch/20230315244/its-raining-money-on-bank-of-america-inflows-of-over-15-billion-reportedly-seen-amid-svb-fallout) since the SVB collapse as billions of dollars worth of deposits, presumably from smaller banks, have moved their funds due to the assumption that their deposits would be fully protected by the FDIC, Fed, and Treasury if these large banks failed because they would be deemed too systemically important. The same can’t be said for smaller banks. This is an extremely problematic dynamic due to how important smaller lenders are to lending in the economy. Smaller lenders make up 38% of the total loans in the economy and are especially critical for real estate, small businesses, and farmers. ![](https://www.datocms-assets.com/56652/1679692196-13.png?auto=format) Not only that, but these smaller lenders have less cash/assets on hand to weather any kind of significant drain on their deposits compared to their larger counterparts. ![](https://www.datocms-assets.com/56652/1679692240-14.png?auto=format) With their largest and cheapest source of funding shrinking, these small banks will need to turn to more expensive sources of capital and likely will need to reduce the amount of the loans they make in the economy. This follows a trend of previous banking crises where tighter lending standards become the norm. ![](https://www.datocms-assets.com/56652/1679692270-15.png?auto=format) With more small banks at risk of seeing their deposits flee, not only are they themselves at risk of going under, but the businesses and households that depend on them for financing them will find it harder to access capital. This is how a liquidity crisis can quickly turn into a credit crisis. We saw a prime example of this earlier in the week with the regional bank PacWest, which needed to shore up capital [after 20% of its depositors, or $6.8 billion, have fled](https://www.ft.com/content/5da23163-82ad-4775-aca2-28268b1c7006) this year alone. PacWest has been using the Fed’s liquidity facilities, already having borrowed $10.5 billion for the discount window, and $2.1 billion from the Bank Term Funding Program. Its stock is currently down -65% in the last month. **And herein lies the conundrum, will the Fed’s liquidity programs and the Treasury’s backstopping of uninsured deposits be enough to stop this banking crisis from spreading as the Fed’s interest rate hikes exacerbate the very problem in the process?** These are big question marks as it stands today, and it’s one reason why owning an asset that functions outside this fragile banking system is so important. This could be part of the reason why Bitcoin has been soaring amidst this banking crisis. Investors are perhaps waking up to the fact that it’s beneficial to own an asset that they can truly own outside of the banking system. It has certainly been a good start to 2023 for Bitcoin. On both an absolute and risk-adjusted basis, Bitcoin is the best-performing asset class year-to-date. ![](https://www.datocms-assets.com/56652/1679692333-16.png?auto=format) Bitcoin represents a safe alternative to the inherent instability of fractional reserve banking. Additionally, Bitcoin has often been described as a sponge for global liquidity and, right now, central banks are doing their best to try to provide more liquidity to the system. Since the beginning of the Fed’s new programs, the Fed’s balance sheet has exploded +$390 billion, erasing around 5 months of quantitative tightening in a little over one week. ![](https://www.datocms-assets.com/56652/1679692393-17.png?auto=format) Time will tell if this recent explosion in the Fed’s balance sheet will prove to be a temporary blip, or if this is the start of a new period of balance sheet expansion. If more banks come under pressure and this crisis starts to spiral out of control, we should expect the Fed and Treasury to do everything in their power to prevent a collapse of the banking system. For Bitcoin, there are reasons to believe that it would benefit in the long run in either scenario. Bitcoin has no counterparty risk, which is the exact kind of asset investors should want to own during a credit crisis. Also, in the event that the Fed tries to pump liquidity into the system, Bitcoin should benefit in that scenario too as a scarce hard asset. Last weekend, I was in Austin at Bitcoin Takeover, and this was confirmed when speaking to multiple individuals who work at Bitcoin-only companies throughout the industry, who said that business has been booming since the bank crisis began. This has certainly been the case here at Swan as well. ![](https://www.datocms-assets.com/56652/1679692428-18.png?auto=format) This is only anecdotal evidence, but it helps to corroborate the idea that investors are waking up to Bitcoin in this environment of bank failures, emergency liquidity programs, and weekend shotgun acquisitions. Bitcoin is an antifragile money that benefits from disorder. It’s an alternative monetary system that gains market share and mind share when the monetary system it’s competing against becomes more unstable. There are lots of words to describe the last week when it comes to the traditional financial system, but orderly is certainly not one of them. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1679692462-19.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # My Journey From Mount Stupid to Bitcoiner - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/my-journey-from-stupid-to-bitcoiner/ This is my journey from altcoins to Bitcoin. --- **Ben Wehrman** · March 29, 2023 · Updated June 27, 2024 A lot of people point out that I seem to make everything about shitting on ETH/crypto, and promoting Bitcoin. I have no pushback on this. Drawing a hard line here has clearly become a crusade for me. Let me provide a bit of extra background on why I care so deeply about this. I've shared my general crypto-to-Bitcoin story before [here](https://twitter.com/benwehrman/status/1619899282785710080), but I'm not sure if I've ever emphasized how deeply convicted I was that crypto was the future, and Bitcoin was just a slow boomer coin whose evangelists were toxic and closed-minded. From 2017-2021, it wouldn't be an exaggeration to say that crypto was a core pillar of my life. I was backpacking for much of that time, through Australia/New Zealand mostly. There was a year-long period in there where I did not sway a single day from a very particular routine: I would wake up, fill my yeti cup full of shitty instant coffee, and spend the entire day in my hostel bed pumping out altcoin research articles for my crypto blog. Sunrise to sundown, every day, without fail. (I've kept the blog alive for the lolz, you can see it for yourself [here](https://t.co/MGHI5Q2JYF)). Over the course of this grinding period, I built one of the largest followings on that platform at the time (essentially a *"Medium for crypto").* I regularly chatted with the CEO/devs, got offers to go on podcasts, and was always on the top featured bar. I had ossified a sense of identity as a relatively big-time *"crypto guy"* on this emerging platform. Needless to say, I ignored, scoffed at, or blocked all Bitcoin maximalists during this stretch of *years*; people like Saifedean, Jimmy Song, Stephan Livera, Giacomo Zucco, Guy Swann, etc. "They're so closed-minded. They don't understand the opportunity of blockchain..." I thought. I carried on my merry way, shilling the travel friends I was making to join this blogging platform for referral bonuses. I was also simultaneously propagating countless articles and noise-maker podcasts that I didn't comprehend at the time. It all traced directly back to the fiat overlords who I thought I was fighting against. You can read my other threads [here](https://twitter.com/WhyBitcoinOnly/status/1587646799250178048) and [here](https://twitter.com/benwehrman/status/1619899282785710080) for the specifics of my Bitcoin enlightenment transition. The point I want to leave you with is this: When you've been through the depths of the crypto hole, built an identity around it, and surrounded yourself with a community of people who tell you you're amazing for "being so open-minded and dunking on those mean maxis"...it is NOT easy to see anything else but confirmation bias. As Alyse Killeen has eloquently explained in her many podcast appearances, there is a lot of money to be made, and internet clout to be gained in the world of capitalizing on people's shiny-object gambling tendencies. Whether you are being intentionally malevolent, or are just a cog in the shitcoin machine. I have been there, .eth friend. I was you on steroids. Dismissing Bitcoiners because they're *"just shilling their BTC bags",* or *"salty that x coin went up a million percent more in the last 12 hours"*, or whatever else. There is not a single reply you can give me that I haven't said with even more [sass myself](https://twitter.com/benwehrman/status/1570780922512826369). When you've been through this path, it gives you a whole new level of understanding of how rotten the fiat system is, and how all of these new Proof-of-Stake crypto coins are not part of the solution. They are simply the latest iteration of fiat ponzinomics where a leader rules you and has every reason to keep you distracted from the real signal that is Bitcoin. So yes, I'm going to keep going hard as fuck against the latest iteration of scammers pretending to be your friend and the sheep who are making the same bonehead mistakes as I once did. There is no more time for fiat games. Turn off the crypto YouTubers, turn off the altcoin CEO Reddit AMAs, and listen to the toxic Bitcoiners who have already completed their Mt. Stupid expedition. [#TrustMeBro](https://twitter.com/hashtag/TrustMeBro?src=hashtag_click). ### Ben Wehrman Ben is an avid Bitcoiner and investor. # Bitcoin’s Moment - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-s-moment/ Born from the ashes of the 2008 financial crisis, Bitcoin was is an engineered solution to the inherent flaws and vulnerabilities within centralized banking structures. --- **Drew** · March 31, 2023 · Updated June 26, 2024 Like Prometheus stole fire from the Gods, Satoshi Nakamoto took the money monopoly power from central banks and restored it to the people. Embedded in the [Genesis Bitcoin block](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluNp0FqD6EC5tlHNS_P-rgA4QIfabcIeKwPuUwfkeINt1oQyfOknWC1u9_J6eiXgFYZE=) was a message that read… *"The Times 03/Jan/2009, Chancellor on the brink of second bailout for banks."* ![](https://www.datocms-assets.com/56652/1680303063-red-circle.png?auto=format) Fourteen years after Satoshi’s famous words, banks are once again being bailed out. In case you missed it, we’re in the early stages of a global banking and debt crisis. In the last few weeks, we’ve seen Silvergate Bank, Silicon Valley Bank, Credit Suisse, and Signature Bank blow up. Many others got hit hard and remain vulnerable to rapidly changing banking conditions.  Investors are increasingly fearful about the potential for more bank failures in the near future due to [several problems within the US regional banking sector](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluFmR-uYAjlCbwhsLFvmHi8Q0Z937lW2qYMZWvinqmGPD0xVVF8gFwWBBzQ51bBLbPaU=). Central banks had no choice but to *“provide liquidity”* (bail out the banks) once our highly indebted and leveraged banking system started breaking down.  The implementation of extraordinary measures by the Fed suggests both desperation and systemic fragility, further pushing investors to seek safe havens during these critical times.  While central banks and governments worldwide are scrambling to bail out failing banks, Bitcoin continues to operate flawlessly.  Not to mention, Bitcoin is up over 48% since this banking crisis came to light (March 10th). ### Bitcoin Is an Idea Whose Time Has Come *"Nothing is more powerful than an idea whose time has come."* - Victor Hugo In a world with increasing uncertainty in the traditional financial system, investors will seek alternatives.  As ordinary people realize the money they put in the bank might not be there when they need it, they’ll start asking questions. Thankfully, Bitcoin is available to protect your wealth. It is immune to bank runs and carries no counterparty risk.  In these times of unprecedented money printing and soaring inflation, the Fed's actions continue to debase the dollar which erodes your purchasing power. Meanwhile, Bitcoin has a fixed supply of 21 million units. No wonder Bitcoin adoption is growing exponentially. Banks can easily de-platform their users. Bitcoin cannot de-platform its users, offering a level of security that banks cannot match.  ### Unsurprisingly, Investors Are Flocking to Bitcoin Bitcoin is acting like a hedge against the existing fiat-based credit system (rather than consumer price inflation as some investors thought).  It’s no surprise Bitcoin has been the [best-performing asset of the year in both absolute and risk-adjusted terms in 2023](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluPINw5MVesBzzPYONWqiOzhIJK4WGLk-uXN9fNxnK-BaTsW1jQWOTzlV3od90C6NcaE=). ![](https://www.datocms-assets.com/56652/1680203856-goldman-sachs-bitcoin.png?auto=format) Recent conditions have even led tech billionaire [Balaji Srinivasan](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluFjs5CKSzdB2WwFXvp3e0Du3cccDllfMW266XK3e948s6tfblUtv0L4Gax05toQ-ynM=) to make a [public bet](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluAyI3d8dcHq-9wCwavTpdjmxB9EFIWU-YCrPZcy9-Vs37b0afWMoV8Mt5fhYlQ0j56Y=) that Bitcoin will hit $1 million within 90 days.  Although this outcome is highly improbable, Balaji's *"sound the alarm"* actions reflect his concern about the banking system and his efforts to encourage people to transition to the Bitcoin life raft. Additional reasons to be bullish: - Price action is driven by spot trading rather than derivatives - 67.8% of all Bitcoin have not moved in over a year (long-term holders in control) - We’re seeing massive buying volume and a huge inflow of new clients this month at Swan  ### This is Precisely the Moment Bitcoin Was Created For When traditional banks are failing, when Central Bankers are lost, and when the level of debt in the system is at an all-time high, it’s time to explore an alternative. Enter Bitcoin.  Born out of the ashes of the 2008/2009 global financial crisis, Bitcoin was made for this moment.   And this current banking crisis will only accelerate Bitcoin’s exponential adoption.  In times of uncertainty, your wealth deserves a safe haven.  Even if you aren’t convinced Bitcoin will be the next global reserve currency, owning an asset outside traditional finance acts as a hedge against the rest of your portfolio. Swan is your trusted partner as you navigate these challenging times.  As an individual, Swan makes it easy to protect your hard-earned wealth by converting your dollars into Bitcoin. The best approach for most people is to simply set up an automatic recurring Bitcoin savings plan. For example $50/week. Set it and forget it with Swan.  If you’re looking to buy larger amounts, Swan Private is our concierge service providing world-class experience, industry-leading research, and 24/7 access to your personal Bitcoin advisor and our team of experts. [Request an introduction today](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluEn27LwgwJyhEbzFqb_J1P5lnyE_FytpwbGm04qO7ZcO6bPSxzayuT4gB6haT1ZxGWA=).  As a business entity, Swan helps you sleep easy knowing your assets are safe during any banking crisis. [Onboard your company](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LltzYZel9jkBF2F4oW6soCTZhDOzzldD3xxrHJHKXQEfwOau6dMutemy7rjM_1Ia3vo5M=), nonprofit, or trust in 1-2 days.  If you’re saving for retirement, consider adding Bitcoin to a Roth IRA, Traditional IRA, or old 401k with [Swan IRA.](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LluBRdZ37Kn5IYLR6HpFCmW0Ay0Ga842Rx4-sWqwnqRRM66qBL0vABz6iw6SxtSpTi3W0=)  If you still don’t own Bitcoin, what are you waiting for? [Sign up for Swan here and we’ll give you $10 in free BTC](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGKr6LltxVguArTldNu9xpNirAMG-irmewrZ9cdjnQat5SBKuccdUgkk8BYlPyb40dCKTf0EO8=). ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # The United State of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/the-united-state-of-bitcoin/ Where the US constitution declared that we are all equal, Bitcoin, within its context of money, ensures we are all treated equally, under completely transparent rules. --- **Tomer Strolight** · April 5, 2023 · Updated June 27, 2024 ### Part Three of *“Comparing Bitcoin to Politics”* This article is the third and final part of a series exploring Bitcoin through political analogies. The first two parts, *“*[*A New Separation of Powers*](https://www.swanbitcoin.com/a-new-separation-of-powers/)*,”* and *“*[*A New Peaceful Transition of Power*](https://www.swanbitcoin.com/a-new-peaceful-transition-of-power/)*”* compared how Bitcoin offers new solutions to systemic risks encountered in political systems. This article contemplates something different – how Bitcoin pursues the goals set out in the famous preamble of the U.S. Constitution, in particular, forming a perfect union between all people who participate in it. ### The State of the State The noun ‘state’ has two meanings: ![](https://www.datocms-assets.com/56652/1680659817-asdf.png?auto=format) The first definition applies broadly to practically anything. What’s your current state of mind? It changes all the time after all. What state of matter is some body of water in the atmosphere taking? Is it a gaseous cloud, liquid rain, or solid crystal snowflakes? What’s the state of a particular patient in a hospital? Are they in stable, serious, or critical condition? With respect to Bitcoin this definition of state applies very specifically to describe one thing in particular. That is, what data exists in Bitcoin’s record, also known as its blockchain. This state of Bitcoin must be updated regularly as people spend and receive Bitcoin, and everyone in the world running Bitcoin must always be in perfect agreement about this state of affairs. The second definition of state applies only to geographic areas and how people in those areas deal with one another. This article will compare ideas behind the state of Bitcoin and the state known as the United States because, it turns out, both pursue some very similar goals, but in radically different ways. Let’s begin with a big question – why do these exist? ### For Whom and To What Purpose? > We the People, of the United States, in order to form a more perfect union ... > > — the opening phrases of the Constitution of The United States of America > Bitcoin: A Peer-to-Peer Electronic Cash System > > — the title of bitcoin.pdf, also known as “The Bitcoin White Paper.” Both Bitcoin and the United States have their “founding documents.” And, both these documents clearly state who and what the thing they constitute is meant to serve and do. In the case of the United States the who is *“We the People.”* These unforgettable three words appear not only as the first ones but they are also written so much larger than any others in the document that clearly they are intended as being of prime importance. It does not say *“We the Rulers”* or *“We the Elites”* or *“We the Experts.”* Nor does it say *“We the Corporations”* or “*We the Politicians”* or *“We the Appointed.”* Nor, moreover, does it say *“I the President”* or *“I the King”* or *“I the Dictator.”* It treats all people as equals in the founding of America, and goes on to declare its purpose is to provide *“Blessings of Liberty to ourselves and our Posterity”* indicating it is also for all people who will follow. This constitution then proceeds to state (this being the verb *“state”*) how the mechanisms of America’s federal government are to operate, laying out the branches, duties, and processes by which each is to function. This famous preamble, beginning with *“We the People”* does not limit its ambitions only to being for all people, nor merely preserving blessings of liberty. It also lists several other purposes. These are 1) to establish justice, 2) to ensure domestic tranquility, 3) to promote the general welfare, and, first among all those listed goals, 4) to form a more perfect Union. Credit for writing this historic document is attributed to James Madison, but it is clear he was writing it on behalf of the People, and that all the founding fathers of America were in agreement, since they all put their *“John Hancock”* on it, including, the actual *“John Hancock”* himself. It has been over 235 years since this great document was written, and enacted. In contrast, unlike the U.S. Constitution, we do not know who wrote Bitcoin’s white paper. Some person, or possibly even several people, going by the pseudonym *“Satoshi Nakamoto”* wrote it. However, just like the U.S. Constitution, this document too invokes who the system is for and how it is meant to operate. Bitcoin too is for all people. The white paper collectively refers to them as “peers” and when referring to them individually, as either a *“party”* or *“participant.”* Like the U.S. Constitution’s invocation of People, the white paper invokes *“Peer”* right at its beginning and also in its largest lettering. The white paper’s stated ambitions may sound far more humble than the U.S. Constitution’s. It claims to propose a solution to something known as the *“double-spending problem.”* However, whereas Madison’s document is vague about the definition of its lofty, *“more perfect Union,”* Satoshi’s paper actually provides a mechanism for all peers to form a completely perfect Union! That perfect union is a worldwide agreement, by all participants, on the state (there’s that first definition again) of all the money in the world issued under this constitution’s rules. The Bitcoin whitepaper constitutes a money for all people, anywhere and everywhere on Earth, living both now and in posterity. It also constitutes a money wherein all have equality and justice in the use of this money (recall Madison’s “establish justice” from the U.S. Constitution’s preamble). It also constitutes a money where all can transact in peace (recall Madison’s “domestic tranquility”). And it constitutes a money where all are united in complete, continuous, flawless, precisely identical agreement on the state of that money’s supply, its balances, and its rules – a completely perfect union. There is no more perfect union than the union of Bitcoin node operators’ view of the state of Bitcoin! All of us who run the software are in a *“United State of Bitcoin.”* To many who study and observe the impact of Bitcoin, this then is a development of historic significance worthy of being considered potentially as important as the US Constitution. It is a new approach, albeit in a narrower domain, to create a perfect union, establish justice, provide tranquility between and liberty to its participants, both now and in the future, for posterity. These similarities to the US Constitution are noteworthy, to say the least. ### A Different Approach to the Same Goals There are differences, of course. Bitcoin can be for all the people (in the whole world), not merely those in the United States, but each one must choose for themselves to participate. Unlike a nation’s constitution, Bitcoin is not an all-at-once revolution governing all who live within specific geographic borders. It is a voluntary offering to be accepted gradually, and individually by each person who decides for themselves that this perfect union with other participants is desirable to them. This may be one reason why its historic significance can be easy to miss, especially in these early days when so few have understood and signed on. The US Constitution was a big bang, accompanied by a violent uprising. Bitcoin, instead, has floated quietly into the world, almost silently at first. Bitcoin’s constitution was not a bloody battle that everyone had to immediately take a side on. It is a patient, gradual revolution. And Bitcoin does not require that anyone sign a document or publicly pledge their loyalty to it. It even permits anonymous participation. Of course, the most dramatic differences between how Bitcoin operates and how the US government operates are that, first, in Bitcoin, all participants really are complete equals, and second, that the rules of Bitcoin are not open to different interpretations or frequent changes. There are no elected representatives in Bitcoin. There are only peers. There are no appointed judges. There are only nodes that judge everything by the same, impersonal, precise, mathematical rules. Very little, and nothing of consequence, is left to individual judgment or personal interests. You either go along with the rules, or you’re not in Bitcoin. ### Is Bitcoin Historic? Is money really so important a thing that we should consider the creation of a money that forms a perfect union between its voluntary set of users as historic? Let us first observe that money itself is the instrument that allows us to deal with each other peacefully in an advanced civilization. When we want something from someone we can either force it from them through violence or threats, or we can exchange something for it. Money is what allows for the latter – for trade. Money is an international language of peace when it is recognized by both people involved in a trade. Money allows us all to live in peace. It allows for commerce, for entrepreneurship, for production, for innovation, and for specialization. Money is one of the key things that distinguishes our species from the brute-force existence of wild animals – and also from other humans who don’t have access to money they can trust, and who must thus live in a condition (a state) where things are taken from them not through mutual, voluntary trade, but by unilateral use of force. To ask if Bitcoin may be historic, let us imagine for a moment that we live in a world where everyone on Earth accepts and recognizes the same money. Imagine a world in which there are no national currencies. Of course, I want us to imagine that this money is Bitcoin. Wherever on Earth we go, no matter what language is spoken there, everyone accepts Bitcoin for their wares. You can take it for granted that anyone knows the value of a satoshi and that so do you. This value is determined by two factors. The first factor is how much money one has. One who has very little values their money very highly, being extremely cautious and judicious with their spending of it. One who has lots may be more spendthrift. The second factor in valuing one’s money, is what one wants and needs that can be purchased with money. If you and another person agree that some number of satoshis are worth what the other person wants for their wares, you can conduct a peaceful trade. If not, you both move on, in peace. Should you proceed with the trade and send them the money, then the whole world is united in agreement that this happened, although they do not need to know the details. They simply know that if this other person tries to spend those satoshis, they can, and if you try to spend them again (the double-spend problem), you cannot. What’s so special about this? Isn’t this how money works now? Well, sadly, no. Not at all, in fact. In many parts of the world what is used as money inflates in supply so rapidly that there is no price stability, and even thinking of any trade you make requires mental gymnastics to consider when in the future you might spend the money you’re trading for wares you need. You don’t sell those eggs you have for money until you really need to use that money for, say, shoes, because the longer you hold the money, the less it buys. Although the problem is not as bad in the West, it is still quite bad. Why do house prices rise so rapidly compared to incomes, let alone at all? The answer we often hear is that real estate is scarce. But what isn’t said, which is more accurate, is that real estate’s supply is increasing at a lower rate than the supply of money which can be directed to purchasing it. Banks are able to lend heavily against real estate, for long durations, and at relatively low-interest rates. This inflates the supply of money directed at real estate and drives the price up. Ultimately, the basic necessity that is housing becomes unaffordable for many people – an entire generation nearly – even in the wealthiest countries on Earth. This would not happen in this world we are imagining where Bitcoin is the money everyone accepts. This is because Bitcoins could not be conjured up by banks to lend against real estate. And of course, this problem is hardly limited to real estate alone. All over the world, it manifests itself in all different manners. The lack of reliable money has left much of the continent of Africa in a state of under-industrialization where things we take for granted, like electricity, clean drinking water, hospitals, roads, automobiles, and so much more, are unavailable to the masses. Meanwhile, our infrastructure here in the West that provides these benefits appears to be under increased pressure, suffering from a lack of maintenance and expansion. Why is that? Shouldn’t we have learned how to get better at generating energy, building more efficient healthcare systems, and so on? Instead, these things are increasing in price, indicating we are getting worse at producing them. It’s all because we do not have a perfect union when it comes to what we are using for money. State-issued currencies are not *“By the people, for the people, and of the people.”* They are issued by elites, politicians, and appointed officials, and directed into the hands of those who know how to play the get-the-newly-issued-money game to their advantage. In some countries it is a straight-out dictatorship – the dictator orders money issued to themselves. In others, the process is far more convoluted, but it is anything but transparent and fair. So yes, I would argue – Bitcoin represents a leap forward in civilization itself. Where the US constitution declared that we are all equal, Bitcoin, within its context of money, ensures we are all treated equally, under completely transparent rules. Where the US Constitution sought justice, tranquility, and liberty, Bitcoin delivers these, within its context of money, with inviolable rules that nobody can break. The release of Bitcoin was a singular event, but like all historic events, it will take time to make its full impact. Bitcoin was itself designed to advance only over a long timeframe, as it is forced on nobody, and will take over 100 years to issue the fixed supply of coins. We must therefore be patient to watch history unfold, but we must also do our part to first develop our own conviction that we want to be a part of this historic leap, and to help others understand why they too would benefit from a world with greater freedom, equality, justice, tranquility, and abundance. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # 3 Easy Steps to Delete Your Coinbase Account (w/ Screenshots) July Update URL: https://www.swanbitcoin.com/education/delete-coinbase-in-3-easy-steps/ You may have wondered “How do I get my money out of Coinbase?” This guide will show you step-by-step how to transfer Bitcoin from Coinbase and then how to delete your account forever in July of 2024! --- **Cory Klippsten** · July 2, 2024 · Updated July 26, 2024 In light of the recent SEC actions against Coinbase, you may have wondered, *"How do I get my money out of my Coinbase account?"*  Today, we'll take you through step-by-step how to move your crypto assets off Coinbase and then permanently deleting your Coinbase account in just **three** **simple steps.** Let’s get into it! ### How to Close Your Coinbase Account in Three Steps Your instinct may be to convert your [satoshis](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/) to dollars before withdrawing your money from Coinbase. But it's worth considering why many consider Bitcoin the [best money](https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1) in human history. You don't want to part with such a precious asset lightly. ### Step 1: Sell Your Altcoins for Bitcoin Before closing your account, convert all your altcoins into Bitcoin. This is a deep topic to explore, but suffice it to say that you are better served by holding Bitcoin than [gambling](https://www.swanbitcoin.com/bitcoin-vs-altcoins/) on ***any*** altcoin. To sell your altcoins for Bitcoin, click **'*****Trade'*** at the top right of any Coinbase page. ![](https://www.datocms-assets.com/56652/1680819451-trade-coinbase-red-box.png?auto=format) Then select the **'*****Convert'*** tab. For any cryptocurrencies besides Bitcoin with a non-zero balance, convert their full amount into Bitcoin. ![](https://www.datocms-assets.com/56652/1680819516-convert-red-box.png?auto=format) ### Step 2: Set up a Bitcoin Address of Your Own Okay, it's time to get your Bitcoin off Coinbase. First, you need to set up a Bitcoin address to receive those funds. If you’re not familiar with what this means, don’t worry! All it means is that you’ll create your own unhack­able bank vault on the Bitcoin network with the click of a button — that’s really what a Bitcoin address is, a digital bank vault. As with any bank vault, what’s essential is securely storing the key that goes with it. **That’s here you have a choice:** 1. Hold in a self-custody option with total control or... 2. An afford­able collab­o­ra­tive custody provider to help you set up and secure your Bitcoin address. Whichever direc­tion you choose, there are 1000's of companies serving Bitcoiners, making it easier than ever to take the next step toward [self-sover­eignty](https://www.swanbitcoin.com/bitcoin-is-hope/). To help you evaluate your [best](https://www.swanbitcoin.com/bitcoin-wallets-not-your-keys-not-your-bitcoin) Bitcoin wallet and [vault](https://www.swanbitcoin.com/vault/) options: - Once you have a Bitcoin address set up and have securely stored your private keys, you're almost ready to withdraw your Bitcoin from Coinbase and send it to your new Bitcoin address. **But not just yet!**   - If you withdraw your Bitcoin by clicking '*Send'* on your Bitcoin balance page and entering your new Bitcoin address, that withdrawal will leave a tiny amount of Bitcoin behind, known as *"dust."* - When you try to close your account, Coinbase won't let you if you have a non-zero balance due to network transaction costs. - To avoid this frustrating situation, you must wait to withdraw your Bitcoin as part of the Coinbase account closure process in Step 3. ### Step 3: Withdraw from Coinbase and Delete Your Coinbase Account It's no surprise Coinbase doesn’t readily tell you how to delete your Coinbase account... But, closing your Coinbase account and transferring your Bitcoin to your new address is easy. **Below is the step-by-step process of how to close your Coinbase account laid out screen by screen...** 1. Log into your Coinbase account on a desktop browser: ![](https://www.datocms-assets.com/56652/1680819577-sign-in-coinbase-f.png?auto=format) 2. Navigate to your user Settings and Activity tab with three clicks. First, click your profile circle in the upper right-hand corner: ![](https://www.datocms-assets.com/56652/1680820393-red-box-profile-pic.png?auto=format) 3. Next, select *'****Settings'*** from the drop-down box window.: ![](https://www.datocms-assets.com/56652/1680820680-setting-red-box.png?auto=format) 4. Find the Activity tab: ![](https://www.datocms-assets.com/56652/1680821227-activity-red-box-find.png?auto=format) 5. Scroll down to the bottom of the Activity tab and click ***'Close Account.'*** ![](https://www.datocms-assets.com/56652/1680821431-screen-shot-2023-04-06-at-5-50-15-pm.png?auto=format) 6. Enter your account password in the pop-up box, and click ***'Close Account.'*** ![](https://www.datocms-assets.com/56652/1680821488-close-your-coinbase-account.png?auto=format) 7. You will be prompted to withdraw your Bitcoin balance from Coinbase as part of the account closure process. 8. You will be presented with a page that shows every possible digit asset on Coinbase. With everything zeroed out, scroll to the bottom and click **'*****Close Account'*** in the bottom right-hand corner: ![](https://www.datocms-assets.com/56652/1680828938-close-account-final-page.png?auto=format) ### Should You Delete Your Coinbase Account? Why does the [#DeleteCoinbase](https://twitter.com/search?q=%23DeleteCoinbase&src=typed_query) movement continue to grow? Top three reasons to delete your Coinbase account: 1. Bitcoin already has an insur­mount­able lead on all other cryptocur­ren­cies in terms of market cap, liquidity, brand recognition, and total users. In the coming years and decades, **Bitcoin will likely accrue 90 – 99%** of all the future value in the digital asset space. 2. Coinbase does not want you to accumu­late and hold Bitcoin. Every aspect of Coinbase's product and marketing is designed to encourage you to trade as many assets as possible as often as possible. Coinbase makes money when you trade like any other [casino](https://www.swanbitcoin.com/bitcoin-vs-altcoins/), hoping to **keep gamblers on the casino floor**. 3. [96% of traders fail.](https://www.swanbitcoin.com/traders-lose-stackers-win/) Unless you're a career profes­sional, the sophis­ti­cated algorithm-aided pros who dominate the space will eat your lunch. You wouldn't sit at a table with the best poker players in the world; trading is the same thing. You are best served by simply buying and holding Bitcoin in [cold storage](https://www.swanbitcoin.com/bitcoin-cold-storage/) or a [Swan Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/). [![](https://www.datocms-assets.com/56652/1701298957-wells-notice.png?auto=format)](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm) - This regulatory uncertainty surrounding Coinbase raises [concerns](https://www.swanbitcoin.com/is-coinbase-safe/) leading to a loss of customer trust and confidence in the platform. - If Coinbase cannot demonstrate it is not engaged in selling unregistered securities, the consequences can include: - **A cease and desist order** - **Financial penalties** - **Legal proceedings** - **Additional operational restrictions imposed by regulatory authorities** ### What Happens When You Close and Delete a Coinbase Account? When closing a Coinbase account, the following actions are typically taken: 1. **Withdrawal of Funds**: Ensure all funds and cryptocurrencies are withdrawn or transferred from your Coinbase account. Sell or transfer holdings to an external wallet or another exchange. 2. **Account Deactivation**: Closing your account means losing access to it. You won't be able to log in or perform any account-related actions. Coinbase may retain your account information as required by law or for other legitimate purposes. 3. **Termination of Services**: Closing your Coinbase account terminates your relationship with them and their associated services, including buying, selling, or trading cryptocurrencies on their platform. You'll lose access to features, tools, and customer support. 4. **Reopening Limitations**: Closed accounts may not be reopened. If you for some reason wish to use Coinbase again, you'll need to create a new account and go through the registration process anew. 5. **Data Retention**: Coinbase [may retain certain information related to your closed account](https://twitter.com/CryptoChrisG/status/1729260646284554603?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1729300085182198247%7Ctwgr%5E4dbb1046deeb37af4b8445f36a1e824a384d690d%7Ctwcon%5Es3_&ref_url=https%3A%2F%2Fdecrypt.co%2F207736%2Fcoinbase-might-forced-share-bitcoin-trading-data-cftc), including transaction records, ccount activity, dentification details for compliance and legal obligations. ### Coinbase Alternatives to Buy Bitcoin Is Coinbase even [safe](https://www.swanbitcoin.com/coinbase-is-in-trouble-4-reasons-to-avoid-it-in-2024/)? According to data from [Glassnode](https://studio.glassnode.com/metrics?a=BTC&category=&e=coinbase&m=distribution.BalanceExchanges&resolution=24h&zoom=all), Coinbase currently holds close to 390,000 Bitcoin, worth approximately $20.5 billion. This figure constitutes under 2% of the overall Bitcoin supply on exchanges, reaching its lowest since 2015. Bitcoin, which had just spiked to its highest since November 2021, saw its price drop by about $2,800 in a matter of minutes as reports of an outage surfaced. [Swan](https://swanbitcoin.com/) boasts remarkably low fees, especially for [automatic](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/) recurring purchases. The recurring purchases feature allows you to consistently invest in Bitcoin effortlessly, empowering you to build your digital wealth over time. Swan has best in class [customer service](https://www.swanbitcoin.com/swan-customer-support/), ensuring a seamless and informed experience throughout your Bitcoin journey. ### Coinbase vs. Swan Bitcoin Trustpliot Reviews ##### Coinbase ***Account Minimum:*** *$2* ***Investment Options:*** [*+150 alternative cryptocurrencies*](https://www.coinbase.com/explore) ***Fees:*** [*0.5% to 4.5%*](https://help.coinbase.com/en/coinbase/trading-and-funding/pricing-and-fees/fees) ***Custody Provider:*** [*Coinbase Custody Trust*](https://www.coinbase.com/prime/custody) ***Trustpilot Rating:*** [*1.8 / 5 from 9,351 reviews* ](https://www.trustpilot.com/review/coinbase.com)***Apple Store App****:* [*4.7 / 5 from +1.7M reviews (#13 in Finance)* ](https://apps.apple.com/us/app/coinbase-buy-bitcoin-ether/id886427730) ***Google Play Store****:* [*4.5 / 5 from +839k reviews, +10M downloads*](https://play.google.com/store/apps/details?id=com.coinbase.android&hl=en_US&gl=US) ##### Swan Bitcoin ***Account Minimum:*** *No minimum balance requirements* ***Investment Options:*** *Bitcoin-only* ***Fees****:* [*0.99%** ](https://www.swanbitcoin.com/fees/)***Custody Provider****:* [*BitGo Trust Company* ](https://www.bitgo.com/swan/)***Trustpilot Rating****:* [*4.6 / 5 out of 1,136 reviews* ](https://trustpilot.com/review/swanbitcoin.com)***Apple App Store****:* [*4.8 / 5 out of 1.5k reviews* ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)***Google Play Store****:* [*4.5 / 5 out of 619 reviews, 50,000+ downloads*](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1) ### Alternatives to Coinbase, How Can I Buy Bitcoin? If you’re outside the United States, our *“Bitcoin Invest­ment Sites for 2024: Top 6 Trusted Sites”* [article](https://www.swanbitcoin.com/bitcoin-investment-sites) has you covered! Become a Swan and get [started](https://www.swanbitcoin.com/drewswanbitcoin/) today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Distrustful Banks and Trustless Money - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/distrustful-banks-and-trustless-money/ The credit-based traditional financial system is built on trust, and right now, that trust is breaking down in a world where trustless digital money exists. --- **Sam Callahan** · April 7, 2023 · Updated June 6, 2024 Since the banking crisis began, many market participants feared that a global financial crisis was right around the corner. In fact, after remarks from Swiss National Bank Vice President Martin Schlegel, it appears that these investors were not wrong to think this way. In an [interview](https://www.bloomberg.com/news/articles/2023-04-03/credit-suisse-faced-bankruptcy-without-ubs-deal-snb-s-schlegel) on Monday, Schlegel said, *“​​Without the government-brokered takeover (of Credit Suisse), it’s very, very likely a financial crisis in Switzerland and worldwide would have happened.”* It appears that the late Sunday government-sponsored shotgun acquisition of Credit Suisse was just enough to avoid a global financial crisis. Today, investor worries about the banking crisis appear to have subsided in part due to the actions from central banks and governments to backstop depositors and provide liquidity to the banking system in its time of need. After the Federal Reserve announced its new Bank Term Funding Program, eased access to its discount window, and ramped up its USD liquidity swap lines from weekly to daily, it seems as if their response has been enough to prevent the banking crisis from spiraling out of control. Only time will tell if these actions will be enough to prevent further bank contagion from spreading, but for now, these liquidity measures seemed to have done have plugged any cracks forming in the financial system. The response from central banks and governments has bolstered liquidity in the banking system but has done nothing to fix the underlying problem that is pervasive throughout the economy today: a breakdown of trust. The first example of this breakdown can be observed in the continuous drain of deposits from smaller banks to larger banks. In the week following the collapse of Silicon Valley Bank, the top 25 US banks gained over $120 billion in deposits, while all the banks outside the top 25 lost $108 billion. This has been a record outflow for these small banks. ![](https://www.datocms-assets.com/56652/1680887821-1.png?auto=format) Depositors no longer trust that their money is safe in these smaller banks because they feel that smaller banks are less likely to receive a backstop from the Treasury and Federal Reserve in the event of a crisis compared to their too-big-to-fail counterparts. Not only are depositors leaving small banks for the safety of larger banks, but they are also fleeing to money market funds where they can earn a greater yield. Money-market funds saw inflows of $304 billion in the three weeks leading up to March 29th. This was a record, topping the $286 billion of inflows observed in three weeks in March 2020. ![](https://www.datocms-assets.com/56652/1680887895-2.png?auto=format) These record inflows into money market funds were partly driven by concerns over the health of these smaller lenders. Why trust a small bank when you can just park your funds in a money market fund and earn four times the yield?  But the breakdown in trust is going both ways. As deposits flow out of these small banks, there is ample evidence that these banks have begun to tighten lending standards in the economy. According to the American Bankers Association, deposit accounts represent 71% of bank funding today. Losing this source of funding undermines the business models of these small banks. They are left with two choices, they can raise rates on deposits, eating into their profit margins, or they can reduce the availability of credit in the economy. This trend can be seen in the percentage of banks reporting a tightening in their lending standards to small firms in the Senior Loan Officer Opinion Survey conducted quarterly by the Federal Reserve. Out of the 80 domestic banks and 24 branches of international banks surveyed,  43.8% said they have been tightening lending standards to small firms. ![](https://www.datocms-assets.com/56652/1680888057-3.png?auto=format) Small businesses have also confirmed this to be true in the latest NFIB Small Business Survey where an increased percentage of survey participants agreed that *“credit was harder to get than last time.”* Yardeni Research shows below how a rise in this reporting typically occurs before a recession begins. ![](https://www.datocms-assets.com/56652/1680888099-4.png?auto=format) This development has not just been observed with smaller firms. From the same survey, the net percentage of domestic banks tightening lending standards to large and middle-market firms has also contracted with 44.8% reporting that they have tightened standards. ![](https://www.datocms-assets.com/56652/1680888132-5.png?auto=format) And the trust is not only breaking down between consumers and banks, it’s also deteriorating between institutions. Companies that need to raise are finding it more difficult to do so in this environment of economic uncertainty. The conditions around the banking crisis are freezing up credit markets between entities. In the month of March, there was nearly $60 billion in new investment-grade bonds issued. This is heavily below the five-year average of $179 billion for this time of the year. ![](https://www.datocms-assets.com/56652/1680888168-6.png?auto=format) The past three years of corporate debt issuance are certainly skewed by low rates during the Covid era which led to corporations borrowing record amounts. January and February of this year saw roughly $150 billion each month in investment-grade corporate issuance. However, it is still noteworthy that March was such a light month. The banking crisis and associated market uncertainty were surely a big factor in March’s light issuance. This trend can be observed in the syndicated loan market as well. The syndicated leveraged loan market is where large borrowers like corporations generally obtain loans from a group of arrangers like commercial and investment banks, which then sell them to other institutional investors like CLOs and private funds.   According to Bloomberg, global sales of syndicated loans fell -43% in Q1 to $493 billion, the lowest recording in 13 years. ![](https://www.datocms-assets.com/56652/1680888224-7.png?auto=format) Director of Leveraged Loans at AllianceBerstein, Scott Macklin, said “*The new issue loan market was previously a Scooby Doo ghost town, especially after the bank failures*,” In addition, according to WSJ, corporations trying to raise in the high-yield junk bond market are finding it more challenging compared to when interest rates were low. These riskier corporations only raised around $5 billion in March, nearly 5x below the five-year average of $24 billion.  There was already evidence of the riskiest borrowers being left behind when the spread between the two riskiest tiers of bonds, B and CCC, continued to widen this month. It’s now around 531 basis points more expensive for CCC issuers to borrow compared to B issuers.  ![](https://www.datocms-assets.com/56652/1680888356-8.png?auto=format) This spread is widening as investors are increasingly worried about the risk of defaults as the banking crisis unfolds, the Fed continues to hike rates, and many believe the economy is looking down the barrel of a potential recession. Traders no longer trust that these riskier corporations will be able to weather the storm, so they are seeking safer areas of the credit markets to invest instead. The credit-based traditional financial system is built on trust, and right now, depositors don’t trust banks to protect their funds, banks are finding it harder to trust borrowers in this period of increased economic uncertainty, and corporations are finding it more difficult to raise capital. This is a toxic combination that could lead to a classic credit crunch which ultimately would result in slowing economic growth if it continues.   In fact, we are already seeing GDP estimates start to slow in response to the banking crisis and subsequent tightening in lending standards. The Atlanta Fed GDPNow estimate has now been cut in half to 1.5% from 3.5% only two weeks ago. ![](https://www.datocms-assets.com/56652/1680888405-9.png?auto=format) This reduction in GDP estimates is likely partly due to a week in which we saw a string of disappointing economic data releases. The ISM US Manufacturing Index contracted to 46.3, the lowest level in three years, and March ISM Services Index dropped significantly to 51.2, well below expectations, with new orders dropping from 62.6 to 52.2. Analysts expect tightening credit conditions to continue to impact these data points. Employment metrics also disappointed to the downside with job openings coming in below expectations at 9.9 million openings, down from 10.6 million a month earlier. Company payrolls rose by just 145,000 for the month, down from an upwardly revised 261,000 in February and below the Dow Jones estimate of 210,000. These come with the unemployment rate still at a multi-decade low, so we will see if this trend in the labor market continues. All of these dynamics point to decreased lending and slowing economic growth, which, all things considered, should be deflationary. But there was one development this week that added to the inflationary worries. News came Sunday night that OPEC+ would cut its oil production across the board. The cuts will exceed 1 million barrels per day starting next month and continue through the end of the year. ![](https://www.datocms-assets.com/56652/1680888483-10.png?auto=format) This reduction surprised markets, which had expected the cartel to hold output steady.  In response to the production cuts, the price of oil shot up over 7% on Sunday night alone to over $80 per barrel. ![](https://www.datocms-assets.com/56652/1680888512-11.png?auto=format) Analysts questioned why OPEC+ decided to cut production now, given the decision came outside OPEC+’s scheduled timetable for reviewing the supply and demand dynamics of the market. Some felt that this action was a geopolitical maneuver to keep the price of oil elevated to bolster US inflation as the Federal Reserve struggles to get it under control. The White House surely was not a fan of the OPEC+ decision, calling it *“inadvisable.”* ![](https://www.datocms-assets.com/56652/1680888540-12.png?auto=format) Others felt that this OPEC+ action was warranted due to signs of slowing oil demand. These net producers are cutting to bolster the price of oil in response to this low demand due to the importance of the price of oil to their local economies. This recent OPEC+ move and the ongoing speculation around it is just another example of distrust growing in the global economy, this time, between countries. This production cut comes as geopolitical tensions appear to be rising. Last week, [the first yuan-denominated LNG trade occurred](https://www.nasdaq.com/articles/china-completes-first-yuan-settled-lng-trade), leading to many headlines speculating on whether this is the beginning of the end for *“King dollar.”* Also, China and Brazil [announced a new trade deal that bypasses the dollar](https://www.barrons.com/news/china-brazil-strike-deal-to-ditch-dollar-for-trade-8ed4e799). In addition, Xi Jinping and Vladimir Putin recently held talks in Moscow, which ended with Beijing and Moscow signing an agreement to bring about [a *“new era”* of cooperation](https://www.aljazeera.com/news/2023/3/21/chinas-xi-says-ties-with-russia-entering-new-era). President Xi Jinping wrote in [a signed letter](https://www.independent.co.ug/full-letter-xi-jinping-writes-on-china-russia-friendship/), *“Our two sides have cemented political mutual trust and fostered a new model of major-country relations. Guided by a vision of lasting friendship and win-win cooperation, China and Russia are committed to no-alliance, no-confrontation and not targeting any third party in developing our ties. We firmly support each other in following a development path suited to our respective national realities and support each other’s development and rejuvenation.”* All of these developments point to a breakdown of trust in old trading relationships that could lead to a more fragmented, multipolar global economy. One of the best measures of growing distrust in the current monetary system is the price of gold. Gold recently broke through $2,000 per ounce and is nearing an all-time high. ![](https://www.datocms-assets.com/56652/1680888612-13.png?auto=format) This price action comes as central banks bought a record amount of gold in 2022, suggesting a  geopolitical backdrop of mistrust and uncertainty. And then there’s Bitcoin. Bitcoin is trustless digital money that was invented because of the inherent fragilities that exist in the trust-based credit monetary system. Just like gold, Bitcoin has benefited from the growing distrust spreading throughout the traditional financial system. Bitcoin is up +68% to begin the year and its correlation to gold has been growing steadily in 2023 as well. ![](https://www.datocms-assets.com/56652/1680889526-14.png?auto=format) The increase in Bitcoin’s price has been even more impressive when one also takes into account some other metrics assessing the health of the network. Bitcoin’s mean hash rate recently hit a new all-time high. ![](https://www.datocms-assets.com/56652/1680889565-15.png?auto=format) The total number of accumulation addresses, defined as addresses that have at least 2 incoming non-dust transfers and have never spent funds, has also reached an all-time high. Investors appear to be accumulating bitcoin at these bargain prices. ![](https://www.datocms-assets.com/56652/1680889607-16.png?auto=format) Furthermore, over 67% of on-chain, unspent Bitcoin transactions have not moved in over one year. Holders have continued to show unwavering conviction during this bear market. Diamond hands. ![](https://www.datocms-assets.com/56652/1680889639-17.png?auto=format) All of these charts, along with Bitcoin’s price action, paint a picture of strength and resiliency in the Bitcoin market, which is a stark contrast to what we are observing in the traditional financial system. The rise of Bitcoin as the traditional banking system finds itself in turmoil has not gone unnoticed by regulators and market participants. Since the fall of FTX in November, the broader cryptocurrency industry has come under severe regulatory scrutiny. Each week, there seems to be a new enforcement action, a new rule proposal, a new lawsuit, or a new cryptocurrency company leaving the U.S. due to regulatory uncertainty. In the past two weeks, we saw [the SEC serve Coinbase a Wells Notice](https://www.natlawreview.com/article/coinbase-gets-wells-notice-sec) (a formal warning that they intend to recommend an enforcement action), [Binance was sued by the CFTC](https://www.bloomberg.com/news/articles/2023-03-27/crypto-exchange-binance-sued-by-us-cftc-for-alleged-derivatives-rule-lapses) for running an illegal derivatives exchange with poor compliance practices, cryptocurrency exchange [Bittrex announced it will shutdown its U.S. operations](https://decrypt.co/125087/crypto-exchange-bittrex-shut-down-us-operations) due to regulatory uncertainty, and peer-to-peer marketplace [Paxful announced it will be winding down operations](https://decrypt.co/125411/paxful-bitcoin-marketplace-closure-cofounder-lawsuit) due to *“regulatory challenges…most heavily in the U.S.”* There has been a lot of conversation around whether these bank regulators’ actions are a top-down coordinated attack on the broader cryptocurrency industry. This has been dubbed *“Operation Choke Point 2.0.”* Since the start of the year, we have seen many different bank regulators crackdown on the crypto industry seemingly all at once. This came after two joint letters from the FDIC, Treasury, and Federal Reserve at the beginning of the year that outlined the increased risks for banks for doing business with cryptocurrency companies. The main argument for why these recent coordinated actions are a form of illegal regulatory overreach was explained thoroughly in a [white paper](https://www.cooperkirk.com/wp-content/uploads/2023/03/Operation-Choke-Point-2.0.pdf) by the law firm Cooper & Kirk. A key excerpt: “*Operation Choke Point 2.0 deprives businesses of their constitutional rights to due process in violation of the Fifth Amendment. It is well settled that when a federal agency attaches a derogatory label to an individual or business, and this stigmatizing label causes the business to lose a bank account or broadly precludes them from the pursuit of their chosen trade, the agency has violated the Due Process Clause of the Fifth Amendment, unless if first afforded the individual or business a right to be heard.*” But has this really been a coordinated attack? Certainly, there has been some form of coordination, but that’s to be expected after billions of dollars of wealth was wiped out from the broader cryptocurrency industry that was selling unregistered securities to retail investors, and that was discovered to be full of fraudulent operations like Celsius and FTX. Regulatory backlash is to be expected after some of the largest financial scams in recent memory were found to be pervasive in the broader cryptocurrency industry, as we have been saying here at Swan for years. Regulators were caught asleep at the wheel and are now trying to do their jobs and protect people from unregistered securities, Ponzi schemes, and other scams. The fact of the matter is the law t clearly states what is and what isn’t a security. It doesn’t matter whether I or anyone else agrees with the law. If you think that retail investors should be protected from fraud and unregistered penny stocks, then you should feel the same about the cryptocurrency industry. To say otherwise would be morally inconsistent and hypocritical. So right now, we are seeing a regulatory backlash in the wake of these cryptocurrency blowups. Bitcoin will continue to shine as a winner in the long term as the only cryptocurrency that is truly leaderless and decentralized. The other winners will be Bitcoin-only companies with honest operations who purposefully avoided providing their customers with access to other cryptocurrencies. Banks will continue to decide on a case-by-case basis whether they want to increase their compliance costs by servicing Bitcoin companies. Some will say *“no,”* but some will say *“yes”* because of the potential increased revenues that come from servicing an innovative new industry. There will always be a banker incentivized to bring in new business to the bank. Whether this is a coordinated top-down attack or not is up for debate, and regulators coming out in full force against these cryptocurrency firms and projects that harmed retail investors should be expected. In the end, we think this helps Bitcoin adoption long-term. The broader cryptocurrency industry has long confused newcomers with false marketing and siphoning investor demand away from Bitcoin into inferior tokens. A regulatory attack on *“crypto”* will help cleanse the industry of bad actors and scammy projects, and will help speed up the demand for digital sound money, just as the world is beginning to need it more than ever before. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1680889748-18.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # My Journey to Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/my-journey-to-bitcoin/ Bitcoin can mean different things to different people. To me, it represents a personal fight for freedom. --- **Yan Pritzker** · April 11, 2023 · Updated June 27, 2024 Bitcoin can mean different things to different people. To me, it represents a personal fight for freedom. Having lived in a country where basic freedoms were suppressed, Bitcoin holds a special significance for me. My family left Ukraine, which was then a part of the Soviet Union, in 1989. Under the Soviet socialist regime, prices were fixed, capital was controlled, information was censored, people were routinely and arbitrarily jailed, and the government set exchange rates that were vastly divorced from the real-world value of the ever-devaluing ruble. The economy was failing to supply basic goods, with the government unable to allocate resources effectively without real price signals. It was possible to obtain a free apartment, but only if you were lucky enough, and waited for twenty years. Many people continued to live in tiny apartments with three generations of family members. A pair of jeans could cost you a month's salary. If you ever saw a line forming at a store, you would stand in it regardless of what was being offered that day, because you would purchase anything you could and exchange it on the black market for what you needed. Although owning foreign currency was illegal, people with connections always found a way to obtain it. Although I was lucky to receive a high quality high school and university education after immigrating to the United States, I was unaware of the role of monetary policy in shaping Soviet society until I started learning about Bitcoin at the age of 35. After learning about ongoing currency crises and capital controls throughout the world, I asked my parents about what happened to our money when we left the Soviet Union. What I learned shocked me. When my family left the Soviet Union, the government only allowed us to exchange $100 per person at their fixed ruble exchange rate. The street value of these rubles was almost nothing, so we took what little we could, along with suitcases of trinkets to sell on our way to America. This was an example of the ugly face of capital controls: we could leave the country, but we had to start over wherever we went. Our money wasn't really ours. As I learned more, I found out that this wasn't just a unique problem isolated to the Soviet Union. It is something that continues to happen all over the world today. By controlling the flows of capital, governments can effectively control their population, preventing the free movement of people to better jurisdictions, and censoring people by cutting off their ties with financial services. Bitcoin fixes this. It fixes all of it. It makes money truly portable and difficult to censor, giving people a real bargaining chip against their leaders for the first time in history. After all, real wealth is created by human labor and ingenuity. If people now have a choice of jurisdiction, then wealth will accumulate in jurisdictions that allow people to flourish. Bitcoin is now providing real opportunities for people living under oppressive regimes. In Nigeria and Belarus, protesters have used it to raise funds when the government was restricted their access to financial services. In Afghanistan, young women are earning their own money by learning to code and using Bitcoin. Immigrants are using it to send money home without incurring exorbitant fees. Relief aid has been sent to war-torn countries like Ukraine and Russia on nights and weekends, when traditional banks are closed, or when the US shut down Russia’s access to the banking system. Bitcoin has become a savings vehicle in Turkey, Nigeria, Argentina, Venezuela, Lebanon, and other nations experiencing currency devaluation. Bitcoin mining has even provided electricity to villages in Africa for the first time, raising their standard of living. While many native-born Americans may find it difficult to imagine, immigrants are all too familiar with the problems of autocratic government. Unlike the United States, most countries do not have the privilege of a reserve currency that is widely in demand, and governments often abuse the monetary printing press, leading to massive currency devaluation. As such societies run into problems, governments tighten controls on money and information in a desperate attempt to hold their population hostage, with predictably disastrous results. We cannot take our privileges for granted. If we do not fight to maintain them, we will lose our freedoms. Politicians have recently championed ideas like price controls on gas and eggs, trying to blame rising prices caused by their fiscal policy on *“greedy”* corporations. These dangerous ideas will distort markets and lead to shortages of basic goods. They have lied to our faces about the inflation we all experience daily, combining it into a single irrelevant number and manipulating the components that go into the calculation. We have seen the utter incompetence of our central bank in creating meme stock bubbles with zero interest rate policy, followed by blowing up banks when they raise rates. The United States abuses our dollar reserve currency privilege to print ever more growing piles of currency to finance perpetual war, while causing the rest of the world to suffer by exporting our inflation. And now we are seeing this behavior start to turn on us with several countries starting to look for alternatives to US hegemony. There is a way to opt-out. Like the printing press or the Internet, Bitcoin is a tool of empowerment for any who embraces it. Bitcoin multiplies the Internet’s democratizing effect on information by bringing control of money back to the people and creates permanent, non-government incentives to develop energy infrastructure critical to human flourishing. What happens in a world where you can access the internet on a tiny device in your pocket? What if you could accumulate a form of money that cannot be seized by your government by performing tasks over the internet and getting paid instantly? What if the government could only pay its military and bureaucrats in a devalued currency that no one else wants? What if people created circular economies based on hard money and built real wealth for themselves, like local businesses and schools? Bitcoin will take us to a bright orange future, where humanity can coordinate on top of the best monetary network ever created to create lasting wealth together. We will find ways out of broken regimes and into ones that focus on freedom. Will a passphrase stored in our heads provide a way out? I’m optimistic. Build your stash of freedom cash at [swan.com](http://swan.com/) ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # The Right Questions to Ask to Avoid Bitcoin IRA Icebergs URL: https://www.swanbitcoin.com/industry/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/ The Swan IRA is uniquely designed and features a distinctive account setup that incorporates various levels of legal compliance, regulatory oversight, custodial services, and high-level institutional security measures. --- **Terrence Yang and Jeremy Showalter** · May 3, 2023 · Updated June 6, 2024 The Swan IRA is a new way Americans can save in Bitcoin for their retirement. Besides fees, what questions should you ask a potential [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) provider and why? - *What is your account structure?* - *Who is the qualified custodian?* - *How is Bitcoin secured?* - *What is the IRA agreement and terms?* - *Does your IRA need or have a legal officer or lawyer on ‘unfettered command’?  Why or why not?*   - *What are the fees?* - *What are the contribution and funding options?* - *How do Transfers into the IRA work?*  - *How do Rollovers into the IRA work?* Let’s step through each of these in detail for the Swan IRA. As a tax-advantaged IRS structure, the Swan IRA has a unique account structure with multiple layers of legal, regulatory, custodial, and institutional-grade security. These layers are unique to Swan and provide a good balance of simplicity, affordability, and regulatory compliance.  Since launching [Swan IRA in Q1 2023](https://www.swanbitcoin.com/swan-announces-a-new-bitcoin-ira/), we have onboarded hundreds of happy new clients and received many questions along the way. We realized there are important structural questions to be considered beyond what is communicated on a provider’s website. What you see on the surface is just one part of an IRA, and these questions help navigate potential icebergs in Bitcoin retirement accounts.   ### What is your Account Structure? Your Bitcoin is stored in a state-chartered **trust company** subject to state and federal regulation. It exists in **your own legally segregated account** that is separate and distinct from all other trust company-related assets, including other customers and the custodian itself. This is foundationally different from an exchange that typically holds customer assets in a group ‘omnibus’ account or even co-mingled with the company’s assets. ### Who is the Qualified Custodian? Every IRA must have a qualified custodian under section 408A of the Internal Revenue Code.  Swan has partnered with “*registered custodians*” under the [Investment Advisers Act of 1940](https://www.sec.gov/investment/laws-and-rules), as amended, for registered investment advisers regulated by the SEC.  **Your Bitcoin is not and can not be rehypothecated** or otherwise transferred. ### How is Bitcoin Secured? Swan's custodian is a [**SOC 2 Type 1 and Type 2 certified trust company**](https://cloud.google.com/security/compliance/soc-2)**.**  Their storage architecture is supported by [**MPC technology**](https://www.coindesk.com/markets/2019/06/10/mpc-explained-the-bold-new-vision-for-securing-crypto-money/) to provide **institutional-grade, distributed-key security** protecting your wallet against any single point of failure**.** ### What is the IRA Agreement and Terms? The Swan IRA has a Roth or Traditional Individual Retirement Custodial Account Agreement with terms similar to other IRA accounts you may have.   ### Does Your IRA Need or Have a Legal Officer or Lawyer on ‘Unfettered Command’?  Why or Why Not?   Following the [McNulty 2021 tax case](https://brieflytaxing.com/mcnulty-v-commissioner-157-t-c-no-10/), which established ‘unfettered command’ as the threshold for taxable distribution of physical custody, there are multiple perspectives on what Bitcoin self-custody setups would stand up in court without early withdrawal penalties or taxable distribution events. Self-custody of Bitcoin in a US retirement account may increase your risk of a tax audit. We have a way for you to self-custody Bitcoin if and when you believe there is, e.g., a near-imminent risk of confiscation, censorship, or increased tax. Feel free to reach out to the Swan Private team, your accountant, or your attorney to discuss various Self Directed IRA options, including self-custody options. Note that any setup with self-custody, including a [2 of 3 multi-signature setup](https://www.swanbitcoin.com/best-bitcoin-wallet/), could be interpreted by the IRS as ‘unfettered command’ as the beneficiary (or manager) can move the assets without any other party involved, even if you do not initially have legal title and any move is reported to the IRS after the fact. ### What are the Fees?  **Setup Fees:** The Swan IRA has **no setup fee**. **Trading Fee:** The Swan IRA has flat, 0.99% buy or sell fees (or taken on deposit if a transfer). **Account Fee:** The Swan IRA has a $20/month account fee. If the balance of the account in total exceeds $100,000, the account fee is 0.25% annually (billed monthly). Note this is lower than most mutual funds or other structures like GBTC, which is between 2-3% annually. ![](https://www.datocms-assets.com/56652/1701237266-sharper-fees.png?auto=format) ### What are the Contribution and Funding Options? You can get started with Contributions at Swan **with as little as $10**.  This is an important distinction vs. some that require significant opening contributions or minimum purchases. You can make Contributions by ACH or Wire Transfer.  And you can set up a recurring Contribution ‘into your IRA’ via ACH. Each individual may have unique Contribution limits and should consult with their accountant if needed. ### How Do Transfers into the IRA Work?  If you have assets (e.g., stocks, bonds, investment funds, etc.) in a different IRA account, you can sell those assets to cash, transfer the funds to your Swan IRA, and buy Bitcoin.  The Swan IRA may have the easiest and fastest transfer process for any Bitcoin IRA. With just a few steps, you can select your current IRA Custodian, enter the transfer amount, sign a Docusign form, and upload an account statement. IRA Transfers can happen in as little as 5 business days. It’s important to note that a [transfer](https://apps.irs.gov/app/IPAR/resources/help/directtransfr.html) into Swan IRA is not deemed an early distribution and does not trigger any penalties. This is a standard process approved by the IRS.  We are always looking for ways to improve, so feel free to share your learning or experience with other Bitcoin IRA options and help us build future features! ### How Do Rollovers into the IRA Work? If you have an employer-sponsored retirement plan from a past employer, you can roll cash into your Swan IRA. Your funds stuck in, e.g., a more traditional 401k can be turned into Bitcoin directly. You can do a partial rollover or complete rollover. With these questions, we trust you will avoid unexpected surprises in Bitcoin retirement accounts! To create a Swan IRA, sign up below, or contact [ira@swan.com](mailto:ira@swan.com) today. --- [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan Advisor for client Bitcoin allocations, backed by world-class custody and educational content.* *Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.* ***** Swan Roth post-tax. Please speak with your Swan expert for details and consult your CPA.*** ### Terrence Yang Terrence Yang is Swan Managing Director where he launches new products such as Swan IRA and Swan Tax Loss Harvesting. Terrence graduated from Harvard Law School and previously served as an officer at prominent Wall Street firms before joining Swan. ### Jeremy Showalter Jeremy is the Chief Business Officer at Swan. He founded Weave Savings and co-founded Pique (AI/ML personalization), acquired in 2021 by MoMo. Before startups, he spent 13 years at Microsoft in Ireland, Vietnam, and at HQ. # Why Bitcoin is the Ultimate Asset for Your IRA URL: https://www.swanbitcoin.com/investing/why-bitcoin-is-the-ultimate-asset-for-your-ira/ Adding Bitcoin to your IRA can provide asset diversification, as well as the potential for higher returns and a measure of protection against monetary debasement. --- **Brandon Quittem** · November 21, 2023 · Updated September 19, 2025 *This is the first article in a series from Swan Research, our new department focused on bringing deep research and analytics to Bitcoin. This team is led by our Chief Investment Officer, Rapha Zagury, who joined Swan earlier this year. Previously he ran a few desks at Wall Street in major firms like Goldman and Merrill while covering some of their largest clients. After leaving New York and Wall Street, he founded a couple of companies including OpenCo, one of the largest credit fintechs in LATAM. In true Bitcoin spirit, Rapha will be open-sourcing his models and tools so you can run the numbers yourself.* ### The Goal is to Enjoy Life Without Worrying About Finances Let’s get straight to the point.  You want to maximize the value of your retirement portfolio so you can enjoy life to the fullest without worrying about your finances, right?  Great. We're on the same page. The next question is: Should you hold Bitcoin in a retirement savings vehicle such as an Individual Retirement Account (IRA)?  We believe the answer is YES simply because holding Bitcoin may increase the expected returns of your retirement portfolio. In this article we’re going to cover: - [What is an IRA?](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#What-is-an-IRA) - [The benefits of an IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Benefits-of-an-IRA-Less-Taxes-More-Savings) - [Traditional IRA vs Roth IRA vs 401(k)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Traditional-IRA-vs-Roth-IRA-vs-401k) - [Why Bitcoin is the ultimate asset to include in an IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Why-Bitcoin-is-the-Ultimate-Asset-to-Include) - [How adding Bitcoin to your IRA affects your returns (Three scenarios)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#How-Adding-Bitcoin-to-Your-IRA-May-Affect-Your) - [What percentage of your retirement portfolio should be in BTC?](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#What-Percentage-of-Your-Retirement-Portfolio) - [Introducing our Bitcoin Retirement Calculator (open-source)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Swan-Research) - Is Swan’s [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) right for you? ### What is an IRA? When planning for retirement, exploring ways to reduce your tax burden is important. After all, the more you pay in taxes, the less you have left over to enjoy your life.  An [Individual Retirement Arrangement (IRA)](https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras) is a tax-advantaged savings vehicle held by individuals in the U.S. While this article is focused on American retirement accounts, similar options exist in other countries.  Most Americans are familiar with 401(k) plans, similar to an IRA, except they are issued through your employer. When you leave that employer, you can “rollover” your 401(k) balance into an IRA you control.  This article will briefly explain the benefits of leveraging tax-advantaged retirement vehicles. However, the primary focus will be on two things… 1. Why Bitcoin deserves a place in every retirement portfolio 2. What percentage should you allocate to Bitcoin  ### Benefits of an IRA: Less Taxes, More Savings *The primary benefit of an IRA (Traditional, Roth, etc) is the potential for tax savings. The less of your money that goes to taxes, the more you have to enjoy your retirement.* *Depending on your IRA type, the potential tax benefits will look slightly different. We’ll explain the differences in the next section.* *Another key benefit of long-term savings vehicles such as an IRA is compounding returns.* ***"Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."*** - Albert Einstein The longer your money has to grow, the more powerful the compounding effects will be. So, start investing as soon as possible, and let time and compounding work their magic. ### Traditional IRA vs Roth IRA vs 401k With a Traditional IRA, you contribute pre-tax income. Below certain income thresholds, you can deduct your contributions from your taxable income in the tax year you make them, which can reduce your tax bill for that tax year. Since you didn't pay taxes on the way into your Traditional IRA, you will owe taxes on the money when you withdraw it in retirement. If you withdraw money from a Traditional IRA before age 59 1/2, you may owe a penalty in addition to any taxes owed. With a Roth IRA, you contribute post-tax dollars. This means you don't get an immediate tax deduction. However, any earnings within the account grow tax-free, and you won't owe taxes on qualified withdrawals in retirement. In addition, you can withdraw your contributions (but not the earnings) at any time without owing taxes or penalties. Anyone with earned income (such as a salary or wages) can contribute to an IRA. This includes both Traditional and Roth IRAs, although there are some income limitations for Roth IRAs. In addition, if you are married, you can contribute to an IRA even if you don't work, as long as your spouse has earned income. For 2023, traditional and Roth IRAs' maximum annual contribution limit is $6,500, or $7,500 if you are 50 or older. This amount can be split between different types of IRAs or other accounts as long as the total contribution doesn't exceed the annual limit. A 401(k) is an employer-sponsored retirement plan. Like Traditional IRAs, you contribute with pre-tax income. Many employers will match employee contributions, which is an excellent incentive. When you leave the company that sponsored your 401k, you can convert it into a Traditional IRA you manage. Many 401k plans restrict what assets you can hold. Employers give you a short list to choose from, and everything else is off-limits. However, if you convert your 401k into a Traditional IRA, you will have full control over what assets you want to invest in. You know, in case you wanted more Bitcoin ;) Additionally, there are no tax implications for converting your 401k to a Traditional IRA, so long as the funds are rolled over within 60 days from one account to another.  ### Why Bitcoin is the Ultimate Asset to Include in an IRA If you have a retirement portfolio, consider adding Bitcoin. While Bitcoin is often associated with volatility and risk, there are [several reasons why](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) it makes sense as a long-term investment. 1. Bitcoin gains can grow tax-deferred (IRA) or tax-free (Roth IRA) 2. Bitcoin increases your asset diversification (reduces correlation to other assets) 3. Bitcoin may increase your risk-adjusted returns 4. Bitcoin may help protect you from the effects of inflation ([monetary debasement](https://www.swanbitcoin.com/monetary-debasement-vs-supply-shocks/)) ### Gains Grow Tax-deferred (IRA) or Tax-free (Roth IRA) Assets with high expected returns (as we believe with Bitcoin) work well in an IRA because any price appreciation will grow tax-deferred (or tax-free in the case of a Roth IRA). Peter Thiel famously bought seed stage equity in Facebook inside his Roth IRA. Thiel started his Roth IRA in 1999 with less than $2,000; by 2021, it was worth over $5 billion. The best part? Because he owned Facebook stock inside this Roth IRA, the earnings are tax-free, which would save him about $1 billion by avoiding capital gains tax if he retired today. ### Diversification Most people have a standard 60/40 allocation in their retirement accounts. This means 60% stocks and 40% bonds. Typically, stocks and bonds are “inversely correlated,” which means when stocks are going down, bonds are going up, and vice versa. This is a diversification strategy designed to minimize risk while maximizing returns. Historically, this has made sense. Do you know what increases your diversification even more? Yep, you guessed it, Bitcoin. This is because Bitcoin has a low correlation to traditional assets like stocks and bonds. The end result is your overall portfolio may have better risk-adjusted returns with Bitcoin in the picture. ### Increase Your Expected Returns Remember that standard 60/40 portfolio? If you invest in the standard retirement portfolio, your expected annual returns would be around 7%.  Not bad. Now let's compare that to Bitcoin… Although past performance does not guarantee future results, it is worth noting that since its inception in 2009, Bitcoin's price has [increased by an average of over 100% per year](https://www.swanbitcoin.com/bitcoin-price-prediction/). While there have been periods of volatility and sharp price declines, the long-term trend has climbed higher and higher.  This doesn't necessarily mean you should all-in on Bitcoin in your IRA. Even adding a small allocation to your retirement account can make a big difference. In the next section, we'll [*run the numbers*](https://www.swanbitcoin.com/bitcoin-price-prediction/) to show the returns we may potentially see after adding Bitcoin to our portfolio.  ### Protect from Inflation In addition to its potential for high returns, Bitcoin can help preserve your purchasing power in the face of inflation.  [Inflation](https://www.swanbitcoin.com/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/) can have a massive impact on the purchasing power of your money over time. For example, the purchasing power of $1 in 1913 is now worth less than 3 cents due to inflation.  This is caused by central bankers continually printing more money. When the growth of the money supply outpaces the growth of real goods and services, we see price inflation.  By contrast, Bitcoin has a fixed maximum supply (21 million) that [cannot be inflated away](https://www.swanbitcoin.com/bitcoin-and-the-true-meaning-of-inflation/). This means it can help protect against the debasement of fiat currencies like the U.S. Dollar. However, it's important to note that while Bitcoin can protect against inflation over the long term, there is no correlation between Bitcoin and short-term inflation. In fact, Bitcoin's price can be volatile in the short term due to various factors such as market sentiment, regulatory changes, and technological developments. Adding Bitcoin to your IRA can potentially provide diversification, higher returns, and protection against the effects of inflation over the long term.  However, as with any investment, it's essential to do our research, understand the risks involved, and consult with a financial advisor to determine if Bitcoin is a suitable addition to your portfolio. Ok, now that you’re convinced Bitcoin deserves a place in every retirement plan/portfolio, let’s talk about what % allocation makes sense… ##### Scenario #1: Hal (25) is a Bitcoin Bull and is setting up his first IRA. He plans to allocate 100% to BTC and, based on his projections, would have $3.2M by retirement. ### How Adding Bitcoin to Your IRA May Affect Your Returns Alright, let’s see what may happen to your returns after adding BTC to your retirement portfolio.  We will use our [open-source Bitcoin Retirement Calculator ](https://nakamotoportfolio.com/apps/ira/ira_client_basic)to help us *run the numbers*. Feel free to enter your own assumptions. This is part of a new initiative called Swan Research (more on that below).  We’re going to analyze 3 common scenarios we’re hearing from our clients (names are anonymized)  - Hal: 25-year-old Bitcoin mega Bull setting up his first IRA - Alice: 35 years old, 2 kids, moderate savings, and bullish on Bitcoin but needs to stay diversified  - Bob: 55-year-old, successful career, healthy savings, wants some Bitcoin exposure but cannot justify excessive risk this close to retirement age Hal is 25 years old, single, and just got his first *“real job.”* He has no savings but decided to set up his first IRA. He has about 40 years to invest before retirement and has a high-risk tolerance.  Hal expects an annual return of 10% from Bitcoin and 7% from a 60/40 portfolio, respectively. He anticipates that the price of Bitcoin at the time of his retirement in 2063 will be $1.3 million. Hal expects his 60/40 portfolio to have an annual return of 7% over the next 40 years. He expects Bitcoin to hit $1.3M by retirement (2063) which reflects a projected average annual return of 10%.  After running the numbers based on his projected Bitcoin price at retirement, Hal discovered that if he allocates 0% of his portfolio to Bitcoin, he can expect to have $824k by the time of his retirement. On the other hand, if he invests 100% of his IRA in Bitcoin, he can expect to have $3.2 million by retirement (3.8x more money) should Bitcoin reach or exceed his projection. Hal is optimistic about Bitcoin's future growth potential and has decided to allocate 100% of his IRA to Bitcoin. He understands the risks associated with investing in a volatile asset and is willing to accept them in pursuit of achieving his financial goals. By doing so, he hopes to accumulate a larger retirement fund, which he can use to enjoy his golden years. ![](https://www.datocms-assets.com/56652/1682358877-bitcoin-ira-scenario-1.png?auto=format) **Assumptions for Hal:** - 25 year old, single - Planning to retire at 65 (40-year time horizon) - IRA starting balance of $0 - $6,500 annual contribution - Projected annual returns (BTC) = 10% - Projected annual returns (60/40 portfolio) = 7% - Projected BTC price by time of retirement (2063) = $1.3M **Running the Numbers:** - With a 0% allocation to Bitcoin, Hal expects to have $824k by retirement - With a 100% allocation to BTC, Hal expects to have $3.2M by retirement  - $2.3M more in his retirement account (3.8x more money) should these projections become true ##### Scenario #2: Alice (35), mother of 2 kids, expects to increase her retirement balance by $1.8 million by adding a 20% allocation to Bitcoin. Alice is a 35-year-old married woman with two kids who is interested in investing in Bitcoin. She already has a moderate amount of savings and is bullish on the future prospects of Bitcoin. However, she wants to maintain a well-diversified investment portfolio. Alice currently has her retirement account invested in a standard 60/40 portfolio. She expects it to return 7% annually on average. Alice makes some assumptions to evaluate the potential benefits of adding Bitcoin to her investment portfolio. She plans to retire at the age of 65, which gives her a 30-year investment horizon. She estimates that Bitcoin will reach $1.9M by her retirement in 2053, reflecting a projected annual return of 15%. After running the numbers based on her projected Bitcoin price at retirement, Alice discovers that if she maintains a 0% allocation to Bitcoin, she can expect to have $1.4M in her retirement account by the time she retires. However, if she adds a 20% allocation to Bitcoin, she can expect to have $3.3M (2.3x more money) in her retirement account, should Bitcoin reach or exceed her projection, while still maintaining a diversified portfolio. ![](https://www.datocms-assets.com/56652/1682358922-bitcoin-ira-scenario-2.png?auto=format) **Assumptions:** - 35 years old, married with 2 kids - Retiring at 65 (30-year time horizon) - IRA starting balance of $100k  - $6,500 annual contribution - Projected annual returns (BTC)  = 15% - Projected annual returns (60/40)  = 7% - Projected BTC price by time of retirement (2053) = $1.9M - Alice currently has her retirement account in a standard 60/40 portfolio however she wants to add a 20% allocation to Bitcoin **Running the Numbers****:** - With a 0% allocation to Bitcoin, Alice expects to have $1.4M by retirement - With a 20% allocation to Bitcoin, Alice expects to have $3.3M by retirement - $1.8M more in her retirement account (2.3x more money) should these projections become true ##### Scenario #3: Bob (55) adds a 5% allocation to Bitcoin to increase his projected returns by 30%. Bob is a 55-year-old individual who is married and has seen his children graduate from college. Bob has been diligently saving for retirement and has a starting IRA balance of $1 million. He plans to retire by age 65, which is only 10 years away. He is looking for investment options that can help him maximize his returns to secure a comfortable retirement. Bob's current portfolio comprises a standard 60/40 mix of stocks and bonds. However, he is considering adding a 5% allocation to Bitcoin. Bob believes that Bitcoin can provide him with the potential to earn higher returns than traditional investments. Bob expects his 60/40 portfolio to have an annual return of 7% over the next 10 years. He projects Bitcoin to hit $400k by 2033, which reflects an average yearly return of 30%. Since Bitcoin has averaged over 100% annual returns over the last decade, and while understanding that past performance does not guarantee future results, he also thinks 30% is a conservative assumption. By managing his initial position size (5%), Bob hopes to boost his overall portfolio returns while offsetting the volatility associated with Bitcoin. ![](https://www.datocms-assets.com/56652/1682358942-bitcoin-ira-scenario-3.png?auto=format) **Assumptions for Bob:** - 55 year old, married filing jointly, kids already graduated from college - Retiring at 65 (10-year time horizon) - IRA starting balance of $1M - $6,500 annual contribution - Projected annual returns (BTC)  = 30% - Projected annual returns (60/40)  = 7% - Bitcoin price by time of retirement (2033) = $402k - Bob currently has his retirement account in a standard 60/40 portfolio however he wants to add a 5% allocation to Bitcoin **Running the Numbers****:** - With a 0% allocation to Bitcoin, Bob expects to have $2.1M by retirement - With a 5% allocation to Bitcoin, Bob expects to have $2.7M by retirement - $611k more in his retirement account (30% more money) should these projections become true ### What Percentage of Your Retirement Portfolio Should be in Bitcoin? We cannot provide financial advice. Even if we could, choosing your Bitcoin allocation depends on your time horizon, personal goals, conviction, and risk tolerance. Hopefully, the three scenarios above have helped you envision how Bitcoin might make sense for your retirement planning. If you want to play around with different scenarios, we encourage you to run the numbers yourself using parameters that would make sense based on your anticipated retirement age, desired allocation and projected Bitcoin price. ### Run the Numbers Want to run the numbers for yourself?  As part of Swan Research, our [Bitcoin retirement calculator](https://nakamotoportfolio.com/apps/ira/ira_client_basic) is open-source. Feel free to play around with the model.  If you [have questions](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) about the model or adding Bitcoin to your IRA, email me at Rapha@swan.com. ### Is Swan IRA Right for You? Here at Swan, our mission was simple: let’s create the [best Bitcoin IRA product](https://www.swanbitcoin.com/crypto-iras/) on the market.  This means easy to use, [enterprise-grade custody](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/), simple and transparent fees, and best-in-class service.  [Learn more about Swan IRA here](https://www.swanbitcoin.com/bitcoin-ira/).  **Setting up a Swan Bitcoin IRA is quick and easy** 1. [Create a Swan Account](https://www.swanbitcoin.com/bitcoin-ira/) (if you don’t have one already) 2. Open a Swan IRA (2 clicks) 3. Fund your account with a Transfer, Rollover, or contribute directly via ACH, wire transfer, or direct deposit ### Swan Research [Swan Research](https://nakamotoportfolio.com/) builds on Swan's mission of driving adoption and education by providing tools, research, and open-source code that explore Bitcoin's groundbreaking effects on the financial world.  This project acts as a lab for experimenting with new and sophisticated ideas to make them available to everyone. The team at Swan Research is dedicated to pushing the boundaries of what is possible with this revolutionary technology. Through Swan Research, users can explore cutting-edge ideas related to Bitcoin, including new investment strategies, alternative financial models, and innovative ways of understanding Bitcoin. Based on the Open Source ethos, the project is available to anyone interested in Bitcoin and wanting to learn more about this fascinating technology. Whether you are a seasoned Bitcoin investor or just getting started, Swan Research is an exciting new resource providing valuable insights and opportunities. ### Let’s Wrap Up An IRA can be a valuable tool for saving for retirement and building wealth over time. Whether you choose a traditional or Roth IRA, the tax advantages and potential for compounding can help you achieve your financial goals.  Adding Bitcoin to your IRA can be a smart long-term investment strategy, as it can provide: - Diversification. - The potential for higher returns. - Protection against the effects of inflation over the long term. However, it's essential to understand and manage the risks involved, including volatility and custody.  By researching, seeking professional advice, and staying informed about market developments, you can decide whether adding Bitcoin to your IRA is right for you.  Ultimately, the key to building a successful retirement plan is to start early, stay disciplined, and be patient. With the right strategy and mindset, you can create a secure and prosperous future for yourself and your loved ones. ### Disclaimer *This article is provided for educational purposes only, and cannot be relied upon as tax, accounting, legal, investment, or other advice. Past performance is not indicative of future performance. Bitcoin is a young, volatile, risky asset, and sudden large and sustained drops in price may occur from time to time. Swan makes no representations regarding the performance, tax consequences, or investment suitability of any structure described herein, and all such questions should be directed to a relevant advisor of your choice. The Bitcoin Retirement Calculator is only intended to show the projected investment performance based on parameters set by you, and in using this tool, you acknowledge that the results generated by placing various parameters through this tool are only projections of hypothetical performance that may be useful in assisting you in deciding how best to potentially incorporate a Bitcoin allocation in your IRA.* ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # Climbing a Wall of Worry - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/climbing-a-wall-of-worry/ Market participants are scratching their heads and wondering, “Is this rally for real?” Let’s look at the data to discern some of the bullish and bearish arguments for where markets will move forward from here. --- **Sam Callahan** · April 21, 2023 · Updated July 3, 2024 The markets are filled with uncertainty and confusion today. If you read the headlines, one analyst is predicting doom is around the corner, while another is claiming that a new bull market has begun. This stems from the fact that assets like equities and Bitcoin have exploded upwards to begin the year, and yet many economic metrics are still showing signs of weakness. There are compelling arguments for why it may be prudent for investors to exhibit some caution here, but at the same time, this is how all bull markets begin – they climb a wall of worry. This has left market participants scratching their heads and wondering, *“Is this rally for real?”* Let’s look at the data to discern some of the bullish and bearish arguments for where markets will move forward from here. The rise in equities has been nothing short of breathtaking given the macroeconomic backdrop. The S&P 500 is up +8.6% YTD, off only 13.9% from its all-time high in December 2021. Similarly, the Nasdaq is up +20.1% YTD, off a mere 20.5% from its all-time high. ![](https://www.datocms-assets.com/56652/1682105836-1.png?auto=format) The rally in U.S. equities can be attributed to many factors, one of which is that we are continuing to see reductions in inflation. Headline CPI inflation came down again last month and now sits at 5% YoY. ![](https://www.datocms-assets.com/56652/1682105866-2.png?auto=format) The markets appear to have taken this recent decline in CPI as a sign that this would result in the Fed doing one more 0.25% rate hike next meeting and then pausing from there. The market is pricing in a 87.7% probability of a 0.25% rate hike at the Fed’s next FOMC meeting on May 3rd. ![](https://www.datocms-assets.com/56652/1682106094-3.png?auto=format) Assets considered *“risk-on”* have rallied after the inflation print and could be attributed to market participants thinking that the Fed’s tightening cycle will soon be at an end. However, it makes one wonder if markets are pricing this correctly? Speeches from various Federal Reserve officials imply that they continue to be focused on bringing inflation down and have not seen the progress in core inflation that they would like to see yet. Core CPI (ex-food and energy) still remains elevated compared to headline CPI. ![](https://www.datocms-assets.com/56652/1682106169-4.png?auto=format) Fed Governor Christopher Waller said [in a speech](https://www.federalreserve.gov/newsevents/speech/waller20230414a.htm) on April 14th, “*Since December of 2021, core inflation has basically moved sideways with no apparent downward movement. So, despite some encouraging news on a slowing in housing costs, core inflation does not show much improvement and remains far above our 2 percent inflation target…I would welcome signs of moderating demand, but until they appear and I see inflation moving meaningfully and persistently down toward our 2 percent target, I believe there is still work to do.*” This statement indicates that the Fed is still laser-focused on bringing inflation down and is not yet satisfied with where inflation sits today. This is starting to be reflected in the implied Fed Funds Futures curve, which has changed over the last week, and is now showing *“higher for longer”* in terms of market expectations for interest rates moving forward. Markets are now only predicting 1-2 rate cuts at the end of the year. ![](https://www.datocms-assets.com/56652/1682106486-5.png?auto=format) The Fed is signaling that they are not done slaying the inflation beast just yet, and the last Fed meeting minutes showed that Fed officials discussed the probability of a *"mild recession"* starting later this year, with a recovery in 2024-2025. This was the first time to my knowledge that Fed officials openly included the *“R-word”* in the meeting minute transcripts. Calls of a recession in the later half of the year have become a common utterance amongst institutions and analysts alike. Part of this could be due to the fact that there is a confluence of factors that are all lining up around that time that could be a headwind for asset prices. ### 1.) The Debt Ceiling and the Treasury General Account  With the debt ceiling expected to be resolved around late Summer or early Fall, the Treasury General Account (TGA) is refilled with tax receipts and the sale of newly issued debt. Already House Republicans are proposing to lift the debt limit. ![](https://www.datocms-assets.com/56652/1682106521-6.png?auto=format) The debt ceiling has always been more political theater than anything because if Congress does not vote to raise the debt ceiling then the US will default, and they can’t have that. When cash leaves the TGA, bank reserves increase, which has the secondary effect of increasing lending and investment in the economy. Thus, a falling TGA account indicates increased liquidity in the system. This is what we have observed this past year. The TGA has been drained and has likely contributed to the rise in asset prices. A draining of the TGA helped improve liquidity conditions and offset the Fed’s Quantitative Tightening over that same time period. ![](https://www.datocms-assets.com/56652/1682106580-7.png?auto=format) But now the TGA is close to being drawn down. The TGA will get refilled with incoming tax receipts and with newly issued Treasury debt when the debt ceiling is inevitably lifted. As the TGA gets refilled, it results in liquidity getting sucked out of the system. This liquidity drain will come as the Fed has made no hint that it will stop reducing its balance sheet via quantitative easing. Jurrien Timmer highlights these liquidity dynamics in the chart below. ![](https://www.datocms-assets.com/56652/1682106612-8.png?auto=format) Barring no significant changes to monetary policy or some unforeseeable Black Swan event, these dynamics will likely result in decreased liquidity conditions around Q3 of this year, which could be a headwind for the financial system and for asset prices. ### 2.) Earnings and Corporate Profitability  One reason that equities may have performed well through the first quarter of 2023 is earnings broadly came in above estimates. For Q1 2023, 90% of the S&P 500 companies that reported had a positive Earnings per Share (EPS) surprise and 63% of S&P 500 companies have reported a positive revenue surprise. ![](https://www.datocms-assets.com/56652/1682106671-9.png?auto=format) Since the surprise earning season of Q1, consensus EPS estimates are continually being revised downward. ![](https://www.datocms-assets.com/56652/1682106697-10.png?auto=format) Analysts are starting to ascribe a greater probability to a drop in corporate earnings. We are already seeing corporate profitability start to roll over. Corporate profits after tax have dropped into negative territory year-over-year. ![](https://www.datocms-assets.com/56652/1682106734-11.png?auto=format) This coming earnings season will be watched closely to see if they come in under estimates due to rising costs from the elevated levels of inflation or reduced demand from consumers. Which brings us to…  ### 3.) The Consumer The consumer has been under constant bombardment during this period of high inflation eating into their incomes. Real wages have declined for 24 consecutive months! And keep in mind this is based on the official CPI calculations, which are used to adjust earnings to arrive at a supposedly *“real”* figure. ![](https://www.datocms-assets.com/56652/1682106778-12.png?auto=format) Consumers are definitely starting to feel the pain. This was evident with the recent retail sales data which disappointed greatly to the downside. Charlie Bilello shows how the inflation-adjusted retail sales is down -3.28% YoY, the lowest level since April 2020 ![](https://www.datocms-assets.com/56652/1682106812-13.png?auto=format) Individuals are starting to turn to *“Buy Now, Pay Later”* apps to make ends meet. These are apps that allow people to take out short-term loans to buy things like essentials. In a recent survey, nearly half of Americans who responded stated they have used Buy Now, Pay Later apps, and 1 in 5 said they rely on such apps to buy groceries. ![](https://www.datocms-assets.com/56652/1682106908-14.png?auto=format) If we continue to see weakness at the consumer level, this could eat into the corporate earnings mentioned above, which could be a drag on economic growth, and lead to a decline in asset prices. Part of the reason consumers have remained strong up to this point is there is still a lot of excess savings in the system as a result of the various accommodative pandemic programs. However, if the current trend holds, these cumulative savings are set to run out by mid-2023. ![](https://www.datocms-assets.com/56652/1682106944-15.png?auto=format) All of these findings suggest that consumers are getting squeezed, and are surviving by reducing their savings and resorting to alternatives like Buy Now, Pay Later apps to stay afloat. If the inflation data continues to decrease from here, this could give the consumer much needed relief and could keep the consumer from cutting back spending, which ultimately would be beneficial for businesses and asset prices. With the drain in excess savings expected to occur by late summer, liquidity expected to get drained around the same time, earnings expected to get hit, and the Fed continuing to stay hawkish, all of this points towards the end of summer and early fall as being an important point in time for the future direction of markets. All of these factors could change with time, but being aware of them could help investors position themselves prudently and mentally prepare for all potential scenarios in the short to medium-term. ### So What about Bitcoin? Bitcoin has always marched to the beat of its own drum. Quite frankly, there is no other asset in the world with the value proposition of Bitcoin. As both a digital store of value that functions outside the traditional financial system, and a new innovative technology, it has the unique ability to offer both safety and potential outsized gains as its adoption continues. This was never more apparent than during the recent banking crisis. Bitcoin’s price spiked as the traditional financial system appeared more unstable than it had in years. This was perhaps due to investors realizing that they had to hedge the counterparty risk that is pervasive in most other asset classes. Bitcoin is an asset that lacks counterparty risk, so it seems like the perfect asset for investors to diversify into. Bitcoin has rallied harder than any asset class to begin the year. It has exploded upwards to the tune of +68.9% to start 2023. ![](https://www.datocms-assets.com/56652/1682106997-16.png?auto=format) To know for sure whether or not Bitcoin will go up or down in the short-term is always a fool’s game, but what we can do is learn from previous bear markets about what to expect to see around a bear market bottom. The first sign is that Bitcoin ended down -77% from its all-time high in November 2022. This was consistent with drawdowns of previous bear markets. ![](https://www.datocms-assets.com/56652/1682107031-17.png?auto=format) During this time we saw speculators sell their coins to addresses that have since not sold. These speculators likely were holding Bitcoin for short-term gains and were shaken out during the chaotic 2022 when various crypto companies like FTX, Celsius, Voyager, Three Arrow Capitals, and BlockFi went under. Typically in bear markets, we see a shift of coins from weak hands to strong hands and this was most evident when Bitcoin dropped under its previous all-time high of $20,000. When the price dropped below this level, over 200,000 BTC moved to entities considered long-term holders. ![](https://www.datocms-assets.com/56652/1682107079-18.png?auto=format) Note that this metric also counts bitcoin’s maturing after 6 months of being held, but the degree to which the coins moved below those prices indicates that there was substantial movement of bitcoin from weak hands to strong hands. After the short-term speculators sold their coins, Bitcoin has been off to the races back towards its all-time highs. This coincides with the halving about one year away. As it stands today, we are about 74% through this halving epoch. ![](https://www.datocms-assets.com/56652/1682107126-19.png?auto=format) Historically, Bitcoin has rallied before a halving event, as shown in the chart below. ![](https://www.datocms-assets.com/56652/1682107149-20.png?auto=format) Now this only looks at the supply side of the equation. The price ultimately depends on demand for Bitcoin increasing as well. But markets are forward looking, and many participants view this as an important event. As a result, the lead up to the halving could result in an anticipatory tailwind for the price of Bitcoin like it has in the past. This is especially true when we consider that demand for a scarce, decentralized money that functions outside the banking system has never been more apparent to many investors. After the banking crisis, many are waking up to Bitcoin’s value proposition. It is clear that the demand has been high for Bitcoin in 2023 thus far. Let’s see if it continues.  Bitcoin ultimately benefits from the return to accommodative monetary policies. Demand for an asset that has absolute scarcity will explode in the event that the Federal Reserve needs to go back to Quantitative Easing and/or Congress decides to hand out more stimulus checks in the event of an economic downturn. This seems to become more likely when you consider the deficit and the unsustainable nature of the US debt burden. The 2023 deficit has absolutely exploded to start 2023, up a massive $679 billion in the first quarter alone. This is an increase of over 134% compared to 2022. ![](https://www.datocms-assets.com/56652/1682107183-21.png?auto=format) So while the Fed talks a big game about fighting consumer price inflation, it’s important to remember that inflation is ultimately needed to reduce the burden of US government debt from a debt-to-GDP perspective. With interest rates rising at their fastest pace in history, the interest expense on the US public debt increased to a record high of $812 billion over the past year. If this trend continues to increase at the current rate, it will soon be around $1 trillion, surpassing Social Security as the biggest expense. When we consider the decline in tax receipts and the ballooning expense of the interest on the public debt, it becomes clear that this is unsustainable. It seems likely that the Treasury in conjunction with the Federal Reserve will eventually have to resort to cutting interest rates to reduce the interest expense on the debt or else risk a default. In other words, there will be pressure on the Fed to go back to QE. In that event, Bitcoin will benefit just like it did in March 2020. Given markets are forward-looking, and Bitcoin has been a leading indicator over the past several years, perhaps Bitcoin is already sniffing out this probable scenario. This could justify some of the price increases we have seen. We can only wait and see how this debt spiral will play out. All in all, Bitcoin has rallied off a low and has regained significant price momentum. When comparing the current price action to previous market tops, and specifically looking at how long it took for the price of Bitcoin to return to all-time highs, we are right near the beginning of it today. ![](https://www.datocms-assets.com/56652/1682107236-22.png?auto=format) We should expect Bitcoin’s rally back to its all-time high to be full of peaks and troughs and for it to take >1,000 days if the price moves similar to previous cycles. The macroeconomic backdrop remains highly uncertain and volatility should be expected moving forward. There are several macroeconomic factors converging around Q3 that investors would be cautious of, but right now Bitcoin is soaring. Bitcoin is climbing a wall of worry, and like all beginnings of bull markets, it is leaving investors in disbelief. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1682107277-23.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: More Relevant, More Urgent, More Ready URL: https://www.swanbitcoin.com/economics/bitcoin-more-relevant-more-urgent-more-ready/ In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many. --- **Ulric Pattillo** · April 21, 2023 · Updated June 25, 2024 In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many. At the time of this writing, Signature Bank and Silicon Valley Bank collapsed, defaulting on $263.6B of deposits. These two banks together achieved the highest mark of failed U.S. bank deposits in one year. In that same week the federal reserve lent out a record $314B to banks in one week to cover their liquidity issues; all the while at 4.75-5% interest rates. ![](https://www.datocms-assets.com/56652/1682114010-bank-failure-chart.png?auto=format) Shortly thereafter, Credit Suisse, a top 50 bank in assets (well over £1T), was the product of a firesale to United Bank of Switzerland (UBS) for £2.65 on March 19, 2023; almost a 66% discount on its valuation. The Bank of England also pleads to businesses to sacrifice profitability and [incorporate price fixing to fight inflation](https://www.theguardian.com/business/2023/mar/24/bank-of-england-boss-urges-firms-to-hold-back-price-rises-or-risk-higher-interest-rates). *"If all prices try to beat inflation then we will get domestic inflation that will start repeating itself. Higher inflation really benefits nobody and particularly hurts the least well-off in society."* *-Andrew Bailey* Banks collapsing at a record volume, the Federal Reserve Balance Sheet spiking and the Bank of England encouraging Soviet-like price controls sounds like catastrophic times. But you wouldn't know by interacting with the public. There is generally a sense of apathy instead of concern toward these topics. Legacy media has incited fear in the hearts of its loyal consumers for four years. The constant pressure to stay inside, wear a mask, engage in a racial civil war, receive an injection for the public good, and rationalize unlimited spending on a war for "democracy" has been an operational test and evaluation on the boundaries of individual liberties and property rights of people all over the world. Now this same mechanism is being used to pacify the people exposed to the greatest risk to their earnings and savings they have ever faced. Speaking with a few unnamed people close to me, I have heard some troubling perspectives about these economic conditions. Some people who hold these views can be categorized as normies: people too distracted by the frivolities of life to consider significant issues. Yet still, some others identify as Bitcoiners in principle. Even those who celebrate Satoshi's invention can still exhibit ideals that would contradict the freedoms conveyed by the Bitcoin Network. In our technologically advancing world, these ideals, if manifested, will also streamline lives into a fascist dystopia that leaves no opportunity for individuals to fully pursue life and liberty. --- Friend A plays basketball with me on occasion. He indicated skepticism when I mentioned Bitcoin. He said, "We must always have physical cash." When asked about what happens when governments enact central bank digital currencies (CBDCs) and retire anonymous paper money, he indicated, "We have to fight for and demand it" because "it's our right." ![](https://www.datocms-assets.com/56652/1682113939-black-man-money-suit.png?auto=format) I think Friend A has a few rabbit holes to dive into, and I promise to help him along. His confusion between Bitcoin, crypto, and CBDCs, has likely not been helped by any Google search on the topic. He is likely left with dead-end jargon such as "too volatile," "uses too much energy," "governments can ban it," "no intrinsic value", "used by criminals", and maybe a "China!" wildcard on occasion. While each of these FUD topics has been and will be exhaustively explored, my chief concern with Friend A is his notion that he has the right to demand something from another entity, especially the state. *"The truth is, one who seeks to achieve freedom by petitioning those in power to give it to him has already failed, regardless of the response. To beg for the blessing of 'authority' is to accept that the choice is the master's alone to make, which means that the person is already, by definition, a slave."* *-Larken Rose* This quote, while accurate, is extremely hard to manifest in the real world, where the techno-state is so ubiquitous. There is no real freedom in asking the state for freedom. That would imply the state has the power to give and deny. There is no true freedom in simply speaking it into existence. The "word of power" or "name it, claim it" as propagated by wealthy mega churches would measure your morality by your divinely granted earthly prosperity. However, much like the shallow carnality of that Christian sect, the idea of simply speaking your freedom into existence while pacing in your real prison cell is hardly a real solution. Throwing words into the air with no substance or action is a coping mechanism for a bleak reality. It is important to remember to whom the fiat currency belongs. Federal Reserve notes are property of the Federal Reserve System (18 USC 333). To claim unlimited rights to its use is asinine. To claim ownership of someone else's production or property violates axiomatic first principles of property rights: you cannot lay claim to someone else's work unless they have gifted or exchanged it free of coercion with you. In the case of the fiat, even the ones in your pocket, it is the property of the Federal Reserve Banks. Therefore they have the unilateral right to do with it as they please, including discontinuing their use. While demanding the rights to someone else's property is a vain socialist pursuit, it is not our only option.  **But Bitcoin…**   --- Friend B recognizes the evils of central banking and realizes Bitcoin is hope for all people. He hopes to see Bitcoin's dollar value exponentially increase in the near future. However, his disposition toward CBDCs is interestingly nonchalant. He believes CBDCs are very similar to the money system we have now, as we currently have a digital dollar. ![](https://www.datocms-assets.com/56652/1682112751-drone-man-optimistic.png?auto=format) I believe Friend B can be described as *"optimistically ignorant."* A society that does not recognize the dangers of impending attacks limits its ability to fend off assaults on its existence. CBDCs are quintessential attacks on individual freedoms. Imagine playing a video game like Grand Theft Auto, and you use money cheat codes. The catch is that the code does not empower you but hinders your ability to play freely and naturally. Imagine a world where these things are possible: - Credit Account Funds are unable to transact for 1-14 days due to the severity of a regulation/code/law violation. - Savings Account Funds interest has reduced from 0.5% APY to -2.0% APY to collectively contribute to fixing systemic economic risk from irresponsible institutional investing. - Paper cash has been removed for circulation to tax any value exchange, even as intimate of an exchange as a parent to child. - Traveling 25 miles away from your registered residence for longer than 14 days will result in Saving Account Funds penalized 1% for every additional day outside the domain; the unauthorized exit of the country results in the immediate forfeit of all funds. - Spending credit account funds at state-sponsored establishments will result in a 3% end-of-month rebate (assuming no social credit violations); spending credit account funds at disapproved establishments will result in an immediate 3% extra tax payable to the state office. The rules listed above are part of a game no one wants to play unless they are on the side of the state. While these conditions are not real or even certain if CBDCs become a reality, these are a real possibility, and there would be little individuals could do to prevent the extent of their reach. To claim we have a CBDC now or it "likely will not be that bad" speaks to a level of comfort and dismissiveness many first-world humans have while the oppressed world currently suffers under the future dystopia we joke about or opine as if it were science fiction. We can argue what state entity would be the last bastion of freedom (Switzerland, Ireland, Texas,...) before CBDCs would engulf the world. What is not up for debate is whether there is a mutually beneficial solution for all people to defend their earnings as state actors seek to covertly create economic weapons to use against their own people. The technological future is bleak for the working-class individual. **But Bitcoin…** --- Friend C is well-read and a very complex thinker. He is passionate about macroeconomics and has refined his thoughts beyond the "Bitcoin = $$$ gainz" smooth brain thought patterns. However, he adamantly pursues a "smooth" transition. He even prefers delaying "hyperbitcoinization" (the resulting world where Bitcoin is the chief or only monetary network) for the sake of those dependent on the fiat infrastructure and for more people to adopt Bitcoin. ![](https://www.datocms-assets.com/56652/1682113225-fire-house-man.png?auto=format) To seek out stability can be interpreted as peaceableness. It is natural to desire to prepare as many others as possible for such a monumental transition as the death of fiat currency. However, it is important to remember that the idea of stability is one of the chief pillars that encouraged the creation of fiat, establishing of worldwide central banking, and removing the dollar from the gold standard. So whose version of stability is better: Jerome Powell’s or Smooth Transition Bitcoiner? Looking at “stability” as the measuring stick, it is better to not make any change at all, for any difference in the state of being is always less stable than no change at all. Arguments can be made regarding the fear of pensions and retirement funds being demonetized. Government careers will be put at risk if there is no money to print to pay them. Government healthcare plans in the West would fall apart. Many schools at all levels would lose their funding and cease operations. For a moment in time, there would be no police to call nor someone to fill in the holes in the roads. Does this sound like mass hysteria to you? To me, it sounds like a typical day in many parts of the world (e.g., the Global South). In these places, the individual is placed at a categorical economic disadvantage by being forced into using money that is a magnitude worse than whatever shortcomings we find with the dollar or euro. The fringe nightmare of the citizens in privileged regions is the daily reality of 75% of the people in the world. Every day in this status quo is another day of freedom violation. How long should the world suffer for the sake of stability? It is said that history echoes. This conundrum is very similar to when the United States woke up to the slavery-based economy being a violation of natural rights. The prevailing strategy toward the liberty of the enslaved people was a compromising one of gradualism. Essentially, to not inconvenience the human thieves who profited off of wrongly embondaged humans, it was suggested to slowly release slaves over time. Each day a slave is whipped and forced against his will to labor; the great thinkers not quite 200 years ago thought this “smooth transition” was an appropriate action. Do we not care about the inconvenience of the violated? Murray Rothbard captured abolitionist William Lloyd Garrison eloquently in Ethics of Liberty: *Thus, the libertarian abolitionist of slavery, William Lloyd Garrison, was not being “unrealistic” when, in the 1830s, he raised the standard of the goal of immediate emancipation of the slaves. His goal was the proper moral and libertarian one and was unrelated to the “realism,” or probability, of its achievement. Indeed, Garrison’s strategic realism was expressed by the fact that he did not expect the end of slavery to arrive immediately or at a single blow. As Garrison carefully distinguished: “Urge immediate abolition in the end. We have never said that slavery would be overthrown by a single blow; that it out to be, we shall always contend.” Otherwise, as Garrison trenchantly warned, “Gradualism, in theory, is perpetuity in practice.”* Let us not be fooled. It was more so the 2nd Industrial Revolution and weaponized politics that made slavery obsolete rather than the kindness of a president or the Union. This does not negate the fact of the unethical existence of people stealing. It is a proven fact of the many natural rights violations of fiat currency, from the intrinsic theft in the Cantillon Effect of money printing to the illicit denial of free market value exchange through sanctions. To advocate for delaying or slowing removing these atrocities is to justify their very existence. This choice of gradualism is essentially exchanging one central planner for another. Both think they can control the economy the best. **But Bitcoin…** --- These three friends are each aware of the need for safeguards against malicious actors or misappropriation of value. However, they miss the mark on a few things that Bitcoin is designed to combat. **In a world where the state dominates the physical domain, you must go to the digital domain, where the state has not and can not completely homestead or claim for itself.** Thanks to the internet being natively open-source (TCP-IP), anyone can build upon the protocol. The Bitcoin Protocol is also open source enabling any participant to join or leave of their own volition. A government does not own nor can it ever own Bitcoin. Therefore, your ability to transact is preserved natively by the code. This cannot be said about even physical cash; whereas you use it, the new owner may opt to give it up to a bank where they have the right to hold it out of circulation, retire it, or create more of it. While physical cash advocates care about privacy and 3rd party custodial risk, they should research more about Bitcoin as this network will meet the use cases of physical cash and other asset classes. **If you discount the capability of state coercion, you discount your ability to defend yourself against their inevitable advances.** This is a paraphrase of the Lao Tzu quote:  *“There is no greater danger than underestimating your opponent.”* CBDCs will be a tool that people in some domains will not be able to escape because they were not aware nor cared enough to defend their monetary wealth against those that would seek to control it. It is the end game product of the [Nixon Bank Secrecy Act of 1970](https://www.britannica.com/event/Bank-Secrecy-Act) as money will have fully evolved into a system of control and negating the three functions of real money (medium of exchange, store of value, unit of account). Bitcoin is, thankfully, the antithesis of this monster that can enable you to maintain the three functions of money in their truest form. This is due to the Bitcoin Network’s four utility features: permissionless, trustless, immutable, and transparent. While crypto advocates claim Bitcoin does not have utility, these four features are the most important of utilities in that they ensure you can preserve your ability to exchange value regardless of what any 3rd party says or wishes. Those with power and resources are incentivized to build the tools necessary to maintain and grow their stake. Bitcoin is a protest and protection against those actions. Do not expect the elite to easily give up what they have. There is no hope in this fight without the Bitcoin Network. **If you advocate for delaying the removal of an atrocity, you are advocating for its legitimacy.** There is nothing sophisticated about making people stay in a perverted monetary system a day past its recognition as a violation of natural rights. Bitcoin is continuously functional and does not crash like the affinity scam crypto networks. The layer 2 Lightning Network (LNP) enables instant transactions for people that care about buying small quick items (e.g., coffee, sandwich) without waiting 10 minutes for a block to be mined. Bitcoin is ready to be used. Are people so fearful of change that they seek the shelter of their oppressor without a second thought? If fiat is stealing from people, the best time to end the violation is yesterday! To think that the existing financial system will go away peacefully is asinine. Their incentive will always be to persist at the expense of the less fortunate. If that means lying, cheating, stealing, or even killing to maintain their advantage, there is no doubt in my mind those in power will take those actions. However, there is also no doubt that Bitcoin’s adoption, network effect, and proof of function will continue to drive its market capitalization higher, enriching and securing its participants. Additionally, there will come a time when getting paid or partially paid in Bitcoin will be a normal form of compensation. So even if many people are left out of the hyperbitcoinization phase, hurrying to a future where people earn hard, unconfiscatable money is infinitely better than waiting for people to buy in for a “nice trade.”  ### Ulric Pattillo Ulric Pattillo is a Bitcoin Essayist with contributions on several platforms. He is a co-author of the Declaration of Monetary Independence which was featured at the Miami Bitcoin Conference in 2022 and 2023. Ulric has a Bachelors in Computer Engineering, a Masters in Business Administration, and works as a Digital Systems Architect. He has appeared on several Bitcoin podcasts including Simply Bitcoin, Pleb Underground, and The Bitcoin Source. Ulric is also the co-host of the Bitcoin Ballers Podcast. You can find his works consolidated on his website serulric.com. # The Banking System vs. Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/the-banking-system-vs-bitcoin/ It’s agreed that there are problems in the banking system. The proposed solutions are wildly different. A look at the recent U.S. banking failures, the nature of banking crises, and how Bitcoin is different. --- **John Haar** · April 26, 2023 · Updated June 27, 2024 In a recent conversation with a friend, he referred to the U.S. banking crisis, and to that, I had to say, *"Which one?"* I genuinely did not know whether he was referring to the 2008-2009 Great Financial Crisis or the recent U.S. banking crisis (which doesn't seem to have an official name yet). The recent U.S. banking crisis involving Silicon Valley Bank, Signature Bank, and Silvergate Bank is still playing out. There are some key differences between the Great Financial Crisis. But they are both indeed banking crises. Silicon Valley Bank was the 16th largest U.S. bank by assets (with approximately $200 billion). The recent banking crisis is not just contained to the U.S. Credit Suisse was stressed to the point that regulators orchestrated a weekend buyout of the bank, with significant government guarantees provided to the buyer (UBS) as part of the deal. The scale of this latest banking crisis is thus far smaller than the Great Financial Crisis. But even so, it raises certain questions when you witness a top 20 U.S. bank find itself a victim of a bank run or a global systemically important bank (G-SIB) with over 1 trillion Swiss francs in assets in need of finding a (government-supported) buyer on a weekend. It leads one to ask: why do banking crises continue to happen? Why do they continue to happen despite assurances from the people supposedly tasked with ensuring they don't happen? After all, in 2017, Janet Yellen (now somewhat famously) said she does not believe there will be another financial crisis in our lifetimes. Additionally, why is it that a crisis can happen to a bank so quickly? Why is it that a bank can appear healthy and safe one day, and then, just weeks or days later, the bank's solvency is in question, or it has failed? Why don't non-bank corporations experience this same type of immediate onset of a crisis? What could be a real solution to address these continued crises? These may even lead you to ask deeper questions regarding whether the goal of the Federal Reserve and any financial regulator is their stated goal. If you pretend for a moment that their actual goal is *"to keep those with control over money in control,"* do their actions begin to make more sense? ![](https://www.datocms-assets.com/56652/1682472068-screenshot-2023-04-25-at-9-19-48-pm.png?auto=format) ### The Recent (Current?) U.S. Banking Crisis  Let's do a brief post-mortem of how and why the recent/current U.S. banking crisis happened, specifically focusing on Silicon Valley Bank (SVB). This will by no means be an exhaustive review of what happened, as these types of situations can be analyzed for years on end if one really wants to. But this summary should provide a broad picture of what happened. The first thing to keep in mind is that in the current financial system, your money is not actually sitting in a bank, nor do you really own it. When you deposit your money in a bank, the bank lends it out in various ways, primarily via loans and securities such as corporate loans, real estate loans, treasuries, mortgage-backed securities, municipal bonds, etc. The bank only holds a small portion of cash on reserve. The loans and securities become the bank's assets, and your deposit becomes the bank's liability to you. When you *"deposit money into the bank,"* it is more accurate to say that you *"lent money to the bank."* When a bank operates this way, it is counting on two things: 1) that a significant amount of their depositors do not withdraw funds at the same time, and 2) to the extent that depositors do withdraw assets, the bank believes it holds enough in high-quality liquid securities which can be sold to satisfy the withdrawals without calling into question the solvency of the bank. Silicon Valley Bank did a poor job managing both of the above items. On #1, their customers, on average, were substantial in size, which led to more risk on the deposit side. If a bank has 100 customers with $1,000 in deposits each, that would be significantly more risky on the deposit side than a bank with 1,000 customers with $100 in deposits each. This is especially true when you consider the fact that in the U.S., we have FDIC deposit insurance up to $250k, which means that customers are less likely to withdraw deposits that are < $250k from any FDIC-insured bank, while customers are more likely to withdraw deposits that are < $250k if they believe a bank's solvency is in question. SVB had a concentrated deposit base and a significant percentage of uninsured deposits (i.e., above $250k). On #2, the majority of assets owned by SVB were a mix of cash, treasuries, municipal bonds, mortgage-backed securities, commercial and industrial loans, and real estate mortgage loans. When interest rates rise, as they did in 2022 at one of the fastest paces in history, the prices of fixed-income securities go down. This means that the fixed-income securities SVB loaded up on in 2020-2021 - when rates were very low - were now trading at much lower prices (perhaps SVB actually believed the Fed's dot plots in 2021 which implied that interest rates wouldn't rise materially, until 2023 or 2024. The price decline due to interest rate increases is not an issue if you can hold the securities to maturity (assuming the securities' issuers can pay back the bond’s principal).  But when you have depositors asking for their money immediately, you cannot wait years for treasuries/mortgage-backed securities to mature/pay down. SVB also owned loans, which are far harder to value at any given time, given they do not trade in as liquid and observable of a market as treasuries or mortgage-backed securities do. We now know that First Citizens Bancshares acquired SVB’s $72 billion of loans at a 23% discount. This means that wherever SVB’s loans were valued on their own books was likely not a realistic level where they could have sold the loans to other buyers if they needed to sell. And when you have depositors pulling billions of dollars, that certainly counts as a situation where you need to sell. **Duration and Bond Prices** If you want to know the quick back-of-the-envelope math on determining the price change of a bond for a given move in interest rates, you need to know a bond’s duration, which represents its interest rate sensitivity. The higher the duration, the more sensitive the bond is to changes in interest rates. We’re not going to do a deep dive on duration here, but a corporate bond that matures in 10 years might have a duration of about 8 years. This means that if interest rates rise by 0.12%, the bond will change in price by ≈0.96, i.e., about 1 point. As you know, interest rates rose by a heck of a lot more than 0.12% in 2022. In this example, if interest rates increase by 2.0%, the bond will change in price by ≈16% or about 16 points. If you own a 30-year bond, the duration might be 15-18 years, so the price changes when interest rates rise are more significant. These are massive moves in the price of fixed-income securities, which are supposed to be safe and conservative. SVB and the FDIC eventually saw that there was going to be no way SVB would be able to survive the combination of: 1. Depositors withdraw funds from the bank by the billions in a matter of days. 2. Securities held by SVB are trading at significant losses. 3. Loans held by SVB likely being marked down significantly if they had to be sold to another buyer.  If the process were allowed to play out, eventually, SVB would have sold all its assets and would have run out of funds needed to satisfy depositor withdrawals.  If you want to know the quick back-of-the-envelope math on determining the price change of a bond for a given move in interest rates, you need to know a bond's duration, which represents its interest rate sensitivity. The higher the duration, the more sensitive the bond is to changes in interest rates. We're not going to do a deep dive on duration here, but a corporate bond that matures in 10 years might have a duration of about 8 years. This means that if interest rates rise by 0.12%, the bond will change in price by ≈0.96, i.e., about 1 point. As you know, interest rates rose by a heck of a lot more than 0.12% in 2022. In this example, if interest rates increase by 2.0%, the bond will change in price by ≈16% or about 16 points. If you own a 30-year bond, the duration might be 15-18 years, so the price changes when interest rates rise are more significant. These are massive moves in the price of fixed-income securities, which are supposed to be safe and conservative. ### Differing Responses to Banking Crisis  Once there is an obvious crisis unfolding which involves bank runs and bank failures, everyone, of course, agrees there is a problem. However, how people believe the problem can be solved and avoided in the future differs wildly. The proposed solutions can generally be grouped into the following buckets: **A. The same system but more regulation** - proponents believe the current banking system is generally okay but that we just need to tweak our regulatory framework, create more regulatory bodies, and appoint better regulators to oversee and manage the system. **B. A new system with near complete government control** - proponents want retail bank accounts to be replaced by accounts held directly with the Federal Reserve. Your bank deposit is no longer a liability of a commercial bank. It is now a liability of the Federal Reserve, which can never have a bank run because it can always create more new units of money. This is effectively a Fed money system or Central Bank Digital Currency system. **C. Bitcoin** - proponents want to disconnect the government, the banks, and human judgment entirely from the process of *"backing money,"* determining the supply of money, and the cost of borrowing money. They instead want to replace it with a finite supply, self-custodial monetary asset that can be easily and cheaply held, sent, and verified relatively easily and cheaply, and peer-to-peer without banks or governments. Here is a short analysis of options A, B, C:  There are three primary risks associated with money:  1. Risk of nominal loss of funds (due to loan defaults / bank mismanagement / bank runs) 2. Risf of debasement of funds through inflation of the money 3. Risk of censorship preventing the use the money for desired purposes Proposed solution (A) is essentially our current financial system. It leaves you exposed to all three risks.  Proposed solution (B) is a new system with complete government control. It leaves you exposed to risks #2 and #3. Crucially, the only reason this system can protect you from #1 is by engaging in and exacerbating risk #2 (inflation and debasement). And you don't need to be a hardcore libertarian to acknowledge that the risk of censorship increases materially if the system is entirely controlled by a centralized government. Proposed solution (C) is Bitcoin. It is the only proposed solution that addresses all three risks. When you hold Bitcoin, you actually own the asset rather than having a liability that is (hopefully) backed by a bank's loans and other securities. With Bitcoin, the nominal value of your Bitcoin cannot *"go poof"* due to loan defaults, interest rate rises, or bank runs. Bitcoin's supply is finite, so it cannot be debased. And Bitcoin is far less likely to be censored than any system where banks and/or governments are the gatekeepers because there is no single party in control of which transactions get approved or rejected. To be fair, Bitcoin still involves the risk of theft and loss, but this is a risk that comes with owning anything, regardless of whether it is monetary, non-monetary, physical, or digital. While it stands to reason that Bitcoin is the only option that actually addresses the issues plaguing our system, the reality is the current system is quite entrenched. It is unlikely that the current system can or will migrate to either of the alternatives described in B or C above. It is far more likely that, in the near term, the *"solutions"* will come in the form of tweaks to the current system. One of the likely outcomes in the U.S. banking system will become more consolidated and centralized. There was already a trend towards consolidating small banks into bigger banks, and the recent baking crisis will accelerate that. Based on the response thus far to the crisis, there is now effectively a two-tiered banking system in the U.S. Large banks with tons of treasuries and mortgage-backed securities can now pledge those securities at par to the Fed for a loan if they need it (this is the BTFP - Bank Term Funding Program). Banks with other assets, such as corporate or real estate loans, cannot do this. If this policy is left in place, large banks will be seen as a relatively safe place to put deposits compared to small banks, where deposits have a more realistic shot of being lost in a bank run. It's also worth noting that without option C (Bitcoin), there is a difference of opinion about whether fractional reserve circulation credit should or will exist on top of Bitcoin. In other words, there is total agreement within the Bitcoin community that Bitcoin as a base layer monetary asset should and will be fixed in supply. However, within the Bitcoin community, some people believe there should be or will be a fractional reserve circulation credit on top of Bitcoin. And some think that this is a good thing. Recall that fractional reserve circulation credit is the equivalent of creating new units of money out of thin air when loans are made. So to believe that this is a good thing, one must believe of some version of *"we need to create new units of money out of thin air to achieve economic growth.*" I am firmly against this line of thinking. If you are interested in reading more about this topic, please see [this piece ](https://www.swanbitcoin.com/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/)initially published in Swan Private Insight. Continuing on the topic of fractional reserve circulation credit on Bitcoin, there are two separate questions: ***should*** and ***will*** fractionally reserve circulation credit ever exist on top of Bitcoin, as alluded to in the prior paragraph? The article linked above mainly addresses the question of whether fractional reserve circulation credit should exist on top of Bitcoin. Whether a fractional reserve circulation credit will ever exist on top of Bitcoin is worth an article on its own. However, for now, if self-custodial base money can be held, sent, or verified relatively easily and cheaply, it removes nearly all of the reasons and incentives that led to fractional reserve circulation credit becoming so dominant in our current system. Ask yourself the following question: *"If precious metals could have been held, sent, or verified easily and cheaply, how many market participants would have said, "I don't want the gold or silver. Give me fractional reserve bank credit money instead"?* Regarding the proposed solution B above, a CBDC, there are additional critical outstanding questions: Who will control the money supply? When will it increase? Who will be the recipients of the new money? The short answer is bound to be... "the'experts,' of course!" If you want to hear firsthand someone who is a proponent of solution B above, I would encourage you to listen to the [podcast episode](https://podcasts.apple.com/bh/podcast/odd-lots/id1056200096) of Odd Lots from March 23rd with Saule Omarova as the guest. As background, Saule Omarova is an academic and public policy advisor. In 2021, she was the Biden Administration's nominee to head the Office of the Comptroller of the Currency (OCC). Omarova's nomination was eventually withdrawn after significant Congressional opposition. Here are a few snippets:  - Co-host Tracy Alloways asked what happens with deposit rates in the Fed money/CBDC system, which Omarova described and promoted.  Omarova's answer: *"one of the beauties and opportunities that this system offers is that rate on various deposits can be established in a much more tailored, more finely managed way depending on a variety of public policy needs by the Fed."* - Alloway asks if rates might differ for individuals and companies. Omarova: *"yes, if that makes sense. For example, if a particular occurrence or dynamic in the economy may necessitate channeling more liquidity into a particular sector of the economy by increasing the rate on deposits."* - And it's not just about centrally manipulating interest rates. Omarova clearly states that the outright sending of new units of money to certain groups would be part of such a system:  Omarova: *"If the need is, in a pandemic, to send money to low-income families, that can be done much faster and much more easily."* It only takes a little imagination to see how those in power might start to use (i.e., weaponize and exploit) this type of system for their own political or financial gain. But I do believe such a system can potentially lead to good outcomes. All we need is for the *"experts"* managing the system to be both omnipotent and benevolent. That's all. ### Why the Pushback against Bitcoin, If It’s the Only Solution That Addresses All the Relevant Problems? Answering this question could be an article or a book of its own. But for now, I'll say that I believe the biggest reasons for pushback against Bitcoin are its non-state nature and its fixed supply.  Many people in traditional finance, academia, the media, and the government believe strongly in these two flawed narratives:  1. "Managing the currency and monetary system must be done by the state." 2. "Creating new units of money is necessary to achieve economic growth." If you believe these narratives, option C (Bitcoin) is off the table. You are left debating how the new money should be created, who should create it, and who should receive it. This is, unfortunately, the current Overton window for mainstream debates on the monetary system. It is often a tactic of those in power to allow for discussion within a narrow Overton window to give the appearance of free-thinking, whereas the reality is that free thinking outside the window is not permitted.   *"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion but allow very lively debate within that spectrum..."* - Noam Chomsky Bitcoiners do not wish to debate ***how*** new money should be created, ***who*** should create it, and ***who*** should receive it. But instead, Bitcoiners reject such a system entirely. Thank goodness Bitcoiners can think for themselves and see past the artificially constructed limits of mainstream debates.  ### John Haar John is the Managing Director of Private Client Services at Swan Bitcoin. He previously spent 13 years on Wall Street, where he was a Portfolio Manager and Insitutional Investor at Goldman Sachs. If you'd like to learn more about the Bitcoin network and protocol function, you can download [Inventing Bitcoin](https://event.swanbitcoin.com/freebook/) by Yan Pritzker for FREE! # The Truth is on Our Side - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-truth-is-on-our-side/ Bitcoin shines the truth on many lies. It is as much a movement as an investment… --- **Drew** · April 30, 2023 · Updated June 26, 2024 Gandhi observed movements go through four stages: *"First, they ignore you; then they abuse you (laugh at you); then they crack down on you (fight you), and then you win."* Despite politicians telling the public that banking contagion has been contained, we continue to see cracks in the foundation of the fiat system. [First Republic Bank](https://www.cnbc.com/2023/04/24/first-republic-says-deposits-tumbled-40percent-to-104point5-billion-in-1q-but-have-stabilized-since.html), the 14th largest bank in the U.S. by assets, has seen its stock price collapse by 90% year-to-date, despite receiving two multibillion-dollar bailouts. This has left the bank on the verge of failure, raising further concerns about the stability of the traditional banking system.  Meanwhile, Bitcoin’s price spiked nearly 9% as the news broke and is up over 75% this calendar year. This adds further support to the idea that Bitcoin serves as protection from banking instability. Moments like this illustrate why it’s prudent for business owners to hold a few months of payroll in Bitcoin in case their bank is the next to fail. [Swan Business makes this easy](https://www.swanbitcoin.com/business/).  Daniel Batten, ClimateTech investor, [made a good point comparing Bitcoin to Electric Vehicles](https://twitter.com/DSBatten/status/1643775684953911298)…  - Both electric vehicles and Bitcoin are fully electrified, so they have no *direct* emissions. - Like electric vehicles, Bitcoin has *indirect* emissions from electricity which is generated using fossil fuels. - Comparing energy mixes to produce that electricity, Bitcoin uses significantly more sustainable energy than electric vehicles. If Bitcoin is more green than electric vehicles, why the double standard? Additionally, both video games and clothes dryers consume more energy than Bitcoin mining. Many people consider these wasteful, however The Times isn’t targeting those industries. **This type of mis-reporting is nothing new for Bitcoin.**  In 2017, the World Economic Forum (WEF) [predicted](https://www.weforum.org/agenda/2017/12/bitcoin-consume-more-power-than-world-2020?utm_content=bufferada1c&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer) that by 2020 Bitcoin mining would consume more energy than the entire world produces. Lol.  Fast forward a few years and now the [WEF is saying](https://twitter.com/coryklippsten/status/1650319451626287104) Bitcoin mining can reduce a *"massive amount of emissions."*  Even organizations that are traditionally opposed to Bitcoin cannot deny the powerful green energy incentives from Bitcoin mining.  Let’s set the record straight… **Bitcoin Truth #1**: Today, Bitcoin mining is responsible for only [0.17% of the world's energy consumption](https://bitcoinminingcouncil.com/wp-content/uploads/2022/04/2022.04.25-Q1_2022_BMC_Presentation.pdf).  ![](https://www.datocms-assets.com/56652/1682898388-0-17.png?auto=format) **Bitcoin Truth #2:** Bitcoin is the greenest industry on the planet with[ over 50% of its energy coming from renewable sources](https://bitcoinmagazine.com/business/bitcoin-uses-mostly-sustainable-energy). By comparison, only [20% of the US energy grid is from renewables](https://www.eia.gov/energyexplained/us-energy-facts/#:~:text=Download%20image%20U.S.%20primary%20energy,natural%20gas%2032%25%20petroleum%2036%25).  **Bitcoin Truth #3:** Integrating Bitcoin mining rigs into energy infrastructure [incentivizes the construction](https://www.coindesk.com/policy/2021/10/11/bitcoin-mining-is-reshaping-the-energy-sector-and-no-one-is-talking-about-it/) and innovation of green energy projects by [reducing the time ](https://www.microstrategy.com/en/bitcoin/documents/seetee-shareholder-letter)taken to pay back investments and, even in some cases, making a green energy project financially viable.  **Despite ongoing attacks, Bitcoin continues to see exponential adoption growth** While the media writes hit pieces and confused politicians like Elizabeth Warren are creating an *"anti-crypto army,"* individuals and corporations continue buying more Bitcoin and pushing the price up. Turns out spreading politically motivated misinformation undermines your credibility. Not to mention, it brings more attention to Bitcoin. And since the truth is on our side, all attention is good for Bitcoin.  To quantify recent price appreciation, let’s look at individual retail investors and institutions.  Despite recent misinformation, retail holders (including Swan clients) are acquiring Bitcoin at a remarkable rate. In the last 30 days alone, an additional 35,000 BTC were acquired by *“*[*Bitcoin Shrimps*](https://insights.glassnode.com/bitcoin-supply-distribution-revisited/)*”* aka individuals who own less than 1 BTC.  What about institutions?  Bank of America (BofA) indirectly loaded up on Bitcoin, buying shares in Microstrategy (MSTR). BofA [now holds a 2.37%](https://money.cnn.com/quote/shareholders/shareholders.html?symb=MSTR&subView=institutional) interest in MSTR, with 226,980 shares worth over $59.53 million. The vast majority of the bank's purchases were in Q1 2023. Financial giant Fidelity, with $4.5T in AUM, is now [the ninth-largest](https://money.cnn.com/quote/shareholders/shareholders.html?symb=MSTR&subView=institutional) MSTR stakeholder, possessing a 1.01% share. They too purchased almost all of these shares in Q1 2023. ![](https://www.datocms-assets.com/56652/1682898439-screen-shot-2023-04-30-at-6-44-58-pm.png?auto=format) ### In the End, Truth Prevails Recent attempts to suppress, distort, and conceal the truth about Bitcoin have not succeeded. Instead, public interest, curiosity, and accumulation of Bitcoin have only increased in their wake.  Why?  Because the truth is on our side and, ultimately, the truth wins out.  And that’s why Bitcoin is [winning](https://www.swanbitcoin.com/bitcoiners-its-winning-time/)! ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # The Bullish Case For Bitcoin Custodians - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/the-bullish-case-for-bitcoin-custodians/ By rallying around a nuanced yet challenging standard for assessing custodians, we can minimize risk and maximize the speed of Bitcoin adoption. --- **Andrew Mahowald and Pretyflaco** · May 12, 2023 · Updated June 6, 2024 *In this exploration of Bitcoin adoption, the essential role of Bitcoin custodial services is discussed, particularly with the Global South in mind where there's an opportunity to get ahead of government-led* [*Central Bank Digital Currencies*](https://www.swanbitcoin.com/why-a-cbdc-will-not-promote-financial-inclusion/) *(CBDCs) by introducing Bitcoin first. The concept of 'Satoshi's hierarchy of needs' is introduced as a way to understand individual financial priorities. Recognizing that self-custody can be a significant step for some, the article advocates for the use of professional Bitcoin-only custodians as an intermediary solution. Guidelines are provided to help select reliable custodians, emphasizing the importance of safety and upholding Bitcoin principles. Amid these complexities, Swan Bitcoin, as an educator in self-custody, simplifies this process, making it accessible to everyone. By recognizing individual differences and prioritizing education, the Bitcoin community can drive faster adoption, benefiting lives and strengthening the Bitcoin movement as a whole.* Bitcoin, we’ve got a problem. The network is under myriad new forms of coordinated attack. In the United States, Bitcoin-friendly banks are being either [systematically shuttered](https://twitter.com/nic__carter/status/1635142855328161795) or denied licenses to even open their doors in the first place (full reserve banking? [Sounds risky, Custodia, sorry!](https://twitter.com/custodiabank/status/1619009284314120192)). One can easily imagine Satoshi, in his or her lonely exile, staring off into the abyss of the global financial crisis 2.0, wondering if their baby Bitcoin is ready for the real *"Then They Fight You"* stage (It's here, we're in it). To win this thing - to win the *"*[*Race to Avoid the War*](https://www.swanbitcoin.com/the-race-to-avoid-the-war/)*"* - Bitcoin needs to onboard enough users (and eat enough value) before it's too late. There quite literally is no time to waste. So. Pause and ask yourself, if your friend wants to start eating healthier, would you tell them to hold off until they can buy land, start an organic farm, and raise their own cows? (Sorry, unless you rip that steak out with your own two hands, it's bugs for you, pal) Or maybe a colleague wants to teach their child how to ride a bike. Would you advise them to slow down and design a comprehensive, multi-step bike training program instead of just using the tried-and-true training wheels method? Let's hope not. You'd soon run out of friends asking for advice, and they'd still use the classic training wheels to teach their kids how to ride a bike (hello, balance and confidence!) and start wondering if someone as dense as you should really be giving advice about the future of finance. Then why, *why*, WHY, if someone wants to dip their toes into Bitcoin, do we tell them to first spend a hundred hours becoming a certified Bitcoin Self Custody Expert™ before they take the first step and join the network? Or, possibly worse, we tell them to write down a seed phrase and self-custody from day one without proper foundational understanding and readiness for the gravity and responsibility of self-custody. ![](https://www.datocms-assets.com/56652/1683248211-self-custody_journeys3.png?auto=format) **New User Journeys** → The first journey is largely a progression via cognition: a user's curiosity was sparked some time ago, and there is already enough conviction to dedicate significant amounts of time to study, leading to books, podcasts, and videos. The user begins to understand Bitcoin as a special asset that will appreciate in value over time (i.e., a good investment) and thus seeks exposure. It is proposed that at this point, users should acquire extensive knowledge about self-custody through best-practice tutorials before committing significant purchases and then proceed to hodling their Bitcoin in a secure setup. This journey is mainly advocated by financially privileged Westerners. It deemphasizes Bitcoin as a medium of exchange, focusing instead on its use case as a store of value and speculative investment. **The purist journey leads with** ***"store of value"*** **at the expense of hands-on, peer-to-peer engagement.** Instead, consider an alternate path known as the *"optimal journey."* This journey emphasizes practical experience and application when onboarding new users, fascinating them by solving tangible problems. It proposes that users start by sending and receiving some sats over Lightning with friends and family first to familiarize themselves with the tech. By doing this, users experience the usefulness of Bitcoin as a borderless, frictionless medium of exchange with instant payments. **Crucially, this initial experience must be smooth and successful** (enter custodial Lightning with maximum success rates and low barrier to entry). For most people in the world, this can be a fascinating experience that solves real problems for them. Naturally, they may be intrigued by this magic internet money, encouraging further learning and curiosity and, in turn, growing their conviction. Driven by empowered self-interest, they become proficient and confident enough to store significant value in the network. Now, naturally, is the ideal time to learn about [long-term self-custody](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/) and self-sovereignty best practices as the need for securing one's Bitcoin properly increases together with the amount of value stored in Bitcoin. *It's time to evolve, team orange, and there's no time to waste. So go on, grab a hot cuppa tang, and hold that cognitive dissonance close like a byte in the Mempool. Let's take a clear-eyed view of Bitcoin custodians and what they offer Bitcoin and Bitcoiners: the good, the bad, and the big picture.* It's time to evolve, team orange, and there's no time to waste. So go on, grab a hot cuppa tang, and hold that cognitive dissonance close like a byte in the Mempool. Let's take a clear-eyed view of Bitcoin custodians and what they offer Bitcoin and Bitcoiners: the good, the bad, and the big picture. ### The Undeniable Truths About Custodians You're not wrong; you're just an asshole (yes, Donny, we know). There are many issues with Trusted Third Parties (TTP) and custodians and always has been since money existed before Bitcoin. #### The Tail Risks Tail risk is a low-probability event with a high impact. At the extreme, they're known as Black Swan events (and authors of books on the topic have oddly profound cases of Bitcoin Derangement Syndrome). - **Fraudulent Management.** Your fearless leader may be revealed as a fraudulent narcissist overnight (Sam Bankman-Fried at FTX), [misappropriating user funds and/or selling their assets to cover liabilities, leaving clients holding the bag](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/). - **Exit scam / Rug Pull.** Unsavory company managers may decide at any time to transfer assets to a privately controlled address, fly to a country without extradition treaties, and disappear into anonymity. Your assets are now their retirement, Your assets are now their retirement, [sorry Africrypt](https://cryptobriefing.com/africrypt-founders-disappear-3-6-billion-btc/), [QuadrigaCX](https://decrypt.co/5853/complete-story-quadrigacx-190-million), or [Thodex](https://www.zdnet.com/article/thodex-cryptocurrency-exchange-founder-allegedly-goes-on-the-run-with-2bn-in-client-funds/) investors. - **Confiscation.** Remember when the Cypriot government [confiscated all bank depositor assets](https://www.theguardian.com/world/2013/mar/25/cyprus-bailout-deal-eu-closes-bank) over €100,000 in 2013 in a deal to remain in the European Union? Or when the Argentine banks announced *"corralitos,"* [freezing depositors' money in 1989 and 2002](https://www.reuters.com/article/us-argentina-deposits/ghosts-of-2002-corralito-spur-argentines-to-shun-banks-stash-cash-at-home-idUSKCN1VD27N), giving back sovereign garbage bonds in return? Or the USA's [Executive Order 6102](https://www.sbcgold.com/blog/a-dangerous-precedent-executive-order-6102/) in 1933, [Lebanon's frozen bank deposits](https://www.npr.org/2022/12/17/1143142512/lebanon-economy-bank-robbery-savings#:~:text=Lebanon's%20banks%20froze%20most%20accounts,one%20of%20the%20milder%20tactics.) from 2019-2023, or [Canada's freezing of the assets of dissidents](https://www.cnn.com/2022/02/20/americas/canada-trucker-protest-covid-sunday/index.html)/protestors? Your assets are only yours until an authority decides they're not. - **Hack.** Mt. GOX, The Dao, and many more. Made worse by large custodians commingling assets together into one large account (making for chop-lickingly tasty targets). If you don't have custody of your assets, they can be stolen from your (negligent?) custodian, leaving you with nothing. These risks can all result in you losing your personal savings through trusting the wrong counterparty at the wrong time. #### The Supply Risks (21 Million Coins, Really?) Perhaps a more esoteric and insidious risk to your Bitcoin is the possible effective expansion of the 21 Million supply cap introduced with certain custodians. - **Rehypothecation.** Every time customer deposits are taken by a custodian and then lent out, and relent out again (and again?), an [asset has been rehypothecated](https://www.forbes.com/sites/caitlinlong/2018/08/13/the-r-and-c-words-enter-the-vocabulary-of-bitcoin-enthusiasts/?sh=6479785668f3) (and a Keynesian gets his wings!). And the supply of the underlying asset has effectively been multiplied, sometimes by a great deal. In this way, the sacred 21M supply cap could be effectively expanded without a single code change.  Related, and perhaps even more unsavory? Those fake, supply-expanding, rehypothecated loans are sometimes used to short-sell the actual underlying asset on over-the-counter exchanges. - **Paper Bitcoin.** Going hand-in-hand with *"Fraudulent Management"* item above, our narcissist-in-chief can absorb a billion dollars of bitcoin purchases and then slowly sell off that real bitcoin over time in elaborate schemes to make more money (or pay for threesomes in the Bahamas). Meanwhile, depositors are holding a shiny IOU for their money, known as *"paper Bitcoin."* ![](https://www.datocms-assets.com/56652/1683248493-long-tweet-custodian.png?auto=format) These risks attack part of what makes Bitcoin so special and consequential (perfect digital scarcity). Interestingly, since rehypothecation affects the whole system and not the individual (directly), there are unique game-theoretical incentives governing each person's decision-making. This would enable individuals to make decisions to help themselves and harm the network. #### The Privacy Risks Not your keys, not your… privacy. This one is pretty straightforward. - **Shotgun KYC.** Even a custodian who doesn't require that you turn over personal information for KYC on the front end may change their tune when the government comes knocking. Oh, you want to access your money? Just give us your personal info first. - **Identification Via Data Leak / Subpoena.** Even without KYC on behalf of a willing custodian, your identity may be discovered due to a data leak and subsequent data analysis or by court subpoena. #### The Censorship Risks Same tune as the privacy risks. If you don't hold the keys to your bitcoin, you don't control perfect freedom to transact, either. - **Reversibility.** Custodians are usually legally on the hook for fraudulent transactions conducted by their systems. Therefore, they generally have the ability to reverse your (custodial intraledger) transactions, should they be deemed fraudulent by an authority. However, reversibility can also be deemed a positive in the case of incorrect transactions due to negligence. Clearly, self-custody purists are right about a lot, and for Bitcoin to grow to its fullest potential over the coming decades, it'll need to be listened to.  *Bit what if there is another side to this custodian story? One with additional layers of nuance, perfectly relevant for this point in time, that serves to help Bitcoin win in the battles yet to come?* **Comparison of Payment Methods across Properties** ![](https://www.datocms-assets.com/56652/1684188652-propertiestable4.png?auto=format) ### The Important Nuances About Custodians  Like a teenager entering adulthood, Bitcoin is 14 and now entering a problematic new stage of life. One full of new concepts, pitfalls, and challenges. And yes, one that demands extraordinary nuance to get to the other side. Let's examine the notion that, under certain conditions, custodians can help Bitcoin and Bitcoiners by facilitating adoption, providing new user-friendly features, and enhancing payment success rates. And let's recall that everyone has unique needs for Bitcoin; a 23-year-old Nigerian man working on a farm likely sees his financial world very differently than a retired housewife in the Washington D.C. suburbs. #### Custodians Can Absolutely Help Bitcoin (And Bitcoiners) It's an undeniable reality that [custodians currently offer many attractive features](https://www.swanbitcoin.com/the-bullish-case-for-bitcoin-custodians/) that simply aren't available otherwise. And these features can help people in desperate need of financial inclusion and digital payments get the help they need. As long as this is the case, there will be good faith Bitcoin custodians who can rapidly onboard these people to the network and help improve their lives. Let's take a quick look at some of the nuanced ways custodians can help Bitcoin and Bitcoiners. - **Less Friction & Up-Front Investment.** In today's attention-based economy, most people have maybe 10 seconds to complete a task, not 10 hours. Requiring first-time users to learn about multi-sig, metal seed plate backups, and GPG file authentication is quite an unnecessary barrier for beginners. Custodians can reduce the upfront costs to nearly zero, enabling someone to immediately start using Lightning for payments (and move to self-custody when they're ready). ![](https://www.datocms-assets.com/56652/1683249202-bticoin-beach.png?auto=format) - **(Much) Higher Payment Success Rates (Lightning Is Nascent Tech).** Using the [Lightning Network (LN) is magical](https://www.swanbitcoin.com/a-look-at-the-lightning-network/). In an instant, anyone can send value around the world with zero intermediaries. However, as still-developing technology, it's often not smooth or seamless for the end user. Even River Financial's LN routing node - one of the best/most efficient and responsible for all transactions through the Chivo wallet in El Salvador - [has ~1.3% of its transactions failing](https://river.com/learn/files/river-lightning-report.pdf) (as of Sept' 22). This may be fine for seasoned Bitcoiners, but for budding Bitcoin circular economies (like Bitcoin Beach, Bitcoin Jungle, and Bitcoin Ekasi), a simple, smooth, fast, and reliable Lightning UX is critical. For many custodial Bitcoin-only wallets, the focus is on making Lightning accessible and payments reliable for everyone. - **Features That People Need.** Today's custodial applications can provide features that people need. Features that will bring people into Bitcoin. *And keep them there*. Like [Stablesats](https://stablesats.com/) in the Bitcoin Beach wallet app, for those users who cannot afford the variance of bitcoin the asset, Stablesats allows them to: (1) Keep their value inside the Bitcoin network and (2) Keep transacting inside the Bitcoin network (using L.N.) using whatever unit of account they need. Or sending Zaps on Nostr, which is made simple and reliable with wallets like the Wallet of Satoshi and Alby (doing cool shit, easily, is a great user experience). Or simply bridging the gap between Bitcoin & legacy banking. If users need to send money back to their bank account, they'll need the help of a centralized service. - **Immediate Financial Inclusion. Banking the unbanked is still important, right? Those 1.4B people need a fast and easy solution to get banked on Bitcoin. For now, at least, Bitcoin's technical limitations mean that a maximum of ~300,000 people per day could open a self-custodial Lightning channel or receive a transaction on Bitcoin's base layer.** [According to one scalability analysis](https://www.truthcoin.info/blog/lightning-limitations/), that means it would take over 121.28 years (!) to onboard all of Earth to Lightning in a self-custodial way. Obviously, this isn't the kind of fast financial inclusion people desperately need. - **Self-Custody Can Be Scary.** My whole family has at least a bit of bitcoin, advocates for it, and defends it against the fiat Luddites in their networks, and yet… they're not all self-custody of their assets. Why? Because it can be a bit scary to take irreversible personal responsibility for your assets. If you make a mistake, it's gone. And if you die without a mindful and properly documented Bitcoin estate plan, your assets die with you (the network thanks you for your donation). It will take time for each person - and humanity as a whole - to evolve back into a self-custody-first mentality. And in the meantime, custodians will allow people to participate in the network at their own unique comfort level. - **Wallet Advantages.** Beyond the beneficial user-facing features noted above, custodial wallets have a few other benefits, such as: (1) Super fast time from download to first Lightning payment (2) Lightning addresses enabling non-interactive payments (no actions are required by recipients to receive payment; the node is always online) (3) Not doxxing one's own home node / I.P. address when sharing invoices in public (4) No channel or liquidity management Some custodial wallets offer users these advantages and more. - **A Bridge To Fully-Scalable Bitcoin. On-chain & layer two solutions simply can't onboard 8 billion people (yet). Even with the Lightning Network, channel factories, and other existing scaling solutions, Bitcoin isn't even close to being ready to service the planet. The world will not wait forever to move to digitally native money.** Critically, custodial solutions can be the bridge between today's immature Bitcoin and tomorrow's full-featured, ossified, and humanity-scalable Bitcoin. #### Satoshi's Hierarchy Of Needs (We Are All Satoshi, And We Are All Unique) The beautiful [statue of Satoshi Nakamoto in Budapest](https://www.statueofsatoshi.com/) invites everyone to see their own face reflected in Satoshi's hooded visage. Behind each of those reflections is a mixture of life experiences, circumstances, and preferences as unique as a fingerprint, all of which inform someone's individual needs at any given point in spacetime. In Maslow's famous [hierarchy of needs](https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs), he proposed that people are motivated to achieve certain things based on where they sit within a particular hierarchy. Importantly, for example, before a person can be expected to focus on self-actualization, they must first meet their basic physiological needs (e.g., food and shelter). *Exactly 80 years after Maslow’s theory, let’s consider a new hierarchy - one focused on our evolving financial needs in a digital world rapidly approaching singularity - and call it “Satoshi’s hierarchy of needs.”* Under Satoshi's hierarchy, an individual will only care about certain properties of a monetary network when other, more base-level needs have been satisfied first. For example, before someone cares about storing value, they must first have the money to survive each day. ![](https://www.datocms-assets.com/56652/1683249404-visual-1.jpg?auto=format) **Satoshi's Hierarchy of Needs** To climb the mountain of Satoshi's needs all the way up to the summit (actualization of self-sovereignty), every one of us must first safely and successfully make camp and acclimatize in each zone below. So, if you sit high in your shiny citadel in Austin, Texas, wondering why some dude in Nigeria doesn't appreciate the immutability of the Bitcoin blockchain, this is for you. It's time to [check your financial privilege](https://bitcoinmagazine.com/culture/check-your-financial-privilege) and consider that said dude has neither a phone with a data plan nor access to digital commerce yet. If you're chilling on a beach in El Zonte, El Salvador, after [the Adopting Bitcoin conference](https://t.co/LtCrG8ioND), hammering the Lebanese people for their slow adoption of Bitcoin, this one's for you too. Check your financial privilege and remember that many people in Beirut are struggling with their day-to-day existence (how could they care about hiding assets behind an impenetrable wall of SHA-256 encryption?). ![](https://www.datocms-assets.com/56652/1683249706-personaldevelopment_legend3.png?auto=format) **Satoshi’s Dynamic Hierarchy of Needs, overlapping and changing over time** *Or maybe you're at your local Bitcoin meetup, slamming all custodians everywhere for making plebs rekt (been there, done that). Then this one's definitely for you: check your financial privilege because 1.4B people don't even have the liberty to consider the possibility of getting rekt by a financial custodian - they haven't even been banked yet.* Beyond Satoshi's hierarchy, each of us has a unique set of preferences, abilities, and circumstances impacting both our use cases for Bitcoin and our calculus for whether custodians make sense. - **Savings Rate & Assets Under Management.** Without a positive savings rate or assets under management of any significance, self-custody matters quite a lot less. - **Risk Tolerance.** Not everyone is a high-stakes poker player (most can't even sit at the table). Self-custody of assets or life savings requires a certain type of risk tolerance that many (most?) are very uncomfortable with today. And the unfortunate reality is that self-custody is inherently risky, too. It's just a different kind of risk. - **Technical Literacy.** Technically, the capabilities required for basic self-custody of Bitcoin are very low. But with great wealth comes great responsibility, and to properly self-custody a significant stack o' Satoshis can require a lot more planning and investment. Seed plate execution, duress planning, GPG file authentication, signing device diversification, and more - this is complex. We all have different levels of technical literacy. - **Risk Environment.** Nobody decides where they're born. Each of our circumstances presents a unique mixture of physical and digital threats to our safety. If you live in a dangerous place, you probably don't want to carry around your own bank in your pocket, ready to upload away your life savings to the first sophisticated armed thief who points a gun at your face. The irreversibility of fast final settlement is beautiful. Still, it is a double-edged sword for those with an elevated risk profile. #### A Complicated Web Of Trade-Offs Each of us is on our own journey to find life, liberty, and happiness. We each have a laundry list of competing needs depending on where we find ourselves in Satoshi's hierarchy. And the unsexy truth is that just as you've used custodial exchange services to execute buy and sell orders on your assets, custodians have the ability to: (1) Fulfill certain use cases (2) At certain points in time (3) For certain cohorts of people. *Custodial wallets and solutions are for specific use cases. If they help to move people up Satoshi's hierarchy and down Bitcoin's rabbit hole, then they will have succeeded in both improving people's lives and strengthening the Bitcoin movement.* ### Invitation To A New Mental Framework Bitcoin is a Rorschach test. It's a mirror. And it contains multitudes. Let this be your invitation to exchange some dogma for discretion and acknowledge that custodians can play a key role in improving people's lives and helping Bitcoin win the one fight that truly matters: the battle against tyrannical, dystopian central bank digital currencies (CBDCs).  ![](https://www.datocms-assets.com/56652/1683249966-retail-cbdc.png?auto=format) #### An All-Of-The-Above Approach (To Win *"The Race To Avoid The War"*) As Cory Klippsten so rightly pointed out, [Bitcoiners are in a race against time](https://www.swanbitcoin.com/the-race-to-avoid-the-war/) to get Bitcoin adoption so far along that the United States and other world governments will never have the chance to orchestrate a coordinated attack on Bitcoin and Bitcoiners. If you wanted to ensure that Bitcoin adoption happens far too slowly to win such a race, you would: (1) Claim the network is ready for ossification, and (2) Demand nobody use custodians, ever. ![](https://www.datocms-assets.com/56652/1683250159-hydro.png?auto=format) ![](https://www.datocms-assets.com/56652/1683250208-jorge.png?auto=format) Recall that under [realistic assumptions](https://www.truthcoin.info/blog/lightning-limitations/) (and including Lightning), it would take 121.28 years to onboard the planet to Bitcoin right now. Even if every man, woman, and child in the United States were orange-pilled today, it would take several years for them to get a self-custodial wallet and open/close just one Lightning channel or receive one transaction (much less conduct their entire economic lives on Bitcoin). This is obviously unacceptable. My fellow Bitcoiners, mathematics clearly tells us that we have no time to waste, and we can't afford the dogma surrounding custodians' role in Bitcoin adoption. Simply put, we need an all-of-the-above approach to onboarding the planet to Bitcoin. We need code enhancements. We need [smart public policy](https://www.btcpolicy.org/). We need orange-pilled neighbors, courageous thought leaders, and circular Bitcoin communities (psst: custodians seeded these). *And yes, we need professional, Bitcoin-only custodians who will serve as a critical bridge solution to help get us across the finish line in the race to avoid the war (and CBDCs).* #### Custodians By Bitcoiners, For Bitcoiners (And Verified By Bitcoiners) What if there were a way for Bitcoiners to both embrace custodians' role in moving Bitcoin adoption forward and simultaneously minimize the risk of anyone falling victim to the next FTX? It might look something like this: a set of robust criteria created by Bitcoiners to assess all custodians against. ![](https://www.datocms-assets.com/56652/1683250338-custodian-checklist2.png?auto=format) **The Bitcoiner Custodian Checklist** Here are a few things you might want to verify about your custodians: - **They're Bitcoin-Only. If they keep their hands out of the shitcoin cookie jar, the odds are better; they won't screw you.** - **They're Built On FOSS (And/Or FOSS Supporting).** Using free and open-source software, like Bitcoin, suggests a lower time preference and a more collaborative and transparent methodology. - **They're Based In A Friendly Jurisdiction.** Custodians are at significantly less risk of seizing or withholding your assets if they're located in jurisdictions known to be friendly to Bitcoin or have a clear and sound regulatory framework for Bitcoin companies. - **They Integrate Lightning & Segwit.** Helping users by utilizing Lightning and other core development features is a signal of support for Bitcoiners. - **They Advance Bitcoin Principles (Including Self-Custody).** A good faith custodian will help advance all Bitcoiner principles, including that self-custody is a worthy goal for everyone in Bitcoin to have and achieve. - **They Submit Proof Of Reserves.** A custodian that doesn't play Binance or Tether or Wall Street games and submits to the most robust proof of reserves available is more likely deserving of Bitcoiner business. Here are a few red flags you might want to avoid with custodians: - **They Shitcoin.** If any part of their core business model depends on proprietary tokenomics to survive or integrates with a security masquerading as money, you'd best steer clear. - **They Use Closed Source Tech.** There's nothing inherently wrong with using closed-source technology. But it's somewhat antithetical to the Bitcoin ethos and certainly the expedient path to high-time preference behaviors. - **They're Based In A Hostile Jurisdiction.** If a custodian is located in a jurisdiction known to be hostile to Bitcoin, there's a heightened risk they may be forced to withhold or seize assets. - **No Proof Of Reserves.** Again, refusing an opportunity for transparency is an obvious, very bad sign for a custodian. - **Doesn't Advocate Self-Custody.** If they make no attempt to educate on the benefits of self-custody for those who are ready for it, they're probably not supporters of Bitcoin. - **History Of Unsustainable Or Unreliable Services.** If there is a history of their services being discontinued unpredictably or if they are built in unsustainable ways (e.g., the project is riddled with technical debt or considered a hobby, stopgap, or sandbox), then it is not a great idea to depend on them as custodians. Custodianship requires professional commitment; dealing with money is not a joke or science project. By rallying around a nuanced yet challenging standard for assessing custodians, we can minimize risk and maximize the speed of Bitcoin adoption. Importantly, we might even live to see Bitcoin adopted as the global reserve asset in this lifetime (and not the next). *So, once again, let this serve as an invitation to integrate a new mental model on custodians and the services they provide for Bitcoin and Bitcoiners. One that acknowledges each of our vast differences and unique journeys. And yes, one that nudges people up Satoshi's hierarchy - and down Bitcoin's rabbit hole - to improve people's lives and strengthen the entire Bitcoin movement.* ### Andrew Mahowald Andrew is a freelance writer and digital marketer living in Minneapolis, MN. When he's not thinking about Bitcoin, he enjoys photography on his Fujifilm, world travel, chess, and good faith contrarianism. ### Pretyflaco Political scientist by education and marketer by trade, pretyflaco has been researching and working on bottom-up and merchant bitcoin adoption since the early days of the Lightning Network. Currently he works on Galoy and Blink. # Another Bank Fails As Bitcoiners Work DC - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/another-bank-fails-as-bitcoiners-work-dc/ Here’s the 32nd issue of Swan Private Market Update, our bi-weekly industry report exclusively for Swan Private clients. --- **Sam Callahan** · May 5, 2023 · Updated June 26, 2024 Another week, another major bank failure. This time First Republic Bank, the once 13th largest bank in the United States, was seized by the FDIC and sold to JP Morgan Chase via auction on Monday. This marked the 2nd largest bank failure in history, behind Washington Mutual Bank in 2008.  In 2023, three banks with a combined $532 billion in assets have now failed. It’s safe to say that we are currently in the middle of a full-blown banking crisis.  ![](https://www.datocms-assets.com/56652/1683309934-1.png?auto=format) Regional banks continue to come under pressure as their assets have bled out as interest rates have soared. Many of these regional banks are sitting on Treasuries and mortgage-backed securities that have suffered greatly as the Fed has gone on its hiking tirade. At the same time, these same banks have been hit on the liability side as depositors have left in droves to the safety of larger banks or in search of higher yields in money market funds.  First Republic’s stock cratered when it released its Q1 earnings report revealing its precarious financial position. The report showed that over $100 billion in deposits were withdrawn from the bank in the first three months of 2023 alone. As a result, First Republic’s stock had crashed -88.5% year-to-date at the end of the first quarter. ![](https://www.datocms-assets.com/56652/1683310464-2.png?auto=format) To stem the outflow of deposits, First Republic received a liquidity injection from eleven large banks in the form of $30 billion in deposits back in March.  ![](https://www.datocms-assets.com/56652/1683309982-3.png?auto=format) On top of that, First Republic did not hesitate to access all the emergency lending facilities it could to keep its doors open.  As the bank came under serious duress, it borrowed: - $63.5 billion through the Federal Reserve’s discount window  - $13.8 billion from the new Bank Term Funding Program  - $28 billion from the Federal Home Loan Bank  Yet despite all of those liquidity measures, First Republic still died. Its shareholders have been wiped out. It goes to show that no amount of liquidity can fix a solvency problem and highlights how the Fed’s emergency programs may not be enough to prevent future bank collapses.  Entering the weekend, there was plenty of speculation on whether or not the FDIC would seize First Republic, but the FDIC was strangely silent. Some thought that after the second and third largest bank failures in history (Silicon Valley Bank and Signature Bank), the FDIC was hesitant to put another major bank into receivership. But in the end, they had no choice. Late Sunday, regulators shut down the lender and immediately sold most of its assets and $93 billion of its deposits to JPMorgan Chase.   This was the ideal outcome for the FDIC because by selling all the deposits to JPMorgan, the government did not have to deem First Republic a *“systemic risk”* and backstop all uninsured deposits like what occurred in the failures of Silicon Valley Bank and Signature Bank. This result was better optics because technically the depositors were not backstopped by the government.  This was another example of regulators picking winners and losers, and in this case, they picked the same winners that they’ve picked over the last several decades – wealthy individuals and JPMorgan Chase.  JP Morgan and its CEO Jamie Dimon were hailed by some as heroes who helped save the FDIC insurance fund around $10 billion in losses after the deal.  Jamie Dimon himself lauded his bank’s response to First Republic’s collapse, “*Our government invited us and others to step up, and we did.*” But, of course, Jamie Dimon didn’t buy First Republic Bank out of the goodness of his heart. JPMorgan made sure the deal was full of sweeteners before they shook hands on it.  As part of the acquisition, the FDIC has agreed to a $50 billion five-year burden-sharing arrangement where it will cover the unrealized losses on First Republic’s loans. This includes 80% loss coverage on single-family residential mortgages for seven years and 80% loss coverage on commercial real estate loans for five years. Said differently, the FDIC will eat the vast majority of losses on all the bad loans on First Republic’s books, and JPMorgan will get billions in new deposits and assets with massive upside and downside protection.  Below is a snapshot of the details of the deal: ![](https://www.datocms-assets.com/56652/1683310147-4.png?auto=format) So JPMorgan gets gifted a bank with FDIC guarantees attached to it to protect themselves if the deal goes south. The cherry on top is that JPMorgan gets to look like the savior of the banking system once again, but in reality, the biggest bank just got bigger.  This highlights a trend that we have seen accelerate since the banking crisis began in March. Deposits have continued to flow out of small banks. Some of these deposits are in search of better yield in money market funds now that they can earn ~5% by parking their funds in a money market fund. Money market funds recently hit a record $5.3 trillion in April. ![](https://www.datocms-assets.com/56652/1683310181-5.png?auto=format) These deposits from small banks are also flowing into large banks as investors feared that small banks are more likely to fail than big banks, especially after Treasury Secretary Janet Yellen essentially confirmed this [in a hearing](https://www.youtube.com/watch?v=Bcvl104tyRY) one month ago.  The traditional financial system continues to consolidate. The number of FDIC-insured financial institutions peaked in 1984 at 17,811 and has been in steady decline since, with 4,897 institutions functioning in 2021. JPMorgan has grown into one of the so-called *“megabanks.”*  ![](https://www.datocms-assets.com/56652/1683310202-6.png?auto=format) ![](https://www.datocms-assets.com/56652/1683310310-7.png?auto=format) Bank consolidation isn’t good for anyone but the big banks. It leads to the potential increase in risks to financial stability and few choices for consumers regarding financial services. This can lead to higher costs and fees for the consumer as competition falls by the wayside. This recent deal only centralizes the traditional banking industry more as it continues to come under pressure. Not only do recent events shine a light on the fragility of the banking sector, but it also shows how the rules that govern the industry are disregarded in times of crisis. In the aftermath of the Global Financial Crisis, the Dodd-Frank Act was passed that aimed to decrease bank consolidation and reduce the risk of *“too-big-to-fail”* institutions by preventing any one institution from holding more than 10% of US domestic deposits. With this recent acquisition, an exemption was made for this rule, and JPMorgan now controls >10% of American deposits. JPMorgan is larger than ever, and the banking sector has never been more centralized than today. There have also been new calls to raise the $250,000 FDIC cap in the wake of these bank failures. This wouldn’t be the first time the FDIC cap was increased during a crisis. The last time the FDIC cap was raised was in 2008. ![](https://www.datocms-assets.com/56652/1683310404-8.png?auto=format) This goes to show that the rules in the traditional financial system are disregarded when times get tough. This is in stark contrast to Bitcoin, where the rules are embedded in the code, never to be changed.  What’s clear is that this banking crisis is not yet over. Many banks are still sitting on massive unrealized losses on their debt securities due to the rapid rise in interest rates over the last year. [According to a recent Hoover Institution study](https://www.gsb.stanford.edu/faculty-research/working-papers/monetary-tightening-us-bank-fragility-2023-mark-market-losses), 2,315 US banks are sitting on assets worth less than their liabilities, and the market value of their debt securities is ~$2 trillion lower than the stated book value. ![](https://www.datocms-assets.com/56652/1683310422-9.png?auto=format) Most of the damage continues to happen at regional banks, which both hold underwater assets in terms of their loan portfolios, but also continue to see deposits leave for the safety of larger banks.  When you look at the year-to-date performance of the regional banking ETF versus the S&P 500 and JPMorgan Chase, the pain felt in these regional banks is clear to see. ![](https://www.datocms-assets.com/56652/1683310566-10.png?auto=format) It didn’t take long for the next victims of the bank crisis to emerge after First Republic’s downfall. Two more regional banks in PacWest and Western Alliance have both crashed this week. PacWest is down -71% and Western Alliance is down -52% over that time frame. ![](https://www.datocms-assets.com/56652/1683310516-11.png?auto=format) Both stocks were temporarily halted on Wednesday and short-selling was banned. This just goes to show that this banking crisis is not over.  It certainly doesn’t help that the Federal Reserve continues to hike rates despite the turmoil in the banking system. The Federal Reserve increased its benchmark rate another 0.25% on Wednesday to combat inflation. This will only worsen the value of these banks’ loan portfolios and raise the difference between the yield that depositors can earn when holding their savings at a bank versus putting them in money market funds.  It seems the Federal Reserve is on a war path against inflation and doesn’t care how many bank bodies it leaves in its wake. ![](https://www.datocms-assets.com/56652/1683310594-12.png?auto=format) In fact, it was recently discovered that the Fed Board was [given a presentation](https://www.federalreserve.gov/supervisionreg/files/board-briefing-on-impact-of-rising-interest-rates-and-supervisory-approach-20230214.pdf) back in February on the risk that rising rates have on banks due to the unrealized losses on their loan portfolios. The example bank used in the presentation to highlight the risk – Silicon Valley Bank. And yet, the Fed kept hiking rates despite the warning.  Meanwhile, all of this chaos has acted as one big marketing campaign for Bitcoin. A key motto of Bitcoin is *“Be your own bank.”* Michael Saylor describes Bitcoin as an incorruptible bank in cyberspace. With Bitcoin, no one needs to trust that a bank is solvent ever again. With each bank that fails, Bitcoin’s value proposition only grows stronger.  Bitcoin itself is growing stronger. Its hash rate continues to skyrocket in 2023. When speaking with two miners on [the most recent episode of Swan Signal](https://www.youtube.com/watch?v=OyiwTY3CwaA), they postulate that this increase is primarily due to the lag in delivery of mining equipment ordered by mining companies over a year ago. The equipment has finally come, and the ASICs are getting plugged in.  Bitcoin’s hash rate is now up over 30% year-to-date. Bitcoin’s security has *“gone to the moon”* this year.  ![](https://www.datocms-assets.com/56652/1683310627-13.png?auto=format) Another theory is that nation-states are starting to get more involved in Bitcoin mining. One miner on Swan Signal spoke of the chatter in the industry around the uptick in ASIC orders coming out of Russia. Over the last couple of years, there have been plenty of rumors about Russia and Bitcoin adoption, especially after the country has been placed under severe sanctions since the Russian-Ukraine War began. These rumors have been shared by many, including fellow miner Marty Bent.  ![](https://www.datocms-assets.com/56652/1683310649-14.png?auto=format) With abundant natural resources, Russia always seemed like a likely candidate to embrace Bitcoin mining, and now it appears that this idea is becoming a reality. Another smaller nation also was discovered to be mining Bitcoin for years. Bhutan, a small Himalayan nation, recently [announced that it has been mining Bitcoin since it was at $5,000](https://www.forbes.com/sites/iainmartin/2023/04/30/bhutan-bitcoin-mining-crypto/?sh=2c41bd011f1b). Bhutan has excess hydroelectric power and has put that stranded energy to use by mining Bitcoin.  These developments speak to a couple of things. 1) Incentives drive Bitcoin mining and its adoption around the world, and 2) the Bitcoin mining industry will continue to be driven offshore if America doesn’t begin to recognize this innovative technology.  Luckily, Bitcoiners are doing their best to educate policymakers on the benefits that Bitcoin could bring to the United States. Last week, the Bitcoin Policy Institute held the first Bitcoin Policy Summit that included talks from two sitting US Senators and various industry entrepreneurs educating DC insiders on Bitcoin.  Watch the talks from the summit from [Senator Cynthia Lummis](https://www.youtube.com/watch?v=leB70BPADx0), [Senator Ted Cruz](https://www.youtube.com/watch?v=4xqNY7k4MqI), and [Strike CEO Jack Mallers](https://www.youtube.com/watch?v=SH_aCW-sXUg).  After the event, 21 Bitcoiners took the Hill and spent the day meeting with politicians to discuss how Bitcoin could benefit the United States.  ![](https://www.datocms-assets.com/56652/1683310682-15.png?auto=format) Overall, the response from these policymakers was positive. Many understood how Bitcoin was fundamentally different from other cryptocurrencies. There was one message that kept being brought up by these Congressional Staff Members, *“We do not want to push innovation overseas. We know Bitcoin is here to stay. We want to come up with guardrails that don’t stifle innovation.”*  My take while I was speaking with these politicians was that these Congressional Offices were more educated and more supportive of the Bitcoin industry than I expected. It was an encouraging visit as regulators continue to crack down on the broader cryptocurrency industry. More and more seem to understand that Bitcoin is a technology that could revolutionize payments and the energy industry.   Bitcoin has proven extremely resilient this year as it has rallied against a backdrop of a regulatory attack on the cryptocurrency industry, a banking crisis, and Federal Reserve continuing to tighten financial conditions. The price continues to consolidate between $28,000 - $30,000, and who has been stacking? Small retail investors have been buying the dip.  Entities holding less than 1 Bitcoin have increased from 5% of the total supply to 6.6%, a 32% increase since June 2022.  ![](https://www.datocms-assets.com/56652/1683310718-16.png?auto=format) Smaller entities are increasingly holding a greater percentage of Bitcoin’s circulating supply. In fact, addresses holding less than one bitcoin are currently accumulating over 28,000 bitcoin per month, while new supply is only about 27,000. These smaller entities are absorbing the entire newly issued Bitcoin every month! And with the next halving arriving soon, we may just have a supply crunch on our hands in no time. Recent research from Glassnode highlights how the smallest entities are gaining a more significant share of Bitcoin’s supply, and larger entities have seen their share shrink since February 2021.  ![](https://www.datocms-assets.com/56652/1683310780-17.png?auto=format) In other words, Bitcoin’s circulating supply is becoming more decentralized and resilient over time while the traditional banking industry continues to grow more centralized and fragile. Many investors are looking at indicators that show that Bitcoin may be entering a new bull market as we approach the next halving in the spring of 2024. These investors are wondering if Bitcoin could drop again or if it will continue to rise toward $40,000. The key point to understand is that Bitcoin’s price increases happen violently. If you are on the sidelines when these explosive moves occur, you will drastically underperform.  If we look at the top-3 three-day upward price movements since 2018, we can see how important it is to be invested when these green days happen. For example, if an investor had invested $100 dollars into Bitcoin on May 4th, 2018, by today, that $100 would be $297. But if an investor had invested $100 dollars into Bitcoin that same day but missed the top-3 three-day price movements, their original investment would be worth $153! In other words, if an investor had missed these top-3 three-day price movements during this period, their total return was 144% less than an investor who captured all of those gains.  The moral of the story, the most important factor for capturing Bitcoin’s future price appreciation is being invested for long periods instead of trying to time the market. When looking at the state of the baking industry, it is hard to not think, *“This is why Bitcoin was invented.”* In the short-term, Bitcoin’s price will continue to be volatile and fluctuate with the macroeconomic environment. Still, over the long-term, Bitcoin’s value proposition continues to be bolstered with every bank that shuts its doors due to its poor risk management and the Fed’s irresponsible and erratic policy decisions. Stack accordingly. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1683310822-18.png?auto=format) Tradingview, Prices as of 05/05/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Swan’s at the Bitcoin 2023 Conference URL: https://www.swanbitcoin.com/industry/swan-bitcoin-miami-conference/ Join your favorite Swans in Miami all week! You can use this page as a guide during the event and [Download as a PDF] (https://drive.google.com/file/d/1VZHNt9e8NKIkOI9mGHL-9YF-myE9rdA0/view?usp=sharing). --- ![](https://www.datocms-assets.com/56652/1683665961-9.png?auto=format) ### Steven Lubka **Managing Director and Head** of Swan Private Follow him [@DzambhalaHODL ](https://twitter.com/DzambhalaHODL)steven@swanbitcoin.com ### Rapha Zagury **Chief Investment Officer** at Swan Bitcoin Follow him [@alphaazeta](https://twitter.com/alphaazeta) rapha@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683665997-7.png?auto=format) ![](https://www.datocms-assets.com/56652/1683666047-8.png?auto=format) ### Ryan Flynn **Managing Director and Head** of Swan Advisor Follow him [@pricestable ](https://twitter.com/PriceStable)ryan@swanbitcoin.com ### Alex Stanczyk **Managing Director** of Swan Private Follow him [@alexstanczyk](https://twitter.com/alexstanczyk)[ ](https://twitter.com/TYonClubhouse)alex@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683748256-sydneyrosen-com-1.png?auto=format) ![](https://www.datocms-assets.com/56652/1683748325-sydneyrosen-com-2.png?auto=format) ### Dante Cook **Managing Director and Head** of Swan Business Follow him [@Dante_Cook1 ](https://twitter.com/Dante_Cook1)dante@swanbitcoin.com ### Gaurav Gollerkeri **General Manager** at Swan Bitcoin Follow him [@ggollerk](https://twitter.com/ggollerk)[ ](https://twitter.com/samcallah)gaurav@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683741910-15.png?auto=format) ![](https://www.datocms-assets.com/56652/1683670682-10.png?auto=format) ### Gui Gomes **President** at Swan Bitcoin Follow him [@GuiAmadoGomes ](https://twitter.com/GuiAmadoGomes)gui@swanbitcoin.com ### Terrence Yang **Managing Director** of Swan Private Follow him[ ](https://twitter.com/GuiAmadoGomes)[@TYonClubhouse ](https://twitter.com/TYonClubhouse)terrence@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683670716-11.png?auto=format) ![](https://www.datocms-assets.com/56652/1683748451-4.png?auto=format) ### Jeremy Showalter **VP Product** at Swan Bitcoin Follow him [@jeremyshowalter](https://twitter.com/jeremyshowalter)[ ](https://twitter.com/TYonClubhouse)jeremy@swanbitcoin.com ### Camila Campton **Community Development Manager** at Swan Bitcoin Follow her [@camilacampton](https://twitter.com/camilacampton)[ ](https://twitter.com/TYonClubhouse)camila@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683739915-3.png?auto=format) ![](https://www.datocms-assets.com/56652/1683764485-sydneyrosen-com-3.png?auto=format) ### Jacob Pope **Media Producer** at Swan Bitcoin Follow him [@Producer_Jacob ](https://twitter.com/Producer_Jacob)jacob@swanbitcoin.com ### Brady Swenson **Co-Founder** of Swan Bitcoin Follow him [@CitizenBitcoin](https://twitter.com/CitizenBitcoin)[ ](https://twitter.com/TYonClubhouse)brady@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683740358-5.png?auto=format) ![](https://www.datocms-assets.com/56652/1683740489-6.png?auto=format) ### Kristin Thompson **Head of Events** at Swan Bitcoin Follow her [@SpeakServeGrow](https://twitter.com/SpeakServeGrow)[ ](https://twitter.com/TYonClubhouse)kristin@swanbitcoin.com ### Nico Moran **Director of Content Strategy** at Swan Bitcoin Follow him [@BITVOLT7](https://twitter.com/BITVOLT7) nico@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683746625-sydneyrosen-com.png?auto=format) ![](https://www.datocms-assets.com/56652/1683740729-8.png?auto=format) ### Jon Chenot **Special Operations** at Swan Bitcoin Follow him [@jonchenot](https://twitter.com/jonchenot) jon@swanbitcoin.com ### Fethi Erimcag **Director of Sales & Marketing Technology** Swan Bitcoin fethi@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683832266-sydneyrosen-com-4.png?auto=format) ![](https://www.datocms-assets.com/56652/1683741114-10.png?auto=format) ### Zach Coletta **Product Director** at Swan Advisor Services Follow him [@twosilo ](https://twitter.com/twosilo)zach@swanbitcoin.com ### Dan Webb **Senior Software Engineer** at Swan Bitcoin Follow him [@hrtlndbitcoin](https://twitter.com/hrtlndbitcoin)[ ](https://twitter.com/twosilo)danwebb@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683741292-11.png?auto=format) ![](https://www.datocms-assets.com/56652/1683741525-12.png?auto=format) ### P **Head of Swan Media** at Swan Bitcoin Follow him at [@phjlljp](https://twitter.com/phjlljp)[ ](https://twitter.com/twosilo)p@swanbitcoin.com ### Nathan Fast **Director of Partnerships** at Swan Bitcoin Follow him [@nathanfast](https://twitter.com/nathanfast) nathanfast@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683741627-13.png?auto=format) ![](https://www.datocms-assets.com/56652/1683748478-5.png?auto=format) ### Sam Callahan **Lead Analyst** at Swan Bitcoin Follow him [@samcallah ](https://twitter.com/samcallah)sam@swanbitcoin.com ### Brandon Quittem **Head of Marketing** at Swan Bitcoin Follow him [@Bquittem](https://twitter.com/Bquittem) brandon@swanbitcoin.com ![](https://www.datocms-assets.com/56652/1683742017-16.png?auto=format) ![](https://www.datocms-assets.com/56652/1683742128-17.png?auto=format) ### Nick Payton **Marketing Manager** at Swan Bitcoin Follow him [@NickDPayton](https://twitter.com/NickDPayton) nickpayton@swanbitcoin.com # How Bitcoin and Lightning Can Boost Productivity URL: https://www.swanbitcoin.com/analysis/running-the-numbers/ The emergence of Bitcoin and the Lightning Network offers promising solutions that could potentially reverse negative trends and revitalize US productivity. --- **Sam Callahan** · May 16, 2023 · Updated July 3, 2024 Today, productivity is falling in the workplace. Year-over-year productivity fell dramatically in 2022, falling 1.8% YoY to end the fourth quarter. ![](https://www.datocms-assets.com/56652/1684185283-01-us-nonfarm-business-sector-output.svg) Bloomberg Finance This worrisome trend continued in 2023, with productivity plunging 2.4% in the first quarter, down 0.9% YoY. The US has now experienced 5 consecutive quarters of YoY declines in productivity for the first time in history. This means that Americans are working longer hours while producing less. There are many theories as to why this drop in productivity is occurring, but one theory around this decline is the rise of *"quiet quitting."* Quiet quitting refers to an employee only doing the minimum requirements of one's job and refusing to put in any extra effort or enthusiasm than absolutely necessary. A recent poll from Gallup found that nearly 50% of the US workforce are considered *"quiet quitters,"* with only 32% responding that they are actively engaged and 18% percent saying they are actively disengaged. ![](https://www.datocms-assets.com/56652/1684185310-02-us-employee-engagement-trend.svg) Gallup This is especially true for younger workers below the age of 35, where the percentage of engaged workers dropped six percentage points, and the percentage of actively disengaged workers rose six percentage points from 2019 to 2022. Another potential factor that may be contributing to the observed decline in productivity over the last 10 years includes decreased corporate investment in Research and Development. This has led to a slowdown in technological innovation, which has limited productivity growth. Another potential contributor is the high costs of global payments, which can impact business productivity in several ways, including discouraging international trade and diverting resources and capital away from productivity-enhancing investments. All of these factors have likely played a role in the decline in US productivity we have seen over the last decade. The good news is that Bitcoin and Lightning Network are coming to corporations and could help reverse some of these trends and get US productivity back on track. Bitcoin, coupled with Lightning, is a breakthrough technology that can create new incentive structures that can help boost workforce morale and engagement, reduce the cost of global payments, and allow corporations to put a portion of their treasuries in an asset that preserves its value over time, which could ultimately spur more investment in R&D. While at Microstrategy's Bitcoin and Lightning for Corporations event last week, I walked away with the feeling that we were at an inflection point. Previously, there were regulatory and technological hurdles stopping these corporations from using this breakthrough technology. Those hurdles have been broken down by the work of countless builders and advocates. Corporations will soon realize the power of Bitcoin and Lightning, and what could come as a result will be a productivity boom. Here's how... ### 1.) Lightning Incentivizes Worker Engagement Imagine a world where each employee at a company can be rewarded for every action they make. If they arrived on time at a meeting, they were rewarded. If they read an article on a topic relevant to their role, they were rewarded. If they contributed positively to a discussion, they were rewarded. If they hit a fitness goal, they were rewarded. This is all now possible with the advent of the Lightning Network. Lightning solved the problem of micropayments because it allows for fast, instant payments for a fraction of a penny. By creating an internal reward system where employees can receive micropayments directly in sats via the Lightning Network, new incentive structures can be created that can result in boosted productivity in the workplace. This dream became a reality through the hard work of builders and advocates of the technology. One breakthrough was when Zebedee announced the [Lightning Address Protocol](https://lightningaddress.com/), which makes sending and receiving money as easy as an email with a Lightning Address. This protocol replaces a standard Lightning invoice with an identifier such as an email address. No more QR codes. No more long Lightning invoices. Now people can use Lightning in a way that is instantly familiar to them. ![](https://www.datocms-assets.com/56652/1684185345-03-ms-tweet.jpg?auto=format) After this announcement, it didn't take long for Microstrategy Chairman Michael Saylor to experiment with it internally at his software company when he converted his corporate email address into a Lightning address and started receiving sats. ![](https://www.datocms-assets.com/56652/1684185369-04-ms-tweet.jpg?auto=format) Little did Saylor's followers know that behind the scenes, Microstrategy was building something much bigger. At last week's Microstrategy World 2023 Conference, Microstrategy revealed its Lightning Rewards program aimed at incentivizing both employees and customers. The Lightning Rewards platform integrates with existing enterprise applications like Salesforce, Microsoft 365, Zoom, Adobe, and more. ![](https://www.datocms-assets.com/56652/1684185391-05-platform-architecture.jpg?auto=format) Each user has their own Lightning wallet and Lightning wallet where they can receive sats as rewards. ![](https://www.datocms-assets.com/56652/1684185411-06-core-components.jpg?auto=format) Now you can deliver instant gratification to your employees and reward them for positive behavior seconds after it occurs. Some examples of how Lightning rewards can be used for employees are listed below. ![](https://www.datocms-assets.com/56652/1684185443-07-reward-examples.jpg?auto=format) Each employee will have a wallet and screen like this. Michael Saylor used the example of being on time for a Zoom meeting. When he was on time, he received 100 sats. He didn't receive any sats when he was late and admitted that upset him. ![](https://www.datocms-assets.com/56652/1684185478-08-transactions.jpg?auto=format) It is easy to understand how this could result in increased workplace productivity if employees are instantly rewarded for working above and beyond with the hardest money to ever exist. Not only that...Microstrategy also went a step further and showed how Lightning rewards could be used to attract and foster relationships with customers as well. What if you could reward a client who wrote a review for your product? What if you could reward a client for participating in a survey or attending a webinar? What if you could reward a client for attending an event? ![](https://www.datocms-assets.com/56652/1684185508-09-customer-loyalty.jpg?auto=format) The possibilities are endless for businesses with this new innovative technology. Micropayments via Lightning open up new opportunities for business to revitalize their workforce with new incentive structures and rewards and to build a close-knit community with their customer base in a way never possible before. This is one example of how Bitcoin and Lightning could help improve workplace productivity in the near future. ### 2.) Lightning Will Allow for Cheap Global Payments In this highly connected, globalized economy, many corporations need to make international payments daily to keep their operations running smoothly. Despite all of the technological advancements that have occurred in the last several decades, global payments remain slow and expensive for these businesses. These high costs can significantly impact the productivity and profitability of corporations engaging in international trade. Today, to make a global payment using the Correspondent Banking System, a business will pay, on average, 10% in fees. These fees are from SWIFT messaging, transaction, and foreign currency exchange fees. ![](https://www.datocms-assets.com/56652/1684185532-10-correspondent-banking-system.svg) With each transaction a corporation needs to make, various intermediaries take their cut and hurt their profitability in the process. On top of that, the average international payment takes 2-3 days to settle. Slow transaction processing times can create delays in supply chains, disrupt cash flow management, and reduce overall operational efficiency, ultimately impacting business productivity. The high costs of global payments can lead to businesses allocating more resources to manage these costs, diverting capital and labor away from productivity-enhancing investments, such as research and development or worker training. Furthermore, expensive global payments could discourage international trade altogether and act as a barrier for small and medium-sized corporations seeking to engage in international trade. This could lead to a decline in the overall level of trade and hinder potential productivity gains that arise from specialization and economies of scale. Luckily, the Lightning Network is here to revolutionize a global payments system that has seen minimal improvement over the last 50 years. The Lightning Network is a second-layer payment protocol built on top of the Bitcoin network that optimizes for speed and cost. Theoretically, the Lightning Network can allow for millions of transactions per second that can settle at practically no cost. In previous years, corporations have lacked the tools to fully utilize the Lightning Network, but that has all changed. Recently, the team behind Lightspark announced the launch of the [Lightspark Platform](https://twitter.com/lightspark/status/1645848843291082752), the first enterprise-grade entry point to the Lightning Network. The company is led by former PayPal President David Marcus, whose goal is to make it easier for corporations to access what he believes is *"the protocol for money on the Internet."* Historically, users have faced considerable complexity when using the Lightning Network, which has hindered its adoption among enterprises. To successfully utilize the technology, corporations need the technical expertise to convert fiat currency into Bitcoin, open channels, route payments, manage channel liquidity, and more. Enter the Lightspark Platform, a groundbreaking solution for corporations that enables them to effortlessly send and receive payments, build novel payment experiences, and devise new business models. ![](https://www.datocms-assets.com/56652/1684185553-11-balance.jpg?auto=format) ![](https://www.datocms-assets.com/56652/1684185579-12-lightspark-predict.jpg?auto=format) By providing a seamless plug-and-play solution, the Lightspark Platform enables businesses to integrate with the Lightning Network while eliminating the need to navigate the network's complexities. This makes it easy for corporations to fully capitalize on the benefits of this cutting-edge technology. With enterprise-grade solutions like the Lightspark Platform, it's easy to envision a world where businesses worldwide are all transacting on the same protocol of money for the Internet. Since these businesses would all be transacting using the same standard, there no longer will be the complex regulatory environment that has contributed to the high cost of global payments. In turn, international payments would become more affordable and able to settle instantly. This innovative payment infrastructure would pave the way for novel business models, where corporations could stream value in real-time based on their dynamic trading relationships. The Lightning Network has the potential to revolutionize how global payments are conducted, addressing long-standing issues that have negatively impacted business productivity. By making international payments efficient and cost-effective, corporations could allocate more resources to other endeavors that help improve their business processes or workforce output. After five decades of stagnation in the global payments landscape, the Lightning Network is poised to breathe new life into the industry, propelling it toward a more efficient, productive, and interconnected future. The first mainnet transaction on Lightning took place in 2018. Now 5 years later, the tools are finally being brought to market that will allow corporations to reap the benefits of this innovative technology. I think David Marcus said it best, ![](https://www.datocms-assets.com/56652/1684185625-13-david-marcus-tweet.jpg?auto=format) ### 3.) Bitcoin as a Treasury Strategy With inflation raging across the globe, it has never been more important for corporations to have treasury strategies to protect their cash from losing purchasing power. Corporations are clearly concerned about inflation. The number of S&P 500 companies citing *“inflation”* on earnings calls remain at historically high levels. ![](https://www.datocms-assets.com/56652/1684185645-14-number-of-sp500-citing-inflation.svg) FactSet When a company gets cash, they need to figure out how to invest it. Bitcoin is an attractive option for corporations to gain exposure to, given its scarcity, especially in an inflationary environment. In 2020, Michael Saylor recognized this opportunity and made headlines when his company, Microstrategy, purchased hundreds of millions of dollars worth of bitcoin. However, he noted that there was a big problem that made it difficult for companies to put bitcoin on their balance sheets. There are currently no accounting or disclosure rules specifically for Bitcoin. Businesses need to classify them as intangible assets, which means they have the mark the value of the asset once a year. If the price of bitcoin goes down, they have to mark the value lower on their balance sheet, and if the price goes up, they can’t record the gain unless they sell the bitcoin. This creates a huge balance sheet impairment for these companies if the price of bitcoin drops. It creates a situation where a company has to potentially list the bitcoin on its balance sheet at a lower value than the market price when it is simply holding it. This accounting problem had to be explained in Block’s most recent quarterly filing, where it speaks on the impairment charges and how Bitcoin’s market price exceeds their charges: *"As of March 31, 2023, the cumulative impairment charges to date were $117.7 million, and the fair value of the investment in Bitcoin was $228.7 million based on observable market prices, which was $126.2 million in excess of the Company's carrying value of $102.5 million after impairment charges."* As you can see, with the current accounting and disclosure rules, if a business decides to invest in bitcoin, the potential impairment to its balance sheet can be substantial. The difference between the value of the bitcoin held on its balance sheet and the fair market value can be significant. The good news is that significant positive developments toward fixing this accounting problem occurred in 2022. The Financial Accounting Standards Board (FASB) is preparing a [new rule proposal](https://frv.kpmg.us/reference-library/2023/fasb-wraps-up-initial-crypto-project-deliberations.html) that would improve the accounting and disclosure rules for companies that invest in Bitcoin; that is currently seeking public comment and is likely to be passed. Back in October, FASB said that fair-value accounting best captured the economics of Bitcoin and determined the method would be a requirement rather than an option for companies. These new rule changes would fix this impairment problem for corporations holding Bitcoin. What used to be a regulatory barrier of entry for companies considering placing some bitcoin on their balance sheets is now close to becoming a thing of the past. For public companies currently sitting on large cash balances with CPI inflation, this could open the doors for them to invest in Bitcoin. Given the current banking crisis, this rule change could come at no better time. In light of these events, a growing number of corporations are now recognizing the importance of considering counterparty risk as a central component of their treasury strategy. This realization became glaringly apparent with the collapse of Silicon Valley Bank. A staggering 97% of SVB's deposits, primarily consisting of business accounts, were uninsured, as they held funds significantly exceeding the $250,000 FDIC limit. As a result, numerous businesses were exposed to substantial financial losses, underscoring the need for a more vigilant approach to risk management regarding their treasuries. During SVB's collapse, over 5,000 CEOs and Founders signed [a petition](https://www.ycombinator.com/blog/urgent-sign-the-petition-now-thousands-of-startups-and-hundreds-of-thousands-of-startup-jobs-are-at-risk/) to Treasury Secretary Yellen and FDIC Chairman Martin Gruenberg stating, *"We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank. According to the NVCA, Silicon Valley Bank has over 37,000 small businesses with more than $250,000 in deposits. These balances are now unavailable to them, and without further intervention, according to the FDIC website, may be inaccessible for months to years.”* The recent bank collapses have woken corporations up to the risk that exists with their banking relationships. With Bitcoin, corporations can be their own bank and don't have to worry about counterparty risk. By holding a portion of their treasuries in Bitcoin, they can hedge themselves against the risk of bank failures. This counterparty risk and inflation risk are something all corporations must consider in the future, and with the regulatory and technological barriers coming down for them to access this savings and payments technology, more and more corporations will be looking for alternatives to protect their cash holdings. A prime example of the technological hurdles for these corporations coming down can be found in the emerging startup Lucent Labs, which operates out of the prestigious Wolf Lightning Accelerator in New York City. Lucent Labs is developing treasury management software tools tailored explicitly for corporations. ![](https://www.datocms-assets.com/56652/1684185747-15-lucent-labs.jpg?auto=format) Lucent Labs Solutions like this that aim to facilitate more effective management of Bitcoin holdings on corporate balance sheets will empower businesses to optimize their Bitcoin strategies and harness the full potential of this protocol of money. Thus far, the list of corporations incorporating Bitcoin into their balance sheets predominately consists of entities within the industry. Below is a list of the top 20 corporations holding bitcoin, ranked by how much they have on their balance sheet. ![](https://www.datocms-assets.com/56652/1684185769-16-top-20-corporations-hold-bitcoin.jpg?auto=format) https://bitcointreasuries.net Incorporating Bitcoin into its corporate treasury has clearly been a winning strategy for Microstrategy. Since adopting a Bitcoin strategy, Microstrategy’s Bitcoin investment has exhibited remarkable performance, significantly outpacing returns from other traditional asset classes. ![](https://www.datocms-assets.com/56652/1684185797-17-performance-since-microstrategy-acquired-bitcoin.svg) Performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. By incorporating Bitcoin into its balance sheet, Microstrategy has successfully achieved multiple financial objectives. Amid a period of soaring inflation–reaching multi-decade highs, the company managed to not only safeguard the purchasing power of their holdings but also capitalize on the substantial appreciation of Bitcoin’s value. This strategic move generated capital that enabled Microstrategy to allocate resources toward productivity-enhancing investments, such as its innovative Lightning Rewards program. This program is designed to foster employee engagement, and it exemplifies how the adoption of Bitcoin as a treasury strategy can yield considerable productivity gains and propel overall business performance to new heights. ### Conclusion Over the past decade, US corporations have experienced a decline in productivity growth due to several factors, including diminished worker engagement, reduced investment in research and development, and the high costs of global payments. These issues have collectively stifled productivity and international trade while redirecting resources and capital away from investments that could enhance productivity. Fortunately, the emergence of Bitcoin and the Lightning Network offers promising solutions that could potentially reverse these trends and revitalize US productivity. By leveraging the breakthrough technology of Bitcoin and Lightning, corporations can create innovative incentive structures to boost workforce morale and engagement, minimize global payment costs, and preserve the value of their treasuries over time, thereby spurring increased investment in research and development. The beauty of Bitcoin and Lightning is that builders will continue to innovate and bring better tools and services to market, making it easier for corporations to adopt this technology. In addition, corporations that adopt Bitcoin and Lightning are incentivized to help the technology grow. This was evident when Jack Dorsey's Block took its Bitcoin reserves and allocated them to the Lightning Network to help increase liquidity on the protocol. ![](https://www.datocms-assets.com/56652/1684185821-18-jack-dorsey-block.jpg?auto=format) Today, we find ourselves on the cusp of a transformative moment, as the influence of Bitcoin and Lightning Network promises to reshape businesses across all sectors of the economy. Corporations that realize the power of Bitcoin and the Lightning Network are poised to outpace their competitors, while those that struggle to adapt risk being left in the wake of this technological revolution. Mirroring the profound impact of the Internet years ago, these technologies stand poised to significantly enhance the efficiency of corporate operations, thereby jumpstarting a much-needed productivity boom that has been absent over the past decade. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # My Top 3 Takeaways from the MicroStrategy World Conference URL: https://www.swanbitcoin.com/industry/my-top-3-takeaways-from-the-microstrategy-world-conference/ The crowd was buzzing all week with an electric energy that was a perfect blend of anticipation and curiosity. --- **Dante Cook** · May 16, 2023 · Updated June 6, 2024 The crowd was buzzing all week with an electric energy that was a perfect blend of anticipation and curiosity. This was the first time many MicroStrategy-trained employees, developers, analysts, engineers, and partners had seen each other in years. It was like a family reunion, except the entire family got a pre-event email alerting them about new features, functionality, ChatGPT, and an exclusive night at Universal Studios for just the family. All the closet Harry Potter fans rejoiced at the idea of spending an evening in Diagon Alley. As Bitcoiners, many of us see Michael Saylor on a podcast or see MSTR on CNBC for having the largest [Bitcoin treasury](https://www.swanbitcoin.com/business/) in the world. But what amazed me was how good their Data Analytics & Business Intelligence is. The MicroStrategy world conference was a 4-day event, with the first 2 days focused on MicroStrategy’s bread and butter data. Executives from the largest and most innovative companies in the world, like Hilton and Sony shared the main stage to talk about how they’re leveraging MicroStrategy solutions to process, transform, and visualize information to empower their teams with critical insights to help them make faster, better decisions. One example was from the insurer Amica, who, although smaller than many of the more prominent players, can provide better customer experiences by empowering every claims agent with real-time data and information about the user, including a risk score based upon telematics, to better help serve them when they call in. Another fascinating presentation was the session on Artificial Intelligence. A less technical or experienced SQL developer could simply ask it questions like they were speaking to a human. The AI would generate clean, robust SQL queries that developers could leverage to build charts in half the time. What made this conference even more interesting was the fact that there were these weird Bitcoiners and Bitcoin companies like Voltage, Swan, Cash App, Strike, and LQWD mingling with the data crowd, teaching them about Bitcoin and Lightning. ![](https://www.datocms-assets.com/56652/1684258664-swan-stand.png?auto=format) The blend was unique and certainly different than any other event that I’ve been to. On Day 3, as the event shifted from a data event to a Bitcoin event, you could see the curiosity of the attendees shift as Fortune 500 Executives in suits were replaced by speakers like Michael Rihani from Cash App wearing jeans and Air Jordan Sneakers. Here are my top three takeaways from the event that have implications for Bitcoin in the Corporate Space. ### Point 1: Bitcoin Is Like The Internet. Lighting Is Like Email ![](https://www.datocms-assets.com/56652/1684258702-l1-v-l2.png?auto=format) In 1982, the Internet had just 100 nodes. Today it has over 1B routers. As a network decentralizes, it becomes more ubiquitous and accessible to more people around the world. The rate of decentralization and adoption in Bitcoin & Lightning is growing even faster than the Internet itself. ![](https://www.datocms-assets.com/56652/1684259134-btc-vs-internet.png?auto=format) So if you follow this line of thinking, what are the implications of adopting this technology as a corporation? What happened to the companies that ignored, dismissed, or fell behind on the internet wave? Think Blackberry. Think Blockbuster. The Internet protocol design is a modern marvel that has transformed our world. But the value capture happened by companies building business models and solutions on top of these internet native protocols. ![](https://www.datocms-assets.com/56652/1684259329-old-vs-new.png?auto=format) To understand the implications of these directional arrows of progress. We need to open our imaginations a bit... **Airbnb**: *the largest real estate company in the world doesn’t own real estate.* **Uber**: *the largest taxi company in the world doesn’t own any cars.* **Instagram**: *the largest camera company in the world doesn’t make cameras.* **Facebook**: *the largest content company in the world does not produce any content.* **Netflix**: *the largest television company in the world does not lay any cables.* **Bitcoin**: *could the largest financial network in the world not have any employees or bank branches?* MicroStrategy’s point to their large enterprise customer base was this: *“The Bitcoin & Lightning networks are growing in a similar fashion to the Internet but faster. So you should consider owning it and leveraging it to improve your business models.”* Sending money to customers, employees, and vendors will be as easy as sending an email. In fact, MicroStrategy provided a demo to all of their corporate customers of how they’ve turned every employee email in their directory into a lightning wallet. ![](https://www.datocms-assets.com/56652/1684259444-36-transactions.png?auto=format) How could you use this to transform your accounts' payables & receivables? I believe that there’s a window in time for companies to adopt a model like Amazon, Costco, and Walmart. Those companies negotiate 30-45 day payment terms with vendors but receive cash upfront or in real-time from customers, effectively giving them 30-45 days to reinvest this cash into their operations. What if you used the Lightning network to receive payments from customers in real-time versus your traditional invoice system while your negotiated payment terms with vendors remained the same as they are now? What could you do with that cash over 30 days? ### Point 2: Employers are going to leverage Lightning to incentivize employee behavior MicroStrategy unveiled its new product, Lightning Rewards. This new product will allow companies to incentivize and reward employees in real-time for behaviors that drive enterprise goals. ![](https://www.datocms-assets.com/56652/1684260503-microstratcoreln.png?auto=format) Incentives within companies are tricky. The majority of compensation and incentive plans fail because companies need to be able to properly incentive the actions they want to see as they happen. What if you could drive down Insurance Premiums by rewarding employees for their participation in your wellness program? ![](https://www.datocms-assets.com/56652/1684260673-microstrat-lightning-activity.png?auto=format) What if you could unlock all of the valuable knowledge trapped in key employees heads by incentivizing them to share that information on internal forums? ![](https://www.datocms-assets.com/56652/1684261519-microstrat-lightning.png?auto=format) What if you could drive more engagement from your disengaged remote employees by rewarding them for showing up at team Zoom meetings on time and having their cameras on? ![](https://www.datocms-assets.com/56652/1684260561-microstrat-mining-rewards.png?auto=format) These things aren't rocket science. However, before Lightning, there wasn't a clean way to incentivize behaviors at the micropayments layer at the speed of light. This is truly innovative and will change how companies engage with employees. There are some fundamental questions people had with this product concerning tax and accounting treatment. Swan's Bitcoin Benefit Plan removes any compliance, legal, tax, or accounting hurdles a company would have to think about because companies don't have to own, touch, or handle BTC to use this product. One thing is clear, employers are seeking ways to attract, retain, incentivize, and reward talented employees all around the world, and the existing benefits tools need to be equipped to help them do this. ### Point 3: Institutions Are Looking For Options During the conference, the stock chart of PacWest stock collapsing, just one morning after the federal government approved the fire sale of First Republic Bank to JP Morgan for 20 cents on the dollar. ![](https://www.datocms-assets.com/56652/1684261704-pacwest-bancorp-swan.png?auto=format) I spoke with several companies there who were actively looking for new banking partners who were unable to access funds because they held their funds in First Republic Bank. Any Corporate Treasury dollars held outside of a Top 4 *"Systemically Important"* bank above the $250,000 threshold is an unsecured liability that companies are finally looking to diversify. In a segment titled Wall Street & Bitcoin, analyst Lyn Alden, Andrew Moss, VP, Global Crypto & Digital Assets Strategy at Bank of America, and Mark Palmer, Digital Assets Analyst from Berenberg Capital, discussed *"Institutional Adoption of Bitcoin."* As a surprise to me, Bitcoin is already being adopted by Institutions. The three questions being debated were: - How fast? - How much? - What form factor? Many institutions are becoming more aware that *"Bitcoin is not crypto."* In fact, this was shared on stage by executives from large institutions like Fidelity. However, the lack of regulatory clarity and fund mandates is a limiting factor in Institutions holding pure BTC on their balance sheet. Many of them have to invest through proxies like MSTR, BITO, GBTC, or several other instruments outside of the United States, which limits the size and scale of their investments. The appetite is there for companies to hold actual BTC with a Qualified Custodian. However, the existing regulatory environment, along with bureaucratic organizational structures, is preventing them from moving with speed, scale, or conviction into BTC. Our job as Bitcoiners is to cross-pollinate and educate as many non-Bitcoiners as possible so that we [win the race to avoid the war](https://www.swanbitcoin.com/the-race-to-avoid-the-war/). In speaking with many executives one-on-one, most of them actually hold Bitcoin. Helping them straddle the genuine tension of FOMO & Career-Risk requires long-term partners like Swan and Swan Private members to come alongside them in a helpful way to nudge them along. ### Dante Cook Dante is Managing Director of Swan Private. He is the host of The Bitcoin Athlete & Proof of Work Podcast. # BitcoinIRA Review 2026: What to Look Out For! - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/bitcoinira-review/ Investing in Bitcoin with a IRA is a smart move to preserve and grow your wealth. BitcoinIRA has the brand name but offers many altcoins with noticable red flags! Let’s see how compares to Swan Bitcoin in 2026. --- **Nick Payton** · June 5, 2024 · Updated October 21, 2026 Investing in Bitcoin through a tax-advantaged individual retirement account (IRA) is a smart move to capitalize on Bitcoin’s long-term potential. In this BitcoinIRA review, we'll explore its features, fees, pros and cons, risks, and other crucial factors to consider and compare it to the Swan's Bitcoin IRA. ### What is BitcoinIRA? **BitcoinIRA Pros** - **Versatile Account Types:** It supports various IRA types, including traditional, [Roth](https://bitcoinira.com/bitcoin-roth-ira), SEP, and even a Saver IRA, catering to different retirement planning needs. - **High Customer Satisfaction:** Solid ratings on [Trustpilot](https://www.trustpilot.com/review/bitcoinira.com) and mobile app stores indicate good user satisfaction overall. **BitcoinIRA Cons** - **Dozens of cryptos:** [Offers](https://bitcoinira.com/live-pricing) +60 cryptocurrencies. - **High Fees:** [Charges](https://bitcoinira.com/bitcoinira-fees-and-services) a 2% trading fee and a 0.08% monthly maintenance fee, higher than many competitors. **Fees** - **Trading Fee:** 2% on transactions - **Monthly Fee:** 0.08% monthly maintenance fee ##### Pros and Cons What are some of BitcoinIRA’s pros and cons? **Pros** - Diversification benefits - Tax advantages **Cons** - Promotes low-quality digital currencies - Volatility and risk - High fees - A learning curve - Slow trade processing ### Who is BitcoinIRA's Target Customer Base? Over 170,000 users have joined the platform, making it one of the biggest crypto retirement platforms. BitcoinIRA is for investors who want to invest in more than Bitcoin. [![](https://www.datocms-assets.com/56652/1702593589-bitcoin-ira-altcoins.png?auto=format)](https://bitcoinira.com/why-choose-bitcoin-ira) BitcoinIRA.com BitcoinIRA is one such type of IRA that promotes and asks investors to diversify their investments into all sorts of [risky fly-by-night altcoins](https://www.swanbitcoin.com/my-journey-from-stupid-to-bitcoiner/). If you’re a true believer in Bitcoin and its [long-term potential](https://www.swanbitcoin.com/why-every-investor-should-have-bitcoin-in-their-portfolio/), you will be irritated with BitcoinIRA. However, if you have a [higher risk tolerance](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/), okay paying much higher fees, and can navigate the complexities of self-managed retirement accounts, BitcoinIRA might be right for you! ### Why Choose a Bitcoin-only IRA Platform over a Crypto IRA  Using a[ Bitcoin-only platform like Swan Bitcoin](https://www.swanbitcoin.com/bitcoin-ira/), as opposed to a broad crypto IRA platform like BitcoinIRA, offers an array of advantages.  - **Simplicity and Focus****:** Bitcoin-only platforms offer a simplified user experience and focus all their resources on Bitcoin-related services. - If you only want to invest in Bitcoin, a streamlined platform without the complexity of managing multiple cryptocurrencies. - **Specialized Expertise****:** Bitcoin-only platforms like Swan Bitcoin deeply understands Bitcoin's technology, market dynamics, and trends. - These platforms offer more customized advice, research, and support specific to Bitcoin investing. - **Enhanced Security****:** They also prioritize and optimize security measures explicitly designed for Bitcoin. This may include robust encryption, multi-signature wallets, cold storage solutions, and other security practices to protect Bitcoin holdings. - **Access to Specific Bitcoin Features****:** You get unique features or services exclusive to Bitcoin. - **For Example**: Access to Bitcoin lending, staking, or other specialized investment options is unavailable on broader platforms. - **Lower Fees****:** Bitcoin-only platforms may incur lower fees than broader platforms supporting multiple cryptocurrencies. ### BitcoinIRA vs. Swan Bitcoin #### Swan Bitcoin IRA ***Account Minimum:*** *No minimum balance requirements* ***Investment Options:*** *Bitcoin-only* ***Fees:*** [*1% trading fee + 0.02% monthly fee/ $20 minimum*](https://www.swanbitcoin.com/fees/) ***Custody Provider:*** [*BitGo Trust Company*](https://www.bitgo.com/swan/) #### *BitcoinIRA* ***Investment Options:*** *+60 cryptocurrencies* ***Fees:*** *2% trading fee + 0.08% monthly fee* ***Custody Provider:*** *BitGo Trust Company* #### Fee Comparison While all BitcoinIRA fees are very high compared to other providers, account minimums and the funding fee are both particularly egregious. BitcoinIRA charges a 2% trading fee and a 0.08% monthly fee. Swan Bitcoin IRA offers lower fees: a 1% trading fee and a 0.02% monthly fee, with a $20 minimum. Jack Bogle, the founder of index investing, once said: *"In investing, you get what you don't pay for."* This holds for Bitcoin saved in retirement accounts. Your future retiree self will thank you for paying close attention to the costs of having Bitcoin in a retirement account. *If you’d like to explore the model and modify the inputs, you can see the details using* [*Swan Research’s Portfolio Modeling Tool*](https://nakamotoportfolio.com/ira/comparison?ira=Bitcoin%20IRA&cash=0&btc=3.5268771459187556&btc_chg=15&years=32&contribution=6500)*.* ### Feature Comparison ##### BitcoinIRA Overview - **Diverse Options:** BitcoinIRA offers a [broader range](https://bitcoinira.com/articles/beyond-bitcoin-alternative-coins-for-your-crypto-ira) of cryptocurrencies, including over 60 altcoins. This might be appealing for those looking to diversify their crypto holdings within their IRA. - **Large Asset Management:** Manages over $2 billion in crypto assets, indicating a significant scale of operations and a substantial customer base. - [Partnership with BitGo.](https://www.prnewswire.com/news-releases/bitcoinira-digital-trust-and-bitgo-announce-educational-webinar-on-crypto-security-301797344.html) ##### Swan Bitcoin IRA Highlights - **Simplicity and Focus:** Swan Bitcoin IRA champions a straightforward approach, prioritizing best practices and focusing solely on Bitcoin, which they believe aligns with their philosophy of doing what's right for Bitcoin and its investors. - **Educational Resources:** Swan provides high-quality information through various channels like [Swan Media](https://www.youtube.com/@Swan_Bitcoin/videos) on YouTube, [Signal Blog](https://www.swanbitcoin.com/signal/), and the [*"Welcome to Bitcoin: 101 Series"*](https://welcome.swanbitcoin.com/), which are aimed at enhancing investors' understanding of Bitcoin and the crypto industry. - **Compliance and Risk Management:** Swan emphasizes minimizing risks associated with Bitcoin investing and custody. This includes handling regulatory or compliance developments proactively to safeguard investors' interests. - **Customer Support:** Swan is known for its industry-leading customer support, with a dedicated team that is responsive and knowledgeable about Bitcoin, ready to assist with any queries investors might have. [Contact Swan Support.](https://www.swanbitcoin.com/swan-customer-support/) - **Marketing Strategy:** Unlike many crypto IRA providers, Swan does not promote multiple digital assets or engage in making price predictions. Their marketing is focused on educating about Bitcoin and discouraging speculative trading with retirement funds. [Learn more](https://www.forbes.com/advisor/investing/sec-crypto-regulation/). ### BitcoinIRA FAQs—Know Before You Invest ##### Who Owns BitcoinIRA? Founded in March 2015, BitcoinIRA is owned by entrepreneurs [Chris Kline](https://www.linkedin.com/in/klinec), [Johannes Haze](https://www.linkedin.com/in/johanneshaze), and [Camilo Concha](https://www.linkedin.com/in/lendingusa/). ##### Is BitcoinIRA Secure and Reliable? BitcoinIRA is a well-known trading platform that specializes in various crypto-based IRA services. ##### How Does BitcoinIRA Work? The platform offers a self-directed IRA, enabling investors to integrate digital assets into their retirement portfolios.  ##### Can I Invest My 401(k) in Bitcoin? Yes, you can open a new account with BitcoinIRA or rollover funds from an existing IRA or retirement account such as 401(k) and allocate those funds toward cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash (BCH), or Litecoin.  ### What Are Some BitcoinIRA Alternatives? [Swan Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/), [iTrustCapital](https://www.swanbitcoin.com/itrustcapital-review/), [Alto Crypto IRA](https://www.swanbitcoin.com/altoira-review/), and [Broad Financial](https://broadfinancial.com/welcome-to-broad-financial-crypto-ira-trust/). ##### What is the Minimum and Maximum Investment Amount for BitcoinIRA? There's no maximum investment limit but there is a minimum initial investment of $3,000. ##### Is BitcoinIRA Tax-free? You are exempt from taxation as long as the money and assets stay within your account. ##### What Are the Risks of BitcoinIRA? The primary risks include market volatility, regulatory and legal challenges, security and fraud risks, and tax implications. Before investing in BitcoinIRAs, speak to your[ financial advisor](https://www.swanbitcoin.com/why-im-driven-to-build-swan-advisor-services-andrewedstrom/) and carefully review the terms and conditions of any financial institution you wish to work with. ### What to Keep in Mind When Choosing a Bitcoin or Crypto IRA Provider Bitcoin isn't a [typical investment](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/). Given its many benefits and lucrative growth, more companies will offer a BitcoinIRA or crypto IRA product sooner or later. Here are some key considerations: ##### Key Considerations **Research Thoroughly** - Before investing in a riskier option like BitcoinIRA, conduct additional research to ensure you protect your [savings](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/) while exposing yourself to long-term price appreciation in a secure asset like Bitcoin. **Risk Management** - Mixing your retirement portfolio with unregistered securities and altcoins on BitcoinIRA platforms is extremely risky. - Consider going Bitcoin-only when choosing an IRA provider to minimize risk. **Fee Structure** - Understand the fees and how the costs will affect your long-term retirement goals. **Provider Reputation** - Choose a provider with a solid reputation and transparent business practices. **Security Measures** - Ensure the provider has robust security measures in place to protect your assets. **Customer Support** - Good customer support can be crucial if you encounter any issues or have questions about your investments. By considering these factors, you can make a more informed decision and potentially reap the benefits of including Bitcoin in your retirement portfolio. By going Bitcoin-only when choosing an IRA provider to minimize risk and maximize your investment's security and growth potential. *Learn more about* [*Swan IRA*](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/) *and how it can help you reach your retirement goals while maximizing your savings. Contact the team at* ***ira@swanbitcoin.com for more info****.t Bitcoin allocations, backed by world-class custody and educational content.* *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # Compare the 3 Best Coinbase Alternatives (What You Need to Know in 2024) URL: https://www.swanbitcoin.com/industry/coinbase-alternative/ The uncertainty surrounding compliance and regulatory problems for Coinbase is intensifying. Bitcoin-only Swan is one of the most popular Coinbase alternatives for buying Bitcoin in July of 2024. Learn why! --- **Drew and Matt Ruby** · June 20, 2024 · Updated July 26, 2024 The sudden collapse of FTX, previously a leading crypto exchange, has led some to question if Coinbase is the best platform for buying and trading Bitcoin and other cryptocurrencies. Coinbase is currently facing regulatory actions from the SEC and other lawsuits. The exchange also suffers from data breaches, dissatisfied customers, high costs, outages, and technical glitches. Many of the tokens sold there are iffy gambles, and some are even outright scams. The future of these tokens is uncertain, so Coinbase's support of these assets is questionable. ***NOTE:*** *We recommend sticking with Bitcoin, a well-established, widely accepted digital asset in good standing with the U.S. government, and using Bitcoin-only companies.* In this article, we will examine three alternatives that can replace Coinbase as the place you buy and sell crypto.  ### Quick Summary #### [**Swan Bitcoin**](https://www.swanbitcoin.com/) **Swan Pros** - Start buying in minutes - [No fees](https://www.swanbitcoin.com/fees/) on your first $10,000 - Friendly expert service - Full suite of Bitcoin financial services - World-class [Bitcoin Education](https://welcome.swanbitcoin.com/) - Rated 4.8/5 on the [App Store](https://apps.apple.com/us/app/swan-bitcoin-buy-save/id1576287352?see-all=reviews) **Swan Cons** - Does not offer non-Bitcoin currencies - According to our analysis of [customer reviews on TrustPilot](https://www.trustpilot.com/review/swanbitcoin.com), we found that: **Why Customers Like Swan** - [**Customer service**](https://www.swanbitcoin.com/swan-customer-support/): Quick assistance from real humans - **Bitcoin-only**: No altcoins offered - **Values**: The company aligns with the Bitcoin community - [**Education**](https://www.swanbitcoin.com/signal/): Offers robust educational materials about Bitcoin - [**IRA**](https://www.swanbitcoin.com/bitcoin-ira/): Retirement offerings - [**Price**](https://help.swanbitcoin.com/hc/en-us/articles/360045394134-What-are-Swan-Bitcoin-s-fees): Significant savings on fees compared to other platforms **(ZERO FEES on your first $10,000)** - **Interface**: Straightforward, clean, uncluttered, and to the point.   **What Customers Dislike About Swan** - **Timing**: Recurring buys can be confusing to some - **Strict process**: Non-US residents report signup can be complex - **Limited options**: Bitcoin-only *Swan let's you start buying Bitcoin in minutes with no fees on your first $10,000, provides friendly, expert service, and offers world-class Bitcoin education.* #### [**Uphold**](https://uphold.com/en-us) **Uphold Pros** - Trade in just one step between any supported asset. - Flexible experience with a broad range of assets. - Publishes assets and liabilities every 30 seconds at the site. **Uphold Cons** - Users report face scans required for transactions. - Unpredictable processing times.  - Customer support is provided by automated bots. **Fees** In the U.S., U.K., and most of Europe, fees are typically: - Stablecoins: 0.25% - Major market FX: 0.25% - BTC, ETH: 1.4% — 1.6% - Altcoins: 1.9% — 2.5% - Precious metals: 1.9% — 2.5% [The complete fee schedule](https://uphold.com/en-us/get-started/service-fees) is available on Uphold's website. According to our analysis of [customer reviews on TrustPilot](https://www.trustpilot.com/review/uphold.com), we found that: **Customers Like Uphold For** - **Refunds**: Offers cash back - **Interface**: The interface is simple but detailed - **Security**: Customers generally feel safe - **Email support**: Prompt email replies **Customers Dislike Uphold Because** - **Account restrictions**: Customers report issues with this - **Fees**: High fees upon withdrawals reported - **Cooling period**: Not always able to access funds **Uphold Solves the Following Problem** The platform to discover new tokens early. Brings you choices faster than any other regulated platform in the U.S. Connected to 28 underlying trading venues, including Centralized and Decentralized Exchanges, Layer 2 Networks, and Rollups. #### [**Bitstamp**](https://www.bitstamp.net/) **Bitstamp Pros** - Industry-leading security - Transparency through internal and external audits - Global presence  - Holds 50 licenses and registrations in key global jurisdictions **Bitstamp Cons** - A short list of coins supported for staking - No margin trading or lending features - Some customers have complained about additional fees - Fees:[ 1% — 1.5%](https://www.bitstamp.net/fee-schedule/) According to our analysis of [customer reviews on TrustPilot](https://www.trustpilot.com/review/bitstamp.net), we found that: **Customers like Bitstamp for:** - **Ease of Trading**: Intuitive interface with instant deposit options - **Institutional-grade security**: 95% of assets stored safely offline - **Encryption**: Highly encrypted personal data - **Proven Reliability**: Serving customers since 2011 - **Customer support**: Live support offered. - **Industry-leading uptime**: Solid platform that rarely goes down - **APIs**: Set up your own trading interface or deploy your algorithmic strategy **Customers dislike Bitstamp because:** - **Restricted access to funds**: Reports of the exchange failing to credit deposits. - **Delayed transactions**: Slow processing can change transaction price - **Video chat**: Video call required to withdraw money - **Issues withdrawing funds**: A range of issues reported withdrawing cash **Bitstamp solves the following problem:** Buy and trade with ease on a trusted crypto exchange. Designed for simplicity, Bitstamp helps customers "feel good about crypto." Let's dive deeper… ### Swan Bitcoin ([**4.6/5 stars from Trustpilot**](https://www.trustpilot.com/review/swanbitcoin.com)) Swan focuses on Bitcoin because it believes Bitcoin is better money that will improve the world. With Swan, you can buy Bitcoin instantly with your bank account or bank wires and sign up for recurring purchases so you can *"set it and forget it."* Customers can also withdraw Bitcoin to self-custody for free. ##### Swan Pros - Start buying in minutes - No fees on your first $10,000 - Friendly expert service - Full suite of Bitcoin financial services - World-class Bitcoin Education - Rated 4.8/5 on the [App Store](https://apps.apple.com/us/app/swan-bitcoin-buy-save/id1576287352?see-all=reviews) ##### Swan Cons - Does not offer non-Bitcoin currencies ##### Customer Reviews Fees: [0.99%* ](https://www.swanbitcoin.com/fees/)Custody Provider: [BitGo Trust Company ](https://www.bitgo.com/swan/)Trustpilot Rating: [4.6 / 5 out of 1,136 reviews ](https://trustpilot.com/review/swanbitcoin.com)Apple App Store: [4.8 / 5 out of 1.5k reviews ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)Google Play Store: [4.5 / 5 out of 619 reviews, 50,000+ downloads](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1) ##### What Customers Say About Swan on Trustpilot - *"Everyone at Swan is so helpful! Whenever I have a question, I can be sure that they will respond to my emails promptly and personably."* - [E. Glosson](https://www.trustpilot.com/reviews/66180e89285e27d1462a8ec8) - *"Best Bitcoin-only financial services company. Truly unbelievable response time!"*  - [Joseph Redling](https://www.trustpilot.com/reviews/65ec84571ba929466c776a6a) - *"Great company! I've been with them two years and the experience has been really good. They've offered webinars and other educational tools to familiarize customers with how to reach their financial goals. I also had very good support from customer service when conducting financial transactions. I received regular updates and was quite satisfied with the responsiveness of the staff."* - [Sunny A.](https://www.trustpilot.com/reviews/65f60ace402c53e267db3695) - **Swan $0 in fees on your next $10,000 investment**: After that, a [modest 0.99% fee](https://www.swanbitcoin.com/fees/) is applied to all Bitcoin buys. No deposit fees, no withdrawal fees, and absolutely no hidden fees.  - Swan offers investors [free withdrawals](https://www.swanbitcoin.com/fees/) into self-custody of purchased Bitcoin with a secure, non-custodial Bitcoin wallet. This gives investors complete control over their digital assets and an added layer of security. - Swan's knowledge base includes [comprehensive educational resources](https://www.swanbitcoin.com/signal/), in-depth market analysis, and up-to-date information on Bitcoin and the crypto industry. - [Swan's experts](https://www.swanbitcoin.com/advisor/) work around the clock to guide you on the technical aspects, market trends, and potential risks of Bitcoin. - [Swan Advisor Services](https://www.swanbitcoin.com/advisor/) helps financial advisors integrate Bitcoin into their clients' investment portfolios seamlessly. Investors get advice and strategic recommendations tailored to their financial goals and risk tolerance, ensuring Bitcoin is a beneficial asset. - Swan's [Specter Labs](https://specter.solutions/) offers a range of safe and easy-to-use self-custody options for Bitcoiners who prefer direct control of their wealth. - [Swan Support](https://www.swanbitcoin.com/swan-customer-support/) offers top-notch customer service. ### Uphold ([**3.3/5 stars from Trustpilot**](https://www.trustpilot.com/review/uphold.com)) Uphold bills itself as *"the platform to discover important new tokens early."*  The crypto broker is connected to 28 underlying trading venues, including centralized and decentralized exchanges, Layer 2 networks, and rollups. Uphold allows you to trade in just one step between any supported asset. It aims to quickly bring customers a variety of choices. Uphold serves over 10 million customers in more than 180 countries. ##### Uphold Pros - Trade in just one step between any supported asset. - Flexible experience with a broad range of assets. - Publishes assets and liabilities every 30 seconds at the site. ##### Uphold Cons - Users report face scans required for transactions. - Unpredictable processing times.  - Customer support is provided by automated bots. ##### Customer Reviews Fees: [0.25% — 2.5% ](https://uphold.com/en-us/get-started/service-fees)Custody Provider: [Uphold Vault ](https://uphold.com/vault)Trustpilot Rating: [3.3 / 5 out of 8,928 reviews ](https://www.trustpilot.com/review/uphold.com)Apple App Store: [4.7 / 5 out of +54.3k reviews ](https://apps.apple.com/us/app/uphold-buy-btc-eth-and-260/id1101145849)Google Play Store: [4.7 / 5 out of +51.2k reviews, +5M downloads](https://play.google.com/store/apps/details?id=com.uphold.wallet&hl=en&gl=US) ##### What Customers Say About Uphold on Trustpilot - *"Easy crypto trades. I've enjoyed using Uphold; its interface is simple but detailed."* - [Brett Buchanan](https://www.trustpilot.com/reviews/66235f8e2a0c58315a14c707) - *"Uphold is a great site for Bitcoin and other digital asset options. It is very secure."* - [David Evans](https://www.trustpilot.com/reviews/66252959db0727acd1975ce0) - *"Uphold seemed trustworthy at first with its smooth interface and great rates, but things quickly went downhill. They started requiring face scans for every transaction, and processing times became unpredictable."* - [A M](https://www.trustpilot.com/reviews/661e0bd853d3cdbbbb39ac92) ##### More About Uphold [Uphold](https://uphold.com/) claims to offer a seamless and user-friendly experience for accessing and transacting a variety of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP), among others. It also supports traditional fiat currencies like the U.S. dollar, Euro, and British pound, allowing users to easily convert between cryptocurrencies and fiat currencies. NOTE: [Swan does not recommend investing in (or holding) any altcoins, only Bitcoin.](https://www.swanbitcoin.com/bitcoin-vs-altcoins/) ##### Fees In the U.S., U.K., and most of Europe, fees are typically: - *Stablecoins: 0.25%* - *Major market FX: 0.25%* - *BTC, ETH: 1.4% — 1.6%* - *Altcoins: 1.9% — 2.5%* - *Precious metals: 1.9% — 2.5%* [The complete fee schedule](https://uphold.com/en-us/get-started/service-fees) is available on Uphold's website. ##### Key Features - Provides seamless conversions between cryptocurrencies and fiat currencies for convenient and fast exchanges, allowing investors to manage their portfolios and benefit from price fluctuations. - Investors can safely store their cryptocurrencies and digital assets in a digital wallet protected by multi-factor authentication and encryption. - Uphold members can easily send and receive cryptocurrencies or fiat currencies to and from other Uphold users worldwide without delays or transaction fees. - Users can fractionally own cryptocurrencies, stocks, commodities, and real estate and diversify their investments through a single platform. - They also get prepaid debit cards to spend cryptocurrencies at any location that accepts regular debit or credit card purchases. ### Bitstamp ([**2.0/5 stars from Trustpilot**](https://www.trustpilot.com/review/bitstamp.net)) Security, transparency, and regulation are the pillars on which Bitstamp has made crypto securely accessible to over 4 million customers globally. Europe's biggest exchange, Bitstamp was founded in 2011 and has offices in Luxembourg, the UK, Slovenia, Singapore, and the US. by trading volume and offers trading of BTC, ETH, LTC, SOL, ADA, DOT (and more than 70 other assets). The exchange is a pioneer in crypto security and regulation, having developed things like cold storage of assets, multi-sig wallets, and SegWit implementation.  **UPDATE:** Robinhood to Acquire Bitstamp Robinhood Markets, Inc. (“Robinhood”) has [entered](https://investors.robinhood.com/news/news-details/2024/Robinhood-to-Acquire-Bitstamp/default.aspx) into an agreement to [acquire](https://finance.yahoo.com/news/robinhood-buy-crypto-exchange-bitstamp-153522648.html) Bitstamp Ltd. (“Bitstamp”), a global cryptocurrency exchange. ##### Bitstamp Pros - Industry-leading security - Transparency through internal and external audits - Global presence  - Holds 50 licenses and registrations in key global jurisdictions ##### Bitstamp Cons - A short list of coins supported for staking - No margin trading or lending features - Some customers have complained about additional fees ##### Customer Reviews Fees: [1% — 1.5% ](https://www.bitstamp.net/fee-schedule/)Custody Provider: [BitGo ](https://www.bitstamp.net/bitstamp-way/#:~:text=All%20customer%20funds%20held%20on,a%20fully%20licensed%2C%20qualified%20custodian.)Trustpilot Rating: [2.0 / 5 out of 839 reviews ](https://www.trustpilot.com/review/bitstamp.net)Apple Store App: [4.7 / 5 out of 248 reviews ](https://apps.apple.com/us/app/bitstamp-buy-crypto-simply/id1494703801)Google Play Store: [4.3 / 5 out of 478 reviews, +10,000 downloads](https://play.google.com/store/apps/details?id=net.bitstamp.appgo&hl=en&gl=US) ##### Key Features - Trust and security  - Bitstamp is one of the first cryptocurrency exchanges to receive a BitLicense, ensuring compliance with strict regulatory standards. - Liquidity and competitive fees - Bitstamp's trading fees decrease as trading volume increases, making it attractive for traders of all levels. - Global accessibility. - Bitstamp's services are available to users worldwide for international cryptocurrency trading. It also offers multilingual customer support so users can get help in their preferred language. - Industry-leading compliance. - Bitstamp adheres to Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to ensure a secure trading environment.    ##### What Customers Say About Bitstamp on Trustpilot - *"After 2 months of trading experience at Bitstamp, I have the following to say: It is the best so far in the world of crypto and blockchain."* - [ΑΠΟΣΤΟΛΟΣ ΠΑΠΠΑΣ](https://www.trustpilot.com/reviews/6616a2441c7bcd5b1b2d1e22) *"I wrote to support, then opened a ticket, then asked again several times but, till now, I received no response or resolution."* - [Gianfranco Ricottilli](https://www.trustpilot.com/reviews/6621394490a4510a56ecafb5) - *"Customer service is of Zero Help – All they say is you must wait for complaints department to answer – and you can't talk to the complaints department!"* - [RS Cassidy](https://www.trustpilot.com/reviews/6626553b7b8025f204067714) - *"I uncovered a range of issues with this platform that pertain to registering external bank accounts and withdrawing cash in a variety of currencies."* - [Silicon Lunch](https://www.trustpilot.com/reviews/6603812da4e050a0ccde480d) ##### More About Bitstamp Bitstamp's user-friendly interface and commitment to transparency and reliability have earned it the trust of many traders worldwide. It's also been a leader in the security industry since its founding. All funds and crypto on Bitstamp are backed 100% and ready to be withdrawn anytime. External parties review its financial controls annually and are subject to regular internal audit reviews. ##### Fees Bitstamp uses a complex maker-taker fee model to determine trading fees. The [fees are calculated based](https://www.bitstamp.net/fee-schedule/) on your current pricing tier at the time of an order's execution. Generally speaking, customers pay between 1 - 1.5% in trading fees. ### Final tips Here are a few tips for picking the suitable Coinbase alternative: - **Determine your specific needs and goals**: If you only want to buy/sell Bitcoin, you don’t need a platform that offers dozens of tokens.  - **Examine fees:** You save money with every trade when fees are lower. - **Consider feedback from other users and industry experts**: It’s always nice to hear what others say about businesses on sites like [G2](https://www.g2.com/), [Capterra](https://www.capterra.com/), and [Trustpilot](https://www.trustpilot.com/).  - **Consider sustainability**: You want to ensure the company you use is trustworthy and will be around for a long while. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan Bitcoin today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # Raising the Ceiling As Tech Keeps Screaming - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/raising-the-ceiling-as-tech-keeps-screaming/ Politicians will continue to spend money they don’t have to paper over problems now, creating bigger ones for future generations to grapple with. Buy Bitcoin. --- **Sam Callahan** · June 2, 2023 · Updated July 3, 2024 All eyes have been on the White House and Congress this past month as the date at which the government can no longer pay its bills, also known as the *“X-Date,”* rapidly approached. U.S. Treasury Secretary Janet Yellen stated last week in a letter to Congress that it was *“highly likely”* that the government will not be able to pay all of its obligations and will default on June 5th if the debt ceiling is not lifted beforehand. This uncertainty led to heightened volatility in the markets as assets attempted to price in the probability of a U.S. default. The good news is, the worst outcome has been narrowly avoided as a bipartisan bill has passed that will suspend the $31.4 trillion debt ceiling until after the next presidential election and into early 2025.  The deal came down to the wire as the Treasury’s total operating balance recently hit the lowest level since September 2017, with only $60 billion in cash left to fund the government’s day-to-day business. ![](https://www.datocms-assets.com/56652/1685729199-1.png?auto=format) Ironically named the *“Fiscal Responsibility Act,”* this bill will do little to reduce government spending. The fiscal bill will hold non-discretionary spending essentially flat in 2024, and allow for a 1% cap on spending increases in 2025. According to some estimates, this new legislation could allow for debt to increase to roughly $35 trillion in that time period. ![](https://www.datocms-assets.com/56652/1685729255-2.png?auto=format) This means that annual trillion-dollar deficit spending will continue unabated despite the high levels of inflation that U.S. consumers are currently struggling with and that the Fed is desperately trying to get under control. If there’s one lesson from this debt ceiling debacle, it’s that politicians will continue to spend and the debt will continue to rise. It doesn’t matter which political party is in office, the debt ceiling will get suspended, and the debt will inflate further.  ![](https://www.datocms-assets.com/56652/1685729308-3.png?auto=format) Once again, the long-term fiscal problems are kicked down the road, this time until 2025 when we have to go through this whole charade again.  Despite the worst outcome being avoided with a last-minute debt ceiling agreement, some market participants have already shifted their focus to how a debt ceiling resolution will impact markets moving forward. When the debt ceiling bill gets passed, new debt will need to be issued and the Treasury General Account (TGA) will need to be refilled. This could negatively impact liquidity and could be a headwind for asset prices including equities, gold, and Bitcoin. This all started back in January when the debt ceiling was hit and Yellen announced extraordinary accounting measures to avoid a default. Since the Treasury couldn’t issue any more debt, they drained the cash they had on hand in the TGA to fund its operations. You can see how they began to drain the TGA in earnest after the debt ceiling was hit in January below. ![](https://www.datocms-assets.com/56652/1685729352-4.png?auto=format) The importance of draining the TGA lies in its capacity to inject liquidity into the economic system. The TGA exists as a liability on the Federal Reserve’s balance sheet, and for balance, the Fed must ensure its assets correspond to its liabilities. As such, when the TGA is drained, there’s a corresponding rise in the Fed’s assets, specifically bank reserves.  In simpler terms, draining the TGA results in an uptick in bank reserves, which in turn could catalyze increased lending within the real economy. This explains why the process of draining the TGA has a pro-liquidity effect, promoting better liquidity conditions within the economic system and providing a tailwind for asset prices.  This is also the reason behind why we saw liquidity conditions improve while the Fed was raising interest rates and undertaking Quantitative Tightening (QT) around the same time. ![](https://www.datocms-assets.com/56652/1685729398-5.png?auto=format) Even though the Fed’s QT strategy aimed at reducing bank reserves in the system, the impact of draining the TGA counteracted these effects, hence helping to bolster the amount of liquidity in the system in the first two quarters of the year. The problem is that now the TGA has all but been drained and needs to get refilled through the issuance of new debt. This is set to occur as the Fed continues to reduce bank reserves via QT. This would be a double whammy for liquidity in the system.  Ultimately, it depends on *how* the Treasury plans to raise debt and refill the TGA and at what speed. Some analysts feel that the Treasury may choose to issue more long-duration bonds because they offer cheaper yields given the current yield curve inversion, but [the meeting minutes](https://home.treasury.gov/news/press-releases/jy1462) of the Treasury Borrowing Advisory Committee from last month foreshadowed what we should expect moving forward when it comes to the debt issuance, “*Dealers broadly agreed that there is ample scope to expeditiously increase the supply of bills. Respondents cited record-high money market mutual fund assets under management and the more than $2 trillion in the Federal Reserve’s Overnight Reverse Repo Facility as evidence of significant demand for short-dated, high-quality liquid assets. Dealers noted that the bill market could accommodate increases across benchmark tenors, but that the largest increases should occur in the shorter maturity bills.*” - Treasury Borrowing Advisory Committee, May 3rd, 2023 Goldman Sachs estimates that the Treasury Department will issue $600 billion-$700 billion in T-bills 6-8 weeks after the deal is signed by President Biden. This coming bill issuance will make for the largest one outside of a crisis, with around $500 billion expected to refill the Treasury coffers in only 4 weeks to meet the Q2 quarterly net issuance after the debt ceiling bill is passed. ![](https://www.datocms-assets.com/56652/1685729479-6.png?auto=format) With Fed raising interest rates by 500 bps over the last year, the Treasury will find it much more expensive to issue these T-bills this time compared to years prior. The question becomes, who will be buying the debt that the Treasury issues?  The worry is that, without the Federal Reserve performing QE and buying up the bonds, the demand for these newly issued T-bills will have to come from the private sector aka, commercial banks, foreign investors, and households. Treasury demand from foreign investors has been on the decline for the last decade and this trend doesn’t seem to be reversing any time soon. ![](https://www.datocms-assets.com/56652/1685729512-7.png?auto=format) That leaves households and commercial banks to pick up the slack. If commercial banks need to step in with the demand, this would be problematic because they would need to sell bank reserves, which would suck liquidity out of the system, as mentioned above.  Yet the most likely outcome is also the most favorable one. It is that these T-bills will be funded by the over $2 trillion in cash sitting in the overnight Reverse Repo facility (RRP). The RRP essentially allows for money market funds to park cash at the Fed if there are not enough T-bills or other cash-like equivalents available close to Federal Fund’s rate. ![](https://www.datocms-assets.com/56652/1685729548-8.png?auto=format) If the rates on the newly issued t-bills are attractive enough, money market funds should take cash out of the Reverse Repo facility and put it into these t-bills for the more attractive yield. Currently, the RRP rate stands at 5.05%.  ![](https://www.datocms-assets.com/56652/1685729583-9.png?auto=format) When we observe the current yields offered by the short end of the yield curve, we find that all the T-bills (1 year or less) are currently offering yields greater than the RRP rate. ![](https://www.datocms-assets.com/56652/1685729809-10.png?auto=format) This has led to growing optimism that the financing of the freshly issued t-bills won’t lead to a liquidity squeeze in the financial system. This stems from the possibility that the money market funds could step in and finance these t-bills using cash from the Reverse Repo Program facility, rather than relying on commercial banks that would have to deplete their reserves, thus staving off a sudden liquidity crunch. In light of this, investors seem to have taken a more hopeful stance, as evidenced by the recent rally in equities, despite the ongoing concerns around the debt ceiling and liquidity dynamics. The Nasdaq and S&P 500 indexes have persisted in their upward trajectories this week, continuing the impressive year-to-date rallies of 33.2% and 10.4% respectively.  Leading this rally in the S&P 500 has been the tech sector, fueled by the burgeoning excitement around AI. The largest 5 tech stocks now make up 20% of the index’s market cap. The gap between the returns of the equal-weighted and the market cap-weighted S&P 500, indicative of big tech’s dominance, has never been more pronounced.  ![](https://www.datocms-assets.com/56652/1685729848-11.png?auto=format) Some investors are voicing their concerns about the current lack of market breadth. They’re questioning the robustness and the sustainability of the current equity rally, but the evidence appears to be a mixed bag. Let’s delve into it a bit. On the one hand, there does appear to be a correlation between S&P 500 forward returns and market breadth when looking at the percentage of S&P 500 stocks trading above their 200-Day Moving Averages. Today, the number of S&P 500 stocks trading above their 200-Day Moving Averages stands at around 42%. ![](https://www.datocms-assets.com/56652/1685729885-12.png?auto=format) Financial Times But on the other hand, we have heard this story before. As recently as 2020, market participants were concerned about the lack of breadth in the stock market. Below is one of several headlines from around that time. ![](https://www.datocms-assets.com/56652/1685729926-13.png?auto=format) The article highlights how Goldman Sachs previously reported its unease about the potential weaknesses in the market. Their concern at the time was primarily due to the perceived dominance of Big Tech stocks in driving the overall index returns.  Fast forward to today, and the five tech behemoths mentioned in that piece have not faltered like Goldman Sachs expected, delivering an average return of 73.2% since the article was published. ![](https://www.datocms-assets.com/56652/1685729959-14.png?auto=format) Digging deeper into the data, we find an interesting pattern: a select group of high-performing stocks have often been the engine behind historical market returns. Take, for instance, a study published by JP Morgan that analyzed the distribution of returns for the Russell 3000 Index from 1980 to 2014. The findings showed that 40% of all the stock components lost more than 70% of their value and never recovered. To put this into perspective, nearly all of the Russell 3000’s returns in that 34-year time period came from only 7% of the companies that outperformed all the others by two standard deviations. This insight underscores a crucial market truth: tail drives everything. Right now, that tail is big tech and particularly AI. This was never more evident than in the meteoric rise in Nvidia stock price, which is now up 169% YTD, briefly becoming only the 5th company ever to cross $1 trillion in market cap. In recent years, the price of Bitcoin has tracked closely to other long-duration assets like tech stocks, suggesting that Bitcoin’s price may be lagging them right now. But even more intriguing, is the comparison between the valuations of a single tech stock and Bitcoin today, as depicted in the chart below.  ![](https://www.datocms-assets.com/56652/1685730003-15.png?auto=format) Dan Tapiero The fact that one semiconductor company has increased its market cap $618 billion in 2023 alone, greater than the entire market cap of Bitcoin, potentially the monetary protocol of the future, highlights just how early we are. It serves as a reminder to zoom out when it comes to Bitcoin’s performance. Bitcoin has been trading in a range between $26k and $28k since early May. But when looking at the monthly chart, Bitcoin is clearly in a bullish breakout similar to what we observed before major bull markets in 2016 and 2019. ![](https://www.datocms-assets.com/56652/1685730046-16.png?auto=format) Overall, there are some potential green shoots out there for Bitcoin in the short term. First, there is the resolution of the debt ceiling drama – especially if the liquidity dynamics remain positive in its aftermath. Secondly, inflation data has continued to roll over. Thirdly, the unemployment rate has risen to 3.7%, which has resulted in the market now ascribing a 65% probability of a Fed pause at its next FOMC meeting, which could stoke animal spirits further. ![](https://www.datocms-assets.com/56652/1685730074-17.png?auto=format) One consideration to keep in mind is the very animal spirits that could trigger a rise in asset prices, can also inflame inflation. This is precisely what the Fed aims to avoid. In a potential domino effect, asset prices could rise, inflation could bounce, and interest rates could increase just as the Treasury is gearing up to issue $1 trillion in fresh debt. The Fed may have no choice but to tighten interest rates further, aiming to tighten financial conditions to quell demand and bring inflation under control.  Taking a step back, it seems we’re at an inflection point in the market. But despite the immediate uncertainty, the broader picture remains quite clear. The recurring drama around the debt ceiling, which unfolds every few years, serves as a stark reminder that we’ve crossed the Rubicon concerning our debt problem. Politicians will continue to spend money they don’t have to paper over problems now, creating bigger ones for future generations to grapple with.  Amid this backdrop, Bitcoin stands as a beacon of change. It offers a novel monetary system that avoids the fragility of the debt-based traditional financial system. As our leaders continue to postpone confronting the debt issue, Bitcoin is likely to reap the benefits. The continued deficit spending boosts Bitcoin’s long-term prospects, as it steadily carves out its niche as an alternative monetary system grounded on the principles of sound money.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1685730113-18.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # BitcoinIRA or Swan Bitcoin IRA? Top Things to Know in 2026 URL: https://www.swanbitcoin.com/industry/bitcoin-ira-fees/ In this guide, we uncover BitcoinIRA fees and expose hidden costs and complex jargon. We’ll go over BitcoinIRA custodial, management, onboarding, trading, and security fees. --- **Drew** · June 1, 2024 · Updated December 23, 2025 Bitcoin and crypto IRAs have become a big deal for millions of American's planning for retirement. So, how does BitcoinIRA compare to a Swan Bitcoin IRA in 2026? ### Fees Swan Bitcoin IRA has significantly lower fees than BitcoinIRA. That difference will add up to be a significant amount over time. #### Swan Bitcoin IRA - 0.02% Assets on Platform (AOP) per month, $20 minimum - 1% fee for buying and selling Bitcoin in your IRA  #### BitcoinIRA - 0.08% Assets on Platform per month - 2% fee for buying and selling Bitcoin in your IRA ### BitcoinIRA Promotes Risky Altcoins for Your IRA Despite branding itself as a Bitcoin IRA company, BitcoinIRA [promotes](https://bitcoinira.com/live-pricing) +60 cryptocurrencies and alternative assets within its crypto IRA platform. Altcoins introduce layers of risk that are fundamentally misaligned with long-term retirement planning. Most are venture-style experiments, characterized by changing monetary policies, opaque governance, regulatory uncertainty, and incentive structures that favor insiders over long-term holders. Their supply can be altered, their rules rewritten, and their value diluted over time—often without meaningful recourse for investors. In a retirement account designed to preserve purchasing power across decades, these risks compound quietly. ### Swan is Bitcoin-only At Swan, we focus on Bitcoin because it is singular: fixed supply, decentralized, leaderless, and built to outlast political cycles, technological fads, and financial intermediaries. Long-term wealth requires durability, not optionality. We believe Bitcoin is fundamentally different from crypto ,and it's the only responsible recommendation for your long-term investments, like an IRA ### A Clear Choice for Long-Term Bitcoin Savers When choosing a Bitcoin IRA, the question is not just about fees—it is about incentives, asset quality, and long-term alignment. Retirement accounts reward patience, discipline, and durability. They are not the place for financial experimentation or assets whose rules can change over time. Swan is built for long-term Bitcoin ownership. We focus on real Bitcoin, transparent pricing, and structures designed to compound over decades, not products optimized for churn, complexity, or optionality. For investors who view Bitcoin as a once-in-a-generation monetary asset and want to hold it with conviction into retirement, simplicity and integrity matter. If you are evaluating where to hold Bitcoin for the long run, choose the platform that treats Bitcoin as savings, not speculation. Choose the company built to steward Bitcoin across generations. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Three Innovations Being Built on Bitcoin Today URL: https://www.swanbitcoin.com/industry/3-innovations-being-built-on-bitcoin-today/ The Bitcoin ecosystem is a hotbed of continuous developments, pushing the boundaries of what is possible with this transformative technology. --- **Sam Callahan** · June 14, 2023 · Updated July 3, 2024 When Satoshi Nakamoto introduced Bitcoin to the world in 2008, it was presented as a peer-to-peer electronic cash system, simple in its construct and grand in its vision. This groundbreaking invention, based on the principles of decentralization, immutability, and transparency, brought a revolution to money itself. However, many often overlook the profound innovation that continues to evolve within the Bitcoin ecosystem, and a misconception has gained ground that there is a stagnation in Bitcoin’s development process. Bitcoin’s design, at its inception, was simplistic by design – but this was a deliberate and strategic move. Gall’s Law, a rule of thumb in systems theory and software development that emphasizes simplicity and incremental development, states: *"A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over with a working, simple system."* The early developers of Bitcoin certainly had Gall’s Law in mind when creating the Bitcoin protocol. It has worked since the Genesis block and has never stopped working since. The simplicity of Bitcoin laid a robust foundation, emphasizing security and resilience, thereby allowing a secure, decentralized network to establish itself without overbearing complexity. In a way, Bitcoin’s core protocol is akin to the Internet Protocol (IP) - minimalistic yet enabling layers of complexity to be built on top. Much like the suite of protocols built upon IP, such as TCP/IP, HTTP, SMTP, and more. Contrary to popular belief, Bitcoin’s simple design does not equate to stagnation; instead, it has acted as a springboard for innovative developments and upgrades. Over time, Bitcoin has evolved and become more complex. We have seen the addition of new features and systems layered on top of the core protocol. Examples include the introduction of Segregated Witness (SegWit), which led to the creation of the Lightning Network, a second-layer solution that enables fast, low-cost transactions; the Liquid Network, which enhances privacy and enables token issuance; and Taproot, which allows for more smart contract functionality and improves privacy. With each new upgrade, a wave of developers and entrepreneurs soon follow, bringing about new products and services to the Bitcoin ecosystem. Today, we are seeing the rise of new companies using Bitcoin and its second-layer protocols in exciting ways never seen before, pushing the boundaries of what’s possible with this new technology. In this piece, we will highlight three companies innovating on Bitcoin and Lightning today to show how Bitcoin continues to evolve, adapt, and maintain its place at the forefront of the cryptocurrency world. ### 1.) Fedi The first company I’d like to explore is Fedi. It is the first Bitcoin wallet being built that’s powered by the Fedimint protocol and taking into account the human experience – mainly that humans trust those closest to them the most. Fedimint is a new protocol that allows individuals to form groups to manage and secure each other’s Bitcoin. Fedi is a groundbreaking innovation in the world of Bitcoin custody, introducing a middle-ground solution between custodial storage with a third party and the autonomy of self-custody. ![](https://www.datocms-assets.com/56652/1686623713-01-spectrum-of-custody.png?auto=format) Fedimint.org Fedimint represents a form of collaborative custody tailored to individuals who prefer not to relinquish their Bitcoin to large, corporate, custodial services but rather, to entrust their Bitcoin to individuals in their community whom they trust. It removes the technical challenges and risks associated with individuals running their own nodes and holding their own keys while reducing the need to trust a centralized third party in the process. Fedimint offers tradeoffs between costs, privacy, ease of use, and security. ![](https://www.datocms-assets.com/56652/1686623852-02-comparison-custody-options.png?auto=format) Fedi.xyz At the heart of Fedimint lies a simple yet brilliant strategy that addresses the custody challenge head-on. It recognizes that within every group, some individuals are more tech-savvy than others. So, these *“group guardians”* step up to manage the Bitcoin wallets and handle transactions while the rest of the group enjoys a seamless, user-friendly app experience on Fedi. Picture this: Your tech-savvy cousin helping your grandma manage her Bitcoin – that’s Fedimint for you! ![](https://www.datocms-assets.com/56652/1686623971-03-fedimint-power-federated-os.png?auto=format) Microstrategy World 2023 Fedimint combines three technologies to achieve its goals shown below: ![](https://www.datocms-assets.com/56652/1686624249-04-rtn-graphic.png?auto=format) Fedimint.org Federations and chaumian e-cash mints are used to overcome some of the challenges currently facing users regarding custody. A *“Federation”* is a group of individuals that pool their Bitcoin together and mint Bitcoin-backed tokens (fedimint-Bitcoin) to allow for intra-community transactions that are both private and fast. These fedimint-Bitcoin can then be swapped for bitcoin through its integration with Lightning Network for transactions outside of the federation. The guardians within the Federation assume the responsibility of maintaining the community’s multi-signature wallet and authorizing the spending of Bitcoin within and outside the Federation. Federations distribute the group’s Bitcoin custody amongst all guardians, ensuring a majority agreement is required for transactions and that the system can handle minor guardian failures. The chaumian e-cash mints allow guardians to process transactions on behalf of any group member without compromising their privacy. By using chaumian e-cash mints, a guardian will not know the identity or amount that a member of the federation is sending in each transaction, preserving their privacy. Here is a graphic that highlights how Fedimint transactions work inside a Federation: ![](https://www.datocms-assets.com/56652/1686624302-05-fedimint.png?auto=format) Fedimint.org Fedi is a wallet that introduces a new approach to custody, privacy, and transaction scalability rooted in a community's trust and bond. Fedi increases access to dollars and Bitcoin and allows 24/7 offline private transfers within a federation. ![](https://www.datocms-assets.com/56652/1686624332-06-wallet.png?auto=format) By focusing on community-based custody and the Lightning Network, Fedi offers a unique solution to problems of cost, custody, privacy, and security. Using guardians as custodial entities brings an element of localized trust, making Fedi an appealing product for individuals who may not have access to traditional financial services, such as those in the Global South. But Fedi has more ambitious goals than just being a wallet. It aims to enable a full-fledged federated operating system where users maintain control over their data and money. This technology will enable private chat within a federation with seamless in-chat transfers powered by the Lightning Network. This would all be under the power and control of the federation instead of a third-party company that can lose or abuse user data. No longer does one have to trust a company like Apple to protect their data; now, they can trust those in their community that they already trust. Fedi also has a functional browser that can host any website on the internet. It can host company websites directly in a federation, which, once again, protects the users' data. Also, if the company website supports the Lightning Network, Fedi can integrate with these seamlessly and allow for Bitcoin transfers between Fedi and the company website. ![](https://www.datocms-assets.com/56652/1686624365-08-sites.png?auto=format) As you can see, Fedi is not just a wallet. It plans to provide a better operating system for users on the Internet that departs from having to trust third-parties to act benevolently with their data and money. It gives power back to the user through Bitcoin and federations. There are some tradeoffs with this model that need to be pointed out. The risks associated with using a federation to manage one's Bitcoin are five-fold: ![](https://www.datocms-assets.com/56652/1686624654-09-rtn-graphic.png?auto=format) Fedimint.org Despite these tradeoffs, Fedi represents an innovative approach to custody and privacy and appears well-positioned to transform the digital landscape. Fedi has a big vision for what it plans to build using the Fedimint protocol. It aims to scale the Lightning Network while providing a new custody solution to improve access to Bitcoin for individuals worldwide. All in all, it is an exciting, brand-new custodial solution and infrastructure being built that aims to drive Bitcoin adoption to those who need it the most. You can test the alpha version of the Fedi wallet [here](https://www.fedi.xyz/builders). Below is an image of the home screen. ![](https://www.datocms-assets.com/56652/1686624674-10-rtn-graphic.png?auto=format) ### 2.) Amboss Technologies Amboss is a leading analytics provider for the Bitcoin Lightning Network. Its analytics and data visualizations help users understand what is happening on their Lightning nodes. The firm supports merchants and consumers in identifying optimal peers and payment paths based on cost, reliability, reputation, and enterprise-grade risk management. Lightning offers several benefits, like cheap, fast payments while still utilizing. Bitcoin's underlying security and decentralization, but one notable challenge is associated with it. When someone opens a Lightning channel with another party, the balance of the channel is entirely on their side. They can pay the other party as much as they commit to the channel. However, the other party cannot immediately pay them back through that channel because all the liquidity is on their side. This is known as the *"inbound liquidity problem."* Now, suppose you're a business that primarily receives payments, and you've just set up a Lightning node. If you open channels to others, you can send payments but can't accept them. This means others can only pay you via those channels once you've spent some Bitcoin through them, which isn't helpful for a business looking to receive payments. They have all the outbound liquidity but no inbound liquidity. To overcome this, a business would need others to open channels, giving them inbound liquidity. Or alternatively, they could use a service that allows them to *"buy"* inbound liquidity where another user opens a channel to you for a fee. This is where Amboss stepped in and created Magma, a peer-to-peer Lightning Channel marketplace to help businesses and lightning users overcome the inbound liquidity problem. ![](https://www.datocms-assets.com/56652/1686624729-11-magma.png?auto=format) amboss.space With Magma, a business or user can see how much another node operator will charge to take their Bitcoin savings and allocate them to open a new channel and provide that inbound liquidity. On top of that, they can review the reputation of that node operator to ensure they are receiving a high-quality channel to their node so they can receive the payments reliability. ![](https://www.datocms-assets.com/56652/1686624756-12-rtn-graphic.png?auto=format) amboss.space Magma essentially matches up people who are saving Bitcoin by running their own lightning infrastructure with people who need Bitcoin to receive payments. Since launching roughly a year ago, the liquidity deployed through Magma has nearly increased fivefold and now stands at 110.85 BTC. Node operators are incentivized to sell lightning channels to those that need inbound liquidity because they can earn a yield on their Bitcoin by opening Lightning channels to other businesses, corporations, and users. The exciting part is that node operators can take their Bitcoin and earn a return on it by opening up channels without ever giving up custody of their assets. These earnings come without having to trust any other party, only their own node infrastructure. This is a low-risk way to earn a yield on Bitcoin, and node operators can earn it while helping other users by providing them with needed inbound liquidity and increasing the utility of the overall payment network. Win-win-win. Amboss created a new reference rate recently dubbed LINER (Lightning Network Rate) from this data. In the press release announcing LINER, Amboss stated, *"LINER is similar to the LIBOR (London Interbank Offered Rate) in traditional finance, which is a benchmark interest rate for short-term loans between global banks, except LINER is free from credit risk. In other words, LINER is well-positioned to be an alternative to enterprises seeking exposure to Bitcoin without the credit risk that imploded CeFi yield platforms towards the end of 2022."* Founder of the Bitcoin Layer, Nik Bhatia, has long theorized about the possibility of a Lightning Reference Rate in his writings and had this to say about the announcement of LINER, *"LINER is a first-of-its-kind reference rate derived entirely from the Lightning Network adjacent to Bitcoin. Unlike traditional reference rates that are set by a central bank like the Fed, LINER and other LN-native rates are derived entirely by free market forces — the first step towards money markets unmanipulated by a central authority, much less fragile and prone to the booms and busts of the traditional monetary order. The first step toward building any active capital market is a regularly-published and updated yield curve to attract capital allocators. Amboss is taking the first step toward bringing this concept to reality, and bringing Bitcoin over LN one step closer to denominating the future of our world financial system."* The way LINER works is it is a dual-index that captures both sides of the market. On one side, there is LINER Cost which tells you what it costs for someone to get set up with some liquidity. On the other side of things, LINER Yield asks, what are people demanding to earn in yield for using their Bitcoin savings to open a new payment channel? Below is a reference rate for the actual cost of capital beginning to develop on the Lightning Network. The red line shows that it would cost a merchant around 3% APR to get bootstrapped with liquidity. Compared to traditional payment processors, this means that this merchant would save about 1% today and have zero chargeback risk if they used the Lightning network instead. ![](https://www.datocms-assets.com/56652/1686624816-13-rtn-graphic.png?auto=format) TIP The green line shows that node operators earned a range of 0-1% in yield in 2023 without giving up custody of their funds at any point for opening new payment channels with other users, merchants, and institutions. By having a Lightning benchmark rate available, users can now understand the return on investment for providing liquidity to the network with their savings and the opportunity cost for not doing so. This custodial risk-free reference rate could be the benchmark around which other capital markets, such as Bitcoin lending and investments, begin to evolve. This could lead to new financial innovation in the Bitcoin ecosystem. It all starts with the hard work of Amboss, which is building the infrastructure to drive Lightning adoption forward. Amboss is providing the data analytics and tools to make it happen and is making it easier for the Lightning Network to grow and for Bitcoin to scale. ### 3.) AnchorWatch The next innovative company in the Bitcoin space aims to take Bitcoin custody and insurance to the next level using miniscript - AnchorWatch. First, let's break down what miniscript is. When Satoshi invented Bitcoin, he also created a new programming language called Bitcoin Script. Bitcoin Script can be thought of as a list of instructions that enables someone to transact with their Bitcoin. These instructions involve providing a digital signature that matches the hashed public key to make it a valid transaction and then broadcasting those instructions to all the nodes in the network to validate that transaction. The simplest forms of Bitcoin Script are verifying single signatures and multi-signatures. However, with miniscript you can take it to another level. Miniscript is a programming language developed specifically for Bitcoin that makes it easier to create, analyze, and understand Bitcoin scripts. Think of it as a tool that simplifies and makes it safer to write rules or conditions for when and how a Bitcoin transaction can take place. To put it in even simpler terms, consider the example of a safe. The traditional way to unlock a safe is by using a key or entering a code. But what if you wanted more complex rules for opening it? Let's say it should open only between 9am to 5pm, or it requires two keys instead of one, or it could be opened by a master key after a specific date. That's where Miniscript comes in. It's like a set of Lego blocks where each block represents a specific rule or condition. You can assemble these blocks in various combinations to define the rules of your *"safe"* (in this case, a Bitcoin transaction) – and it ensures that you don't make mistakes while creating the rules. This allows for more flexibility and security in determining how your Bitcoins can be spent, making it a powerful tool for new forms of Bitcoin custody and management. AnchorWatch sees this as a potential game-changer regarding institutional custody and Bitcoin insurance. Today, insurance on Bitcoin custody is undercapitalized and does not take advantage of Bitcoin’s unique properties as programmable digital money. If you want insurance on your custodied Bitcoin today, many custodians offer insurance well below the total assets under their management. In other words, it is fractional reserve insurance, where the custodian would only be able to pay out some of its clients if they filed claims. On top of that, the way the insurance industry treats Bitcoin today is either a lot like gold in a vault, which poses centralization risks, or is custodied using Multi-Party Computation (MPC). MPC is a cryptographic technique where you separate a private key into different shards and store them in various locations with different parties. This way, no single party has full control over the Bitcoin. Instead, a certain number of these parties must come together and combine their shards to authorize a transaction. But MPC is not ideal because 1.) it's always connected to the Internet, posing cybersecurity risks, and 2.) It is ultimately dependent on the human processes and policy permissions on top of it, which can be exploited via the collusion of the parties in control. Miniscript takes custody to the next level and can help distribute the risk of custodying. As a result, Bitcoin could open the door for more institutional adoption. Miniscript allows one to program logic directly into the multi-sig setup itself. No more trusting human processes on top of a secure setup like MPC. One of the interesting things that Miniscript enables, and how it differs from traditional multi-sig schemes, is that it allows for one key to have priority over others - a master key. In other words, it enables a hierarchy of keys where the Bitcoin cannot move unless a specific key signs. It also allows for spending conditions associated with Bitcoin, such as timelock conditions. AnchorWatch CEO Rob Hamilton walked through an example in a tweet back in December: closely analyze the visual to the right shows a 2-of-3 miniscript setup between a customer, a custodian, and a lawyer. Below, Rob explains the spending conditions attached to the keys above and how this distributes risk because, after 100 blocks, the customer can unilaterally take her Bitcoin back if needed without the custodian or lawyer's signature. ![](https://www.datocms-assets.com/56652/1686624975-14-rh-tweet.png?auto=format) Rob describes this as *"layered security"* and that the customer has a *"sovereign veto,"* where they have ultimate control over the private keys after a certain amount of time has passed. The fact that miniscript allows one to distribute risk and then a customer no longer has to even trust the institutions they are working with after a certain period of time is a game-changer when it comes to institutional custody. ![](https://www.datocms-assets.com/56652/1686625018-15-rh-tweet.png?auto=format) Furthermore, it allows institutions to distribute risk amongst each other using Multi-Institutional Custody schemes. With miniscript, this is all possible. One can create sophisticated custody schemes, distribute the risk amongst various parties, and make custody extremely secure. On top of that, it can allow for new ways to think about insuring custodied Bitcoin. That's what AnchorWatch is working on. AnchorWatch has built a new wallet, Trident Wallet, that uses miniscript to create unique multi-sig setups for its clients. AnchorWatch plans to combine smart-contract on-chain governance via miniscript schemes, with off-chain compliance and monitoring to further de-risk custody for institutional clients. ![](https://www.datocms-assets.com/56652/1686625046-16-trident-wallet.png?auto=format) Given that Bitcoin is programmable money, Trident Wallet allows for first-of-its-kind insurance policies where AnchorWatch can never unilaterally move the money. Still, at the same time, the client can't move it without them signing off on it during the duration of the insurance policy. However, when the insurance policy ends, it can be programmed so that the Bitcoin becomes unlocked, and the client can withdraw their funds unilaterally. No longer does the client have to trust the insurance company. Ultimately, AnchorWatch plans to monetize like any other insurance company by collecting premiums, paying out claims, and netting the profit. Today, insurance companies are wary of getting involved in Bitcoin, given the various risks and the current state of custody solutions. But with miniscript, AnchorWatch can use it to decrease these risks, opening the door for more institutional adoption. It's companies like AnchorWatch that are going to make large pools of institutional capital finally comfortable allocating to Bitcoin in the future. ### Conclusion Bitcoin continues to inspire innovation far beyond its initial design. This is clearly evidenced in the work undertaken by companies such as Fedi, Amboss Technologies, and AnchorWatch. Fedi is bringing about a collaborative custody solution empowered by the Fedimint protocol and Lightning Network and aims to provide a new operating system that allows users to regain control of their data and money. Amboss Technologies is building liquidity marketplaces on the Lightning Network and creating the first Lightning Reference Rate, which could serve as a benchmark for Bitcoin financial products moving forward. And, AnchorWatch is utilizing the power of miniscripts to derisk custody and provide more robust insurance, hopefully attracting more institutional capital to the space. Far from stagnating, the Bitcoin ecosystem is a hotbed of continuous developments, and companies like these are at the forefront, pushing the boundaries of what is possible with this transformative technology. Their efforts reaffirm Bitcoin's ever-evolving nature and are prime examples of how new innovations will continue to emerge with time on the stable foundation that is the Bitcoin protocol. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Green Shoots and Lawsuits - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/green-shoots-and-lawsuits/ As investors become more optimistic about the state of the economy and asset prices, we’ll see if Bitcoin can join in on the party as it overcomes the regulatory calamities ensnaring the broader cryptocurrency industry. --- **Sam Callahan** · June 16, 2023 · Updated June 6, 2024 Last week started with a couple of bombshells as the SEC hit two of the largest cryptocurrency exchanges in the world, Binance and Coinbase, with lawsuits on back-to-back days. Coinbase has been charged with operating an unregistered securities exchange, broker, and clearing agency while offering unregistered securities via its staking-as-a-service products. The cryptocurrencies named explicitly in the complaint as securities were: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO. Coinbase CEO Brian Armstrong responded to the allegations in a tweet stating that Coinbase will contest the charges in court and deny any wrongdoing. ![](https://www.datocms-assets.com/56652/1686943638-1.png?auto=format) Coinbase's main defense seems to be that they attempted to meet with the SEC on multiple occasions to register, but the SEC refused to meet with them and provide a path for registration.  Furthermore, Coinbase argues that the SEC failed to provide clear guidelines distinguishing between what is and isn't deemed a security.  But is this really true? The SEC argues that they did provide clarity; Coinbase just didn't like it. This is evident in the communications between Coinbase and the SEC when it was registering to go public.  In [Coinbase's own S-1 filing](https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/699359de-d974-4ad9-b7f6-5031f2f432d3.pdf), it states, > "A particular crypto asset's status as a "security" in any relevant jurisdiction is subject to a high degree of uncertainty, and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition... Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a supported crypto asset currently offered, sold, or traded on our platform is a "security" under applicable laws." Additionally, the SEC responded to the draft of Coinbase's S-1 filing in [this letter](https://www.sec.gov/Archives/edgar/data/1679788/000000000020011705/filename1.pdf), where it instructed Coinbase to change the language of the filing to clarify that there are risks to listing these digital assets that may be considered unregistered securities.  The letter states: > "We note your disclosure that "[t]he test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict." Please emphasize that this test is a legal test and is different than your scoring model, which is not a legal standard and only a risk-based assessment that does not preclude legal or regulatory action based on the presence of a security. *We note your disclosure that:* > "[p]ublic statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form)." Please revise this risk factor to clarify that Bitcoin and Ether are the only digital assets as to which senior officials at the SEC have publicly expressed such a view, and further clarify that as to all other digital assets there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the predictions of your scoring model." The *"scoring model"* to which the SEC refers is the Crypto Rating Council (CRC). Coinbase, in collaboration with other institutions, created the CRC, intending to establish a rating standard to determine whether a digital asset qualifies as a security. Instead of employing the Howey Test – also known as the rule of law – Coinbase applied this self-created rating system to each digital asset before deciding to list it on its platform.  The SEC explicitly stated at the time of Coinbase's public registration that this rating system does not constitute a legal test. The SEC alleges that Coinbase fully understood the risks of listing these digital assets apart from Bitcoin, which all lacked regulatory clarity, and consciously chose to list them anyway using their own scoring system. Coinbase believed this scoring system would offer some regulatory protection and gave them the confidence to list these digital assets, even when some of them were considered *"high risk"* according to their scoring model. The SEC states in the complaint: ![](https://www.datocms-assets.com/56652/1686943691-2.png?auto=format) Today, Coinbase lists over 250 digital assets despite nearly all lacking regulatory clarity. Furthermore, Coinbase markets these *“other crypto assets”* on its social media accounts and website. These advertisements failed to disclose the tradeoffs between Bitcoin and these inferior cryptocurrencies. Often, Coinbase falsely marketed them as secure, decentralized, and good long-term investments when they proved to be anything but. It’s clear why Coinbase markets these digital assets to its clients. These *“other crypto assets”* made up nearly half of Coinbase’s trading volume and transaction revenue in Q1 2023. ![](https://www.datocms-assets.com/56652/1686943865-3.png?auto=format) Part of the reason they felt compelled to take this risk was not just the increased revenues but also because Coinbase began feeling pressure to list more tokens after it began losing market share in 2021. Coinbase’s Q1 2021 10-Q filing reports how it was losing market share to competition that is *“supporting certain crypto assets that we do not currently support.”* ![](https://www.datocms-assets.com/56652/1686943893-4.png?auto=format) That main competition was Binance, which exploded onto the scene in 2017. Part of Binance’s user acquisition strategy revolved around listing every digital asset under the sun without regard to securities laws. After just over a year of operation, Binance had already listed 151 coins on its platform, compared to Coinbase’s nine. As a result, it’s unsurprising that Binance faces the same charges as Coinbase in its SEC complaint. While Coinbase can position itself as a victim and criticize the SEC’s regulation-by-enforcement approach, it’s clear that it assumed regulatory risks by listing these digital assets in response to heightened competition and the allure of quick profits. Following this regulatory action, Coinbase’s stock plunged nearly -10%. Since its IPO, Coinbase’s stock is now down -81.4% compared to Bitcoin, down -55.4% over that same timeframe. ![](https://www.datocms-assets.com/56652/1686943923-5.png?auto=format) The chart above highlights how Coinbase stock could have been a better substitute for owning spot bitcoin. Any investor who used this stock as a proxy to gain exposure to Bitcoin is learning the harsh lesson that there is added regulatory and business risk when holding Coinbase equity. Such risks simply do not exist when investing directly in spot Bitcoin. Binance was also charged with operating as an unregistered exchange, broker, and clearing agency, and I imagine it won’t be difficult for the SEC to substantiate this given the internal messages it obtained: ![](https://www.datocms-assets.com/56652/1686943961-6.png?auto=format) Binance, however, faces more severe allegations in its SEC complaint than Coinbase. The company has been charged with issuing its unregistered securities with its BNB and BUSD tokens. It’s also accused of misleading clients by commingling and diverting their funds to offshore trading firms owned and controlled by Binance CEO CZ, who allowed these firms to engage in manipulative trading, artificially inflating the platform’s trading volumes. This nefarious activity is what distinguishes the Binance complaint from the Coinbase one. If this situation reminds you of the charges laid against FTX and Alameda Research earlier in the year, you’re not alone. The similarities between what has been disclosed in the SEC’s complaint against Binance and FTX are striking. ![](https://www.datocms-assets.com/56652/1686944000-7.png?auto=format) The SEC has now requested that the courts freeze Binance’s assets and appoint a receiver to liquidate US-based holdings. ![](https://www.datocms-assets.com/56652/1686944024-8.png?auto=format) This action is likely based on the suspicion that Binance is hiding the state of its balance sheet or the real location of client funds. The move signals the SEC’s concern about the activities uncovered in their investigation of Binance. The SEC’s charges against Binance, which included market manipulation and commingling of user funds, come nearly a month after a separate CFTC lawsuit exposed potential violations of Bank Secrecy Laws. It also revealed a lack of internal controls that facilitated illicit activity, including the involvement of terrorist groups on the platform. ![](https://www.datocms-assets.com/56652/1686944057-9.png?auto=format) The point here is that this SEC complaint could become the least of Binance’s worries, given the severity of these charges. It is well known that [the DOJ has been investigating](https://www.coindesk.com/business/2021/05/13/doj-irs-investigating-crypto-exchange-binance-report/) the offshore exchange for years.  Currently, the potential consequences of the SEC and CFTC complaints are: 1. *Cessation of Binance.US operations* 2. *Disgorgement* 3. *Fines* If the DOJ decides to act against Binance, we could be discussing criminal charges and potential jail time for those involved, threatening not just Binance.US, but the entire international exchange too.  The market reacted in various ways in response to these regulatory developments. There was considerable volatility as the market absorbed the news.  Many of the cryptocurrencies that were specifically named in the complaint as unregistered securities saw massive sell-offs when priced against Bitcoin. These cryptocurrencies are down an average of -26% against Bitcoin since the lawsuits were made public. ![](https://www.datocms-assets.com/56652/1686944098-10.png?auto=format) Upon examining Bitcoin’s market capitalization in relation to the broader cryptocurrency market capitalization outside Ethereum, Bitcoin is up over 10% since the SEC complaints were announced. This same metric is now up 50% in 2023 as Bitcoin continues to take market share from the rest of the cryptocurrency industry, which is embroiled in regulatory uncertainty. ![](https://www.datocms-assets.com/56652/1686944130-11.png?auto=format) Given that Bitcoin, unlike other cryptocurrencies, has no issuer or founding team and is sufficiently decentralized to be classified as a commodity, it does not pass the Howey Test and is thus categorically not a security. Increasingly, investors are selling off other cryptocurrencies for fiat or Bitcoin as they understand this fact. Compounding the problems for these other cryptocurrencies is that they continue to be delisted from major exchanges and platforms, exacerbating their liquidity woes. Binance.US announced that it would be delisting over 100 trading pairs after the SEC complaint was announced. ![](https://www.datocms-assets.com/56652/1686944232-12.png?auto=format) Binance Popular trading platforms, eToro and Robinhood, similarly delisted these cryptocurrencies in response to the regulatory actions. ![](https://www.datocms-assets.com/56652/1686944259-13.png?auto=format) Celsius, currently going through its own bankruptcy proceedings, also announced that it will sell all the altcoins it holds for Bitcoin and Ethereum starting on July 1st. ![](https://www.datocms-assets.com/56652/1686944289-14.png?auto=format) This could result in around $215 million flowing from these other cryptocurrencies and into Bitcoin and Ethereum. ![](https://www.datocms-assets.com/56652/1686944311-15.png?auto=format) The prices and liquidity of these cryptocurrencies will likely continue to come under pressure as more platforms delist them to protect themselves against regulatory enforcement actions. Another trend we observe in response to this news is a spike in Bitcoin withdrawals from Binance as users withdraw their Bitcoin from the embattled exchange. ![](https://www.datocms-assets.com/56652/1686944476-16.png?auto=format) Seeing users withdraw their Bitcoin from this offshore exchange, now charged with defrauding them, is a positive development.  ***Bitcoin Decouples From Equities*** Bitcoin’s price wasn’t immune to the volatility around these regulatory events. Bitcoin initially dropped on the news before spiking back up and has now found some support at $25,000. This occurs as other risk assets, such as the Nasdaq, continue to rise. Due to the endogenous events in the cryptocurrency industry, Bitcoin has decoupled from the Nasdaq after being positively correlated to the index over the last couple of years. Since Bitcoin topped out above $30,000 in May, the Nasdaq has rallied by +14.9%, while Bitcoin has fallen by -8.6%. ![](https://www.datocms-assets.com/56652/1686944515-17.png?auto=format) Over the past couple of weeks, we have seen equities continue to rally in the wake of the debt ceiling being lifted and a U.S. default being narrowly avoided. Since then, the market has responded to economic data points and a pause in the Fed’s rate hikes, providing further green shoots for the stock market. The S&P 500 is now up over 20% from its low in October of the previous year, which officially marks a new bull market. ![](https://www.datocms-assets.com/56652/1686944558-18.png?auto=format) So far in June, the Russell 2000 has outperformed the S&P 500 and Nasdaq by over 2%. This shows that the stock market rally is broadening, alleviating concerns over the lack of market breadth in this recent move. ![](https://www.datocms-assets.com/56652/1686944588-19.png?auto=format) The rally in stocks has continued, leaving stock market bears in disbelief. This has caused some institutions to rethink their expectations of a recession in 2023. Goldman Sachs revised the probability of a recession downwards: ![](https://www.datocms-assets.com/56652/1686944619-20.png?auto=format) The Institute of International Finance was also in the headlines changing its tune: ![](https://www.datocms-assets.com/56652/1686944640-21.png?auto=format) The sentiment is noticeably shifting in the markets as investors attribute a greater probability to the *“soft landing”* narrative and start believing that this rally is more than just the longest bear market rally in history (the second-longest was seven months in 1938). This rise in equity prices can be attributed to three bullish developments in the last month: 1. *The resolution of the debt ceiling drama* 2. *A continuing decrease in inflation metrics* 3. *The Fed pausing interest rate hikes for the first time in 15 months* After the US narrowly avoided defaulting on its debt obligations, the second tailwind for asset prices came when headline CPI came in below expectations at 4.0% YoY, and core CPI services ex-housing dropped to 4.6% YoY, its slowest pace since February 2022. The rate of change of this CPI decline since it peaked in June 2022 is now one of the fastest in history. The reported inflation in May was mostly related to rises in housing prices, higher used car prices, and food prices.  The shelter component continues to support CPI metrics. Given that Owner’s Equivalent Rent operates with a lag, and we know that rent prices have been in decline, we should expect this to decrease the headline number in the coming months. ![](https://www.datocms-assets.com/56652/1686944686-22.png?auto=format) Lastly, we have seen the PPI fall off a cliff. After peaking at around 11% YoY last year, it has declined for the 11th consecutive month and sits at 1.1% YoY. It’s important to note that, historically, the PPI typically leads the CPI. ![](https://www.datocms-assets.com/56652/1686944711-23.png?auto=format) These signs of easing inflation ultimately gave the Fed room to pause interest rate hikes for the first time since it began raising them in March 2022. When looking at the Fed policy over the last 20 years, one can observe that a Fed pause after a hiking cycle has never been followed by additional rate hikes, despite the language from Fed officials that more rate hikes are on the table at future meetings. ![](https://www.datocms-assets.com/56652/1686944749-24.png?auto=format) Investors viewed this pause as a positive development, and equities soared. Historically, on average, the S&P 500 has returned 14% one year after the final Fed hike, based on data from 1954. ![](https://www.datocms-assets.com/56652/1686944774-25.png?auto=format) As investors become more optimistic about the state of the economy and asset prices, we'll see if Bitcoin can join in on the party as it overcomes the regulatory calamities ensnaring the broader cryptocurrency industry. One thing is certain: the long-term fiscal problem, which will almost certainly require greater deficit spending and the Fed monetizing that spending one day, remains an unsolved issue. Ultimately, this makes Bitcoin's value proposition as a decentralized store of value so attractive. The most interesting line of questioning at the [FOMC press conference](https://twitter.com/JoeConsorti/status/1669158354839642112?s=20) arose when Edward Lawrence of Fox Business asked Fed Chairman Jerome Powell about the CBO projections regarding the federal debt and deficit and whether he would discuss fiscal responsibility with policymakers. Jerome Powell responded, saying, *"We don't do that. I will say we are on an unsustainable fiscal path, which needs to be addressed over time."* Edward Lawrence: *"Is there any conversation around the Federal Reserve financing some of that debt coming down the pipeline?"* Jerome Powell: *"No, under no circumstances."* This exchange highlighted the elephant in the room - our fiscal situation.  Who will be buying all of our Treasuries that need to be issued in the future if foreigners and commercial banks are no longer buying?  The answer is the Federal Reserve. So, despite Jerome Powell stating that the Fed isn't even considering financing the government debt *"under any circumstances,"* if it becomes an issue of financial stability or national security, then this will happen.  The Fed will once again step in to finance the debt to prevent yields from spiking and our government from becoming insolvent. When you zoom out, it becomes clear who will end up buying all these treasuries: ![](https://www.datocms-assets.com/56652/1686944904-26.png?auto=format) And in that scenario, the dollar will ultimately be sacrificed once again. Yellen all but admitted the long-term trend of the dollar in a recent hearing: [![](https://www.datocms-assets.com/56652/1686944944-27.png?auto=format)](https://twitter.com/AutismCapital/status/1668694000512159744?s=20) Not only will the dollar be sacrificed in the future when the accommodative fiscal and monetary policies inevitably return when the debt problem rises to the surface once again, but it will also be harmed as it continues to be weaponized by the U.S. government.  This will prompt foreign governments and investors to seek alternative reserve assets to diversify that risk. Bitcoin represents a neutral reserve asset that is impossible to debase. As the world continues down this path of monetary debasement and currency wars, Bitcoin will increasingly become an attractive reserve asset for individuals and governments. The U.S. government has a spending problem. The federal deficit has continued to explode this year, already up $2.1 trillion over the last 12 months. Although the price of Bitcoin is getting dragged down by regulatory attacks against the broader cryptocurrency industry, it’s essential not to lose sight of the bigger picture. Bitcoin is the one word you won’t find in these lawsuits because it is unique amongst a sea of crypto-pretenders.  It is a scarce, decentralized store of value.  Governments and central banks will have to print again due to the unsustainable fiscal path we’re currently walking on, and when that time comes, Bitcoin, as the world’s only digital hard money, will likely shine.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1686944989-28.png?auto=format) Tradingview, Prices as of 6/16/23 As the regulatory landscape shifts, it’s wise for investors to consider safeguarding their holdings by moving them from Coinbase into secure cold storage. Additionally, ***converting altcoins to Bitcoin and opening an account with a Bitcoin-only company*** could prove to be a strategic move in light of these changes. Your instinct may be to convert your Bitcoin to dollars before withdrawing your money from Coinbase. But it’s worth consid­ering [the reasons why Bitcoin is the best money](https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1) in human history. You don’t want to part with such a precious asset lightly.  ***** UPDATE: It was*** [***reported n July 31st***](https://www.ft.com/content/1f873dd5-df8f-4cfc-bb21-ef83ed11fb4d)***, ahead of initiating legal proceedings against the exchange, the US Securities and Exchange Commission instructed Coinbase to halt trading in all cryptocurrencies except for Bitcoin. This move indicates the agency’s intention to exert regulatory jurisdiction over a broader section of the market.*** ***According to Brian Armstrong, the CEO of Coinbase, the SEC provided this recommendation before taking legal action against the company, which is listed on Nasdaq, for its failure to register as a broker.*** ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # The Essence of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/essence-of-bitcoin/ Bitcoin’s essence is that it is a good idea, for the good of humanity, whose time has come, and which cannot be stopped. --- **Tomer Strolight** · June 22, 2023 · Updated June 27, 2024 ### Getting to the Essence of a Matter If you were to ask the question *“What is man?”* you might get a joking reply like *“mostly water.”* Such an answer wouldn’t be incorrect, but it would hardly be useful. It wouldn’t even tell you the difference between a man and a watermelon, or a cup of tea, both of which are also mostly water. To be useful, you would need to go deeper and ask the question *“What is the essence of man?”* That’s a discussion that has been ongoing for thousands of years. I’ve personally thought about and discussed this topic a great deal, in large part because I want to understand what it is I am. I’ve also been doing a lot of thinking about the question of *“What is the essence of Bitcoin?”*. I’ve been asking this because I am fascinated by Bitcoin. However, I also think Bitcoin is a reflection of some very particular things about man and his essence, so asking questions about Bitcoin actually provides answers about the essence of man and mankind as well. ### Essence Lies in Understanding Fundamental Distinctions Between Things To explore the essences of some of the concepts we’ll be discussing, I’m going to rely heavily on using hyphenation followed by the word *“like”.* For example, if I said something is *“life-like”*, I am specifically saying that it is not exactly alive, but that it is more like living things than non-living things. A lot more. Why can’t I just say something like Bitcoin is or is not alive? Because a term like *“life”* applies to things on Earth we are very familiar with and Bitcoin is different. While there does exist *“edge cases”* of what may or may not be alive, like viruses, it is mostly easy to look around at things and see what is alive, what was once alive but is now dead, and what was never and will never be alive. By the way, this article won’t talk about whether or not Bitcoin is life-like. That’s not the essence we’re after. (If you do happen to be interested in a piece about how Bitcoin is life-like, please read *“Hello, I am Bitcoin”).* ### Part 1: Nature Versus Civilization #### Humans Operate in Two Realms: Ecology and Economy Since we've already mentioned *"life-like,"* let's talk about something life-like. A company is life-like. It is founded (born), operates (lives), grows, adapts, and learns. It may give birth to other companies and merge with other companies (which in life is something slime molds do, but not humans). It cooperates with other companies and competes with others – sometimes to the bitter end (death). It is a process that consumes resources and produces something. It eventually comes to a demise — a death-like event. A company even has *"organ-like"* departments, each performing a particular function necessary for its overall health. A company consumes inputs and converts them into outputs which are part of the economy. This reveals another entity, the economy, which we could describe as *"ecosystem-like."* As companies are to living things, an economy is to a whole ecosystem. We can view a company's inputs as *"food-like"* and its process of making whatever it is that it makes as *"digestion-like"* and *"metabolization-like."* We can view the money it spends as being *"expending-energy-like"* and its storing of money as *"storing-of-energy-like."* In the actual life realm — the ecological one, the ecosystem — living things use energy to try to capture more energy than they are using because that is how they survive. In the economic realm, companies try to capture more money than they are using it because that is how they survive. Also, in the economy, it's not just companies that store energy and expend it using money. Humans do it too. Humans dwell in both the ecosystem of living organisms and within the economy. Those are the two realms we try to survive and thrive within. We store and expend actual energy in the ecosystem, and we store and spend monetary energy in the economy. We humans straddle an existence in both realms — the ecological realm and the economic realm. In the ecological realm real energy is energy. In the economic realm, money is energy-like. But money isn’t exactly like energy. Money is just an agreement to exchange actual energy. A pile of money doesn’t do any work itself. It isn’t energy. Only people and companies who accept money in exchange for work do the actual work. Put a pile of money in the middle of a table and ask it to mow the lawn, and nothing will happen. But ask a person to mow the lawn and offer them some of that money, and they just might agree to it. #### The Essential Difference Between the Two Realms — The Law of the Jungle vs. The Law of the Economy Money isn’t actual energy. It is an offering from one participant in the economy to another to trade energy for that money. This is where the economy differs from the ecological realm. Participants don’t typically offer anything as a trade in the ecological realm. In ecology, living things take energy and give nothing in return. Plants take sunlight and give nothing to the sun in return. Animals eat plants and give nothing directly in return. Animals eat other animals and provide nothing in return. Ecology operates on *“The law of the jungle.”* The economic realm exists apart from the ecological realm, and it does so entirely and only because of money! Money is the invention that makes it practical to say, *“Instead of taking without giving, I will trade something I have for something you have.”* Since barter doesn’t even work on small scales, it is only money that allows this realm of trade — the law of the economy — to exist. Every magnificent man-made thing we see around us is possible only because we invented money and found a way to work cooperatively through trade instead of operating as the animals do by taking things without giving anything in return. **That is what the economy is: Replacing the brutal, merciless, life-and-death use of force with trade!** Note now the essential distinction of how economic participants are not life-like in the traditional sense of life. They don’t have to kill and eat others to grow, thrive, and survive. They instead have to find other economic participants willing to cooperate. This is a distinction many people are not fully aware of. We do, after all, talk about competition in the economy which sounds an awful lot like competition in the ecosystem. Both have this notion of survival of the fittest. But there is a big difference. Fitness in the ecosystem means you take energy without giving anything in return. The plant takes from the sun. The herbivore takes from the plant. The predator takes from the herbivore. In the economic realm, though, we do not accept. Instead, we trade. We trade our product for money — or vice versa. ### Part 2: The Essence of Civilization #### Trade Is One of the Essences of Being Human This, then, is one of the essential distinctions of man from all the other living things. Only man is capable of trading like this. And it is from this capacity to trade that one crucial element of the essence of man comes into focus. Man can take and also give. When he gives something in exchange for getting something in return, that is what we call a transaction. For that to happen at scale, we need money. Money is something one gets that one can then use to trade with another person. Thanks to money, humans don’t need to take from each other by force because they can trade. #### Fairness and Justice are Concepts of Trade: Much of Human Morality Arises From Trade Thanks to trade, also known as transactions, made possible through the invention of money, we have found a way to thrive and survive that other living things have not. Trade is something distinctive about mankind. Trade is where the very idea of *“fairness”* or *“justice”* comes into play. There is no notion of fairness or justice in the ‘law of the jungle.’ In the jungle, you can and are expected to kill to survive. In the wilderness, you are expected to fight for your life or get killed by something else. In the economic realm, we deal with fairness and justice. We are expected to use our energy to produce something of value to others and to fairly trade it with them for something they have used their energy to produce, which we value. Taking without giving back something fair in return is considered injustice. Nearly every element of our moral code comes from avoiding the law of the jungle and usually replacing it with the law of the economy! Don’t kill — reject the law of the jungle. Don’t steal — obey the law of the economy. Don’t initiate the use of force against others — reject the law of the jungle. Don’t lie — do not misrepresent what you are giving in trade in the economy (fraud is one of the few types of lies we have actual laws against). The above don’ts of our moral code make up the logic of the laws we pass to enforce our morality. The *“dos”* of our moral code, below, are the positive, permissible, and recommended moral actions: Do live and let others live. (That’s directly against the law of the jungle.) Do trade fairly with willing counterparties. (That’s the law of the economy) Do act peacefully towards others. (That’s also the law of the economy) Do tell the truth: about what you are capable of, what your product is, and the integrity of your money. (Be honest in trade within the economy) Whether you’re religious or not, this moral code is the one that the vast majority of humans believe in. Even wicked humans who regularly kill, lie, steal and cheat don’t deny it — they just try to find ways to work around it or rationalize breaking it. #### Money’s Essential Role in Human Morality We need money to be moral on a large scale with large populations. We cannot live a life without stealing unless we have money. Stealing involves the initiation of violence, so we cannot live a life without violence without money. If you think hard enough about it, you’ll see we cannot live a life without murder without money — and if you just look at history, you’ll see that when money collapses, much murder ensues. Thus, human morality at any significant scale — that of trading instead of taking — is impossible without money! So when we hear the refrain that *“money is the root of all evil”* or that the *“love”* of it is, we should be prepared to counter with “No. Money is needed so we can eliminate the need to do evil.” This finally brings us to our friend, Bitcoin. Well, almost. ### Part 3: Immorality as Civilization’s Destroyer #### The Immoral Humans - Profiting from Injustice and Unfairness Some people don’t act morally. The law of the economy is not a necessity of nature. It is that you do work and trade your work for the creation of others, using money. Since it asks rather than commands, it can be disobeyed, and some people disobey it. We’re not talking about people who steal something and run away with what they took. We’re talking about those who try to distort humanity’s morality. This code says that trading work for work is fair, reasonable, and moral. These are people who want to take from others without giving anything in return and attempt to justify doing this even though it is unjust. Now, since morality has so much to do with the economy, it should come as no surprise to you that many of these immoral people call themselves *“economists.”* They are trying to, after all, rewrite the law of the economy to introduce their immoral rationalizations into it. They have learned that there is no better place to attack morality than from within, which means attacking economics. They have tried to pass off a different moral code to try to cover up their immorality by saying it is okay to take by force — to steal, to initiate violence, to even kill — in short, to act according to the law of the jungle. They say this is fine as long as they give some of what they take to people who they say require what they took by force. They do not talk much about trade. They implement this immoral code through the mechanisms of politics and by altering the laws of our civilization — laws that were supposed to enforce morality but which they rewrite to enforce this distortion of it. At first, these distortions of morality were acknowledged as immoral but were said to be small and necessary — *“A temporary and small 1% income tax”* as an example. We, of course, all know what happened to both the temporariness of this tax and its share of the total income. #### Distorting Morality Through Distorting Fairness This distortion of morality ultimately manifests through distorting the idea of fairness. What was deemed fair before this distortion took place was voluntary exchanges between people, usually with one side exchanging money — a ‘fair’ trade. Instead, economists and politicians now talk about everyone having to surrender their *“fair”* share, and they call this justice.  Anyone not surrendering their fair share violates some new law, and there’s at least one huge agency that will ensure you’re caught, prosecuted, have that fair share seized by force, are made to pay a fine, and perhaps even be thrown in prison, your freedom taken away by force. That is the very law of the jungle like. This distortion of the concept of fairness has been very effective. Many people are persuaded by it, especially the young and other people who have never yet had the opportunity to do honest work in exchange for honest money. That, by the way, is why economists teach economics primarily to young people who haven’t ever worked for their money. It’s much easier to deceive inexperienced people about what is and isn’t moral. As this immorality has spread, it has taken over more and more of our civilization. After taking over the professions of economics and politics, the immoral class completely took over money itself. Now that central bank fiat currencies exist, the immoral actors don’t even have to seize the wealth of the producers directly through taxation. They now just print or digitally conjure into existence money and give it to themselves. “Quantitative easing” or “treasury asset purchases” are really just confounding labels for stealing. ### Part 4: The Essence of Bitcoin - Civilization’s Restorer #### Bitcoin: Stopping Immorality in Its Tracks Why has Bitcoin become a rallying cry for freedom, justice, fairness, and moral action? Because Bitcoin is an invention that cuts through the lies of the immoral class and takes away the power they have captured over the last fifty years: Bitcoin says, “Seizure of money and goods by force is Theft and is immoral, and I am enforcing the economic law of ‘don’t steal’ through the inviolable laws of math.” It adds, “Theft through inflation is immoral, and I am also enforcing the economic law of ‘don’t steal’ through a supply cap through the inviolable laws of math.” It says, *“Trading work for money is moral, and I am enforcing this by allowing the creation of (the strictly limited supply of) money only through the mathematically provable performance of work (proof of work).”* It says, *“Lying is immoral, and every statement in my records will be mathematically provable to be true through the branch of math known as cryptographic signatures.”* Finally, it concludes, *“Everyone is entitled to participate in this moral system.”* It enforces this by sidestepping any possible attempt to restrict participation, again using inviolable math. In this case, it simply says, *“To participate, all you need is a large random number, which you can even make just by tossing a coin many times if that’s all you have.”* #### Bitcoin Has the Immoral Class in a Panic Bitcoin does not listen to economists’ claims that *“It is moral to take without giving anything in return.*” Bitcoin does not listen to the politicians who promise to take from some and give to others in exchange for votes, yet who are really after cushy entitlements and joining the higher-paid ranks of the immoral class. Bitcoin does not listen to central bankers who mislead us about who their policies enrich and what they are actually up to. So these people are all freaking out. Bitcoin enforces genuine morality, true fairness, and authentic justice through math while saying to the immoral class, *“You have no power here! Your lies have no power here!”* So the immoral class is scrambling to keep their power. They may try to outlaw Bitcoin. They may try to create a distorted immoral version of it (what they call a CBDC). They may try to capture Bitcoin through regulation. They may try to discredit Bitcoin by publishing papers saying it is immoral because it doesn’t let them exercise their power, and so on. They may bring forth corrupted ‘experts,’ ‘scientists,’ celebrities, and whoever or whatever else they can think of. They will fail in all these attempts because Bitcoin operates on laws more powerful than the law of the economy, which only asks that we not lie, steal, or kill. The true laws of the universe are those of mathematics and physics, and Bitcoin is enacted and enforced using those laws. #### The Essence of Bitcoin: Replacing Breakable Moral Laws: With Unbreakable Mathematical Ones This is the essence of Bitcoin that this article is meant to reveal: Bitcoin enforces proper human morality in the economic realm through math and physics and disarms the immoral class from perpetrating their immorality. Note how the first politician in the world to make Bitcoin legal tender, Nayib Bukele, one of those rare (and at least sometimes) honest politicians, ran on a platform that said, *“There’s enough money when no one steals.”* He said that honestly. He effectively said, *“Let’s obey the law of the economy, not steal.”* It led him straight to Bitcoin.  #### Bitcoin Is the Cure Bitcoin doesn’t need politicians to support it. However, because it is an unstoppable moral force, it will lead to the end of politicians who rely on an immoral code to abuse power. The same fate is in store for central bankers and economists. The immoral class has become too big and is exacting too high a toll on our civilization. They are parasites, and they have become too numerous and too greedy for their host to suffer them any longer — that host being a moral civilization of moral-acting people. Fortunately, we have the cure. Just as you must take a pill to kill off an infection of parasites, you must take this pill, the orange pill, Bitcoin, to cure yourself of the infection of the immoral class. The immoral class has overplayed its hand. They have become too greedy. Their schemes are failing. Their lies are exposed. This whole class is exposed as immoral, as violators of the law of fair trade, which distinguishes humans from other living things and is our basis for human morality. It is Bitcoin that lets us peacefully unwind this doomed, runaway economic immorality without suffering complete economic collapse. #### Bitcoin’s Impact Is Only a Matter of Time How quickly Bitcoin replaces the corrupted, immoral financial system with a truly moral system is uncertain. It may happen very quickly — largely because of the fact that in acting with increasing desperation to save their collapsing system, the immoral class is actually accelerating its demise, thus making room for Bitcoin to become adopted more quickly. There are many variables at play. However, what is not a variable is that the laws of math and physics have primacy over any man-made laws. So no matter what laws they come up with, the immoral class will not be able to stop Bitcoin. #### We Can Make It Happen Faster In an ideal world, the immoral class would accept defeat and stand down. They would beg forgiveness. We don’t live in such a world. So we must stand up. We must: - run a Bitcoin node - convert our fiat money to Bitcoin - accept and spend Bitcoin - learn how to use the Lightning Network - educate ourselves - speak up - speak out - be moral by obeying the laws of the economy - be brave - not let ourselves be intimidated - not let ourselves be fooled - not be a part of restoring morality to our civilization. If, unfortunately, you find yourself in the pay of this immoral class, begin to find your way out of it because it’s going away. Bitcoin cannot be stopped, and that’s a significant turning point in history in favor of the good. Bitcoin’s essence is that it is a good idea for the good of humanity, whose time has come, and which cannot be stopped. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Substance of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-substance-of-bitcoin/ Bitcoin is a carefully and precisely engineered solution to a crucially important human need — the need for a reliable, universal medium to use as money. --- **Tomer Strolight** · July 7, 2023 · Updated June 27, 2024 The dictionary defines substance as: ![](https://www.datocms-assets.com/56652/1687834975-substance-white.png?auto=format) Does Bitcoin qualify as being a substance? By exploring the answer to this question, we actually gain some understanding of Bitcoin that may have been out of our reach before. By comparing Bitcoin to other substances, we can see how, at least in the material realm, it appears as though we have discovered a new element or material with unique and unprecedented properties. Using this frame, we can test Bitcoin’s properties against those of other substances that we have worked with for decades, centuries, or even millennia. Let us explore here, together, these unique properties of this *pseudo-substance* and learn what makes Bitcoin unlike any other substance we have ever encountered before and how we might therefore use it to do things we’ve never done before. ### Property 1: Teleportable – Satoshi’s Take It would be remiss to leave out the fact Satoshi himself took a quick stab at [comparing Bitcoin to an imaginary metal](https://bitcointalk.org/index.php?topic=583.msg11405#msg11405) way back in August of 2010. So let’s start there. He then wrote: *"As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:* *- boring grey in colour* *- not a good conductor of electricity* *- not particularly strong, but not ductile or easily malleable either* *- not useful for any practical or ornamental purpose* *... And one special, magical property:* *- can be transported over a communications channel* *If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.* *Maybe it could get an initial value circularly, as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some.) Maybe, collectors, any random reason could spark it.* *I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.* *(I'm using the word scarce here to only mean limited potential supply)* In his post, Satoshi observed that Bitcoin was *teleportable* – that it could be trans**port**ed over a **tele**communications channel. This is a very unique property indeed because there is no other substance we are aware of that can be teleported. In fact, even information we transmit over the internet is not actually teleported – it is copied – and the original still exists. If you downloaded this article from a server, it did not disappear from its original location; you merely made a copy of it. When you send Bitcoin, however, the copy you retain of that Bitcoin that you spent loses its ability to be spent again. The act of teleporting Bitcoin effectively destroys the value of the Bitcoin being sent and creates a new and equal amount of Bitcoin that can be spent, which has now been teleported to the possession of others. (In Bitcoin technical-speak, you are spending an Unspent Transaction Output (UTXO), thereby transforming it into a Spent Transaction Output and creating new Unspent Transaction Outputs that total the amount of the UTXO you spent.) The ability to teleport rather than transport Bitcoin makes it a unique substance with unique benefits. Certainly, the example Satoshi gave of transferring it over long distances is a valuable use case. Additionally, in our increasingly digital lives, we enjoy the convenience of transferring anything we can over telecommunications networks, even when we are face-to-face in person with others, especially when it comes to money. ### Property 2: Immovable, Unless You Know a Secret Sticking with Satoshi's style, imagine a substance with the following magical property as a thought experiment. This substance could not be lifted, moved, damaged, destroyed, or carried away with any tool or any amount of energy. Instead, however, it could be moved only by uttering a spell – a secret spell. Such a magical object that can only be moved by its rightful owner has been imagined before. One example is Thor's hammer in the Marvel Universe. In that imaginary universe, it was only Thor who could lift his hammer. It somehow was bound to him and only him. So even if it was left out in plain sight, it was of no use to anyone but him. Similarly, the legend of the sword *"Excalibur,"* which was embedded in a stone and could be withdrawn from the stone only by the rightful king, had this mythical power to be taken only by one special person. With Bitcoin, this trait is no longer resigned to the realm of fiction or legend. This is the power of self-custody in Bitcoin. It is available to anyone, not only Norse gods or the sovereign of Great Britain. In Bitcoin, only the one who knows the secret, private key can move the Bitcoin associated with that key. Obtaining your own private key is a trivial task while figuring out someone else's, provided they have taken proper precautions to keep it secret, borders on the impossible. (Now, a minor detail is that when you do utter your secret spell to move some of your Bitcoin, you must give some portion of the Bitcoin in the form of a fee to a Bitcoin miner.) A Bitcoin transaction essentially is a statement saying, *"This unspent Bitcoin is now to be spent and sent to the following unspent addresses, with a portion going to the miner who adds this transaction to the blockchain, and here is the proof that the private key(s) required to spend this unspent Bitcoin is known to me, the sender."* Through the mathematics of private-public key cryptography, anyone can check the validity of the proof through Bitcoin's public ledger (the blockchain) anyone can check the validity of the claim that the Bitcoin is not yet spent. If both those conditions are met, and if the fee is sufficient, you can expect that the Bitcoin will move to where the owner decreed it is moved to. And once this is done, the Bitcoin that has moved will retain the ability to be moved again *only by its rightful owners*. There are so many potential benefits to such a substance that they are hard to all imagine. The major one, of course, is that securing such a substance relies not on having a fortress to protect it but on retaining a piece of knowledge, which can be memorized, easily hidden, kept in multiple locations, carried around in one's head anywhere in the world, and more. ### Property 3: A Substance that Records Its Own History Once again, let's imagine a substance with a unique, magical property. This time, it is a substance that can be reshaped (only by its owner as per the previous property), but when it is reshaped, it remembers its previous shape. In fact, it remembers all its previous shapes – perfectly. None of the previous forms are erased from memory. There is no substance possessing this property that is known to us. When you look into any Bitcoin transaction, you can trace it back all the way to Bitcoin's genesis. Whether it is the transaction history of the satoshis in the transaction going back to the blocks that they were issued in, or the chain of blocks that leads back, one by one, all the way to the genesis block from those blocks, all the satoshis that exist can be traced all the way back to the genesis block. Put another way, Bitcoin is a record of its entire history. It is a recursive record of itself. For any amount of Bitcoin to exist, it must trace its history back to its issuance in one or multiple blocks. Those blocks must themselves trace back their history through a chain going all the way back to the very first block ever. The Bitcoin blockchain is a record of every issuance of Bitcoin ever and every transaction of Bitcoin ever. Each new entry in the record declares how much Bitcoin exists in that new entry and showing which previous entries are being spent to create that new entry. If you do actually try to look at it all yourself, it will be overwhelming, as there are hundreds of thousands of blocks and tens of millions of transactions. But you can start anywhere, trace transactions back to when the satoshis in them were issued in a block, and easily trace that block back to Genesis. Now, this property is sometimes viewed as a weakness concerning privacy. However, it is necessary to ensure that no Bitcoin can ever be spent twice or conjured up out of thin air, and there are ways to confound attempts to violate privacy. This brings us to the next unique property. ### Property 4: Restricted to a Known, Finite, Verifiable Supply This property is commonly known and widely appreciated, but still, nevertheless perhaps under-appreciated. There are and can only ever be 21 million Bitcoins, each made up of 100 million satoshis. ![](https://www.datocms-assets.com/56652/1687835069-bitcoin-inflation.png?auto=format) When used as a store of value, to be exchanged for other goods or services, whose supply is not restricted or even known, Bitcoin's scarcity provides another unique property that we simply cannot expect from any other substance, including gold. There is a certainty — an assurance – in Bitcoin that eliminates a risk associated with any other substance we are holding for the sake of preserving its value. That assurance is that nobody will develop a breakthrough to increase its supply and therefore drive down its price based on flooding the market with it. Money is the only substance that we want to remain scarce. Civilization is enriched whenever we figure out how to make any other substance more widely available and abundant – except for money. When we make money more abundant, all that happens is that price inflation occurs. This is, of course, one of the central problems of fiat money. Unknown and unpredictable supply, especially as present circumstances reveal, is a tremendous problem when relying on a substance to serve as money. What is under-appreciated about this property of Bitcoin, though, is that everyone can know and verify this restricted supply. Nobody really knows how much gold there is out there, where it is, or at what rate it's being discovered. There is no way to verify any popular claims of how much gold exists or remains to be mined. The [BBC reports that estimates range from 155,000 tonnes to much as 2.5 million tonnes of gold](https://www.bbc.com/news/magazine-21969100) have been mined. That's a discrepancy of sixteen times, which nobody can verify. However, both the current supply of Bitcoin and its issuance schedule leading to its final supply can be verified inexpensively and relatively quickly by anybody anywhere in the world. This uniqueness is especially valuable in a world where trust in claims that can't be verified continues to erode. ### Property 5: 100% Pure and Uncontaminated (and Uncontaminateable) Let's go back to imagining magical substances, this time imagining one that cannot be mixed in or blended with any other substance. If someone hands you some amount of it, you can quickly verify both the amount, right down to the atomic quantity of it, and moreover, you can know that the amount handed to you is 100% pure. Any kind of fraud of passing off something else or something diluted is impossible if the recipient takes a few simple and inexpensive precautions. This substance cannot be counterfeited or faked. Like all the previous properties discussed here, Bitcoin possesses this property too. When someone sends you Bitcoin, that's all you receive. There are no trace amounts of anything else mixed in. It's impossible to make it appear that there's more Bitcoin in a transaction than there actually is. This is true only of Bitcoin taken into self-custody because a promise of Bitcoin from another person is just a promise. But Bitcoin in self-custody is 100% pure Bitcoin. This property is yet another assurance that you know what you've got. You've got 1) a 100% pure substance, 2) that nobody else but you can move, 3) that's strictly limited to a known supply, and 4) that you can teleport to anyone else, anywhere in the world. ### More 'Magical' Properties In its early days, Bitcoin was often somewhat jokingly referred to as *"Magic Internet Money"*. That expression was itself a hand-wavy approach to saying *"it's quite complicated, but it works."* However, it turns out that even more than fourteen years in, it is still helpful to imagine Bitcoin as a substance with various 'magical' properties. Doing so helps us more easily understand how Bitcoin works and how it is different from all other known substances. There are other unique properties of Bitcoin that this article won't go into detail about, such as having zero mass (unlike matter), being at no single particular location (because every Bitcoin is located in every single Bitcoin node in the world), being a substance you can 'back up' and keep the entirety of what you own in multiple locations at the same time, being perfectly divisible down to its smallest particle – satoshis in the case of Bitcoin – and probably quite a few more. Bitcoin is simply, in so many ways, unlike any other substance we know. And each of those ways makes it quite useful for the things we use money for – storing value, transmitting value in exchange for goods and services, and measuring value. This isn't really ***magic***, though. It's what we often see when we get to a point where we have engineered something from raw substances and no longer rely on those raw materials alone to serve a particular purpose. Just as a hammer is an engineered, dramatic improvement over using a rock to smash things – it fits better in your hand, uses leverage, balance, and momentum to direct the striking energy exactly where desired (provided you don't hit your thumb) and combines various materials like wood, plastic, and iron each for their benefits. And a hammer is itself quite inferior to a nail gun, which uses electricity to perform the energetic work previously required by the person holding the hammer. Hammers and nail guns might have been considered 'magical nail drivers' when people first encountered them, but they are so commonplace and well-understood that nobody is awestruck by them (although the first time one sees a nail gun at work, it does leave quite an impression). In reality, Bitcoin, like the nail gun, isn't a substance but a carefully and the precisely engineered solution to a crucially important human need – the need for a reliable, universal medium to use as money. However, since we currently use something so vastly inferior to fiat money, and many of us can see the weaknesses of fiat money when compared with an actual substance, like gold, it is beneficial to compare Bitcoin to gold and all other substances to see how it is superior as money, and why, therefore, it will, in time overtake both fiat money and gold as what people use for money. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Great Institutional Bitcoin Capitulation - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/are-institutions-feeling-the-fomo/ For once, the big financial institutions are late to the game, and it’s beautiful to see. --- **Sam Callahan** · June 30, 2023 · Updated June 6, 2024 In the aftermath of the regulatory actions against crypto-native firms like Coinbase and Binance, many investors braced themselves for a significant plunge in Bitcoin’s price. The sentiment swiftly morphed into fear, and it’s not difficult to grasp why this change occurred. Binance and Coinbase, the world’s two largest cryptocurrency exchanges by trading volume, are now facing lawsuits from the SEC for allegedly conducting illegal operations and offering unregistered securities. As a result of these legal actions, these companies could be subject to fines, disgorgement, and potentially an order to halt operations in the U.S. Understandably, investors were initially unnerved when these lawsuits were announced. But Bitcoin’s price did not drop as many expected. In fact, it found support at $25,000 and then shot back up the next week to over $30,000 in one of the best 1-week returns in recent memory, rising nearly +20%. ![](https://www.datocms-assets.com/56652/1688148546-1.png?auto=format) There are plenty of reasons Bitcoin may have shrugged off this negative news. For starters, one common sign of the beginning of any bull run is when the market disregards seemingly bad news. When bad news no longer negatively impacts the price, this shows seller exhaustion after the prolonged bear market since November 2021. This is the classic adage that early bull markets climb a *“wall of worry.”* Secondly, Bitcoin’s price could be reacting to the fact that investors are starting to understand that Bitcoin is the only cryptocurrency with any regulatory clarity. Capital could flow out of riskier cryptocurrencies and into Bitcoin as investors attempt to reduce their risk. Lastly, there has been good news recently that’s outweighing the lousy news in investors’ minds. All of these factors appear to be in play today regarding Bitcoin. These recent legal actions against the two largest exchanges come after a year in which we saw crypto-native hedge funds, trading firms, exchanges, and lenders falter one by one. The landscape of the broader cryptocurrency industry has irrevocably changed. Many of the dominant companies from 2022, along with their key figures, are no longer here. Some have filed for bankruptcy, some are mired in regulatory troubles, and others are awaiting trials for their alleged crimes. While some may interpret these events as signs that, once again, *“Bitcoin is dead,”* larger entities seem to see this as an opportunity to gain market share in this emerging asset class. Since the announcement of these lawsuits, there’s been a surge of declarations from traditional financial firms expressing their intention to enter the Bitcoin market in some capacity after years of sitting on the sidelines. After many years of these firms avoiding Bitcoin and even actively discouraging investors from investing in it, they seem to have finally woken up to Bitcoin's innovation. Let’s look at how the messaging from these financial institutions has changed over the years. ### 1. BlackRock ($9 trillion AUM) **Then:** ![](https://www.datocms-assets.com/56652/1688149879-2.png?auto=format) Bitcoiner [Niko Jilch](https://twitter.com/NikoJilch?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) had a chance to interview Fink in Austria on June 13th, 2018, and asked him about his Bitcoin views. Here is what he said… ![](https://www.datocms-assets.com/56652/1688150008-3.png?auto=format) **Now:**  In December 2020, Larry Fink began to change his tune with Bitcoin. In [an interview](https://www.youtube.com/watch?v=NKxTSk8cONw), he stated, *“Can it [Bitcoin] evolve into a global market?*  *Possibly. Indeed, to me, the evidence that it has captured the imagination of so many who want to learn about it or are interested in it is a very telling sign.”* This quote foreshadowed what was to come.  In the Summer of 2022, BlackRock announced that it would connect its Aladdin investment platform to Coinbase Prime to provide its clients with access to crypto trading and custody services.  A week later, BlackRock [launched a spot Bitcoin trust](https://www.reuters.com/technology/blackrock-launches-spot-bitcoin-private-trust-us-clients-2022-08-11/) for its private clients. ![](https://www.datocms-assets.com/56652/1688150157-4.png?auto=format) Fast forward to this past month, and [BlackRock has filed for a Spot Bitcoin ETF](https://www.reuters.com/business/finance/blackrock-close-filing-bitcoin-etf-coindesk-2023-06-15/#:~:text=June%2015%20(Reuters)%20%2D%20BlackRock,comes%20under%20intense%20regulatory%20scrutiny.). (more on this later) ![](https://www.datocms-assets.com/56652/1688150247-5.png?auto=format) ### 2. Deutsche Bank ($1.4 trillion AUM)  **Then:** Over the years, Deutsche Bank has consistently warned its clients of the risks of investing in Bitcoin, even going as far as telling investors to avoid it altogether. In 2020, they warned that an economic crisis could lead to the *“end of Bitcoin.”* ![](https://www.datocms-assets.com/56652/1688150469-6.png?auto=format) **Now:** In 2021, the bank stated that it was exploring the possibility of offering an *“institutional-grade hot/cold storage solution with insurance-grade protection.”* It appears now those plans are being set into motion.  Last week, Deutsche Bank applied for a [digital asset license](https://blockworks.co/news/deutsche-bank-crypto-custody-license-germany) from German regulator BaFin to operate as a crypto custodian to drive the bank’s growth. ![](https://www.datocms-assets.com/56652/1688150502-7.png?auto=format) German’s largest bank has apparently had a change of heart. It is now taking action to develop its infrastructure and get into the Bitcoin game. ### 3. Santander Bank ($1.7 trillion AUM) **Then:** In the past, Santander had terminated client accounts for trading Bitcoin and limited clients from sending Bitcoin payments. ![](https://www.datocms-assets.com/56652/1688150548-8.png?auto=format) > “Santander Bank, the $90 billion Spanish financial institution and banking group, recently began to close accounts of users involved with Bitcoin trading.” ![](https://www.datocms-assets.com/56652/1688150592-9.png?auto=format) **Now:**  Santander is taking steps to provide its clients access to Bitcoin. CACEIS, the asset servicing arm of the bank, became registered by France’s Financial Markets Authority (AMF) as a crypto custodian. ![](https://www.datocms-assets.com/56652/1688150629-10.png?auto=format) On top of that, Santander even published [its own research](https://www.santander.com/en/stories/lightning-network-blockchain) on the Lightning Network. ![](https://www.datocms-assets.com/56652/1688150660-11.png?auto=format) Santander is not only building out infrastructure but is also educating its clients on the innovation occurring on Bitcoin. Oh, how the tides have changed.  ### 4. Citadel Securities ($62 billion AUM) **Then:** The CEO of Citadel, one of the largest hedge funds in the world, Ken Griffin, has often slandered Bitcoin in the past, calling it a Tulip bubble and a *“Jihadist call”* against the dollar. ![](https://www.datocms-assets.com/56652/1688150715-12.png?auto=format) **Now:**  Not even a year after criticizing Bitcoin, in [a Bloomberg interview](https://www.bloomberg.com/news/articles/2022-03-01/what-citadel-s-ken-griffin-thinks-of-russia-ukraine-sanctions-markets-cryptohttps:/www.bloomberg.com/news/articles/2022-03-01/what-citadel-s-ken-griffin-thinks-of-russia-ukraine-sanctions-markets-crypto), Ken Griffin admitted that he was wrong about it. ![](https://www.datocms-assets.com/56652/1688150779-13.png?auto=format) Griffin stated, *"Crypto has been one of the great stories in finance over the last 15 years. And I'll be clear, I've been in the naysayer camp over that period...* *I still have my skepticism, but hundreds and millions of people today disagree with that,"* he said. > "To the extent that we're trying to help institutions and investors solve their portfolio allocation problems, we have to seriously consider being a market maker in crypto." Griffin appeared to be preparing the market for the idea that Citadel would soon be dipping its feet into Bitcoin. This culminated in Citadel teaming up with other financial giants like Charles Schwab and Fidelity to build a new exchange called EDX Markets. ![](https://www.datocms-assets.com/56652/1688150832-14.png?auto=format) EDX Markets [recently went live](https://www.wsj.com/articles/crypto-exchange-backed-by-citadel-securities-fidelity-schwab-starts-operations-597f6d46) and stated that it draws on *“standard practices in traditional, regulated financial markets and differs in key ways from how crypto exchanges typically operate.”* The main difference is EDX Markets solely operates as an exchange. Unlike crypto exchanges like FTX, they plan to separate the functions of exchange, custody, and clearing to prevent conflicts of interest. In many ways, the adults are coming into the room.  ### 5. Societe Generale ($1.5 trillion AUM) **Then:** France’s second-largest bank, Societe Generale, was no different than its counterparts in doubting Bitcoin in the past. Its CEO publicly stated that Bitcoin had no future in 2017. In 2021, it declared that gold is better than Bitcoin in a portfolio. ![](https://www.datocms-assets.com/56652/1688150866-15.png?auto=format) **Now:** ![](https://www.datocms-assets.com/56652/1688150919-16.png?auto=format) SocGen has now secured registration to become a crypto custodian after receiving licensing approval from France’s Financial Markets Authority (AMF). The French bank doesn’t want to be left behind. Two entities that we haven’t mentioned yet are Fidelity ($4.2 trillion AUM) and Charles Schwab ($7 trillion AUM). The reason is that both have been more supportive of Bitcoin. Charles Schwab has always taken a *“wait and see”* approach and, to my knowledge, has never slandered it publicly. Fidelity has been a leader in the industry.  It has been building Bitcoin infrastructure and publicly endorsing Bitcoin since around 2014. Both of these firms are also behind the EDX Markets exchange mentioned above.  These all indicate a large shift in sentiment towards Bitcoin within these large financial institutions. These incumbent players appear to be finally recognizing the massive opportunity that exists by supporting Bitcoin to make money for their shareholders. These banks are capitulating and are starting to understand that Bitcoin has staying power and that they better be prepared for its adoption to continue to grow.  These recent developments have prompted some speculation among Bitcoiners regarding the sequence of events and the timing of these announcements amidst the regulatory crackdown on crypto-native exchanges. Preston Pysh captured this attitude in his tweet below. ![](https://www.datocms-assets.com/56652/1688150999-17.png?auto=format) Whether or not this was a concerted effort between traditional banks and regulators to squash crypto-native firms for their own gain is pure speculation. Still, regardless, when it comes to [Bitcoin’s price and overall adoption, these are bullish developments](https://www.swanbitcoin.com/bitcoin-price-prediction/). The combined AUM of the traditional financial institutions mentioned above equates to $24.9 trillion. With a market capitalization of ~$592 billion today, Bitcoin’s market cap exceeds the AUM of only one of the companies mentioned above (Citadel). Bitcoin is a tiny asset, especially compared to other traditional asset classes, with an absolute fixed supply. So what will happen when all of this institutional demand for Bitcoin occurs all at once? I’ll give you a hint… ![](https://www.datocms-assets.com/56652/1688151038-18.png?auto=format) **BlackRock Throws Its Hat in the Ring** Out of all of these bullish news headlines, none was larger than the announcement that BlackRock, the largest asset manager in the world, with over $9 trillion in assets under management, has filed for a spot Bitcoin ETF. Once this announcement occurred, all of the other ones soon followed. Over the last decade, a spot Bitcoin ETF has been a topic of lore for Bitcoiners. A spot Bitcoin ETF has always been *"right around the corner,"* only for the SEC to reject every application. To date, there have been nearly 30 spot ETF applications that have been rejected by the SEC. The reasons why the SEC has rejected these ETFs have primarily revolved around the lack of investor protections and the risk of market manipulation of the spot markets. But many view this application as having a good probability of getting approved. Why? 1. This is BlackRock. Whereas past ETF applications have primarily come from crypto-native firms, this filing has been made by arguably the world's most powerful and largest asset manager. BlackRock doesn't file for ETFs if they don't think they have a good chance of approval. Its successful track record of ETF filings says it all – BlackRock has been approved 575 times and has only been rejected once. 2. The most significant difference between this application and those in the past is that it addresses the SEC's main argument for rejecting prior spot ETF filings: a lack of comprehensive surveillance-sharing agreement to prevent market manipulation and fraud. Fidelity lays out this fact in its ETF re-filing: ![](https://www.datocms-assets.com/56652/1688155794-19.png?auto=format) Fidelity ETF Filing When the SEC approved a CME Bitcoin Futures ETF, its argument was, > “The CME ‘comprehensively surveils futures market conditions and price movements on a real-time and ongoing basis to detect and prevent price distortions, including price distortions caused by manipulative efforts." *"Thus, the CME’s surveillance can reasonably be relied upon to capture the effects on the CME Bitcoin futures market caused by a person attempting to manipulate the proposed futures ETP by manipulating the price of CME Bitcoin futures contracts, whether that attempt is made by directly trading on the CME Bitcoin futures market or indirectly by trading outside of the CME Bitcoin futures market.”* - [Tencium Futures ETF Approval](https://www.sec.gov/rules/sro/cboebzx/2023/34-97102.pdf) BlackRock and other firms argue that if the Bitcoin Futures pricing is based on the pricing of the underlying spot Bitcoin markets, why wouldn’t the CME satisfy the SEC’s concerns for a spot Bitcoin ETF as well?  This is exactly what Grayscale is arguing in its ongoing lawsuit against the SEC to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF. Grayscale contends that the SEC is acting arbitrarily and capriciously by approving a Bitcoin Futures ETF while not approving a Bitcoin Spot ETF. This stance appears to contradict the Administrative Procedure Act and the Exchange Act’s requirement for rules and regulations to be applied without favoritism for one type of product over another. The Bitcoin Futures ETF trades on the CME. However, it is priced using the same pricing indices that reference the same underlying spot markets. Therefore, both products are exposed to the same risks, making the approval of one product over another seemingly unfair. This is a strong argument for why a spot ETF should be approved, which is why Bloomberg’s Senior Legal Analyst Elliot Stein gives Grayscale a 70% chance of winning its case against the SEC. Is BlackRock potentially front-running a Grayscale win? ![](https://www.datocms-assets.com/56652/1688155945-20.png?auto=format) But BlackRock even went a step further than every other ETF application to date. It’s also establishing a surveillance-sharing agreement with Nasdaq and *“U.S. BTC Spot Market Platform”* (presumably Coinbase) to add an additional layer of protection for investors to quell the SEC’s concerns. ![](https://www.datocms-assets.com/56652/1688151183-21.png?auto=format) Blackrock ETF Filing This detail is why many market participants are optimistic that BlackRock’s ETF application will get approved. They believe this addresses the SEC’s longstanding concerns regarding having proper surveillance and controls in place to identify fraud and manipulation in the spot markets. Not long after BlackRock’s ETF, we saw investment firm [ARK amend its ETF filing](https://www.coindesk.com/business/2023/06/28/ark-amends-spot-bitcoin-etf-filing-to-include-surveillance-sharing-similar-to-blackrock/) to include a similar surveillance-sharing agreement. This was notable because it shows that ARK thought this was important enough to amend its filing to improve its approval chances. This is also important because ARK has filed before BlackRock, meaning that it could be the first ETF approved, not BlackRock.  Next came Fidelity [re-filing its ETF application](https://www.reuters.com/technology/exchange-operator-cboe-files-with-us-sec-list-fidelitys-spot-bitcoin-etf-2023-06-29/), this time with a similar surveillance sharing agreement between a *“U.S. BTC Spot Market Platform”* (presumably Coinbase) and the CBOE. We also saw WisdomTree ($87 billion AUM) and Invesco ($1.5 trillion AUM) [file ETF applications of their own](https://www.barrons.com/articles/bitcoin-etf-blackrock-invesco-wisdomtree-517e6539). In other words, the race is on. The SEC wasted no time in responding to these new ETF applications. It has [returned the filings](https://www.wsj.com/articles/sec-says-spot-bitcoin-etf-filings-are-inadequate-390336e8) because it didn’t specifically name the spot Bitcoin exchange with which they are expected to have a *“surveillance-sharing agreement”* or provide enough details about those arrangements. These firms will need to provide more information before the SEC even considers approving their applications. What could happen to the price of Bitcoin if the vaunted spot ETF gets approved?  Well, the nice thing is we have already seen how the market would react to a spot Bitcoin ETF given that The Purpose Bitcoin ETF out of the Toronto Stock Exchange launched in February 2021. If this foreshadowed what was to come, we could be in for fireworks. When the Purpose Bitcoin ETF first launched, it broke records. It traded $80 million worth of shares in its first hour and $200 million in its first day. It went on to eclipse over $1 billion in AUM after only 3 months after being listed. ![](https://www.datocms-assets.com/56652/1688155983-22.png?auto=format) A U.S.-based ETF would almost surely be even more popular than its Canadian counterpart. A spot Bitcoin ETF would attract so much demand because it fits into the existing regulatory structure for institutional investors like financial advisors, family offices, pension funds, etc. A Bitcoin ETF would allow these investors to gain exposure to Bitcoin through an investment product they are familiar with and approved by their investment mandates. If they have been sitting on the sidelines because regulations have been preventing them from owning spot Bitcoin or because they didn’t feel technically capable of acquiring it, then an ETF is going to be very attractive to these institutional players. However, all of this news comes with one large caveat – a spot ETF is not real Bitcoin. By buying an ETF, an investor buys a paper IOU that represents the underlying Bitcoin; they don’t own it. All of these potential ETFs come with counterparty risk. Under most of these trust agreements, shareholders generally have no voting rights or rights to authorize actions in the trust. You are trusting the sponsor to secure and manage Bitcoin effectively. Furthermore, these ETFs carry fees that an investor shouldn’t incur when buying actual bitcoin. So, while this may be bullish for the price of Bitcoin, nothing can top buying real Bitcoin – with no counterparty risk – that you own. Financial institutions are coming to Bitcoin. And what they will eventually realize is that Bitcoin is an extremely scarce asset. There will only ever be 21 million. Retail investors who understand this have been front-running these institutions for years, slowly accumulating the only asset in the world with an absolute fixed supply. For once, the big financial institutions are late to the game, and it’s beautiful to see. ![](https://www.datocms-assets.com/56652/1688151330-23.png?auto=format) ***Market Overview*** ![](https://www.datocms-assets.com/56652/1688151352-24.png?auto=format) Tradingview, Prices as of 06/30/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Miami Bitcoin 2023 Conference Wrap-up - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/miami-bitcoin-2023-conference-wrap-up/ The Bitcoin 2023 Conference took place in Miami from May 18th — 20th. Here are our top takeaways! --- **Drew** · July 17, 2023 · Updated June 6, 2024 We were blown away by the outpouring of love and support for Swan – at the Swan booth, [Swan House](https://twitter.com/coryklippsten/status/1659718055449198594), the Pleb Party, Thank God for Bitcoin, and other events. The Wall Street Journal even stopped by the Swan House. ![](https://www.datocms-assets.com/56652/1688706987-swan-house.png?auto=format) Meeting in person and spending time together highlights the incredible camaraderie Bitcoin brings out in all of us!  Thanks to everyone who took the time to stop in, say hi, and hang out with us.  We received a bunch of Twitter love, including this one from [Kenny Florian](https://twitter.com/kennyflorian/status/1660329285511524355?cxt=HHwWhsC9kYes1oouAAAA): ![](https://www.datocms-assets.com/56652/1688707012-kenny.png?auto=format) #### Bitcoin Is a 2024 Presidential Election Issue In his first public appearance as a U.S. presidential candidate, Robert Kennedy Jr. delivered a powerful keynote at the conference, where he laid out his six-point Bitcoin platform:  **1) Guarantee the right to own Bitcoin** **2) Guarantee the right to run a node** **3) Ensure the right to use electricity as you choose** **4) Ensure the U.S. remains the global hub of Bitcoin**  **5) Recognize Bitcoin is not a security but in a class of its own** **6) Evaluate whether to pardon Ross Ulbricht and others unjustly prosecuted** *“Everybody is so passionate about Bitcoin,”* said Kennedy*, “not just because it’s a currency, but because it’s an exercise in democracy."* Kennedy also announced he would take donations in Bitcoin over the Lightning Network. ![](https://www.datocms-assets.com/56652/1688707315-rfk-btc.jpeg?auto=format) He isn’t the only 2024 presidential candidate embracing Bitcoin.  Republican Vivek Ramaswamy declared he would accept Bitcoin for campaign donations, along with a proposal to relax tax regulations for Bitcoin mining in the U.S. Former U.S. presidential Candidate and House of Representative member Tulsi Gabbard delivered a speech that really struck home: *“Ultimately, they’re driven by a fear of losing power and losing control,”* said Gabbard, referring to politicians*, “and, at the heart of it, they’re afraid of us. They’re afraid of a free society.”* The U.S. political class is quickly awakening to the fact that they can’t control Bitcoin.  *“You would think,”* Gabbard continued, *“they would be interested in how Bitcoin is transforming the lives of people around the world, but they don’t actually care about people.”* Five years ago, if someone said three U.S. Presidential candidates would hold a very public, pro-Bitcoin campaign position, most people would have thought the idea crazy.  #### Miami Highlights Continuing Bitcoin Development Bitcoin continues to inspire new generations of builders who want to contribute to creating the peer-to-peer economy Satoshi’s invention made possible. Conferences like Miami, and the weeks that follow them are a popular venue to make big announcements.  At the Miami conference, David Marcus, former PayPal President and co-creator of Meta's Libra/Diem cryptocurrency, recently announced:   *"I've decided to dedicate the rest of my life to building on*[ ](https://twitter.com/hashtag/Bitcoin?src=hashtag_click)*Bitcoin, specifically on Lightning."* His new company, [Lightspark](https://www.lightspark.com/), is developing various solutions based on Lightning, supporting corporate and individual use cases. ![](https://www.datocms-assets.com/56652/1688707362-lightsprak.png?auto=format) Marcus was eager to share his excitement around Taro, a Layer 2 scaling solution enabling the Lightning Network to support a multi-asset network.  A developer going by the name [Burak](https://twitter.com/brqgoo) announced an entirely new layer two scaling solution called [ARK](https://www.arkpill.me).  ![](https://www.datocms-assets.com/56652/1688707395-ark.png?auto=format) ARK states it takes an altogether new approach, not relying on state channels to scale as Lightning does, and therefore not requiring users to acquire inbound liquidity to receive payments. It also addresses privacy by making transactions anonymous and blind the same way e-cash does. Payments settle every 5 seconds and finalize with each Bitcoin block mined.  Jack Dorsey-backed Block [announced a new web5 toolkit](https://finance.yahoo.com/news/jack-dorsey-backed-tbd-launches-143526983.html) to decentralize the Internet that includes decentralized identifiers (DIDs), Verified Credentials (VCs), and Decentralized Web Nodes (DWNs).  #### Institutional Investing In Bitcoin Continues to Grow At the conference Tether announced a commitment to allocate up to 15% of net operating profit towards accumulating BTC. The leading stablecoin already holds over $1 billion of BTC. Adding 15% of its profits into Bitcoin would equal approximately $300M annually. **Tether might give Michael Saylor a run for his sats at that rate.**  Since the conference, institutional interest has dramatically picked up, most notably with a lot of Bitcoin ETF applications from huge investment firms, including the two giants Blackrock and Fidelity. #### Don’t Miss Out On Pacific Bitcoin Next up is the second annual Pacific Bitcoin Festival in October. It promises to be even better than last year's, which many people said was the best Bitcoin conference they’ve ever attended.  The first round of speakers were announced. Join Lyn Alden, Preston Pysh, Alex Gladstein, Natalie Brunell, Stephan Livera, and many more to come.  [Don't miss out. Get your tickets today with promo code *“Miami” for 20% off*](https://www.pacificbitcoin.com/)*.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # The Charmed Life of a Baby Boomer Named James - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-charmed-life-of-a-baby-boomer-named-james/ The baby boomers left us with a debt/GDP ratio of 120%, and grandkids that can’t afford to buy a house. What is the current generation to do? Enter Bitcoin. --- **Mark Harvey** · July 17, 2023 · Updated June 27, 2024 James was born in 1946 during a time of peace, shortly after the most deadly war in history. He began work in 1962 at age 16; and was paid the minimum wage of $1.15 ($11.55 in today's dollars). ##### The minimum wage is $7.25 today. James gladly contributes a portion of his paycheck to the Social Security fund. It would surely be there in 2012 to support him when he reaches retirement age. At age 18, he decides that he wants to go to college. No problem! The average tuition for public school is only $243 per year ($2,334 in today's dollars). He can easily work a summer job and pay his way through school. No need to take a student loan! ##### The average annual cost of public school tuition is $10,423 today. In 1965, a new scheme called Medicare was invented. Not only can James rely on Social Security to support his retirement, but he can now also expect affordable healthcare in his old age. America rocks! James finished college debt free in 1966. Time to settle down and buy a house! The median price of houses sold in 1966 was only $21,400($196K in today's dollars), which was 2.9X the median household income at the time. James has no problem buying a house at these prices relative to his household income. ##### The median cost of houses sold today is $437K, which is 4.9X times the median household income. James is now in his prime working years. He is paying into his retirement through Social Security, where he fully expects to get back the fruits of his labor when he retired in 2012. James is also very prudent financially. He invests a portion of his paycheck into the stock market each month. In 1978, this new thing called a 401k was invented, and in 1998 the Roth IRA. These great tools allow James to significantly grow his retirement portfolio, which consists mostly of stocks. Then in 2008, the game seemed like it was all over. The *'Great Financial Crisis'* hit. Stocks (James' retirement portfolio) crashed. The crisis happened only 4 years before James reached the retirement age of 66 in 2012. The timing could not be worse for a person like James. It seems that Social Security and Medicare were unsustainable and caused the US to go into too much debt. Now there is nobody left to buy U.S. bonds! What does the Baby Boomer generation do to keep the party going? Enter Quantitative Easing (QE)! From 2008 to 2022, a QE-fueled stock rally saw James' retirement portfolio skyrocket 600%! *"Wahoo!"* said James as he entered a comfortable retirement thanks to his monthly Social Security check, affordable healthcare, and a fat equities portfolio. To top it all off, the price of James' house appreciated 20X from when he bought it in 1966. James entered retirement, leaving the country with a Debt/GDP ratio of 120% and grandkids that couldn't afford to buy a house. James is adamant that the younger generation is terribly misguided with the whole #Bitcoin thing. ### Mark Harvey Mark is a Technology Analyst and Investor with a background in Engineering and Finance. You can find more research at his [website](https://markharveyresearch.com/). # The Inflation/Deflation Tug-of-War - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/the-inflation-deflation-tug-of-war/ Overall, the economy and central banks are in a tense tug-of-war. Inflation and disinflation are going back and forth. Which side will gain the upper hand? --- **Sam Callahan** · July 14, 2023 · Updated June 27, 2024 “*Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” - Milton Friedman*  Since the pandemic and economic lockdowns of 2020, the world has struggled with a surge in global inflation. Today, CPI inflation has finally begun to subside in the U.S. Headline CPI inflation came in at 3% YoY, while core CPI remained more sticky at 4.8% YoY. ![](https://www.datocms-assets.com/56652/1689346673-1.png?auto=format) This disinflation has primarily come from the normalization of supply chains, falling commodity prices (especially energy), and tighter monetary policy in the form of higher interest rates, which has indirectly reduced economic activity. The pandemic in 2020 and recession that soon followed resulted in a steep fall in demand while supply chains were disrupted. However, as things began to open back up and demand - now boosted by massive fiscal stimulus packages and monetary easing - came back online, the supply chains were still dysfunctional. ![](https://www.datocms-assets.com/56652/1689346930-2.png?auto=format) This created an environment where too much demand was chasing too little supply - a perfect inflationary cocktail.  On top of that, central banks around the globe were slow to respond to the rise in prices. As the inflation rate steadily rose, central bankers seemed to be asleep at the wheel. ![](https://www.datocms-assets.com/56652/1689347071-3.png?auto=format) This led to central banks rapidly trying to play catch up by raising interest rates at the fastest pace in history in an attempt to crush demand and bring inflation down. However, lucky for them, the supply side of the inflation equation did a lot of the heavy lifting for them. Supply chain bottlenecks have reduced, and improved global trade efficiency has helped bring down price levels, much to central bankers’ delight. There are numerous ways to illustrate how supply chains have normalized over the past year or so. The first is the Baltic Dry Index (BDI), a shipping and trade index that measures changes in the cost of transporting various raw materials, including commodities such as coal, grain, and iron ore. The index is used by economists and traders as a leading economic indicator because it can provide insights into global supply and demand trends. The BDI has dropped nearly 80% since it peaked in September 2021. ![](https://www.datocms-assets.com/56652/1689347245-4.png?auto=format) Tradingview The second way to observe this trend is by looking at the Global Supply Chain Pressure Index (GSCPI). GSCPI is a metric that combines various global transportation measurements and supply chain-related components of the PMIs from various economies with the goal to measure the potential of supply chain disruption. The higher the GSCPI, the more likely there will be supply chain disruptions. One can observe how GSCPI spiked during the pandemic and lockdowns but has now decreased significantly since. It now sits at one of the lowest readings dating back to 1997, indicating supply chain pressures have eased tremendously. ![](https://www.datocms-assets.com/56652/1689347299-5.png?auto=format) Another way to view this progress is by tracking the S&P Goldman Sachs Commodity Index, which is an index of all commodities. When looking at this index, one can observe how we experienced a rapid rise in the price of all commodities off the lows of 2020, only for them to peak in early 2022. Today, according to this index, commodity prices are down 28.2% since that time. This signals that supply chains have eased. ![](https://www.datocms-assets.com/56652/1689347333-6.png?auto=format) Tradingview Energy has contributed greatly to this recent disinflation. When digging in deeper to the June 2023 CPI report, gasoline prices are down 27.1% YoY. ![](https://www.datocms-assets.com/56652/1689347385-7.png?auto=format) BLS, CNBC Food prices have also come down steadily off their highs in 2023. The FAO Food Price Index continues its downward trend, down another 1.4% in May, and now 23.4% off its peak reached in March 2022. ![](https://www.datocms-assets.com/56652/1689347443-8.png?auto=format) FAO The decline in the costs of essentials like fuel and food in 2023 has provided consumers with more discretionary income, allowing them to continue spending in the economy. This recent disinflation also may help buoy the U.S. consumer because we have now seen back-to-back monthly positive real wage growth after nearly 6 quarters of consecutive negative growth. ![](https://www.datocms-assets.com/56652/1689347481-9.png?auto=format) This recent trend change could be why we have observed a rise in consumer sentiment of late. ![](https://www.datocms-assets.com/56652/1689347502-10.png?auto=format) @JeffreyKleintop Most of the consumer spending continues to be in the services sector as households are spending their money on eating out, entertainment, and travel. This can be seen below when looking closer at the inflation data. Core services ex-housing remains elevated, well above the Fed’s 2% target, at about 4% YoY. ![](https://www.datocms-assets.com/56652/1689347555-11.png?auto=format) This was never more evident than when Americans broke a new air travel record over the July 4th weekend. ![](https://www.datocms-assets.com/56652/1689347595-12.png?auto=format) TSA checkpoint travel numbers confirm that air travel is back, if not higher, than pre-pandemic numbers. People continue to travel after being cooped up in their homes during the pandemic. ![](https://www.datocms-assets.com/56652/1689347620-13.png?auto=format) Further evidence of consumer strength is provided by the number of ticket sales at live events. Live Nation posted record Q1 revenues and attendance in 2023. ![](https://www.datocms-assets.com/56652/1689347645-14.png?auto=format) All of this continued strength from the consumer could be inferred as a long-standing consequence of the extraordinary fiscal and monetary policies in response to the pandemic, which saw household excess savings explode. ![](https://www.datocms-assets.com/56652/1689347673-15.png?auto=format) @lawhon_sam Households still have excess savings remaining from those stimulus programs and continue to drain them. Some analysts expect household excess savings to be completely drained by the end of the year. However, as of today, it still provides the consumer with ample ammo to continue to spend in the economy. Signs that the economy is still running hot can also be seen in the Atlanta Fed’s GDPNow metric, which estimates a Q2 real GDP growth of 2.3%. ![](https://www.datocms-assets.com/56652/1689347797-16.png?auto=format) The inflation surge that began in 2021 has started to subside. But does this signal a sigh of relief, or the calm before the storm? The fear that’s starting to take hold now is that everyday consumer, already stretched thin, might just break. This could trigger a ripple effect, leading to deflation, and ultimately, a recession.  Troubling signs have begun to surface, indicating consumers are nearing their breaking point. For instance, rising auto loan delinquency rates signal a worrying trend. ![](https://www.datocms-assets.com/56652/1689347848-17.png?auto=format) Apollo In addition, there has been a noticeable dip in total credit and debit spending among high-income households. Considering that the highest income quintile (top 20%) contributes to around 40% of consumer spending, this is a notable data point. ![](https://www.datocms-assets.com/56652/1689347954-18.png?auto=format) Financial worry is casting a shadow over these high-income households, and questions are beginning to surface like: *“Can we continue to meet our minimum debt payme*nts?” ![](https://www.datocms-assets.com/56652/1689348002-19.png?auto=format) With personal balance sheets appearing increasingly grim, high-income consumers may start to tighten their belts more. Perhaps this gives us a clue as to why same-store weekly retail sales have gone negative year-over-year for the first time since 2020. ![](https://www.datocms-assets.com/56652/1689348037-20.png?auto=format) In the midst of all this, around 43 million Americans are bracing themselves to restart their student loan payments after over three years. With an average monthly payment of $395, this cohort is facing the reality of having less discretionary income. A significant portion of their income will be redirected towards repaying their student loans, resulting in less money flowing into the economy. ![](https://www.datocms-assets.com/56652/1689348069-21.png?auto=format) Yet, despite these troubling signs, consumers are holding strong, and inflation and the economy remain hot. All of this comes back to the unprecedented fiscal and monetary policies conducted during the pandemic, which flooded the economy with trillions of dollars. The BIS recently published its annual report, which admitted what many market observers already suspected – these policies have directly triggered the inflation surge. The report remarks, “*With the benefit of hindsight, the extraordinary monetary and fiscal stimulus deployed during the pandemic, while justified at the time as an insurance policy, appears too large, too broad and too long-lasting. It contributed to the inflation surge (Graph 20) and to the current financial vulnerabilities.*” - BIS, [2023 Annual Report](https://www.bis.org/publ/arpdf/ar2023e.pdf)  With asset prices still elevated, real wage growth now positive, households still flush with cash, and the economy still running hot, inflation remains too high. It begs the question, *“Has the “cure”* been worse than the *“disease?”* Were these policy responses more costly than beneficial? It appears that the BIS is correct in its assessment that the massive policy responses to the pandemic were too large and, thus, inflation rages on. Although inflation has shown signs of abating, mostly related to easing supply chains and dropping commodity prices, the Fed might have a harder time reining in more stubbornly persistent inflation than anticipated and getting CPI down to its 2% target. President of Spectra Markets, Brent Donnelly, said it well, ![](https://www.datocms-assets.com/56652/1689348115-22.png?auto=format) The Fed’s Christopher Waller gave us a sense of where Fed officials’ heads are at with inflation in [a recent speech](https://www.federalreserve.gov/newsevents/speech/waller20230713a.htm), “*While I expect inflation to eventually settle near our 2 percent target because of our policy actions, we have to make sure what we saw in yesterday's inflation report feeds through broadly across goods and services and that we do not revert back to what has been persistently high core inflation. The robust strength of the labor market and the solid overall performance of the U.S. economy gives us room to tighten policy further*.” Therefore, expect the Fed to persist with rate hikes, despite the recent downward surprises in inflation data. On the one hand, we see signs of inflation slowing down, disinflation taking hold, supply chains recovering, and commodity prices dropping. On the other hand, consumer sentiment remains high, wage growth is accelerating, and GDP growth is robust.   Caught between a rock and a hard place, the Fed was already behind the curve and is now in danger of overshooting, potentially triggering a recession just when their tightening policies are starting to show their impact. However, with the sheer amount of money that was injected into the economy over the past several years, we may find ourselves in a new norm of elevated inflation for the foreseeable future. In that scenario, investors will want to hold scarce, hard assets. Bitcoin continues to perform well during this period of persistent inflation. Since those inflationary government and central policies were enacted, Bitcoin has nominally greatly outperformed bonds, stocks, and gold. ![](https://www.datocms-assets.com/56652/1689348164-23.png?auto=format) Tradingview Bitcoin is now up 87.8% year-to-date, having well-outperformed major stock indices, bond indices, commodity indices, and real estate indices. ![](https://www.datocms-assets.com/56652/1689348234-24.png?auto=format) Tradingview Overall, the economy and central banks are in a tense tug-of-war. Inflation and disinflation are going back and forth. Which side will gain the upper hand? Only time will tell. But it would be prudent for investors to consider ways to diversify their portfolios with assets that protect their purchasing power during these turbulent times, and Bitcoin has proven that it can do just that. ![](https://www.datocms-assets.com/56652/1689348262-25.png?auto=format) Tradingview, Prices as of 07/14/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # How Bitcoin Challenges Keynesian Economics - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/how-bitcoin-challenges-keynesian-economics/ We’re in the midst of two great economic experiments. The Keynesian ideal of central control of money is being challenged by a novel money called Bitcoin. --- **Brady Swenson** · February 24, 2020 · Updated July 3, 2024 ### How Bitcoin Challenges Keynesian Economics *“We’re all Keyne­sians now.”* Milton Friedman coined the phrase, often mis-cred­ited to Richard Nixon, back in 1965, and its truth changed since. Unless you began your [Austrian economic](https://www.britannica.com/topic/Austrian-school-of-economics) educa­tion at birth in some unknown Austrian paradise on this planet at this partic­ular time in human history, we’re all Keyne­sians by default. ### What’s a Default Keynesian? A default Keyne­sian is a person who, probably unwit­tingly and passively, supports the central­ized monetary and fiscal policies that are descended from the ideas of econo­mist [John Maynard Keynes](https://en.wikipedia.org/wiki/John_Maynard_Keynes) simply because that’s *the way things are now.* ### Who’s John Maynard Keynes? He’s a dead econo­mist whose ideas currently have an effec­tive ideolog­ical monopoly on the global economy. ### Why Does This Matter? There are [excel­lent](https://www.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861) [resources](https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1) [avail­able](https://mises.org/library/ethics-money-production) to help you under­stand what money is and to learn its history, but here's the gist: Humans discov­ered money as a solution to the problems of barter, described by econo­mists as the [coinci­dence of 'wants problem](https://en.wikipedia.org/wiki/Coincidence_of_wants).' Human society arrived at a consensus, or [Schelling Point](https://en.wikipedia.org/wiki/Focal_point_(game_theory)), that gold is the best money. Over and over again through history, humans figured out how to centralize the power to control gold and inflate its value beyond its natural histor­ical infla­tion rate of about 1.5 – 2% (simply, the amount of gold we mine from the Earth yearly). Most recently, this human drama took place through the creation of the US Federal Reserve in 1913, the global agree­ment to use the gold-backed dollar as the global money — the Bretton Woods agree­ment — in 1944, and the removal of the U.S. Dollar from the gold standard by Nixon in 1971. Since then, central banks worldwide, including the United States Federal Reserve, have continuously inflated the money. They make printing it sound compli­cated and wise with lots of big words. Really it amounts to instantly creating more digital dollars out of thin air and giving it to big banks to lend or using it to buy lots of equities. Keynes played a key role in all this by providing academic justi­fi­ca­tion for govern­ment and central bank inter­ven­tion during reces­sions through monetary policy (reduc­tion of interest rates) and fiscal policy (govern­ment spending). The problem is that it is all too easy for central banks and govern­ments to lower interest rates, print money, and spend it in the face of a reces­sion as it is usually a popular thing to do in the short run. Still, the counter-cycle actions prescribed by Keynes to raise interest rates and taxes when the economy is growing are less popular and often never happen. Keyne­sianism gives credence to the conceit that a few people can effec­tively improve the function of money in an economy by control­ling it. Govern­ments and central banks love that idea for obvious reasons. The current world economic order is run by Keyne­sian thinking. It's simply *the way things are now*. But now there's another way. ### The Red Pill at the Bottom of the Rabbit Hole Two of the most loved Bitcoin metaphors are the red pill from *The Matrix*, and the rabbit hole, from *Alice in Wonder­land*. These two are invoked so often because they get at the idea that Bitcoin leads to an educa­tion, or reedu­ca­tion, on many fasci­nating topics. Chief among these topics is that [Bitcoin](https://www.swanbitcoin.com/what-is-bitcoin) is teaching us default-Keyen­sians what money really is — and this is the most impor­tant lesson Bitcoin teaches us. ### What Money Really is These days, like many before them, we're forced to use certain monies by the decree and enforce­ment of national govern­ments and monarchs. But this isn't what money really is. This is what we Bitcoiners refer to as *"fiat money."* Despite what default Keyne­sianism has us believing, money isn't that compli­cated. Money is simply a good, asset, or technology that is deter­mined by the free market to be useful to solve the problems of barter and store the value of your labor over time. Money has network effects, just like the internet and the social networks built on top of it. Austrian economics hypoth­e­sizes that left alone by central author­i­ties, human markets will naturally converge on the best money, often called *"sound money."* As mentioned above, humans have, throughout history, converged on gold as the most sound form of money. Gold, however, could not escape control by central author­i­ties, so human societies have been engaged in a swing back and forth between sound money and some debased, inflated version of it. ### A New Option: Bitcoin is the Best Money We've Found The techno­log­ical miracle of Bitcoin is that Satoshi invented sound money able to resist capture by central author­i­ties. It is the first good, asset, or technology able to be free to operate as money for a global human economy. It is unable to be confis­cated, censored, debased, or inflated. Bitcoin is a profound '[Zero to One'](https://www.amazon.com/Zero-One-Notes-Startups-Future/dp/0804139296) moment, and the impli­ca­tions for human society are nothing short of revolutionary. ### The Re-education of the Default Keynesian Masses The collec­tion of economic ideas that have persisted as an alter­na­tive, like heroic cockroaches after a Keyne­sian ideolog­ical Armageddon, is called Austrian economics. Austrian economic thinking has been carried forth by small groups of devotees to the academic tradi­tion of Mises, Hayek, and Rothbard, polit­ical bands like the Liber­tar­ians of the United States, and specu­la­tors like the gold bugs. The first Bitcoiners were the cypher­punks who came mostly for the tech. The next wave brought the Liber­tar­ians and gold bugs, who came mostly for the sound money. Based on my obser­va­tion of avail­able liter­a­ture, public internet commu­ni­ca­tions, and my private conver­sa­tions with Bitcoiners, it appears to me that both of these groups skewed heavily toward aware­ness of Austrian economic ideas compared to the general population. I ran a Twitter poll earlier this week to ask Bitcoiners about when they first started learning Austrian economic ideas, before or after they discov­ered Bitcoin. ![](https://www.datocms-assets.com/56652/1689407518-brady-rabbit-hole.png?auto=format) The results [surprised](https://twitter.com/NSKinsella/status/1140792765929984003) some seasoned Austrian economics devotees. Right now, with a signif­i­cant sample set, it appears that two-thirds of Bitcoiners have been intro­duced to Austrian economic ideas by Bitcoin. We're in a new wave of Bitcoin — one in which most new Bitcoiners are default Keyne­sians being taught what money really is by Bitcoin itself. ### Two Great Experiments We're now amid competing exper­i­ments of epic propor­tions. Central banks and govern­ments worldwide have gone all-in on central­ized, infla­tionary monetary and fiscal policies. And the first sound money able to resist control by a central authority is competing against this central­ized model of money control. Austrian economics has a new and better horse in the race. Where gold inevitably wore down in the face of the constant pressures to centralize control of money, Bitcoin seems able to resist and, indeed [actually grow stronger in the face of central­iza­tion pressures](https://medium.com/@aantonop/anti-fragile-blockchain-39c894613c7e). We know very well from history that humans will centralize control of money if it is at all possible, and the value of central­ized money is proven to be inevitably debased and inflated away. As the first sound money resis­tant to central control, [Bitcoin is wealth insur­ance](https://twitter.com/dergigi/status/1134420038994354176) against the histor­i­cally probable eventu­al­i­ties of the central­ized control of money. It's downright *rational* for all default Keyne­sians to hodl Bitcoin because *the way things are now* is no longer how it always has to be. There are default Bitcoiners being born every day. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Is Bitcoin Like the Dutch Tulip Bubble? - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/is-bitcoin-a-bubble/ Is Bitcoin’s price in a bubble? Is this the Dutch Tulip Craze all over again? The answer might surprise you… --- **Yan Pritzker** · February 27, 2020 · Updated June 6, 2024 If you could use tulips to instantly transmit value across the globe to anyone in any country, regard­less of whether they had a functioning govern­ment or banking system. If the govern­ment couldn’t come to your door and take away your tulips or control who you could sell them to or in what ways. If tulips could last for hundreds of years or millennia and be handed down to your children, redeemed for other forms of value. If you could hide tulips in your brain and walk out of a failing nation holding all your wealth in your head without anyone being the wiser. If you could program tulips to require autho­riza­tion from multiple parties before they could be passed on in a completely unbreakable way. If it was impos­sible to grow inferior malnour­ished tulips by skimping on nutri­ents and selling them like the real deal. If each tulip carried inscribed on its petals its entire unforge­able history of ownership. If someone couldn’t invent a superior way to produce tulips and flood the market to crash the price. Then yes, [Bitcoin](https://www.swanbitcoin.com/what-is-bitcoin) is just like Dutch tulip bubble. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # The Three Futures of Digital Money - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/future-of-digital-money/ As money rapidly turns digital, we must contemplate three possible futures of money: central bank-managed, corporate-issued, and decentralized. --- **Yan Pritzker** · February 26, 2020 · Updated June 6, 2024 As money rapidly turns digital, we must contem­plate three possible futures of money: central bank managed, corpo­rate issued, and decentralized. But first, some brief history: ### The Current Monetary System is a Very Recent Invention Most people reading this, being younger than 75 years old, have known money as something the govern­ment issues at will, without any backing. In fact, the current global finan­cial system, which hinges on the US Dollar as the world reserve currency, was [born as recently as 1944](https://en.wikipedia.org/wiki/Bretton_Woods_system), was [stripped of its gold backing only in 1971](https://mises.org/wire/today-1971-president-nixon-closes-gold-window), [has created massive inequality](https://wtfhappenedin1971.com/), and [may, in fact, be on its way to a bitter end](https://www.cnbc.com/2019/10/31/de-dollarization-russia-china-eu-are-motivated-to-shift-from-using-usd.html). We are now witnessing the next rapid trans­for­ma­tion in the nature of money. The vast majority of dollars in existence are already digital entries in bank databases. Many of us swipe our credit cards or wave our mobile phones or watches at payment termi­nals without giving much thought to the impli­ca­tions of such a system:  Every payment is now controlled and surveilled by an inter­me­diary, whether a corpo­ra­tion or government. If we want a glimpse of the future, we can look to China, where [86% of the popula­tion already uses digital payments.](http://www.chinabankingnews.com/2019/04/15/chinas-mobile-payments-penetration-rate-highest-in-the-world-at-86-pwc-report/) While global penetra­tion of mobile payments is standing at a modest 34%, it’s not hard to see that with exponen­tial growth, we will likely see the vast majority of payments go digital within a generation. Once payments go fully digital, we can expect one of three futures, depending on who controls the produc­tion and transfer of digital money. ### Central Bank Digital Currency (CBDC) CBDCs are no longer a fiction. Nearly every major central bank is either [planning to launch](https://www.telegraph.co.uk/china-watch/technology/china-digital-currency/) or [planning to inves­ti­gate](https://www.reuters.com/article/us-usa-fed-harker-digital-idUSKBN1WH1L4) issuing their own digital currency. Several inter­esting (as in [*“May you live in inter­esting times”*](https://en.wikipedia.org/wiki/May_you_live_in_interesting_times)*)* things become possible in this world. The first of these is negative interest rates, which allow the bank to make your money evapo­rate over time unless you spend it, as per this paper from the IMF: ***"In a cashless world, there would be no lower bound on interest rates. A central bank could reduce the policy rate from, say, 2 percent to minus 4 percent to counter a severe reces­sion. The interest rate cut would transmit to bank deposits, loans, and bonds. Without cash, depos­i­tors would have to pay the negative interest rate to keep their money with the bank, making consump­tion and invest­ment more attrac­tive. This would jolt lending, boost demand, and stimu­late the economy."*** [[source]](https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/) If the thought of your money being stolen from you automat­i­cally to “stimu­late the economy” is scary to you, good. You still live in a world where negative interest rates [haven’t been normal­ized](https://www.bloomberg.com/news/articles/2019-08-08/the-non-weirdness-of-negative-interest-rates). On the other hand, if you’re reading this from a future where this is the new normal, remember: your prede­ces­sors were warned, and they did nothing. The second thing CBDCs allow for is much greater surveil­lance and economic censor­ship. [China’s already playing this game in full force](https://techcrunch.com/2019/06/12/as-payment-and-surveillance-technologies-collide-free-speech-could-be-a-victim/). Latin American dicta­tors also love economic censor­ship, so here’s another beauty from the BBVA: ***"CBDCs are Central Bank-issued instru­ments that combine cryptog­raphy and DLTs to achieve four possible general goals."*** [*[source]*](https://www.bbvaresearch.com/wp-content/uploads/2018/04/CBDC-Latam.pdf) - *Improve inter­bank settlement* - *Digitize cash to improve efficiency in manage­ment and payments* - ***Develop a new monetary policy tool to overcome zero-bound interest rates*** *😱* - ***Increase surveil­lance*** *and reduce finan­cial system instability* ### Corporate Digital Tokens This future is exempli­fied by the likes of Libra, Hashgraph, Ripple (XRP), and Telegram. These compa­nies or corpo­rate conglom­er­ates expect us to buy their corpo­rate-issued tokens and treat them as money in the digital world while they hang on to our *“real money”* and earn interest on it in the real world. This vision of the future is quite bleak. For a visual, look to the movie Wall‑E, where a giant corpo­ra­tion called Buy-n-Large takes over the entire world, to the point where the de facto [leader of Earth is the CEO of BnL](https://pixar.fandom.com/wiki/Shelby_Forthright). If this future sounds prepos­terous, consider what you believe if you’re buying up tokens of Ripple (XRP), Hashgraph, Telegram, Libra, or any other corpo­rate-issued money. If these tokens do indeed become world money, then the people who issue them will be the wealth­iest in the world, will own a giant propor­tion of world money, and will be our de facto leaders, with the oligarch class of token fund bros following close behind. The peddlers of such systems will sell you awful lies. They may be so deluded as to believe them for themselves. Does Zuck really think he’s banking the unbanked with Libra? He actually might. Maybe he intends in full faith to maintain the Libra currency peg basket in perpe­tuity. But will this hold true of Supreme Chancellor Zuck III, his great-grandson?  I don’t know. I wouldn’t want to find out. Every currency ever backed by something of value has had that peg broken. Not only do we have to trust these corpo­ra­tions with our money, but this system has all the same proper­ties that the CBDCs do since they ultimately operate under the watchful eye of govern­ments, who will surveil and censor to their heart’s content in the name of protecting us from ourselves. Poten­tially worse, these new corpo­rate behemoths could overpower states, creating the very world Wall‑E warns us about. ### Decentralized Money Person­ally, I don’t think any of the above will happen. And the reason is: we now have [Bitcoin.](https://www.swanbitcoin.com/what-is-bitcoin) Those of us living in America or other consti­tu­tional democ­ra­cies funda­men­tally believe that limiting the state’s power is a *good thing.* Yet we give the state unchecked power to spend money. We have seen in practice that [the debt ceiling is a charade](https://en.m.wikipedia.org/wiki/History_of_United_States_debt_ceiling) and that the govern­ment creates money whenever they want. [Fiat money, backed by nothing, is printed out of thin air to fund perpetual wars.](https://mises.org/library/war-and-inflation) While a consti­tu­tional democ­racy is decent at preventing any one branch of govern­ment from taking too much control, it is not immune to corrup­tion by bribery, whether the outright illegal kind or the legal kind we call lobbying. When the state wields power over the monetary press, it never ceases to expand, as money creates power, and power creates money in a perpetual cycle. It doesn’t matter which party is in charge when money is at stake; the game is who can get their hands on more of it first. Bitcoin fixes this. With Bitcoin, [the monetary policy is set in stone](https://en.bitcoin.it/wiki/Controlled_supply), enforced, and audited by every node on the network, preventing anyone from arbitrarily printing more. Rather than giving the state monopoly over money produc­tion, the produc­tion of bitcoins is decen­tral­ized by allowing anyone who commits hardware and burns electricity to partic­i­pate in securing the network and earning Bitcoins in reward. As a volun­tary system, people can now choose to [save some of their income in Bitcoin, regard­less of where they live](https://link.medium.com/VZzV0fZZh1) or what money their govern­ment imposes on them. As they build up a stash of BTC, they amass sover­eignty and option­ality to [escape their country with their wealth secure](https://time.com/5486673/bitcoin-venezuela-authoritarian/) if their circum­stances become dire. The existence of [the Bitcoin option](https://www.swanbitcoin.com/what-is-bitcoin) is itself a check on misbe­havior on the part of the state. As more people acquire these coins, they opt out of the fiat system of their state, eventu­ally gaining the power to move freely in the world to a juris­dic­tion that offers them the freedom they seek. Over time, this defunds autocratic states, as they lose the human capital they require to function. ### The Choice is Yours All money will be digital in the future. Whether it happens in your lifetime or in the lifetime of your children and grand­chil­dren is relatively unimpor­tant. What’s more impor­tant is that we now have freedom of monetary choice, thanks to [Bitcoin](https://www.swanbitcoin.com/what-is-bitcoin). If you believe that free and decen­tral­ized money is the only money of the future, you know what to do. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # What is a Bitcoin Fork? - Swan Bitcoin URL: https://www.swanbitcoin.com/education/what-is-a-bitcoin-fork/ Unlike a stock split, the new shares still refer to the original company; a Bitcoin fork creates new assets out of thin air at zero cost and grifts them to existing holders. A fork does not affect the 21M supply limit. --- **Yan Pritzker** · February 26, 2020 · Updated June 25, 2024 You may have heard a lot of noise in the media about Bitcoin *“forking.”* Because we have no analog to forks in the tradi­tional world, some sources have incor­rectly referred to [Bitcoin forks as dividends](https://www.bloomberg.com/news/articles/2017-10-25/bitcoin-is-paying-out-dividends-now-just-not-to-everyone) or have [misun­der­stood forks as if they expand the supply of Bitcoin](https://www.cnbc.com/2017/10/25/bitcoin-gold-price-plunges-what-is-hard-fork.html). The truth, however, reveals itself in market data. Unlike a stock split, where the resulting shares still refer to the original company, a Bitcoin fork is much more analo­gous to creating new unrelated digital assets out of thin air at zero cost and gifting them to existing holders of Bitcoin. A Bitcoin fork does not affect the 21 million supply limit of Bitcoin itself. Let’s dive in. Imagine you have the world’s gold stored in the ultra-securely engineered Fort Knox under heavily armed guard. You build a small, poorly engineered shack and call it Fort Knox Lite, securing it with a single guard. You paint some rocks a gold color and put them in the shack. You then announce to the world that you’ve *“forked gold”* and issued every holder of gold an equiv­a­lent amount of free rocks inside your shack. We need many miners guarding Bitcoin, making it expen­sive to 51% attack. A fork of Bitcoin that has only a few miners, just like your poorly protected shack, is easy to attack. The code is probably struc­turally unsound, built by a small inexpe­ri­enced team of devel­opers with poor peer review, just like your shack. Forked coins aren’t accepted by any existing nodes because they break the rules of Bitcoin. Likewise, people with chemical tests for gold wouldn’t accept gold-painted rocks. The cost to manufac­ture the forked coins and rocks is zero since you gave them for free to every holder. This limits the market’s interest in forks of Bitcoin. For example, let’s look at Bitcoin Cash (BCH), possibly the best-marketed fork of Bitcoin. This coin launched in 2017, at the tail of a long war over the Bitcoin block size. This parameter affects both the trans­ac­tional capacity and decen­tral­iza­tion aspects of Bitcoin. Everyone who held Bitcoin was given equal amounts of the new coin. Many Bitcoin holders immedi­ately sold this *“costless”* variety to accumu­late more of the truly scarce original Bitcoin, driving the price lower. Although this coin shares more than 99% of its code and thus technical DNA with Bitcoin, the market has valued it at only around 3 to 4% of Bitcoin’s value. Dozens more forks followed, trying to co-opt Bitcoin’s brand name, but the market valua­tions of those fared even worse. As you consider the thousands of cryptocur­ren­cies that have been created, none of which have signif­i­cant market value and almost nonex­is­tent liquidity, ponder this paradox: creating Bitcoin forks is free and easy. However, changing the rules of Bitcoin or creating new Bitcoins is anything but easy. Next time you hear someone with limited Bitcoin knowl­edge ask why Bitcoin is special, answer with that. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Does Bitcoin Have Any Intrinsic Value? - Swan Bitcoin URL: https://www.swanbitcoin.com/education/does-bitcoin-have-intrinsic-value/ Bitcoin represents economic liberty. If you own Bitcoin, you have portable wealth. You can walk away from a failing regime and not lose your life savings. --- **Yan Pritzker** · February 26, 2020 · Updated June 27, 2024 Many people think that for something to become money, it must have some *intrinsic*, or more correctly, *utility* value. Let’s suppose for a moment that you believe in the utility value and think that gold was used as money because it is shiny, and people want to wear shiny things. Let’s suppose [cowry shells were used for 4000 years as money](https://en.wikipedia.org/wiki/Shell_money) and exchanged in some cases at a rate of a [handful of shells for a cow](https://www.nbbmuseum.be/en/2007/01/cowry-shells.htm) because people found them so attrac­tive and rare **(far from their source of produc­tion)** that they were worth a cow. From the examples above, we can see the idea of intrinsic value is specific to cultures. In some cultures, shiny metals were valued. In others, shells or beads.  What do we value today? Clearly, it’s not cowry shells, which can be had for about $5/100 on Etsy. I posit that what we **(most people on Earth)** value is liberty and freedom. Freedom from oppres­sive regimes. Freedom from autoc­racy. Freedom to do what we please with the money we earn. Freedom to leave our country with our wealth when our country is no longer a welcome environ­ment for us. Living in a first-world economy, it is diffi­cult to under­stand the value of Bitcoin. Isn’t it just a slower, more expen­sive way to send money?  What’s wrong with PayPal, Chase QuickPay, or any number of options that are free and instan­ta­neous?  The answer is that nothing is wrong when liberty is an assump­tion, and you have a functional banking system and relatively non-corrupt government. But this is not the case in huge parts of the world. When we immigrated to the US from the former Soviet Union, my parents were allowed to exchange approx­i­mately $100 per person of Soviet Rubles for USD. The rest had to be sold on the black market for pennies on the ruble. It was illegal to own U.S. dollars, and the govern­ment strictly controlled the entire economy. This kind of currency control is playing out worldwide today in places like Venezuela, Argentina, Iran, and Zimbabwe. There are cash short­ages as the govern­ment prints ever more digital money while denying people sover­eignty by not issuing cash that you can carry with you and exchange even on a black market. This means you’re completely at the mercy of the corrupt govern­ment. They can freeze your bank account, steal your funds, or simply not allow you to leave with the money you’ve worked all your life to save as the economy tanks and the money hyper­in­flates, you’re left with nothing. What is the value of Bitcoin in such economies?  Bitcoin repre­sents economic liberty. If you own Bitcoin, you have portable wealth. You can walk away from a failing regime and not lose your life savings. Critics of Bitcoin point to its volatility without realizing that the Venezuelan Bolivar infla­tion has been between 50 – 150% *per month* for the last 3 years, topping out at upwards of a million percent per year. The Bolivar has completely failed as money because it no longer stores value, and the people holding it are now locked into economic despair.  What if they were able to hold Bitcoin instead?  How much misery in this world would be prevented?  In Afghanistan, women previ­ously limited by a patri­ar­chal society are [gaining finan­cial autonomy because of Bitcoin.](https://news.bitcoin.com/afghan-entrepreneur-empowers-women-through-bitcoin-in-afghanistan/) What’s more, cash is being eradi­cated worldwide, even in first-world countries. Already most trans­ac­tions we do in the US are done through corpo­rate payment networks like VISA and settled digitally by our banks. What we gave up during the transi­tion from physical cash to digital payments is privacy and control. We no longer own the money we claim to have, and our data is constantly sold to the highest bidder for the privi­lege of using these payment networks. ### So, What is the Intrinsic Value of Bitcoin? Unlike money we’re used to, Bitcoin isn’t shiny, heavy, or made of a cotton/linen blend. But on the other hand, you can carry it without a suitcase. It’s digital, like the money in your bank account and your PayPal account, but unlike those sums of money, it can’t be taken from you if the govern­ment decides you’ve done something wrong. Like a credit card, you can use Bitcoin to buy things or send them to someone halfway around the world; however, unlike the credit card system, you can do so without giving up your identity and finan­cial details to [central­ized repos­i­to­ries that get hacked.](https://www.zdnet.com/article/equifax-confirms-more-americans-were-affected-by-hack-than-first-thought/) It can’t be made into jewelry, though by signing messages with private keys you control, you can flaunt your wealth if you so choose without exposing it to loss. It is not *“backed by”* a govern­ment central bank complex that [decides in a secret room whether it will lose 2 or 4% of its value this year](https://tradingeconomics.com/united-states/inflation-cpi). It does have a guaran­teed supply schedule that cannot be manip­u­lated by humans and a value that is decided purely by the market. The intrinsic value of Bitcoin is its ability to [move across national borders undetected](https://medium.com/@mattahlborg/nuanced-analysis-of-localbitcoins-data-suggests-bitcoin-is-working-as-satoshi-intended-d8b04d3ac7b2). There is liter­ally no other asset that is both scarce, digital, and portable in your head by memorizing twelve words. Moreover, because of its pseudo-anony­mous nature, it is possible for people in any country, regard­less of how tightly currency is controlled or oppressed, to [start earning Bitcoin from anywhere in the world](https://www.inverse.com/innovation/57129-fereshteh-forough-afghanistan-bitcoin). This kind of liberty has a value that has yet to begin to get tapped. Stop thinking of Bitcoin as a payment network, and start thinking of it as a tool to take down those seeking to control us. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Is Bitcoin the Myspace of Crypto? - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/is-bitcoin-the-myspace-of-crypto/ Sound money requires a commitment to decentralization, and properties hard to change and attack. Altcoins are built by centralized teams with a profit motive, not a happy accident of a growing ecosystem by cypherpunks. --- **Yan Pritzker** · February 27, 2020 · Updated June 27, 2024 ***"Let's say Buffet is right. Bitcoin dies. So what? Myspace and Friend­ster both died, but they paved the way for other social media like Facebook and Twitter to completely overrun the planet. Crypto is out there, and it's not going away."*** - Gilfoyle, Silicon Valley on HBO After under­standing [the basics of how Bitcoin works](https://www.swanbitcoin.com/what-is-bitcoin), the next logical question tends to be: *“Blockchain tech sounds inter­esting. How do we know a better version won’t show up and turn Bitcoin into the Myspace of crypto?”* A moat is a compet­i­tive advan­tage a business builds that prevents new entrants from easily competing. For Myspace, that moat was a huge user base with friend relation­ships. People wouldn’t use competing services if their friends weren’t already there. But as large a moat as a well-connected social graph is, it wasn’t enough to stop Facebook from eating Myspace’s lunch in the span of only a few years. Bitcoin’s moat is much, much larger than Myspace’s. To under­stand that, let’s examine what it would take for a Bitcoin Competitor to displace Bitcoin. ### Be a More Salable and Liquid Money The first thing to under­stand is that the Myspace vs. Facebook compar­ison is poor because you can have an account on Myspace and Facebook simultaneously at no cost. Many people did this during the transi­tion phase from one to the other. Once enough critical mass was on Facebook, people stopped using Myspace. This is not how money works, however. If you hold a dollar’s worth of Bitcoin, that’s a dollar’s worth of another coin that you’re not holding. You have to make a conscious decision to sell one currency for another. You cannot store the same value in both at the same time. Now ask yourself why you would hold anything but the most liquid, widely accepted currency? The answer is only specu­la­tion. If you can’t shift the entire economy around you to also hold the other coin, there is no way that it can become dominant. Bitcoin’s liquidity is far beyond any of its competi­tors. Today, the market cap of Bitcoin is about $160B, according to [Messari](https://messari.io/onchainfx). The next biggest competitor, Ethereum, has only $25B of market cap. This doesn’t even measure the true liquidity by looking at how much you could meaning­fully sell before the price slips signif­i­cantly. Liquidity drops exponen­tially as you go down the list of largest coins. The number 10 competitor to Bitcoin has 0.5% of its daily trading volume. Liquidity is a snowball. Holding the most liquid money means other people want it, which begets more liquidity. By holding anything but the most liquid money, you actively punish yourself while waiting for everyone else to do the same. The economic incen­tives do not align in favor of liquidity shifting overnight to a competitor. ### Demonstrate $100B+ Worth of Security Over Ten Years By circum­stance, Bitcoin was allowed to grow from a worth­less internet geek exper­i­ment that nobody cared about, to financing the purchase of a pizza for 10k BTC, to a peak price of $20k USD per bitcoin. It did all this relatively quietly, without anyone breathing down its neck. During this time, it built up a world-class immune system from years of attacks and grew the world's largest network of hash power. For ten years, securing more than 100 billion dollars, it has been impos­sible to hack. It is nearly impos­sible to launch a new cryptocur­rency today quietly. The cat is out of the bag, and all the tricks are well-known. Let’s look at an alter­na­tive blockchain, EOS, [worth about ~$10 billion at launch](https://coinmarketcap.com/currencies/eos/) and nearly $2 billion as of mid-2020. It experi­enced a freeze two days after launch due to bugs in the code. These bugs were patched within hours with minimal oversight or review. Will you put $100B of value on a network like that?  EOS may be around in 10 years, but by then, Bitcoin will be 20 years old and securing trillions in value. ### Thwart Attacks From Existing Hash Power Given the thousands of coins out there using dozens of hashing algorithms, any new coins are threatened by a 51% attack from existing hash power. This [has already happened to Bitcoin Gold](http://fortune.com/2018/05/29/bitcoin-gold-hack/) and [several other coins](https://www.coindesk.com/blockchains-feared-51-attack-now-becoming-regular/). A new competitor has to survive attacks by existing hash power or use an algorithm with no special­ized ASICs. If there are no ASICs, the system can easily be attacked by renting commodity GPUs, which are widely avail­able. It also cannot start securing a large amount of value as EOS did on day one, which is reckless and a good way to get into central­ized patching behavior. So that means they can’t raise money either, but rather do a fair launch similar to Bitcoin and grow slowly in value to build up their security model propor­tion­ally. However, if they’re growing slowly, they cannot catch up to Bitcoin’s user base and liquidity due to the passage of time. ### Be Highly Decentralized A large part of Bitcoin’s security model comes from a high degree of decen­tral­iza­tion. This means the protocol is hard to change and thus can be trusted to honor the proper­ties promised in its code (fixed supply, etc.). This property was proven when many businesses and miners got together and wanted to push a change to the block size to steer the protocol in a partic­ular direc­tion. Their [fork](https://www.swanbitcoin.com/what-is-a-bitcoin-fork) was rejected by users and failed spectacularly. A competitor that’s highly decen­tral­ized rules out any compa­nies or teams founded by known people, as that creates a central point of failure and coercion. It also rules out any coins willing to *“move fast and break things”* since you can only do that when you’re central­ized. Any competitor is either moving fast and gets central­ized or moving slow and can never catch up. ### Attract the Best Developers in the World Much like Linux created a whirl­wind of activity that prevented other *Nix-like systems from competing, so has Bitcoin. Every day this commu­nity grows, and new compa­nies are built on top of Bitcoin, offering new services. A competitor has to steal devel­oper mindshare from an exponen­tially growing nucleus which includes dozens of compa­nies, educa­tional programs, and conferences. ### Grow a Worldwide Financial Network [Hundreds of exchanges world­wide](https://coinmarketcap.com/currencies/bitcoin/#markets), hundreds of hedge funds and trading desks, and a network of people who [already use Bitcoin as an alter­na­tive to failed curren­cies like the Venezuelan Bolivar](https://www.forbes.com/sites/realspin/2017/02/03/why-venezuelas-currency-crisis-is-a-case-study-for-bitcoin/#4671a1d719b2). All these things would have to be built for a Bitcoin competitor to displace it.  Insti­tu­tions like the Chicago Mercan­tile Exchange, which trades in Bitcoin futures, aren’t going to list every new competitor without tons of existing exchange volume to back it. You’d have to convince hundreds of businesses to accept this new competitor instead of Bitcoin. A competitor that is likely less secure, less liquid, has less compe­tent devel­opers, and by defin­i­tion less adoption world­wide. That’s a steep hill to climb. ### Be a Sounder Money There is a [gross misun­der­standing that Bitcoin is supposed to be a fast and cheap way to send money](https://fintechnologynews.com/neither-fast-nor-cheap-choosing-bitcoin-is-foolish-says-nanopay/). It clearly cannot be that based on its funda­mental proper­ties involving a world­wide repli­cated ledger. However, Bitcoin’s primary and actual demon­strated use case as censor­ship-resis­tant sound money is growing. Anything else, such as making remit­tances cheaper, is a cherry on top. Most would-be competi­tors still think they need to solve the fast payment use case, which is already solved by dozens of central­ized compa­nies world­wide and solved reason­ably well. And it’s also being solved by the quickly growing Light­ning Network on top of Bitcoin. Competing on the sound money front requires an above-all commit­ment to decen­tral­iza­tion and proper­ties that are truly hard to change and attack. Unfor­tu­nately, coins cannot compete on this front by virtue of the fact that they are typically built by central­ized teams with a profit motive and not a happy accident of a slowly growing ecosystem that was created by cypherpunks. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Exploding Three Myths About the Upcoming Bitcoin Halving URL: https://www.swanbitcoin.com/industry/bitcoin-halving/ The next Bitcoin halving is almost here. We explore whether the halving is priced in, if other coins are a model for Bitcoin, and fear of a mining death spiral. --- **Yan Pritzker** · March 1, 2020 · Updated June 6, 2024 The next [Bitcoin halving (aka halvening) is almost here](https://www.bitcoinblockhalf.com/). In May 2020, the reward for mining new blocks will be cut in half from 12.5 to 6.25 Bitcoins.  A halving occurs after every 210,000 blocks **(approx­i­mately every four years)** until all 21 million Bitcoins have been released by roughly the year 2140. As the supply of newly released coins dwindles, the price of Bitcoins could rise if demand remains consistent. There are a lot of miscon­cep­tions around halvings. Let’s explore a few of them… ### Myth #1: The Halving is Priced in Some believe that because [Bitcoin’s stock-to-flow model](https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25) is already known, the halving is already priced in correctly (i.e., already reflected in Bitcoin’s price). [Joe Weisen­thal](https://twitter.com/TheStalwart/status/1157331492453933057?s=20), the editor at Bloomberg, noted: ***“You can’t simul­ta­ne­ously believe that markets are smart/efficient and also believe that events liter­ally everyone can see coming at the same time actually matter.”*** [Meltem Demirors](https://twitter.com/Melt_Dem) of CoinShares, a cryptocur­rency investment/research firm, [argued](https://twitter.com/Melt_Dem/status/1209457337393647617) that due to the rise of Bitcoin and cryptocur­rency deriv­a­tives, which decou­ples these assets from their inherent value and supply-demand economics, ***“there is a very real possi­bility the price of Bitcoin does not go up after halving.”*** #### The Truth: Halvings have indeed been known since the incep­tion of Bitcoin. If this halving is priced in, that would imply that past halving should have also been priced in. Yet in the past two halvings, the price skyrock­eted in the two years following. The halving impacts the future supply of Bitcoin. Since [95 – 99% of people world­wide are not in Bitcoin markets](https://medium.com/@coventureresearch/how-many-people-own-bitcoin-9dd3ddd7bba5) and will be entering after the halving, the future will bring more demand to an inflex­ible supply. When a supply shock like the halving occurs, one can’t predict where demand will meet the new-found supply. It’s also worth mentioning that many people who currently own Bitcoin, perhaps even the majority, do not know about the halving. A check of [Google trends shows *“Bitcoin halving”* on the rise](https://trends.google.com/trends/explore?q=bitcoin%20halving&geo=US). The knowl­edge of the halving is still growing. With each halving, comes even [higher price expectations](https://www.swanbitcoin.com/bitcoin-price-prediction/) among big industry players and institutions. Pseudo­ny­mous Bitcoin analyst [Plan B, ](https://medium.com/@100trillionUSD/efficient-market-hypothesis-and-Bitcoin-stock-to-flow-model-db17f40e6107)the author of the stock-to-flow model, argues that while [markets price in all infor­ma­tion, they sometimes misprice risk](https://medium.com/@100trillionUSD/efficient-market-hypothesis-and-bitcoin-stock-to-flow-model-db17f40e6107). He points out that assets gener­ally have returns corre­lated to their risks, but Bitcoin appears to be liter­ally *“off the charts”* on its risk-to-reward ratio. He says, ***“It seems that these risks have been overes­ti­mated by the market, and that bitcoin really was a great invest­ment oppor­tu­nity, in line with [stock-to-flow] model.”*** ![](https://www.datocms-assets.com/56652/1689615725-halving-yan.png?auto=format) *S*[*ource: twitter.com/ChartsBtc*](https://twitter.com/ChartsBtc/status/1179040494157848578?s=20) ### Myth #2: Bitcoin Will Crash Because Other Coins Crashed After Their Halving Some believe that since other coins dumped after their halvings, the same will happen with Bitcoin. They point to the example of LTC (Litecoin): [*“Hype Over Litecoin’s Halving Leaves Owners Holding the Bag.”*](https://www.bloomberg.com/news/articles/2019-08-02/crypto-hype-over-halving-leaves-litecoin-owners-holding-the-bag) #### The Truth: This belief ignores the other funda­mental issues that plague altcoins like LTC. Bitcoin’s trading volume is typically more than the next 30 largest altcoins by market capital­iza­tion combined. The smaller the market, the easier it is to manip­u­late. [Traders use altcoin trading to accumu­late more Bitcoin](https://bitcoinist.com/popular-crypto-analyst-explains-how-to-accumulate-bitcoin/), while [Bitcoin itself is used as a store of value and not often moved](https://www.newsbtc.com/2019/12/28/70-of-bitcoin-moved-6-months-means-big-bull-run-coming/). People plan to [pass Bitcoin on to their children](https://www.wealthmanagement.com/estate-planning/estate-planning-bitcoin-explained). At the same time, it’s hard to find anyone who seriously considers this for any other altcoin. This makes sense, as [only the coin with the highest liquidity and saleability across time and space can be consid­ered a monetary good](http://monadnock.net/menger/money.html); this is a self-reinforcing characteristic. [Other coins are neither scarce nor secure, like Bitcoin](https://medium.com/@jimmysong/on-altcoin-valuation-bf19a30ee0df). It is perhaps for this reason that gold and Bitcoin have strong price corre­la­tions with their [stock-to-flow models](https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25), and other altcoins do not, indicating that we should not use altcoin behavior to predict Bitcoin behavior. ### Myth #3: The Halving Will Cause a Mining Death Spiral Block rewards are granted to Bitcoin miners for performing the work of securing the Bitcoin ledger. The halving is a reduc­tion in mining rewards. If miners no longer receive as many block rewards, will they continue mining, or will they sell what they have and leave the market, driving prices and hash rate (calcu­la­tions per second performed by miners and adding to the security of the network) lower, and creating a *“mining death spiral”*? Ramak J Sedigh, founder and CEO of Plouton Mining, [says](https://coinrivet.com/what-impact-will-the-Bitcoin-halving-have-on-bitcoin-mining/), ***“The upcoming halving will force the small opera­tors and those running S9s out of the market, except in the unlikely scenario that BTC reaches a new all-time high by the end of May.”*** Jeffrey Barroga, Digital Marketing Officer at peer-to-peer Bitcoin market­place Paxful, says, ***“Mining is already compet­i­tive and resource-exten­sive as it is, and when you combine that with the impending block reward reduc­tion in May, hobbyist miners, and small players might find that whatever BTC they gain is insuf­fi­cient to pay for the overhead costs of running their rigs.”*** #### The Truth: Bitcoin has a built-in Diffi­culty Adjust­ment Algorithm. The mining process is similar to throwing darts and trying to hit a bullseye of a partic­ular size. As the price of Bitcoin goes up, more miners want to partic­i­pate. To regulate how much Bitcoin is issued at any one time, the bullseye shrinks to make it harder to hit. The same thing happens in reverse if the price of Bitcoin falls or miners stop mining for any other reason. The bullseye grows in size, making it easier and more profitable to partic­i­pate in mining. Fears of miners abandoning the network due to halvings are as old as Bitcoin itself, dating as far back as forum posts in 2011. About a year ago, Finance Magnates wrote an article spreading a lot of [fear about a mining death spiral](https://www.financemagnates.com/cryptocurrency/news/has-the-bitcoin-mining-industry-entered-into-a-death-spiral/), which appeared to confuse GPU-based cryptocur­rency mining with Bitcoin mining, among other things. Nonethe­less, in the period that followed, Bitcoin massively added hash rate rather than losing it. While it’s true that without a rise in Bitcoin prices, the halving may make some miners unprof­itable, it’s impor­tant to realize that all miners have a different base cost depending on their electricity and other operating expenses. If the price of Bitcoin does not rise, the most ineffi­cient miners will be forced off the network, and more efficient miners will take their place. Rather than following the predic­tions of journal­ists, it may be worth following the money. The industry has placed long-term bets on Bitcoin’s future, ranging from the [Peter Thiel-backed Layer 1](https://fortune.com/2020/02/19/bitcoin-mine-open-crypto/), which is funded with $50M and will open on 30 acres in Texas, to the [Whinstone project](https://www.coindesk.com/1-gigawatt-bitcoin-mine-under-construction-in-texas-would-dwarf-bitmains), which plans a giant 1GW mine in the same area. All over the world, in places like [Mongolia](https://bitcoinist.com/mongolia-1000-bitcoin-miners-2019/) and [Paraguay](https://www.coindesk.com/bitfury-partners-to-launch-bitcoin-mining-centers-in-paraguay), reports of mining are on the rise as people find new and creative ways to tap previ­ously unhar­nessed energy sources. ### Conclusion When it comes to the halving, there are plenty of miscon­cep­tions floating around. Make sure to examine all aspects of it and come to your own conclusions. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Bitcoin and the Technological Evolution of the Financial System URL: https://www.swanbitcoin.com/economics/evolution-of-money/ We are living in hyperbitcoinization, or the repricing of the world in Bitcoin. Bitcoin is a better store of value than gold. For the same reasons people hold gold, Bitcoin will be valued at least on par with gold. --- **Bitcoin Tina** · March 11, 2020 · Updated June 25, 2024 We live in [hyper­bit­coiniza­tion](https://nakamotoinstitute.org/mempool/hyperbitcoinization/), a process basically repricing the world in Bitcoin. This is because Bitcoin is much better than gold as a store of value. For many of the same reasons that people like holding gold, I think it’s a reason­able propo­si­tion that Bitcoin will wind up being valued at least as highly as gold. ### Imagining the Future It’s hard to convince others of this because most people have a hard time imagining a world they don’t currently live in. They can’t envision how the future will be different from today. They can’t picture the impact of new technolo­gies. They dismiss them or write them off as bubbles or Ponzi schemes. Look at other techno­log­ical changes. In the early 1900s, every­body used horses. Your options for trans­porta­tion were a horse, a horse, and wagon, or a carriage. And within a decade or so, we were using mostly cars for trans­porta­tion with very few horses. In my life, we’ve seen typewriters disap­pear and get replaced by computers. Calcu­la­tors came around, and slide rules disap­peared. We evolved from using film to digital pictures. Technology evolves. It’s hard for people to under­stand how quickly these things can take place. ![](https://www.datocms-assets.com/56652/1689615840-horse-bugge.jpeg?auto=format) ***Credit:*** [*Kaye*](https://www.flickr.com/photos/hwmobs/) We used to use gold and precious metals as our only money. They have signif­i­cant drawbacks, though. Gold has a funda­mental security flaw: It’s heavy and hard to carry around. And you can only do business with gold with face-to-face trans­ac­tions. Also, there are issues with its exten­si­bility; it’s very diffi­cult to conduct small trans­ac­tions with gold. So how did we solve these issues? We created banks as a techno­log­ical solution to the problems with precious metals. Once you had banks, you could deposit your gold with that bank, and that banker could say, *“This person is good for this money.”* That made it easier for you to conduct business.  *"We created banks as a techno­log­ical solution to the problems that existed with precious metals."* More recently, stock certifi­cates came along as a techno­log­ical solution to problems with investing. They made trading a much smoother process. So we see that the finan­cial system also benefits from techno­log­ical evolution. ### Money As a Simple Machine We don’t think much about the money we use. People think, *“I use money all the time. Why do I need to think about it?”*  But there are certain simple machines we use all the time that we don’t think about either. The wheel’s a straightforward machine. We use it all the time, but we never think about it. It’s the same with pulleys, levers, screws, wedges, the inclined plane, etc. Money is an essen­tial simple machine that gets ignored too. It’s core to our human existence.  **Related link:** [*Shelling Out: The Origins of Money*](https://nakamotoinstitute.org/shelling-out/) by Nick Szabo However, the money we use today is funda­men­tally flawed. Here’s a thought exercise: Decide on a sum that seems signif­i­cant to you (you can decide whether it’s $10,000, $10 million, or something else). If you had to hold that amount of money for 20 years in just one asset, which would you choose? Cash? Treasury bills? Money market fund? Gold? Stocks? Real estate? The one loser that people would not want to own is cash. We may not know how the other assets will perform. Still, if we hold cash for an extremely long period, it will become worth less over that period. *"The money we use today is funda­men­tally flawed."* [Video](https://www.youtube.com/watch?v=A5afH0UH_JA) People don’t under­stand that dollars lose value. This reduc­tion in purchasing power is due to infla­tion. Bitcoin cannot be inflated. Bitcoin’s fixed supply and infla­tion resis­tance make it a superior store of value. Ideally, money would be a riskless asset that doesn’t deteri­o­rate over time. It ought to be the thing you can hold for a long period without spending it on a consump­tion item or investing it in something like real estate. The great thing about money is it gives us option­ality. So it’d be great if you could hold your money in a riskless way while maintaining that optionality. ### Choosing the Best Ladder Money may not be physical, but it’s still good, and people judge it by certain quali­ties. An analogy to consider: a workman’s ladder. What are the quali­ties which might cause a worker to choose one ladder versus another? Height, weight, strength, durability, design, materials, etc. People choose a ladder based on those quali­ties, and if 1,000 workmen all choose the same ladder, they make that decision based on the quali­ties of that ladder and how well it fits their needs. ![](https://www.datocms-assets.com/56652/1689616031-best-ladder.jpeg?auto=format) ***Credit:*** [*Dave Dugdale*](https://www.flickr.com/photos/davedugdale/) Yet we don’t think of money this way since it’s just been dictated to us. We don’t see the process of how money became money. But like the ladder, money also has certain quali­ties as a good. Based on our obser­va­tions and judgments, we decide to use a certain currency. Money is also a tool. It’s become so much a part of us that we don’t think about it that way. So let’s examine the quali­ties we’d want in ideal money; it would be scarce, impos­sible to repli­cate, reusable, portable, highly divis­ible, easy to secure, and easily trans­actable (even at a distance). All that sounds a lot like Bitcoin. To go back to our analogy, Bitcoin is the ladder we want. *"Over time, everyone will end up buying Bitcoin because of its outstanding quali­ties. And the more people come to under­stand this, the more they will want to hold it."*  ### A Conservative Investment I think of Bitcoin as a [conser­v­a­tive invest­ment](https://www.swanbitcoin.com/bitcoin-investment-sites) because it’s so superior to gold. The value of it should wind up at least equal to gold’s value. Different types of people will pay succes­sively higher prices for it, though; skeptics will overcome their objec­tions first, then the cynics, and then the haters. And the haters will end up paying the highest price. In the end, Bitcoin will wind up being adopted as the world’s one and only money. Some skeptics argue, *“The govern­ment is going to stop the use of Bitcoin.”*  And the govern­ment could certainly be an imped­i­ment since it could make purchasing Bitcoin diffi­cult. But think about when the internet first came around. There were those who opposed it back then, but banning it clearly would have been a bad idea. Instead, laws were passed to make it easier to use the internet and conduct online trans­ac­tions in a more trust­worthy and business-friendly way.  If, instead of passing those laws, a country had just banned the internet, it would have suffered in compe­ti­tion with other nations. The same will be true for Bitcoin. The disin­ter­me­di­a­tion that Bitcoin has on the finan­cial system will happen regard­less of whether certain countries actively oppose it. Any govern­ment that tries to ban it will wind up in a disad­van­taged position. *"Any govern­ment that tries to ban it will wind up in a disad­van­taged position."* ### Bitcoin as Gold 2.0 ***“As a thought exper­i­ment, imagine there was a base metal, a scarce gold but with the following proper­ties: a boring gray in color. It was not a good conductor of electricity. It was not partic­u­larly strong, was not ductile, or easily malleable either. It was not useful for any practical or ornamental purpose...*** ***But it had one special magical property. It could be trans­ported over a commu­ni­ca­tions channel. If it somehow acquired any value for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recip­ient sell it. Maybe you could get an initial value circu­larly, as you’ve suggested by people foreseeing its poten­tial useful­ness and exchange. I would definitely want some.”*** - Satoshi Nakamoto  I agree with Satoshi. I think of Bitcoin as being Gold 2.0 or digital gold. The payment technology aspect of it is still in its relatively early stages. Still, its value as a scarce item, which you can hold, easily secure, and use to transmit value, is undeni­able. Saifedean Ammous, who wrote the Bitcoin Standard, talks about the idea that the most impor­tant trades we do are the trades we do with our future selves. Bitcoin’s value is clear whether you’re passing wealth along to a future gener­a­tion or just passing wealth along to your future self. So, in the next decade, even if Bitcoin can’t be used to buy coffee, there’s more than enough value there that you should buy some for yourself. And then, as other people come to recog­nize the quali­ties inherent to Bitcoin, you can sell off little pieces of it as its value increases. ![](https://www.datocms-assets.com/56652/1689617694-bitcoin-standard.jpeg?auto=format) **Related link:** [*The Bitcoin Standard: The Decen­tral­ized Alter­na­tive to Central Banking*](https://www.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861) by Saifedean Ammous People who buy Bitcoin are putting their own personal skin in the game. These people under­stand all the quali­ties mentioned earlier and that Bitcoin is money you can hold outside of the finan­cial system. It’s money you control yourself (if you control your private keys). It’s money that, essen­tially, cannot be taken from you. As people come to under­stand the proper­ties of Bitcoin, they will want to own some. I think you’ll see Bitcoin reach a value that is unimag­in­able. I think most people can’t imagine Bitcoin being valued at half a million dollars in 10 years. My guess is it’ll be a lot higher than that. ### Bitcoin Tina Tina is a former trader. He’s a finance guy, knows he knows this stuff on that front and has been in Bitcoin for quite a while. Well known as being a preamble on Bitcoin Twitter, and really carrying the banner. # What’s Driving Bitcoin’s Price in the Current Debt & Inflation Predicament URL: https://www.swanbitcoin.com/investing/tracking-bitcoin-rally-after-the-cash-injection-of-2020/ Fulfilling its destiny as a hedge against reckless fiscal and monetary policies, Bitcoin has proven its mettle in its first fourteen years of existence. Let’s look at the current debt and inflation predicament. --- **Sam Callahan** · July 18, 2023 · Updated July 3, 2024 ### Tracking Bitcoin’s Rally After the Cash Injection of 2020 It’s hard to believe that it’s been almost three years since the U.S. government, in collaboration with the Federal Reserve, injected trillions of dollars into the economy in response to the pandemic and economic lockdowns of 2020. The federal fiscal response to the pandemic dwarfed stimulus packages from the past. In total, the combined stimulus actions totaled 24.6% of debt-to-GDP. To put that into perspective, the fiscal response during the Global Financial Crisis in 2008 totaled only 7.0%. ![](https://www.datocms-assets.com/56652/1689657101-federal-fiscal-response.png?auto=format) The fiscal response arrived in three waves: The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan Act came as a combination of direct stimulus checks to households, boosted and extended unemployment benefits and a plethora of loan facilities, tax breaks, and other corporate subsidies. As a result of these fiscal policies, the U.S. federal deficit exploded to nearly 15% of GDP in 2020, levels not seen since World War II. ![](https://www.datocms-assets.com/56652/1689657152-us-fed-deficit.png?auto=format) The Federal Reserve primarily monetized this fiscal stimulus, which saw its balance sheet explode during the pandemic. Unlike previous times, the Federal Reserve monetized multi-trillion-dollar fiscal stimulus packages passed by Congress that went directly into the real economy. In addition, $454 billion was authorized in the CARES Act to fund the Fed's new large-scale asset purchase program (Quantitative Easing). This $454 billion was leveraged by the Fed to add about $4 trillion dollars worth of assets to its balance sheet, which the Fed did rapidly. ![](https://www.datocms-assets.com/56652/1689657245-fed-balance-sheet-expand.png?auto=format) To give you an idea of how large and quick the Fed's Q.E. program was in 2020, the Fed bought $625 billion worth of bonds in one week, more than its entire Q.E. program during the Global Financial Crisis about a decade earlier. In Christopher Leonard's book *"The Lords of Easy Money,"* he beautifully illustrated the sheer size and speed of the Fed's Q.E. program when he wrote, *"In roughly ninety days, the Fed would create $3 trillion. That was as much money as the Fed would have printed in approximately three hundred years at its normal pace before the 2008 financial crisis."* The magnitude of the U.S. fiscal and monetary policy responses to the pandemic and economic lockdowns, when measured as a percentage of GDP, was astonishing. Indeed, the combined effect of the federal deficits and balance sheet expansion was even more extreme than during World War II. ![](https://www.datocms-assets.com/56652/1689657327-us-fiscal.png?auto=format) Now we could endlessly debate whether or not these actions from the central bank and government were warranted to fend off a deep recession and help households and businesses in need. Still, there is no debate about how unprecedented the size and speed of these actions were. The highest inflation in decades resulted from these ultra-accommodative monetary and loose fiscal policies. The Bank of International Settlements' recent annual report revealed how central bank and government policies in response to the pandemic lockdowns, directly and indirectly, contributed to the surge in inflation. *"With the benefit of hindsight, the extraordinary monetary and fiscal stimulus deployed during the pandemic, while justified at the time as an insurance policy, appears too large, too broad, and too long-lasting. It contributed to the inflation surge and to the current financial vulnerabilities. In the longer term, the challenge is to wean growth away from excessive reliance on macroeconomic policies to set the basis for a robust and sustainable expansion."* – Bank of International Settlements (BIS) The charts below highlight how the change in core inflation was correlated with government expenditure and loose monetary policy. ![](https://www.datocms-assets.com/56652/1689657562-more-expansive.png?auto=format) To ***“deviate from the Taylor rule”*** means a central bank sets interest rates that don’t correspond with what this guideline recommends when it comes to its inflation targets. For example, if the Taylor rule suggests that the interest rate should be increased due to high inflation, but the central bank decides to maintain or even decrease the interest rate, it can be said that it deviates from the Taylor rule. This deviation was evident when the Fed continued to keep interest rates near zero while CPI inflation rose throughout 2021. This BIS data provides evidence of what many market participants already knew - the monetary and fiscal policies, which resulted in the Fed’s balance sheet more than doubling, contributed to the high inflation we’ve all experienced since. The BIS went into further detail on how exactly this occurred, *"The main channels through which monetary and fiscal policies influence economic activity differs considerably. Fiscal policy does so primarily through the direct impact of spending on goods and services and the production of some of those services, as well as through transfers to households and firms. Monetary policy works primarily through the central bank’s operations in financial markets – notably the policy interest rate – which have a pervasive effect on yields, borrowing costs, asset prices, and the exchange rate."* During this inflation surge resulting from these policy decisions over the last several years, it has been challenging for investors to protect their wealth. Investors no longer live in a world where a traditional 60/40 bond and equities portfolio preserves one’s wealth and helps it grow over time. There are now risks to owning bonds that didn’t exist before in an era of low inflation and low-interest rates. With government and central bank policies stoking inflation, investors need to look outside of bonds to protect their life savings. Historically, the best-performing investments in previous periods of high inflation were scarce, hard assets. One such asset is Bitcoin. So how has Bitcoin performed since the governments spent trillions and the Federal Reserve’s balance sheet exploded? Let’s take a look. 👇🏼 ### Bitcoin's Performance Since the Liquidity Rushed In On Sunday night, March 15th, 2020, Fed Chairman Jerome Powell announced a sweeping set of actions in response to growing distress in the bond markets and the equity market tanking the week before. On that fateful night, the Fed: - Slashed its benchmark interest rate by a full percentage point to nearly zero (0-0.25%) and introduced forward guidance that it would keep rates at this level for the foreseeable future. - Announced that it would purchase at least $700 billion in government bonds and mortgage-backed securities in the coming months in a massive round of QE. - Encouraged banks to use their discount window, lowered the discount rate to 0.25%, and lowered reserve requirements to QE. - Enhanced standing U.S. liquidity swap lines by lowering the rates on currency swaps with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and the Swiss National Bank. In an unprecedented move, the Fed would launch seven facilities over the next week to support the flow of credit and liquidity. This included the Secondary Market Corporate Credit Facility, which enabled the Federal Reserve to purchase corporate bonds for the first time in history. ![](https://www.datocms-assets.com/56652/1689657619-market-corporate-credit.png?auto=format) In addition, one week after the largest QE action in history, the Fed announced it would continue to purchase Treasury bonds, mortgage-backed securities, and, for the first time, commercial mortgage-backed securities *“in the amounts needed.”* ![](https://www.datocms-assets.com/56652/1689657659-in-amount-needed.png?auto=format) The Federal Reserve said, *“We will do whatever it takes.”* The Federal Reserve would go on to buy a whopping $120 billion worth of bonds every month from June 2020 until November 2021 - a rate of bond-buying unparalleled in its history. I am recapping these Fed actions to highlight why March 15th, 2020 is a critical date in financial history. It was the night that the liquidity gates burst open. That Sunday evening, the Federal Reserve went into overdrive to maintain the flow of credit and liquidity in the financial markets and economy. As such, it is a logical starting place to measure how assets have performed since these inflationary policies were set in motion. When we look at Bitcoin’s nominal returns relative to other major asset classes since that fateful date, we can see how it has clearly performed well in this new high inflationary environment. ![](https://www.datocms-assets.com/56652/1689657716-bitcoin-outperformed.png?auto=format) This outperformance shows that **Bitcoin has protected investors’ purchasing power better than every other asset** class since the central bank and government flooded the economy with liquidity, and the inflation rate has soared. Perhaps the best way to recognize this dynamic is to look at the relationship between Bitcoin’s price and the expansion and contraction of the Fed’s balance sheet. Bitcoin’s rally in 2020 coincided with a QE program that started during COVID-19 and with increased institutional interest in cryptocurrency markets. In the aftermath of the Global Financial Crisis, multiple quantitative easing and tightening rounds occurred. After many years of giving lip service to the idea of reducing the size of its balance sheet, the Fed finally began doing so in 2018 in a process known as Quantitative Tightening. This continued until late 2019 when the Fed pivoted and implemented what has been termed *“QE-not-QE”* in a bid to prevent the overnight repo market from seizing up. This resulted in the Fed’s balance sheet expanding once again. Soon afterward came the monstrous QE programs in 2020. Since April 2022, the Fed has been reducing its balance sheet. The Fed’s balance sheet peaked at nearly $9 trillion in early 2022 and now sits at $8.3 trillion. If you look at the history of QE and QT and the consequent rise and fall of the size of the Fed’a balance sheet, you can also observe a noticeable trend in the price of Bitcoin. Mainly, it seems that Bitcoin’s price explodes during periods of balance sheet expansion and falls when the Fed’s balance sheet contracts. ![](https://www.datocms-assets.com/56652/1689657777-bitcoin-price-and-fed-total-assets.png?auto=format) This makes intuitive sense when one understands that QE results in boosted asset prices and increased liquidity in the system. Bitcoin’s price seems to respond favorably to periods when the Fed performs QE and market and liquidity conditions are favorable. One can see that when the Fed attempts to reduce the size of its balance sheet with QT, like in 2018 and 2022, Bitcoin’s price suffers. This same trend is observed when looking at the annual returns for Bitcoin and the YoY changes in the Fed’s total assets on its balance sheet. When the YoY change in Fed assets balloons, Bitcoin’s price follows, and vice versa. ![](https://www.datocms-assets.com/56652/1689657857-annual-returns.png?auto=format) This illustrates how Bitcoin's performance is intimately tied to governments' fiscal profligacy and central banks' accommodative policies. As central banks embrace loose monetary policies and governments open their coffers, liquidity and inflation surge - and with them, so does the price of Bitcoin. Today, the Federal Reserve persists in its Quantitative Tightening strategy, attempting to shrink its balance sheet while simultaneously hiking interest rates to tighten monetary conditions. Consequently, the price of Bitcoin has languished, remaining suppressed since reaching its peak in late 2021. This scenario begs the question: when will the Fed again have to resort to expanding its balance sheet? ### The Fiscal Trap and the Awaiting Sponge A common phrase in Bitcoin circles is that Bitcoin acts as a liquidity sponge. It has behaved this way since March 15th, 2020, reflected in its price. We now have evidence from the central banks themselves (the BIS) that loose monetary policy and fiscal spending can lead to inflationary pressures, specifically asset price inflation. We also know that the price of Bitcoin tracks the size of the Fed’s balance sheet. Dive into the U.S.’s current fiscal landscape, and you’ll find a picture rife with challenges. Already, the U.S. is running a federal deficit of over $1.5 trillion over the last 12 months. Worse, tax revenues continue to falter as spending remains elevated. ![](https://www.datocms-assets.com/56652/1689657915-deficits-are-growing.png?auto=format) Tackling this fiscal problem isn’t made any easier by the Federal Reserve’s continued interest rate hikes, designed to combat inflation but paradoxically pumping up the fiscal deficit by increasing the interest expense on federal debt. In other words, the Fed’s policy to fight inflation is worsening the very thing that contributed to it (according to the BIS and other analysts like Lyn Alden) – large bouts of deficit spending. The graph below illustrates how a significant amount of the federal debt increase has occurred in recent years due to rising debt servicing costs from the Fed’s interest rate hikes. ![](https://www.datocms-assets.com/56652/1689657965-federal-debt-total-public-debt.png?auto=format) This underscores the tightrope the Fed must walk: high debt levels, as a percentage of GDP, can severely hamstring its ability to fight inflation with higher interest rates. In a grim paradox outlined by the BIS, monetary and fiscal policies can end up in a deadly tug of war when these dynamics are at play. *“Easy monetary policy can induce the government to build up more debt; expansionary fiscal policy can make it harder for monetary policy to be as tight as necessary,”* warns the BIS. All signs point to Federal Reserve officials continuing to hike interest rates, particularly if inflation proves stubborn. They have already increased rates by 500 bps, and more hikes appear likely from their recent messaging. If this happens, the debt servicing costs will only rise along with the federal deficit. This could also provoke bond investors to sell their bonds, recognizing that the Fed will need to raise interest rates even higher as inflation lingers. This could send yields soaring even higher, ballooning the debt servicing cost even more. One can see that bond yields continue to creep up, with the 10-year and 2-year Treasury yields recently blasting to their highest levels since 2008. ![](https://www.datocms-assets.com/56652/1689658018-yields-are-rising.png?auto=format) Just how high will the Fed and Treasury permit interest rates (and thus debt servicing costs) to soar before fiscal worries eclipse their concerns about inflation? No one can know for sure what the central bank or government will decide to do in that environment. But if yields continue to rise as bond investors sell their holdings and the economy continues to run hot, then historical precedent suggests that inevitably the Fed will step in with bond-buying programs to help *“facilitate the flow of liquidity and credit”* and decrease the borrowing costs for the government. At this point, it would be more shocking if the Fed didn’t step in. In that scenario, the Fed’s balance sheet would once again expand, and, at that moment, history suggests that one of the best assets for investors to own during periods of balance sheet expansion is Bitcoin. Fulfilling its destiny as a hedge against reckless fiscal and monetary policies, Bitcoin has proven its mettle in its first fourteen years of existence. When looking at the current predicament that the government and central bank face, given the debt levels and high levels of inflation, it’s difficult to see how we won’t continue to see the same policies enacted with similar results in the years to come. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Coronavirus, Financial Crisis, and the Epic Bitcoin Crash of March 2020 URL: https://www.swanbitcoin.com/culture/swan-roundtable-market-crash-coronavirus-bitcoin-price/ A roundtable conversation about the current epidemic chaos and how it will impact Bitcoin, the global financial system, remote working, and more. --- **Brady Swenson** · March 23, 2020 · Updated July 3, 2024 John Vallis, Guy Swann, Gigi, and Hass McCook joined [Swan Bitcoin](https://www.swanbitcoin.com/) team members Cory Klipp­sten, Yan Pritzker, and Brady Swenson to sound off on the current epidemic chaos and how it will impact Bitcoin, the [global finan­cial system](https://www.swanbitcoin.com/bitcoin-and-the-technological-evolution-of-the-financial-system), remote working, and more. (This conver­sa­tion occurred on March 13, 2020.) You can also [listen to the full conver­sa­tion](https://swansignalpodcast.com/episodes/regrouping-after-a-bitcoin-price-crash-episode-1) on the Swan Signal podcast or [watch it on the Swan YouTube channel](https://www.youtube.com/watch?v=uB7KVUyP3PM). **John Vallis** (**host of** [**Bitcoin Rapid Fire Podcast Show**](https://anchor.fm/john-vallis/))**:** My biggest regret is not having that much dry power because I’ve been bullish for so long. Such a big drawdown makes me think, *“What’s happening in the world? Are we turning a corner? Are we entering a new stage?”* ![](https://www.datocms-assets.com/56652/1689617921-vallis_glqfm1g-400x400.jpeg?auto=format) **Hass McCook (civil engineer with an MBA from Oxford who now focuses on Bitcoin):** With Bitcoin, as in nature, every­thing goes back to the mean. The trick is auto-recurring buys; that’s it.  It crashed, that’s fine. Do you still believe in it, though?  Do you still believe in it today like you believed in it yesterday?  Many people, especially newbies, are panicking because, psycho­log­i­cally, it’s not easy to be down such a big sum. Some people, for example, lost 25 – 50% of their net worth. That’s pretty rough. If you’re somebody that hasn’t been around for six years, you could start thinking, *“Maybe the world isn’t ready for this.”* But if you still believe today what you felt yesterday, then believe it tomorrow, and just auto-recurring buys. ***"The trick is auto DCA (Dollar Cost Averaging); that’s it. If you still believe what you believed yesterday today, then believe it tomorrow, and just auto DCA."*** - Hass McCook ![](https://www.datocms-assets.com/56652/1689618143-gig-ra2u3la8_400x400.png?auto=format) **Gigi (Bitcoin author and curator of** [**bitcoin-resources.com**](https://bitcoin-resources.com/)**):** I whole­heart­edly agree with what Hass is saying: If you want to stay sane, just auto-recurring buys. Don’t look at the price. I stopped looking at the price around two years ago. I don’t care about the price movements that much. As far as I’m concerned, Bitcoin is still Bitcoin. Nothing has changed in cyber­space. It’s still producing blocks every 10 minutes, and it’s only in the finan­cial system that we’re experi­encing this tsunami. Obviously, it’s one of the biggest pandemics we’ve seen so far, and it’s a crazy, crazy time. But nothing happened in cyber­space; Bitcoin is still marching on as strong as ever. **Brady Swenson** (**Head of Educa­tion for** [**Swan Bitcoin**](https://www.swanbitcoin.com/) **and host/creator of** [**Citizen Bitcoin podcast**](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937)): Tick tock, next block. **John Vallis:** I’m almost envious of people entering the space over the next 12 months. We’ve got the battle scars from being in space for three or more years. We’ve made all the mistakes, lost money, went through the emotional roller­coaster. Someone that enters today should get educated, develop their convic­tion, under­stand what this is, what it could be, and just auto-recurring buys. Don’t make it a big part of your life; just have it running in the background and keep accumu­lating. Have that zen perspec­tive, and then it doesn’t have to be this crazy thing that you’re obsessed with all the time. It’s your bet on the future. Let it happen; you don’t need to worry too much about it. I wish that was my approach from the begin­ning, but I’ve made all the silly mistakes.  **Brady Swenson:** Once you move past the price obses­sion, then you can just get obsessed by all the intel­lec­tual stimu­la­tion that Bitcoin’s about to drop on your ass. **Gigi:** I’m not even sure if it will be easier for the people entering now. Bitcoin still has the poten­tial to swing so insanely hard that I think it will be tough to stay calm and auto-recurring buys once Bitcoin takes off. We’re going to start hitting a new all-time high. On a longer time horizon, it’s obvious that the fiat curren­cies will depre­ciate in Bitcoin terms. And I think we all believe that to a degree of virtual certainty. I think all surprises in Bitcoin will continue to be on the upside.  ![](https://www.datocms-assets.com/56652/1689618260-guy-swann.png?auto=format) **Guy Swann** (**OG Bitcoiner and host/creator of** [**The Crypto­conomy podcast**](https://thecryptoconomy.com/)): I’m liter­ally all over the place. I went from panicked to exuberant to really, really panicked to just so jacked, like somebody was pushing me into the UFC ring. I haven’t had an auto-recurring buy method before Swan Bitcoin. **Gigi:** You haven’t experi­enced Bitcoin Zen yet; that’s the problem. **Guy Swann:** I searched quantum computing in Google and sorted by date, and I was just like, what was causing this?  I basically came to the conclu­sion that tick tock, next block. None of that had changed. Monetary policy is the same. All that panic went away. I was like, *“This shit’s on sale.”* I went desper­ately hunting for fiat anywhere. **Cory Klipp­sten** (**Founder of** [**Swan Bitcoin**](https://www.swanbitcoin.com/) **and** [**GiveBit­coin**](https://givebitcoin.io/))**:** I don’t think that you’re ever going to get away from the [finan­cial­iza­tion](https://en.wikipedia.org/wiki/Financialization) of this asset. Humans do that because their incen­tive is to do so. So you have to build something anti-fragile, or at least robust through those actions. **Gigi:** What I find fasci­nating is how quickly public opinion changed. Some of the Bitcoiners were sounding the alarm starting almost two months ago. And people who under­stand exponen­tials and how these things tend to grow saw it coming and were sounding the alarm, and nobody took them seriously.  Everyone was like, *“You’re insane,”* and “Why are you inciting panic?”  Now suddenly, everyone is panicked and a coron­avirus expert. It’s weird how quickly this happened. So, in my opinion, it’s also an applied exercise in exponen­tial growth. So that’s why I think it’s insanely inter­esting to watch all this. **John Vallis:** The Bitcoin drop, I’m not fazed by it at all. It’s just what Bitcoin does, and yes, it can be an emotional roller­coaster, but my faith wasn’t tested. We’re turning a corner, and the scenario that we’ve all been talking about for the last several years, basically since ’08, seems to be coming to fruition now, with the virus as a catalyst. It feels like we’re at the begin­ning of this crazy period of uncharted territory. **Guy Swann:** I think we actually have an advan­tage with Bitcoin. The markets are going to bleed for a long time. The [legacy markets](https://www.swanbitcoin.com/how-bitcoin-challenges-keynesian-economics) are going to be hurting. It looks like we found our bottom in 24 hours. Knock on wood, knock on wood, knock on wood. There’s a huge swath of people that were just buying every­where. I know I was part of that. The whole legacy market is fluff on top of fluff on top of promises on top of liabilities.  ![](https://www.datocms-assets.com/56652/1689618349-hass.jpeg?auto=format) **Hass McCook:** People may not have jobs to stack stats. So I think every­one’s going to be in for a rough ride. Probably not to the point where we’re all selling apples, but this will probably be more like the Great Depres­sion than the Great Reces­sion, in my opinion. I think this could be the big unwinding.  **John Vallis:** Every time this happens, Bitcoin’s anti-fragility is on display for those of us who see what’s going on. Whereas the exact opposite thing seems to be happening in the legacy system. We’re in the numbers of trillions now. That much capital is getting injected into the markets, and there’s not much of an effect. So the fragility of the legacy system is seemingly more and more apparent. The problems are becoming so evident that they are becoming more top of mind for many people.  ***"Every time this happens, Bitcoin’s anti-fragility is on display for those who see what’s happening. Whereas the exact opposite thing seems to be happening in the legacy system."***  - John Vallis ![](https://www.datocms-assets.com/56652/1689669189-cory-picture.png?auto=format) **Cory Klipp­sten:** I don’t care as much about the finan­cial markets because it affects so few people. Capital attracts capital, and the US attracts help. The global system doesn’t want the US to go down. It seems like the world will rally to the cause and save our asses, and that’s probably just because the world runs on the dollar. **Yan Pritzker** (**Co-founder & CTO of** [**Swan Bitcoin**](https://www.swanbitcoin.com/) **and author of** [***Inventing Bitcoin***](https://www.inventingbitcoin.com/))**:** Every­body’s going remote. That’s what I see in all my chats. Tech compa­nies they’re going remote because it’s easy for them. If they’re not tech compa­nies, they’re coming up with all kinds of crazy last-minute ways to go remote because it’s not native to them. It is a really inter­esting shift in our society happening very rapidly. Every­body’s forced to learn this new way of working. It may be a big produc­tivity hit in the short-term. Still, it also may be a big produc­tivity boost in the long-term as people learn to work better remotely and see what they can accom­plish when they’re not distracted all day with other people in the office. **Cory Klipp­sten:** What I love about remote working is it’s actually a lot like Bitcoin. You can mix and match the best people for the job on top of this remote work protocol. Why should we have to find some UX guy that happens to be in LA and can make it to the office in Santa Monica or something like that if the best guy for the job lives in a small town outside of Frank­furt?  You can just search for this global talent pool and find people in your tribe. We know how impor­tant it is to find people in every role who speak Bitcoin and give a shit. Those people are not neces­sarily going to live in one location. That’s got to be true for everything. ![](https://www.datocms-assets.com/56652/1689669302-yan-picture.png?auto=format) **Cory Klipp­sten:** I don’t care as much about the finan­cial markets because it affects so few people. Capital attracts capital, and the US attracts help. The global system doesn’t want the US to go down. It seems like the world will rally to the cause and save our asses, and that’s probably just because the world runs on the dollar. **Yan Pritzker** (**Co-founder & CTO of** [**Swan Bitcoin**](https://www.swanbitcoin.com/) **and author of** [***Inventing Bitcoin***](https://www.inventingbitcoin.com/)): Every­body’s going remote. That’s what I see in all my chats. Tech compa­nies they’re going remote because it’s easy for them. If they’re not tech compa­nies, they’re coming up with all kinds of crazy last-minute ways to go remote because it’s not native to them. It is a really inter­esting shift in our society happening very rapidly. Every­body’s forced to learn this new way of working. It may be a big produc­tivity hit in the short-term. Still, it also may be a big produc­tivity boost in the long-term as people learn to work better remotely and see what they can accom­plish when they’re not distracted all day with other people in the office. **Cory Klipp­sten:** What I love about remote working is it’s actually a lot like Bitcoin. You can mix and match the best people for the job on top of this remote work protocol. Why should we have to find some UX guy that happens to be in LA and can make it to the office in Santa Monica or something like that if the best guy for the job lives in a small town outside of Frank­furt?  You can just search for this global talent pool and find people in your tribe. We know how impor­tant it is to find people in every role who speak Bitcoin and give a shit. Those people are not neces­sarily going to live in one location. That’s got to be true for everything. ***"I’m excited to roll out something that just works, is super simple, and under­cuts the fees of anybody else in the US. Set it and forget it, and just keep stacking."*** - Cory Klipp­sten **John Vallis:** With the greater chaos circling around us, the more I get excited that Bitcoin simply exists and continues to do what it always has done. I’m super inter­ested in all the devel­op­ments that are happening in the space, the compa­nies, the tech itself, Light­ning, and all that stuff, but also just the meat and potatoes that this thing is still here, and there’s no reason for us to doubt it excites me.  In fact, my convic­tion and confi­dence in it continues to grow with each passing day. You can’t control the exterior environ­ment. We’ve expected a lot of chaos. That’s why we’re in this space in the first place. It’s a tumul­tuous journey, and you’ve got to be ready for that. But just roughly every 10 minutes, tick-tock, next block. **Brady Swenson:** Tick tock, next block. **Yan Pritzker:** Now that we have this real flash crash, it will be in all the media:  *“Bitcoin’s dead; it’s going to zero.”*  It’s inter­esting to see the reaction from both sides. On one side, you have the *“Bitcoin is dead”* people; on the other, you have every­body in my Twitter feed buying. The next time Bitcoin goes higher, whether it be 10 or 20, or whatever the next milestone is, people will remember that it had “died” and then become very inter­ested in why it hadn’t actually died. So I think it’s impor­tant to have these events so that people remember them. **John Vallis:** We had this massive blood­bath in the market, right? But more than ever, I got several messages from people that have never really expressed interest in Bitcoin. I got messages saying, *“How can I get involved in this? How can I get some?”*  **Yan Pritzker:** Yeah, I had the same. Some people hesitated to buy for a long time, and I noted, *“Hey, it’s on sale big time. This is a massive crash.”*  People were inter­ested in it, and people were like, *“Okay, how do I buy, how do I buy?”*  More people started thinking of it as a sale, and that has to do with the overall market. **Cory Klipp­sten:** And it’s because the narra­tive from the last 10 years is that it is a hedge when markets crash. They may not have been watching the Bitcoin price over the last few months. Still, the stock market crashes, and in the back of their head, they’re like, *“Oh, there was that Bitcoin thing which is what I was supposed to do when the market crashes.”*  And then they come over and take a look at it. I think that’s the reaction of the people outside the space. The people inside the space reacted encour­aging because of how quickly we just got over this. This was just, *“Eh, Bitcoin is going to do what Bitcoin is going to do. Whatever.”*  We had the biggest gaining day since 2011 a few months ago, so we probably did deserve the biggest one-day drop since 2013. That was in the cards. **Yan Pritzker:** *"We were overdue. It pumped 300% over a year, and that's what nobody in the media would report. Bitcoin flash crash? Dude, it's been on a massive bull run for a year. Are you kidding me?"* 300% up. So, of course, we just needed a trigger. **John Vallis:** I love the people in this space. Many people have a big portion of their net worth wrapped up in this stuff, and to see it go down by 30, 40, 50% in a night, and just be like, *"Meh, we're good. I'm still here; I ain't going nowhere."* Man, that's a unique mindset, and I love it. **Cory Klipp­sten:** Well, how many BTC are in one BTC? **John Vallis:** Yeah, exactly. **Yan Pritzker:** Always one. I think when you hold Bitcoin and get used to that volatility, you get used to believing in yourself rather than being led by what every­body else around you is doing. If every­body else is selling Bitcoin and it's going down by 50%, then you still under­stand the long-term value propo­si­tion of Bitcoin as freedom money, as a censor­ship resis­tant store of value. So you're buying. Nothing has changed. ***"I think when you hold Bitcoin, and you get used to that volatility, you get used to believing in yourself rather than being led by what every­body else around you is doing."*** - Yan Pritzker **John Vallis:** That's such a good point because the reason why a lot of us get emotional with these market things is because there's nothing more truthful than a market. It's just emergent collec­tive behavior. So when it's tanking, it's reality saying, *"Hey, you're on the wrong side of this. You're not in reality."*  To have the convic­tion and the emotional stability to say, *"No, I know what's going on here more than what 'reality' is telling me."*  To hold true to that, it's tough to develop, but once you get there, it's such a zen, peaceful place. Being in Bitcoin is like a rite of passage. You either succumb to that emotional roller­coaster and end up just converting back to a herd mentality, or you make it through the challenges of that. You come out the other side trans­formed and more confi­dent in your ability to develop your own perspec­tive and have confi­dence in it. That's such a gift of being in this space. **Gigi:** Bitcoin is still Bitcoin. It’s still producing blocks. Nothing happened in cyber­space, nothing at all. It’s still smooth sailing for Bitcoin, and there is a very, very nice silver lining to the whole crypto crash and the global market meltdown that’s going on right now. I think 99.99% of all the shitcoins won’t survive this. I think that’s a good thing to see as well. The Bitcoin narra­tive was right. Go for the sound money, go for the deep stability, build a stable system, go for robust­ness, go for maximum decen­tral­iza­tion so that you can actually survive a global catastrophe like this. Bitcoin is fine.  The internet and the networks will be fine, and the miners will be fine. I think in terms of value, Bitcoin will recover surpris­ingly quickly. It’s not only retail investors now. Many people who have been in finance for a very long time, such as wealth managers and insti­tu­tional investors, are taking notice. It won’t be just individ­uals that are eyeing Bitcoin. In the next few months, we will see in hindsight that Bitcoin is uncor­re­lated to the rest of the finan­cial markets. Bitcoin won’t actually stay corre­lated in the next 6 – 12 months.  ***"Go for the sound money, go for the deep stability, build a stable system, go for robust­ness, go for maximum decen­tral­iza­tion so that you can actually survive a global catastrophe like this. Bitcoin is fine."*** - Gigi ![](https://www.datocms-assets.com/56652/1689672086-brady-picture.png?auto=format) **Brady Swenson:** I was so proud of my wife last night. I said Bitcoin went under $4,000, and she was like, *“Wasn’t it $10,000 a few weeks ago or something?”*  That was the last time I told her about the price. I was like, *“Yeah.” She goes, “Wow! Well, how can we scrape together some money to buy more?”* **Yan Pritzker:** Nice. We’re all in this space because we believe Bitcoin needs to exist and be robust, and it needs to have a good user experi­ence and educa­tion, and these things need to exist to bring on the next wave of people. It’s going to take time for these things to feel like they’re comfort­able, normal, and trust­worthy. So I think we just have to wait. **Brady Swenson:** It’s long-term thinking, strong hands. **Yan Pritzker:** Strong hands. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Rampant Inflation Is on the Way and Here’s What it Means for Bitcoin URL: https://www.swanbitcoin.com/economics/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/ Once people realize what’s happening to their money, they will start buying Bitcoin. --- **Yan Pritzker** · April 2, 2020 · Updated June 25, 2024 We currently have govern­ments and central banks worldwide stepping up to try to save their economies from imploding. But as we know, they are imploding because every­body’s on lockdown, and produc­tivity is grinding to a halt. There’s going to be a lot less stuff produced. There will also be a lot less demand for that stuff as people are locked in their homes and unable to go to restau­rants, bars, stores, museums, or anywhere else. The govern­ment is trying to solve this with money. They’ll be printing lots and lots of money. They’re going to make it easy for people to take out loans. Mortgage rates will go down. Small business loan rates will go down. There will be tax breaks. We’re going to see [helicopter money](https://en.wikipedia.org/wiki/Helicopter_money) (i.e., people getting money directly from the government). ![](https://www.datocms-assets.com/56652/1689672687-chopper.jpeg?auto=format) ***Source:*** [*The Finan­cial Times*](https://www.ft.com/content/9bcf0eea-6f98-11e2-b906-00144feab49a) ### What Does This Mean For Money? So you have to ask yourself: What does this all mean for money? As they produce more of it, each individual money unit loses value (i.e., infla­tion). Usually, we have a little bit of infla­tion every year. The govern­ment will tell you that the infla­tion rate is about 2%, but that doesn't match reality. Just look at things like educa­tion, housing, the stock market, etc.; the price of those things is increasing at a rate higher than 2% in recent years. We had maybe a trillion dollars worth of base money going into the finan­cial crisis of 2008. We came[ out of that crisis with about 4 trillion](https://fred.stlouisfed.org/series/WALCL). We're going to see much bigger prints this time. The Fed's balance sheet is already at $4.6T and growing as it continues to buy more and more assets to rescue the market. There's only one asset on this planet that is infla­tion proof: Bitcoin. The supply of Bitcoin cannot be inflated. Even the supply of gold can be increased if it becomes profitable. With Bitcoin, that's just not possible. ***"There's only one asset on this planet that is infla­tion proof, and that is Bitcoin."***  - Yan Pritzker ### The Impact on Bitcoin What does this all mean for Bitcoin?  Well, in the long run, it means that once people realize what's happening to their money, they will start buying [Bitcoin](https://www.swanbitcoin.com/what-is-bitcoin) since it's the only thing that will not be subject to monetary policy manip­u­la­tion. Unfor­tu­nately, Bitcoin, like every­thing else, [took a drop recently](https://www.forbes.com/sites/investor/2020/03/13/bitcoin-crash-2020/#4e5d564f61c8). This was to be expected since there was a mass panic sell-off of all assets, which was forecast by many in the space. ![](https://www.datocms-assets.com/56652/1689672738-cory-anyone.png?auto=format) Bitcoin isn't quite where it needs to be regarding market cap and penetra­tion to survive unscathed events like this. We only have $150 billion worth of Bitcoin, so it will [suffer during an event like the coron­aviru](https://www.swanbitcoin.com/swan-roundtable-market-crash-coronavirus-bitcoin-price)s. But it's impor­tant to under­stand that Bitcoin's design is to be infla­tion proof, seizure proof, and censor­ship-resis­tant. Those charac­ter­is­tics are unchange­able, whether there's a crisis or not. As more people wise up to this, we will see more and more demand for Bitcoin. And you know what that means for Bitcoin's price. ***"Bitcoin's design is infla­tion proof, seizure proof, and censor­ship resis­tant. Those charac­ter­is­tics are unchange­able, whether there's a crisis or not. And as more people wise up to this, we're going to see more and more demand for Bitcoin."*** - Yan Pritzker ### The Halving is Coming Too It's impor­tant to remember that we are entering into [the halving](https://finance.yahoo.com/news/bitcoin-approaching-halving-explained-170508182.html) in May, where the amount of new Bitcoin being produced will be cut in half. It's quite a striking coinci­dence that this will happen at a time when the amount of every other money being produced in the world will go up tremendously. ![](https://www.datocms-assets.com/56652/1689672779-google-trends.png?auto=format) ***Google Trends for “Bitcoin halving” (captured on March 27, 2020).*** While every other market in the world is dropping, Google Trends for *“Bitcoin halving”* are at an all-time high. People are wising up to this. The question is: Do you want to be the first to know that, under­stand it, and act on it? Or do you want to be the last? ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # The Biggest Misconception in the Markets? Thinking We’re Dealing With a Sound Currency URL: https://www.swanbitcoin.com/economics/the-biggest-misconception-in-the-markets-thinking-were-dealing-with-a-sound-currency/ Massive government intervention in markets is underway, but what happens to Bitcoin as a result? --- April 3, 2020 · Updated June 25, 2024 *Massive govern­ment inter­ven­tion in markets is underway, but what happens to Bitcoin as a result?*  [*In a recent episode of The Break­down*](https://podcasts.apple.com/us/podcast/the-breakdown/id1438693620)*, host* [*Nathaniel Whitte­more*](https://twitter.com/nlw) *inter­viewed* [*“We Study Billion­aires”*](https://www.theinvestorspodcast.com/we-study-billionaires/) *host* [*Preston Pysh*](https://twitter.com/PrestonPysh) *about it. Along the way, Pysh spoke (below) about what he sees as the biggest miscon­cep­tion in the markets today.* ![](https://www.datocms-assets.com/56652/1689673825-preston-p-picture.jpeg?auto=format) **Preston Pysh:** When you get into how the market's been pricing things for the last 10 years, you have to look at Discounted Cash Flows/CAPM models and what's taught at every business school in the world. And the one funda­mental flaw with these models is they're based on the assump­tion that you're dealing with a sound currency. All these valua­tions assume you're dealing with a sound currency.  ***"The one funda­mental flaw that every one of these models has is it's based on the assump­tion that you're dealing with a sound currency."***  - Preston Pysh When you price this stuff, it all goes back to the bond market. Let’s go back to the 2008 timeframe: They were yielding around 5 – 5.5% back then before the crash. So if the bond yield is 5%, well your Discounted Cash Flow models on how stocks are valued are based on a premium to those interest rates. Well, as those interest rates go lower and lower, guess what happens to the asset price under this CAPM model that they teach in business schools? The value goes up.  So as these bond prices get pressed to 0%, the asset prices of every­thing in the globe, whether it’s a bond or a stock, goes up. But no one in those models is assuming that the currency is about to fail in those models. That is the biggest miscon­cep­tion in the markets today. ![](https://www.datocms-assets.com/56652/1689673859-breakdown.png?auto=format) [*Listen to the entire episode.*](https://podcasts.apple.com/us/podcast/the-breakdown/id1438693620) *This segment begins at 43:55.* # Swan is Supporting the Mining Disrupt Conference URL: https://www.swanbitcoin.com/industry/swan-is-supporting-the-mining-disrupt-conference/ Join us on July 25-27, 2023 in Miami for the World’s Largest Bitcoin B2B & Bitcoin Mining Conference & Expo! --- July 19, 2023 · Updated June 6, 2024 Swan is pleased to support this year’s [Mining Disrupt Conference](https://miningdisrupt.com/).   Mining Disrupt is the largest Bitcoin mining conference and expo in the world. It is taking place this year at the Miami Airport Convention Center from July 25th to the 27th. Now in its fifth year, the conference boasts over half a million square feet of exhibition space, more than one hundred exhibitors, dozens of speakers and discussion panels, a pre-party, an after-party, an art gallery, and more.   The keynotes and panels will cover virtually every important topic in Bitcoin mining, from the latest technological advances to environmental discussions, political developments, and the implications of the upcoming halving.  Swan’s Steven Lubka will be there.  The full list of speakers, topics, and side events can be found at the [Mining Disrupt site](https://miningdisrupt.com/#speak). If you’re interested in mining, you’ll want to be there. [Get your ticket here](https://www.eventbrite.com/e/mining-disrupt-conference-2023-miami-florida-tickets-394226089847). Swan supports the Bitcoin Mining industry in a variety of ways.   Through our media outlets and events, which include [Swan Signal](https://www.youtube.com/playlist?list=PLoB1eZWSVHVbOwGibtxs8sqdsAm-dTj9S), [Cafe Bitcoin](https://open.spotify.com/show/6cd6PpeeaZLiTvsyh5SjGB?si=dea76ee3307a4fbe), [our blog](https://www.swanbitcoin.com/signal/), [YouTube](https://www.youtube.com/@Swan_Bitcoin), [Twitter](https://twitter.com/Swan), [Pacific Bitcoin](https://www.pacificbitcoin.com), and more, we provide news and education from our analysts and experts about the workings and importance of Bitcoin mining.  These channels also provide many companies in the Bitcoin mining industry with a platform to communicate their latest developments, strategies, and other topics of interest to Bitcoiners in general.  Swan also supports organizations that provide political and academic research and advocacy for the Bitcoin mining industry, like [The Bitcoin Policy Institute](https://www.btcpolicy.org). Keep an eye on [Swan’s Twitter account](https://twitter.com/Swan) for the latest news about and from the conference.  Sincerely, The Swan Team # Accepting Scarcity: A Bitcoin Meditation - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/accepting-scarcity-a-bitcoin-meditation/ This essay focuses solely on the conceptual world of logic, language, and concepts, excluding the mystical and non-conceptual realm, which is also deserving of exploration through meditation and mysticism. --- **Reed Wommack** · July 15, 2020 · Updated June 27, 2024 ### Everything is Scarce: The concep­tual world is governed by scarcity. This scarcity is most evident in the physical realm: there is a physical limit to the size of our universe, the width of our solar system, the diameter of our Earth, the length of your street, the height of your spouse, and the size of an atom. Any physical object, no matter how large or small, neces­sarily ends. While some things may appear more endless than others, their apparent limit­less­ness is merely a trick of perspec­tive. You may be tricked into feeling that large, numerous objects like galaxies are less scarce than small, more intimate objects (like pet fish). Still, in reality, all physical things are scarce. You may have two kids, and your neighbor has ten kids. While you have fewer kids than your neighbor, you and your neighbor have scarce kids. All physical things are limited in the binary choice between unlim­ited and limited. Non-physical objects (in Buddhism, we call them mental objects) are also equally limited and scarce. While it is clear your cat has physical bound­aries (its organs don’t spill out to infinity), it is equally true but less obvious that your concep­tion of *“cat”* is also bounded. *“Cat”* has a limited meaning. Although people may argue about the breadth of its defin­i­tion, and each person may hold a slightly different mental boundary of what consti­tutes a cat, for each person, *“cat”* means something and neces­sarily implies some category of *“non-cat.”* While we may convinc­ingly disagree about whether a dog-fox hybrid is indeed a cat, we would still be arguing about whether one concept fits into the bounded category of another concept. The truth would remain that those categories have edges, even if we disagree on where those edges are. So all physical objects and all mental objects are inher­ently scarce and limited. As much as you’d like any single concept or object to be infinite, it is not. Your body is limited, and the concept of your body is limited. Even words that attempt to point toward the noncon­cep­tual world (words like Love, G‑d, Nirvana, Sublime) are limited and, there­fore, have the bound­aries inherent to all concepts. The limita­tion of concepts is well-known within Buddhism: Buddha once reminded his followers that his teaching was the finger pointing at the moon, not the moon itself. ![](https://www.datocms-assets.com/56652/1689857482-moon-reed.jpeg?auto=format) ### Accepting Scarcity So the reality of the concep­tual world is that it has limits. When we accept this scarcity, we accept reality as it is. When we ignore this scarcity or trick ourselves into believing it is infinite, we delude ourselves. According to Buddhism, ignorance or delusion is one of the three causes of our suffering (the other two are attach­ment and aversion). So when we are deluded about reality, we perpet­uate suffering. When we are aware of reality as it is, we avoid suffering. We all have stories from our lives of people who suffered because they have not accepted reality as it was: they did not accept a break-up and kept pleading to be taken back; they did not accept a death and kept wishing for their parent to return; they did not accept their current reputa­tion and kept bragging to any who would listen. And likewise, we all know of people who can handle surprises and tragedies with tranquility and aplomb. So accepting reality as it is, in this very moment, is paramount to avoiding suffering. This is not to say that life won’t change, that you are resigned to an inevitable fate, or there is nothing to be done, quite to the contrary. We must just accept reality as it is now and start here rather than fanta­size about it. And the reality is all things are scarce. Unfor­tu­nately, we repeat­edly and routinely delude ourselves about scarcity. We make hyper­bolic state­ments about our physical objects — *“The mountains are endless,”* *“There is always another fish in the sea,”* *“The Fed has infinite cash”* — and about abstract concepts too — *“his love is eternal”* or *“his compas­sion knows no bounds.”* However, all those concepts are misleading — even the infinite cash state­ment! While they may provoke the intended emotional response (a sense of vastness) given enough time, life forces people to learn that their previous concep­tion of infinity was wrong. They get to the end of the mountain range, finish the dishes, or see their compas­sionate lover squash an ant. And at that moment, if they still cling to the concept of infinite­ness, they suffer through the process of letting go of their wrong view. To avoid deluding ourselves and the neces­sary suffering that arises when the reality of scarcity smacks us in the face, we should never conceive of anything as infinite, even if it appears very large. Even Murray Rothbard, my favorite writer, suffers from this slight delusion in his opus *Man, Economy, and State.* He writes, *“In the first place, all means are scarce, i.e., limited with respect to the ends that they could possibly serve. If the means are in unlim­ited abundance, then they need not serve as the object of atten­tion of any human action. For example, the air in most situa­tions is in unlim­ited abundance. It is there­fore not a means and is not employed as a means to the fulfill­ment of ends. It need not be allocated, as time is, to the satis­fac­tion of the more impor­tant ends, since it is suffi­ciently abundant for all human require­ments. Air, then, though indis­pens­able, is not a means, but a general condi­tion of human action and human welfare.”* But it’s not just “*means”* that are scarce. Every­thing is scarce. Nothing is in unlim­ited abundance, not even the *“general condi­tions”* of air. Even if the air is so numerous that each molecule holds little value to humans, it only appears unlim­ited due to our narrow perspec­tive. And if we hold this perspec­tive for too long, we eventu­ally cause suffering when air pollu­tion begins to build up in cities, the buffalos go extinct, the frontier closes, or passenger pigeons disap­pear from the skies. Even if something is so vast that you die before you ever discover its scarcity, eventu­ally, someone will reach its end. They’ll have to suffer when waking up from the lie of infinity you told them was true. ![](https://www.datocms-assets.com/56652/1689857764-reed-circle.jpeg?auto=format) ### Training the Mind to Accept Scarcity Fortu­nately, you can train your mind to accept scarcity, which has innumer­able benefits. Namely, you are better able to see reality as it really is, less likely to be deluded, and less likely to suffer the discom­fort of waking up from your delusion. Paying close atten­tion to anything effec­tively trains your mind to see scarcity (one minor benefit of atten­tion-training). So the closer you pay atten­tion to a tree, the more you recog­nize that it is not like any other tree. The closer you pay atten­tion to your lover, the more you see how no one could replace her. Still, this scarcity is a felt sense. It is not verifi­ably nor logically valid. It arises from a deeper place of intuition and is only sustained by consis­tent attention. As soon as your atten­tion drifts off the present moment aware­ness of the object, the object can delude you into believing its infinite­ness. For instance, you can intuitively sense dollar bills are scarce by staring at a dollar bill for long enough. Still, you are not logically convinced of its scarcity. As soon as your mind drifts slightly, you start imagining loggers clearing the forests to run dollar printing presses full-steam or the images of the Weimar Republic hyper­in­fla­tion when people used dollar bills as fire-starter. Suddenly you’re caught in an internal story where the sacred dollar bill in front of you trans­forms into just another dollar among infinite dollar bills. Thus, all objects, fiat included, don’t force you to see their logical scarcity unless you maintain strict attention. That is all objects except Bitcoin. For Bitcoin repre­sents a new object of medita­tion that can train one’s logical mind to accept scarcity. Bitcoin is the first time a concept has such a clearly defined incon­tro­vert­ible boundary: 21 million. Whereas I could imagine copies being made of other scarce objects (multiple Mona Lisas or Hope Diamonds), with Bitcoin, I cannot. No such copy can ever be created. The block reward schedule and incen­tive struc­ture assure that. So staring deeply at Bitcoin protocol can train one’s mind to accept scarcity not just as an intuitive truth but as an abiding logical truth. As a medita­tive tool, Bitcoin medita­tion most resem­bles death medita­tions — both harness the concep­tual mind to teach a concept, and neither transcends the concep­tual realm. While many medita­tors grow comfort­able with death simply by culti­vating present-moment aware­ness, some find it helpful to train the logical mind to accept death by focusing on it directly. Then later, when their minds drift to other topics, they can still remember their impending death and the death of all things. Bitcoin medita­tion is similar. By focusing on Bitcoin, you see absolute scarcity deeply. Then, even when your mind drifts to other things, you increas­ingly know the reality of scarcity everywhere. So for me, it has provided a compelling medita­tion object, aside from giving a long (though not endless) intel­lec­tual rabbit hole, contem­plating Bitcoin has, more notice­ably, anchored my mind from drifting into delusions of infinity in everyday life. It has grounded me in concep­tual reality. Even without sustained atten­tion on Bitcoin, even when I lose my atten­tion and get caught up in the stories of Bitcoin, those stories are not based on, nor have allusions to, infinity. (Bitcoin is just going to the moon, which is a set distance away). While many other medita­tion objects (namely my breath) have provided me even more profound medita­tive training, Bitcoin has helped me under­stand the scarcity of concep­tual reality more clearly. I believe it allowed me to sidestep a little suffering arising from my own delusions. In the coming years, I look forward to watching Bitcoin train my logical mind even more, but for now, it’s back to my breath. ### Reed Wommack Reed Wommack is the Head of Client Services at Swan Bitcoin. Reed heads Swan Bitcoin's Customer Support. So if you ever run into issues with any Swan products, feel free to DM Reed on Twitter. You can find him on Twitter here: https://twitter.com/ReedWommack # Swan Signal Monthly: July 2020 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthly-july-2020-newsletter/ Our July 2020 monthly newsletter includes: Liftoff: A curated list of recent Bitcoin content from Swan and around the web Behind the scenes updates from the Swan team --- **Brady Swenson** · August 3, 2020 · Updated June 6, 2024 ### Liftoff: Is Bitcoin Headed Toward an All Time High? On July 27th, Bitcoin broke out of a 2‑year downtrend, sending the price up to $11,400. BTC closed up 11% on the day, causing a frenzy of excite­ment. Let’s examine Bitcoin from a risk vs reward standpoint. Now may be the best risk-adjusted time to buy Bitcoin in its 11-year history. While there might not be quite as much upside poten­tial as when a Bitcoin costs a dollar, the risks today are signif­i­cantly less. Bitcoin is no longer an Internet curiosity. It has emerged as a significant player on the world stage. Compa­nies such as Square, Visa, IBM, JP Morgan, and Fidelity are investing in Bitcoin projects.  Many of the most impor­tant investors on the planet are buying Bitcoin.  For example, [Paul Tudor Jones said he’s putting almost 2% of his fund’s assets into Bitcoin](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1AGwbrCsMWFqAlXAzLdrcC4Y9s6wU0PY0l34LTN1gVhm-2FxLTsv5RE-2FIH6Ycthi1evyqux4MM7YA-2BNhb3gtfsZ4RMr4sU7CidIfuX1DPhrPYF7knoWgXUSBIpB3d2CE-2BKilJEXoosnmbgQJWXNqSuDy6LPxekeu2lH0XQ34yvpvF4CXB9DSt-2FCFIO1BfOgfPryBi3SiNg0RYpCV-2F0VCqjWZMh98ObOUZm4zZ-2FZ5ZOSOuHaZQcwWmBFpDpek3FlO4p-2BXNe4KGHRp-2FLCJIOMI9Kv36FNwgutOlid0arAj-2FFtPzfwEVdD6ecuK7A-2FHbLtHTUmaH-2FrHR0xDrkh-2BhBto3o9BYoFzFA4auTJ6kXvN5yJQ-2Bjh5sFP2Hr-2BmMcwcBsgk5daTSdit6XXw4L96rPCCpIwhBgUdF4Jmwb97ycRQnUFW0iBcfujd-2Bd3keNq2j6-2BWwffrF5UW1N7dgpK1FirGWFPOg-3DsiZr_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtN1S2skngqaLxgsD6amhqPTLx15Rhs2U42TdiQuNJULozh2QEkEBZFwEp1mDGXjw0rFDAWEOX9xQzePrL4dj28zKKQTZNL7YZ1QdcsHmyPAbxQ4vCCQPjDrHgORAnUyMdvWylpVHOkXE4cnuNAKB1K5pJPLPZ6V9SBz14HO1mG-2Beau01YLnLk2PYjtMZecqVCw-3D-3D), saying, *“Every day that goes by that Bitcoin survives, the trust in it will go up.”* The Bitcoin network has run with [99.98% uptime](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1KpkyeXrBnlGBZzXBQPa1v-2Fwh9KTJ26kYgRhW-2F-2ByhjZuXc-2Bl8-2BtoL9SXxmBt-2BkZI8VWmZldwMjG-2Bz0EdKAsB-2BcNOv2SCkOsDgcj6JvG-2Bg59xGttwvVOf694kU9aO1wkBQJLcGD7eB9NuMIh0NWv6Tv2Bibl5x5d8sV6I27UsWEXUiy7kw2RiCF2maKw-2BEFKCoypReGExnWkDVEAyb7aBL3pypQgCYHe57PBsnM9cokOl6x1uNd9q9YehgX7-2FL5jzIR6wik8IiMhUvVszqxIj02ZJ65SymqVDwlnRagly1LR1zQaqPygCVZvdV3T-2Fxw0JgURIgMDJ3twDcQE3yDhH6OJbunHZDcffzhYb-2FzUKnJNtwymO_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtGtS-2Bra-2BdcmMQZ7ihf90q3sMTBxH72604gr3oetTN2etyvWJtJeRuW8BRqIIJetxiVfso9lF24zsU6E8KX9bYMfTO8CCKVcV7wsHwrndF7xEL6ViI1PVebjOhWIy-2F5FGGxIg-2F-2BQubAR9gEjP-2B-2FMRMb0Xq-2BN6ntws5Jb-2BbA-2FWb-2BFrbAz0QFhUIVyw8h-2BFIgP-2Fvw-3D-3D) for more than 11 years and has never been compromised. Even elements of the U.S. govern­ment are begin­ning to embrace Bitcoin. Late last year, U.S. Congressman Patrick McHenry said in a hearing on cryptocur­rency that *“the world that Satoshi Nakamoto, author of the Bitcoin white paper, envisioned is an unstop­pable force.”* And just this month, the US Office of the Comptroller of the Currency (OCC) [published a letter](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1N-2B5r4t31KVsmhb-2FSJSqwOKb-2F8ds7RFN2d1pD0Q6-2FtX-2BOi9Rd0WflVKPmyVmDEk6KJu08ouabInHLdion5QD7MPmks7ThIapbpLcaf9Cs8YTdH3PRTlW78oaaa7UUQSlCjz7dW-2BwBokmfOIGFEO6brceTWtjAx-2B-2FZP6HWElzwtRsUxeDUnna8q9rtAydb9Ia1VWtRf3WA1Kpozvpj-2BCiakx8qxw9GhhttQtJI-2BbrugjklDgL7gZe2Qhm8lg2kkcS-2FznKG9RzSIUMpUR0AE60pLFUU6bpV080WMzFA9pqfDNYgfDeShPRzNz-2BtiNqrQ-2B6hMDbItjBeTGgElwWwYS-2Fv4helX-2BOmrmpuIzajPtkDkT4Eq1ProB-2BnRgcO2onJGHRdg-3D-3DdJKo_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtEOaIJW3TKwyIfTIJfw2iXN-2F9KC7XhuI2Phx-2FOxQ6lgqgkSfCYpnWHDq95QeT5P4llKGi8qa4LpE8R0M41rSNdKx3eDHlDwpSCRrvdeLgMmtXylgycDE1RYitHpiZ9CWeXMzMXqyDrOnNsu7BKoqg4mTt0KjQS36TLVyZ8d5aR5v2rFLnBIMFgjiu8LhZmWvxQ-3D-3D) clari­fying that national banks can now legally custody Bitcoin. The list goes on and on, and the message is clear: Bitcoin is here to stay. In other words, the downside risk of owning Bitcoin has never been lower.  #### What About the Upside?  Although Bitcoin might sound *“expen­sive”* at $11,000.  The good news is there’s still a *ton* of upside. The total market cap of Bitcoin is around $200 billion. Respectable, but still tiny compared to significant assets like gold. Gold’s market cap is still about 50 times larger. Let’s assume Bitcoin reaches only 10% of Gold’s market cap… we’re looking at $50 thousand per Bitcoin or nearly 5x from today. There is plenty of room to run. #### The World is Waking Up to Bitcoin  Every day more people are starting to buy Bitcoin as an invest­ment. The current uncer­tainty in the macro­eco­nomic climate doesn’t hurt either. Since there will only ever be 21 million Bitcoins, an increase in demand means the price can only go up. Do you think more or less people will buy Bitcoin in the future? All indica­tors point to exhilarating years ahead. **Noted Invest­ment Strate­gist Lyn Alden Recom­mends Swan** ![](https://www.datocms-assets.com/56652/1689858935-lyn-tweet.png?auto=format) [Join Lyn and Start Investing with Swan Now](https://swanbitcoin.com/?gc=sub_confirmation) ### Beginner Friendly Resources [**Bitcoin: A Guide for the Perplexed with Vijay Boyapati**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1NTjmZtJlKuj1bz33pCfqsroI4K5Z0HijHXdeimAY3IJwF7KlrwQu0HoeEP2qgvlZ-2B7hSzfxI8-2F-2B51CM4CfQdzoT7ygVwLwH0Nd6-2FQXmtCLAmZ7SvF6r-2FUi1LYd2CIgSRcGhPQy36sT4jDtnXT6NzBAHXAtQZpN20ohWciT83vYrf2wDmJNtO4ycpUsjJ2st9zTvPsAs9jf63sO3vXgSJD6V69lzEa3Zym9sGNtibcBAa-2FRA2Ozu8H3td4SSG4BwquPfYlImdclUyksXKJpLaouH-2BymFE13jsp79HrDfDOzORJVtKahe6UnMvGdg2KSy05G63wtePn8NZwcLg12YgEiwhC8k4b1Rt824BGotPaoeglJ74Sl-2BzFblSNHVLhnb3w-3D-3DuwG2_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtC4WTTnjWCEBmCseSbVpqB4sCp0iZxswLRNChNXKKictMzQIHhwtx9dr7q4i1eEd7mBKBwJRE-2BZN1uHBCbpMuodznWmGYdAshZMhh1pjfIfpSR-2F1xK9h9rHE6RISXqH8n92VlFm6eBU93PC2u4WeA21PyM4plfxfoYeDMAVYD5Sggc3krmpqTUbPEOPKHv7QDA-3D-3D) **by The Tom Woods Show** Crash course into Bitcoin, why it matters to the world (and you), where it’s headed, and why it’s superior to Gold.  [**Why does Bitcoin use Hash Functions?**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Fl63ANIhNaB4FbN4MEkWzRyAOdc03uZM59dtdUuHo6zG17wg1Hzd7u-2BmnVJ8b8D9B5-2B8NKjW0hNOobS5CZ5smdyxjbAiyWyyyK-2FuRa24uOgselSDsAD7snOkBvTGWiLcam3-2B6xugmlQ4QoRYpOVkeBxofLdPksB1NCWJUSRWqBq2g6Kk9fDG16BGmrkqGDIynmNvWio0GN3G0vNiHLEyuLHqxJ-2BUJ2YeYZuXsGcZesUn0zH2AyxqhUhH0e-2BZNg6BsIR2X2fSlRVilFsFbMo4Zb8fEQfgHJab4WDncGqF354V5pDHtW7wOGyr6qnWTCeSePKgyZYmJOfyb-2BQH9z8J1SFG4qwJuX-2Fecjv6yOCtGSdoGDBO7my8sb1N-2FXvzuld-2Fg-3D-3D1BnZ_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtKm9zk4ICpTnbIcS1Z8kKpqP-2B7N-2B-2B-2BCVfZxD5q-2BXJZHDO-2FPcWjLAwYIYAIGpG9NTH1g-2BbC1F3rGyeNCthoTnSPu-2FCp1yMotja0PDtVHI1myV6aR2o96rgBfi6hHRNNZ75T8I8PKMc8K6UjdbpHnZ51-2FVWH16md6l053Io7tWBA2X9qLnRM9QviPqrpffpdEujg-3D-3D) **Twitter Thread by Dany Diekroeger** A fun thread to enrich your under­standing of Bitcoin. *“hash functions”* are like finger­prints for data. No tech background required. Bitcoin Tidbit: What is *“Stacking Sats?”* ​[/stak/-ING sats] 1. Verb: the act of regularly accumu­lating Bitcoin. This term has been organ­i­cally adopted by the Bitcoin commu­nity because it’s a catchy phrase and acquiring small amounts of Bitcoin every week is the most rational approach to accumu­lating it. Sats is short for Satoshis, the smallest unit of Bitcoin. [Matt Odell](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1J323CaWtDwE8jBepRDuVls-2BARRsDXLdvgFIrll4DMtZ-2B1HR5EVWCj6s9WFEgINkelVQBvw-2FWnZj3dqc8pWgJobGUyRwmfYvQ14mk-2BntBZTquvH3CGc8LiEOhArjz07gD5PpHMrfaV0mi9TmcMq6B6jxj5G2kHBKlDq3K8IE2RKc1EG3vA53ulYk4y0x2zkVWU-2Fh2Pse0BZeE-2B9nrQ7y7jAIGBUbpOPWbcQcrQEDFoahVu-2BDUg3gej9v5eQvY7NXeQh-2FgTkm4WWb0XbyvBRRuYLqbFCK8JIinRTRVRzAPL42cwQJ8dhoXU54kK0wIzXMLTOLsiC6Hmr1gWQ0OEaxrpM-3D6KhV_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtJqqHwsxwm-2FOZdsyXX6gFcfyvw2Z3MmIVF4xrdc4lD-2BQ3RUcAPub9qkbfHGUX5iWm8NS-2BY1-2Bncg6KGDCSaDyc7qqOmxyWxxzHWQk5E3xY7r9AgCZYFU5zwo9LTDvNOU9TsodQqsKtUs2DpdHht0Alp4aWsEAkWZ3D6s-2FQO6-2F0Ef2QP73SoBmSeVKdGgpSiHgBw-3D-3D) gets credit for popular­izing the phrase, but the origin is unknown. Example of stacking sats in a sentence: *Friend: hey do you trade BTC?* *Me: No way, most traders lose all their money. I’m stacking sats with Swan.* ### Bitcoin Content Showcase [**Bitcoin Invest­ment Thesis**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1IQpFM2cZmUT4B-2Btkeo0zGcaGd44kIUgpAiPaf-2Bg1xErOPFexKEU4ZGuZahq3B0tRaVQkbFEi6to6FJoqLSEuDwJ20rIrQesVnCFxdTbMn2YuBveO2fBINaIkUZ0AZezgC30-2B0TNUnlEpDsg-2F3-2FtsddtL2wOwLqm0gqh6hKpCafncmNRGLaSGOMFRsXAFRheEIwLUHTUoR5eRfPvaPdqsX6bzE4RfrA3rYnMfBmna76v5OuePIysVQ7Va84Rh2ISTGMK3rIYbhNCATlP-2F7Qa5-2FCefYR7Zop6n1Je7GONKRlCH76-2BfH4cZTPB2WxOEvgAXzpupxfwXp057QPOHnFl6ZzSBZVvLJ-2FpGvGTwpEKmFEKV8-2Fsmy9LNYg6op6CmnS31A6o806-2BUU2ZjT96t7js5NROxbpJwmi9BpEmeOO8J59esK0BsNYQuh2tYc6M8IXb1A-3D-3DL0pw_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtIEJPv4gridqWEbcznzZFBLVCZV04Id5-2BlYswBH7AK7-2ByoF13cV0UNc5A4lnU2snNvVFvc6v3hKE-2BA01LTAEU3rIL57KJCDyVfC1TivbuzKAgZtcxMKj8ZVAglMPhaq9W0FLcWDxhFujkwmcruGVtRVMUGdug-2BV-2F1na1OYBVgzULGxbz2RdI4DijdpW8sNuhrQ-3D-3D) **by Fidelity Digital Assets** Fidelity makes the case that Bitcoin is an aspira­tional store of value. The report explores the inherent charac­ter­is­tics that position Bitcoin to fulfill this role in the future and discusses factors that may drive greater demand for such utility. [**3 Reasons I’m Investing in Bitcoin**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1EFwOMkp1fK4yljUeJaUdbonbtRqMlRazxkSdy2G1FDOmD5HCdNetvBh6o2nZfZ3Gv3xH9p2JAwy2uAk5zUmX7YjOySJDf-2BsA0CGwYTse3HhdqZ-2FgDLHGIdT-2Bn5huuGDQ7gyBls-2Fn739q48aCTMsMlSKjGzOehLTDbnBmF2Iai-2FqUAzzNUxobgPFMikllu46ibDbjAkWLLzIuXK8SD6kTjLZcJEBdPKtWkz7B6fe-2BnPgv8EYfq5JwObUVPbLfinkN-2B99VAdpjAmdQCQIsWXaH9Du7xtzQXWvkrcTtD3ZsLuPbYhyuGjHlB285hm7QW1FWCPzwCE1uo7CxVciGnwDa4AVNMjFfpPQhEwqAGf24lpG4ang_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtH6HpdEXsxQ-2ByESbWexhlKqxuAyS5VF469FMnFkuOaZNezMVO-2BTIaweqBh-2Fpf-2BHSqs3ouxtBR47H6v-2BmgK7WeUt84j96HYWr2XWN6jC6Ja6MChPayeDAMvzXkwMpTdeIW8N2iee1doqjR7lYSG2yy2sJjelJHIpjwBpvN7AT-2F1OJhOHSq9oUEdriPJ2LiLYmDQ-3D-3D) **by Lyn Alden** Lyn Alden published an in-depth analysis highlighting three reasons she started buying Bitcoin in 2020. Lyn is another example of the macro investors getting into Bitcoin this year.  [**Masters and Slaves of Money**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1GmUlAExdaQbOpbImjzd1hmuQnXYlu-2FvdbK4HO9v9zporh-2BWEhZ0s7Fm6x-2BM3lPhRQ-2FINOOIE4vVz0akr1BsyAvnYKTpTuRzAVbQzapbGevaYPQbnrCOYpaEy9PF4AKRPE1o97CAFPA8hQ37lZ1G22yZ-2FZ-2BKgI27jTE477R6y2FFKf-2F45SknzYFv-2FFCmLa4KiOO9E2Mfw3kSLnGj189AuxUXjWge7i1oKMAoBINKTPK-2FlguquCbZ-2BGO6nF5v9BKgzngukEO-2FGu8HKMJB-2FwJTkvHlvhV4kuDWvrqO3iSaNILIqcPQEm8nZepAG0KSlx-2FVCDTZTdvCViwC9-2FcWZXUqtLA53VcQe3HH-2FYfaAuIDLP-2BQ7fMs6M1qTCuOe9FdIDcPMg0Du1noElVbPbj3EZTNNkM-3DA8VO_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtD-2B1ETlNBtc6JDgtUawyYuMu4Ng2ARP508bjxVZVlUf0V78v0-2F96OtRE-2FnQcFMT4PunjAYrbkeXdgD6g-2FCEjkuy1PXmGl-2FtM59yhTRUNVRnyY1tJzoZGZG-2B5mI30SA2jxr8UZ9xxDhshTG8tB-2BpavemkkXfhpvg8ixGI83CJrS5pH7wZViHNb903O8vQ-2Bn1Ngg-3D-3D) **by Robert Breedlove** Breedlove explores money as a tool for trading human time and the impli­ca­tions throughout history. He argues that central banking is a weapon to steal time and inflict wealth inequality. Bitcoin, as incor­rupt­ible money, is the defense. [**Debunking Common Bitcoin Myths**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1IpJfmzaXHXHbRKT34-2Bxlw8K09WJ9CpMmP1zQWlvByl7GWL25eWx7Dj4GtPy5yyKeLbkjRcau1s3Dzi7KDGUmVeyXkmbNpT4bKSrCMq4NbUUIbaKYMUEWp9U2nmatVYfRuKqsptK5pRtYShKYzxJqMYBNH-2Ba-2BdtkB8ung6XUANMswI5srlGVHtNJywUGZmYtguNfiRgRUGNvbS1iN1BudyyaOpji7O6b3BEA5fybLgeTsvYpnH2gLpVGx-2Fh1wcMFpPXpW4U2Nkc4Str0kMRVPYBsoi3Xqm8f7PVjrDGIJqfOEPYU0eETSYovPRcsURacM63qZ5T9d9blgqKonVfOScwbgomLF3w6zPmBiAasrYihO9Nd_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtESF7HVfQFq9QkNJsT41hseuidNSPjoKg6ogh8BUczKMTu6TY0R9-2F8AQoheE39clsHbQok0dkOCWVapvnENU-2BWlBEJ2dSSn4B8zfKTJRm-2BwJF9QwItfsJVKt-2B3KT07N3xumEf-2FsheKhljSGIa1Gh-2BG-2BMLkuR6EgcdYylLJriqi-2BEAwPS-2FrvyezyX4koSNS01og-3D-3D) **by Yassine Elmandjra** Yassine gives thoughtful rebut­tals to common Bitcoin myths such as Bitcoin is too volatile, Bitcoin is a bubble, Bitcoin is for crimi­nals, Bitcoin wastes energy, and more.  [**Bitcoin’s Town Square**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Io6g4dJFdPo-2FHfWf63hzkyWMQYaomKCukb01E2hgITh-2FA2gI85NLcD3B7bdrWbiFOqGKxZ06Ac643tZQz4CXF-2B2ZbK5PrXWciEh3GoK1Pu8ZBnbntafiToBytnkn8Fob-2BMU-2BsETeloqNBitSt37baw-2FCsGacrRx7p9H1KFtOOfOjyeiORLc0hy3nHUN1hUfm-2BqRIzZAgOQT3eApGwlygp-2BencPwwHWLkZQ2sB1VJvfsmIldbicfDqUx6Romx8wXGOANXyza-2FeQaYg07Qa4-2BRPLRxFY-2FDykQBQZG0u7T9GKUF-2BmQwieApyJ3OE-2FWOJXVj0OTRoLWMT-2BnPUREKMNeed8bhuLzuWzEICOvjuVZ-2FD8LQZRq_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtCjsTzWs6945l0t3kY1gAVSgWTFdgDSmhZHYZf6L8N-2BhX2WQkercuF8iao3n3XpXY3mBArxW3Omin-2Fuh192DRekns5G7FF3Ek-2BHtbFK0-2Bt21-2FBguNrd08Lzbs7ocGoISn8N4RNTJG62rtYugQ4UZgfP8HQZeonR6E063wUDvR2Zn0hABxABsSwcLTFFv-2Fbh01w-3D-3D) **by Zane Pocock** For most Bitcoiners, the mempool is simply a list of pending trans­ac­tions. Zane argues they’re the center­piece of the Bitcoin economy and totally underrated. ### Highlights From Swan’s Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, [Swan Signal](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasxro6fTAMSJG7P-2BL3Jrv9eRo8fjB-2BvwzOt21f3-2BvJtzxn9t0lrjRLKjPpdt9N16O3zmvtTj2dVwxekLnGJYyW05U-2B70IiQeJL94EbdCiLAq5seQOOFKudgHbVpTV4YKH73tJTFZ6J3R6RK0fqM31s-2BoTSqHpyaMQVCDkcyfJ5f-2FhH1H0o1ohuTQA0thPuCELHzJTcJ4DI-2BBGQsdG86Z2u17uwvv-2FqLIJVPgTj55moTe8ektr2v-2BTPHnDBdTmDGg-2FYYw4uCnXzmWGL8vP4xyolUAB-2Fvz-2FQSeLXs1PTx5UW1f5ukZdcmMErj6ZG-2BwEGs-2BWFhsRXGX58g9JvnHyRyyMIsu6My_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtFUPO5tmgJO5Cwd3HJGWdlpx80CZl7p9T3LEdQQYUcisNg15jGuWEbA9RRjWM8pgXzqKWHglihfY5vg2mtptNtr48ESVVRLZF-2F0LuDcvEat6OwCR1B2xEda3AdhwJPJo2DbOxV6Af-2Bk7Rpt5G45bQMpiBeUamPI7I1Q-2BN29RYq8xVmtWP7m-2BnrVTMQMkO0AnUg-3D-3D), features thoughts and opinions on Bitcoin from the Swan team and friends.  On our weekly live broad­cast, [Swan Signal Live](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1BWUEhKAscuSR-2BxuJ0bTy0paD2HujZEhy-2FONQpthFgZ4VEnpZlpomcJXP4hs4EAUCdGIK3TMeS4-2BiFUYI0-2BW0n2CXCZdgZ-2BuHCKP2RtnvfZo8wgH5kyIHyTpSCcthBed8dZgMuqj7iUJKDULH3vgk8-2FcZ4zNX9ezLvFyDRBNqj2CxVOHB3CQBpgrx-2B7XOrvbEudvGmXDNETq5m-2F4cbAg7axTX2UuIV96GD7DChGidrOl4-2FapXICviCQvzHiwiJPlyAbQcbdqVlinYFOS2FrqjgskK4PqEaYUK-2F-2FPof71lsx-2FWt98J-2B7n3xTzHcO58AqVVTT88J2AGPSWQVZ49C7Y8lMD8yC9c0sCI7wxa2DhsGiXyZdz_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtJxui-2FTox2jH3YQVSiXlTuGe3hcCYJs3Opff5LtRdag4cVOEsyap4iTLtVxGiQAh5sU-2FFk1SzzN0VA76NX-2FV7US40f59iHLBUu1OV-2BPSBnQ5dXehq6H19rmSQGrgt4L0YlWDSJpQydPfEsOyiVGOfByVCugIv-2BTTisBchh9Lzz9njgpvcYE8mIVRE0-2F3roE9tA-3D-3D), a pair of experts join us to discuss Bitcoin economics and technology. The live broad­cast is then published as audio on the [Swan Signal Podcast](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Gljfj-2FSYRaMZQQhgdxltjPgMyRGK9UE2a5yQlipjZiXrhmDe2qCBwWemOdPsNOBjnNGUIZrbPhMdwdpowxoNqe9J1rFN0NxUhNDfTTVvDvhKtB99n5J-2BAwhY4HtGi2Whvw7Zgs0HkSDNfIEhaXH0NOlHOCzMfRilUbvnmHUO9izrnCTTHpHjSOff7EIxn4wSjiGacnJmsY4ylhd1q-2BOvoCTEFkHxvoQF0tDMYYQ4NCi0ca5l6pE9hp5Y1ugB-2BXHGYjPUBHhtU6qMPdkvXgSRgvXm-2F-2BAUMSfqvp0YjSd5mh24cu4Ug9yG9XESQqkXQlAyZWpYPiKn9DNNzTaJYHsTF4-3DezRk_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtGa9GM9oEs32fZWXP2QG76CxVo85JSBGBERc3QPLVIV9zS9i8zyrK2XqSCqNNuMCs-2F5ONTl2Idt9OMPuwO8fZbhouV0CCq2G6o-2FWaaq3lNrpBCcBmec-2FkLS1dBjKu3DqJd9wVG-2BIvNTt6QxW4TvzBezEjrJwpTg4TP1ZIUehcplRi3iwqwgaiTIP-2FDQNSQlIGw-3D-3D).   [**Swan Signal Live 17: Jimmy Song and Aleks Svetski**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatFRQW1pP2GK2qwL6E-2FCPED-2BfZd0T1M4z4eEmt5-2B2S1pPk9nAG-2Bx-2Fy89IKTAROTPyVtN03zhWvOiY09acpzjRHipawX9-2BxoGUFcU-2FADBlGS-2FRKQr9XBDY0m91ne-2BbZbm3-2BCUTYREJcuK8ZlD9u4dML-2BxfNc14R366nqGzpM9gnyFWUzdzf-2BxCPi1L02oueyZ5BS-2F7G8LFBab1FpIyaqVVcvOqcnwAqFyhUxvREgZCTzd5tx1SAdi6h7lPMf7ElUshldopQoHPreZvKE-2BEsYlwCr0iYbQ22PU6E7ki4d0KBMo5P3YCAtBoVQWk7ZMPH6pki481wWxpZ4HQjDIDj6rYtREu2tpqJiYvyjkUzi-2Fal3x5OlrIQ9QXwlwlZeQxqb90QjyPgkU8y2TLS6MgyXBqt7jAfq_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtNP8wzJpd-2BmYlXZbRu8-2FB6EKpkMjo6XIBaZY-2Bo5Vsdg9Ifftm7YefdKL-2FNkksOdejrUEd8-2BE3IoSAGVlt69HSuNgopZ2OFXsSokr-2FT3eNGFGIYrJ8vuJdlZSHnklrgp4jK1JlZYfl32dtBFu0JaokpH7rt5JqepjWPtZCMoH8FL2-2B-2Fp64-2BxKHW4m3O00evi2IQ-3D-3D) Join us for a discus­sion on the merits of being *“Bitcoin-only,”* morality in Bitcoin, Bitcoin’s immune system, and the macro­eco­nomic impact of Bitcoin.  [**Swan Signal Live 18: Stephan Livera and Marty Bent**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatFRQW1pP2GK2qwL6E-2FCPEDKWjiVUAzHD-2FWshVoZ8C9QSVd1etmRa2-2BACPeuMcSkhIuSkfPmRJ3JI0S7vvRCu-2BC29NuhdO-2BrxBOIrMyxg8lLQQ6GJhv-2BY7HjIy0kdPHlfdci86crxsqqW9df39t-2BSjS5hCghFx-2BN-2FdHXqYxsddrusNmnqgdFirlxwiRgiijYFZsHZS1k0LpSmZqrotI84Mz54trGdBiYOLP76hmnjTvrsQb2cbnPf5EtumJF0zwbM3IckCm-2FmDj6yH8fBWZ7cGH0KND9RcLJL3B54J53DXtBBR3uCtY-2BUTzZbkREl2eY33ajUc-2BYlPcLYPUNg2eE5h65La5XbheeU-2FWmjDhM9G-2FC-2BDri29ybwiTYc5292zCCAQAdFoxJNHoP7nVV-2BKrxapmUu2n_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtGHwehBorMWIrebD-2F-2BSwveWdaWyZHlwmV-2B3tb4f8OMRSSvKqv7Tr4xpilfmu2ipXcswKXcNmqdtSanIWYGZxke3VttsH6h4TId28VyZp1bPW64RTWcClVTjPebJxLs66YDQRMfdz1m-2FW5ETrYU11bNj-2BothZNSWqpSGdif2kQJoz41QkmKyxZ6PjsNl-2B44MsyQ-3D-3D) We discuss every­thing from dominant Bitcoin narra­tives and the state of mining to Austrian economics liter­a­ture and the future of Bitcoin. [**Swan Signal Live 19: Ben Prentice and Mark Moss**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasJvI2BveZgj5wTpQQ7JFB06FsdD65AZNzUhba074dGO0eE-2FSh5Zb1JKH4t4bQzFi3R-2BJ-2BU2eg0l745djO6cJWQcJUUo5E0Z0tia9JS99pDblz7O042mzS50txEN9DWsGqXSqq3qafPpGRfKDU-2Bht41HEfd-2BpWQPH8SJoMT-2FAbBxPJSsispb487qJrtp7C-2FgDGrVOsM0dj4Z6AqsPqQcYRM7N9e49ryV0kYe57ztZUcVYsaK-2F17iGkYeyd0i2oAYcvc-2FHgFu17Ckf8iRMY0pLRooEV4rSK76-2Fizv7xusao-2BNs5arVR5FpJcKU6Aws3yTmbPWmVXZmNIgZZkGuTnA1CNzGh7-2Bjk5RIMb21exHS5Me4NdQ2hsYWbe4Zmb0iPkxEWcKGIamdo8sqtWB2d4RmS1vKUy_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtEMJS8nnpctc89lCYhan-2Fk5sQl1r7P-2B-2BaFD6Yqb8u7hJjwZIO7oJB5hE7KzQTgwbPZOu4uLf4Kh77K-2Box3upAcxqL4c2Z1CjQbyS4EHdJvbo4o2qFuuCOwIX3qz3AZJqLHzlPpCGGu8NrPpqSHqFgh0InpaqKye4eyj4nMfqejTP9131lh8w3NTyDiyTYQKBXA-3D-3D) Tune in to learn about defla­tion, the role of money in an economy, pushback from govern­ments, and Bitcoin’s game theory.  [**Swan Signal Live 20: Samson Mow and Parker Lewis**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatLU-2BS8-2BhZcu0gO-2FA1NXLZ-2BBfTmuIkLyITtiuVEuJ9rhvqBU4W43GDuBGYTq0jL9sqE7UvX1g2w32BA8QRYv00PrDpj7arLDjPlwJ3Tp22nm3WNj8kvrF6fg7VK6PiKVYmm0DN6D3KdGNh1Q0Fc29Er-2FT7Qi2WiF0yJWP6nqK-2F2mrnBmRjZp8VIxaF-2B7mbzIH0RBuXlFOjz5xQwjWzLWVqVmbbcIDjuz5AeaXxGtkgIj4eIZXUb7KNqZpHyy9mqectOB0ucZChMmXlvRxlqOpDsRz8Y6u-2FG3-2FhYdoztL2fvynpO0DzwGVXmGx2grixgRaA2qYD2Cwc94EryTY5l-2BWw1DUZvLW9fqYGLyyHC-2FSapJM9HkM-2FovoOCijazWtcQVLtthd29-2BQlAuZCBxixK1odNiirA_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtMHUgyDV8FJNXoQaxGrm5UBA67VRFnjFkyABJ0tgB5laLD2MV3EfxBzgnympYCG93PvczcYgzLf0RudAPfJGiPWV9I5c-2F5Bl3VacN56ZmOpKOdCQ4QvB-2BxXBDPTEZQSgL28Ts1n4b2yLi5A1b4uS14YdFDcHRsl71aEbVcPVypWcEZ85AYPcBnMik0pgDV-2B7MA-3D-3D) Exploring geopol­i­tical tensions, Bitcoin mining, the integrity of Bitcoin businesses, and their expec­ta­tions for the next bull run.  [**Swan Signal Live 21: Lyn Alden and Jeff Booth**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatwMFnqoM5lj-2B-2Fv7eePsUd7qkCGsuyKVRKTSCQ6dfCp9WHKxUWr37VlKwoh7vUkPSqxFnByMpFzmVfImB1H-2FOC9eBgSPRfaTm3I8zfXSLxCe8k2QzLEiwkAqwFXOsgKrCpssJ-2BLAhDDpRGPZRnKHAIFZDrU2PPAuDnZUMFTsTgiL-2Bt8LRiUVhoftS2W77HKjDNWcD-2Fc9cwiCLhAp60sQsECui3Ejps-2BZu4tGWlCva9R7Ztk4jZ1BXXPm2aq01xEgX-2F-2BXGUSFu2hl-2B8j5hMxVf7PwpkHcVdKYtKjdTHXlrgX9O-2FafirMYhbwVebLLyTeSyGFdCueEeqGXZUrQ7etwT0InNTziD1fV9vxr8Z3G-2F2Y9Gc9eui4jY1tXn11qKI1jTOGkQIlgt3DuC-2BlI472Bh3tQmgO_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtDumosB9en1nx6-2FDe9IIXbGsPbL5vqTGdRyQ4CafwD91MTmgWA-2FLmzjK8491FSbcE4x7c4pAyoOXoHkL6aSmfX7lO6uDboJlY8nxdhsK1nChP1q4Ypum350i0XOPlTRBmmwHcww9vUnHs63LnWWzz1HZT1D8zLRNtI4iIspMHBOsnEcGAGcoOw91u7GxpAleJQ-3D-3D) Watch a great discus­sion about monetary manip­u­la­tion, deflation/inflation, Bitcoin as an invest­ment, the questions of a peaceful path to Bitcoin, and price speculation.  [**How to Delete Coinbase in 3 Easy Steps**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatCbZAxMwBZTGNAkLhhcjPwmSkhkcFoFsTx-2FdpkP9bWAJVcC0J0yBEibtbg8zUMbkj1oSqCSzdmhPSs9imI-2F4HXrgM3qOBeIZDBDUvT6DLCRBG7SgcSBCVlVytXU37TiX9mnadH3OIug4PAmwlpzeplyOIu27sXIF-2FkHW4NebHWQEJ-2BmvrStdI52fUK1PAUgDnhA7tLwae3k1pAx2n-2FYtQeSkfiws7VlsMAk5TCXv-2FceAyC1-2FNXe3j1XI7bBpvGV-2BqlQGaqAw3MAWcoBLQN5Xk4UOEQ-2Bq6IB2J97LPjg5YUiGTVD9IK-2FbkXZfOsvAYCHPK4ogHSDtrhup-2B04HsZDdvvyzsg325L1WhldekaAYM9H4-2BA95IFA3gMfYWEbRKq3dWitmAKk2d8VjPlxYnhC8zMZ67E_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtBPRKLLbJlEKeKM0ZJwfuxFuXNjat1ldhPLcrJ-2BPiJQlAFQK38gfo1rbq-2Bp5qomCX8BjgbkK-2BVkhEXUCHmLrZmO-2F23RuWjO3IughqWNwEdQBa-2BCLQYkGuqQPsb8CMduoYNOCZspWQZraHQ3d5e1sg0WUI6gdFdSGVAAKD5EzT4iry6rSVC07UcvxUcXZHJ6EXA-3D-3D) Learn why people are deleting their Coinbase accounts, step-by-step how to delete your account, and why the alter­na­tives are superior. ### Behind the Scenes at Swan [We launched the Bitcoin Arsenal!](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1PszZrPDzSK2JC5Tj3f2zTZ63JA0rc9IB23JblGw0KPx13bUr-2BkRyEo6GEDgqnYvuqds1rw4nfJH6-2FQsQp9Xc8xUVU55szHoW-2FagVW4YI0DoJ17qyRjUkExKF4Fl9mMeGrShQbsgGkwXvf-2BAYZGDSKx2pPAlhIBC9f5fFBb6RgWnbLNsCzxlSOE98Z9aOUXrBtfgUVII6X9derCIhvoPQYvfSVoFaGYpqktywPN8fRoVlyBba1XGFDOyf4bCLsr-2FCJzXHztn3-2BcX8LS2j2a0IlrF1sjV-2BYerTuA-2F1RoJ8eAn7uLPFgnwdrKR1-2FP3lZ6imd-2FsbPQi8M-2F2pA5lK-2FJHQCGbmrFhtwZRQ14YYh9MqOcf5BucjXdzTG1AkBw6no9oyQ-3D-3DqQk8_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtJHiFA751BjylsMi741THBMTKsLZMlTu6dmbRcGWcGegQ-2FTDwrGId9HuTgJ-2FK-2BuoeqzF84i7x38-2F-2B-2BuTRMuLVpj-2FgPAIpzbs1Fezppl8EokK7WNZYLf8-2FoAPU6lxFCH-2FdnrzU3QTI0rig2SbiUog0Ko0OjO9ski96k-2FXdBBAzWEDZ2jokyJRMJFnDJFobCaeyA-3D-3D) **The arsenal is a repos­i­tory of resources, memes, and art used to teach and advocate for Bitcoin.** [Check it out here](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbB4lA87r08Ign9f6zNH6Fpxsw0utbN5ETaE5tCtI6V9RjyaFRliA9ew0T-2BevmyCy25-2FU1UhzIHI6PkYHa5ORlADRZDEBD1M9wbKJcb6N-2FrvLkmA96xdUgPSky5fP5cz3ljFVp2aCeo5662ujW0u9RVw8arXyo-2BpoYjDFmmZfWygdkg8JbGtcjwRf7WvPk-2BK1QUDdBy3gwJvT3Dt2-2BQAgc3N6otOSS-2Fj-2FRae1po27rn-2FWne6XiSKfvvoolFaQ9rHmZHZh7rx7GIvDKsPdNIVD-2Bf2MaU9-2ByBqW8y-2BsTbAwpM7fJWxzIBisMCQdaCJmudS0B15XkdTS8MMxexSm7eYZx3I-3DhXjB_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtH5tBqMH5pi2fwvr1PCckLVBxC1lFexQvaqVY0FUM3Y29qSMxJsmOZfY7zbJZH6Ydiu4Vg2-2BKamg6-2BFh87-2FrwJoHvLSgwVNG-2BojWGAYLwsN1WNvYqISVuZvj4l5xerLKgqHl4TikLkspPjmD-2BNRujbGUyVBsdeah3y013-2FAo7lOwLieZTMbxc01SLSx3raqC2g-3D-3D) **and follow the** [Bitcoin Arsenal account on Twitter](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1DrnBAEAtOUzOeNgxRzxNS6iV9AvZX96SWQl4CCCP6SV2sGo0JlUq0-2BRXDM5cqDLfcRr2LY4k7u-2FW-2B6hP1k-2FrUDvpMYZRqEWe2Loye-2FmpoLF-2F0-2FeX4q3-2FX-2BeW4kULfEgSfuJ3qM2I2whPhkNTDSPuOPTrkYI8hD0mu-2Bt6va6XihJlMxKL7-2BsorY0-2BzjXKB1n3nCsbWt0sbjrEkC0uL556U0DWg7n70QSRJvRqNrhnbyUUpIwGneo3tw3cbgnfZlvpdKPeSTNIgJoUfW2JeQYVLJgkIR1Zq7gvXVtKwpGwVEhGYGCN5FuXrSkgAEs6K2cVeceQ-2B-2B92P72VXhvVWBHivc-3DUpbt_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtOw8pDwyOrGlB421He5g163aw6Y7b5Ofvfo6ZEXXohffSf8jOIhUnm0y9ow3ksWdd-2BnSO3W40auMlJmi2AcCiSdyqIR8YpLXJJ4KlHUNLf0XkUoOnv8PvueHyhi0fsbKQ4-2F7uFr0VCMV-2FXcNRPFmEDBt4X18NDqtqVKXQaAiyaoybSrev9xdOM-2B8Rf9I2z50rA-3D-3D)**. This is just the begin­ning; we plan to continue to help the commu­nity to build out this resource.**  ![](https://www.datocms-assets.com/56652/1689859185-swan-force.png?auto=format) - Many **Swan members have increased their weekly purchase amounts** over the past week. As always, you can update your plan from [your dashboard](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1I-2FZ3sGZ-2BjOmGKtVlcn5W61JmcZqqI0aQ38jwlneLO6pxte8ckWOKfbTymvvVAxRUvJIhG7NZDXpjkeU0VoLumbG-2Be8AuqzRJN9wtyisJXDonSnd6MB4uwceRixs-2FubtZ2IliuG5mW-2BXjIpJP7QtAjsLJr7W53QhWvmrC4LRbzvmpx2FS3s0v-2F7YT78JSqKXiMvsZsaRidjYC5bRHz8t58cTW0UQoP1THb4hi-2FMFjyrr-2FGrLBF-2BRqGzUXTg78RhfqyoziyYhehi4OxI0md5m8Fn5ypgA5kSD3pMNajX4qglgZncQyn1a-2FhKNsKrbpHYMEJ-2BMgS8YwNOtLTcLTaavJztwKfiw2uyonQ20UsPAZ63-2FcX5__WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtGc-2Bm7Lk7nOfws6dvSQailrXzArauq188zSzBkF8Ezc8773lLWHMFirCQrafnlwG1EDhGGe57r0zpLQ7QfWzeXPtzkxattDI1AuMz3J6NS-2Fo4VSeBjs9qM9Gfv0RLguc27YYLR-2Fvc4-2B-2FmwOJ8mnz-2BPNiioQgYocG8GNUzjG-2BtNS-2FCDCFY6LFyG3-2BrCddCg9D2Q-3D-3D). - We expect to launch **one-time purchases** in August. Stay tuned for that announce­ment soon! - Our weekly Swan Signal Live video and podcast format is **receiving rave reviews**. We carefully pair two guests, leading to unique insights not found anywhere else. SSL airs on [Twitter](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbJhPaWbsMkymaWFG62FaZrRrMsJ3jMpyrA5NWuf4SORO7pQ5RGvZCy8W4J-2ByqCV7LYkVgawSQbuwnrnskY-2F76pp9CjITaapYpCgDIeKGH1Cg-2B-2Fjlgxwq4PE7NRcvSt7wOjoIAb1nzVRzmr45VGEoCFdbmYfZl-2FfN3SZFhbgPfMzppzVkFn3-2Bb7XAZF6JRKHJz71HyBCvba0L5IYaHqyvm7z-2FLXg8jI0vXYGjydSPDsvJWJCr-2F7Xk5SPOvsjbRl0I1yF0GL5Lv89eQkAh9wtFb8THhcusdNoqUyitFLrhF5X9hJebS37MabAaXVmmT02HdffR-2BmtrTdQ4JU8mKg-2B-2FTS4-3DZARh_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtMCfKtHDbCkz6hRQalOIIqIWJvZbGQZsC9B1jPCbji1eZMdFlMPw4uZxruqj6rCx4mHklF-2F8KJCb8Q77xEmGZ1BiHH5VxJol5EWBJUPA7mX6MZxkO1rLst5lOI7wFb9yuZkptdZbWko82XQpjs5RxdjM8H2tMR-2BxXeuU1bTJE0BpH5msBYC-2FrtjKRtdaX85bBA-3D-3D) and [YouTube](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1BWUEhKAscuSR-2BxuJ0bTy0paD2HujZEhy-2FONQpthFgZ4VEnpZlpomcJXP4hs4EAUCdGIK3TMeS4-2BiFUYI0-2BW0n2CXCZdgZ-2BuHCKP2RtnvfZo8wgH5kyIHyTpSCcthBed8dZgMuqj7iUJKDULH3vgk8-2FcZ4zNX9ezLvFyDRBNqj2CxVOHB3CQBpgrx-2B7XOrvbEudvGmXDNETq5m-2F4cbAg7axTX2UuIV96GD7DChGidrOl4-2FapXICviCQvzHiwiJPlyAbQcbdqVlinYFOS2FrqjgskK4PqEaYUK-2F-2FPof71lsx-2FWt98J-2B7n3xTzHcO58AqVVTT88J2AGPSWQVZ49C7Y8lMD8yC9c0sCI7wxa2DhsGiXhdc0_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtJK1MJ7TT-2FuJklJEEpbUYkb2SePzNW9iduzAIEfgtTW-2FCa8uX-2Bk66jdqa3zc1DEdLlXMTbgEnFc61Wqcxxm8P-2BwFRPg4fu6fCaMdfwwt3x3-2B9qTshrU-2F79gi-2Fcx3xYf6rEfeVhFEvpDfk9hOqkW2A1ZRLxIAy08xMdtmXFo9hO7Onm6Uql59A4uz0RvbuM69bg-3D-3D), or you can listen and subscribe to the audio podcast at [swansignalpodcast.com](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbO7EIgR2l7TcqcwNPBTWGG4k-2F6lNCjhsc5JbQaof2WNNxbhw1RqVXKD6h5lbIlw-2B35STIMYhMk0OgKXa4NL-2FS1LuRRY6Kg3a9zdGgtmUQJDyZubxYCObEcjs1zOFlXE6Kn125x9GMOV4imMsCkfm9Kw861osbiz-2FTl0FWytrau5PoQX9gJ2hG7IF-2BIoVRqH1SI-2BqLcuRh2eUZJ8-2FlBhARl-2BQyq0dN-2BKg77cS19AWNS2LATnJ473B-2F86ijEHtBPrWl3STEh3T6n0mdIb7VLgQZeCWtwDRcThviDyd7eOTQQwRElW26EQ5pH3n7M4mqEmWfIfRGbWm0hEtwj4IpHwfEVo-3DVHIA_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtGmA0EkQ0YXq8ELDeHXJi3DcABDYW62alLdoyxf8RQrCe7Imt4P2kddGrQN5C7dhc-2FppCbjybODA-2FD9cB0kkZCHSWm1uR3CZXCTm8SjEMbWtv8TU-2BbdeYTMCGPCp104QSNOdnai7QZuvNJf8bwLn4sxdHB4uUqu0LzkCeT18ZbZLz6qzc38yW1btFtdvjfLMSA-3D-3D) - Our referral program, ***“Swan Force,”*** **is growing**. [If you want to earn BTC for refer­ring other users to Swan, join here](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasWS9-2FV-2FX-2F8EYz26GgA0wHydn9-2BxLZaeFHinAd2dwIdEtQJoiHiuLtZTJKkguB3aZt8WPQHVCJkLAVkyZCfPWoxGwULWjr8sVi4g7lPFCgBxa3ZcG2z5DdkHpqQkgrZVQPMalftWL48i9e0umJCVY8xaxtEK1R0alfSxPK68JaDGgSmY6vuvYXduQxo6rOu-2FnhYLu1we8TVaMhjtvAxqsLwWhcz3zXZy0gFaoGzh50aNoyK7Bj4XZPW2sx2YR7FTs3G-2FSRBv9tE1kAwdlBFP4Jv0cVwY7v2p54PkmbDA9cuKHG4g2ll4lLio8pWdd2-2BP6EpUOCJA67Akq-2Fr0IHtigTiUSIe_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtAVHW1ngVFy1b2kuRTeEz1p5iuDnXCvz358DhlJb64lN1BHHmvOtNXdixobuclPgX5DHNNyL7sDLxnrNFgOXlO5xXd4XzwT3jJ5BShY-2F0qWT5y-2Fqbhm7VhQrprd8p2xJORSRH7gkqRdFQY4eVF7F-2FYo3CmBte4-2Fr-2FADJIMCWdJ0SV3F0Cu9u-2BlfHONkDon68-2Bg-3D-3D). Earn 25% of your refer­rals’ fees for 3 years when they become a Swan member **(annual plan of $50/wk or more)**. ### Thank you! We are deeply thankful for all of you, our early adopters. Thank you for helping us take flight. We are proud to fly along­side you on this Bitcoin adventure. Your turn… Did you like this newsletter? What do you think about Swan? Any sugges­tions? We’d love to hear from you.  Please find us on [Twitter](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1KYuCJjfJagbmh8owINMXmWud3NWoZjjfhkz4-2F9YbAQ7-2Ba3iqB7w1mf0RDgrmz-2F6VMYriJHjwrAs12NZDi4-2FsqMt0CxA51YZMgqZu6KNm8eQw8iN6-2FK9C9RL3uR54dc0Baq5bpPMjzYAcKOz2-2BjUNYNWp2hroSGmprEuEXL6HTLIHKAO8gsv2CshYLizAmgd8I-2F8glBCXpgGhJ2f5L0vNOqPUGwANzX-2B48RG-2BkX5LTfkWQtme-2FgHvjWHFX6RMl8t2vTGe4phdVoaRgW8PveFM-2FjFNRgdgX9cnYHvRQKsvBzN2Pl8EvaCzJ9zTtlnhXogoXDXrEOhgL1OzAkHU0eExww-3DZGEx_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtCbv3570YUMr0cLN35BfBHxiUbPrZNikU336ATaR2WwdHqJzuUz7D5vdLVMKI3dUWdi7JF1SfXo3oK-2BmUp67Pop40vGFKxUC9lS3BlRyDpNRWeq-2FtsjblyZWMNWXcN6cjI-2F-2FA5UKh2QkoQ2Sv94FMltUljX35QXuSI1ZA2wdCi-2BXOK7P6CijoeI6b3Iihr9pSg-3D-3D), [Facebook](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Lhd4yMZjhl2QoBqjONtqCIwbdtDoiL9B6j60FoGeN9U6PEg731gdCyLOYcrELqnWzFbu-2B3rirDGdGGsUOZdHLQV0SuPERYENiJGB5MoSwyvpo2XZOm0YSLbJZOQ06-2FPHdDkNpjcg6p-2B-2Bbh1LK9-2BtzUy0Y-2F3mUUw228EuEioAPVLaC5EbwPxM-2FBmDYNuZTNv1RqjYD-2BNFAvnfqmBPYMlZ9ahb5fLeAQitONIH-2F5-2BSmL6vQyENiZEYeTZze1UkpmzaucsnEVj5pgkvur7sMLJ4homuLISEI28Pqp6L1CiaP-2BggcSmQDyTS7bCIq69KYVVbU16PYoXS3nSEn2zC849UgA-3DfCtk_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtCR5KJ4xM05y50kX1SpU3Tjhj9C15kAJJFO0Tw86FU4e3Cmg8end2BNTgMHIgtSDGE2Kr6ehxFp-2BYEHHRgu2bEvhQq8j8PREmm4jcpylNwYDE0Z5wcwwZfRf7ufYI9e3K8sHUvl1CGcpD93GdLq9lrkuMHX53GqJkmS-2FLjXs9foRr7SzL1rqaRUbHepFndhVJg-3D-3D), and [LinkedIn](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1NS3EjNd1f5YnoAv-2BSltO6013fduF7DslQAvNq-2BNGiTUxyxk8O5Ft68DVzVUoe2VM4j-2FgpU7J-2FL2tyscuHvt3hXRcMN9eoAuGspxrSN66jya4-2BhCJ0SfBoYsi4zhSh7dN941AMFk1vq51Qz1ZwDdUD6LCzMFPDNLPbYkLTNSd7fmK6D3nN-2BzV7gakcyJJfb5-2F-2BQsakS9QjF3QbzfhqZuEknxLPAMp6TBZy5LqnhHv-2BbF-2B1TLO6XQAsVjjJBCPM-2FytMYpH75EMScb4rtlTbs5T9UBtSdHevvLVm7DfFagG-2Fp-2B-2FNiu9etB8sczfvRNYnnmw77qgFD7EON-2BBou5sD91v-2Be5Z-2BOmUVFSFjX7L5pcNqyRSPwg_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtOGTwmOT1eNQ4PkEFuuXyhnEJabkjs25hqBiO7tj9alkqYQZM-2BH57-2BoQqj-2Fl6hBpnMHsj4XmsLIX3EMzkieVAaLzueutQXPeQWu9cviuwtAps1Vt3cVEVMfV-2FRO5wzxW012-2FQW1dYRCZHxeIavWLvVVfoOQPYfAbTiTdm8E0kSi8pCAxpJuMQjM2WBGuF12c5g-3D-3D). Email us at [hello@swanbitcoin.com](mailto:hello@swanbitcoin.com), or reply to this one! Thanks, The Swan Team P.S. Subscribe to the [Swan Signal YouTube channel](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1BWUEhKAscuSR-2BxuJ0bTy0ocrVOOcM0YgudB2buOHUzGKPjInbhibBrPdK2lYzXIgvMCYTYNUQODtgJQl8-2F2kLpOaC9pn8WGwhHEbxjFGPvNfSolIuXNMEJvRxOVJGJun79McF4PFUbCYKE3pQI9vOvU9bwQT6AcL0yBAgJAJsiAUAadqo00Luf0jZqC59uvhBRoIQxFDmFMC7CZh-2FUKdkYY5G8rp3Yy8gpdqY31uFiiDuWPFjOtY6c1uaY07MfnRYpIGIObUXfCcnrdhHpbOXh8VZVAbCAWE06zLcTW4npNFq-2FgtY7b5ZNvXCzo4MWkXOgPe45n6XDmyid0FuW3Nwc-3D_21y_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtAThipX8xx4jcl5qTA5ES-2FCGnZFc0ADUlrsTrMiRGwjnW0EFwbqwKKpNQSSkmBmeIUh3KgAnbb9-2BQbmJXNKZeYPijLPYXZPPJ1iWnhJSKhrv3QHcPj05L-2BFYwEOO-2F1hztnDJIa3G39fzTNf9cFt9xX0H4CgIdWT-2BiMOZsSe36zZw9PZvoMePfKOyzG-2BFrqyIbg-3D-3D) for full episodes, highlights, and our newly launched Bitcoin FAQ, in which Co-founder Yan Pritzker answers common Bitcoin questions.  ![](https://www.datocms-assets.com/56652/1689859355-swan-force-logo.png?auto=format) *Get paid to recruit new Bitcoiners!* [*Click here for the details*](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1OsUrOBqyHkB8j3XtlXJW7ruV1veIcR0ZIrVLKk2pnEQAzaB3mQrOR4AIRDUbdqmoLHhtv9RunJRed3UHTqpMvGwvbU-2Feqc9O3O6pwyiHZFWbEA4IICYm3n1kD0-2B7TRycM57nQ5aFAg-2FWlxkQbmWcyzjas-2FGxNaAstSOYOXIpMS30bTL0khWInYRGZmPRg3SBmmLvuhEPYU4a1-2B04ecNb3oZzLg7XhJ-2BiJ2AXl48x83VAjxgkdXAg-2Bxq74c37F9PSqOO3q7spWjMfQcn7H7j31Q6Nm7fwJmiqBw1uaJCyckv0R9YBRJCrByNSskAdV6xULLe1B0I-2FZYRxeiR6oETFw7frgAMxBCzCEzfqh9LX7o1zTpL_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2FX-2FCDIzACaqF5jGhFZwc-2FqdB-2FVWCoebTR2IiYnruszlzmcjrq37uU6OX2uMdkexU-2FFf44QoRuX7bCtHIYW1XvjzSZcJiB3JuCg0lfCynXC7kF4-2BHVa-2Bdhjz8wBnWAswlHUqVfmsGDOaoncATF-2FKpkg46tV9DAxjgprISNXCoNWtG6G0wHa6AbzUpiBtmIwum9Qwv0Wb9PSrmWulc5ONgklBU1y3P6l5495emz3FewaSTAUmQqWREvV8398-2BgnxhHvRT-2B2bcpJl8aKGtZU9M7ssE92RfIjSQGJr-2FeDY7ehftLZESiKG3L5bZcYnr-2BmsMZrGxEVcCZEAJoj1fbwgZaZBt-2FnHq00pZnhPr2ghf4rO5A-3D-3D)*.* ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Why I Joined Swan Bitcoin URL: https://www.swanbitcoin.com/industry/why-i-joined-swan-bitcoin/ A picture on my wall that says: “You literally ought to be asking yourself all the time what is the most impotant thing in the world I could be working on right now, and if you are not working on that why aren’t you?” --- **Gigi** · August 18, 2020 · Updated June 6, 2024 ![](https://www.datocms-assets.com/56652/1689859565-screen-shot-2020-08-13-at-10-15-04-am.png?auto=format) It is a quote by Aaron Swartz and my daily reminder for two things: (1) life is short, (2) impor­tant things exist, and working hard on them is worth the sacri­fice so that the future might be brighter than the present. To me, that impor­tant thing is Bitcoin. ### A Flock of Swans I believe that the people behind [Swan](https://www.swanbitcoin.com/) — Cory, Yan, Brady, Brandon, Brekkie, Jörn, Reed, and many others — under­stand the impor­tance of Bitcoin. They under­stand that making the transi­tion to a sat-dominated world as painless as possible, for as many people as possible, is one of the most impor­tant things you could be working on. As more people opt into Bitcoin, having a way to seamlessly move from the fiat world into the Bitcoin world is essen­tial.  I know no better way than auto-DCA: set it and forget it. Ignore the noise, focus on the big picture, and consis­tently stack sats on the way to hyper­bit­coiniza­tion. Switching from manual buying to auto-DCA was one of the best decisions I ever made as a Bitcoiner, and I am delighted to join a company focused on that. Less FOMO, less trading, less zero-sum games. More building, more outreach, more Bitcoin Zen. ### Education Across the Pond It seems that the amount of your exposure to fiat is inversely corre­lated with your under­standing of money. Conse­quently, educa­tion around this and other topics related to Bitcoin are dear to my heart. Swan has a strong focus on educa­tion from the start, with Yan as the author of *Inventing Bitcoin* and Brady, Citizen Bitcoin himself, as the head of educa­tion.  Most people still have no idea what Bitcoin is, how it differs from other forms of money, and why they might want to use it. I hope this will change over the coming years, and I hope I can contribute to Swan’s effort of bringing Bitcoin educa­tion to the masses. There is only one way to build an [intran­si­gent minority](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/): one Bitcoiner at a time. ### This Is Water As David Foster Wallace famously said in his commence­ment speech: These two young fish are swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, *“Morning, boys, how’s the water?”* And the two young fish swim on for a bit, and then eventu­ally, one of them looks over at the other and goes, *“What the hell is water?”* The metaphor may not be perfect, but in the world of Bitcoin, code is the water that David Foster Wallace is speaking of. I feel that I’ve been so immersed in Bitcoin that I forgot what makes it all work: [code](https://github.com/dergigi).  I’m excited to return to my roots as a computer scien­tist and programmer to work on what makes Bitcoin and its ecosystem work. I will continue to write words as well, but damn, does it feel good to write code again. ### Taking Flight I feel blessed to be part of something so monumental, so profound, so optimistic as Bitcoin. An orange beacon of hope, in a world that seems to be split­ting apart at the seams. I feel blessed that I can work along­side so many amazing bitcoiners — inside and outside of Swan — people that tirelessly work towards a bright orange future. I have the feeling that we are on the verge of something great. This giant bird is about to take flight, and I hope the world is ready. We will do our best to get as many people on board as possible, as safely as possible. It won’t always be easy, but I know in my heart that it is the most impor­tant thing in the world I could be working on right now. Onward! ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # Tell Me About Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/education/tell-me-about-bitcoin/ Preston Pysh is a Swan Advisor. --- **Preston Pysh** · September 2, 2020 · Updated June 25, 2024 ### What Does Bitcoin Intend to Solve? Bitcoin was created to put a global, digital peg on fiat currency. [Since 1971](https://wtfhappenedin1971.com/), money around the world has not had a peg. This can work, but not over a long period because govern­ments around the globe will debase their fiat money to create growth through finan­cial engineering. It’s the classic Tragedy of the Commons – only between nations with their fiat money. To date, this has occurred via the bond markets, which now have no yield on a real basis.  I’m sure you’ve noticed that existing fiscal and monetary policies are polar­izing social classes globally. This is the result of overusing infla­tionary economic policies with no monetary peg. Do yourself a favor and Google: [Cantillon Effect](https://www.google.com/search?source=hp&ei=NQVQX7DWIeXR5gKZz5WIBQ&iflsig=AINFCbYAAAAAX1ATRZUUdGpSmCD2MzwHoOFZTjoy69JE&q=cantillon+effect&oq=cantillon+effect&gs_lcp=Cgdnd3Mtd2l6EAMyBQgAELEDMgIIADICCAAyAggAMgIIADICCAAyAggAMgIIADICCAAyAggAOggIABCxAxCDAToLCC4QsQMQxwEQowI6CAguELEDEIMBOgIILjoICC4QsQMQkwI6BQguELEDOggILhDHARCvAToLCC4QsQMQxwEQrwFKBQgJEgExSgYIChICMTVQiQlYzh1goR5oAHAAeACAAZYBiAHxDZIBBDAuMTWYAQCgAQGqAQdnd3Mtd2l6&sclient=gws-wiz&ved=0ahUKEwjwxPGbrMvrAhXlqFkKHZlnBVEQ4dUDCAg&uact=5). Since Bitcoin has a fixed supply of coins and it runs on a decen­tral­ized protocol (similar to the Internet Protocol (IP) or Trans­mis­sion Control Protocol (TCP)), it has been forcing fiat curren­cies to conform to its rules for ten years now. ![](https://www.datocms-assets.com/56652/1689861073-comp-wages-arrow.webp?auto=format) Until 1971 produc­tivity and compen­sa­tion rose in lockstep. After the dollar was removed from the gold standard in 1971, produc­tivity continued at the same pace while compen­sa­tion went essen­tially flat. This is the Cantillon Effect at work. ### The Price is So Volatile! Yes, it is — for now. This is a new form of currency, and the current market capital­iza­tion is very low relative to existing fiat curren­cies. As a result, you get volatile swings. Addition­ally, the Bitcoin protocol has a four-year cycle based on a game theory incen­tive struc­tures used to execute fiat currency. This cycle is straight­for­ward, and it’s impor­tant to under­stand why the volatility peaks every four years. To better under­stand this cycle, please read [this paper](https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25). ![](https://www.datocms-assets.com/56652/1689860894-bitcoin-price-pg.png?auto=format) ### How Does Bitcoin Have a Fixed Supply of Money? Have you heard the buzzword blockchain? Imagine if I could send you a digital picture. Once you receive that digital picture, you are the only person who can possess it. You can’t copy it or send a copy of it to another family member. Well, that’s what the Bitcoin blockchain enables. Bitcoin has done this with 21 million Bitcoins. And before you say that’s not enough units for the entire world, please realize that you can break 1 Bitcoin into 108 units. Or in other words, there are 2,100,000,000,000,000 total units. There will never be any more than that because of blockchain technology. ### There Are a Million Crypto Coins — Why Bitcoin? First, remember, bitcoin is an open-source decen­tral­ized protocol. When studying how proto­cols reach mass global adoption, you need to under­stand network effects over commu­ni­ca­tions channels. Although Wikipedia isn’t a protocol, it can serve as an example. Anyone could copy the open-source code for Wikipedia, change the name, and then try to adopt new users and overtake Wikipedia as the global source on the internet. This doesn’t happen because of network effects. Bitcoin has the strongest protocol network effect for pegged money.  [Here’s an impor­tant article](https://medium.com/@nic__carter/its-the-settlement-assurances-stupid-5dcd1c3f4e41) highlighting why it’ll likely stay that way. ![](https://www.datocms-assets.com/56652/1689861406-image-1.png?auto=format) ### Governments Will Never Allow it! Have you heard the buzzword blockchain?  During the early years of protocol growth, this was a significant concern. Today, the opposite is occur­ring. You have state govern­ments like Wyoming already passing legis­la­ture to protect Bitcoin holders. Addition­ally, countries like Germany, Australia, South Korea, and many more are already passing laws to protect owner­ship. [Here](https://www.theinvestorspodcast.com/episodes/tip284-bitcoin-law-legal-implications-w-caitlin-long/) is an hour-long podcast conver­sa­tion only addressing this question — recorded in 2020. ### Final Note: You know there’s something system­at­i­cally wrong. The world you knew 20 years ago is not what you have today. Guess what? The fiat money, fiscal spending, and infla­tionary monetary policy are causing it. Future bailouts and a further debase­ment of fiat currency will only strengthen this trend because it’s applying more of the same policies that brought us to this point. Bitcoin is the answer to this runaway global policy and broken incen­tive struc­ture. No single-paged paper will answer the depth of questions you have. Here is a great resource that’s organized to help answer any questions you might have:https://tinyurl.com/btc-resource **Find Preston Pysh on Twittter at** [**@PrestonPysh**](http://twitter.com/prestonpysh)            **Download this document at:** [**https://tinyurl.com/Bitcoin1pager**](https://tinyurl.com/Bitcoin1pager) ### Preston Pysh Preston Pysh is a Swan Advisor. # Is Bitcoin for Criminals? - Swan Bitcoin URL: https://www.swanbitcoin.com/education/basic-bitcoin-questions-is-bitcoin-for-criminals/ Many people continue to associate Bitcoin with unlawful beahvior, but in reality, less than 1% of Bitcoin transactions are actually used for illegal activities. --- **Reed Wommack** · September 18, 2020 · Updated June 25, 2024 People new to Bitcoin commonly think that Bitcoin is for crimi­nals. They believe it is for hackers, kidnap­pers, and drug dealers, not for ordinary people like you and me. This idea arose because Bitcoin was indeed used as currency on an early online drug market­place, [the Silk Road](https://en.wikipedia.org/wiki/Silk_Road_(marketplace)). And it is true that many computer hackers now demand Bitcoin as a ransom payment. Many people continue to associate Bitcoin with unlawful behavior, but [in reality, less than 1% of Bitcoin trans­ac­tions are actually for illegal activ­i­ties](https://www.dcforecasts.com/bitcoin-news/illegal-bitcoin-transactions-are-declining-now-at-1/). In the grand scheme of Bitcoin, lawful users vastly outnumber unlawful users. Most people use Bitcoin to store value, send money overseas to relatives, pay rent, give gifts, or trade.  Here at [Swan Bitcoin](https://www.swanbitcoin.com/), we help people use Bitcoin to save money long-term, much like you would use a piggy bank or a 401k.  However, there is no way to elimi­nate unlawful users from Bitcoin. Bitcoin is for every­body. It is a neutral, open currency. Anyone who wishes to use it can use it. In that sense, it is sort of like physical cash. Physical cash can be used by murderers and kidnap­pers, but also by teachers, landscapers, and children selling lemonade at the end of their driveway.  Like physical cash, there is no easy way to stop crimi­nals from using Bitcoin. After all, Bitcoin is avail­able to everyone. Just because some people have used it for evil before doesn’t mean that the tool itself is evil. Just because physical cash has been given to kidnap­pers before, that doesn’t mean you should swear off using physical cash. Or just because bank robbers use a getaway car doesn’t mean that cars are for criminals! Fortu­nately, Bitcoin is legally treated as property in the United States. So it is legal to own and legal to trade. While we condemn using Bitcoin for uneth­ical activ­i­ties (like ransoms), the vast majority of Bitcoin users are using Bitcoin for whole­some activ­i­ties (like savings).  So Bitcoin is undoubtedly not just for criminals. ### Reed Wommack Reed Wommack is the Head of Client Services at Swan Bitcoin. Reed heads Swan Bitcoin's Customer Support. So if you ever run into issues with any Swan products, feel free to DM Reed on Twitter. You can find him on Twitter here: https://twitter.com/ReedWommack # On Bitcoin’s UX - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/on-bitcoins-ux/ Why the internet doesn’t feel as clumsy anymore is twofold: (1) we got used to the novel concepts the internet brought with it, and (2) countless layers of abstraction make interacting with the base layer easier. --- **Gigi** · September 20, 2020 · Updated June 25, 2024 There is an ongoing discus­sion in the Bitcoin space revolving around the topic of user experi­ence, or UX for short. Bitcoin still feels weird, clunky, and compli­cated at times. The main reason for this is that Bitcoin and its parts (the network, the protocol, the cryptog­raphy, the scripting language) are indeed weird, clunky, and compli­cated. Just like the internet was and arguably, still is. ![](https://www.datocms-assets.com/56652/1689917785-setup7.png?auto=format) The reason why the internet doesn’t feel as clumsy anymore is twofold: (1) people got used to a lot of the novel concepts the internet brought with it, and... (2) count­less layers of abstrac­tion make inter­acting with the base protocol easier. Related technolo­gies such as plug-and-play helped to make the user experi­ence even better. Gone are the days of manually setting the IRQ number of your network card! ![](https://www.datocms-assets.com/56652/1689917871-pete-what-is-an-irq.gif?auto=format) Just like the internet, Bitcoin is an evolving ecosystem. Keep in mind that many things have already changed for the better. For example, the first wallet that supported QR codes was released in 2012. XPUBs ([BIP32](https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki)) were proposed in the same year. Seed phrases ([BIP39](https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki)) were proposed in 2013. [BIP44](https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki) (HD Wallets, aka “accounts”) came in 2014. SegWit ([BIP141](https://github.com/bitcoin/bips/blob/master/bip-0141.mediawiki)) was proposed in 2015 and — after a prolonged civil war — activated in 2017. Today, most people take QR codes and seed phrases for granted, not realizing that these weren’t always part of Bitcoin. I’m sure that some take the Light­ning Network (made possible thanks to SegWit) for granted as well. My point is all of these under-the-hood technical improve­ments are insanely impor­tant for UX. Without them inter­acting with the Bitcoin network would still be hell.  Seed phrases?  Easy wallet recovery?  Light­ning Network? Forget it!  Yet, all these improve­ments are insanely technical and require technical discus­sion. More improve­ments are coming down the pipeline (Schnorr, Taproot, and [more](https://bitcoinmagazine.com/articles/2020-and-beyond-bitcoins-potential-protocol-upgrades)), so expect discus­sions in the Bitcoin space to remain technical for quite some time to come. Think “Linux” — not “iPhone.” ![](https://www.datocms-assets.com/56652/1689917983-suse-linux-1998.png?auto=format) **Speaking of iPhones:** The tension seems to be between tinkerers and users coddled by iPhones & Co., expecting every­thing to work perfectly and be super-duper easy to under­stand RIGHT NOW.  Well, it isn’t. Just like one had to know what an IP address is and how packet switching works in the early days of the internet, you need to know what an XPUB is today. DHCP got rid of the IP addresses problem, just like Google did away with the “typing in exact URLs” problem. All of that will be true for Bitcoin as well. It just won’t happen overnight. The base protocol will probably slowly ossify over time, just like the Windows TCP/IP setup dialog ossified over time. Once the base layer is suffi­ciently optimized, most innova­tion will happen on higher layers.  ![](https://www.datocms-assets.com/56652/1689918060-win95-tcpip-1.jpg?auto=format) I believe some people closer to the engineering side are simply tired of the “it’s so compli­cated, it should be easier” line. Yes, we agree all of it should be more accessible, and we are all doing our best to make it so. Some are building products that are easy to use, others are working on protocol improve­ments so that every­thing will be easier and better in the future (thank you, core devs!), others are working in the broader ecosystem, and others on educa­tion and outreach so that more people can get on board and help to make Bitcoin better. Over time, people will get used to the concepts we can’t abstract away. I’m convinced that things will get easier, just like connecting to a network is more straightforward than in 1995. ![](https://www.datocms-assets.com/56652/1689918150-wifi-pass-make-good-things.png?auto=format) Bitcoin is a new paradigm, just like the internet was. Just like there was no way around email addresses ([“What’s this strange @ sign?”](https://youtu.be/UlJku_CSyNg)) and URLs (“What’s http/https/ftp/ssh?”) there is currently no way around bitcoin addresses, private keys, and, you guessed it, XPUBs. Some concepts are essen­tial. Removing them because you want a better UX might be fatal. Remove packet switching ([net neutrality](https://www.battleforthenet.com/)) from the internet, and you destroy what made the internet great in the first place. Remove self-custody (or account-creation via mathe­matics, neutrality, or a multi­tude of other things) from Bitcoin, and you destroy what makes Bitcoin great in the first place. It goes without saying that self-custody will always be worse in UX terms when compared to letting someone else take care of things. Similarly, setting up your own domain and hosting your own website will always be more hassle than creating a Facebook page. It’s a matter of trade­offs, always. Focusing purely on maximizing UX might lead to subop­timal results in the long run. Just compare Facebook, TikTok, and the walled garden of iOS to permis­sion­less open proto­cols and the FLOSS ecosystem. Person­ally, I will always choose freedom over convenience.  The future is bright. We have a lot of building to do. Gigi Want to help? Get involved! Join the conver­sa­tion on [Twitter](https://twitter.com/swanbitcoin/) and [Telegram](https://t.me/swansignal). In love with design? Join the [Bitcoin Design Slack workspace](https://bitcoindesign.slack.com/join/shared_invite/zt-gytq2snl-4TEWJOTKrXRCB4YLBoDunA#/) organized by our friends at Square. Good with languages? Help to [trans­late Bitcoin core](https://bitcoin.org/en/bitcoin-core/contribute/translations) and other open-source projects to your local language. If you’re especially ambitious, you can try to create a [BIP39 word list](https://github.com/bitcoin/bips/blob/master/bip-0039/bip-0039-wordlists.md) for your local language. Not afraid of code? Partic­i­pate in the [Bitcoin Core PR Review Club](https://bitcoincore.reviews/) and review open pull requests. Onwards! ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # Choose Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/choose-bitcoin/ I believe a line has been drawn in the sand between people, projects, and companies that support Bitcoin and those that do not, and in some cases, actively work against it. --- **Brekkie von Bitcoin** · October 5, 2020 · Updated June 26, 2024 So I’ll start by saying that I am by no means a *“Bitcoin OG,”* but I have been around longer than some folks. I can still remember repurchasing my first bit of Bitcoin in 2013, right at the top, directly before we crashed… ![](https://www.datocms-assets.com/56652/1689919226-feeling-on-btc.png?auto=format) The day we crashed was when I became a HODLer, and at the time, I hadn’t even heard the word before. I hadn’t read the White Paper. Heck, I didn’t even know what a blockchain was. But *“Magic Internet Money”* made sense to me. It’s like gold in World of Warcraft, right? I am also Jewish, and being part of a culture that’s been perse­cuted for so long can prepare a person pretty well for under­standing the concept of sound money, especially money that is uncon­fis­cat­able. I don’t want to get into all that history but suffice it to say, if Bitcoin had been around in the years leading up to WWII, my family that fled to the United States could have done so with far more than just the clothing on their backs. ![](https://www.datocms-assets.com/56652/1689919634-image-2020-10-02-133011.jpg?auto=format) But back to 2013… At the time, there weren’t many options for buying Bitcoin. Mt. Gox was still functioning. Local­bit­coins was around and didn’t require KYC back then, but I hadn’t heard of it yet. And then there was Coinbase. *“Holy sh$t. Look at this,”* I said to myself. Coinbase had a polished app, and despite the wait time back then between depositing USD and the ability to buy Bitcoin, I was impressed, and for a good reason. At the time, Coinbase was revolu­tionary, and while I vehemently disagree with how they’ve evolved as a company over time, it’s fair to say that Coinbase is respon­sible for onboarding a considerable number of Bitcoiners, including me. And for that, they should be commended. But times have changed. Coinbase has changed. And most impor­tantly, the Bitcoin ecosystem has changed… For the better. Bitcoin, for me, is not just about revolu­tion­izing the global monetary system by intro­ducing sound money. Bitcoin is about choice. You don’t have to use it. No one is forcing you, and hopefully, no one ever will, even if, at that point, you’d be stupid not to. This ability to choose is part of why I love Bitcoin so much. As the regulatory landscape shifts, it's wise for investors to consider safeguarding their holdings by moving them from Coinbase into secure cold storage. Additionally, ***converting altcoins to Bitcoin and opening an account with a Bitcoin-only company*** could prove to be a strategic move in light of these changes. Coinbase is facing potential regulatory challenges and uncertainties on all fronts including, [a Wells’ Notice](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm) by the U.S. Securities and Exchange Commission (SEC). It has led many crypto investors to seek alternatives. ***** UPDATE: It was*** [***reported n July 31st***](https://www.ft.com/content/1f873dd5-df8f-4cfc-bb21-ef83ed11fb4d)***, ahead of initiating legal proceedings against the exchange, the US Securities and Exchange Commission instructed Coinbase to halt trading in all cryptocurrencies except for Bitcoin. This move indicates the agency's intention to exert regulatory jurisdiction over a broader section of the market.*** ***According to Brian Armstrong, the CEO of Coinbase, the SEC provided this recommendation before taking legal action against the company, which is listed on Nasdaq, for its failure to register as a broker.*** ### Bitcoin is, at its Very Core, an opt-in System ![](https://www.datocms-assets.com/56652/1689920061-brekkie-tweet.png?auto=format) Under­standing that Bitcoin is a choice was a big Aha moment for me. Under­standing the corol­lary to that idea, that I could use Bitcoin to opt out of the legacy system, was an even more significant Aha moment. But back in 2013, when it came to buying Bitcoin, there really wasn’t much of a choice. If you were a noob like me, Coinbase was the go-to and, frankly, the only option that wasn’t sketchy for an outsider. It would be a while before I’d read the White Paper and the Cypher­punk Manifesto and came to under­stand the impor­tance of things like privacy. So even while Local­Bit­coins could have been a better option back then, it just wasn’t something I cared about. Since those early days for me, I have changed a lot. ### Or Rather, Bitcoin Has Changed Me I care about privacy. I care about individual sover­eignty. I care about *“unfucking”* the finan­cial system and promoting the hardest, soundest money we have ever seen and ever will see. I care about Bitcoin, but more than that, I care about ensuring the future of Bitcoin. This may not be obvious to everyone, but I believe a line has been drawn in the sand between people, projects, and compa­nies that support Bitcoin and those that do not and, in some cases, actively work against it. As I said before, the Bitcoin ecosystem has changed for the better. Just as Bitcoin gives us a choice to opt out of the legacy finan­cial system, Pro-Bitcoin compa­nies (real Pro-Bitcoin compa­nies…) have sprung up and are seizing the oppor­tu­nity to give the people a choice. And now I am asking you to make a choice. I am asking you to choose to support Bitcoin. This doesn’t mean you have to go out and learn the intri­ca­cies of coding and elliptic curve cryptog­raphy. You do not have to be a core dev to support Bitcoin, although if that is your goal, you have my respect and admiration! What I am really asking you to do, is to think carefully about how you interact with the Bitcoin ecosystem. Under­stand that your actions, even something as simple as how you buy Bitcoin, can have unfore­seen consequences. Choose to support compa­nies and projects not in it for the quick buck but for the long haul. Give your support and your hard-earned (and quickly depre­ci­ating) fiat money to compa­nies and projects that actually care about Bitcoin and, in so doing, care about you as well. Luckily the list of compa­nies and projects like this is growing every day. Some good examples include [Coinkite](https://coinkite.com/) for trusted hardware solutions, [CasaHodl](http://keys.casa/) and [Unchained Capital](https://unchained-capital.com/) for custody solutions, [Fold](https://foldapp.com/) and [Lolli](https://www.lolli.com/) for earning sats back, and [River Finan­cial](http://river.com/) and [Swan Bitcoin](http://swanbitcoin.com/bvbtc) for onramp solutions. Even in the area of KYC-free Bitcoin, there have been huge strides, and I would highly recom­mend anyone inter­ested to head over to [Bisq](https://bisq.network/) and see what it’s all about. ### Swan is a Mission Driven Company Like Coinkite, CasaHodl, Unchained, and others, Swan Bitcoin is a mission-driven company, so I decided to join Swan as a full-time team member. We care about Bitcoin, Bitcoiners (and precoiners!). At Swan, we like to say that educa­tion *is* our marketing. We pride ourselves on being the safest and best way to auto-stack BTC, but more than that, it’s our mission to educate and help create 10 million Bitcoiners, a true [intran­si­gent minority](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority) that cannot be stopped. This is part of why to become a Swan member. You have to commit to recurring Bitcoin purchases. Not only is the constant buy pressure of auto-stacking good for Bitcoin, but [a recurring purchase strategy is a proven method](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/) for accumu­lating assets while dampening your exposure to volatility. Why is that impor­tant?  Because Bitcoin is absolutely not a get-rich-quick scheme. In the words of Jameson Lopp: ![](https://www.datocms-assets.com/56652/1689920437-loop-tweet.png?auto=format) On top of giving our customers the easiest, safest, and best way to set up a recurring purchase Bitcoin strategy, we also offer the option for Bitcoiners to set up automated, recur­ring withdrawals. We want our customers to reach the point where they are [comfort­able with self-custody](https://www.swanbitcoin.com/bitcoin-wallets-not-your-keys-not-your-bitcoin/), whether with a hardware wallet or a multi-sig solution. Contrast our business model with the onramps you’re already familiar with. They have high fees, [a total lack of respect for finan­cial privacy](https://decrypt.co/31461/coinbase-wants-to-identify-bitcoin-users-for-dea-irs), and often promote false narra­tives and guide you towards unproven, highly risky quote-unquote assets… I think it’s impor­tant to point out there is nothing wrong with trying to make money, but the smartest compa­nies, in my opinion, are the ones that under­stand that [profits are best realized when they come secondary](https://www.swanbitcoin.com/bitcoin-price-prediction/), as a result of the mission, not the other way around.  This is something I was taught and believe to this day:  If you work hard at doing what you love, at something impor­tant that you’re genuinely passionate about, then money will follow. Compa­nies like Coinbase have lost this thread and deviated from the core ethos of Bitcoin. It’s my belief that profit alone has *become* their mission. As a result, I believe they will trend toward obsolescence. Why?  Because now we have alter­na­tives that better serve consumers. And *this* time… I choose Swan Bitcoin. So what will you choose? Well, that’s up to you. Do your own research and see what makes the most sense. If you live in the U.S., I hope you consider stacking with Swan, but at the end of the day, I just hope you choose Bitcoin. And in the meantime, head over to [Bitcoin­De­vList](https://bitcoindevlist.com/) and support ongoing Bitcoin devel­op­ment.✌️ Converting altcoins to Bitcoin and opening an account with a Bitcoin-only company could prove to be a strategic move in light of these changes. If you are a U.S. citizen and are seeking a [Coinbase alternative](https://www.swanbitcoin.com/coinbase-alternative/) platform to buy Bitcoin, consider Swan Bitcoin. Don't hesitate to reach out anytime with any questions. Once you are ready to take control of your financial future, here is [how to delete your Coinbase account](https://www.swanbitcoin.com/delete-coinbase-account-in-three-easy-steps/) in three easy steps. ### Brekkie von Bitcoin # Why You Should Hold Bitcoin as a Corporate Treasury Asset URL: https://www.swanbitcoin.com/investing/treasury/ When companies like Square and MicroStragegy start buying Bitcoin, it’s time to pay attention. But, smaller private companies are also making this move. Here’s why you should consider doing the same. --- **Brady Swenson** · October 8, 2020 · Updated June 25, 2024 **If your company is consid­ering acquiring some bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** Did you know that compa­nies worldwide are starting to hold Bitcoin on their balance sheets? When compa­nies like Square and MicroS­trategy start buying Bitcoin, it’s time to pay atten­tion. But smaller private compa­nies are also making this move. Here’s why you should consider doing the same. ***"We believe that bitcoin has the poten­tial to be a more ubiqui­tous currency in the future. As it grows in adoption, we intend to learn and partic­i­pate in a disci­plined way."*** - Amrita Ahuja, CFO, Square The Federal Reserve has removed the store of value function of money. It is their stated objec­tive to inflate away the value of the cash in your treasury by at least 2% per year. This adds up quickly. Fortu­nately, there is an alter­na­tive store of value that has matured to the point where large public compa­nies like Square and MicroS­trategy trust it as a corpo­rate reserve asset. ***"This invest­ment reflects our belief that Bitcoin, as the world's most widely-adopted cryptocur­rency, is a depend­able store of value and an attrac­tive invest­ment asset with more long-term appre­ci­a­tion poten­tial than holding cash. Since its incep­tion over a decade ago, Bitcoin has emerged as a signif­i­cant addition to the global finan­cial system, with charac­ter­is­tics that are useful to both individ­uals and insti­tu­tions. MicroS­trategy has recog­nized Bitcoin as a legit­i­mate invest­ment asset that can be superior to cash and accord­ingly has made Bitcoin the principal holding in its treasury reserve strategy."*** - Michael Saylor, CEO, MicroStrategy Back in August, MicroS­trategy, a billion-dollar Nasdaq-listed company, announced the purchase of 21,454 bitcoin, almost five times the amount Square did. The media mostly slept on the initial investment by MicroS­trategy, unlike the coverage of Square, which was widely publi­cized. These two compa­nies are demon­strating not only the safety of but a neces­sity to hold Bitcoin on corpo­rate balance sheets to avoid dollar debasement. ***"We just had the awful realiza­tion that we were sitting on top of a $500 million ice cube that’s melting."*** - Michael Saylor, CEO, MicroStrategy **Swan can help you put Bitcoin on your balance sheet**. We have access to deep pools of liquidity and will work with you to help you under­stand Bitcoin and build a position respon­sibly and safely.  ***"We feel pretty confi­dent that Bitcoin is less risky than holding cash, less risky than holding gold."*** - Michael Saylor, CEO, MicroStrategy **If your company is consid­ering acquiring some bitcoin, please email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### At a Glance *List below as of 10/8/2020* **Here are some compa­nies that hold Bitcoin (BTC) on their Balance sheet as a corpo­rate treasury reserve asset**. #### MicroStrategy **Website:** [microstrategy.com](https://www.microstrategy.com/) **Date of Announce­ment:** August 11th, 2020 **Location:** USA **Company type:** Publi­cally traded on NASDAQ **Industry:** Enter­prise Software **Size of company:** 2,396 employees and $1.42 billion market cap **CEO:** Michael Saylor  **Amount of Bitcoin:** 38,250 Bitcoin **Fiat spent:** $425M (85% of Treasury) **Press Release:** [MicroS­trategy Adopts Bitcoin as Primary Treasury Reserve Asset](https://ir.microstrategy.com/news-releases/news-release-details/microstrategy-adopts-bitcoin-primary-treasury-reserve-asset) **Inter­views:** [Pomp Podcast #385](https://podcasts.apple.com/us/podcast/385-michael-saylor-on-buying-bitcoin-with-his-balance-sheet/id1434060078?i=1000491434744), [Stephan Livera Podcast #213](https://stephanlivera.com/episode/213/), [Bitcoin Audible #47](https://anchor.fm/thecryptoconomy/episodes/Chat-47---Magic-Gold-with-Michael-Saylor-ejrbld), [Real Vision](https://www.realvision.com/shows/the-interview-crypto/videos/the-deliberate-corporate-strategy-to-adopt-the-bitcoin-standard), [Bitcoin Standard Seminar 5](https://podcasts.apple.com/us/podcast/the-bitcoin-standard-podcast-seminar-5-with-michael-saylor/id1403202032?i=1000492552234) **Quotes:**  *“Bitcoin is 19.3 trillion times more secure than it was 10 years ago, 50x more secure than the next best thing. Gold is still as secure as it was in 1934.”* *“Bitcoin is digital gold — growing harder, smarter, faster, and stronger due to the relent­less progres­sion of technology.“* **If your company is consid­ering acquiring some bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### Square, Inc. **Date of Announce­ment:** October 8th, 2020 **Location:** USA **Company type:** Publi­cally traded on NASDAQ **Industry:** FinTech, Payments **Size of company:** 3,835 employees and $81b market cap **CEO:** Jack Dorsey **Amount of Bitcoin:** 4,709 Bitcoins **Fiat spent:** $50M (~1% of Squares total assets) **Press Release:** [Square, Inc Bitcoin Invest­ment Whitepaper](https://images.ctfassets.net/2d5q1td6cyxq/5sXNrlEh2mEnTvvhgtYOm2/737bcfdc15e2a1c3cbd9b9451710ce54/Square_Inc._Bitcoin_Investment_Whitepaper.pdf) **Quotes:** *“Today, Square announced that it has purchased $50M in bitcoin. Square believes cryptocur­rency is an instru­ment of economic empow­er­ment and provides a way to partic­i­pate in a global monetary system, which aligns with the compa­ny’s purpose.“* **If your company is consid­ering acquiring some bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### Tahinis Restaurants **Date of Announce­ment:** August 18th, 2020 **Location:** Canada **Company Type:** Private **Industry:** Restau­rant Chain  **Size of Company:** 4 corpo­rate locations and 3 franchises coming soon **CEO:** Ali Hamam **Amount of Bitcoin:** 100% of Treasury **Cost Basis:** N/A **Press Release:** [@TheRealTahinis](https://twitter.com/TheRealTahinis/status/1295770434349281281)  **Inter­views:** [Bitcoin Rapid Fire w/ Bitcoin Magazine](https://podcasts.apple.com/us/podcast/bitcoin-as-reserve-asset-w-bitcoin-magazine-tahinis/id1476958861?i=1000490069813), Citizen Bitcoin **Quotes:** *“We as a company decided to store all of our excess cash reserves into Bitcoin as it offers a much better alter­na­tive to saving cash. We will continue to do that over the coming years and maybe forever if we don’t need the fiat.”* *“For me I view Bitcoin as a true savings technology that stores wealth across time and space. And it became apparent to me that a game of musical chairs is being played out right now, and the music will stop, and some people will get left out.”*  **If your company is consid­ering acquiring some bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### Snappa **Date of Announce­ment:** August 24, 2020 **Location:** Canada **Company type:** Private **Industry:** Graphic Design Software **Size of company:** 7 employees **CEO:** Chris Gimmer **Amount of Bitcoin:** 50+% of Treasury **Press Release:** [Why We’re Holding Bitcoin as a Reserve Asset](https://chrisgimmer.com/bitcoin-reserve-asset/)  **Inter­views:** [Tales From the Crypt #192](https://podcasts.apple.com/fr/podcast/192-christopher-gimmer-marc-chouinard/id1292381204?i=1000492290663), [Bitcoin Rapid Fire](https://podcasts.apple.com/us/podcast/corporations-buying-bitcoin-w-christopher-gimmer/id1476958861?i=1000490374903) **Quotes:** *“Would you rather save money in a currency whose supply is inflating yearly? Or would you rather save in a currency whose terminal supply is program­mat­i­cally fixed?“* **If your company is consid­ering acquiring some bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### Swan Bitcoin **Date of Announce­ment:** October 8th, 2020 **Location:** USA **Company type:** Private **Industry:** FinTech, Bitcoin **Size of company:** 8 employees **CEO:** Cory Klipp­sten **Amount of Bitcoin:** 100% of revenue, 50% of Treasury **Announce­ment:** [Twitter](http://in%20today%27s%20totally%20unsurprising%20news%2C%20http//swanbitcoin.com%20announces%20that%20100%%20of%20revenue%20since%20inception%20is%20held%20in%20#Bitcoin,%20comprising%20more%20than%20half%20of%20%20@SwanBitcoin%20%20treasury%20assets.) **Quotes:** *“We are a Bitcoin company, and we hold Bitcoin as a reserve asset because we believe Bitcoin is the best savings technology in the world.“* **If your company is consid­ering acquiring some Bitcoin, email us at** [**Treasury@SwanBitcoin.com**](mailto:Treasury@SwanBitcoin.com) **to see how we can help.** ### Which Company is Going to Buy Bitcoin Next? As more compa­nies realize the advan­tages of holding Bitcoin on your balance sheet, we’ll likely see an accel­er­a­tion of these announcements.  *“No one wants to be first, last, or left behind.”*  Putting Bitcoin on the balance sheet is no longer consid­ered a risky move. Thanks to MicroS­trategy and Square, Inc, who set a strong prece­dent for future compa­nies consid­ering a similar move.  ***If your company is consid­ering acquiring some bitcoin, email us at*** [***Treasury@SwanBitcoin.com***](mailto:Treasury@SwanBitcoin.com) ***to see how we can help.*** ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Investing in Bitcoin Like a 401k - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/investing-in-bitcoin-like-a-401k/ The best way to approach investing in Bitcoin is regular contributions over time like a 401k. --- **Brady Swenson** · October 12, 2020 · Updated June 25, 2024 ### Bitcoin is Here to Stay Bitcoin is eleven years old, yet the language we use to describe it lingers from its earliest days when some of Bitcoin’s first users lever­aged it to circum­vent the existing finan­cial system and engage in nefar­ious commerce in the darker corners of the internet. More recently, it has been portrayed as a risky invest­ment, a gamble on question­able merits. Is it the most techno­log­i­cally innov­a­tive Ponzi scheme ever or a grass­roots attempt at an internet-native currency? Either way, it is often portrayed as risky. The language used to describe Bitcoin carries forward from these earlier eras. In society’s collec­tive conscious­ness, the word “Bitcoin” reflex­ively recalls crimi­nality, unknow­able complexity, and above all, invest­ment risk. Collo­qui­ally, we still talk about “taking a risky bet on Bitcoin” or “putting some money into Bitcoin just in case it takes off,” implying that Bitcoin is a risky invest­ment with long odds — like putting chips on one Roulette wheel number. These are all outdated notions. Bitcoin is now a player on the global stage. The US govern­ment is embracing Bitcoin as a legit­i­mate asset. Promi­nent macro­eco­nomic investors like Paul Tudor Jones, Raoul Pal, and Lyn Alden are publicly investing in Bitcoin. Compa­nies such as Square, Visa, IBM, JP Morgan, and Fidelity are investing in Bitcoin projects. The list goes on and on, and the message is clear: Bitcoin is here to stay. In other words, the downside risk of owning Bitcoin has never been lower. ### Investing in Your Future You likely already save for your future. Every paycheck, you deter­mine how much to spend and how much to save. Many people keep money in their bank account as it feels nice to have a finan­cial cushion sitting there in cash. But, because of infla­tion, money sitting in a bank account loses purchasing power over time. That’s why the gener­ally accepted finan­cial advice is to invest your savings in assets that will grow in value over time. There are two common ways to invest your money to build personal wealth: buying a home and investing in compa­nies. Building equity in a house by paying down a mortgage is a safe and steady way to deploy your savings into an asset that histor­i­cally gains value over time. Investing in a diver­si­fied portfolio of stocks has been the most surefire way to outpace infla­tion over the last 50 years. Histor­i­cally, the best way to do this has been through 401k retire­ment accounts because of their tax-advan­taged status and because you contribute to them consis­tently over time. These two types of invest­ments have something in common: they both are designed to ensure a consis­tent invest­ment month after month. If you own a mortgage-backed home, the first thing that happens when your paycheck comes in every month is you pay your monthly mortgage. It’s automatic, so you don’t even think about it. The same is true for your 401k. When you set up a 401k, you specify how much you would like to automat­i­cally contribute each month. In both cases, the key to success is making a one-time decision to prior­i­tize the monthly alloca­tion of your paycheck to these assets. By owning a mortgage or setting up a 401k, you are automating the contri­bu­tions to your investment. ### The Shifting Landscape  While home owner­ship and stock investing will continue to be part of the bedrock of individual finan­cial security and wealth building, struc­tural changes have compli­cated the surrounding finan­cial landscape.  We are entering a period that legendary Wall Street investor Paul Tudor Jones had dubbed [“The Great Monetary Infla­tion,”](https://www.docdroid.net/H1fuimX/the-great-monetary-inflation-pdf) which really began in earnest when the United States ended the US Dollar’s gold standard in 1971 and began to manage money supply by decree of the US Treasury and the Federal Reserve Bank. Central banks are printing money whenever credit begins to contract to artifi­cially stimu­late growth. However, this solution is simply not sustainable.  This money printing has conse­quences for building equity through a home mortgage and investing in stocks. They will likely do well in U.S. dollar terms. As the purchasing power of a dollar sitting in your bank account decreases, the nominal value of your home is likely to rise accord­ingly. The same is true of your stock portfolio.  But therein lies the struc­tural change: the nominal dollars in your portfolio (in your checking account, in any certifi­cate of deposit, and any bonds you hold) are likely to see their real value eroded during the Great Monetary Inflation. The single best hedge against the deteri­o­rating value of the dollar is Bitcoin. As a non-sover­eign, hard-capped supply currency, the more that the long-term viability of the dollar deteri­o­rates, the more the value propo­si­tion of Bitcoin has appeal. What does this mean for saving for your future now? ### Approach Bitcoin Investing Like You Approach a 401k The answer lies in what has driven finan­cial security over the last half-century: automated, sched­uled savings. This has meant building equity in real estate via a home mortgage and building equity in your owner­ship of the global economy via a 401k stock portfolio. Now, it can also mean building equity through accumu­lating an ever-greater % of the hard-capped supply of Bitcoin. There are simple truths at the heart of this winning formula: - *The idea of a diver­si­fied portfolio is to stabi­lize your finan­cial security by not having all your eggs in one basket.*  - *The value of home owner­ship and stock owner­ship is that you are building your % owner­ship of the assets in the world that people value.*  - *The genius of the home mortgage and the 401k is that they allow you to prior­i­tize saving for your future and enforce that prior­i­ti­za­tion through an automated system.* These truths remain. The only differ­ence is that the world is digitizing at the same time that the fiat-based currency system heads toward a collapse. In this shifting landscape, the critical recog­ni­tion is that a healthy approach to diver­si­fi­ca­tion now must also mean hedging against the risk of the eventual failure of paper currency printed by Central Banks. And that’s where Bitcoin investing comes in. Bitcoin is a savings technology. The most effec­tive way to hedge against the risk of currency failure is to own some Bitcoin. The most effec­tive way to start to own Bitcoin is to make a one-time decision to set up a Bitcoin recurring buys plan that will squirrel away a little bit of your income into Bitcoin savings on a regular, consis­tent basis, just like you do with your 401k.  ### Set Up Your Bitcoin Recurring Buys Plan Like a 401k To start investing in Bitcoin as you do with your 401k, you simply need to set up a recurring purchase recurring buys plan and let it run, making regular contri­bu­tions. So where can you set up this kind of Bitcoin buying plan (often called recurring buys or dollar-cost-averging)?  If you’re outside the United States, our article “[Bitcoin Invest­ment Sites for 2020: Top 6 Trusted Sites](https://www.swanbitcoin.com/bitcoin-investment-sites)” will get you started picking the right option for you. If you’re in the U.S., [Swan Bitcoin](https://www.swanbitcoin.com/) is an increas­ingly popular choice, as it is easy, dedicated to Bitcoin educa­tion, and has the lowest fees for automatic recur­ring purchases of Bitcoin. Getting a Bitcoin investing plan started with Swan takes just a few minutes. You specify the dollar amount and frequency for your purchases. Swan will pull USD from your bank account and automat­i­cally convert it into Bitcoin. It’s as simple as that — [click here to set up your Bitcoin recurring buys](https://www.swanbitcoin.com/). ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Can the Government Shut Down Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/can-the-government-shut-down-bitcoin/ At some point on everybody’s Bitcoin journey, they begin to realize that Bitcoin may actually be a better form of money. --- **Reed Wommack** · October 30, 2020 · Updated June 26, 2024 At some point on everybody’s Bitcoin journey, they realize that Bitcoin may actually be a better form of money. They recognize that it has several vital traits (supply capped, digital, censor­ship-resis­tant, etc...) that make it better than their government’s currency. However, the govern­ment benefits from printing its own currency. So people fear their govern­ment will try to shut down Bitcoin.  Fortu­nately, Bitcoin was purpose­fully designed to be resis­tant to the government’s attacks. Bitcoin’s founder, Satoshi Nakamoto, studied the past failures of non-govern­mental curren­cies before he developed Bitcoin. He realized that many past non-govern­ment curren­cies (like [E‑gold ](https://en.wikipedia.org/wiki/E-gold)or [Liberty Dollar](https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency))) failed because there was a central­ized point that govern­ments could attack. So when the currency got too big, the govern­ment would take the CEO to court, raid an office building, or disable the small network of computers that ran the currency. Bitcoin was designed to be resis­tant to these types of attacks. There is no Bitcoin CEO. There is no single physical location of Bitcoin. There is no one-building that Bitcoin is stored in. Instead, it is stored and run by thousands of computers (aka nodes) all over the world.  Even if the US govern­ment tried to track down all of the computers running Bitcoin in the US (which would be impos­sible given that many are run in rural, totally secret locations), they *still* wouldn’t be able to kill the network. Any American with internet access (or even radio access!) could still commu­ni­cate with the Bitcoin computers running the software in Ethiopia or Indonesia. So Ameri­cans would still be able to access and send their Bitcoin. So long as one person anywhere in the world is running the Bitcoin software, Bitcoin works. If govern­ments cannot easily kill the network because there is no single weak point to attack, people then fear that they will try to ban Bitcoin. This is a slightly more credible threat. Govern­ments could pass laws making it illegal to own, buy or sell Bitcoin. After all, govern­ments have tried to ban other things (like Brie cheese, [saggy pants, kissing on Sundays](https://www.rd.com/list/weird-things-banned-in-the-u-s/), marijuana, and alcohol during the prohi­bi­tion). But Bitcoin has some advanced privacy features that make enforce­ment of a ban very diffi­cult. It’s very easy to hide your Bitcoin and very diffi­cult to prove that you own it. And if people find Bitcoin useful, they will probably keep using it regard­less of the ban!  That said, we don’t expect the US govern­ment to ban Bitcoin. After all, it seems like they are being [increas­ingly supportive of Bitcoin](https://www.forbes.com/sites/matthougan/2020/07/27/the-occs-notice-on-crypto-is-a-really-big-deal/#55cc97e36301). However, if the winds shifted and they did begin to try to attack Bitcoin, they would fail. Bitcoin’s decen­tral­ized computer network assures that a govern­ment cannot kill Bitcoin. ### Reed Wommack Reed Wommack is the Head of Client Services at Swan Bitcoin. Reed heads Swan Bitcoin's Customer Support. So if you ever run into issues with any Swan products, feel free to DM Reed on Twitter. You can find him on Twitter here: https://twitter.com/ReedWommack # Our Most Brilliant Idea - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/our-most-brilliant-idea/ Ideation and wealth creation are mere expressions of life’s central impluse: growth. --- **Robert Breedlove** · November 2, 2020 · Updated June 27, 2024 Ideas ambulate humanity across history. A new and useful idea is an innova­tion that can benefit everyone for the rest of time. There­fore, it is critical we construct socioe­co­nomic struc­tures conducive to the creation of new ideas: civiliza­tion can only advance amid an everlasting flow of fresh knowl­edge. Free trade is the means by which we maximize ideation and its physical manifes­ta­tion: wealth creation. Anything that impedes trade — like central banking — is (by defin­i­tion) a terrible idea. Contrarily, all accel­er­ants to free trade — like money — are among the most brilliant ideas we’ve ever had. ![](https://www.datocms-assets.com/56652/1689923374-1_y13ashmdpyscoormall8va-1.jpg?auto=format) ### Ideas Drive Economics *"A pile of rocks ceases to be so when somebody contem­plates it with the idea of a cathe­dral in mind."* - Antoine De St-Exupery Ideas are the origins of every­thing we say, do, or make. The purpose of any economy is to generate and share useful ideas through free trade (to achieve what econo­mists call the division of labor or knowl­edge special­iza­tion). Civiliza­tion emerges not by an aimless concourse of varia­tion, but rather it is molded in the image of our ideas, which we express through action to remake the face of the Earth. Better ideas, or sharper knowl­edge, equip mankind to more intel­li­gently harness the gifts of the Earth to satisfy his wants to ever-higher degrees in ever-less time. In ideolog­ical space, compe­ti­tion is free and fierce: only the most useful ideas survive the test of time. Resul­tant knowl­edge encodes the patterns of action we use to etch our imagi­na­tions into the world around us. The market chooses winning ideas, only to be widely distrib­uted as material riches, finer manners and morals, and more profound art. Our lives are lived by enacting our ideas. As HG Wells said: ***“Human history is, in essence, a history of ideas.”*** Or as William Durant elaborates: ***"History as a labora­tory rich in a hundred thousand exper­i­ments in economics, religion, liter­a­ture, science, and govern­ment — history as our roots and our illumi­na­tion, as the road by which we came and the only light that can clarify the present and guide us into the future."*** Pouring forth from our forebears is this civilizing heritage of ideas sharp­ened through free trade and expressed in the tools, techniques, and cultures we make for ourselves. As we trade, our ideas become better, giving every­thing we say, do, or make more want-satis­fying quali­ties. Consider how our language has evolved from grunts to enunci­a­tions, or how our behav­iors have been shaped by culture, or how our trans­porta­tion technolo­gies have progressed from wagons to airplanes. Substan­tive ingre­di­ents for all modern miracles surrounding us today have always been avail­able, but prior to their inven­tion, we simply lacked the ideas neces­sary to manifest them. As the living gener­a­tion respon­sible for ideation, our aim must be to forge our ideas into finer form for posterity: An aim we accom­plish through innovation. ![](https://www.datocms-assets.com/56652/1689923592-idea-lightbulb-robert-bitcoin.jpeg?auto=format) Innova­tion is simply a recon­fig­u­ra­tion of the raw materials of nature by indexing them to our most useful idea struc­tures. Said differ­ently: creativity is taking known elements and reassem­bling them in accor­dance with new knowl­edge. Sharp­ening knowl­edge to better satisfy ourselves requires fires from the ideolog­ical colli­sions and frictions innate to trade. Trade is mankind’s *“meta-idea” — the gener­a­tive idea of all our best ideas. Meta (from the Greek μετά, meaning “after” or “beyond”*) is a prefix meaning more compre­hen­sive or transcending: trade is an idea about improving ideas. It presup­poses that anyone may know something everyone else does not, incen­tivizes them to teach the rest of us, and lets us all capitalize on any such learning oppor­tu­ni­ties. Trade indicates to us whether we are ill-informed in pursuing a goal that can save us from harm or help us achieve it more easily. Wealth gener­a­tion is insep­a­rable from ideation: the more we know, the more effort­lessly we satisfy our (present and poten­tial future) wants through innova­tion, and the more wealth we gain. Author Matt Ridley captures the spirit of this relation­ship between free trade and innova­tion in these words: ***"Innova­tion is the child of freedom and the parent of prosperity."*** Free market capitalism is an idea unequaled in its gener­a­tion of innova­tion. It proved the most successful economic model for expanding trade, ideation, and wealth creation in the 20th-century ideolog­ical contention between American capitalism and Soviet commu­nism. Misguided by utopian promises, Soviet Russia attempted to replace the profit motive intrinsic to American Capitalism with appeals to nation­al­istic faith and devotion, thereby poisoning the wellspring of learning engen­dered by trade. Under the moral­istic camou­flage of Commu­nism (*“from each according to their ability, to each according to their needs”* was the Marxist slogan), some of the most gruesome atroc­i­ties in history were perpe­trated. Soon into the Soviet exper­i­ment, produc­tivity collapsed, and millions starved or were slaugh­tered by the state. When govern­ments play God, civiliza­tions burn in hell. Soviet Russia redis­cov­ered what wise Aristotle had warned centuries earlier: ***"When every­body owns every­thing nobody takes care of anything."*** American capitalism outcom­peted Soviet commu­nism. Capitalism is a socioe­co­nomic system premised on the three pillars of private property rights, rule of law, and honest money. Private property rights repre­sent an exclu­sive relation­ship between individ­uals and any portion of nature they invest their time in reshaping, rights they can then exchange with similarly self-sover­eign people. Rule of law is a mecha­nism for nonvi­o­lently resolving private property disputes. Honest money is the private property unimpeded market processes naturally select as most tradable. Since Capitalism optimizes for trade, it supports this gener­a­tive source of new ideas by incen­tivizing economic cooper­a­tion and (peaceful) compe­ti­tion. Indeed, the stability of rules is the bedrock of peace: with fixed and simple laws, market partic­i­pants are forced to play the game well to make an honest living. As Bastiat said: ***"When goods don’t cross borders, soldiers will."*** In an elemental sense, trade is the water that sustains innova­tion, and its stead­fast flow is a source of peace. Capitalism is the socioe­co­nomic *“water well”* built to protect this everlasting ideolog­ical wellspring of civiliza­tion — trade. ![](https://www.datocms-assets.com/56652/1689923804-breedlove-water-well-painting-picture.png?auto=format) ### The Idea Supercomputer ***"Great minds discuss ideas. Average minds discuss events. Small minds discuss people."*** - Eleanor Roosevelt As the ultimate token of trade, money is an indis­pens­able tool for ideation. In trade, every­thing is valued at some ratio of every­thing else. For instance, a car might be worth 132 chairs, or a house worth 11 cars. Money is the medium through which we more easily calcu­late these exchange ratios: a tool that simpli­fies trade by standard­izing its inter­me­di­a­tion. Like all tools, money lets us achieve greater results with less effort, and the time-saving tools impart *is* wealth. Specif­i­cally, money allows us calcu­late, negotiate, and execute trades more quickly. Without money, a constant recal­cu­la­tion of count­less exchange ratios among different economic goods would be neces­sary. With money, all exchange ratios are compressed into a single number — the money-expressed market price. In this way, money is an accel­erant to trade and (its invis­ible twin) ideation. Standard­iza­tion to one money creates economies of scale in trade. Such econo­miza­tion is what drives the market to coalesce around a single money — as we saw with gold and (its former currency abstrac­tion, and now appari­tion) the U.S. dollar: ![](https://www.datocms-assets.com/56652/1689923930-paper-is-poverty-jefferson-quote.jpeg?auto=format) Money is the medium through which market partic­i­pants express their ideas, prefer­ences, and values. Pricing systems are economic telecom­mu­ni­ca­tion networks endlessly echoing and coordi­nating market action by dynam­i­cally informing everyone of everyone else’s trades. For instance, when you buy a car and sell a house, the economy responds adaptively by producing more cars and fewer houses. Even when you purchase public equity, you are expressing the idea its expected future cash flows are worth more than its current price, and the market­place absorbs this thesis when you execute the trade. Price signals perpet­u­ally prime incen­tives to ensure resources are allocated in accor­dance with the current aggre­gate compo­si­tion of market partic­i­pant prefer­ences. Entre­pre­neurs engaging in trade give rise to truthful pricing as they strive to buy low, sell high, and profitably serve one another. A genuinely free market is a forum of unham­pered and volun­tary exchange where ideas compete, combine, and trans­form. Seen this way, the free market may be consid­ered the ultimate distrib­uted computing system — a nexus of conscious­nesses driven by human action and inter­con­nected by prices. ![](https://www.datocms-assets.com/56652/1689924026-robert-tweet-mind-process.png?auto=format) Money improves the exten­si­bility of our minds. Thinking is an expres­sion of ratio­nality: the act of comparing all relevant factors to any course of action. By cogni­tively gener­ating different aspects and avatars relevant to any given situa­tion, humans create mental staging areas for future action. As with the root word of ratio­nality — *ratio* — thinking involves contrasting one thing against another. When we extend our thinking into money, we gain insight into the collec­tive mind of other market partic­i­pants through price signals, which themselves are expres­sions of ratio­nality: ratios of exchange denom­i­nated in monetary terms. By consol­i­dating the ratio­nality of all market actors into the market price, ideation explodes. In this way, free markets are idea-gener­ating super­com­puters. This is why American innova­tion is unrivaled. Mankind makes the world his own by channeling energy across the ideolog­ical field lines fashioned in his extended mind — the free market. ### Free Markets are Free Thinking ***"Man’s mind, once stretched by a new idea, never regains its original dimensions."*** - Oliver Wendell Holmes Contrary to popular miscon­cep­tion, money is **not** a govern­ment creation. Money is emergent — it is simply the most tradable good in any given market. As people seek to satisfy their wants through trade, they steadily seek to trade their goods for more tradable goods to get closer to obtaining the object(s) they desire. As this process unfolds, a specific asset gains the highest liquidity — whether it is salt, cattle, or gold — this most exchange­able good is (by defin­i­tion) money. Money, then, is an inexorable outcome of free trade. As global markets converged, they coalesced around precious metals as money due to their superior monetary proper­ties of durability, divis­i­bility, porta­bility, recog­niz­ability, and scarcity. Gold — which excelled all other metals in scarcity — became the dominant money of the world precisely because its supply was the least change­able. Central banks eventu­ally coopted gold and built a pyramid scheme on it called fiat currency. When central banks monop­o­lized the market for money, it became unfree. Violating free market capitalism, as Soviet Russia learned the hard way, is a really bad idea — it runs counter­vailing to the natural human proclivity for trade, ideation, and wealth gener­a­tion. As Marcus Aurelius poeti­cizes our capacity for collaboration: ***"We were born to work together like feet, hands, and eyes, like the two rows of teeth, upper and lower. To obstruct each other is unnatural."*** Clearly, obstructing the ability of market partic­i­pants to express their ideas through trade is a break­down in the *“rules”* of Capitalism. All frictions on free trade are dissi­pa­tive to both innova­tion and wealth creation. An actual Capitalist society neces­si­tates unbreak­able rules of trade such as the equitable rule of law, invio­lable private property rights, and unstop­pable honest money. In such a purely Capital­istic system, individ­uals would have no way to create value for themselves other than giving society what it wants (even if its wants are as yet unartic­u­lated). But our over-regulated world today is a far cry from this ideal. All regula­tions are limita­tions on free market forces that constrict ideation and its physical manifes­ta­tion: wealth creation. The ultimate expres­sion of legal regula­tion is monop­o­liza­tion, in which all peaceful compe­ti­tion is suppressed through coercion or violence.  Today, the money market is not a free market, as it is forcibly dominated by cartels of central banks — legal monop­o­lies that distort prices, reduce trade, and inter­rupt ideation.  Tellingly, central banking was also a key compo­nent of Soviet commu­nism — an exclu­sive state-owned banking monopoly was the [5th measure](https://mises.org/wire/why-marx-loved-central-banks) in Marx’s 1848 *Manifesto to the Commu­nist Party*. True capitalism has never existed precisely because the rules of money have always become twisted by inter­ven­tion­ists pursuing their own pecuniary gain in every market known to history. Legal imped­i­ments erected by govern­ments to insulate central bank monop­o­lies on money from free market capitalism are manifold. Such artifice destroys account­ability, ingenuity, and virtue. ![](https://www.datocms-assets.com/56652/1689924262-more-laws-less-justice.jpeg?auto=format) With unbreak­able capital­istic rules, the *“game”* of macro­eco­nomics would impose an organizing principle onto humanity, encour­aging us to find better ways of saying, doing, or making things by betting against each other in the market­place as opposed to lying, stealing, or taxing.  When rules cannot break, play is fair, and want-satis­fac­tions escalate. As *“players”* prove one another wrong in the market­place — by discov­ering and selling better means of satis­fying wants — the resul­tant produc­tivity gains diffuse into society through trade. An environ­ment conducive to contin­uous learning at scale is culti­vated through Capitalism. Said differ­ently: when ideas compete freely, more wealth is created — most often in the form of better tools, services, or knowl­edge. Mises describes this inextri­cable relation­ship between ideation and market compe­ti­tion in his master­work [Human Action](https://cdn.mises.org/Human%20Action_3.pdf): ***"But compe­ti­tion does not mean that anybody can prosper by simply imitating what other people do. It means the oppor­tu­nity to serve the consumers in a better or cheaper way without being restrained by privi­leges granted to those whose vested inter­ests the innova­tion hurts.*** ***What a newcomer who wants to defy the vested interest of the old estab­lished firms needs most is brains and ideas. If his project is fit to fill the most urgent of the unsat­is­fied needs of the consumers or to purvey them at a cheaper price than their olde purveyors, he will succeed in spite of the much talked of bigness and power of old firms."*** To use [Ray Dalio’s](https://medium.com/@breedlove22/an-open-letter-to-ray-dalio-re-bitcoin-4b07c52a1a98) term: free markets are *idea meritoc­ra­cies*: unham­pered trade networks that incen­tivize the culti­va­tion and infusion of the best ideas into civiliza­tion. Implicit in the meta-idea is the presup­po­si­tion innova­tion can only be nurtured, not legis­lated.  Here, the ignorance of [MMT](https://mises.org/power-market/mmt-not-modern-not-monetary-not-theory) advocates clamoring for *“the activa­tion of idle capital through infla­tion”* rears its head: proceeds from theft via infla­tion can mobilize people and capital, but only in an unintel­li­gent way since bureau­crats lack both the account­ability and distrib­uted computing power endoge­nous to the free market, and only until this parasiti­za­tion of value from the produc­tive economy kills it.  In simple economic terms: free markets make mankind more produc­tive; monop­o­lies, or unfree markets, make mankind less produc­tive. Further, the condi­tion of our collec­tive mind closely mirrors the state of our money. We only think in dollars today because they were once redeemable for gold. Central banks have hijacked the monetary exten­si­bility of our minds (the old *“bait and switch”* tactic) and corrupted our capacity to perceive the world clearly: ![](https://www.datocms-assets.com/56652/1689924407-robert-tweet-breedlove-crime-against-humanity.png?auto=format) Free minds need freely selected money. By embracing a free market paradigm in the totality of our actions, we become more free-thinking, intel­li­gent, and wealthy. Another way to think about the free market is as a system of error detec­tion and correc­tion: through prices, it incen­tivizes the discovery and resolu­tion of unsat­is­fied wants (socioe­co­nomic errors).  Central bank induced infla­tion distorts this error correc­tion system and causes dissat­is­fac­tions to swell. This market manip­u­la­tion is (osten­sibly) justi­fied by the self-decep­tive inten­tion­ality of central bankers to *“manage the economy,”* as if any human had ever success­fully managed any complex system without triggering a cascade of unintended conse­quences. Convic­tion in the utility of their neces­sarily limited knowl­edge, as opposed to the free market processes which contin­u­ally revivify knowl­edge, is the black core of central bank malev­o­lence. As John Milton, author of [*Paradise Lost*](https://en.wikipedia.org/wiki/Paradise_Lost), brilliantly observed: ***Evil is the force that believes its knowl­edge is complete.*** Central banks could repent merely by admit­ting this gargan­tuan error in ideology and letting the free market clear its 100+ years of mistakes. This would be painful at first, but undoubt­edly in the long-term best inter­ests of civiliza­tion — like a drug addict finally entering rehabil­i­ta­tion. But hubris and greed will almost certainly prevent such an ideal outcome. To summa­rize the argument: free market pricing is an error-clearing system, and central banking amelio­rates its capacity for error detec­tion and correc­tion; acting as if its knowl­edge of markets is complete, central banking is evil incar­nate — an insti­tu­tion of economic tyranny as misguided as Soviet Russia. In the ideolog­ical sphere, freedom is as creative as tyranny is destructive. ### The Greatest Idea of History ***"An Idea Is Salva­tion By Imagination."*** - Frank Lloyd Wright Quintes­sen­tial to the idea of any money is that both present and future market partic­i­pants will freely accept it in trade. The likeli­hood of a money being accepted by the broadest possible set of trading partners is primarily based on how reliably it maintains its scarcity across time. To maximize this store of value function, a money must be resis­tant to misap­pro­pri­a­tion — whether by infla­tion, counter­feit, or confis­ca­tion (all of which are theft).  The money most resis­tant to invol­un­tary exchange (aka theft) tends to become the most widely adopted volun­tary medium of exchange. Put another way: in free market compe­ti­tion, the most theft-proof money wins. Those who erroneously choose a less theft-proof money are disfa­vored by market processes when their wealth is compro­mised by thieves through infla­tion, counter­feiting, or confis­ca­tion. Another way to say it: market partic­i­pants adopt the money, which minimizes the need to trust one another. Central banks continue to hoard gold because it is trust-minimized money. Bitcoin exhibits even greater trust-minimiza­tion quali­ties and is there­fore [disrup­tive to gold](https://medium.com/the-bitcoin-times/bitcoin-and-the-tyranny-of-time-scarcity-1d1550dfd8b0). ![](https://www.datocms-assets.com/56652/1689924600-robert-tweet-bitcoin-is-disruptive.png?auto=format) Money is the best idea we’ve ever had, for without it, all the other marvelous ideas gener­ated by markets would not exist. As the most tradable thing, money is the highest instan­ti­a­tion of our meta-idea, offering us unbri­dled option­ality in market exchange. As a technology, free-market-selected money maximizes both human freedom and cooper­a­tion.  Histor­i­cally, gold reduced the incen­tives to violence because it was a more secur­able form of wealth than food, land, and most other assets. In this way, gold greatly constricted the scope of assets worth fighting over, thereby inducing unpar­al­leled social cooper­a­tion, trade, and wealth gener­a­tion. This has profound moral impli­ca­tions too: when money is hard to steal, society becomes hard-working; when it is easy to steal, society drifts toward kleptoc­racy. Let me state the argument in a single sentence: gold was the greatest tool we ever had to incen­tivize ourselves to civilize ourselves. ***"If the aim of humanity is to build civiliza­tions, then our most brilliant idea was the use of gold as money."*** The global gold standard improved trade (our meta-idea) in a trust-minimized way and standard­ized the world to a single monetary protocol — thereby maximizing time-savings in trade and its associ­ated wealth creation (two sides of the [same coin](https://medium.com/@breedlove22/money-bitcoin-and-time-part-1-of-3-b4f6bb036c04)). Again, wealth creation is absolutely depen­dent on ideation: using gold as money led the world into an unequaled efful­gence of novel ideas and innova­tions, ushering in an era known collo­qui­ally as both The Gilded Age and La Belle Époque: ![](https://www.datocms-assets.com/56652/1689924680-le-belle-painting.jpeg?auto=format) A brilliant idea indeed, but far from perfect: because gold is physical, it is still vulner­able to theft. Because gold is heavy, economies of scale related to its use as money led to the central­iza­tion of its custody in bank vaults (since it is cheaper to transact in paper abstrac­tions of gold than physical gold). An anti-capitalist insti­tu­tion — the central bank — festered around these central­ized gold hoards.  These decep­tive and evil insti­tu­tions operate with flagrant disre­gard for the tenets of capitalism: central banks are above the law, practice perpetual private property confis­ca­tion via infla­tion, and peddle the most dishonest money in history. All central bank business models are criti­cally depen­dent on the divis­i­bility, porta­bility, and recog­niz­ability short­com­ings of gold: - ***If gold were perfectly divis­ible, there would be no reason to abstract it into paper currency.*** - ***If gold were perfectly portable, it would be encoded as infor­ma­tion, and there would be no need to place trust in banking custo­dians as final settle­ment could be conducted at the speed of light.*** - ***If gold were perfectly recog­niz­able, there would be no economic gain from the “public stamp” of national curren­cies as anyone could verify the veracity of money themselves instantaneously.*** Indeed, these techno­log­ical failings of gold formed the attack surface repeat­edly exploited by central banks. Fortu­nately for citizens of the 21st century, free trade — which has been exponen­tially enhanced by the internet and digital technolo­gies — has gener­ated an even more brilliant idea that promises a perma­nent ending to the thieving schemes of central banks. ### The Greatest Idea of Modernity ***"There Is One Thing Stronger Than All The Armies In The World, And That Is An Idea Whose Time Has Come."*** - Victor Hugo America was founded on the three pillars of free market capitalism: private property rights, the rule of law, and honest money. The American Consti­tu­tion autho­rized states to issue gold or silver currency, outlawed income tax, and prohib­ited national central banking.  Unfor­tu­nately, upon successful imple­men­ta­tion of the American central bank (after two failed attempts), the private property rights founda­tional to free market capitalism became vulner­able to limit­less viola­tion via infla­tion.  An example of this failure came with the *“*[*Great Gold Robbery of 1933*](https://mises.org/library/great-gold-robbery-1933)*”* (aka Execu­tive Order 6102): an uncon­sti­tu­tional decree and blatant viola­tion of private property rights. All govern­ment decrees by fiat are lies (including fiat currency), for truth need never be forced. Free market forces always [zero-in](https://medium.com/@breedlove22/the-number-zero-and-bitcoin-4c193336db5b) on truth. ![](https://www.datocms-assets.com/56652/1689924840-breedlove-bitcoin-fuck-you-money.png?auto=format) Bitcoin is the ideolog­ical synthesis of gold and the internet; it perfectly exempli­fies the three pillars of free market capitalism under­girding the idea of America in a form that cannot be perverted by fiat decree. As its money supply cannot be changed, its holders are immune to confis­ca­tion via infla­tion, thus perfecting their private property rights (Pillar 1). Disputes within the Bitcoin network are settled consen­su­ally. It is imprac­tical to employ violence in an attempt to sway this process, thus perfecting the process of nonvi­o­lent dispute resolu­tion embodied by the rule of law (Pillar 2). By perfecting these first two pillars of free market capitalism, Bitcoin is a self-fulfilling prophecy predes­tined to perfect its final pillar by becoming the final evolu­tion in free-market-selected honest money (Pillar 3). As the only sacro­sanct money in existence, Bitcoin is purified capitalism: a perma­nent imple­men­ta­tion of the soundest socioe­co­nomic *“water well”* in history: ![](https://www.datocms-assets.com/56652/1689924912-breedlove-adoption-curve.png?auto=format) Compe­ti­tion and collab­o­ra­tion are the trades of life. The conser­vatism of energy is truth — organi­za­tions, methods, and tools that accom­plish the greatest results with the least effort tend toward dominance as they are willingly embraced by market partic­i­pants whose *“skin is in the game.”* Strict adher­ence to thermo­dy­namic princi­ples is the way all-natural systems grow (there is no other way). Monies, moral­i­ties, and strate­gies that best amplify produc­tivity outcom­pete on the free market for ideas — submis­sion to this truth is freedom. Bitcoin is a system that minimizes compet­i­tive asymme­tries by maximizing account­ability and thereby incen­tivizes fair play and error-clearing in the market. Modeled on the unbreak­able rules of the universe — thermo­dy­namics — Bitcoin is best known for its meteoric growth pattern: ![](https://www.datocms-assets.com/56652/1689924974-thermo-dynamics-bitcoin-chart.jpeg?auto=format) We are what we build, and we build what we are. Ideation and wealth creation are mere expres­sions of life’s central impulse: growth. Without adequate levels of exchange, the growth of organ­isms and economies deteri­o­rates. On this point, nature is ruthlessly clear: when you’re finished changing, you’re finished. As we age, we experi­ence a slowing of blood flow, which presages a break­down of body and mind. Physical exercise can provide some protec­tion by increasing our metabolic exchange of oxygen, water, and nutri­ents, thereby keeping us smarter, healthier, and more energetic as we age. As William Durant eloquently describes this decline into senescence: ***"It is a physi­o­log­ical and psycho­log­ical involu­tion. It is a hardening of the arteries and categories, an arresting of thought and blood; a man is as old as his arteries, and as young as his ideas."*** What is true for the individual market partic­i­pant micro­cosm is true for the global market macro­cosm: impeding free trade constricts ideolog­ical *“blood flow.”* It makes the *“socioe­co­nomic super­or­ganism”* (aka humanity) more vulner­able to disease and death. Close-minded constituents conjure a build-up of misfit­ness to reality for the collec­tive. Creating block­ages to trade via regula­tion and confis­ca­tion — the implicit purpose of central banking — is cancerous to the free market paradigm that invig­o­rates our economic vitality, social morality, and the advance­ment of civilization. All individ­uals seek to attain freedom, goods, and power for themselves. Govern­ments are simply a multi­pli­ca­tion of ourselves and our desires, without external gover­nance, and armed with weapons of mass destruc­tion. No amount of tears can wash away the blood war sheds; only practi­cality, properly imple­mented, can prevail. Absent a battle to fight — whether moral or physical — people become weaker. Arraying armies against an enemy gives people cause for unity. Perhaps Bitcoin will serve as a moral alter­na­tive to war — a peaceful yet disci­pli­nary force on humanity. American Pragma­tist William James believed a *“moral equiv­a­lent”* of war was neces­sary to end its horrors: ***"So far war has been the only force that can disci­pline a whole commu­nity, and until an equiv­a­lent disci­pline is organized, I believe that war must have its way."*** If this proves true, Bitcoin will become a new organizing mode for civiliza­tion: like a religion born from economic and computer science, a wisdom tradi­tion that defunds and destroys central bank war machines and ideolo­gies. Warfare is Darwinism writ geopo­lit­ical, and its atroc­i­ties will be endless until all nations agree, or are forced, to yield their self-arrogated sover­eignty to a higher authority — a *“super­state”* hodling individual sover­eignty as its axiomatic mantra. Bitcoin — a public utility that facil­i­tates trade flows of private property — is the bridge between commu­nistic utopi­anism and capital­istic pragma­tism and could grow to become the super­state to which all nations bend the knee. Perhaps this ultimate usurpa­tion of the nation began with the Genesis Block on day one, or perhaps it is still yet to transpire one day. For now, we can only say: Bitcoin is money. Money is the ultimate token of trade, and trade is mankind’s meta-idea. Whatever wins as money on the free market is a brilliantly formu­lated, civilizing idea. Capitalism is the socioe­co­nomic system that optimizes for the expan­sion of trade’s scope by respecting free market princi­ples, foremost of which is individual sover­eignty. Bitcoin — an honest money offering its holders invio­lable private property rights and perfected rule of law — is the capstone innova­tion of capitalism. It is as if all trade throughout history led us to the emergence of this idea: an unstop­pable, incor­rupt­ible, and highly acces­sible money. ***Consid­ered in combi­na­tion, these ideas make Bitcoin mankind’s most brilliant idea yet — a salvific founda­tion on which we can build a future civiliza­tion charac­ter­ized by more ingenuity, morality, and prosperity.*** Like ideas, Bitcoin exhibits non-corpo­re­ality, virality, and antifragility — it can be moved at the speed of light and stored in the mind. By virtue of its resis­tance to theft and rooted­ness in the thermo­dy­namics of work, Bitcoin portals us into a world of untold liberty, elevated morality, and enhanced produc­tivity. Bitcoin gives us the freedom to trade without central bank inter­fer­ence, store our wealth in a place resis­tant to seizure, and embrace truth in a world drowning in deception. ***Salva­tion: to see each thing for what it is — its nature and its purpose. To do only what is right, say only what is true, without holding back. What else could it be but to live life fully — to pay out goodness like the rings of a chain, without the slightest gap.*** - Marcus Aurelius Thank you for reading *Our Most Brilliant Idea*. - Follow me on Twitter: [https://twitter.com/Breedlove22](https://twitter.com/Breedlove22) - Stack sats with me, get $10 in free Bitcoin through this link: [https://www.swanbitcoin.com/breedlove](https://www.swanbitcoin.com/breedlove) - Journey with me as I write my first book: [https://bit.ly/3aWITZ5](https://bit.ly/3aWITZ5) - If you enjoyed this, please send sats: [https://tippin.me/@Breedlove22](https://tippin.me/@Breedlove22) - Or, send sats via Light­ning Network with Strike: [https://strike.me/breedlove22](https://strike.me/breedlove22) - Or, send sats via PayNymID: +tightking693 ![](https://www.datocms-assets.com/56652/1689925278-breedlove-wallet.png?auto=format) Bitcoin accepted here: 3CiBznmvP2jXVSPR9bUWZwSNtbe9ubp36M **Trans­la­tions:** Thank you for feedback during the writing process: [Jimmy Song](https://medium.com/u/4acb12744ff8?source=post_page-----aced329f8941--------------------------------) [Brandon Quittem](https://medium.com/u/4f4c6b04c659?source=post_page-----aced329f8941--------------------------------) @Greg Z [Zach_of_Earth](https://medium.com/u/e36e0e52f842?source=post_page-----aced329f8941--------------------------------) **My sincerest grati­tude to these amazing minds:** @real_vijay, [Saifedean Ammous](https://medium.com/u/becf6824fd89?source=post_page-----4b07c52a1a98----------------------), [Brandon Quittem](https://medium.com/u/c74d75cd8d58?source=post_page-----4b07c52a1a98----------------------), [Dan Held](https://medium.com/u/ca481e1bf815?source=post_page-----4b07c52a1a98----------------------), [Naval Ravikant](https://medium.com/u/67f5049293c7?source=post_page-----4b07c52a1a98----------------------), @NickSzabo4, [Nic Carter](https://medium.com/u/a063100e6515?source=post_page-----4b07c52a1a98----------------------), @MartyBent, [Pierre Rochard](https://medium.com/u/1206face71fc?source=post_page-----4b07c52a1a98----------------------), [Anthony Pompliano](https://medium.com/u/1d0168ffead9?source=post_page-----4b07c52a1a98----------------------), [Chris Burniske](https://medium.com/u/2a8f9285c9aa?source=post_page-----4b07c52a1a98----------------------), @MarkYusko, @CaitlinLong_, [Nik Bhatia](https://medium.com/u/dc7ae094ae3a?source=post_page-----4b07c52a1a98----------------------), [Nassim Nicholas Taleb](https://medium.com/u/f138bf5466fe?source=post_page-----4b07c52a1a98----------------------), [Stephan Livera](https://medium.com/u/b0082959a759?source=post_page-----4b07c52a1a98----------------------), [Peter McCor­mack](https://medium.com/u/79b96a130697?source=post_page-----4b07c52a1a98----------------------), [Gigi](https://medium.com/u/29f663fdaf68?source=post_page-----4b07c52a1a98----------------------), [Hasu](https://medium.com/u/90326a938400?source=post_page-----4b07c52a1a98----------------------), @MustStopMurad, [Misir Mahmudov](https://medium.com/u/2c121d83fdee?source=post_page-----4b07c52a1a98----------------------), [Mises Insti­tute](https://medium.com/u/11fe656b8466?source=post_page-----4b07c52a1a98----------------------), [John Vallis](https://medium.com/u/e179e924df32?source=post_page-----4b07c52a1a98----------------------), @FriarHass, [Conner Brown](https://medium.com/u/7e2af4996eb3?source=post_page-----4b07c52a1a98----------------------), [Ben Prentice](https://medium.com/u/41b995bfb220?source=post_page-----4b07c52a1a98----------------------), [Aleksandar Svetski](https://medium.com/u/c3dfe7e1392a?source=post_page-----4b07c52a1a98----------------------), [Crypto­conomy](https://medium.com/u/f1620960c83?source=post_page-----4b07c52a1a98----------------------), [Citizen Bitcoin](https://medium.com/u/8dbb1acf1534?source=post_page-----4b07c52a1a98----------------------), [Keyvan Davani](https://medium.com/u/b35b793f54bf?source=post_page-----4b07c52a1a98----------------------), @RaoulGMI, @DTAPCAP, [Parker Lewis](https://medium.com/u/4860f822b31a?source=post_page-----4b07c52a1a98----------------------), @Rhythmtrader, [Russell Okung](https://medium.com/u/ffa1d9486b31?source=post_page-----4b07c52a1a98----------------------), @sthenc, [Nathaniel Whitte­more](https://medium.com/u/1b4838316374?source=post_page-----4b07c52a1a98----------------------), @ck_SNARKs, [Trevor Noren](https://medium.com/u/37121823cc91?source=post_page-----4b07c52a1a98----------------------), [Cory Klipp­sten](https://medium.com/u/1fed44f3e556?source=post_page-----4b07c52a1a98----------------------), [Knut Svanholm](https://medium.com/u/f12c589770d1?source=post_page-----4b07c52a1a98----------------------) @relevantpeterschiff, [Preston Pysh](https://medium.com/u/db32871ef5f3?source=post_page-----255ecc93404f--------------------------------), @bezantdenier And anyone else I forgot 🙂 Sources: a. [https://www.grunge.com/91938/ideas-changed-course-humanity/](https://www.grunge.com/91938/ideas-changed-course-humanity/) b. Rational Optimist by Matt Ridley c. Medita­tions by Marcus Aurelius d. Fallen Leaves: Last Words on Life, Love, War, and God by Will Durant e. Manifesto to the Commu­nist Party by Karl Marx f. [https://oll.libertyfund.org/pages/did-bastiat-say-when-goods-don-t-cross-borders-soldiers-will](https://oll.libertyfund.org/pages/did-bastiat-say-when-goods-don-t-cross-borders-soldiers-will) ### Robert Breedlove Robert Breedlove is founder, CEO, and CIO of Parallax Digital, a global Bitcoin-focused hedge fund and consultancy. He considers himself a freedom maximalist and believes he’s found his life’s work in Bitcoin. # Bitcoin is For Everyone - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/looking-out-for-the-little-guy/ We serve HNWI clients wishing to purchase Bitcoin. Even more importantly, we help great-grandmas, college students, veterans, and fast food workers buy their first Bitcoin and begin saving for their future. --- **Reed Wommack** · November 2, 2020 · Updated June 27, 2024 Swan Bitcoin prides itself on giving small customers a fair deal. Our minimum purchase is only $10 per month, and our fees for the smallest plans are only 1.99%.  Many exchanges have minimum purchase sizes of $100, charge five times higher fees for small buys, or only allow customers to wire money into the exchange, which costs $10 to begin with!  Swan’s goal is to create 10 million new Bitcoiners in the US and a big part of that is making Bitcoin acces­sible to every American. We want to make it as easy and afford­able as possible to set up a recurring Bitcoin buy plan with Swan, no matter how much money you have or make.  We serve clients wishing to purchase hundreds of thousands of dollars of Bitcoin, but even more impor­tantly, we help great-grandmas, college students, veterans, and fast-food workers buy their first Bitcoin and begin saving for their future. In our view, Bitcoin changes people for the better, so the more people who own and self-custody Bitcoin, the more indepen­dent, resilient, and forward-thinking our society will become. We would prefer ten million customers each buying a hundred dollars of Bitcoin per week than a hundred customers each buying ten million dollars per week.  Although Swan would earn similar fees from both situa­tions, [having ten million Bitcoiners with skin-in-the-game](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/) would more profoundly improve our culture and society. And I say this as the Head of Customer Support, whose job would become much easier if we only had one hundred wealthy customers! For us, it’s much more impor­tant to have people learning about Bitcoin than it is to squeeze more from our customers. Of course, you should save a little bit more Bitcoin for your kids and grand­kids. Of course, you should delay purchasing a fancy new gadget and buy Bitcoin instead. But even more impor­tantly, you should reach out to your neigh­bors and friends and get them to start buying a little bit of Bitcoin.  In fact, if you sign up for Swan Force, our referral program, at [swanbitcoin.com/enlist](http://swanbitcoin.com/enlist), you can give your neigh­bors a free $10 of Bitcoin to get them started, and every $10 count. I’ll just as gladly get on the phone to answer questions that help a minimum wage earner put a piece of their paycheck into Bitcoin as I would be to help a million­aire do the same. If you’re concerned that you don’t have enough money to invest in Bitcoin, call us at (218) 379‑7926, and I’ll be glad to listen. ### Reed Wommack Reed Wommack is the Head of Client Services at Swan Bitcoin. Reed heads Swan Bitcoin's Customer Support. So if you ever run into issues with any Swan products, feel free to DM Reed on Twitter. You can find him on Twitter here: https://twitter.com/ReedWommack # Welcome to Bitcoin TV - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/welcome-to-bitcoin-tv/ Bitcoin TV makes it easy to sit back and learn all about this revolutionary new money. --- **Cory Klippsten** · November 11, 2020 · Updated June 6, 2024 Bitcoin TV has just launched, making the best of Bitcoin avail­able in a curated streaming channel for everyone around the world, around the clock. With viewing initially avail­able at [bitcointv.network](http://bitcointv.network/) and [on YouTube](https://www.youtube.com/watch?v=Hv3NTan7_Jc), the channel’s mission is to educate and enter­tain both newcomers and long-time advocates of the decen­tral­ized digital money. ***“Bitcoin TV makes it easy to sit back and learn all about this revolu­tionary new money,”*** said founder Cory Klipp­sten. ***“There is a ton of high-quality Bitcoin educa­tion content avail­able, but there’s so much noise that curation is an absolute necessity.”*** Klipp­sten, who is also CEO of Bitcoin purchasing service [SwanBitcoin.com](http://swanbitcoin.com/), previ­ously worked on YouTube sales strategy at Google and later advised online video compa­nies Pluto TV (acquired by ViacomCBS), New Form, and Reelgood. Preview partic­i­pants made it clear that Bitcoin TV fills an acute need. As one fan said: ***"It’s CNBC for Bitcoiners. I leave it on my TV throughout the day, listen to it at the gym, and hit the Youtube chat in the evenings."*** With zero promo­tion for the week-long preview, the channel garnered thousands of viewers with an average watch time of 47 minutes. **Just the Begin­ning for Bitcoin TV** With support and partic­i­pa­tion from many of Bitcoin’s best content creators, Bitcoin TV plans to add value to existing Bitcoin educa­tion content through produc­tion, curation, editing, organi­za­tion, and presen­ta­tion. In Q1 2021, Bitcoin TV plans to launch over-the-top televi­sion services like Pluto TV, Roku, and Samsung.  The service already features respected technol­o­gists, econo­mists, and Bitcoin advocates like Andreas Antonopolous, Raoul Pal, Lyn Alden, Chamath Palihapi­tiya, Naval Ravikant, Max Keiser, Stacy Herbert, Adam Back, Danielle DiMartino Booth, Preston Pysh, Matt Odell, Robert Breedlove, Stephan Livera, Andy Edstrom, and Tuur Demeester, with many more to come. ![](https://www.datocms-assets.com/56652/1689926105-screen-shot-2020-11-11-at-12-13-26-pm.png?auto=format) **Bitcoin is Ready for Prime Time** The Bitcoin industry has matured quickly over the past few years, as Bitcoin has become a significant player in the global macro­eco­nomic and invest­ment landscape. Some of the world’s leading finan­cial insti­tu­tions and investors like Fidelity, JPMorgan, Stanley Druck­en­miller, Paul Tudor Jones, Raoul Pal, and more have made large invest­ments in Bitcoin and in the broader industry. ***“The time is right for Bitcoin TV to build on this momentum,” said Brady Swenson, Program­ming Director of Bitcoin TV...*** ***“As hundreds of millions of people around the world discover Bitcoin in the coming years, we will continue our efforts to bring the best minds in the world to Bitcoin TV.”*** ![](https://www.datocms-assets.com/56652/1689926170-screen-shot-2020-11-11-at-12-15-21-pm-1.png?auto=format) **Bitcoin TV is Provided Free for All by SwanBitcoin.com** Swan makes it easy for retail investors to set up automatic recur­ring purchases of Bitcoin straight from their bank account, similar to automatic contri­bu­tions to a 401k. This *“set it and forget it”* method has proven the best approach for building a Bitcoin position over the long term, avoiding the pitfalls of trading and related tax conse­quences while ensuring steady accumu­la­tion. The service also allows members to wire funds or use ACH bank trans­fers for larger one-time purchases. Says Klipp­sten, ***“The more someone knows about Bitcoin, the more they buy, so Bitcoin TV is a natural exten­sion of our commit­ment to education.”*** The Swan team already includes several authors and podcast hosts, including Yan Pritzker (*Inventing Bitcoin*), the pseudo­ny­mous Gigi (*21 Lessons*), Swenson (the *Citizen Bitcoin* and *Swan Signal Live* podcasts), Andrew Edstrom (*Why Buy Bitcoin*), Klipp­sten (the forth­coming book *Bitcoin: A Bright Orange Future*), and Jason Don, aka Brekkie von Bitcoin (the *Swan Lounge* podcast). Addition­ally, Swan sponsors the *Stephan Livera Podcast* and Bitcoin writer/philosopher Robert Breedlove, both leaders in the space. ***"In a time of monetary chaos, Bitcoin is inspiring millions to imagine a brighter future we can build together. We hope Bitcoin TV will help unite the world in pursuit of this cause."*** ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Bitcoin is Hope - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-is-hope/ A fundamentally dishonest money, fiat currency ruins relationships with the intrinsic entropy of nature and our fellow humans. To rejuvenate hope, we must set sights upon honest money, entrepreneurship, and civilization. --- **Robert Breedlove** · November 20, 2020 · Updated June 27, 2024 Hope moves us forward, and our values chart the way. Money is intended to be a safe haven for economic value — not a constant cause of stress, worry, and entrap­ment, as it is in the world today. A funda­men­tally dishonest money, fiat currency ruins our relation­ships with the intrinsic entropy of nature and our fellow humans. To rejuve­nate hope for more harmo­nious human action in the world, we must set our sights upon the invalu­able aims of honest money, entre­pre­neur­ship, and civilization. ![](https://www.datocms-assets.com/56652/1689928111-bitcoin_is_hope_ship_on_sea_bitcoin_sun.png?auto=format) ### Hope is the Wind Hope is the wind that carries us forward: an attitude to act instead of despair. Most of our lives are spent navigating from *“what is”* to what we believe *“should be,”* each of us charting our way by what we perceive to be valuable. The ideal state towards which we are (hopefully) moving ever-closer is the pursuit of our own poten­tial — a seemingly ever-receding horizon no matter how rich, fit, or well-liked we become. True progress is only possible by taking actions guided by clear valua­tions. Action is akin to a slicing scythe, which separates prover­bial wheat (the valuable) from chaff (the value­less). Sometimes, we may lose hope, but we can always redeem it through action. ![](https://www.datocms-assets.com/56652/1689928184-breedlove-superman.jpeg?auto=format) Spanning the everlasting gulf between *“here and now”* and *“a better tomorrow”* is a bound­less ocean of space­time. All the aims of our actions can only target other places and other times. As we sail the stormy spatiotem­poral seas toward our desired desti­na­tions, we inevitably encounter unfore­seen stres­sors, setbacks, and challenges.  Pain — the inarguable basis of being — becomes acute when the conse­quences of our actions diverge from our aims. [*Hamartia*](https://en.wikipedia.org/wiki/Hamartia)*—*this tendency to *“miss the mark”* so funda­mental to our sinful human nature — pervades precisely because our universe is one of entropy. Entropy is uncer­tainty, random­ness, and disorder; it naturally pours forth from reality and destroys the works of man over time (just ask any homeowner). Forti­fying ourselves from the omnipresent chaos of nature within handcrafted systems of socioe­co­nomic order, we distin­guish ourselves as human by building civiliza­tions. Yet human flour­ishing can exist only along a knife-edge of order and chaos.  Encoun­ters with entropy are the only way we can grow stronger, faster, and smarter — indeed, such adapta­tion to life’s many tribu­la­tions is *our only hope* of becoming better. [Hormesis](https://en.wikipedia.org/wiki/Antifragile) ensures that life improves its environ­mental fitness through failure; hence the old adage *“what doesn’t kill you, makes you stronger.”* The lessons gleaned in our contentions with chaos are struc­turally incor­po­rated into manmade law and order. In Talebian terms: individual fragility is insep­a­rable from ensemble antifragility. Adver­sity advances us. Absent the rough waters of life, our true compe­ten­cies could never emerge, nor our civiliza­tions thrive. As the ancient African proverb says: ***"Smooth seas do not make skillful sailors."*** In moder­nity, the dominant insti­tu­tion in the world is central banking; its (osten­sible) purpose is to *“smooth the seas”* of markets by imposing price stability and low unemploy­ment. This misguided purpose inflicts depravity on market partic­i­pants by robbing them of the critical stres­sors neces­sary for learning and the devel­op­ment of compe­tence. Cutting entre­pre­neurs off from the vital flows of infor­ma­tion engen­dered by well-measured exposures to entropy causes price distor­tion, inter­rup­tion of innova­tion, and suppres­sion of skill­ful­ness. Eleva­tion of the human condi­tion is achieved by break­throughs in engineering, not the art politic. Polit­ical machi­na­tions can only divvy up the spoils gener­ated by our ingenuity. Innova­tion is the unleashing of human creativity, the fruits of entre­pre­neur­ship, and the restora­tion of hope when formerly benefi­cial systems of order fail us. Exper­i­men­ta­tion in the dark labora­tory of the unknown is the only way we can gain illumi­na­tion. Nature is terri­fying and volatile, but it is also the unexplored terri­tory where we hunt to enrich humanity’s treasury of knowledge. ![](https://www.datocms-assets.com/56652/1689928333-drangons-gold-breedlove.jpeg?auto=format) ### Treasure Hunters Life well-lived is a series of skill-building expedi­tions. Before any embarka­tion we must first set our desti­na­tion: a precise deter­mi­na­tion of where we want to go. Desti­na­tion-setting is an inher­ently subjec­tive and value-driven decision. Equipped with the motiva­tional guide­lines encoded in our systems of value, we set our aim and set sail. Spiriting us along is the hope that our wits, skills, and instru­men­ta­tion will prove true in our trek. When faced with ambiva­lent courses of action, we take the path perceived to be most progres­sive toward our values. As the heavenly maps of human action, our values are moral behav­ioral schemas intended to help guide us through the inexorable ambigu­i­ties, complex­i­ties, and trade­offs in our circum­nav­i­ga­tions across the tempes­tuous seas of space­time. Consti­tu­tional to this cartog­raphy of action is the answer to one of life’s most ancient mysteries: ***"Why did the chicken cross the road? Because the chicken decided being on the other side was more valuable."*** Life well-lived is a series of skill-building expedi­tions. Before any embarka­tion we must first set our desti­na­tion: a precise deter­mi­na­tion of where we want to go. Desti­na­tion-setting is an inher­ently subjec­tive and value-driven decision. Equipped with the motiva­tional guide­lines encoded in our systems of value, we set our aim and set sail. Spiriting us along is the hope that our wits, skills, and instru­men­ta­tion will prove true in our trek. When faced with ambiva­lent courses of action, we take the path perceived to be most progres­sive toward our values. Mapping our values is a charting of aware­ness, a training of the moral compass, and a trimming of the sails toward the outcomes we ultimately desire. By estab­lishing an unwavering hierarchy of personal values, we are accepting the sacri­fices requi­site for forward movement. All individ­uals and insti­tu­tions are finite. No entity can accom­plish all aims. Life is a series of decisions in which we face trade­offs and oppor­tu­nity costs. As both individ­uals and insti­tu­tions, we choose a single course of action at the neces­sary exclu­sion of all others: a rule of reality beyond excep­tion, even for the (allegedly omnipo­tent) central banks of the world. Action is the sacri­fice of life to our higher values, in the hope that our aims hold true. All attempts to tamper with this calculus of sacri­fice neces­sary for progress can only fail. ![](https://www.datocms-assets.com/56652/1689928431-dont-chase-two-rabbits.png?auto=format) Soon after embarking on any voyage toward a valued aim, we observe the congruity between our inten­tions and the conse­quences created by our actions. Improving the fitness of action and expec­ta­tion is the highest hope of humanity; as conver­gence comes, man gains greater freedom to try his mettle on other forms of misfit­ness within a broader sphere of possi­bility: a principle expressed in adapta­tion, innova­tion, and evolu­tion. In this way, man circum­am­bu­lates himself toward his value-directed *“North Star”* through an itera­tive process of trial, error, and retrial — finding his proper path through exper­i­men­ta­tion and perse­ver­ance. Through this inher­ently non-linear and unstable process, man converts entropy into growth. Paradox­i­cally, mankind can only succeed in advancing himself through a willing­ness to fail. The way of the warrior (and the entre­pre­neur) is the resolute accep­tance of death, the alacrity to confront the chaos of nature coura­geously with the aim of converting it into a good and useful order. Poignant to this paradox of progress is the ancient wisdom of warrior-sage [Musashi](https://www.amazon.com/dp/B07KPV4HYW/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), in one of his nine princi­ples for strategic living: ![](https://www.datocms-assets.com/56652/1689928511-the-way-in-training.png?auto=format) Training their minds, spirits, and charac­ters against the entropy of nature, entre­pre­neurs deliver to us all the hard-won treasures of erudi­tion earned in their explo­rations. Entre­pre­neurs seek knowl­edge by putting their skin in the game and adven­turing into the unexplored terri­to­ries of nature in search of better, cheaper, and faster ways of satis­fying wants for society. Enduring the pain of failure, adapting to the unknown, and living to tell (and sell) the tale is the way of the entre­pre­neur. These infor­ma­tion foragers under­stand the inherent trade­offs of hunting and navigate them intel­li­gently to achieve growth. Antithet­ical to the entre­pre­neurial ethic is the central bank, which *“chases two rabbits”* of growth and stability, with delete­rious results in the long-run. Growth is purely a market process, and it cannot be induced by decree (just try yelling at your garden to *“grow faster”)*. By attempting to override Darwinian reality, central banking stifles entre­pre­neurial adaptivity — the most impor­tant aspect of survival for any species. ![](https://www.datocms-assets.com/56652/1689928562-breedlove-darwin-quote.jpeg?auto=format) As we navigate the world, the fitness of our value-maps to the progress we observe is depen­dent on circum­stances both within and beyond our control. For instance, if an entre­pre­neur leading a hyper-growth technology company is intent on disrupting an entrenched industry, he can control his own alloca­tion of time and capital with the aim of making a software solution that (he hopes) market partic­i­pants will prefer. But no entre­pre­neur can control broader market forces like customer prefer­ences, industry regula­tions, or competitor actions. Indeed, he must strive valiantly even to *“control”* events within his own organi­za­tion. Clearly, we can exert some degree of influ­ence on the things outside our control, but to a much lesser extent than we can our own time, atten­tion, and capital. Truly, we can only ever (hope to) maintain control over our thoughts, attitudes, and actions as we live and learn. Knowl­edge is treasure, and entre­pre­neurs — led by hope — its dogged hunters. ### The Way of Hope Hope — the ultimate motiva­tional emotion — propels each of us forward and indicates when we veer off of the optimal path to our value-mapped desti­na­tion. All action is future-oriented and there­fore specu­la­tive by nature, requiring faith in a percep­tual model of an unknow­able future. When we take action, and the results play out in a way consis­tent with our inten­tions, then we experi­ence positive emotions and are motivated to move further forward by the hope of experi­encing more good feelings.  In this way, goal achieve­ment reinforces our patterns of action. Contrarily, when our actions cause conse­quences divorced from our goals, we experi­ence negative emotions. We are motivated to change course in the hope of avoiding more bad feelings. Failure gives us pause to recon­sider our trajec­tory through lived experi­ence and the systems of value mapping us through life. In human action: pleasure is our preacher, and pain is our teacher. Or, to cite the stellar [lyrics](https://www.youtube.com/watch?v=cmgvIWpVUwc) of Muse: ***"Our hopes and expec­ta­tions. Black holes and revelations."*** Values deter­mine not only where we focus our atten­tion but also how we filter our percep­tions. Goals, by defin­i­tion, are the valued ends of games we play.  In the [Selec­tive Atten­tion Exper­i­ment](https://www.youtube.com/watch?v=vJG698U2Mvo&list=PLB228A1652CD49370), scien­tists proved that focused atten­tion can blind us to most other aspects of being when engaged in goal-directed action. This means that our values tell us where to look and partially deter­mine *what we see.* In any given situa­tion, if you’re feeling hopeless or lost, you could be the victim of bad circum­stances, or you may just be blind to the pathway forward due to a disval­u­a­tion of goals, since goal-setting, in part, deter­mines your percep­tions.  Atten­tion is directed and refracted through the circuity of our values, an inter­sub­jec­tive reality which we commu­ni­cate with humanity’s most impor­tant tool — money. Money is a tool of value expres­sion: it is used to denom­i­nate market exchange values (prices) and is a medium by which we commu­ni­cate inter­per­sonal values. When you decide a good or service is suffi­ciently valuable relative to its current price, you buy it, and the market responds by producing more of what you purchase or causing its price to rise (or both). Through buying, the inter­per­sonal values and action patterns of producers you buy from are energized since your actions help achieve their goal of revenue gener­a­tion. Selling, of course, causes the reverse: declining prices, less produc­tion, or a general devital­iza­tion of producer values and action patterns (or all three). In this way, trade reshapes the relevance of elements in the world around us. ### Reality: A Realm of Relevance Most members of Western Civiliza­tion conceive the world from a materi­alist viewpoint, yet the reality of human experi­ence is perhaps best under­stood as a realm of relevance. Although our surround­ings are composed of *matter*, we perceive them as *what matters* in the sequences of our goal-directed actions. When we press the accel­er­ator on an automo­bile, and it moves forward, knowl­edge of its inner workings is irrel­e­vant to our goal of trans­porta­tion. But when the vehicle has a mechan­ical failure, its inner workings become quite relevant since they now impede our goal of forward motion. The goal of innova­tion and civiliza­tion, then, is to make the opera­tions critical to want-satis­fac­tion less relevant to our active aware­ness, thereby freeing up our limited atten­tion spans to focus on ever-more valuable aims. As Alfred North White­head poeti­cally elabo­rated this pathway toward civilization: ***"It is a profoundly erroneous truism repeated by all copy-books and by eminent people when they’re making speeches, that we should culti­vate the habit of thinking about what we’re doing. The precise opposite is the case. Civiliza­tion advances by extending the number of impor­tant opera­tions which we can perform without thinking about them."*** Civiliza­tion, to be sustain­able, must be maximally free from compul­sion. Control over the primary economic frame of refer­ence — money — means central banks can compul­sively reshape the relevance of objects for players in the socioe­co­nomic landscape. As a medium through which mankind conveys value, money is a motiva­tional and percep­tual tool penul­ti­mate to our own five senses. When someone rests their drink on a table, it is a tool to them. At the same time, that table can be an obstacle to someone being paid to jump over it. Objects only matter in the context of our goal-directed actions. There­fore, a compul­sory command over money is the power to (at least somewhat) recon­figure relevance within the minds of human beings and rewrite history. As Mises explains in his Magnum Opus [*Human Action*](https://mises.org/library/human-action-0): ***"The course of history is deter­mined by the actions of individ­uals and by the effects of these actions. The actions are deter­mined by value judge­ments of the acting individ­uals, i.e., the ends which they were eager to attain, and by the means which they applied for the attain­ment of these ends."*** Since attain­ment of money is such a major goal in life (private property rights are a [terri­to­rial imper­a­tive](https://www.amazon.com/Territorial-Imperative-Personal-Inquiry-Property/dp/0988604310)), control over money means central banks possess the power to twist our valua­tions, percep­tions, and goal orien­ta­tions. Monop­o­lized money mutilates our sense of meaning. Cowering to central­ized control over money forfeits all hope of humanity forming a free civilization. ### The Destabilization of Civilization Freedom is held to be the highest value of Western Civiliza­tion, where individual sover­eignty is super­or­di­nate to state sover­eignty. Pricing systems, denom­i­nated in money, are primary deter­mi­nants of the config­u­ra­tion of relevance in a free world. Relevance is always a relative and dynamic quality, and in the sphere of exchange, it is sculpted by prices. We can think of prices as commu­ni­ca­tion tools for gathering or dispersing atten­tion to the things markets want satis­fied or the problems its partic­i­pants wish to solve. As prices increase (infla­tion), more atten­tion is drawn to resolving the under­lying *“want”* each repre­sents by dissuading buying and incen­tivizing selling. This is a healthy function in a free market, as price increases indicate wants that demand to be satis­fied. But when price increases are artifi­cially imposed through currency depre­ci­a­tion, they do not reflect real wants for which the market demands satis­fac­tion (except perhaps an unartic­u­lated want to elimi­nate central banking). In a non-manip­u­lated market, prices tend to decline naturally (defla­tion) as we become smarter and better at satis­fying wants. As prices deflate, more atten­tion is liber­ated to seek satis­fac­tion of higher value wants for society. In this way, central bank induced infla­tion pumps up our socioe­co­nomic problems and desta­bi­lizes civiliza­tion: an ironic outcome for a *“stability providing”* insti­tu­tion. Defla­tion shrinks our problems by lowering prices away from our active aware­ness, freeing us to focus on higher value aims, and letting us grow more civilized (as White­head so brilliantly said in the above quote). To state the argument succinctly: ***"Artifi­cial price infla­tion is desta­bi­lizing. Natural price defla­tion is civilizing."*** Infla­tion is compul­sory and invis­ible theft — an insid­ious enemy of hope and an ampli­fier of socioe­co­nomic problems. When people feel that they are free and able to signif­i­cantly influ­ence the courses of their lives, they naturally develop higher hopes for the future. Freedom matters for sustain­able social cohesion and skill-building. By placing freedom at the pinnacle of our social value hierarchy — as Western Civiliza­tion was meant to — we engender an environ­ment most conducive to cooper­a­tive problem-solving at both the individual and insti­tu­tional levels. All force by fiat runs counter to this core principle. A more hopeful world is equal to liberty minus legisla­tive force. As Bastiat wrote in his infamous antis­tate treatise [*The Law*](https://mises.org/library/law): ***"Try to imagine a regula­tion of labor imposed by force that is not a viola­tion of liberty; a transfer of wealth imposed by force that is not a viola­tion of property. If you cannot recon­cile these contra­dic­tions, then you must conclude that the law cannot organize labor and industry without organizing injustice."*** Lack of unwar­ranted legis­la­tion in human affairs leaves us free to engage in the activ­i­ties we find relevant and meaningful. Liberty lets us render more satis­fac­tion from life and generate more wealth through work. Intuitively, a world where everyone works on what they love is better econom­i­cally, cultur­ally, and spiri­tu­ally.  Freedom from compul­sion is an essen­tial ingre­dient of this ideal state. Vividly visualize your highest hopes and dreams. I am sure you will find freedom as an indis­pens­able element of your day-to-day existence. But this fading remnant of the [American dream](https://en.wikipedia.org/wiki/American_Dream) is diametric to our world’s present finan­cial night­mare caused by infla­tionary fiat currency. ### Inflation is Despair In the world today, the rules of money are bent and broken to favor a few [cantil­lion­aires](https://mises.org/library/how-central-banking-increased-inequality) at the expense of everyone else. This has the conse­quence of sucking hope out of society, since no matter how well citizens run their personal or business affairs, they are perpet­u­ally pushed further off the path of progress to their valued ends. In life, progress feels the best, and hope for more propels us forward. Central banking inverts hope by causing a persis­tent regres­sion of civiliza­tion through the distor­tion of price inflation. ![](https://www.datocms-assets.com/56652/1689935240-inflation-is-despair.png?auto=format) No matter how produc­tive society may become, or how many problems its entre­pre­neurs may solve, central banks steal vast swaths of economic surplus by imposing *“positive price infla­tion”* through fiat currency counter­feiting at scale. Further, and more devas­tat­ingly, these proceeds stolen from entre­pre­neurs are increas­ingly used to fund police states and perpetual warfare world­wide. The dishonest money we use today is asymmetric, and we are all victims of the most colossal fraud in history. Truly I tell you, infla­tion is most accurately described as any or all of these five malev­o­lent acts: 1. *Theft* 2. *Taxation without Representation* 3. *A Legally Enforced Injustice* 4. *A Viola­tion of Natural Law (Inborn Rights to Life, Liberty, and Property)* 5. *An Act of Moral Turpitude* Fiat currency supply infla­tion perpet­u­ally plunders the economic surplus of produc­tive people, no matter how hard they work. Always turning up the tread­mill of infla­tion to outpace the real economy’s produc­tivity gains leaves people utterly hopeless.  Debasing curren­cies forces everyone to fight their economic battles uphill on an ever-steep­ening slope: costs keep rising, wealth dispar­i­ties keep widening, and laws keep convo­luting.  Infla­tion is toxic to truthful pricing, the natural environ­ment, and virtue-seeking. Without accurate prices, relevance becomes more a matter of dictate than discovery. By siphoning away people’s private property rights, incen­tives to care for the Earth and its many diverse ecolo­gies are broken, leading to [mass pollu­tion](https://mises.org/wire/conservation-free-market). And since value is more easily gained under a fiat currency standard through polit­ical positioning instead of problem-solving, decep­tion is rewarded, and devel­op­ment of virtue is largely abandoned. Modern civiliza­tion has come so far in so many ways, yet infla­tion remains our prime impetus to despair. ![](https://www.datocms-assets.com/56652/1689935407-tweet-max-keiser.png?auto=format) When you come to see the truth of fiat currency— a game with ever-shifting rules designed to disfavor those already dispos­sessed in the socioe­co­nomic hierarchy — it becomes clear why its victims are constantly drained of morale. All hope for a more fortu­nate future. Central banking is an economic tyranny: a top-down bureau­cracy built on lies and theft, built to maximize the value of its share­holders at any cost; it is a monopoly that enriches itself by depre­ci­ating our money. As the Red Queen told Alice in Wonderland: ***"Now, here, you see, it takes all the running you can do, to keep in the same place."*** ![](https://www.datocms-assets.com/56652/1689935529-the-queen-alice-in-wonder-picture-breedlove.jpeg?auto=format) ### A New Hope Stripped of the sound money neces­sary for forward economic progress and its associ­ated positive emotions, citizens holding their savings in fiat currency are plagued by hopeless­ness. In this sense, and in many ways, Bitcoin is a new hope for the world.  First, Bitcoin restores economic indepen­dence to entre­pre­neurs by giving them a way to store wealth that cannot be plundered. Working-class people now have a savings medium that does not force them to take unnec­es­sary risks or extend their working lives in a race to outpace infla­tion.  Second, each incre­mental unit of reser­va­tion demand for Bitcoin is decre­mental to fiat currency since to save Bitcoin, you must divest your fiat.  A shrinking market value for dishonest money can only benefit humanity since fiat currency is the stealth funding source for every dictator, world war, and intern­ment camp in human history. By nulli­fying the infla­tion-financing of govern­ment milita­riza­tion, Bitcoin repre­sents a restora­tion of hope for the retreat of global warfare and (re)advancement of civiliza­tion. Finally, by disrupting the insti­tu­tion through which politi­cians enrich themselves and exter­nalize costs — the central bank — Bitcoin forces govern­ments to be more account­able to the prefer­ences of their citizens. In a Bitcoin denom­i­nated world, citizens would be treated more like govern­ment customers than [slaves](https://breedlove22.medium.com/masters-and-slaves-of-money-255ecc93404f). Honest money empowers the realiza­tion of all our high hopes for civilization. ![](https://www.datocms-assets.com/56652/1689935611-honest-bitcoin-coin.jpeg?auto=format) Such dramatic change can seem scary to people who are gener­ally conser­v­a­tive. Those comfort­able in the relative stasis of their socioe­co­nomic surround­ings are often reluc­tant to *“rock the boat”* even when infla­tion ensures it is ([gradu­ally then suddenly](https://unchained-capital.com/blog/dollar-crisis-to-bitcoin/)) sinking. Central banking is criti­cally depen­dent on an ignorant and passive citizenry to perpet­u­ally perpe­trate its scheme of plundering our private property rights to the benefit of their share­holders. This parasitic insti­tu­tion preys on the capital entre­pre­neurs accumu­late as a buffer against uncer­tainty with the aim of maximizing its own share­holder value. Our compla­cency gives the entropy exter­nal­ized by fiat currency infla­tion an incuba­tion period to infect our socioe­co­nomic fabric, thus causing the future of civiliza­tion to become less certain with each new dollar produced. Infla­tion is a legally justi­fied policy of plunder injecting dishar­mony into the natural human capacity for collab­o­ra­tion. Unfor­tu­nately, such a policy is orthodox, as Mises writes: ***"Economic history is a long record of govern­ment policies that failed because they were designed with a bold disre­gard for the laws of economics… economics as such is a challenge to the conceit of those in power."*** Uncer­tainty is entropy, and money is an insur­ance policy on the uncer­tainty of the future. Since money can be used to buy anything in the market­place, it is an instru­ment of pure option­ality and the most effec­tive tool for dealing with uncer­tainty. By confis­cating money through infla­tion, central banks maximize certainty (negen­tropy) for their share­holders in the form of profits, growth, and dividends, all while exter­nal­izing uncer­tainty (entropy) onto society in the form of price distor­tions, capital misal­lo­ca­tions, and warfare. ![](https://www.datocms-assets.com/56652/1689935870-robert-truth-can-be-tweet.png?auto=format) Entropy is an inerad­i­cable property of thermo­dy­namic reality; when its imbal­ances grow too great through forced redis­tri­b­u­tions, our socioe­co­nomic insti­tu­tions can rupture. Razing our inter­sub­jec­tive struc­tures in this way is the essence of *social revolu­tion*: a disso­lu­tion of social conven­tions, an upending of our vener­ated insti­tu­tions, and a defiance of the values which previ­ously provided our bearings. All sinister yet unintended conse­quences arise from misguided attempts by central banks to suppress the entropy of prices and employ­ment. Fortu­nately, Bitcoin can help us elimi­nate the enforced socioe­co­nomic entropy imbal­ances caused by central banking. ![](https://www.datocms-assets.com/56652/1689935928-entrophy-painting.jpeg?auto=format) To most effec­tively contend with uncer­tainty at scale, entre­pre­neurs — our economic heroes — need untram­meled liberty and a sound frame of refer­ence for values. *“Measure twice, cut once”* is the most impor­tant mantra of every effec­tive entre­pre­neur. With Bitcoin, we move away from an economic system premised on *“stable prices”* and toward one based on stable [measure­ments of value](https://www.youtube.com/watch?v=-2RlW7bIe-s&feature=emb_logo).  Imposing price and employ­ment stability, the (osten­sible) purpose of central banking, is ignorant of entropy and an exacer­ba­tion of long-run volatility. Bitcoin is engineered in accor­dance with the unavoid­able entropic reali­ties of price discovery, unemploy­ment, and growth insta­bility. Bitcoin is money rooted in thermo­dy­namics, optimized for measure­ment stability: ![](https://www.datocms-assets.com/56652/1689935985-systems-of-measurement.jpeg?auto=format) If we hope to thrive in this universe, we cannot centrally barri­cade unstop­pable flows of entropy and must instead learn to harness this innate cosmo­log­ical force in a decen­tral­ized way. ### Righting the Ship The way of decen­tral­iza­tion is the free market: a forum of free exper­i­men­ta­tion where problem-solvers make wagers to try their hands at resolving entropy for society. Entre­pre­neurial entropy resolu­tion comes in the forms of want satis­fac­tion and innova­tion. True entre­pre­neurs are those who play with fire and learn from their mistakes, growing the civiliza­tional treasury of knowl­edge in the process. Entre­pre­neurs are tinkerers pursuing positive payoff convex­i­ties while hoping not to get burned, yet contributing to the enlight­en­ment of us all of us when they do occasion­ally go up in flames. Tinkering is antifragile action that trans­mutes random­ness into revela­tions. As Nassim Taleb states in the opening lines of his master­work *Antifragile*: ***"Wind extin­guishes a candle and energizes fire. Likewise with random­ness, uncer­tainty, and chaos: you want to use them, not hide from them. You want to be the fire and wish for the wind."*** ![](https://www.datocms-assets.com/56652/1689936081-btc-waves-moon.png?auto=format) My hope is that Bitcoin will help entre­pre­neurs regain their economic antifragility by giving them the ability to store savings in plunder-proof money and discour­aging undue debt accumu­la­tion. Maximally sover­eign, problem-solving-entre­pre­neurs, forti­fied by sound savings, are our best fighting force against eternal entropy. Let us honor them as true heroes and disavow the heinous bureau­crats under­cut­ting their achieve­ments through unnec­es­sary legis­la­tion and infla­tion. Let liberty, not legis­la­tors, lead us. ![](https://www.datocms-assets.com/56652/1689936156-robert-resolutionn-is-information.png?auto=format) A leader­less civiliza­tion is, for the first time, possible with Bitcoin. As a means of preserving wealth through polit­ical sea-changes by perfecting our private property rights in money, Bitcoin gives the world great hope for renewing virtu­osity. Perfected private property rights are prereq­ui­site to the proper place­ment of freedom, growth, and respon­si­bility in our social hierarchy of values.  My hope is that Bitcoin will help civiliza­tion perma­nently emblazon entre­pre­neur­ship and virtue-seeking as its highest values, as was true for some ancient Roman [Stoics](https://www.amazon.com/Meditations-New-Translation-Marcus-Aurelius/dp/0812968255/ref=pd_lpo_14_t_1/140-4443572-1087915?_encoding=UTF8&pd_rd_i=0812968255&pd_rd_r=31e19e64-f243-4415-8f2e-50766ced985a&pd_rd_w=z5xJ4&pd_rd_wg=wFVP9&pf_rd_p=7b36d496-f366-4631-94d3-61b87b52511b&pf_rd_r=232M12EP5RBC4YWM28VS&psc=1&refRID=232M12EP5RBC4YWM28VS). There are no final answers to the world’s unlim­ited problems: our only hope is to empower more and more problem-solvers. Entre­pre­neur­ship is problem­atic to problems and, there­fore, our greatest hope. To this end, Bitcoin is money purpose-built for entre­pre­neurial account­ability, adven­tur­ous­ness, and (mental and finan­cial) enrichment. Bitcoin suffers no kings. A money uniquely charac­ter­ized by a firmly fixed finitude of supply, Bitcoin is capable of commu­ni­cating an infinity of economic and inter­per­sonal values without being politi­cized, thereby bringing an unprece­dented harmony to human action across space­time.  In Bitcoin, only our [ideas](https://breedlove22.medium.com/our-most-brilliant-idea-aced329f8941) matter, not our egos. Although entropic sailing is never smooth, a money composed by princi­ples of pure justice pushes us all to become more compe­tent by facil­i­tating an equitable arena for economic compe­ti­tion and cooper­a­tion. Removing the attack surface for would-be-plunderers of money is a great leap forward for the poten­tial prolif­er­a­tion and moral­iza­tion of civiliza­tion. Bitcoin imparts a renewed hope for humanity as we navigate ever-deeper into the impen­e­trable horizons of the future. Hope is the wind sweeping us all across the endless spatiotem­poral seas. Naviga­tion by strong values and seeking their instan­ti­a­tion in our charac­ters as virtue is the only way we can advance ourselves and our civiliza­tion. Seen this way, Bitcoin is a battleground to restore freedom, truth, and virtue in the world.  In this global campaign for liberty, our strategy is simple: hold our savings in the [hardest money](https://breedlove22.medium.com/money-bitcoin-and-time-part-1-of-3-b4f6bb036c04) in history to recon­sti­tute hope for the billions of sorrowful souls world­wide and all the gener­a­tions yet to come into being. Where our money goes, our minds naturally follow, leading each of us down paths we find uniquely meaningful and relevant: hopefully into our own entre­pre­neurial pursuits to profitably satisfy the wants of our fellow human beings. Through Bitcoin, we can redis­cover the value of unencum­bered entre­pre­neur­ship — the idyllic principle under­lying Western Civilization. Saving in honest money takes the intel­lec­tual, polit­ical, and philo­soph­ical wind out of the sails of dishonest money, letting us right the *“socioe­co­nomic ship”* once and for all. In its ascent, Bitcoin promises to decap­i­talize the overly complex (by design) monetary, legal, and tax author­i­ties encum­bering entre­pre­neurial skill-building expedi­tions today. By defraying frictions to free trade, Bitcoin gives the world hope for a future charac­ter­ized by true freedom. Hope is the wind that moves us forward. Fiat currency is a false tempest: a destruc­tive windstorm tragi­cally affecting our civiliza­tion. By saving in Bitcoin we raise our sails stead­fastly as entre­pre­neurs racing toward sunnier skies. Bitcoin is Hope. ![](https://www.datocms-assets.com/56652/1689936292-bitcoin_is_hope_ship_on_sea_bitcoin_sun.png?auto=format) ### Robert Breedlove Robert Breedlove is founder, CEO, and CIO of Parallax Digital, a global Bitcoin-focused hedge fund and consultancy. He considers himself a freedom maximalist and believes he’s found his life’s work in Bitcoin. # Op Ed: Pitching Bitcoin During the Holidays - Swan Bitcoin URL: https://www.swanbitcoin.com/education/op-ed-pitching-bitcoin-during-the-holidays/ The HODLdays are a time for friends and gift-giving, but as good Bitcoiners, we already know that the best gift of all is Bitcoin. --- **Brekkie von Bitcoin** · December 24, 2020 · Updated June 27, 2024 *Origi­nally Published in* [*Bitcoin Magazine*](https://bitcoinmagazine.com/articles/op-ed-pitching-bitcoin-holidays)*, December 24th, 2019* It’s that time of year again! When you can’t decide whether to get a pumpkin spice or eggnog-flavored latte, your local mall reeks of cinnamon, pine needles, and dirty fiat money. The HODLdays are a time for friends, family, and gift-giving, but as good Bitcoiners, we already know that the best gift is Bitcoin. But how do you convince your friends and family to go down the Bitcoin rabbit — uh, reindeer hole?  The Bitcoin space has matured so much in the last few years, and as a result, giving Bitcoin is easier than ever. It used to be diffi­cult to provide Bitcoin to folks without worrying that they’d lose their private keys or, worse … sell the BTC for a central­ized shitcoin! I could name-drop some of those shitcoins now, but in the spirit of the holidays… actually, screw it. XRP. That’s what I meant to write. I said it. Take that, Brad Garlinghouse! Anyhow, it used to be diffi­cult to give Bitcoin because of the steep learning curve. It will definitely still take time for your recip­i­ents to learn about key manage­ment or the value of self-sover­eignty, but educa­tional resources have improved drasti­cally. There are even novel options like [GiveBit­coin](https://bitcoinmagazine.com/articles/givebitcoin-wants-you-to-give-bitcoin-this-holiday-season) that time locks the BTC *and* provides educa­tion. If you want a more hands-on approach, you can always use a paper [wallet](https://bitcoinmagazine.com/guides/what-are-bitcoin-wallets) or help your recip­ient set up their first [hardware wallet](https://bitcoinmagazine.com/articles/bitcoin-wallet-reviews-whats-the-best-hardware-wallet-on-the-market). But there’s still the problem of convincing your friends and family that Bitcoin matters. I think we’ve reached a turning point, though. As *“The Bitcoin guy,”* at all the holiday parties (or any event for that matter), I’ve noticed that where people didn’t want to know about Bitcoin before, lately they’ve been asking me about it completely unprompted, almost to the point of me being sick of it. Sometimes I just want to crush some eggnogs in peace, ya know?  But Bitcoin DOES matter, and if someone is genuinely curious and wants to learn, how can you not take the time to help them? ### KYA: Know Your Audience Not everyone is recep­tive, though, and some folks may even ask you about Bitcoin just so they can poke fun at it. Honey badgers don’t care about these scrooges, but remember that every single conver­sa­tion about Bitcoin comes with the poten­tial to change some hearts and minds. In order to do that, though, you have to be ready. You have to under­stand Bitcoin well enough to defend against the FUD, and you can’t just talk to someone and tell them why YOU think Bitcoin matters. You must know your audience and tell them why THEY should think Bitcoin matters. You need to get on their level and remember what it was like before you had your Bitcoin epiphany. To aid you in your efforts, let’s imagine that you’ve just walked into your family’s annual holiday party… ### The Wall Street Fat Cat **Pitching Bitcoin: Wall Street** Oh no. There’s Uncle Jamie, the Wall Street fat cat. Why does he always wear that suit? And does he really think that red tie makes him seem more powerful?  Life is good for Fat Cat Uncle Jamie. He’s worked hard to get where he is, and maybe he still does, but now he tells others what to do and how to do it. Heck, he might even use his fat-cat money to influ­ence politi­cians. Why on earth would Uncle Jamie care about Bitcoin when his inter­ests are so aligned with the legacy system?  Pitching Bitcoin to folks like this may be challenging, but several arguments might catch their atten­tion. The first of these is Bitcoin’s poten­tial as a safe haven asset. Bitcoin is demon­strating more and more that it is uncor­re­lated to tradi­tional assets. With the advent of negative interest rates and the general senti­ment of the world economy deteri­o­rating by the day, bitcoin is starting to look pretty attractive.  It doesn’t hurt that Fat Cat Uncle Jamie likely has plenty of money to burn and, as a result, has a higher risk toler­ance than most. Getting a fat cat to go full bitcoin anarchist is probably out of the question, but to echo [Anthony Pompliano](https://twitter.com/APompliano), the goal here should be to get them off zero.  Appeal to their bottom line, and you can’t go wrong.  Orange coin good. Number go up. And maybe wait till Uncle Jamie has had a few spiked eggnogs before pitching him on Bitcoin… ### The Millennial Cousin **Pitching Bitcoin Millennial** Look over there! It’s Cousin Savannah! This one should be pretty easy. Millen­nials like Savannah already make up a large portion of the Bitcoiner commu­nity.  And if you look at what drives them, this should come as no surprise. Millen­nials may have a high time prefer­ence, but they also reject societal norms and hate being told what to do. They’ve lost faith in their govern­ments and insti­tu­tions, and Bitcoin may just be the answer they didn’t know they were looking for. Starting off with the sound money argument isn’t always recom­mended, but for Millen­nials who lived through the 2008 finan­cial crisis and are still dealing with student loans and a less-than-favor­able job market, this argument may just work.  Millen­nials like Cousin Savannah are also well suited for the environ­mental argument. Bitcoin consumes a lot of energy but for good reason. Energy is the digital fortress that protects Bitcoin. And as Bitcoiners, we know that Bitcoin actually [encour­ages the growth and devel­op­ment of renew­able energy sources](https://medium.com/@philgeiger/bitcoin-is-good-for-the-environment-fc5ff7448b9e), osten­sibly by fixing the root problem of destruc­tive consump­tion, i.e., easy money. [Parker Lewis](https://twitter.com/parkeralewis) writes that *“*[*Bitcoin Does Not Waste Energy*](https://unchained-capital.com/blog/bitcoin-does-not-waste-energy/)*,”* and for the ultimate energy-FUD-dispelling article, see *“*[*PoW is Efficient*](https://medium.com/@danhedl/pow-is-efficient-aa3d442754d3)*”* by [Dan Held](https://twitter.com/danheld).  Finally, if Cousin Savannah is too busy thinking about her college loans to care about the environ­ment, you can always appeal to her greed. Bitcoin maybe 10 years old, but things are just getting started. Even the most conser­v­a­tive models point to the poten­tial for asymmetric returns, the likes of which the world has never seen. Use that to your advan­tage. Cousin Savannah already thinks she’ll be working long past the current age of retire­ment. Bitcoin fixes this.  ### Great-Uncle Goldbug After catching up with Cousin Savannah, you look over to see Great-Uncle John the Goldbug beckoning you over. Here we go again … Just like last year, he’s probably going to regale you with all of his latest doomsday prepa­ra­tions. But wait! This year, you’re going to fire back and teach him about Bitcoin! Oh, the gold bugs. Peter Schiff aside, gold bugs like Great-Uncle John should be our best friends.  So why aren’t they? Goldbugs already under­stand the princi­ples of scarcity and sound money, but they tend to be from an older gener­a­tion that isn’t as comfort­able with the idea of a natively digital asset.  This is where you come in.  To start with, maybe even get yourself one of [these ugly Bitcoin sweaters](https://hodlmoon.com/product/bitcoin-sweater/) to help lead you into the conver­sa­tion. And don’t be pushy. Engage with Great-Uncle John in an intel­li­gent debate. Ask him why he is so bullish on gold. Then you can start to bring up some of gold’s drawbacks, such as its low salability across space, the high costs associ­ated with securing and assaying it, and the diffi­culty in dividing it into usable amounts.  But the key here is not to talk negatively about gold’s drawbacks but rather to speak positively about how Bitcoin solves these drawbacks. And it wouldn’t hurt to remind Great-Uncle John that the United States central­ized gold when they made buying, selling, and owning gold a [criminal offence](https://en.wikipedia.org/wiki/Gold_Reserve_Act) in 1933. U.S. citizens couldn’t freely transact in the shiny, yellow metal again until 1975. Once again, Bitcoin fixes this. ### The Foreign Exchange Student Pitching Bitcoin Foreign Exchange Who’s the new girl?  Oh, right, Aunt Nancy is hosting a foreign exchange student from Venezuela. Well, this should be interesting… You grab some eggnogs and go over and intro­duce yourself to Manuela. She seems pretty cool, and she’s even heard of Bitcoin. She has some friends back home who are using it to help them get by, but she doesn’t under­stand what it’s all about or how to use it herself. What a perfect oppor­tu­nity here to teach Manuela how Bitcoin can act as a hedge against the insta­bility she knows all too well!  Ask her about the hardships she’s faced back home. Speak to her on a personal level. Bitcoin doesn’t fix every­thing directly, but it can certainly help. Tell Manuela how, when properly secured, Bitcoin can’t be confis­cated or censored. It’s a neutral currency that no govern­ment can control. Tell her about the 21 million BTC hard cap and known supply schedule. Tell her how Bitcoin’s monetary policy is secured by code and not by greed-prone humans like Maduro. Orange coin good.  It’s impor­tant to note though if you’re sipping eggnog and singing carols with someone like Manuela (and you’re not doing so *in* Venezuela), these folks are probably doing OK. They’re not dealing with hyper­in­fla­tion directly, but they likely have family and friends who might benefit from Bitcoin. I highly recom­mend reading [this article](https://medium.com/dlabvc/paxful-is-the-most-important-bitcoin-company-you-arent-paying-attention-to-4e699db0c5ca) from Matt Ahlborg to better your under­standing of how some people are using Bitcoin and gift cards to send remittances. ### The Gen‑Z Cousin **Pitching Bitcoin Gen-Z** Oh wow! Cousin Jenny is growing up so fast! And appar­ently, she has over a million followers on TikTok now?  What the heck is TikTok anyway?  Whatever, not impor­tant. Time to shill some Bitcoin!  According to *The Econo­mist*, [*“Gener­a­tion Z is stressed, depressed, and exam-obsessed.”*](https://www.economist.com/graphic-detail/2019/02/27/generation-z-is-stressed-depressed-and-exam-obsessed) Gen-Zers like Cousin Jenny are similar to their Millen­nial forebears, but they’re the first gener­a­tion to grow up in a fully digital world. They’re also the first gener­a­tion to have been born after 9⁄11, and they’ve never known a world without war. But these delicate Christmas snowflakes are tougher than they look, and they’re resolved to change the world for the better.  If you can manage to pry the phone out of their hands and get them to look you in the eye for a conver­sa­tion, Gen-Zers like Cousin Jenny should be highly recep­tive to what Bitcoin is all about. As internet natives, Gen-Zers under­stand the concept of digital money better than any of us. Turns out Cousin Jenny is also an avid Fortnite player, so you can explain to her that Bitcoin is just like V‑bucks, except there’s no one control­ling where and when you can spend them.  Then you remember that Cousin Jenny is always talking about how she wants to change the world and make it a better place, so you tell her all about Bitcoin’s poten­tial to effect positive change in the world. Gen-Zers may not be thinking about their retire­ment yet, but they are thinking about all the injus­tice in the world. With its sound money princi­ples, Bitcoin can take away the power of the fiat printing press, thus making the prospect of never-ending war far less likely.  And just like Millen­nials, perhaps more so, Cousin Jenny and the rest of Gen‑Z care passion­ately about the environ­ment. Use the same arguments as mentioned in the section on Millen­nials. Bitcoin consumes a lot of energy, but focus on how it’s all for a good reason.  Worried about the environ­ment? Bitcoin fixes this. Cousin Jenny finally looks up from her phone. She informs you that she just made you go viral on TikTok. Oh, and, to your amaze­ment, she already knows all about Bitcoin… ### Grandpa, the Baby Boomer **Pitching Bitcoin Grandpa Boomer** Next, you go in for a strong handshake with Grandpa Russell, the baby boomer. This is gonna be tough. While baby boomers like Grandpa Russell may have ushered in a great societal change in their youth, they have since become a much more conser­v­a­tive group of people. Like Grandpa Russell, many baby boomers were hippies who thought they could change the world. When that didn’t come to pass, they became disil­lu­sioned and regretful, or worse, became standard-bearers for the polit­ical and economic status quo. These folks will spend months planning their extrav­a­gant Christmas lights and then flippantly say that Bitcoin is wasteful. But not all boomers are alike, and this is where knowing your audience is key. Sit down with Grandpa Russell and talk to him. Ask him about what it was like living through various finan­cial crises, the Vietnam and Cold War, and what it’s been like seeing the rise of Big Govern­ment. If you can tap into those memories and get him to remember how he felt back then, you might be able to make him see that with Bitcoin, positive societal change is still possible. Turns out that Grandpa Russell doesn’t have any imagi­na­tion whatso­ever, and he flat out refuses to think back to the days of his youth. Not to worry! There is always the savings argument. After the 2008 finan­cial crisis, Grandpa Russell was forced to continue working and delay his retire­ment for a few more years. Like him, many boomers are still working, trying desper­ately to grow their retire­ment funds and praying that their pensions will be a reality when the time comes. These folks may be risk averse when it comes to their future plans, but in a world where pension funds are drying up, Bitcoin may just fill the gap. Talk to people like Grandpa Russell about Bitcoin’s poten­tial for asymmetric returns. Urge them to set up recurring buys each week, even if it’s just a small amount. Number go up. ### The Evangelical Cousin Uh oh. It's Cousin Clyde. After living it up in college, drinking away the limited number of brain cells he had to begin with, Cousin Clyde was BORN AGAIN, HALLELUJAH! He's probably going to try to convince you to attend Midnight Mass like he always does. You could decline like you always do — or maybe you agree to go, provided he listens to your Bitcoin pitch? ***"And he causes all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: and that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name." (Revela­tion 13:16 – 17 KJV)*** Whether religious or not, the Bible contains some oddly prescient passages. The one above, from the Book of Revela­tion, could be inter­preted to predict the govern­ment and tech company driven [panop­ticon](https://en.wikipedia.org/wiki/Panopticon) that is a distinct possi­bility in our near future. Whether it's [China's social credit system](https://en.wikipedia.org/wiki/Social_Credit_System) or the ever-growing invasion of privacy by compa­nies like Google and Facebook, if we don't act to protect our privacy, there won't be any privacy left to protect. Bitcoin fixes this.  To be fair, Bitcoin will *hopefully* fix this. Bitcoin is currently pseudo­ny­mous, CoinJoining methods aren't perfected yet, and there are various methods of linking bitcoin trans­ac­tions to careless or ignorant users. But privacy is a major concern for Bitcoin devel­opers and many of us Bitcoiners are hopeful that devel­op­ments like the Light­ning Network, Taproot, and Schnorr signa­tures will help to bring us the privacy we so desper­ately need. Santa Claus will somehow always be able to stalk us and know whether we've been naughty or nice, but the lack of privacy we have seemingly welcomed with open arms isn't helping. But back to Satosh— I mean, Jesus. When pitching Bitcoin to devout Chris­tians like Cousin Clyde, it's best to appeal to their concern for their fellow humans.  What better time to do this than during the holidays?  Remind Cousin Clyde about the panop­ticon that is emerging and tell him how Bitcoin has the poten­tial to return our privacy back to us. Tell him about its sound money charac­ter­is­tics and how, with a Bitcoin standard, govern­ments would no longer be able to inflate away the savings of the poor, nor would they be able to continue printing money to fund violent wars overseas. Violence and inequality may be on the rise, but Bitcoin fixes this.  Charity is also a huge part of Cousin Clyde's life, so definitely urge him to set up a recurring buy plan with Swan into Bitcoin. If numbers go up, so does Bitcoin's purchasing and donation power. You could even point him to the [BitGive Founda­tion](https://www.bitgivefoundation.org/), an American nonprofit organi­za­tion that solicits bitcoin donations for use in chari­table causes. ### Your Jewish Great-Grandma **Pitching Bitcoin Jewish Grandma** *Oi vey*. It’s the moment you’ve been dreading. You’ve had some eggnog, so that’s good, but now Great-Grandma Ruth is calling you from Florida to wish you a happy Chanukah. For some reason, you never remember to call Great-Grandma Ruth. Even when you do call her, it’s never often enough. Not to mention, she always wants to know why you’re not married yet and when you’ll give your mother some grand­chil­dren. What is that horrible guilt you’re feeling for no apparent reason? As mentioned in the goldbugs section, some older folks find new forms of technology hard to keep up with. But that doesn’t mean they can’t under­stand the need for a decen­tral­ized, censor­ship-resis­tant sound money. You just have to talk to them in a way that resonates.  This pitch is catered to Great-Grandma Ruth, who comes from the Jewish side of the family, but it can just as easily be used for anyone who has lived through great tragedy, societal upheaval, a diaspora, and/or hyper­in­fla­tion and govern­ment confis­ca­tion of wealth.  How many people have had to escape their home countries in the middle of the night with nothing but clothing on their backs?  By creating a brain wallet and memorizing a mnemonic recovery, or seed phrase, it’s possible to escape in the middle of the night with the clothes on your back *and* the entirety of your wealth. No bills, jewels, or gold to hide from would-be confis­ca­tors. Bitcoin fixes this. ### The Central Banker Party Crasher **Pitching Bitcoin Central Banker** Well, crap. Your Aunt Nancy has a new boy toy, Jerome, and he wants to wish you happy holidays, too even though you’ve never met the guy before. And it turns out he used to work for the Federal Reserve. Of course, he did. Is it even worth trying to talk to this putz about Bitcoin? The gospel of Keynes is strong with central bankers. They have bailouts in their blood. If you and Jerome happen to end up talking about Bitcoin, perhaps it would be best to simply comment on how inter­esting it is that we are living in a time with actively competing monetary systems. Then smile, back away slowly, and stack some more sats… Thank you all for reading, and I hope you found this amusing and hopefully a little helpful. And I hope you have a joyous HODLday season! — Brekkie ### Brekkie von Bitcoin # Swan Signal Monthly: August 2020 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthly-august-newsletter/ Business intelligence software company MicroStrategy, a public company traded on NASDAQ, announced in August that it has adopted Bitcoin as its primary treasury reserve asset. --- **Brady Swenson** · September 20, 2020 · Updated June 6, 2024 Welcome to the August 2020 edition of the Swan Signal monthly newsletter. This month’s letter includes: 1. *Liftoff: a short essay on an impor­tant topic* 2. *A curated list of recent Bitcoin content* 3. *Behind-the-scenes updates from the Swan team* ### Liftoff: MicroStrategy Buys 0.1 Percent of All Bitcoin That Will Ever Exist MicroS­trategy bought $250 million worth of Bitcoin, a staggering 21,454 Bitcoins, or 0.1% of all the Bitcoins that will ever exist. MicroStrategy’s stock shot up 16% on the news and has sustained the gains over the past three weeks. That kind of price increase was undoubtedly noticed by CEOs of other public compa­nies. Two of the company’s biggest share­holders, Black Rock, the largest asset manager in the world, and Vanguard, the largest provider of mutual funds in the world, certainly took notice as well. ![](https://www.datocms-assets.com/56652/1690019464-blue-chart-micro.png?auto=format) Micros­trat­e­gy’s stock price shot up 16% after the news. This news comes on the heels of investors like billion­aire Paul Tudor Jones revealing [signif­i­cant invest­ments](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1AGwbrCsMWFqAlXAzLdrcC4Y9s6wU0PY0l34LTN1gVhm-2FxLTsv5RE-2FIH6Ycthi1evyqux4MM7YA-2BNhb3gtfsZ4RMr4sU7CidIfuX1DPhrPYF7knoWgXUSBIpB3d2CE-2BKilJEXoosnmbgQJWXNqSuDy6LPxekeu2lH0XQ34yvpvF4CXB9DSt-2FCFIO1BfOgfPryDj3eO-2FyCVhSkWAXmU8QgLeKMdWdhQRzs9Ye-2FUfeC0Tb73suxLkiQBTDT-2B3Eomat8qIydW-2BoKBt6apnJeC0D8AZFoog4RK6pGOq-2Fxwi8OBpCPWlLjbeqkf5WMtVTvNkB3In-2FtxzJxvh8-2Fi8jilsw3p-2BzdClf04rDMRu8YsW2NT3QN5Pyjcb9EGf197MvifL-2FoxUnRRFQPCcyz-2FrFDMLGD6v5TXfGlpLuTWSkN3Oj-2FhuPNra2HUJW2boNcK-2FlvJySTP4TMBGzyIa-2F2DP6-2B58So-2Fo-3Dgab5_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bs0nOPzBjQF7hODgNZEn8mICr-2B-2Fc-2FvzwJY0LW5AmQUk6sFAetdHRoSzHXwvqLHpwjuaquUZ-2BVTlGIRGeD7ZAs-2BWtC8pjrCKlNQnHolIePPc4Fxf7TlbP2Bw-2BNaFZFWB7-2BQsOxZEiZTMSBn9gfs1YOMGE2VBRBhXyHqR-2BaaJPkjJP79jEBVs6vI-2B3SveLqBHM9A-3D-3D) in Bitcoin. When more prominent players begin to get in the game, it gives valida­tion to other wealthy players to do the same. We expect more news like this in the coming months. ![](https://www.datocms-assets.com/56652/1690019520-forbes-green-light.png?auto=format) Forbes made clear the meaning of MicroS­trat­e­gy’s move. One reason Bitcoin is so inter­esting is that it is readily acces­sible to anyone. It is an internet-based protocol for the transfer of value. Imagine being able to buy a piece of the early HTTP protocol that runs the Web. That would have accrued an incred­ible amount of value over the years. It’s still early. You can start accumu­lating Bitcoin right now before more corpo­ra­tions and big investors get in the game. We have noticed a lot of customers increasing their plans lately. We just increased our per-purchase limit to $10,000. You can increase your plan anytime; just [head over to your dashboard](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1I-2FZ3sGZ-2BjOmGKtVlcn5W61h20G8fxBC6s64-2FbwkeSyeMG1mradYjSkXFOj-2BHTsk3I5T5rgSgsg4T0Q5uhioSVWt85ai1OUZE9PVm54Hj1vhycaNhUY8UK1xKQd1b059mbzyslYnT9NprS1W9jiwZ02Re6cAi5UHyZinrq5sBDj5auDgJW7G2-2BvjeNsCK5JE43kRWQlxJNGQ3KwHFN2kgqrWW8uXLvmtmC-2BXYHfm3UNc6JbCWRE8HEMsL53PFoMFnOMb8mUK5vQhYcsX2oMUOO65CmQlW5D4bgKJJVgmCLcmBWrNPZiv1Yh-2BIHWQ2rplGJA0Xk4DAPwZTP-2ByusIkhzU-3DouWX_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BpmYAMkmyUF0hgUU4Bauvwfeq0CBw2xZK-2FRHGhyfCsaKnUvn1jgQTQkn2lV4ZiitFK86Z0fFUFXt08gvSYNYKmtH34BTKRGLqnzS0EpSsvfUGiRzN335kbJ8k7WXR0FtkoSnNAE00K8mP-2B8icTL45rifzvoOeolsGLhoXNiDspRPTcfhRjsoG2aKeG0ujgGdFw-3D-3D).  ### Bitcoin Content Showcase We’ve pulled together some of the best Bitcoin content from this past month for you. [Game Theory: Either You Play, or You Lose](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8txxiwUBU0yZSwGA7ceU4hizcA77LxVzvxbcG85BPhLyGqwy86uujSoe8UCQn8ZthfwuX1XluM8CmvbkkYw0Zd7tfL5k6flUV91QXVdYJ-2F0giM4tyBkOtlDH89UkjxgaDyM7C-2FS4O9NykoZ6MW8FM5PvWhBcySu4sTvT1Z5kQ3i-2B0k6G1M8b9PjUSHxLZ3oXeg71RKZSDHYR4nDiyFNnBSGENiw4yAnDM6H9Q-2BGqRLk-2FcM7yg3xQhvoFQTYt9mLVn2PBCx2hwXDsOSEnDWrU4TikrBHdPDCPyuHobWdjsB1IcYB1OW0FBkWWiKvR-2F9NuFIAJBoHVvrVabpg2L5DpYkBkm_4_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bpt7BpIHUfZyb5XJGMGqRSyzwR36s6JwuIRTgDhId9BWMVEuq5ddVBAAuUaXyVwKmlcQXAowXkcRlAhKfx8JyaJV6Ki20NRhOvqyoQCZjXPFnGPbI91AjVbIGbA31Q-2BoWwu2WBrZwfLo3OqfWydudbV8w1eT0Zbh7rqZo19XO52cWlV9HnhnwuG820jw3AzoSg-3D-3D) *by Mark Moss* Corpo­ra­tions are putting BTC on their balance sheets. Mark uses game theory to explore the implications. [Sylvain Saurel: HODL is boring. And that’s why it works](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1As03NkYI3BwfzTNOZVnaqnGBDDQIedxjUCKlIdsXBeJZy56BZz9V-2BD6jzCr9LkPVpFzMjJbLKWx1uUS2hg6WeHZ7BnZbkGM92pWkSVxbK8bXdOGSvB-2BnQ26UTEdpcGTfBHTp2U9Nk3dD21jgsP3F45-2BGLyQTrfhzfZvzUSUmXxphZDSvS11S1qXVVQLUdVGW6D07VoW-2BYbTxupXN6g5W2hwNfDSQAQb-2FY98bqoH35IF6AlEjNTDrN-2FK9L2gd2YCaEPSlnKSfv7VlAHBVIvW3uZZe96tFpEpXXCVPKW0VNiF-2Fr0qpwv1dCgvNnpDdQRdFTptKKh8aDvMEbZBTw2n9UWTXyKvDbM14YPr-2B6aEMbJ4BuZIQXKah4xNHhxjpaVQKVu8hCwHLZwZ6w-2BaAnxHMcWB8lMU08DQOim7wROVrGsiPGg7BUYw5B-2Bv-2FdmjVYoJW-2BA9mn8CUMqUjCdEnJUvTR4-3D_Ji__WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BjqfOafB-2Fu6yqZq0DeHZTMPkpdlZsX4dgtIGKXjlSkFQoXkKalf4bFg9IHbkdGzNg5KVZ1j39px5j32J-2FbFnw97xaq4HMTBvaWvdiGAmBynil9Zsfxo9APou94ijA3vQzD4v3eGrmS0IkiWb5LnmRV8Brnc-2Bsg9LBg-2FVuIxkjnXmkU1Z4Q5wMeovvmFdZUYKiQ-3D-3D) *by Sylvain Saurel* Why good invest­ments should feel boring and why regular recur­ring buys are the best way to accumu­late Bitcoin. [The Investors Podcast 311: Lyn Alden, Luke Gromen, Jeff Booth](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1IHYSdbur7lkjCGb-2FM7hFp63T0SsDS2kVgMoZF2cyElBd4bvSoP1SkFwXuy2W0CJc9CNpBddCqNILiQNdO2hdcTXsx-2B-2Fv-2FtwoyZqYF7yHhQM-2FE4ZjQdlR9857U2y2wzVsVMk6C2Z4ex-2F-2BdDDSRoY64LK9vMYf-2BbDLvZPF55wJCqH-2B0UBz-2B29wzg0rAtPT5Cr0XrzIyt8QDGncqFQB-2BJK8ouwG1dQhLVrGD7DmEWtKP150K4ll1u-2BSXhzreB09XVCLB9YQ3fgt6Jf7IlMGhu7zM-2FJjdfmCbeVeMg-2BNKuhbZCfACPFHaws-2BaghvHcR2OgKVmaXxkbv39U7nm34pYBwOi-2FcB22TOQImPUQRAc0EnG7USe7GwQO14rd0XAxE26nh4JXOBiX-2FN7Yg1pbroPSGCFKB5P8i0nXInIVPIGbu6LAlMHu0eZLbPsXJ9m0rl0q8KA-3D-3D0ope_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bp4oWFzlWJ1WNIGurMEpj6OO-2FaezyT4nAP-2ByO-2F-2FdiluBflcPrvd-2FBF728mFc7FyJfCJrMfASbVDCooTkCzKYk-2F0QDArSNOTWroqGOJUQtC8N7b3Jh8oB460E87Ea2rnmZP9XYmCORkr-2BhXwl97u0QjPccbVl1SW422NllHwzIK0eK7fs9mqENc5EfV9hqXdQdA-3D-3D) Why MicroS­trategy adding BTC to their corpo­rate balance sheet is very bullish for Bitcoin. Bitcoin discus­sion begins at the 1:05:42 mark. ### Bitcoin Tidbit: What Does *“Hodl”* Mean?  ***“Hodl” is a popular meme that refers to simply accumu­lating bitcoin rather than trading it. It origi­nated from a*** [***famous 2013 post on the Bitcoin Talk forum***](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1BEHrH04C1n0KzcScCsXuPjX-2BB-2B72ggDLWUcXPpZb4XTzzY65k5oAD3UOtg4LV3202wTVXvyNA9G5ZUcMYiQrG-2BitPvtlpfeCMPsKMORxTT-2FEdopLtMKsMMvZXfE11wTDWSPSN6Z30nmm-2FFyWIAdH5mpV9snspKAMVvy7eOSPQ3Frdl8i53SeYeTODOUvt0ceBTX1HlIumsp2GfMwUmNBEftFfhBRAvPbOCyCFKcqw2hox137dgSr3JaQNrifTGrXswdL-2BOQAjcmWCy-2Fqk8Xx19pBbDxbNzNIvZoHR-2BM7NgkiJKla4kPWufckiY-2BSZV7uGQtJpcL2rhLPcyundHtkzgTzcobSf5oOr6c8UDx21wjJSI8_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BujOawZ-2F9EEOqXmRdHMDa-2Bcq8AskNEd6-2FzzNgZZMhMvUuUT-2FS024BQgCuLWmw1QeiwZ-2BdBZmLPthsn0cQJwVYksY4vAKzKfHXKxVYGLxQylyOeJOI66f2Gqpy2ditvwWrO4jRV4AtizbIoGAQS8PJsSrE284o1fa9h8g1Oqx-2Ben3iWHvHZabHhI8f2Uqm5c4fQ-3D-3D) ***where a user misspelled “holding.” The Bitcoin commu­nity quickly adopted the phrase and it has become one of the most used memes in Bitcoin. What started as a simple typo has become a rallying cry to hodl bitcoin for the long-term."*** [On the Brink Podcast with Ray Youssef](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1DikHcxW8iKHyMb7KUBneLgnVHRpGC3PFxtVYXrHKQXsDdbPBqhk1nTN2Gm4zDoAeHXKd5OsS84UdU2TCnyRNotCPP7gcn4nGElI1rO60eQUeyqCTMAaSgGFEnUSJAbun3EPgr8neH1GB76NxFGZkHp3hMu21Khd6bmt1f0t9NAlrnrqfgeD9lmG31qVng-2FUXWS8rYLOWu1dQ1JI2QKjiO3ZNDpRWDe8iiudmDHt-2FcJ06817gt-2FR8CKcNpKQbJhUKESSMcUmKZNlT31LdmlW3ZPClNCmTKR6S-2BOUt7gFUWOeo-2B2mPpG-2BBCgBcLbOlvC0jZGu2b-2F-2B1Q5oqESHiRQ26-2BhqW8apLwmW40VfD4HqygtwBGVl_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bk6N2KHSfD4p7li-2BMqaCtheplIZB44cbCEsUKa-2B85P3GxsNfWIsKsiHwwl9k2Xe5o9NQXoZRoALDjb0CIXGMy6mNcRhZM58nXGzY-2FSyM5eiHNf2HSrNCRl8TlQfZDIiAmlFvR-2FkzmKVFyelAKO2BTzcWgfWkfkLjc6tFggbLhA6CUZOVqUQH2XhUGn0UAohUTA-3D-3D) Anexciting look into Bitcoin’s rapidly growing peer-to-peer usage in devel­oping countries. Ray is bullish on Africa widely adopting BTC sooner than later. [Raoul Pal on Stephan Livera Podcast](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1N1RZkIRZMvbDN4nw7OlWzrKeoA2Uihf8JH0mkQujxAr-2Fo1T-2BCYUPZUHYNTb6I9A6PHBSfaIxaaXpTZc6cIunzqWL3H2ByfK-2Bsw4oSl6nx6eoCeVMhpiY6QNVfbaZtYObaP-2BB8saiyFYlxhtl2UM1-2B13H5AKLOr6RP7jJUeEXaNRHwX1SA0NFDgOgmuZBLWzSAlgGxSDzjjKw-2F3w-2BxuNZMZOU6Ycy-2BKu0bL6lHcvBA3gWEPsdJRIZ7teh9jQcor84Feyye5Buyb95NrYIRBKgMfmKou6e7elHITvhvkeQckG0vFdzF9l-2F5Cn3kBttjPPmNJ4D8nOnGDM7cmk-2FUWF29Q-3D8vrS_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BvMIvjTdYsOeJAse7QoiUdGji-2F-2FmT-2BZtNGQEAxAAttieFN8ph90-2FNc9euqqPEdqer09iMDK3k2sv-2BljnZ7MtGUM5JMIwCc-2FfSmM9zEEE4vCWks15-2Blx0g-2F6tOmsGelIdTPZBHeUQwJZDn-2BvTXIhYApkoLf8ePEMP-2BP75-2BMf-2FnK0SspDBuSeQQOFiXFoCoVil4A-3D-3D) Raoul Pal of Real Vision argues the merits of recurring buys into Bitcoin, a favor­able risk-to-reward ratio, and how market condi­tions have created the *“perfect storm for Bitcoin.”* ![](https://www.datocms-assets.com/56652/1690019881-just-dollar-cost-average.png?auto=format) #### Highlights from Swan's Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, [Swan Signal](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasxro6fTAMSJG7P-2BL3Jrv9eUlKHYvgCzCBYb9wSVGQmC983Ch87pA9BCnCn2CtLpnZqmOvGnhErjl3gQv4mVtdJDji2yYsgMr2rCJzWfgMuLolBQXSBvfHoYKn9I3p40otXEnuR8gtNTufPZMEUjTBJMt-2B8uhvmqBzOdR2gAjXiGGiAMeyfnBQLuf45Ci8RizJbcSxfplN78XSfK80FTudrvdvVH5Q5ZvH7EaevslKCQzvTvXufqBXLRf8KYZX-2B93o6XHMgRx5uM-2BpVz1-2BDVjv-2FEQl1dErNignzJPfUyuJ5ypGhhamBmN1PSYCoUayoj-2F3LAE-2Fb7O85Etj03cRLivCQbF66vGg4zfRTHYIE4sW0kw-3D-3DZMOF_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bsy9zTB62vsFsSLp-2F6eiV8s9hsTWEXSVDh3lzzmjUKtj5r6F0NP7M6NAWMVpOvbJfVdxJUxGNdyKTGg3O7xyB8WG9Ah5eFcI0GVgltuIVOin0jtpSlLpdXLvYX6KHeDsyDfWCaFdXbEhGxPuco2SaN5wp8dhFxk7HT3Ma2-2BMTxsAic1kOArdF3-2BZrL2wmdwbZg-3D-3D), features thoughts and opinions on Bitcoin from the Swan team and industry experts. Our weekly live broad­cast, [Swan Signal Live](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tqEIF5v9XePkVYfLxf4AP4A19x-2FJSq9yWTcPRHPMZSSr7cN0FCKN6akkU9h6lJpR9aO0EMmgZldBHrsbsfmSelSJavtGAlayzDyiRcOoeM49GF9GflUYkFshbB-2FpiVcyCffBiFmEli4ec4opS4dFx9Pd801lEWHKt59VRocXgPAKuwEPhxUp-2BgSR0fxxH2qImZoPxPXCrtAY1YjB5sQgoYBO74GZn5KgyzPS7OszxazwYl1s1MVwhN7hgdy6Il7pIuM1RWOH2-2Fo9lhouGi5XfEYQxPoq4iLSOw2s6xK9j-2BlDRnMicqUNmXzR55f-2BksnIao8nS68tLWEEmAK-2FGr7pi2Vrom_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BuJSGfRREobOReKJ8OCDoUl7jITL8GFuIjdpvCmlhUCUsqxhTvCmWiUASkdDdEm0CmyQH-2F-2FNrpsSneqF8IXL8R6giQWW25kDgwAv08ddbahggicFfxb8gWjWlR1GO5duutCUZWcsG6QuxyPQDNCfC2PRifuNf7LNKsc1iAjb3eX0aoguUllNNCQ31GuR-2FVPlSA-3D-3D), pairs notable guests for compelling discus­sions about Bitcoin and economics. The live broad­cast is then published as audio on the [Swan Signal Podcast](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Gljfj-2FSYRaMZQQhgdxltjPgMyRGK9UE2a5yQlipjZiXrhmDe2qCBwWemOdPsNOBjvGDJFPfLlckLmIs4uTqKgVhKbFYdn9sgQvoRatf-2FZTjkQpZp1fK7FlgL8Upxq3UqNfaISyrN2eLpw2lXUlYNR-2FqhGx8O3V5hmtHJG5DEeU4idFL3WmcOOpBmFH67pObJrM9hcCLKbRoFaehO-2BmBsL0So9IfxS-2FWa7kyXsbfT4Om29l7ez4rga-2FYo8gjHRizbxO818UbCabtPiMK-2FxG-2F5K8gFmIumdApGviUL8UL-2BZdRqzeNkeIDTpynktzVNzJNsZ-2FY4hYZ3Cttgrjfl5KDwIA-3Damwy_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bgbk35-2Bjmo-2FZg2MCJ-2FcYLxW8cVGjYtapNgoHzJhquz8armr1fDNfbjXk1DeayDZS-2BO76Nu-2FaSleYnG0onc9PP3TS8TbF8qo0jJ8B52pqT1Z2vr4n6qzo3Qc4FjbKx-2Bf1PREcNLOtvJc-2F6k2EZsCPHM6OZKJC42miFmK5PDRKdQI1iZsMKPH0071VQm-2BUm-2FDThQ-3D-3D) feed. [**Swan Signal Live 22: Robert Breedlove and Cory Klipp­sten**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfaulrFchJzMxFqVARg6p5z5GOQCt3RWU7a7zFdaKgHOh4fqJmnTl5GzNZ-2B5g9BTpX8rIMRii4JfEtTwajXXIyZuTM8hsJeYN2I-2BaLq-2Bwbxyu-2FvS3ZKhl-2B-2BEHwOGjs3VZOwJbCmyU-2B7EMDg-2FHavpWDaO1WKsHqMFgBhIH7HAe2JM0jCygvUJT9qEEWqomkYdrEXh9DE0r64yZjCxus9pMZFUxYB2RBjN1DznrU6CnfBjQLP9rAJgijU6vFcwBOaQwY2Rw4LiuA6lA3u3DAGCwoo62RIm-2FaDZUZULKsdsd55-2F-2BYqUvZ9j4vvwIs074eOAWCwsumuYSkDLFIRT6NlbfFUnw5x-2FI15KmhCTou6xKgKZsWdevkOPDQUSdw3A-2B2ktEkkD21YAk5ENHyEoBCvU4vIeAm1vbHd1XmJbvjHnpjzdiZA-3D-3DozvX_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BtQm2DXahZBr-2BK-2BXcSrlYGJjjctOVCHkW5KQ7fIVn5j9f7za-2FZkKy3GhbypMWdsLY8s1N5NugYnYSGRlS7hkookJJ78lLkPocXYUYYWHDorSq8vpQadQUAetlbO8fxlraf2iqwVySQvMB8zzC89XwStJcDrsjv8lB5F9dvPGQ7-2B0dGd6adp3ng2GR1vnY68XTw-3D-3D) How central banking steals human time and corrupts human values, Nassim Taleb's ideas, ancient wisdom, and the world's future under a Bitcoin standard. Robert: *"I do think we are in the early stages of a currency collapse."* [**Swan Signal Live 23: Saifedean Ammous and George Gammon**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfauG4EFQw4ivp5J2B8sE71DyteRKBBu-2B-2BIwerTUg9vwQ8Q7lFOSpadD-2B4X-2FMvU1mPzVqvHEOAjKiEsXisPxyn1Zi2wHhb-2BN2YEEgy0H4ifolRyQRAgkSidCXP-2F-2BWIop3yWmMQQd1VQK9GjV-2FcYL3mB5D4pLZ74g8tqcQVx77s4-2B07BbacEibTq7rkdsyTFqmYngEgc06KjKVvK81ZNGLe1C4UngN-2FjR95fe9jSoVAOYO57RaTr9bNhnmR3WDteKUB8Jj8XLU5z9OGxmi-2BZbPM0fU2rkODJw7-2FMG5MjXjeTQZRAXRevUoIUAOViykIsqzwwTDvnaEdgm9pn9VCbVZj1cUzfL2Q-2Fpa1PmJX7KrEuolGm5-2F58bGi-2F6M01HQFtxeruymJllFbwJ6Z-2FnnRYj0Ea0Da5kSReGKuICJvIxRm7m6fg-3D-3DAIGB_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bms1oSChC4tI6P3Nxonv-2F7k2kBvwGkl3zKoFwOWyMu0rkkSfbxKc0mXEbzaPYOT-2B6ICPsXfQzaBKFSycIbXGkdF3ic8BNa8iWrZN1YSwg-2FsEiGAnBWEDYS4PUOjKuIvzaB45EZoWxb9DWvEl3Fp6FlyBwKj94V9AygOOn2rW4yIVJT-2B7R1-2BCXpySc93o-2FIwSOw-3D-3D) Monster episode where we cover gold, central banking, the deval­u­a­tion of curren­cies, and how Bitcoin is going to suck value out of every other store of value. Saifedean: *"Bitcoin is the way we eutha­nize the fiat standard, peacefully."* [**Swan Signal Live 25: Preston Pysh and Andy Edstrom**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8sWSmFMtsHz7W70YhunU7ThjMt3XvpFPEhigG9ZGwqRYj38-2B2Z457I9mm5RdywJ-2FHrFXPmtfdfsa5lPRbW3MYHi75lFB7EHjzk3SjO6slwELtJ7zMsAvd2VF0DqrtfrXfFD8pRTVX8QP5fEuR4clZU8l9WYWLXBvNILEMhOj-2BsPl3Q85hP6Uro9fPBwZwK2yk4O9pkh-2BBANCD1Felg2Yayl3rMd7Q7-2Fjw5os1mYbXWmhNFhm7yXC4SG6J8nZTqPHenX732Excu1e0-2Fs4V30ZTF3jJCKS9easYZgO8VVnl-2BZFVWLubujUo17c1ZJYfnWdvoIfyEqPeWrVJRDUpCVSq87j7LA_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bv6pjrvqRcDJtIotoe5vin20PnzhRbktdcjUmd3vtWkkEY2yYhqWXkEkKA8ClY5-2FX6ol1U8H00vYm7WROtt139PfrY8akMmCbLeRorkqOmEj7q6Gz5pC-2BLtNEn22YJuiwz8lYpEosob11AtLKmh5DSsGAkblM36Sv9E8IeQlOFkJBuP1HZSs3CGdsKxEYfkb9w-3D-3D) Preston and Andy get extremely bullish on Bitcoin's prospects for the next 18 months and over the long term. Andy: *"It's hard to see what the major risks are in the long-term."* ### Behind the Scenes at Swan - We just increased our per-purchase **limit from $5,000 up to $10,000**. You can[ increase your Swan plan here](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1I-2FZ3sGZ-2BjOmGKtVlcn5W62inXG1EW0Nns2e3U4MzKqsVRNTAyt0U-2FFh-2BfJH1I3xJrh6-2Bj7SG9VeLpFw1inHn6FzF7fz55GpVBkmgsQor60xwyib-2Bv05DzpCiCCeH1qNeXkN54LL21LJC-2B32XkB1bjXuj6ccf-2F8erUxZp40A-2BnbQgVduhgwRc7VCtpg0vLbwJzgWgdyOGcf-2B2ig-2BJNRrbdwUptSpSkKDcCF3J9AxG2ZNABFWC5yyRBwmNIHn3w-2BQYoPEjDMqLgoXypyYJ8BHD-2FfNkHOz4PQcfbO6waH61xxFFRtXZixd0mgZojvBQuUtySa3ztuUtMF0vwwsouZCRgE-3DaPja_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BldoqZYjrk-2BpTRO6KAyKvUS3AOo2KslKhweGMNNFQ5sO7m9EM0bzPFX9ZayMVSe0SFhSTYx9ZMwJ-2BgN6Fb2hwvisEmysysMTB1snB3-2FmUzEr6-2FFwV188U8qQAAm09AM3-2BL0E9iyOU342D7xRX7iE6ZFdEwLH9DqKAzogmG4gyfL6ABeci1z0eBjQGSlPG1uvWw-3D-3D). - **Daily buys** are sched­uled to go live in September ([sign up here for Beta Access](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasBrNi2BmwyMM3G4t-2BqRI5-2BMBh-2FJF3UVlr7V84u10xEpOKzBDkXBPNTCr801flbhZUw5yD7kwS9QXtuwomOSKiKmCev4C94cDJiLrAXRZv0vj7JwwS5rHHzRo9OzW1u4Pb39M0l1l6Jwr1xnJ5WdCE971Ip67QnDzDv6qmLq82GkwHAx6S3WKX7lcR6fYlrQUxwTmsWwwqkWq4-2F-2BZwUN3XMOwLlKlt75iLfSOeeWwTNy8R-2BVKI-2FIGgJ-2FTVyWL-2B2GKAPy7s4ceh02hRbor3E5tbod6uVbPTDBeFH4r9B-2FlbyvM4kiJHWo5VlEIKv4AIGcIc-3DL2xg_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BkSoA7WUy9ZWSaS5G1qi9jOZOMwPsK29P01z3URYNou9ECrkfNQShy9mY897ljkpjrlVOIVERqWmGjmc2THvpO-2FDzbNx9G16kEKkIsxV-2BP5HV9OWasX4V8M85w43ox6uA6HMQCUl0iqZIVYsNRNjLIxRF1YV0RwFAl3VEeOYAGqlcGuAVNryYDQyqSCRmn4lNA-3D-3D)) - **We welcomed Gigi** ([@dergigi](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1MVIJRUJNd-2BR6mdWVGek2QmKNxFQ2tLTtC-2F4kFiM-2BsE-2BJN-2F77YkY-2FQjfnVYbbIhg5kHSefUX0jTRGGb3JnrxADLHfrNu41Om3gj3MZkwukOQc-2FzZxJwYH8PPN-2FQcyqCSCmKcd2ukbbgEpKh1SLqN24OxTU4B4Dnrc2YskvUGQ9yDfSjC73xPK3k2eg61xHceEPuH4-2FhYSueWC4ayTZvNkOw2VxCsLIfV3cZAAYt0tHG3RgxfGSPibVSzcVoK-2FC6HQD7xM4O9dv7d2N-2FVLTjczlY3m4Bds7gX2x6qMuLNcIks0z5AQGf6qRU0KNE7sUdh2QIiH2XjOsh3TXLMSkOhuOA-3Dt2qp_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BqMeWjv8m0JB6lnu8e3e04jES2oP5tjMKjx-2FTB0fqX9vOsSK2tHmzei5V-2Fxkma0NzhABySJGkED-2FhzjSn5e2O410jqkWbQ7Ss9sHJKPPxVhjGUzxUke-2B4wkszivmPinMTooibQnmKUh4R83fk-2FVi-2BKiFjnsdXaj4IlDH8BKH0E-2BjAm9EpAjmJqowZu4Xyks76g-3D-3D)) to the Swan engineering team ([article](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfavzByPXkOTE-2F1lNY5snWmVOGW5Typ9fce8ko7cHjpfTlkz5dDHKBlVccR1RVPvRmCO0hlL-2Fb8aWBo5D9o3y6a7s6cV-2FuegAxxUQ-2FP0spqKiQySJuQWMAtF0megmGxXHDSJPiT-2B1B5B6yOcdGbAtKFnmgojd-2BT03abx-2Bjobg13HlQ7do-2BQe7Cfgm6zDLezHw1MiLWQI66WjQQK0Wetwz4cMlRNn1cWIZnyPh9HMdkm5MSdTd0p99QwvXUiud85H6n9zrOb2eZbdP5IuvHN9vvEhxiLjs-2FF05OGvrdCn-2BPJp9gRap-2F3SCpM4JmtVaDWG8Yp2XCbTpmnwaRAjZZxMXuJfK6UN8_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BqETgBSVHEN6YAp3c4soMRfZzxEhFqUI0ILCCCly7mPsARJStzewitO0Fkpxl30cTrJ30Up61DkrMN06WfZ9gf6EI9CRfJIBz9IxmVhag8pX6DO2tp9sxxZpSCFGvmsJdetJ0CPAX9c4AQO1XgSFmaY0wNfm5BPBnY-2BfBmsQKbzOnJdpVHGOfj80heApi2Ee3g-3D-3D) and[ live stream announce­ment](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8v-2Fg072-2FXDawQStloemw5EpBFNAzbiKsA1vbyY9BZ80R6ANDHtrEonbEjkK2ZSObBhZ5aWOVqCLEchaI2SLANcVf6uwFexvODXtroqjQiSrmidZpxcdfBd2uF-2BmwovGC3BHcnrx132VFsHjpHcH8fH-2FX-2BQ-2FnTuSFIduMygHWUko-2BrWhOEt9MA7MFURZq18NPa92u0ncvJ4G34ffz14d7z4mA9yP-2BXGDt49Vbe0OE0-2B74iLEgxvoMuGIEBQYXLJihOB7xPL3sf2LssprkvntQB6vB1UWMFG46IBg6EJ7hwC2dMY8t6yQv3M6kk16tCZPCJw4aR2En0TEEFxlsGh0mbzkGLii_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BicsK88QlZvi1IjJ1j9um8pHGeB6XeMwL3KeDneZe45gICvsLNcxO-2BZbmNZ4-2BVXa7KrnRyupnh3y9Jbjsk3oMpdD6IrIYjfREV-2F75VlVi3KPRsEMH8e9rJKp-2BV7yoZVaHrgVNYfrZtK4TZKbnKw2-2F4W-2FeD4FudFhl-2BSn3VIx5gth2dpow-2FBXn1iFpke-2FsURVpQ-3D-3D)). Gigi is a widely respected Bitcoiner and author of [21 Lessons: What I Learned from Falling Down the Bitcoin Rabbit Hole](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1EfM83-2F5Ddf6Iqilh8d4FOQCLWscWp0a1SdE-2FgvZCwBQsX3UFl2G8bohSraLLLex4WeB6-2Bfx7qXvG-2BFmoH8zUhyieQQoJ-2Bv4HVk1luv8ybK3vE-2FxNFi9XYpcfzoSh5ysiPqFCVyVdDz-2FAYFxcbaaEgRCSW385CsjHGtRGNpBUcdWpYYCI62KPmDIF1XHITf-2FLaJOWhE-2BjjZzfumgHO02ykGiFap-2FmUfhiemxe4CprMWGM8LtONnbHJLaCNwVgVpx7BgSSt09PzjYC1tuvdEbACJqRhrm2vqbrMW-2FBc1Fy5TKfKLzS1y4ogJGIFHkfEnFwQ-3D-3Dqngi_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BowruB42XyYv-2FcJ0stVMI2a7D8prxbPrKBdGRDyfmF6rDBhDZGuwTPVL4vKQRlhyUenWf218oeiSkTedP0gNNx7q09HXfpYt8RP6XeSf5LOAabNV5cEzd-2BwkmjL6aP9avzd0xxhjOJd0O2TmV4ORxcEVltfvmINyugz4HbMQi5palDvW8xRPYX4c3NoBL4Qn6w-3D-3D). He has exten­sive software engineering and manage­ment experi­ence. We're excited to have him on the squad! - Our weekly Swan Signal Live video and podcast format is **growing rapidly**. We carefully pair two guests, leading to unique insights not found anywhere else. SSL airs on[ Twitter](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbJhPaWbsMkymaWFG62FaZrRrMsJ3jMpyrA5NWuf4SORO7pQ5RGvZCy8W4J-2ByqCV7LRzS-2FLWMqPUDlxhR17tuFd-2FtsByBU6uUicdCbuuIMgSBpIHmsy34sb6FGPzBYthCtimvYHItN2EhQjaRHXmlJzLqe7bsfGV-2BISKYwjrAVqQZTlxbl5PjeV59TMpmZSkW5hiX8h44JOD9eV6A4vbMRw95XOz66UA5hdDCUVCV0ac9kgmafCv8SjXc8oDbsQa2bbUw3gEOuIpeEsNFjaSU2Y945s7Qd9an-2FSX5OsSC76JQsNshnq0u0BDeXtD0tLPqaGcH-2Byai0BNj57Vc1HzJNLE-3DeUwI_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BifVxXmXJYmZjVUP1-2FGroVx19efUY-2Fa4Sn4zzU0a-2FZpRsTE7-2FbG0eCq-2BOe5rtoQPyIIRiU1m65Ng-2FiQ2uJdmXRNWDqaX1CjXtoCrYKQGg2QlPQxlcKlRy8L-2FMylsQw2RJR3FWeGBGeTjFs5LA-2Bh-2F4H7z3F6BUTiIEWvEFBPQhG9h7Enb3YWzBziiYuLEshd5vw-3D-3D),[ Facebook](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbH39XMBVJkRDBscxSabWkvm6XE8uFteFFlI7X3yjseiZGegskK8KqVN4zpNiWOooIcyxb55VFgOzbvajAU3AVy0IHawCEUPPQBcvzZrxye7rzPSwhOZvuTjWfn-2B7WlUd7I4jIS-2Ff3usQjVJ2vFR2OcZ58y9VbIlDri5rOd9jIzjsYu5WZxxtpglauFcsx9EC7D0MPVAHrDybuZypV1j6VmYsEhMNQcoT7Mfc5pxmlKKGjJg0wG3SgJtZ8AeZuXlusG-2BUU1itQWk1xUXpGRWDYmldvtNCS2RFzsCiroij20Cs8Bk6fTd7iOipvdEN-2FynPVwpd99zzMSl8IrHPZD1Lktc-3DTZoY_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bva3vGe6HUtHZvAt5E9DwcAgbPU5WJFevPpjAchdLWfmdQ69MjG3zrBAkVOGmo0SH9AimJRt-2FG6LVclv2pRFOccVScnk-2FpFRtS2RG559MvgSdXWXOVosmoQWMfrLgEV92KBcZoHsc7ukL-2FCmBll8-2BcwextzlpODBh-2BM9dsgMyfAIO1zmAYyTC9qXlJ9yuYBtng-3D-3D),[ YouTube](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tqEIF5v9XePkVYfLxf4AP4A19x-2FJSq9yWTcPRHPMZSSk3MPdZpOSwr8nqlz4rh-2BjDuInoLh6quDPlDfqzUEY38nqjP9K1V-2B0dTqMcwZjc44iZmjExPr7kXEJrX5Lvzb7Ji1fYhL3qZMIZb66jtMVikzcTNJU5DQ3Xl-2B7jPt-2F3TsUjdukIneC8AeHtXJDjmwTVmznnM7h272Aee0xwjtb-2FIXrKagiKDisUM4psRdlKHJ78nL5AnSwhE-2BEQf3825QIp08nvPjMf-2BQK2TQ2YZWeXRRQ3LBuhyy9KFSDXvPsA4M2h3zTHn-2FUmYZMQBTix6efzn-2BHXz9erkjsCcRLlQ8NX6aOfbz1ro4LdxiaV3aa5nIVC0qcyvz2A6WLRaEdp08x8-3DYDzt_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BtSbwql-2FEUjAeRVMYYbOjGwk7M05oO-2Fw0W8XsFmcoIigmDwH9hfeRRs73ac-2BjB7hfAyHJ7Y-2F7UptszD9cmXQ4jw4X39E4QJQMvCnGR3hiJsLxvMUYdn1duLKGUKIliM-2Buv31CSR-2FFFUCyiTCsUADqAT0pTUZQyVLIPXjc6JEcQiLoHXNUXee5MQTq8y6aJnglA-3D-3D), and[ Twitch](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbAtHwNrSkDT9rDpxcueBJx0kU95NTm7XsCguKh-2F1GnklbnaIeqve2lLkJFk1fgR62YEJ0tQXoVUepToQglaceoR5oZWFeGURS5a0XNwTYnGE6MWsTk6r02QwWt1uSYQHGhi1VIpMZ65531hPodrwjEWX9-2B1PsB96gVix-2BDY-2F9Zr7oaaAfFFaCMtO5NXAI35WNbRnpmxUZijxLHcMTZhB5psEf-2FjnJ3OzadI1JeUZeZX-2B5NmqheogLKj2Bns-2F8iDKSFsz2uV6jMYLaTWIn28y214tW3pUvlWg6FcYwZvZ-2BoY-2Be9rIphO3IrG2iyZ68FUCJY1Qhggjb8v2SWLMAYk2yjk-3Dseyy_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2BnyIvOyMcC096E3cH92rrf5xxyZ-2FtydNUeP2GAvGrxQ6okCS97oxenSPG9rbaHWMFBCCFpuPt52zKlSoPqDExS5uyGifjprAVc5RrBDb3j7WNrNhhZqmme1kRoJBb-2BqvjnuEY3pg9Va9DQo3cBLFJtyr6wSM-2BKpu-2BiioMP9DQYrwAIwd135qB3uSWpST7pzrhQ-3D-3D), or you can listen to the audio podcast at[ swansignalpodcast.com](https://trk.swanbitcoin.com/ls/click?upn=0rqoueVZ4xtpgZEVFB4TbO7EIgR2l7TcqcwNPBTWGG4k-2F6lNCjhsc5JbQaof2WNNxbhw1RqVXKD6h5lbIlw-2B33aFBUkX-2Bhda7b45unh4gYYLn3jzXIAtNma4PwXcwfGtFgBgOgcw0k8HwnNTQ3pWBos3oK66K2ztOKfLvuxcggmNJNNTVO3vb9vixDGlO3UoOeI9v5pcleoA5yU8KjZ2ZpY9lvdMYNNOq2QodKGvAalHdb9xqgRVXKbsHe0Yn70hd269Du7RVInXA0shvG-2B77-2FOyl-2FiaSjVMhfvuYAaoSYctNpkA8utHdS-2BqRm9Brvzai8QG1noH9TzRwkv9OkjNH1CCyiS9OYie6OYWdX0plSM-3DP2mu_WkYiJltALfFYFHvE5erN2F8UZINk-2FZvBPyNe3iDhGh-2F5mxmVgygkKJ3KPqjSe0HULBDmO89kBOGea6WPSjtUIbxs-2BfbwlZ62vR9ePsrG-2FYjpRBnUaxje9NNVfpZLTEfrb5cdabMtUo0JRMP4tiUkjv8obteZO5aZquiakhW1zmY7oowNviFviPUtCtmmlty8xYwJFMuHFkXrEeyEmaGq-2Bj-2FM-2BFSwq7XHy1nQ12Fz7HNsD0b64fJa2Xj4XRPQIoOcST27O73UIxFG9M3misz7GZ-2FHvPj-2BTzqhwJnkOKWEtcfwysSSOAjcgxXxCtoj5LeC5JQ635yz705ceq-2BP8eEmxuhs29Ob7JI75T3wwuhajuvzhZ3CvmsaZK1eMw0Wv5BoJltB86se64fDabmLj6-2Fshw-3D-3D) ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Swan Signal Monthly: November 2020 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthy-november-2020-newsletter/ Bitcoin has undoubtedly made improvements since 2017: Better onramps, custody solutions, new-Bitcoin only companies, the Lightning Network, and more. However, a story in 2020 is how the world around Bitcoin has changed. --- **Brady Swenson** · December 4, 2020 · Updated June 6, 2024 Welcome to the November 2020 edition of the Swan Signal monthly newsletter. In this month’s letter: 1. *Liftoff: a short essay on an impor­tant topic* 2. *A curated list of recent Bitcoin content* 3. *Behind-the-scenes updates from the Swan team* ### Liftoff: 5 Ways This Bitcoin Price Run is Different than 2017 Bitcoin has undoubtedly made steady incre­mental improve­ments since 2017, such as more users, better onramps, improved custody solutions, new bitcoin-only compa­nies, more educa­tion, improved scala­bility, Light­ning Network devel­op­ment, and more. However, the big story in 2020 is how the world around Bitcoin has changed. Here are 5 ways this bull market is different than in 2017… #### #1 Currency Devaluation is Coming ![](https://www.datocms-assets.com/56652/1690021480-m2-money-supply-swan.png?auto=format) M2 Money supply is increasing rapidly of late In 2017 the economy seemed stable, unemploy­ment was low, and the future seemed bright. Every­thing changed with the events in 2020, leading to 20% of all dollars in existence being printed.  When more dollars flood into the system, the purchasing power of each unit must decline. For investors, currency deval­u­a­tion means taking a defen­sive position with scarce assets like gold.  However, everyone is starting to realize that Bitcoin is better than gold and more practical in a digital society. Rick Rieder, the CIO of Black Rock (the world’s largest asset manager), says, *“*[*Bitcoin is taking some of gold’s place.”*](https://twitter.com/SwanBitcoin/status/1329802266925215745?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) #### #2 A New Class of Investors (The Rise of GBTC) ![](https://www.datocms-assets.com/56652/1690021784-btc-grayscale-graphic.png?auto=format) Grayscale now holds over $10B worth of Bitcoin in their insti­tu­tional-friendly invest­ment vehicle. Investors like it because it’s avail­able in tax-advan­taged accounts and can be acquired through mainstream brokers like Fidelity. While Greyscale is an ineffi­cient (expen­sive) way to acquire BTC, the demand is exploding. This speaks to a new class of investors entering the market. Most millen­nials and *“crypto-natives”* [prefer buying BTC outright from places like Swan](https://www.swanbitcoin.com/?gc=email_newsletter_1120&utm_campaign=email_newsletter_1120&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) so they don’t have to pay the high fees and premiums of GBTC. However, many compa­nies, insti­tu­tions, and individ­uals are desperate to get exposure to Bitcoin, so they’re willing to pay the premiums. #### #3 Corporations Have a lot of Cash and They’re Starting to Buy Bitcoin For Their Treasury ![](https://www.datocms-assets.com/56652/1690021896-micro-price-since-btc.png?auto=format) MicroS­trat­e­gy’s stock price after it started buying Bitcoin In August of 2020, Michael Saylor, the CEO of the billion-dollar enter­prise software company MicroS­trategy, announced they were converting their corpo­rate treasury to Bitcoin. Since then, their stock has increased by over 275%.  Corpo­rate treasuries around the world have noticed. Quickly after, Square announced a $50M alloca­tion to Bitcoin. Currently, over 4% of the outstanding BTC supply is [owned by corpo­rate treasuries](https://www.buybitcoinworldwide.com/treasuries/).  The big players haven’t even started to move in yet. Apple alone has $200B in cash on its balance sheet, which is over half the entire market cap of Bitcoin. Even if corpo­ra­tions dip their toes in, Bitcoin’s price will skyrocket. #### #4 Square and PayPal Alone Buying Most of the New Bitcoin Supply Square’s Cash App has seen exponen­tial growth in Bitcoin sales throughout 2020 with no signs of stopping. In Q4 2020, PayPal began selling Bitcoin to their ~300M customers. Square and PayPal alone are [buying most of the new supply entering the market](https://www.cnbc.com/2020/11/24/square-and-paypal-emerge-as-whales-in-the-crypto-market-.html?__source=sharebar%7Ctwitter&par=sharebar&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D). In 2017 the Bitcoin protocol issued 1,800 new BTC per day. In 2020, the protocol was only issuing 900 BTC per day due to the programmed supply issuance schedule.  Less new supply entering the market and increased demand in 2020 means that basic supply and demand forces will increase prices. #### #5 Bitcoin Has Been De-risked Those who pitched Bitcoin in 2017 received scrutiny from peers and faced severe career risk which made it easy to dismiss Bitcoin Since then, we’ve seen the U.S. Office of the Comptroller of the Currency (OCC) declare national banks can legally custody Bitcoin.  U.S. Congressman Patrick McHenry said, *“Bitcoin is an unstop­pable force.”* Legendary Investors like Paul Tudor Jones and Stan Druck­en­miller are going on national televi­sion explaining why they’re investing in Bitcoin. [Citibank Analyst calls a $300k Bitcoin price](https://www.nasdaq.com/articles/citibank-analyst-says-bitcoin-could-pass-%24300k-by-december-2021-2020-11-16?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) by 2021. And, of course, major corpo­ra­tions and banks such as Square, Visa, IBM, and Fidelity are investing in Bitcoin projects.  These combined events have effec­tively de-risked Bitcoin as an asset. This monumental shift led to larger pools of capital entering the space. ![](https://www.datocms-assets.com/56652/1690022190-saylor-bitcoin-tweet-treasury.png?auto=format) We’ve pulled together some great Bitcoin content from around the web for you… ### Bitcoin Content Showcase [**Bitcoin is Winning The Covid-19 Monetary Revolu­tion**](https://www.bloomberg.com/opinion/articles/2020-11-29/bitcoin-and-china-are-winning-the-covid-19-monetary-revolution?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **by Niall Ferguson**  One of the world’s leading economic histo­rians, Niall Ferguson, gives histor­ical context to Bitcoin’s rise as an alter­na­tive money. [**Bitcoin Common Miscon­cep­tions w/ Robert Breedlove**](https://www.theinvestorspodcast.com/episodes/bf-001-bitcoin-common-misconceptions-w-robert-breedlove/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **on** **The Investors Podcast** Swan advisors Robert Breedlove and Preston Pysh explore Bitcoin and money from first princi­ples. A perfect intro­duc­tion for the Bitcoin curious. Share this one far and wide. ***Bitcoin Tidbit: What is the “Bitcoin market cap?...”*** ***“Market Capital­iza­tion” is the best way to measure the total value stored in Bitcoin. To calcu­late market cap, multiple the unit price (~$19K) x the outstanding supply (~18.5M) which gives you a Market cap of about $350B. In November 2020, Bitcoin broke the previous all-time high market cap of $330B from back in 2017. Very impres­sive growth in only 12 years, however, Bitcoin’s market cap is still 50x smaller than gold. Lots of room for growth."*** [**Bitcoin is Fourth Turning Money**](https://www.whatbitcoindid.com/podcast/bitcoin-is-fourth-turning-money?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **w/ Brandon Quittem on What Bitcoin Did** Breaking down the Fourth Turning thesis, demographics, cycles in history, and how Bitcoin acts as an insti­tuion to rally around during a crisis period.  [**Bitcoin at 12 (Years Old)**](https://medium.com/@nic__carter/bitcoin-at-12-f6fce39cb9bb?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **by Nic Carter** Written for the 12th anniver­sary of the Bitcoin Whitepa­per’s publi­ca­tion, this piece captures the spirit of why so much intel­lec­tual capital rallies around Bitcoin #### Highlights from Swan’s Content [**Swan Signal Live 36: Marty Bent and Alex Gladstein**](https://www.swanbitcoin.com/election-day-with-marty-bent-and-alex-gladstein-swan-signal-live-e36/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) Election day special! Join us for a discus­sion about democ­racy, freedom and how Bitcoin is used as a tool to defend individual privacy. [**Our Most Brilliant Idea**](https://www.swanbitcoin.com/our-most-brilliant-idea/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **by Robert Breedlove** A must-read. Markets enable trade and special­iza­tion which increases idea gener­a­tion that leads to wealth creation. Robert explains how markets work much better when operating on a sound money standard. [**Swan Signal Live 37: Robert Breedlove and Brandon Quittem**](https://www.swanbitcoin.com/robert-breedlove-and-brandon-quittem-swan-signal-live-e37/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) Deeply philo­soph­ical discus­sion spanning a wide range of topics including histor­ical cycles, order vs entropy, Bitcoin as a moral oblig­a­tion, Bitcoin and property rights, and how free markets are a positive force in the world ### Behind the Scenes at Swan - Swan had another record-breaking month in terms of new customer signups and total Bitcoin acquired by customers [🚀](https://emojis.wiki/rocket/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D#:~:text=Meaning%20of%20%F0%9F%9A%80%20Rocket%20Emoji,user%20is%20determined%20to%20fulfill.) - [Robert Breedlove](https://twitter.com/Breedlove22?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) expanded his role at Swan! Robert is the CEO of [Parallax Digital](https://www.parallaxdigital.io/?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) and a well-respected writer in the Bitcoin space. In addition to his role as an advisor, Robert will be publishing monthly articles on the [Swan Signal blog](https://www.swanbitcoin.com/signal/?gc=email_newsletter_1120&utm_campaign=email_newsletter_1120&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D). - [Phil Gibson](https://twitter.com/MrPseu?_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) joined the support team at Swan. He’s helping onboard new Swan customers and crushing support tickets. Phil also hosts a Bitcoin podcast called [A Boy Named Pseu](https://open.spotify.com/show/3fLf1NRajwbtwKGpznFClr?si=1qmsyP3rSb6ExZJZ5yZqgA&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D). - Swan is now accepting wire trans­fers directly from your Swan Dashboard.  - Swan is adding the ability to buy now soon. [Sign up here](https://www.swanbitcoin.com/buynow/?gc=email_newsletter_1120&utm_campaign=email_newsletter_1120&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) for early beta access. #### Thank You! Both Swan and Bitcoin are at the begin­ning of something great. We really appre­ciate your support.  **As always, you can** [**head to your Swan Dashboard**](https://www.swanbitcoin.com/?gc=email_newsletter_1120&utm_campaign=email_newsletter_1120&_ke=eyJrbF9lbWFpbCI6ICJyd3dvbW1hY2tAZ21haWwuY29tIiwgImtsX2NvbXBhbnlfaWQiOiAiS3pMS0VTIn0%3D) **to increase your plan size, setup auto-withdrawals, and wire funds for one-time purchases.** Thanks, The Swan Team P.S. Have friends and family who are curious about Bitcoin? ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Swan Signal Monthly: December 2020 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthly-december-2020-newsletter/ Earlier this month Bitcoin broke through the all-time high price, and psychological barrier of $20,0000, driven by short-term retail trader speculation. --- **Brandon Quittem** · December 31, 2020 · Updated June 6, 2024 Welcome to the December 2020 edition of the Swan Signal monthly newsletter. Bitcoin broke new all-time highs this month and all signs point to explo­sive price action ahead. We’re thankful for your willing­ness to take a chance on a fledg­ling company this year and we hope we have served you well. Thank you for being an early Swan adopter, it means so much to us. Many of our members are taking advan­tage of our newly supported Buy Instantly feature. We’re also supporting wires of $2,500 to $10,000,000 if you’re looking to make a big buy before the end of the year. Check these out on your Swan dashboard. **Check out your Swan Dashboard** Before we dive in, we just want to remind you that, as part of our commit­ment to educa­tion, we’re offering a [free copy of Inventing Bitcoin](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1OsUrOBqyHkB8j3XtlXJW7pgVCg8HYJWwfhCI-2FuIJ3SPxvONxMR-2FDtQu7ux9kS-2FTlHA79jYtLzpHK9dvVP0ijHFRp6Mfs9fdZQ1Z0LVJ02UZIWqd3AfL6FntNiBnrsBj-2FWtCBku8yZ-2BVdmVUe1FS6j4qj3RfXnGI3swUNvqx7nVjVghVmqIipVKTURVO-2FSas1wtKBg5gbwHr6HgymyYhazqeV07JE8P6tcna5vzrTDCV7fWpSZ3OY7WugBb1k0STOw-3D-3DbieZ_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwWkQ6qkeYWlhEBAeLvwaKzKC-2BaadVyUXKNu8wxpgGGJvoEHO0fQe80gQbEg2hB-2B-2BZceyJhfjEEC56SfGoRwWrubm8Q4IE0GZ5RBzUUJ6KvBYYN-2FWgDLXg6CAr6mlB7UKcDEXMDgOfLoIQdEb2o7Eiw0AhWGfVhmUjS3KK9xGkVpFduMjd6hor62vrnu1WfHqpA-3D-3D) by Yan Pritzker. The book is a great intro­duc­tion to the Bitcoin system, highly rated on Amazon, and often recom­mended by Bitcoiners. Share it with friends and family over the holiday season!  We’ll follow up with more Bitcoin educa­tion and some notes on why Swan is a great way to start stacking.  In this month’s letter: 1. *Liftoff: a short essay about Bitcoin* 2. *A curated list of recent Bitcoin content* 3. *Behind-the-scenes updates from the Swan team* ### Liftoff: HODL FOMO Earlier this month, Bitcoin broke through the all-time high price and psycho­log­ical barrier of $20,000. The 2017 bull run where Bitcoin reached $20,000 was driven by short-term retail trader specu­la­tion. These traders were driven by the fear of missing out ([FOMO](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1MwWv2A0cWHhqWKQmwW8z2nYOpxuzGN9Xw-2BKiq9kAcwXdm-2BUdsFXp1AIJOPfk9VC-2FCO6Id5LiX3xZcqtLVs1DN2x53tDqqEHcqhllcMdulHgLvZ-2FlrApK1MY-2BievcQRF2dFk6v07TnPAxxiCC3PpduMZSfSRbNJtPEI0XQSZsOnKQiF3-2FqPoUN3gg-2FmWDelGtA-3D-3DZYS5_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwcPQPLX1dGx9nMu-2BameoLisaHSY9QIDMQ6hNxKnO3gVbGbT6wjo9Z4lFfC0PFShgXsdFqfc47L0WgClI63-2F55lpjxJnxf-2FxwLDeu3vpvSX-2FN-2FkO1vNX5HID-2F4yLXxJRIqtH6XfmLWfTPeHOCKbUF-2FpaRLbX3K0MuaoRBtsz7uJfAVxT0tgC-2B5ezIlFSaeyZ5hA-3D-3D)) on USD gains. As we’ve discussed many times here in the Liftoff, the investors we’re seeing buying up a lot of Bitcoin right now are funda­men­tally different. These investors seem to be buying Bitcoin to hold for the long term ([HODL](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1LoZWtZw0NpFDgrwXbtRpL1ARkD0M-2FtylRTia-2B3CopZzjhVPr5S78cG0wNTx9nitj1WhSVQD8ajNJ9YzlzpBSszfk1LSW73UrE1TH-2BZzwm4YcwFDKFjhcwbri4gsATaHiz0n206LzcBB5V7v9b9A5tXUG0IZVUm669GwJV9vCghSGQyqATEekcvd4SyeEMpWkQ-3D-3DtrKt_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwRZZmC0ETyhAlQ05U6TlIhI-2FOrlOws8RjfO5GmbITNlywGS8EgHNTuP38a6IpRpa8HQbp0Vm69e-2FFvo51YJzd-2FC7NtLlkeo-2BWGaSUdXANRviiJnNQbcDNv-2B9mKXTnp9pvwDZIrq0L1w0wSUIa0B1XLhAMuU7RfvT5Na97VWmL8XDVGuQIehgR7PkkzKmExZYuQ-3D-3D)). Both individ­uals and corpo­ra­tions are feeling the fear of missing out on the adoption of Bitcoin as a reserve asset. While we saw specu­la­tive USD-based FOMO during the last bull run, during this run, we are witnessing the begin­nings of BTC-based FOMO (we call it HODL FOMO).  The big buyers realize there are only 21M Bitcoin and they don’t want to be left behind in a race to accumu­late their own position. In the following chart, you can see this HODL FOMO phenom­enon in a histor­ical context. As the price started to run up from March 2020 low, you can see Bitcoin held on exchanges dropped precipitously. ![](https://www.datocms-assets.com/56652/1690023102-bitcin-on-exchanges.png?auto=format) Why? Large investors, compa­nies, and insti­tu­tions started taking large positions in Bitcoin, such as Paul Tudor Jones, Stanley Druck­en­miller, MicroS­trategy, Square, MassMu­tual, Guggen­heim, and more. These investors are not leaving Bitcoin on exchanges in hopes of trading them for USD at a higher price, as investors did in 2017. They are taking their Bitcoin off the market to hold for the long term in fear of letting their competi­tors front-run them and missing this oppor­tu­nity to buy and hold Bitcoin as a reserve asset at these relatively low prices. The conse­quences of this trend, should it continue, could be shocking. As Bitcoin avail­able on exchanges dries up, the supply shock could make the Bitcoin price shoot up very quickly until sellers are willing to part with their Bitcoin again. As this cycle continues, Bitcoins that become avail­able at higher prices are bought up by investors looking to sweep them off the market into cold storage, creating another supply shortage, and so on. With few sellers and increasing demand driven by HODL FOMO, we could see Bitcoin prices that surprise us all. We will continue to watch this trend. ### What Swan Customers Are Saying ***"When you come across this kind of customer service experi­ence, you’ve made a fan for life… Swan is the only platform I will recom­mend from now on.”*** - [**@Hodlberry video testimonial**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Hb3wAtV8cipcVKBh7iJaN7lNPlcTdv-2BSEyvt-2FSDc81NB70-2BRWPaytPUCtQ-2FlOD1vIqTPUdPzn-2BAGBLj5Ra3TjaJlSaBs33xCKBfZKuvIZ75il1mMdYAxE88rA2UQE8oMEiMu7yX6ngmcIh8RPs6wbh4wbWOpeHJ7Vv-2FFy73QDo2FnIxs-2BKEBZBzZTpg6m8592ylNI21ib07YHUS-2FWmLw2g-3DBjuM_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwZ0aVBalFsTwj-2B7OfMCadOiAGreVUUoXBdjTFh-2FOmsF0HcIeZ2iNCmEmXgqsO7FlUzTCyFQkWZr6mJEa9hYK3rUAlm7ZtIlLDzQtDw9ZD78PR-2BCS-2Bs1aeDD9jYtf6EGiOKAgm0FXknIIpU2mYBhnDhkIPvBDJe7NuVl8vAtfrxOCSsHWmDF-2Bzuf4Rsb-2FVU8YPg-3D-3D) ***"Yeah, [Swan] has consis­tently proven to be solid. I’m a customer for life… building them into my regular habits was easy and is helping us build gener­a­tional wealth.”*** **-** [**@BrokenSystem20** ](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1FszC0eZo9mwKYndy2rIFG5s-2BKQP3JZVUW6lRxCq8X-2F-2B7VVq2PukPDaCPBjq0jXoiEmmTQ-2BY98g23vAZuq9Sie3IR5zaYMH0EZeqFhUpgnoaHNb-2Bd6DK35ONc203oCsXiiJcJ7zlgyONf8hBw7MWbFrQH-2BmNz5zAfKjgmNtg1PtUbgvCTZS1X5sx6BsvjZQTeIwx2aw48l1hUpDFUlBybJU-3DoVmk_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwTVL2SjQep1PBpBmVBYDKJhheQLqqt4Nu81Gc2vhIHp43bXgtTlNe3vGekQg-2FurEiboYAruovQwz0z-2FRShZK9JkufwF071zTQXCn0rZacLdOMiZXNWC5zHCD-2BVAMeVT4Ibck7ui8Q-2FrcejZvIKh9WGaD5IcFzBP2SEr5oXaKBZIr2Ps8t25JYMicW-2BM1ocicsA-3D-3D) ![](https://www.datocms-assets.com/56652/1690023275-today-swan-is-so-good.jpeg?auto=format) **Swan is the easiest and safest way to accumu­late Bitcoin.** [**Start investing in Bitcoin with Swan today.**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasb73Q3SHST-2B4y6f1mNFPAOc5EF30dJTBjF9v8Y4rsJA3CgycmZJbyYlG7LdsW-2BFsoxzbB-2B7iBw61i2dcaCu67hFq-2BO32k72cpL2Ce2r0-2BdUF7HSWoCBG1Ng7DdZhwnDaPpn4-2FVJIoqPqis6B5EZL3gnMDr3GLPVUQ4NhztVdF4iEJ51jYzr8Hpx7v0eWXH4fYefoDbfBAMUulsP73pSENBlhYK_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLecXC5IZ2vRS65ve5Lj8EHeG92B-2B0iz6w9J7tdXzAsVftx0UpEIuzVkQ-2F-2FiKdA18dkgDpgBYK3VA3mgOO9DcUch8n8XEnjm7anVunRfC4WIp9TK7Zfnr7bEB4OdEByYFIccYeOwLa4za5xYvqciTojtrNFXqe47bABTIo33iuUTx0W5JQ-2BeNLBqwCjHv2ok5lhA-3D-3D) We’ve pulled together some great Bitcoin content from around the web for you… ### Bitcoin Content Showcase [**Niall Ferguson** ***“Bitcoin Revolu­tion”*** **on Stephan Livera Podcast**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1N1RZkIRZMvbDN4nw7OlWzoRHW1S4Ku6lpoVa1jFhdN1xX60NGgcXRt-2FGQSvy-2FIrUyUC-2BzmLZZvD6xXScEWbqDZRejpjZ2ekcNKdNivYs4Z48k6XeM60YQRumIpTj0zFSrQKwilLkBMgkEPlvyOTrG1lqv6Yx8jXrv4NcqtNva6vlzenB6pOvGDV2wohgzw-2BNw-3D-3DOHRN_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwX6-2FUlQrHcFLLsxsrqYUR3vEmcXLI-2F5f1UfSFWi6LWB3-2F3zmRvZgjGkc4awuh6G8x1W7L7-2FRFGOeI0acZHqoVTgEuCFBDFG6xHWLRhWwL-2BU0j2Z6B-2BEvDbSxTJ0VB8UBbSmcYXYwr9HKPoV-2BQ0SZBYnqN4poFsZ5k36PLydTS5VvaQalv18IJG38VNxZU224JK1wPuPbjDUxfNCnc8ypBVY-3D) Niall is an author, histo­rian, and econo­mist who recently became bullish on Bitcoin. Learn about the history of money, the rise of Bitcoin, and what the finan­cial future holds. [**Congressman Warren Davidson on Noded Podcast**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1NQPDAYGdzQ43I3MgXIEujoHRPhho4zmYdYnz2M2SzrWynvLXF52zlFic1lk5KmRCxD0-2FwUK2eD5AUZ5WJzpQ3Ie87MHKL8Ckw3yALY-2B59pNDcS0pW5PxXBh6kgCpda9LVR3D-2F4aN-2BH2az8b9Ye2w-2F4g07HiezdvDKH-2FvD2AznS9f5Q9WVvumwfrFY9zLWZxiUzBsPpnugYN4HfH7d7-2FN9vOQzmcW-2B1DlWyP9Mz-2FM8ntQVk3_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwSH0ri5jQDXsRNA9GogmZcqbi6afbGDTBqXahjJcPaCMUZAsE-2BFQrU3XSf0FkTMLFSuOppSeRgxTtcFshkWbZISJLQjL9XDz8tZs7z5vvtVAoi0u318-2FnUkUthgdfNgTsZxzF0n-2FOsxojtun3a-2FVqBKYkT4tcmDImlJrbnd8GJmWCNEzGV2zAZV5O854-2BmeZDuF3M8BIJcen4kVPH28WqTU-3D) Hear what a Bitcoiner in Congress thinks about polit­ical philos­ophy, the legisla­tive process, regula­tory actions, and monetary economics as they relate to Bitcoin holders and node opera­tors. [**Vijay Boyapati** ***“Case for Bitcoin”*** **on The Investor’s Podcast**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F8iRlCiGDYUa4PVWnkRuiCI7Sg-2FZVQynIr-2FWDl-2F3fZg0yrPuHXc2xKtoJiloRc3PBAoeEnDPnXjTw8sUycGt29orEiUjzMv5rJ1clfnmK1wuTwK9d3W5u4lLvB98-2Bre8Mll72079jPOH-2BN6faL-2B6oGbrEIE1-2FOLFuatKICmfWw-2FVTMB0MvRDm7aA-2F4PbLqgpi-2FbLcNOsxkY3Pu7d11uJQ3pq1Jl7B8T5ypv-2FBb4wbwPwUoNOr8hbVrBKiKz1G4gTxMvw0umlE4gof2vOIfOaPg-3DQhe3_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwVNMC-2FKEy-2FE6Wqslx6ljjsEGKCIgxlQKTSfloEPR280Jj6GGqYeb2N-2B97RtFpjlyuCv92QdVe14BjhQplxkcLSg9630d0xM35eiGXl5XCYi0sCyoqn3wAP6ZpfnWLyFBqQdrM3ZS7puVkjt-2BjXLL83kcZASgFkVFnFVV-2BvYSGjq7TEGxIlXUGz-2Fp71Ldkmmz3BrBSDEPn8NFDZv1aYILt2c-3D) The author of *“The Bullish Case for Bitcoin”* breaks down Bitcoin funda­men­tals. Learn how money evolves, why Bitcoin matters, and Vijay’s long term price targets. Beginner friendly. **Bitcoin Tidbit: What is the** ***“Bitcoin Blockchain?”*** The blockchain is a public record of Bitcoin trans­ac­tions in chrono­log­ical order. It’s shared among all Bitcoin users so everyone can verify that all trans­ac­tions are valid. #### Highlights from Swan’s Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, [Swan Signal](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfavUpmPja4396ETQNOoEUobOE0EuhhQJtwhfUYXZfoo4iUnCAXYA8VlerMJfwpupvD7Shr7rkHoMPR2256uQ2BfEPFxEJWXNpNpDpKnCapheWQVvYwSQ-2BXAxLT7MRQKHDYagQRpgi0HQFjVOtLRLJOm-2B6RyE_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwdHsHrKF-2FR4gPOE2mM-2BKDIYpNxKvlYNfZcGJjturWqNxNuCrevXsLFRr1A61itA-2FW0t33jrKjeHYQeKFDJf1HowTfEhmX6kqocqJiO44Rvv9wqRcBlveSsN9ZaTeShLQtDDKuf24gUHS0rs-2BcqPmS95NKUlonCvP2FBby4D6DUux0VdOrxqjX7ji2CgzvF2bbyZblBAih1gUJUtgNlySRo8-3D), features thoughts and opinions on Bitcoin from the Swan team and industry experts.  Our weekly live broad­cast, [Swan Signal Live](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tqEIF5v9XePkVYfLxf4AP4A19x-2FJSq9yWTcPRHPMZSSgjAeKJV-2B2rKP5ATsPogJYpiqV95uj5OkQg-2FzbdiEFH5w5hq0JwP-2BqdvHTzDS9-2BJWelfSp-2FPC6qMnDQKdsQ5LZ-2BtqQGEeIxwjHVmDblZOohWaQICH5BSmDYWNHlUnk4Jer2LrZfTGTlGGu8F0OIm-2B-2Fw-3D2F_A_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwYl95-2BLZiktNxyHJzRnGVVi-2BRulhfVLjH-2FE6-2F3R6TNCllDI44XRkkyXFrdAw68EXHxbthnVgUf5GQ-2FB9zzgqEqFPD8EdbjbAZbhOrj3kXQLvCQlmQIhgmkKA6fehc-2BuDBxRBn6pl1-2FMQEpxPax0L8jwAJIKkSCpthm6W0z4N9JMQGnyWS9IOCKFX1Gt5F6EvUpEPaHgXUEaGS-2FcGX8BZUe4-3D), pairs notable guests for compelling discus­sions about Bitcoin and economics. The live broad­cast is then published as audio on the [Swan Signal Podcast](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Gljfj-2FSYRaMZQQhgdxltjMI-2FaDKe5kBbUwUlmomJkAPtfjun7zRXQDmvvnAnU8Bfz4xC3Mokdkrhq9Vv5cE5uVmEdfBcd1mrs6aD8ehu-2BzCQWewIfRUDezVKieiJwdR8Hk61igAaKahzX1S2ePcpvNFqFfAcSQTkc7qwwfvC7xc4THF_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwQl8Ixcp0pmr99i-2Bmz5pQuUU7qQYSF31O8MlCwb0ZLMyFgq-2B6nWCfu91TRpfLcMqgMMcmFBmr7YqzcVY-2FjgercU4mNl4xg2kea0xYF7dp5gJXY0B7W1L7VdqJe7Wx-2Fu82boluKY7wMG70YJRqHo-2F2myEAoOPtHOVVqcf9zOPeJsKC1jFewizIZGWf6MkQzsUEyFHx0dTwoK34ykzkl6BpuI-3D) feed. Subscribe to receive new episodes.  [**Swan Signal Live 40: Lyn Alden and Andy Edstrom**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfavVFgjX0RtaOTmKkglslf9ye4y2pz-2F61B6yL-2BJHd6Vf0b0kdOcHMVHyETCI5GpnN1ETjoWN0AF41v1OgKS0QxtfhsUvfkBy6CnA2O4ieCmBgEZX2twGcHXrLq-2Bvze2jqJkQSHXQsq-2B89nizBZqNjODuVY3ovpUIBVgqShJnHGWn3osOiHSeTMGNB6Tr2YuzDjoBJfhT24J6FJl7cvLeKtfguWzu_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwU1IAqWH-2FijSBrJLrH5DgyTa-2Bb1NaDS9GSbOaiB6YYmV94MlorlXB14I-2Fs7-2FZQHEONvZzbNtREE1bBf7Yu6KBPHCHA-2FxQDzGairNnMKoOtGA086BzwIaU6ahNZkEV5qb-2BD6he2D4tlMOdWeoxA-2FaiA0kQp3FcLHCTUyFgDSRYMiEBte1Gxum6lyQIVzRpcbDHLVrVT4rK3OZSay4lrM9kd4-3D) Lively discus­sion of recent Bitcoin news including Niall Ferguson’s resounding endorse­ment of Bitcoin, Guggen­heim Invest­ments eyeing a $530m BTC position, future govern­ment actions towards Bitcoin, and more.  [**Swan Signal Live 41: Hass McCook and Gigi**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfaszc3ma1vZ3p65xEhnTCCqQ9hiQHDmSR2CNit6mOmkHrEgpLPf9U-2Bmniwf9S4xTyXarQweE9i5U8ynbMFZJIeVliuh0NAkNAtXcIVxCNKIzFcN3voZWFInXC1b-2BII-2By1HIQx7crJgU2OZIEQn54VUO4F1oHThto6bJiSyxR-2FoAd-2FwZuxljL8PSVqn5SYAxx1n4hHAzsf1ogZbQWAsW5Ayyl3URu_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwabyxoQih3BCGpK01g3z8RXWlK1ZDIDdumg-2FN-2BFJpXvmz0sdlov3ndo8a4aaZPEGHAq3Q7yNJN-2FUpkIqv5qNB6Log1ltbyThxX8YS0uPcfqQGXTQMs8SUeDEI1uNHxV7Wv4t3ZSukoUgLlc4-2FJaKTprbfwV1-2BB-2FYLWactQ5FdZJYT8obTZpQjnSR94h4CkzmZvHCREO95FovYssnvJDau70-3D) Hear from two deep thinking Bitcoiners as they discuss why making regular recur­ring Bitcoin buys is so impor­tant to them, Bitcoin’s user experi­ence, and the moral failings of fiat currency. [**Swan Signal Live 42: Preston Pysh and Mark Moss**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfav9G58AAO3r7-2BdcYFtUpqtJbSf33je-2BbLegAWr-2Fg1A2o5f9uJGKZYN3302byjZN7QVXDCD3tLZ9wsl2d5b3Xpsi7yJzRVz8oSnqb0gsWUmBhgcs6m8K-2BNmQKsqynyeKKQOhOEVra0TooBySYwJauFETUog6djfQ1KLMXMFZh9Bmv6h3u4P3AeeTohE7IRBEBSfR3i0ZvE-2F0i9O-2B30EmFU6gDu3O_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwde0-2F8GXFtcUEIjbxWmbHDWs0uI8AYo205NMBwdtn080V8T-2F6ajO8xf1exqym3nUzACRDOBi4U-2F49dejA2vJVJLxFytoV52hUGDwaWnHouzcvHZEleAQS05-2BJ6-2FeHK-2BSSoDqW5cxKTP2i1XdJVc7aPl9DDQP4KZKgXYjFKj3Ugtz4OmVvwn2MeL-2F3hgMmIlsoObeEcW8QqLGOKJ8oEmnfP0-3D) Three Bitcoin podcasters discuss Micros­trat­e­gy’s recent move to raise debt to buy Bitcoin, the looming Bitcoin shortage on exchanges, and Bitcoin vs Gold.  [**Swan Signal Live 43: Max Keiser and Bitcoin TINA**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tL-2Fjxi9hDr3oxKovwnnSLnQV054-2BV6T0mbJhwDaqUJgcQyRJIm5YoiFehrUF2c1zogzxHOvLSwUsy-2B1fEj3gk23iXv5dhrlgUTRfnwxfoXWsxxC06C9sMnpXpOszxMnHvs-2B3Ur8AzJN4cRiU4d32i62qQFV2QNV8wRYbRMLanC7w-3D-3D9Hxz_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwUeH048t39p0QW0h0nNnzG6lhQFlvuvvvsezh1ZHWWqa1nAbe8fr-2FhnrET56pM1rweMdqyfgvUDkhzOd5bnY9FQ8TvzL5z2q0-2FReegWOyX8o5MrKnglIc-2BmitxU09S-2FzAlBeD9h8vuKsLc7dOSPwVe-2BW-2BtCVq3LDNKxAvJ1g9kOlk-2BqA83yCxPQD1Lk0a7pAI34psVoJ8h-2Bn3KLp1st71sw-3D) Join former Wall Street legends discussing the fiat collapse, Bitcoin as *“the big long,”* game theory of Bitcoin, Bitcoin narra­tives, and how the world economy is changing. ### Behind the Scenes at Swan - Swan had yet another record-breaking month in terms of new members and total Bitcoin bought  - We launched one-time buys for all Swan customers! Head to your Swan dashboard to buy instantly with ACH. - For larger purchases between $2,500 and $10,000,000 you can wire money from your bank to your Swan account. Your funds will be avail­able to purchase Bitcoin within 24 hours. - [Zane Pocock](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1AMrVVGanKhwXoWhKufCqBcjyh-2FNs6JrzJwOYyELXd3eueeceUb328MTtCZYPTofhzAmS1EmqbMdzngH9D4XDQAEwM97WIubex-2FbHn0s9kMgXg-2Fzz9ey45uX6D7hOxOOhaP7RDMfe-2BgRZOP2dK9guKFAAdLBmkoAko92cHYxCRvTl9w1_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwexTuX7eko3rOj8-2Bdels28o4QZK-2B6KuOgXExC4G6YkOq8sIzTQo81lmuz7dRokvgd3MAg-2BLlxjnLCRq52wWK8X-2B-2Fkg4TdFnJBhW20SfZzm1ydQVJFojQ48CU-2FUVGzN8-2BNXyRo5w8LUbRcwXM65jYXI-2FgNFanvLfLjrokRH1uPtNZPoVq7gDigeWBNFKJAcZV6TNiPOMlD80rcMoaq-2B9ZRmg-3D) joined the Swan Team! Zane is an excel­lent writer, techni­cally savvy, and a talented marketer. - Swan Force has grown to over 1,200 members! Join Swan Force to [get paid to recruit Bitcoiners](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfas9MdF9wYTq2F8TFdl5jI0422dIbNFf5eBhOlv6FM59FCRl4vDDJz5FUe9ANSppG5VNTRZW43WTUAJG2Y-2BOaqNnW9H4QSzPLv6XFe7rOjVKgJ7bEMtKVbRet9teOiMwBJfSbrOm0RojTlmYMga2dhT88ve8_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwXBfBTlZROOYqNUE1Iw7d4182joZZev1vUfN26zjtpaZLmCymZVKT3HAEh84RRzh9gb6mVyty7Ngs7UT4omGCJw8Umz8x3WFVM9U47-2BIdYbeCpySKy5oIxIURzZxqMNPcSkarctAhYV0gHv5QuZNCjx5X7OfcJehesIV3Qo-2BaXOo0DXUxCW2nfAUbaFrQEjJc46ILnvCah3G0LAO2aaazFg-3D). When you recruit someone to Swan, you’ll earn 25% of all Swan fees for 3 years.  - Help your friends and family learn about Bitcoin by [sending them Yan Pritzker’s book Inventing Bitcoin (FREE)](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1CGohc3bIouG901O8KXBZwOs1FkZvMjsymR4RzYnZYDM48-2B7js4Vl5HAk6gQgG8014NZMTrUEcbTNaM6Na3GUbkdQYEcnqFFenSARRCeCMT429z-2FsT1EafU6KlC8yi76HHG-2Fi8ZgQmruOi-2FxQ-2BRGhu-2FqBKeV9wRMjalAa8S-2FBhAmxaVkRqjjbwrvzLTO1jdebw-3D-3DePLZ_NyUSH89yFL5-2FAcTnJyVs3XAd4toaSoxKZFlQvbDs4gVM-2FIZIeeG0kfYg19mwNgEa-2BU2TWECyVpskHfxzOm3jJ-2Bybep-2BsfSh6gT-2BUoKUCd9jTFBpaIx80uHV0tXE76tje8YipAZW7fiNwwG71wUz8FvK7QSQNdzIjeKq9WpAJ0wmWdUsQmhzbC0GzSbMh5oYdS-2BvWhiz0VNnrVS3s9CaLwb3tzKxJmP3MlUkqY29sFsJ3x5OpVnM-2BOf-2FiekEN2zuG5EZquI80EVR6U8x8a2OzLUFrNBUeJFw4isM96j9lVKCiy9P7DJgeo2Azv2jrvgADQ-2BwkxnIc-2FegGiFHyVtRr-2BXu8KtdmKY3OK8iT4Lg-2B31-2BdF5jyq2yqROLv72Ulq0m29mEz0czyYAOgIRTR0K8a4FJ7cyxBcwmlnwELsZ7UTiQ-3D). #### Thank You! What an exciting time to be in Bitcoin! Both Swan and Bitcoin are growing fast and we couldn’t do it without your support. Any questions about Swan or Bitcoin more gener­ally? Our growing support staff loves answering your questions 🙂 Feel free to email us at [support@SwanBitcoin.com](mailto:support@SwanBitcoin.com). **Once more, we want to express our deep grati­tude for you and all our Swan members. Together we can help bring about a bright orange future just a little bit faster.**  Thanks, The Swan Team ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # Swan Signal Monthly: January 2021 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthly-january-2021-newsletter/ Bitcoin hit a new all-time high of $42,000 in early Janurary and has since pulled back to $33,000. Is this a buying opportunity? --- **Brandon Quittem** · January 31, 2020 · Updated June 6, 2024 Welcome to the January 2021 edition of the Swan Signal monthly newsletter. Bitcoin hit a new all-time high of $42,000 in early January and has since pulled back to $33,000.  Is this a buying oppor­tu­nity? Read on to find out. Ready to start investing in Bitcoin? You can [get started through SwanBitcoin.com today](https://www.swanbitcoin.com/?gc=email_newsletter_0121&utm_campaign=email_newsletter_0121&_ke=). New users can make one-time buys OR set up an automatic recur­ring purchase plan (ex: $50/week). In the meantime, we hope you find our monthly Bitcoin newsletter valuable! In this month’s letter: 1. *Liftoff: a short essay about Bitcoin* 2. *A curated list of recent Bitcoin content* 3. *Behind-the-scenes updates from the Swan team* ### Liftoff: Bitcoin Down 22% From its All-Time High. Is This a Buying Opportunity? Bitcoin is trading at $33,000 at the time of publi­ca­tion. This is down 22% from the recent all-time high of around $42,000. Should we be worried? No, we should not be worried. In fact, it’s healthy to see pullbacks in a bull market.  For some histor­ical context, Bitcoin rose from $1,000 to $20,000 in 2017, and during that run, we saw five ~30% pullbacks. Buying during those pullbacks turned out to be wise moves. ![](https://www.datocms-assets.com/56652/1690023988-pullback-black-chart.png?auto=format) **Swan customers have been buying this dip in earnest** 💪 We’ve noticed that any time the Bitcoin price drops by 5 – 10%, existing Swan customers log into their dashboard and make on-time buys. In fact, our biggest volume days are when the price dips 🙂 As a reminder, our new *“buy instantly”* feature is avail­able for all Swan Customers.  **Swan customers aren’t the only ones buying this dip…** In fact, we’re seeing increased insti­tu­tional investors buying Bitcoin like never before.  - [Harvard, Yale, and other Univer­sity endow­ments have been quietly buying Bitcoin](https://www.coindesk.com/harvard-yale-brown-endowments-have-been-buying-bitcoin-for-at-least-a-year-sources?_ke=) for over a year.  - [Ray Dalio said, ‘Bitcoin is one hell of an inven­tion’](https://www.bridgewater.com/research-and-insights/ray-dalio-what-i-think-of-bitcoin?fbclid=IwAR3yDE1uNC5ikeaae9noKv5QrHomvAN3JLiqk8XaUQ1nmUQOev1eiInWLXo&_ke=) and is consid­ering adding BTC to a new fund he’s creating. - Michael Saylor, CEO of MicroS­trategy, is [teaching thousands of C‑level execu­tives how to put Bitcoin on their balance sheet](https://www.microstrategy.com/en/resources/events/world-2021/bitcoin-summit?_ke=) on February 3rd.  - The world’s largest asset manager, [Black­rock, is offering their clients exposure to Bitcoin](https://www.bloomberg.com/news/articles/2021-01-20/blackrock-files-to-add-bitcoin-futures-to-two-of-its-funds?_ke=). - [Anthony Scara­mucci of SkyBridge Capital launched a new Bitcoin fund](https://www.bloomberg.com/news/articles/2021-01-05/scaramucci-sees-massive-gains-for-bitcoin-in-comparison-to-gold?_ke=) and said, *“Bitcoin is better at being gold than gold is at being gold.”* - Over [$40b worth of Bitcoin is sitting on Corpo­rate Balance sheets](https://bitcointreasuries.org/?_ke=), and more to come. - Elon Musk just said, *“*[*Bitcoin is really on the verge of getting broad accep­tance*](https://www.cnbc.com/2021/02/01/elon-musk-on-clubhouse-i-am-a-supporter-of-bitcoin.html?_ke=) *by conven­tional finance people.”* Wonder if Tesla is quietly accumu­lating BTC? In other words, there’s a wall of insti­tu­tional money buying Bitcoin now, and the future looks very promising.  Get started buying Bitcoin today by setting up an account at SwanBitcoin.com. Swan Customers can buy Bitcoin in three ways: 1. [Buy Instantly](https://www.swanbitcoin.com/?gc=email_newsletter_0121&utm_campaign=email_newsletter_0121&_ke=) with your linked bank account 2. [Wire Transfer](http://help.swanbitcoin.com/hc/en-us/articles/360056921474-How-do-wires-into-Swan-work-?_ke=) for larger purchases (between $5k and $10m) 3. [Set up an automatic recur­ring purchase plan](https://www.swanbitcoin.com/?gc=email_newsletter_0121&utm_campaign=email_newsletter_0121&_ke=) (ex: $500/week) **Start Investing in Bitcoin with Swan** ### What Swan Customers Are Saying ***"I stack like a gangster on Swan. Easy, lowest fees around. The ‘Smash Buy’ feature puts Coinbase and Cash App to shame. Auto-withdrawing my multisig cold wallet gives me peace of mind. Fantastic!”*** - **Max Keiser** ![](https://www.datocms-assets.com/56652/1690024175-three-swan-good-feedback.png?auto=format) **Swan is the easiest and safest way to accumu­late Bitcoin.** [**Start investing in Bitcoin with Swan today.**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasb73Q3SHST-2B4y6f1mNFPAOc5EF30dJTBjF9v8Y4rsJA3CgycmZJbyYlG7LdsW-2BFsoxzbB-2B7iBw61i2dcaCu67hFq-2BO32k72cpL2Ce2r0-2BdUF7HSWoCBG1Ng7DdZhwnDaPpn4-2FVJIoqPqis6B5EZL3gnMDr3GLPVUQ4NhztVdF4iEJ51jYzr8Hpx7v0eWXH4fYefoDbfBAMUulsP73pSENBlhYK_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLecXC5IZ2vRS65ve5Lj8EHeG92B-2B0iz6w9J7tdXzAsVftx0UpEIuzVkQ-2F-2FiKdA18dkgDpgBYK3VA3mgOO9DcUch8n8XEnjm7anVunRfC4WIp9TK7Zfnr7bEB4OdEByYFIccYeOwLa4za5xYvqciTojtrNFXqe47bABTIo33iuUTx0W5JQ-2BeNLBqwCjHv2ok5lhA-3D-3D) We’ve pulled together some great Bitcoin content from around the web for you… ### Bitcoin Content Showcase [**Robert Breedlove on George Gammon Rebel Capitalist Podcast**](https://podcasts.apple.com/us/podcast/robert-breedlove-bitcoin-deep-dive-gold-standard-banking/id1492584441?i=1000505933982&_ke=) Deep dive into Bitcoin, the history of Gold, and the past, present, and future of banking in a Bitcoin world.  [**Stoner­idge Share­holder Letter on Bitcoin**](https://www.microstrategy.com/content/dam/website-assets/collateral/bitcoin-downloads/Stone-Ridge-2020-Shareholder-Letter.pdf?_ke=) Stoner­idge Asset Manage­ment recently launched a Bitcoin fund. They recently published their 2020 annual share­holder letter describing their Bitcoin thesis. They’re incred­ibly bullish on Bitcoin. [**Vijay Boyapati** ***“Bitcoin 101”*** **on What Bitcoin Did Podcast**](https://www.whatbitcoindid.com/podcast/the-ultimate-bitcoin-101?_ke=) Vijay is one of the best at artic­u­lating the value propo­si­tion of Bitcoin. This is a perfect episode for begin­ners, be sure to pass along to your friends and family. **Bitcoin Tidbit: What is a** ***“pseudonym?”*** A pseudonym is a ficti­tious name that a person or group assumes for a partic­ular purpose. Bitcoin’s creator used the pseudonym *“Satoshi Nakamoto”* to conceal their identity. There is a miscon­cep­tion that Bitcoin addresses are anony­mous, however in reality they’re pseudonymous. #### Highlights from Swan’s Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, [Swan Signal](https://www.swanbitcoin.com/signal/?_ke=), features thoughts and opinions on Bitcoin from the Swan team and industry experts.  Our weekly live broad­cast, [Swan Signal Live](https://www.youtube.com/channel/UCl4takhOQtiyprismCPsa2Q?_ke=), pairs notable guests for compelling discus­sions about Bitcoin and economics. The live broad­cast is then published as audio on the [Swan Signal Podcast](https://swansignal.simplecast.com/?_ke=) feed. Subscribe to receive new episodes. [**Swan Signal Live 45: Lyn Alden and Jeff Booth**](https://www.youtube.com/watch?v=v1a_oUdO9lk&t=2s&_ke=) Great discus­sion on technology as a defla­tionary force, long-term debt cycles, and Bitcoin as a solution to unpayable sover­eign debt. [**Swan Signal Live 46: Preston Pysh and Andy Edstrom**](https://www.youtube.com/watch?v=I6AVKRDmkh0&_ke=) A lively discus­sion on the latest in Bitcoin, macro­eco­nomics, and finance. There’s a reason these two >guys are regulars on the Swan Signal Live show 🙂 [**Why Bitcoin is not a Ponzi Scheme by Lyn Alden**](https://www.swanbitcoin.com/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/?_ke=) Lyn Alden method­i­cally breaks down why Bitcoin is NOT a ponzi Scheme in a recent guest post on the Swan Signal blog. Lyn is known for her sharp wit and unmatched clarity in her writing.  [**Sover­eignism Part 1: Digital Creative Destruc­tion by Robert Breedlove**](https://www.swanbitcoin.com/sovereignism-part-i-digital-creative-destruction/?_ke=) Robert explores the digital disrup­tion of the nation-state and the subse­quent ampli­fi­ca­tion of individual sover­eignty during the digital age. ### Behind the Scenes at Swan - Swan hit another record-breaking month in terms of new members and total Bitcoin bought 🚀 - Product Update: all Swan customers can choose between buying Bitcoin instantly OR setting up an automatic recur­ring purchase plan. - Clubhouse: Swan team has been hosting bitcoin rooms on Clubhouse, join our club *Café Bitcoin* to be notified of future events.  - Facebook: we launched a new Facebook group *“Cafe Bitcoin”* to help educate people about Bitcoin. [Join the group and invite your friends](https://www.facebook.com/groups/cafebitcoin21?_ke=)! - [Robert Breedlove](https://twitter.com/Breedlove22?_ke=) joined the Swan Team! Robert is the managing director of Swan Private which helps corpo­ra­tions and high net worth individ­uals build gener­a­tional wealth with Bitcoin. Stay tuned for the Swan Private public launch. - Swan Bitcoin Advisor, Max Keiser, just launched a newsletter called the *“Daily Dose.”* If you like Max, you’re going to love this. [Sign up here](https://orangepilldailydose.com/?_ke=) - Swan Force has grown to over 2,500 members! Join Swan Force to [get paid to recruit Bitcoiners](https://www.swanbitcoin.com/enlist/?_ke=). When you recruit someone to Swan, you’ll earn 25% of all Swan fees for 3 years.  #### Thank You! Wow. The energy surrounding Bitcoin (and Swan) is explo­sive right now.  2021 is poised to be an incred­ible year and we’re so glad to fly along­side you. 🦢 **As always, Swan is here to ensure investing in Bitcoin is easy, fast, and safe.** [**Click here to get started**](https://www.swanbitcoin.com/?_ke=) **today!**  Thanks, The Swan Team P.S. Feel free to reach us at [SwanBitcoin.com/support](https://www.swanbitcoin.com/support?_ke=). P.P.S. As part of our commit­ment to educa­tion, we’re offering you and your friends a [free copy of Inventing Bitcoin](https://swanbitcoin.com/freebook/?_ke=) by Yan Pritzker. Share this link around! ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # Swan Signal Monthly: February 2021 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthy-february-2021-newsletter/ Corporations are raidly adopting Bitcoin. This will lead to price appreciation and make Bitcoin even hard to stop. Square (SSQ) recently purchased 3,318 BTC (worth $170M) for their corporate treasury. --- **Brandon Quittem** · February 28, 2021 · Updated June 6, 2024 Welcome to the February 2021 edition of the Swan Signal monthly newsletter.  Today we’re exploring the accel­er­ating trend of corpo­ra­tions adopting Bitcoin and the poten­tial implications.  Ready to start investing in Bitcoin? [Get started through SwanBitcoin.com today](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasb73Q3SHST-2B4y6f1mNFPAOc5EF30dJTBjF9v8Y4rsJA3CgycmZJbyYlG7LdsW-2BFsoxzbB-2B7iBw61i2dcaCu67hFq-2BO32k72cpL2Ce2r0-2BdUF7HSWoCBG1Ng7DdZhwnDaPpn4-2FVJIoqPqis6B5EZL3gnMDr3GLPVUQ4NhztVdF4iEJ51jYzr8Hpx7v0eWXH4fYefoDbfBAMUulsP73pSENBKAkd_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeXUmqbeojQX3APegu4OVRAqFR8gd86dkJOxQNNKQv3r5M694pN01uMrEiMPNr3Umrk-2F0lnN6-2FD502cAvNRSZbzDvD4GgtYMze0UDr-2F5eSIsSs4RkIlDD70kriiFGQB5zoEfP2RuQ9g2QMWzFq1sqb3SokZD3KjFJrwT7LG3IbATYDQQUNLTqgjUNov-2FEyzbz8A-3D-3D). As a reminder, Swan offers one-time instant buys or automatic recur­ring purchase plans (ex: $50/week). In this month’s letter: 1. Liftoff: a short essay about Bitcoin 2. A curated list of recent Bitcoin content 3. Behind-the-scenes updates from the Swan team ### Liftoff: Accelerating Trend of Corporations Buying Bitcoin Corpo­ra­tions are rapidly adopting Bitcoin. This will lead to price appre­ci­a­tion and make Bitcoin even harder to stop.  Square ($SQ) recently purchased 3,318 BTC (worth $170M) for their corpo­rate treasury. Combined with their October 2020 Bitcoin purchase, Square now has $396M worth of BTC on their balance sheet.  Twitter, also run by Jack Dorsey, announced a [$1.25B convert­ible note offering](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1GhN58I4xvRM8ToHhl0DKfolICfUpZ0Jk9eKp6ZYaWpINsRzzYsucuo3tYBZzWI8X-2FkBsFFDVH6tmlj1PHffRPJnJXo4RMirbqKfuF6MgjLJb1dqpIxV5DBzNSnLUNM87WPUmFws6DTKJdz5PKrESOziu3n-2B6K1TnGx-2B-2Fb2Ir-2BZcNHFrbOS8nxLm7HfNWqfT6kYYvtMoHMWrA1rY2DsH0zeunvEZRT7uNFltaWdQJ7FZwYoh9HexwwXG5AAKPPbGaw-3D-3Dl6YI_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeeR44RAHD2O4SGSwhoLfd0MGgHT2qak5PJkCmtuVdbknJZoKYKRXA-2BLUWSZ1F6oPA7AE0wANukXxUZolAZv3orxfxCCCBmMhpjKiLA4OMC0o790shCKktBisa-2B-2FY-2FFd2OkFzkVsBItssm5joTAtX2CK-2ByVG9Scgd4Y-2Bhuv66I7QjAUogS-2FTbwP2LLF7LNHWxcQ-3D-3D). Could they be following the MicroS­trategy playbook and raising funds to buy Bitcoin for Twitter’s balance sheet? #### How Significant is Corporate Adoption? We’re witnessing an accel­er­ating trend of corpo­ra­tions buying Bitcoin in large volumes to protect their purchasing power.  Last week MicroS­trategy ($MSTR) bought another $1B worth of Bitcoin (via convert­ible note), bringing their total to around $4B on their balance sheet.  Tesla bought $1.5B in Bitcoin, repre­senting about 5% of their treasury.CEO of Stone Ridge Asset Manage­ment, Ross Stevens, said they have enough [insti­tu­tional customers lined up to acquire another ~$20B of Bitcoin](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8sU7yH4zNg-2FJN4VtohX8Ze5zGkP9xw9Tj5KK6Z1iNrxbBK2XN0EjJdr0j1NbsFuHfv3zQUbJntPhm0NJ1iIj-2B2i9pxeQN-2FJDn0ja3so8zpBvyBR2Pa15UJvOZR0JzEgXEQyvEqdXPMlxvLA5O2CTF2i2EsNNyvwVc8P8fb269ya8g-3D-3DUi3__uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeVjPwrPloAcDX-2Bz6Pz4FyIK41e9zbGNiAzLRWRXbqkOz1ArQTnzxTR1Ok9BZ-2FaS5HDg9PSymgLMOX2XoA4sD-2FTcF0RxDKvu0tVnDeF4zbUvYJbZUG8xm1eHQRV2hLNb56QErNCKqxrebsQjrbp6qIUS5z6Fbp4ZplwXTzDevg2o8-2F9vkw6erF1cKkQfdtD2svw-3D-3D) by the end of 2021. In other words, this trend of insti­tu­tional money flowing into Bitcoin is accelerating. #### Let’s Run the Numbers From BitcoinTreasuries.org On October 8th, 2020, approx­i­mately 60,000 Bitcoin (worth $618M) were held on corpo­rate balance sheets.  By February 24th, 2021, Bitcoin held in corpo­rate treasuries increased to 1,300,000 BTC worth over $74B.  *This is a 22x increase in BTC held in corpo­rate treasuries in the last 5 months*… Not to mention a 120x increase in the U.S. Dollar value of BTC held on corpo­rate balance sheets.  However, this is only the begin­ning.  There is still over $4T in cash on Corpo­rate balance sheets in the US alone. #### Positive Feedback Loop Michael Saylor, CEO of MicroS­trategy, bought $2B+ worth of Bitcoin and has since “open-sourced” his playbook. He [hosted a confer­ence in February 2021](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1J3kQlz9zTPwqPEMhxmnhfXlR04DiZkC1xXfeIZdrTRZeI5CZvTaHspcHFXZvyaLC3OdsY0chKZpR-2FvM8SjU-2BMh0IUFpwbHOikaWYJoJ4FGfnTxoGzqmiXkTIZ1qRSrF8yY2VS2e-2BmsbJh4XePhU3Dgt3FLNekUFjE7fXiHfZvW1Y50Lw11Ka0f0zi6osezwdk5vl1CM3TiYpV7pNvhAVD8-3DzbDm_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeZ8iUQHD4rKlsxT9FSOSCNaQce-2BGx2Yru46LDm3pSdR9IW3XtXj8rK965QqVd9ntkYC4aMz6lTQ5x0oKXA73pqvy8yVy7pE01SZHW5iajOoJRO7hUO8tknFCcNLVeopxj303HV1q529N0aBEMHBP168fi1g6xrpTfdAG4XqvjaOECCBW6JPr9joWGWzgvJChUQ-3D-3D), teaching 1,000+ corpo­ra­tions how to buy and hold Bitcoin on their balance sheet. ***“Bitcoin is an invest­ment grade, safe-haven treasury reserve asset. Bitcoin is the solution to the store of value problem faced by all corpo­ra­tions and their customers.”***  - Michael Saylor People who own Bitcoin, such as Elon Musk, Michael Saylor, and Jack Dorsey, have a strong incen­tive to promote their invest­ment.  Why?  Because it pushes the Bitcoin price up, making their invest­ment more valuable. In MicroS­trat­e­gy’s case, acquiring Bitcoin also led to an incred­ible price appre­ci­a­tion of their stock ($MSTR). How could any corpo­rate treasury ignore this? ![](https://www.datocms-assets.com/56652/1690024866-micro-buys-red-arrow.png?auto=format) **It gets even better…**  Corpo­ra­tions aren’t only buying it as an invest­ment-grade treasury reserve asset. They’re also plugging their business opera­tions into the Bitcoin network.  Some corpo­ra­tions are selling  Bitcoin (Square/PayPal), others provide custody (Fidelity), some are accepting BTC as payment (Tesla), and others are mining Bitcoin (Marathon/Riot Blockchain).  This repre­sents a new stage of accep­tance by the legacy finan­cial system in the US. As Bitcoin continues to entrench itself in the existing polit­ical struc­ture, it becomes harder and harder to stop.  Luckily for Bitcoin holders, this trend of *“accep­tance”* shows no signs of slowing down. ### Swan Private Since MicroS­trategy opened the flood­gates in October, Swan has seen a deluge of inter­na­tional interest from corpo­ra­tions, HNWI, and other entities. To meet that global demand, we have [launched Swan Private](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfausbLeAVinJonXcTwTUWnVoR-2BAlmeZtrdu7VGihOhj5jUWIBaQOQ7Q155o64fAU52IpoJ3roZ5Wv1m2WAN6-2F7vD50eeSoy-2BYQhvH9OGZkHHWkYkWO92PBUeIiSjMsUwTNI2I1hT-2B-2B0IUQq-2FXA-2BvA8LJP7GA_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeUiCGhb0ifANTv9AxhyQGak-2B-2Fdd8ELRJbNQOaBIguFEmgcR5Wxjk0vWfjW4vFc5Gr-2FX-2BVaofaL4qrR1x-2B0uHYu-2BzLkHAdWM2TsfNOpyV3oPuKSTT-2BJ42vzk1B4mmKBsHQrTrNOAEP6C0C2Eq7qBKpgG1WXxeqXYiGyDi47eQzWWlmemnJdkGy3rBoVQ93GUHTA-3D-3D), open for business worldwide. Swan Private guides corpo­ra­tions and high net worth individ­uals toward building gener­a­tional wealth with Bitcoin.  ![](https://www.datocms-assets.com/56652/1690024958-partner-swan-bitcoin.png?auto=format) ### What Swan Customers Are Saying ***"Thank you for being an example of how to run a Bitcoin company. Your team gives a lot and you’ve won the commu­nity over. No one ever has a single bad thing to say about swan and co which is a diffi­cult feat in this industry.”***  **- Swan Customer** ![](https://www.datocms-assets.com/56652/1690025010-my-bank-screwed-me-tweet.png?auto=format) **Swan is the easiest and safest way to accumu­late Bitcoin.** [**Start investing in Bitcoin with Swan today.**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasb73Q3SHST-2B4y6f1mNFPAOc5EF30dJTBjF9v8Y4rsJA3CgycmZJbyYlG7LdsW-2BFsoxzbB-2B7iBw61i2dcaCu67hFq-2BO32k72cpL2Ce2r0-2BdUF7HSWoCBG1Ng7DdZhwnDaPpn4-2FVJIoqPqis6B5EZL3gnMDr3GLPVUQ4NhztVdF4iEJ51jYzr8Hpx7v0eWXH4fYefoDbfBAMUulsP73pSENBlhYK_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLecXC5IZ2vRS65ve5Lj8EHeG92B-2B0iz6w9J7tdXzAsVftx0UpEIuzVkQ-2F-2FiKdA18dkgDpgBYK3VA3mgOO9DcUch8n8XEnjm7anVunRfC4WIp9TK7Zfnr7bEB4OdEByYFIccYeOwLa4za5xYvqciTojtrNFXqe47bABTIo33iuUTx0W5JQ-2BeNLBqwCjHv2ok5lhA-3D-3D) We’ve pulled together some great Bitcoin content from around the web for you… ### Bitcoin Content Showcase [**Ross Stevens + Michael Saylor**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8sU7yH4zNg-2FJN4VtohX8Ze5zGkP9xw9Tj5KK6Z1iNrxbBK2XN0EjJdr0j1NbsFuHfv3zQUbJntPhm0NJ1iIj-2B2i9pxeQN-2FJDn0ja3so8zpBvyBR2Pa15UJvOZR0JzEgXEQyvEqdXPMlxvLA5O2CTF2i2EsNNyvwVc8P8fb269ya8g-3D-3DOJJ8_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLea49gViWLLTOLuYj-2FGw-2FWgyDDeWNgAgGGKB0Z0YnJquLUb8AuTaf86WHMPZgq7-2F4WukIlaWYyNG4jRqh5UqAdl5dhDXfUDnZonxzqtNEdz1rOkMRU-2BVwuWww50qAYjY3yaHUdOJVOPd4XYG83gDnQRkT9PvGk2kU9xiCdtrsx5exgdUa777zi8hZ51oOjc6R-2Bg-3D-3D) **at MicroS­trategy Confer­ence** Best Bitcoin inter­view of the year? Ross Stevens is the Founder and CEO of Stone Ridge Asset Manage­ment. Ross said they’ll have over $26b in BTC under manage­ment by the end of 2021.  [**Can Govern­ments Stop Bitcoin**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1FP98kKzrXFbmmus6RudBpTo1a3RmnghtFJEF-2BQ6AxeSRkTlEBPEe1GbZsY9ZKkKEk0kGN3arT7mVomAhtnYBEnmUaZrOtASZ1W-2BQFkFFXLuVxta4pmyd9DipZItrFaCwkLU77X8vQHx5kj7iOsndM7ep0ClRZMvlA2IYWOnlX-2F9r85JonROsSRF04ph2CCzro4tf9udusasSactjHs-2Fv8Y-3Dqofp_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeY-2BcruyOV3OyK7ALvo5MzrJZX5gB4XXieIWDIPWK0JOrkwFc67rd2EwtNjdxHk-2FXilwlFYzn2rTIvvYlSo7r-2B6sie2SNaD0S4sY4PIMyhPBAkCK-2FfpDCQwyIjS0s8axDKWLaepfP1-2FoR2V-2FoPenGvaSvCyG6MK2txmvbhxrfjN7mo6QSGwpJqG6dDnq7BZryhw-3D-3D) **by Alex Gladstein**  Alex addresses a common concern *“won’t the govern­ment shut down Bitcoin?”* As the Chief Strategy Officer for the Human Rights Founda­tion, Alex has a unique perspective. [**Bitcoin is Venice**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1EfE16g-2BeR65L6MBvRNWdKkVtkkLf3Szqza8gzJV5OlCYWfPH-2BD0Mbc10nLTvDlBWtVbGsbjF9lJ4MEMWqIdVBV-2FmEgxSGTZPyduN-2BmxuYbTiGnkr4zii7wbFM2MlZLCs2EJ-2Br3-2BWuxDBb1PcZxg6X9UgRihusj3KQWMxvj1L7KZjNGR3S6jXM1aDzM20v9-2F4QMxbEKoZndy10R05fndqKc-3DdjKS_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeWdIn9MKD2Vsf7rBXK5xFPtbF951xW0xJ5YX2s7k2b8ZhpsYW1pQn73ka4rASc7xTrckEE-2BMRXpL1r9EWcrU4o-2BOtSq4wawiktsh9v-2Fw03GJH-2FbceqxlCHDdEsUoXPY5-2FU-2BD-2F7NcVgEuhQ2rUD8nCopdnXMSm5WM4Cx556CkvLkR-2FvzCDIUKhGZ09zo1ZtRIBQ-3D-3D) **by Alan Farrington** Philo­soph­ical essay exploring Bitcoin as a type of economic system akin to that of ancient Venice’s gold standard. Jordan Peterson even [tweeted out this essay](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Bmr090kvkepkpudHDPvrS8no-2FzYuUahRTvoK5NiPiYZ-2FdVCcmXiY89vg0BEdRF8uAwV7fwPclfKIPd4DfM1bVQiQx3g40Diq4t8C6IHU6KtTFJeFkFAsgQVU7VpSArkc1eS4nTbmfx-2FwGwlBj-2F6-2BpS1HjJtjso4QybbaQjqlQvNMp5ShvRNSU-2BoAqrupEkBV8a4YyTJ0uKjFYAIB1T7CpY-3DVjPl_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeVulkoJtszdnlqfrrFWefpQ1Ui7GQuw6UUdPuDRbGeoAKmzSjJagiW7P4y5TVKYqQarZVD9JW9dlmgpnpTJLqqIqduI7dXN4dHbEFSSofKpfn3avRtWsZoWCAjTnr2S7s2FQaHMs43-2BwCNs-2BtHYF4VktBmC-2FzKsqlzYjNnVRttJY3INL9O3R1oMLYyEyTlnBrg-3D-3D) and later [asked several Swan employees to have a conver­sa­tion](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Bmr090kvkepkpudHDPvrS8no-2FzYuUahRTvoK5NiPiYZFjcKl9d8-2B19R08y-2F8q7kezP3HAVFk-2BQZ1-2BE4HgHQJj92JW20WKYJJ71b0Wwbl1y6qtejBN-2BPVJ5NM9fQZEbAXjuXCFMu0z5Cxyb4JChcIdZW6P1gtVviFHbs1rPUbNBRmNizYVCUG4j8kTGbc5FYhff9pxfmZnK95W5Zeu5vZcw-3DPeEh_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLearjL-2FFfdxTk5I5JvHh8NgtnGsKWrB3yLdzFFJrs11gpo6rHyX07IHH-2BlHGCO8ujGxZzMup4bR7BS8cuFkaXc7MuD8WP-2FXi1lqLbtMlzUOXLLfe7OR9K3rl3jjyrE3qtW-2BtDkTqM3OhhobHU2XVuluAqy1qV50CxIFf-2BRWBGcNZ9PdkhKGXDVx2NY469YZXcww-3D-3D).  [**Bitcoin is Protecting Human Rights**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8sLmF36QzvwdNnwakP7tSPa6dPSQTdMdt17OAB2INB9Tt0nwPEZ2q2kBJYGzGX8W6aMpxpBDjYy-2Fn24WlMtKLzY-2Bgl1-2BNYVgQQgfOtSuf2qrblPHsVDgzPRfdTdaNRZ18Yo5cQ2W1Sz-2F4-2FYPXUFE8lLhFfPGaQMVJt-2Ftmx-2FOPyIdw-3D-3DbhW3_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeRzeqFIPWm843kKhr3PGvRTQZXSdfzwBxjvW44L-2BnRcl6lNRcIKXEZ7-2FOlImoRu00DbtNDG6RlvTlKNrGBA1KML1V9tUj-2FvMTYVrCjmgEB8B3w7BsNW-2FmAiVMajQ8hDNviuKx9LYZEKOkINAEKBbhaoCnsOOzzCk2Xc-2FDCRubVv3K1O-2F6LemNn0-2BQgR4S5-2BcdA-3D-3D) **(video) by Alex Gladstein** Learn how Bitcoin is being used to empower oppressed individ­uals around the world. Rebuttal for *"Bitcoin is only for speculation.”*  [**What Bloomberg Gets Wrong about Bitcoin’s Climate Footprint**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1GQ-2BSYxcKeHfJDFOnNqj1DInYPjSxeWB6-2Bgi8b0AlzJMOVAz-2Fb1BfMC0DP11kcIubFSO6r8vuPkADt6p-2BlxeqImv4mLNTKknI268Xt3hva2YeySZm3OMJYmBnmGi3lM-2FUuQE62jxA0Qkzt22zMXJIrE2aEkCSFZgfTHWpuHgidVpjbdgJ7V0Hmuvbfthsa939BEWwK0iqBj0tK-2BCNyI1h4JlDFIi6h3h5jG2m6k6Y8CE8moH_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLedI96ikUQlP483VDp72tUhRD63WMvYnbL7PQuJu0K2gP3RhAwb3gv1CNE1Vu3IRIiDUSVmiCaO1MNTrFQOZLPo15S6HXZ887hDuuHo33gv4Bgar96Jpfs9h36MTJEHMe7YTmplaKmvI-2B5hre74OaFpH9w1mu1rigiOzw3YsHuBvLMb-2B4LAxVipiSYTf1xGRvOQ-3D-3D) **by Nic Carter**  Journal­ists keep comparing Bitcoin to Visa. Nic refutes this compar­ison and explores the different *“layers”* of the monetary stack. #### Highlights from Swan’s Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Some highlights from February… [**Bitcoin Privacy Best Practices**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfavbJXgxE6StpkvLzStKWSGJN9Phu0EL-2Bn1Uz4kZSDgkPjDjTp-2FzPz5bgT6EfZl15FXebzVj3RtxWO1rs1Xf0RdwQTBhy9f6DR1CsSO-2BDNDqzAv-2B32-2BKMwZggRtysbPM5zBbvk30oxZPaVDRWAlZk-2FnF-2FnFy9CrDi-2FuAlR0beS-2BN38UJTPbqUaSASWC5t91vPk8-3DgIfF_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLefK2YTl6GAjoR0iU5Fo4Rz5Np-2FTU4xNd5IDjYSsWwpBnpF-2FAWlJSGNSQJ9BoDa3ksl9ItLtSSV-2FOQtml-2BhwSw4HTyxJIKlRDSAyHygiDstRjHJz411g4Tc1a9vdVIEfeTPJZ42Z-2BtIIMiCR5oj6-2FogPZcV8NAH3mn9zA01BsVjMflJicxPH1AprexbWd5UFYNA-3D-3D) **by Gigi**  Why privacy is impor­tant, privacy best practices, and action­able advice for newcomers and Bitcoiners alike. [**Is Tether a Threat to Bitcoin?**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfavZ9m2G1-2B1sfzaeNh6OvEXIJvt4LuH45MbJsHyTwYIqvanb8eg7GJ-2BXKLwgFTeW4qWCJzHTAPdO-2FbRlDZ7rm-2FV1H0KvYM6-2Bxc8dQuCttGavm-2Ft5jUEhfIKiiL-2BF-2BRBcN0B29KCfb8ivR3ivejJn769INclOsFC7zWQP-2B-2FkDe1BU4A-3D-3D2ado_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeSakc18Bz7ynptXNXZC01OyJrADzpIupUNHdpf-2BSeOrG3lPGFX9IDolk2coL5CMc5czDNU9HuOEQ7hO-2F1FDM5nTW1XqbH5yzbkEgzgM2szNPLEfZWLFQUGCfDiPMnQJXQpZzGFlmkwgeossfCJUX4RGH9wBp6uH-2FUerKu1F2PH4EbnizkVlpKLR9OvTNXjot9A-3D-3D) **by Dan Matuszewski** Former OTC desk trader clears up the misun­der­stand­ings and FUD around Tether. Summary: Tether is not a threat to Bitcoin.  [**Swan Signal Live 50: Eric Weiss and Andy Edstrom**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8uNGRhArpqB8WHMg5cCyOvC-2Fbo8NTTbyd8eshjGF1z4llaLHEl8sFYDWWUk-2FRpT9nrR6oJeylGnHwKwgqoWcJuDrsghGZEJT-2BaYb7WDnvA-2FgU1rQMLtDb8l0RPnd3Xr4xQ10u0MsTUWSE5a4VWvgm189BbDknSOwPCgrd0b-2FKx7sA-3D-3DLwi7_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLebGA2xHM6f8B1gra9OHLgFIKnnTmPdgqF25N0ckLJhrTZFzKvgGfNB8soQE2UZ-2Bb-2BmXRVGXgo7OofRh-2BpyQaouuqeO1JtRQSqcJc1TdFA608VlbK3kXS9wdwiITnzuERurq-2BPrYiHMxHEdHyuW8K0JC0T6meIBYPsruKB1yNNWKiUMchem0hKYYYNtQhjS-2Fv3A-3D-3D) Eric Weiss, CEO of Bitcoin Invest­ment Fund, and Andy Edstrom join Brady to discuss the orange pilling of Michael Saylor. [**Swan Signal Live 49: Robert Breedlove and Knut Svanholm**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tSOhMNiVY5X0-2FObtEeXP1Tk-2FMO1QeNQuiwu-2BEXZ47TtXF0D2Z5uCJkqidNGVzeHCDCO-2FtORTCG74iGJ9gUJ-2BhVoiyxcGDsVyATDShP2wN46Qlaur5UjShwJHxhUP-2BqL3rjwSMtZNFi4A-2FXhSQ3gqLwsP438oYnVNUSd9ef-2FZVIvw-3D-3DXbAk_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeX3Em3GsJsPYnSOqNay-2FpVUdMFqRHaMCZpbRQwhdzGI0jAl1pO7v9XMEOJVzCPq3qP47BgenzQA0BizO-2BPKWBgQv8cG26L9tykS3oJ-2BRlEgg-2FiAc-2FKtJITa-2BCqDWcvfQuteIcIFtKvDAE6NcnsbHTJmG-2B1xnvP3cCUF0BF-2FcINg-2FdrONZ9i2hRr0-2B8s0bF48sg-3D-3D) Fasci­nating discus­sion of personal sover­eignty, the future of the state, and the philo­soph­ical context of Bitcoin. ### Behind the Scenes at Swan - Swan hit another record-breaking month in terms of new members and total Bitcoin bought  (never gets old saying this)  - [Swan Private](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfausbLeAVinJonXcTwTUWnVoR-2BAlmeZtrdu7VGihOhj5jUWIBaQOQ7Q155o64fAU52IpoJ3roZ5Wv1m2WAN6-2F7vD50eeSoy-2BYQhvH9OGZkHHWkYkWO92PBUeIiSjMsUwTNI2I1hT-2B-2B0IUQq-2FXA-2BvA8LJvLUn_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeQZwKTSuQVBxMsA1KXZoM6mNhEkqWlCzaqNfkkrn0QX7oHj3CHphykUMoMIc8ayZrva7rKdoY1zitKHQg1-2B1YPzn2T20ENkiV4-2FVXFHtk2eGFQ-2BP4zNKparoZcc9bminiTvwVakexNqje-2B9TkYfYRqz-2FkQCsLztE85MasMUXTpGih1kvRUL0OCThUAaDzIHLtg-3D-3D): Our concierge service that guides corpo­ra­tions and high-net-worth individ­uals toward building gener­a­tional wealth with Bitcoin is live. Hundreds onboarded already, join us.  - Wire Trans­fers: [Wiring instruc­tions have changed](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1I-2FZ3sGZ-2BjOmGKtVlcn5W61NiKXUsYhtJIsWQ47mzmzXYzvYBKKuErUnCrnNXQMygMlMS6fIBj3kOZG6Y-2BUnY6O4P9U2-2FsDCck7lmqS3UjtqANQf38in2goyzbZWftNwP-2BS9qiEF4p0EjNzoYCKnF4AaCKZ-2BBzOR2V60e9Z1-2F1bIjLJq_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeSs505-2BbbwwDfsJkxvRMjiSD2bmRTMGlRncphW8kaNNNbbX-2BlW5qLUxWlC-2B13ZRVBE22JQw0i71QMIUbby40JUJARxhNAE2ZsOARc4sdyMnpnDnkK8vsQVmhp1Vg4goZYMPf2a2SKn5zYkyjqRVov4aOEAFeIJmCKXsrg2h8F2viQwGMLiYEIuZN9cOw-2FWNqlg-3D-3D)! Good news is your wire trans­fers will clear faster enabling you to convert your dollars into Bitcoin faster through Swan.  - Swan in the media: Cory was mentioned in the [Wall Street Journal](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1P19eMI1T1CysDNLw-2BEMf5vQdumHgj6yEhFbGxMwqoI7kNO1WoM6bnBrOtWAEJoVTt3lCX3JPhra3lZ3TO-2FspPeT1Gfde-2BfUi36uWfAPYGXVbaCsK4AWfff3CAV00yyQC839BUqsZV5AoKBbed8WnWfDagZ9zpkTJfY2RzaQ7-2BkswOm2VtWE2dQ2lSgd0jHdDvgpkxVdaUHK-2Fn6eAKKRofXDLPLsIExOCGPmKoHE8e44ngUFmh-2FrrYCNmRJg68rN9nwma3ladP2OyOu1dL0esUbs953fgK4caF5l8it8eXn5JoCG_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeeblgr36czunHXccFDoOEztqnWANH5APgujU2Ua0uMj-2BpoT-2FHX-2FEvkcHjeVF2Avg6cgLd1L-2BFCsxtA5jtnZKWgwBtAnCqt6gwY5YptwmNNakHwSgr778jIp-2BqLpHA2A5FzPwUpIjJ8pSYqHBuxl-2BT1BBOz-2FrqsNNzKnTxjL2l3Awu46i1GxU4faWrKaO0ysvMQ-3D-3D), Yan was inter­viewed on [SALT Talks by Skybridge](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Ond67yoWKgMbQVFsGxju8tUr73-2BCQNd2dTs1kdN4xb-2BiiyUcMctdTq4lc8XiGH2b-2BDDtOC1Qbf-2FEsmpEqcCDMeDJGSVbuwjBfw9WUDgL3IK1OQiH-2Fyt-2Bv-2FnFJHrKZqV0C7RygzDYTKNNlIXAwiFSpwcSppu0F1DwGjJR4d1y6vB-2B6HQNT3oqBzR3k13LOC3LS1GLKXHcJdC5oo1-2B-2BZ31La17HIio2mB4FbKbtDQMDXPJqJn2sNtoe66AZxcEJ0mUtst00DyFHfRbifghkks5qZj9-2FanN7z-2Fts9z2jJ8pI2fZChz3B5lj1QZX1ESOiPxNFmUTVrCAwtziDtYV-2FdRBnutAlwNoVjuF6q-2FrLebXRsqkNMXFjadRFFxval1-2B9UJppLIpg7-2BtRGGFnJlbym9KkYJeH6Xs29uF8CcN7ZklATFXKgL1AHc2EeqOB-2BB5WrXIgT7ihZUSw5OhQ-2BX7RqigFYWWUwRZUNR-2Fj8hX-2FMVViwQKWn9hq5Mi7GI3Cn2L8-2F8xyb1IaCbz-2FmZB4MT1zrD0Co2fXm5lgR3lVwx1JEyng2y33m7Wb3CRVZ0iKAvg4ZfdQ-3D-3DvPN0_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLec-2BMBxjJJVkStSHSSPmhHEm4AoQT-2B99XouJH0TdV4ZJ8xk8-2FkGfub04M7jE4vjQbPGc9WvAED5y5xs9eTJhGNev0usDZeNOR3Of13HNh0ijqUkSXYNgAGMAHnMK1NfXZjp0Vw03ekBy7Cd8mFajfQDMREX-2Fd7Ol7RzDzoznWAXuPlTVhAr-2BqVvXD-2B4DyhYuoiw-3D-3D), and Cory was inter­viewed on the [What Bitcoin Did](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1E8tR1iKqdKuuapAK2ggsPfpc-2BKkU00wvKuGcK0nYtirY3NjYXlkrRfsjsVF3jGWvQHWPf293atsuDvr7lVpjUk1QJO4KkA-2Fr-2FSRyTaQPpjeqjYATdnLOL9-2BDbDCP03k93plQNiUgWU3FOInwBOMuolLCToM822z2TqEcjJblyf1g5ZWGwlucSLcrRDgfXuopL1DDAuod7jEeoVU5J8kGoE-3DrjPV_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeUNVcpncAhAgxP7B8RRehkWHT9iOS6-2B0SRxHCGTEOM1H7zCjrlA1FK76UgeMMr8-2BhoaVAWoGu-2Ft1pQU5rB4qK2e-2B6CJCh5fz-2FJNLhOQ3G2Lgw-2FSyKVva-2BrSKMmrtUr3a-2F5sZc3Y3taBsgPKS8eeCT-2FsWuwN6MxpO4xG6ZDMxyD5wTM33q1vl6uBkaSbYbmz1WA-3D-3D) podcast. - Clubhouse: The Swan team has been hosting Bitcoin rooms on [Clubhouse](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1CNJciUAe8X7Ohxhb-2FEZoS-2FDlHw69vwdvW2IMGmSbKEs545EWqeU4tO7YEK43HGSAxzw0dBtektU63ijEIr-2Bk2pdZDGlp3DBlsKTiZvF5jmO-2FN0lERpbUv7Y2vKA2yj4ODJcBJjUVja-2BGMS-2Bffn9wUedbKFsUEkJNFx9to8kgXzZyZSDiEBHgtkJGDt70ZzvHadQQrvWdYSqy-2BGmNPuPj6kUQX3I-2BJ-2B7jQ0tEq-2FaKtu-2F9zRkx2SrpXyC7XLARtuRCe5DQVWy-2BR-2BSk867ysO126OkZz-2FPorcA1KMJ07hZJz0VnZH6rruPM8jyJSJZoTbA-2FIp2UvsdaTl7ohDOpqDDPtqNMCYggmcpMcYSLeRXwmp2S4QvYKwHd3z4yh2JsUdq-2BvZeTlTNsvl4NOx9c8rhThoY4L5jz03cA5fY3HN5XcfKi2QbNGYfDiZzYLwXyBiFNTxhNJzC-2FdpynY1w4nwaaR61nHFHdJwvu1bEwcglTX-2FgtOFELK6GmOcTxxcYtMBD4y6i4V-2FCn-2Bk8aacW3jkZRePbinlEynIZ6jUiafxiRslsSPfLFAlSrw0a-2BhRHn4GsK272pb-2FnyjfRTRVeSm8AkjOX6SXbpWKLA5hDrwFF0gwWe8JUs5ulGglhQowHO7PM-2BbDhaLo3jNJpd5z-2Fy-2FXcauda5TfU8cCyVGAC-2FPzhHgojfiLxkJ6mAUma0BdmutamANoBt7dRzJKYA-2B-2FT7otMgu9velQ7SpRriNt8gZ0ZbYs6Tg1mXMhKTK0cN2n-2BQp3-2FuibmmuWdH3zpQM8eBxsGShNhP0mRQrB18Lmglot7hjim4vGh6DPGiWnR0qv3ePqVnOYhxeovUc0-2BA6HBrXJy-2F-2FelOhNPin-2FJmJcgN7RJUTOn70r6iFAPT4RXsqk7v6wdbUArDObKizAcmVo6PGtgNnHHeAasEdaOLMmRlmYRG-2FJKRL-2BTNwtDiQmJV4UrT8B45kqgDVjtkQhIHIIxbTICvwPy5Ur5r6dkbrXH-2BqF2BqQNKo4niJh0dilKR8zDuJUQ7w-3D-3DN-IB_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeR6kmKcB5fN8mZ1MggcXLWx0QVOdsaxidvGHOD5ledZN84PC9wSs1gBDHKTew3yC85V8d-2B-2BTdExBRFPfMlnuuGQBFpv6IlLrc28DDnei68UGevUiO1-2B0CiU6qiM1SxhW7uc54TNJ9fg9KwLb-2B43lkJjYgXBvGahzjLcoPDReUr0V8LTERrLzYwLsUhyAI-2Fir9Q-3D-3D). We’ve helped grow a Bitcoin club, *Café Bitcoin,* to over 60K followers with Bitcoiners all over the world hosting rooms in the club. Really incred­ible growth in six weeks.  - Facebook: We run a Facebook group called *Café Bitcoin* to help educate people about Bitcoin. [Join the group and invite your friends](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1I2aql7cylzqgCcDVPhQNS4x8qBWV8JHVHR4BAfWwV3FQXlM2Lts5BEyGo6BnxiEtB9wHDA4VxBhpOiuuTkifBkJv3liQa5u7n8XrG5Ws-2BR-2FJHaXepn-2B1G-2B1zKECdxcqfZNGHJgJKY-2F6zj9oMSd7pZucbw-2B71ziw9z8WOpu-2F8Qgywx7GokZMN2LaxcR0LoYo3g-3D-3DLiu7_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeZxasBkzQJZ34apYuKAw-2FjQflk8AQYr6-2Bs2gDBctXrBbNCEEIjiB4gKTvvfnh074UEhRgCl80DBdh5-2FNfK3fflJh8Ls8CQ-2BHPW4pT2Km9sDw8C1LS5J0WgdYeqDSrR4Nvuuy1Q0kVlm79aedolc2jbK409hiHJ7lErGqfLxuoULAKFqlt8B4ubZHe1pHFVEY-2FQ-3D-3D)!​ - Swan Force: Grown to over 4,500 members! Join Swan Force to [get paid to recruit Bitcoiners](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfas9MdF9wYTq2F8TFdl5jI0422dIbNFf5eBhOlv6FM59FCRl4vDDJz5FUe9ANSppG5VNTRZW43WTUAJG2Y-2BOaqNnk9EjO-2F7EMj35-2FX87b3Lx09m2FodLM-2BTbEhadZPrA0lJS8Aizcd8aVHiQxmMm65O-2FDmT4_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeY5lc9aI8J8NhKUEtmZA0T2LfHkNV49B-2Bg-2BFHJC-2FTBaTe-2BuyCpEZknb8P0M3b0CGYFZsYJjWSN2NWJrOj-2FUwpL3r70rH4ANJ1A6L-2F4ghlOno3ALZh2uYVyM-2BGKfo-2FTjBau10sxosZgMLJ7bbKLQj6dDVXUdpYgQ2OComp302pLms6VcYCoA0Cnh1qvw2HFw21w-3D-3D). When you recruit someone to Swan, you’ll earn 25% of all Swan fees for 3 years.  #### Thank You! Our mission at Swan is to onboard the next 10 million Bitcoiners and we couldn’t do it without you! **As always, Swan is here to ensure investing in Bitcoin is easy, fast, and safe.** [**Click here to get started**](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfasb73Q3SHST-2B4y6f1mNFPAOc5EF30dJTBjF9v8Y4rsJA3CgycmZJbyYlG7LdsW-2BFsoxzbB-2B7iBw61i2dcaCu67hFq-2BO32k72cpL2Ce2r0-2BdUF7HSWoCBG1Ng7DdZhwnDaPpn4-2FVJIoqPqis6B5EZL3gnMDr3GLPVUQ4NhztVdF4iEJ51jYzr8Hpx7v0eWXH4fYefoDbfBAMUulsP73pSENBjcTR_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLeexwkZ1rtXy0J26bLRw44-2B7knBoZHdAA-2F08-2FOijrim1ny9GsddCBy7p1rtYezqnxb-2FPOxLybXG4Qet6USVLjwg8bL6hGkhaDXMMCwqrZ4WpT6hBkLjuZrisR1O399UrjW-2FfYO64oO2U0cA4qhQbVP1pBHPU6-2BRoSg0D47AS-2BnZSKajdp51WQ2R6UMJnxTnxFCQ-3D-3D) **today!**  Thanks, The Swan Team P.S. Questions? Reach us at [SwanBitcoin.com/support](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1F3dHxFB4ng2kkKHpubjfatJDZQGEo-2BrOBavJxRM2w-2BPTnpRfl0csLqXcS50Sca8L7D08kkdlXJva7iLF4WxJPAeooj-2BlwTe-2BlcYPjH4lQ9Jh8wNmkT0vRnywqTi2yWnIHJSo6SrfCmIvM1LZnWsbHfTKKjXFjjyAs3TBtkSJEwzzF4L9dest92liyo11mDs9P7P4P8mr4a-2B3LPwjPCPNsQoyCnIbIKpSE2u5C4Ne-2FCSaeOLRprODR0y3cxGFqbppA-3D-3DlaKL_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLef5EzVEHQzozzNSk8iqdFIEfF3DKz0OKHlATf-2F3itOdGaXcC029HF8aH3M-2F9oSH9QSJ7PWpeY8DSRXcC9ud4KxJEQ7rtoHIW9I1r-2FhWO1ppY-2FgGrJaYFa4pno0FLCYBHbvfaOaoNIM-2FM8kBmi-2FKJh2pvkrH4UIOQtWm8j7a3-2Fav6AgpDqNKdlrehZkfhFq1LGg-3D-3D). P.P.S. As part of our commit­ment to educa­tion, we’re offering you and your friends a [free copy of Inventing Bitcoin](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1OsUrOBqyHkB8j3XtlXJW7qTy8l-2BiYUDmGTsvrVqWJ-2B0lC4SEtaSoorPYFm3avgFNw6OpXsewdgtrxFnoJQcpP4S-2BfYpfcToZm9ui-2FFGExRiNLNSVKjqKzfM9gi6sGZj7yqC9pTMe5RPbUOg2GRippDy2mGMbldGlwViHnXX4mskXVbf_uJgXvmkZVTkaUH53oTldKU9KtImZC5v-2F3dqBhcQqpYucXaBnz10yqoRVNLjfCkhuaWHfToZaS2umjfUPSf104fLEmB9670c1BF00if9jdhWUaLsqSkgcLXmZEkxZOMo-2Bu3KZr9FrQ-2FLPac1rlbwH2m09KgbaGHi-2ByLnxIc-2B9GU1xqo7wBJih6DvLD4RvO6X117C4QjW40YPjfIe-2BZSjLecOscHHaavIRPFM1VwkUJoG0Srv7Gk0d6ateGbPDRUU5mmHn-2FIwjZLdmXoZwq1CYzsCY-2F2uOE06rxGe3qg12Fq2y4o6LY-2Bt2Yr-2Fh-2BBbBrQh1lGarwzDrcfY7SCeRUqxlJXtHuzeN5m3x17iXZfH6yZvbjalv8ekGkJebhg98qIvRkkvXW6FoIt81v6O8y9ClWw-3D-3D) by Yan Pritzker. Share this link around! ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # Swan Signal Monthly: March 2021 Newsletter URL: https://www.swanbitcoin.com/industry/swan-signal-monthly-march-2021-newsletter/ Bitcoin hit a new all-time high of $62,000 this past month, pulled back to $48,000 and is now right back up to $52,000. Historically, in bull markets, this means Bitcoin is about ready to start another leg up. --- March 21, 2021 · Updated June 6, 2024 Welcome to the 10th edition of the Swan Signal monthly newsletter. Bitcoin hit a new all-time high of $62,000 this past month, pulled back to $48,000, and is now back up to $59,000. Histor­i­cally, in bull markets, this means Bitcoin is about ready to start another leg up. In the meantime, we hope you find our monthly Bitcoin newsletter valuable!  In this month’s letter: 1. *Liftoff: a short essay on an impor­tant topic* 2. *A curated list of recent Bitcoin content from Swan and around the web* 3. *Behind-the-scenes updates from the Swan team*  ### Liftoff: 5 Misconceptions About Bitcoin’s Energy Use You’ve probably seen headlines such as ***“Bitcoin boils the oceans”*** or compar­isons like ***“Bitcoin uses as much energy as Greece.”***  Time to explore the top 5 miscon­cep­tions about Bitcoin’s energy use… **Claim One:** Bitcoin doesn’t do anything useful; therefore its energy use is not worth it.  Most people critiquing Bitcoin for energy consump­tion assume Bitcoin doesn’t provide any value.  For example, clothes dryers consume way more energy than Bitcoin, but no one complains because we agree they add value.  There is a reason a decen­tral­ized protocol with no marketing budget went from zero to a $1T market cap in 12 years. The roughly 100M Bitcoin users value it. Now the critics might say, ***“Well, the only use case for Bitcoin is specu­la­tion, which is bad.”*** In a recent Video, Alex Gladstein explains how [Bitcoin is protecting human rights](https://www.youtube.com/watch?v=xLYYh4aPXAM), and Yan Pritzker lists a wide range of *“*[*non-specu­la­tive uses for Bitcoin*](https://twitter.com/skwp/status/1335627973915971592)*.”*  **Claim Two:** Each Bitcoin transaction is responsible for [insert large number] CO2 emissions. This argument simply divides the total energy consump­tion of Bitcoin by the 300,000 trans­ac­tions per day settled by the network. This approach results in a very high ***“energy cost per trans­ac­tion.”***  Let’s break this down… Bitcoin has a high fixed energy cost to maintain security, each marginal trans­ac­tion is very efficient. This is similar to building software which requires large upfront capital invest­ment (high fixed cost). However, once the software is finished, you can push it out to nearly infinite users at a low cost.  The economic density per trans­ac­tion is increasing. Said another way, a Bitcoin *“trans­ac­tion”* is not the same as one *“payment.”* For example, a single Bitcoin trans­ac­tion could support one million end-user payments over layer 2 networks like Lightning. Both [Nic Carter](https://www.coindesk.com/frustrating-maddening-all-consuming-bitcoin-energy-debate) and [Lyn Alden](https://twitter.com/LynAldenContact/status/1374774380748750849) explain this in detail. **Claim Three**: Bitcoin’s Proof of Work is *“inefficient” .* Bitcoin’s Proof of Work function appears ineffi­cient at first glance.  However, there are no alter­na­tives if we want a secure, decen­tral­ized, sound monetary system.  Critics will also attack Bitcoin’s energy consump­tion without comparing the relative energy costs of other known finan­cial systems such as our current fiat monetary system, the petrodollar.  The short answer is a monetary system built on Bitcoin consumes orders of magni­tude fewer resources than our existing finan­cial system. Dan Held explores this in *“*[*PoW is Efficient*](https://danhedl.medium.com/pow-is-efficient-aa3d442754d3)*.”* **Claim Four:** Bitcoin hogs local power resources, driving prices up. This is simply not true. Bitcoin miners are only profitable when they find the lowest-cost energy on the planet. [The cheapest energy is *“nonrival energy,”*](https://medium.com/@nic__carter/noahbjectivity-on-bitcoin-mining-2052226310cb) meaning it doesn’t compete with consumers.  Instead, most Bitcoin miners consumed stranded, curtailed, or other­wise wasted energy. For example, China overbuilt hydro­elec­tric power sources. During the rainy season, they produce way more energy than can be consumed, so instead of wasting it, they happily sell it to Bitcoin miners.  Inter­est­ingly, Bitcoin can run exclu­sively on *“nonrival energy”* since Bitcoin consumes less energy than the total nonrival energy produced today.  **Claim Five:** Bitcoin consumes dirty energy. Critics who make this claim fail to examine the energy mix that Bitcoin consumes. Let’s look at the data.  According to the Inter­na­tional Energy Agency (IEW), [nearly 28% of global energy produc­tion came from renewals in 2020](https://www.iea.org/reports/global-energy-review-2020/renewables).  On the other hand, Coinshares estimates that [73% of Bitcoin’s energy consump­tion comes from renew­able sources](https://coinshares.com/research/bitcoin-mining-network-december-2019). By compar­ison, Bitcoin is leading the charge in renew­ables. In summary, Bitcoin is not boiling the oceans; it’s very good for the world.  ![](https://www.datocms-assets.com/56652/1690025854-bitcoin-earth-hands.png?auto=format) We’ve pulled together some great Bitcoin content for you… ### Bitcoin Content Showcase [**Archi­tecting the internet with Bitcoin’s Sphinx Chat**](https://podcasts.apple.com/us/podcast/239-sphinx-chat-encrypted-chat-over-ln-banking-unbanked/id1292381204?i=1000513470484) **on Tales From the Crypt Podcast**  Walk away with an under­standing of the big vision for Bitcoin’s Light­ning Network. In short, the future is already here. Content moneti­za­tion without ads, encrypted chat over Light­ning, Banking the unbanked, and much more.  [**Aker Share­holder Letter announcing new Bitcoin venture (Seetee**](https://www.seetee.io/static/shareholder_letter-6ae7e85717c28831bf1c0eca1d632722.pdf))  The second richest man in Norway launched a new Bitcoin subsidiary. Notably, they praise Bitcoin mining as an impor­tant industry that’s net positive for the world.  [**Bitcoin’s Layer 2 Solutions with Ryan Gentry on The Investors Podcast**](https://www.theinvestorspodcast.com/bitcoin-fundamentals/btc019-bitcoins-layer-2-lightning-network-w-ryan-gentry/)  Learn how Bitcoin is extending its capabil­i­ties with layer 2 solutions such as Light­ning Network. This one might blow your mind. The future is already here; it’s just not evenly distributed.  **Bitcoin Tidbit: What is a hashrate?** ***“Hashrate”*** *refers to the total combined compu­ta­tional power that is being used to mine and process trans­ac­tions on the Bitcoin network.* *The more* ***‘hashrate’*** *a miner has the higher the chance they will* ***“mine a block”*** *which rewards them with freshly minted BTC. Currently the* ***“block subsidy” is 6.25 BTC per block.*** #### Highlights from Swan’s Content Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, [Swan Signal](https://www.swanbitcoin.com/signal/), features thoughts and opinions on Bitcoin from the Swan team and industry experts.  Our weekly live broad­cast, [Swan Signal Live](https://www.youtube.com/channel/UCl4takhOQtiyprismCPsa2Q), pairs notable guests for compelling discus­sions about Bitcoin and economics. The live broad­cast is then published as audio on the [Swan Signal Podcast](https://swansignal.simplecast.com/) feed. Subscribe to receive new episodes.  [**Bitcoin: Fee-Based Security Modeling**](https://www.swanbitcoin.com/bitcoin-fee-based-security-modeling-lyn-alden/) **by Lyn Alden**  Lyn explores Bitcoin’s security model and how it will evolve as we transi­tion from a ***“subsidy-based security model” to a “fee-based security model.”*** [**Swan Signal Live 53: Gigi and John Vallis**](https://www.youtube.com/watch?v=c-jaIlpw5Ks)  Philo­soph­ical discus­sion of Bitcoin’s relation­ship with time, the bridge between the physical and the digital, and orange pilling the smartest people on the planet. [**Swan Signal Live 54: Vijay Boyapati and Lyn Alden**](https://www.youtube.com/watch?v=wcGFctqEBq8)   Bitcoin market cycles, macroeconomic outlook, NFTs, and game theory. The first time this incred­ible duo has recorded a conver­sa­tion together. ### Behind the Scenes at Swan - Swan just celebrated its first birthday! We’ve grown to tens of thousands of members, thousands of bitcoins trans­ferred to long-term hodlers, and we are eternally grateful to Bitcoin and all our members. - We are accepting inter­na­tional clients at swanbitcoin.com/international for instant buys with wire transfers.  - [Swan Private](https://www.swanbitcoin.com/private/): Our concierge service that guides corpo­ra­tions and high net worth individ­uals toward building gener­a­tional wealth with Bitcoin is live. Our clients are onboarded in days instead of weeks/months, which is common at Coinbase/Gemini.  - Swan in the media: Brady was inter­viewed on [Keiser Report](https://www.youtube.com/watch?v=Rd3r8xN2QJY), Gigi was inter­viewed on [What Bitcoin Did](https://www.whatbitcoindid.com/podcast/bitcoin-philosophy-with-gigi) - Clubhouse: The Swan team has been hosting Bitcoin rooms on [Clubhouse](https://trk.swanbitcoin.com/ls/click?upn=QKKgTWB5agWu-2B4U54y4w1Jmg7LDSv0aW1oyxPNOceazioJpyahjq23XOpxcLDABZkVg4WXkF-2BqnvGMUgaGUq0NrMosi15sFU9tLTJh70CsjWdW64gOkd39QHLGZ7LWngYSonUWxXke8rC1S9BWXGcKqCimqBI4xpJQl2bsNArpY-3Dp15A_hFDJzuIapHE6MvPLNgJhayEA-2BMV-2BLfevyCGpUe9-2FsiRg05ojkfwVN32SNdr9B3DG-2FRNspInb6FdVbZ4IdFJZ9yg3iA6FYtP7xa-2FU8Ct-2FX1JUzmzt0N2J63j0pvQjCZwb84f4pvWhnmY5YDBcBD1Wp3q9yfs1V2tmEK1gos5LSNuS-2BNLrbalzNllXj7oITRhxWiEs59RU-2BhjI15loehiZd4TRixRi-2BRP6FpL4kCPfRfKomSkEZI4yWnVaefEB3l14qaVS6pqaoPtzMAIHst1uZ0rIkCuqeBww5V7FkvDom7qdNv4joE5-2FfdbPd7tBOngk8UFdI5tdd692Nh5GfXkIqf2G1V-2Bb4fKe8o-2BjVFpBq2Qctvf6VnrcPQzZmNTKRtN913EoduEe9A0P2Zh3-2FGVxR1urJLS5DZSr-2BW1xSHRyNaA-3D); join our club Café Bitcoin to be notified of future events.  - Facebook: we run a Facebook group called Café Bitcoin to help educate people about Bitcoin. [Join the group and invite your friends](https://www.facebook.com/groups/cafebitcoin21)! - Swan Force has grown to over 5,000 members! Join Swan Force to [get paid to recruit Bitcoiners](https://www.swanbitcoin.com/enlist/). When you recruit someone to Swan, you’ll earn 25% of all Swan fees for 3 years.  #### Thank You! While central banks worldwide are forced to debase their curren­cies, people realize that they need a new strategy to protect their wealth.  The smartest people on the planet are flocking to Bitcoin. And it’s not just individ­uals. We’re seeing insti­tu­tional investors like Paul Tudor Jones, PayPal enabling people to spend Bitcoin at their 29m merchants, Fidelity applying for a Bitcoin ETF, and corpo­ra­tions like Tesla buying $1.5B Bitcoin and accepting Bitcoin as payment.  Bitcoin is up 800% in the last year alone, with no signs of stopping. Of course, there will be more volatility ahead, but the long-term trend is clear. Bitcoin is here to stay.  **As always, Swan is here to ensure investing in Bitcoin is easy, fast, and safe.** [**Click here to get started**](https://www.swanbitcoin.com/) **today.** Thanks, The Swan Team P.S. As part of our commit­ment to educa­tion, we’re offering you and your friends a [free copy of Inventing Bitcoin](http://swanbitcoin.com/freebook/) by Yan Pritzker. Share this link around! # Bitcoin is Time - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-is-time/ The relentess beating of this clock is what gives rise to all magical properties of Bitcoin. --- **Gigi** · January 14, 2021 · Updated June 26, 2024 ***"One luminary clock against the sky Proclaimed the time was neither wrong nor right."*** - Robert Frost, *Acquainted with the Night* (1928) ***"Time is still the great mystery to us. It is no more than a concept; we don’t know if it even exists"…*** - Clifford D. Simak, *Shake­speare’s Planet* (1976) Time is money, or so the saying goes.  It follows that money is also time: a repre­sen­ta­tion of the collec­tive economic energy stored by humanity.  However, the link between time and money is more intri­cate than it might initially seem. If money requires no time to create, it doesn’t work as money very well or not for long. More profoundly, as we shall see, keeping track of things in the infor­ma­tional realm always implies keeping track of time. As soon as money goes digital, we have to agree on a *defin­i­tion of time*, and herein lies the whole problem. You might think telling the time is as easy as glancing at whatever clock is nearby, and you would be right when it comes to everyday tasks. But when it comes to synchro­nizing the state of a global, adver­sarial, distrib­uted network, telling the time becomes an almost intractable problem.  How do you tell the time if clocks can’t be trusted?  How do you create the concept of a singular time if your system spans the galaxy?  How do you measure time in a timeless realm?  And what is time anyway?  To answer these questions, we will have to take a closer look at the concept of time itself and how Bitcoin makes up its own time: block time — more commonly known as *block height*. We will explore why the problem of timekeeping is intimately related to keeping records, why there is no absolute time in a decen­tral­ized system, and how Bitcoin uses causality and unpre­dictability to build its own sense of now.  Timekeeping devices have trans­formed civiliza­tions more than once.  As Lewis Mumford pointed out in 1934:  ***“The clock, not the steam engine, is the key-machine of the modern indus­trial age.” Today, it is again a timekeeping device that is trans­forming our civiliza­tion: a clock, not computers, is the true key-machine of the modern infor­ma­tional age. And this clock is Bitcoin."*** ### Keeping Track of Things ***"Let the child learn to count things, thus getting the notion of numbers. These things are, for the purpose of counting, consid­ered alike, and they may be single objects or groups."*** - David Eugene Smith, *The Teaching of Elemen­tary Mathe­matics* (1900) Very broadly speaking, there are two ways to keep track of things: physical tokens and ledgers. You can either use real-world artifacts directly, e.g., give someone a sea shell, a coin, or some other tangible *thing*, or you can repli­cate the state of the world by writing down what happened on a piece of paper.  Imagine you are a shepherd and want to ensure that your whole flock returns home. You can put a collar on each sheep, and as soon as a sheep returns home, you simply remove the collar and hang it up in your shed. If you have one hanger for every collar, you will know that every sheep is returned safely as soon as all hangers are filled. Of course, you can also count them and keep a list. However, you will have to create a new list every time you start counting, and you will also have to make sure not to count a single sheep twice (or not at all). Money is essen­tially a tool to keep track of who owes what to whom. Broadly speaking, every­thing we have used as money up to now falls into two categories: *physical* artifacts and *infor­ma­tional* lists. Or, to use more common parlance: tokens and ledgers. ![](https://www.datocms-assets.com/56652/1690027016-ledger-token.jpg?auto=format) It is impor­tant to realize the inherent differ­ence of these categories, so let me point it out explic­itly: The first method — a physical token — *directly* repre­sents the state of things. The second one — a ledger — *indirectly* reflects the state of things. Each comes with advan­tages and disad­van­tages.  For example, tokens are physical and distrib­uted; ledgers are infor­ma­tional and central­ized. Tokens are inher­ently trust­less; ledgers are not. In the digital realm — no matter how intensely marketing gurus try to convince you of the opposite — we can only use ledgers. It is an *infor­ma­tional* realm, not a physical one. Even if you call a certain kind of infor­ma­tion a *“token,”* it is still a malleable piece of infor­ma­tion, written down on a hard drive or some other medium that can hold infor­ma­tion, effec­tively rendering it an infor­ma­tional record. The ledger-like nature of all digital infor­ma­tion is the root cause of the double-spend problem. Infor­ma­tion never repre­sents the state of the world *directly*. Further, the movement of infor­ma­tion implies copying. Infor­ma­tion exists in one place, and to *“move”* it, you have to copy it to another place and erase it at its origin. This problem doesn’t exist in the physical realm. In the physical realm, we can move things from A to B. The infor­ma­tional realm doesn’t have this property. If you want to *“move”* infor­ma­tion from List A to List B, you have to copy it from A to B. There is no other way. Another way to think about it is in terms of unique­ness. Physical tokens are unique compos­ites of atoms whose assembly is not easily replic­able. Pure infor­ma­tion does not have this property. If you can read the infor­ma­tion, you can also copy it perfectly. Practi­cally speaking, physical tokens are unique, and digital tokens are not.  I would even argue that *“digital token”* is a misnomer. A token might repre­sent secret infor­ma­tion, but it will never repre­sent unique, singular, uncopy­able information. This differ­ence in proper­ties shows that there really is no way to *“hand over”* infor­ma­tion. It is impos­sible to pass on a digital token like you would pass on a physical one since you can never be sure if the original owner destroyed the infor­ma­tion on his end. Digital tokens, like all infor­ma­tion, can only be spread, like an idea. ***… "if you have an apple and I have an apple, and we swap apples — we each end up with only one apple. But if you and I have an idea and we swap ideas — we each end up with two ideas."*** - Charles F. Brannan (1949) Physical tokens — what we call physical bearer assets, or *“cash”* — are free from this dilemma. In the real world, if you hand me a coin, your coin is gone. There is no magical dupli­ca­tion of the coin, and the only way to give it to me is to physi­cally hand it over. The laws of physics do not allow you to double-spend it. While double-spending does exist in the non-digital realm — George Parker, a con artist who famously *“double-spent”* the Brooklyn Bridge and other landmarks comes to mind — it requires elabo­rate decep­tion and gullible buyers. Not so in the digital realm.  In the digital realm, because we are always dealing with *infor­ma­tion,* double-spending is an *inherent* problem. As everyone who has ever copied a file or used copy-and-paste knows, infor­ma­tion is something that you can copy *perfectly*, and it is not bound to the medium that hosts it.  If you have a digital photo­graph, for example, you can copy it a million times, store some copies on a USB stick, and send it to thousands of different people. Perfect copies are possible because infor­ma­tion allows for flawless error correc­tion, which elimi­nates degra­da­tion. And to top things off, there is virtu­ally no cost to dupli­ca­tion and no way to tell what the original was. **Again:** When it comes to infor­ma­tion, copying is all there is.  There simply is no way to *move* digital infor­ma­tion from A to B. Infor­ma­tion is always *copied* from A to B. If the copying process is successful, the original copy of A is deleted. This is why the double-spending problem is so tricky. Absent of a central authority, there is no way to move *anything* from A to B in a trust­less manner. You always have to trust that the original will be deleted. A natural side-effect is that, when it comes to digital infor­ma­tion, it is *impos­sible* to tell how many copies are in existence and where these copies might be. Because of this, using digital *“tokens”* as money can not and will never work. Since tokens derive their relia­bility from being hard to repro­duce as a result of their unique physical construc­tion, this advan­tage disap­pears in the digital realm. In the digital realm, tokens cannot be trusted. As a result of the nature of infor­ma­tion’s intrinsic proper­ties, the only viable format for digital money is not a token but a ledger — which brings us to the problem of time. ### Tokens Are Timeless, Ledgers Are Not ***"For the things seen are tempo­rary, but the things unseen are everlasting."*** - Paul of Tarsus, *Corinthians* 4:18b When it comes to physical tokens, the time of a trans­ac­tion does not matter. You either have the coins in your pocket, or you don’t; you can either spend them, or you can’t. The simple act of posses­sion is the only prereq­ui­site for spending. The laws of nature take care of the rest. In that sense, physical tokens are trust­less and timeless. When it comes to ledgers, physical posses­sion falls by the wayside.  Whoever controls the ledger needs to ensure that things are *in order*. What is other­wise given by physical laws, namely that you can’t spend money that you don’t have and can’t spend money that you have already spent previ­ously, has to be enforced by man-made rules. These rules govern the orderly opera­tion and mainte­nance of a ledger, not physical laws.  Moving from physical laws to man-made rules is the crux of the matter.  Man-made rules can be bent and broken; physical laws - not so much. For example, you can’t simply *“make up”* a physical gold coin. You have to dig it out of the ground. You can, however, absolutely make up a gold coin on paper.  To do this, you simply add an entry to the ledger and give yourself a couple of coins. Or, in the case of central banks, simply add a couple trillion with a few computer keystrokes. (Fancy finan­cial people call this *“Rehypoth­e­ca­tion,” “Fractional Reserve Banking,”* or *“Quanti­ta­tive Easing”* — but don’t be fooled, it’s all the same: making up money.) To keep ledgers and those who manip­u­late them honest, regular, indepen­dent audits are required. The ability to account for every single entry in a ledger is not a luxury. Auditors need to be able to go over the books — backward in time — to keep ledgers honest and functioning. Without reliable timestamps, verifying the internal consis­tency of a ledger is impos­sible. A mecha­nism to estab­lish an unambiguous order is essential. Without an absolute sense of time, there is no way to have a defined order of trans­ac­tion. And without a defined order of trans­ac­tions, the rules of a ledger can not be followed.  How else can you make sure how much money you actually have?  How else can you make sure that things are *in order*? The distinc­tion between tokens and ledgers highlights the neces­sity for keeping track of time. In the physical realm, coins are timeless artifacts that can be exchanged without oversight. In the digital sphere, coin stamping requires timestamping. ### Centralized Coinstamping ***"Time: a great engraver, or eraser."*** - Yahia Lababidi (b. 1973) The common way to solve the double-spending problem — the problem of making sure that a digital transfer only happens once — is to have a central list of trans­ac­tions. Once you have a central list of trans­ac­tions, you have a single ledger that can be the sole source of truth. Solving the double-spending problem is as easy as reviewing the list and ensuring that every­thing adds up correctly. This is how PayPal, Venmo, Alipay, and all the world's banks — including central banks — solve the double-spending problem: via a central authority. ***"The problem of course is the payee can’t verify that one of the owners did not double-spend the coin. A common solution is to intro­duce a trusted central authority, or mint, that checks every trans­ac­tion for double-spending...*** ***[T]he problem with this solution is that the fate of the entire money system depends on the company running the mint, with every trans­ac­tion having to go through them, just like a bank."*** - Satoshi Nakamoto (2009) It is worth pointing out that Satoshi didn't manage to make infor­ma­tion non-copyable. Every part of Bitcoin — its source code, the ledger, your private key — can be copied. All of it can be dupli­cated and tampered with.  However, Satoshi managed to build a system that makes rule-breaking copies entirely and utterly useless.  The Bitcoin network performs an intri­cate dance to decide which copies are useful and which aren't, and this dance brings scarcity into the digital realm.  And, like with every dance, a temporal measuring stick is required to dictate the rhythm. Even a central­ized ledger can only solve the double-spending problem if it has a consis­tent way of keeping track of time. You always need to know who gave how much to whom and, most impor­tantly: *when*. In the realm of infor­ma­tion, there is no coin-stamping without timestamping. ***"It must be stressed that the impos­si­bility of associ­ating events with points in time in distrib­uted systems was the unsolved problem that precluded a decen­tral­ized ledger from ever being possible until Satoshi Nakamoto invented a solution."*** - Gregory Trubet­skoy (2018) ### Decentralized Time ***"Time brings all things to pass."*** - Aeschylus (525 BC – 456 BC) Time and order have a very intimate relation­ship. As Leslie Lamport pointed out in his 1978 paper *Time, Clocks, and the Ordering of Events in a Distrib­uted System*:  ***"The concept of time is funda­mental to our way of thinking. It is derived from the more basic concept of the order in which events occur."***  Absent a central point of coordi­na­tion, seemingly intuitive notions of *"before," "after,"* and *"simul­ta­ne­ously"* break down.  In the words of Lamport:  ***"The concept of 'happening before' defines an invariant partial ordering of the events in a distrib­uted multi­process system."*** **Phrased Differ­ently:** Who should be in charge of time if putting someone in charge is not allowed?  How can you have a reliable clock without a central frame of reference? You might think solving this problem is easy because everyone could just use their own clock. This only works if every­one's clock is accurate and, more impor­tantly, everyone plays nice. In an adver­sarial system, relying on individual clocks would be a disaster.  And, because of relativity, it does not work consis­tently across space. As a thought exper­i­ment, imagine how you could cheat the system if everyone was in charge of keeping time for themselves. You could pretend that the trans­ac­tion you're sending now is actually from yesterday — it just got delayed for some reason — thus, you would still have all the money you've spent today. Because of the asynchro­nous commu­ni­ca­tion that is inherent in every decen­tral­ized system, this scenario is more than a theoret­ical thought exper­i­ment. Messages get delayed, timestamps are inaccu­rate, and thanks to relativistic effects and the natural speed limit of our universe, it is anything but easy to tell apart the order of things absent of a central authority or observer. Who's there?  Knock knock. ![](https://www.datocms-assets.com/56652/1690027703-man-clock-congress.png?auto=format) So you both swipe the card at precisely the same moment.  What happens?  (Dear physi­cists, please excuse my use of *“the same moment”* — we will ignore relativistic effects and the fact that there is no absolute time in our universe for now. We will also ignore that the concept of synchro­nous events doesn’t really exist. Bitcoin is compli­cated enough as it is!) The central ledger at your bank will probably receive one trans­ac­tion before the other one, so one of you will be lucky, the other not so much. If the trans­ac­tions happen to arrive in the same *tick* — let’s say in the same millisecond — the bank would have to decide who gets to spend the money. Now, what would happen if there was no bank?  Who decides who was the first one to swipe?  What if it wasn’t only you two, but hundreds or even thousands of people coordi­nating?  What if you didn’t trust those people?  What if some of those people are trying to cheat, e.g., by setting their clocks back so that it looks like they spent the money a couple of minutes earlier? ***"A time-related tool [is] needed to estab­lish a canon­ical ordering and to enforce a unique history in the absence of any central coordinator."*** - Giacomo Zucco, [*Discov­ering Bitcoin*](https://bitcoinmagazine.com/articles/discovering-bitcoin-a-brief-overview-from-cavemen-to-the-lightning-network) (2019) This problem is *precisely* why all previous attempts at digital cash required a central­ized registry. You always had to trust someone to correctly identify the order of things. A central­ized party was required to keep the time. Bitcoin solves this problem by re-inventing time itself. It says no to seconds and yes to blocks. ### Keeping the Time, One Block at a Time ***"Time’s glory is to calm contending kings, To unmask false­hood and bring truth to light, To stamp the seal of time in aged things, To wake the morn and sentinel the night, To wrong the wronger till he render right,"*** - William Shake­speare, *The Rape of Lucrece* (1709) All clocks rely on periodic processes, something we might call a *“tick.”* The familiar *tick-tock* of a grand­fa­ther’s watch is, in essence, the same as the molec­ular-atomic buzzing of our modern Quartz and Cesium clocks. Something swings — or oscil­lates — and we simply count these swings until it adds up to a minute or a second. For large pendulum clocks, these swings are long and easy to see. For smaller and more special­ized clocks, special equip­ment is required. The frequency of a clock — how often it ticks — depends on its use-case. Most clocks have a fixed frequency. After all, we want to know the time *precisely*. There are, however, clocks that have a variable frequency. A metronome, for example, has a variable frequency that you can set before you make it tick. While a metronome keeps its pace constant once it is set, Bitcoin’s time varies for each tick because its internal mecha­nism is proba­bilistic. The purpose, however, is all the same: keep the music alive, so the dance can continue. ![](https://www.datocms-assets.com/56652/1690027970-grandpa-watch.png?auto=format) * first block (6 days) ** timestamps between blocks can show a negative delta ***"The fact that Bitcoin is a clock is hiding in plain sight. Indeed, Satoshi points out that the Bitcoin network acts as a clock, or, in his words: a distrib­uted timestamp server.*** ***In this paper, we propose a solution to the double-spending problem using a peer-to-peer distrib­uted timestamp server to generate compu­ta­tional proof of the chrono­log­ical order of transactions."*** - Satoshi Nakamoto (2009) That timestamping was the root problem to be solved, also apparent by examining the refer­ence at the end of the Bitcoin whitepaper.  Out of the eight refer­ences in total, three are about timestamping: - *How to timestamp a digital document* by S. Haber, W.S. Stornetta (1991) - *Improving the efficiency and relia­bility of digital timestamping* by D. Bayer, S. Haber, W.S. Stornetta (1992) - *Design of a secure timestamping service with minimal trust require­ments* by H. Massias, X.S. Avila, and J.-J. Quisquater (May 1999) As Haber and Stornetta outlined in 1991, digital timestamping is about compu­ta­tion­ally practical proce­dures that make it infea­sible for a user — or an adver­sary, for that matter — to either back-date or forward-date a digital document. Contrary to physical copies, digital documents are easy to tamper with, and the change doesn’t neces­sarily leave any tell-tale signs on the physical medium itself. In the digital realm, forgeries and manip­u­la­tions can be perfect. The malleable nature of infor­ma­tion makes timestamping digital documents an elabo­rate and sophis­ti­cated process. Naive solutions do not work. Take a text document, for example. You can’t simply add the date at the end of the document since everyone — including yourself — could simply change the date. You could also make up any date in the first place. ### Time is a Causal Chain ***"In an extreme view, the world can be seen as only connec­tions, nothing else."*** - Tim Berners-Lee, *Weaving the Web* (1999) Making updates is a general problem, even in the non-digital realm. What is known in the kidnap­ping world as *“Authen­ti­ca­tion by Newspaper”* is an available solution to the problem of arbitrary timestamps.  ![](https://www.datocms-assets.com/56652/1690028127-kidnapped.jpeg?auto=format) Proof of Time This works because a newspaper is hard to fake and easy to verify. It is hard to fake because today’s front page refers to yester­day’s events, events that the kidnapper could not have predicted if the picture had been weeks old. By proxy of these events, the picture proves that the hostage was still alive on the day the newspaper came out. This method highlights one of the key concepts regarding time: *causality*. The arrow of time describes the causal relation­ship of events. No causality, no time. Causality is also the reason why crypto­graphic hash functions are so crucial when it comes to timestamping documents in cyber­space: they intro­duce a causal relation­ship. Since it is practi­cally impos­sible to create a valid crypto­graphic hash without having the document in the first place, a causal relation­ship between the document and the hash is intro­duced: the data in question existed first, and the hash was gener­ated later.  In other words: without the compu­ta­tional irreversibility of one-way functions, there would be no causality in cyberspace. ![](https://www.datocms-assets.com/56652/1690028198-ab.png?auto=format) A before B With this causal building block in place, one can devise schemes that create a chain of events, causally linking A to B to C and so on. In that sense, secure digital timestamping moves us from a timeless place in the ether into the realm of digital history. ***"Causality fixes events in time. If an event was deter­mined by certain earlier events, and deter­mines certain subse­quent events, then the event is sandwiched securely into its place in history."*** - Bayer, Haber, Stornetta (1992) It goes without saying that causality is of the utmost impor­tance when it comes to economic calcu­la­tions. And since a ledger is nothing but the embod­i­ment of economic calcu­la­tions of multiple cooper­ating partic­i­pants, causality is essen­tial for every ledger. ***"We need a system for partic­i­pants to agree on a single history […]. The solution we propose begins with a timestamp server."*** - Satoshi Nakamoto (2009) It is fasci­nating that all of the puzzle pieces that make Bitcoin work did already exist. As early as 1991, Haber and Stornetta intro­duced two schemes that make it ***"diffi­cult or impos­sible to produce false timestamps."*** The first relies on a trusted third party; the second, more elabo­rate *"distrib­uted trust"* scheme, does not. The authors even identi­fied the inherent problems of trusting a causal chain of events and what would be required to rewrite history.  In their words, ***"The only possible spoof is to prepare a fake chain of timestamps, long enough to exhaust the most suspi­cious challenger that one antic­i­pates."*** A similar attack vector exists in Bitcoin today in the form of a 51% attack (more on that in a later chapter). One year later, Bayer, Haber, and Stornetta built upon their previous work and proposed to use trees instead of simple linked lists to tie events together.  What we know as *Merkle Trees* today are simply efficient data struc­tures to create a hash from multiple hashes deter­min­is­ti­cally. For timestamping, you can efficiently bundle numerous events into one *"tick."* In the same paper, the authors propose that the distrib­uted trust model intro­duced in 1991 could be improved by carrying out a recur­ring *"world champi­onship tourna­ment"* to deter­mine a single *"winner"* who widely publishes the resulting hash somewhere public, like a newspaper.  Sounds familiar? As we shall see, it turns out that newspa­pers are also an excel­lent way to think about the second ingre­dient of time: unpredictability. ### Causality and Unpredictability ***"Time is not a reality [hupostasis], but a concept [noêma] or a measure [metron],"*** - Antiphon the Sophist, *On Truth* (3rd century AD) While causality is essen­tial, it is not suffi­cient. We also need *unpre­dictability* for time to flow. In the physical realm, we observe natural processes to describe the flow of time.  We observe a general increase in entropy and call that the arrow of time. Even though the laws of nature seem to be obliv­ious regarding the direc­tion of this arrow in most cases, certain things can'tcan't be undone, practi­cally speaking. You can'tcan't unscramble an egg, as they say. Similarly, entropy-increasing functions are required to estab­lish an arrow of time in the digital realm. Just like it is practi­cally impos­sible to unscramble an egg, it is practi­cally impos­sible to unscramble a SHA256 hash or crypto­graphic signature.  Without this increase in entropy, we could go forward and backward in time willy-nilly. The sequence of Fibonacci Numbers, for example, is causal but not entropic. Every number in the series is caused by the two numbers before it. In that sense, it is a causal chain.  However, it is not helpful to tell the time because it is entirely predictable. In the same way that a kidnapper can'tcan't simply stand in front of a calendar that shows the current date, we can't use predictable processes as proof of time. We always have to rely on something that can't be predicted in advance, like the front page of today'stoday's newspaper. Bitcoin relies upon two sources of unpre­dictability: trans­ac­tions and proof-of-work. Just like nobody can predict what tomor­row'stomor­row's newspaper will look like, nobody can predict what the next Bitcoin block will look like. You can't predict what trans­ac­tions are going to be included because you can'tcan't predict what trans­ac­tions are going to be broad­cast in the future.  And more impor­tantly, you can't predict who will find the solution to the current proof-of-work puzzle and what this solution will be.  In contrast to the kidnap­per's newspaper, however, proof-of-work is physi­cally linked to what happened *directly*. It is not just a record of an event — it is the event itself. It is the proba­bilistic direct­ness of proof-of-work that removes trust from the equation. The only way to find a valid proof-of-work is by making a lot of guesses, and making a single guess takes a little bit of time.  The proba­bilistic sum of these guesses is what builds up the timechain that is Bitcoin. By utilizing the causality of hash-chains and the unpre­dictability of proof-of-work, the Bitcoin network provides a mecha­nism for estab­lishing an indis­putable history of events witnessed.  Without causality, what came before and what came after is impos­sible to tease apart. Without unpre­dictability, causality is meaningless. What is intuitively under­stood by every kidnapper was explic­itly pointed out by Bayer, Haber, and Stornetta in 1992: ***"To estab­lish that a document was created after a given moment in time, it is neces­sary to report events that could not have been predicted before they happened."*** ![](https://www.datocms-assets.com/56652/1690028784-rainbow-papers.png?auto=format) Proof of Publication It is the combi­na­tion of causality and unpre­dictability that allows the creation of an artifi­cial *"now"* in the other­wise timeless digital realm.  As Bayer, Haber, and Stornetta point out in their 1991 paper:  ***"The sequence of clients requesting time-stamps and the hashes they submit cannot be known in advance. So if we include bits from the previous sequence of client requests in the signed certifi­cate, then we know that the time-stamp occurred after these requests...***  ***"[B]ut the require­ment of including bits from previous documents in the certifi­cate also can be used to solve the problem of constraining the time in the other direc­tion because the time-stamping company cannot issue later certifi­cates unless it has the current request in hand."*** All the puzzle pieces were already there. Satoshi managed to put them together in a way that removes the *"time-stamping company"* from the equation. ### Proof of Time ***"Causa latet: vis est notis­sima. The cause is hidden, but the result is known."*** - Ovid, *Metamor­phoses*, IV. 287 (8 AD) Let us recapit­u­late: to use money in the digital realm, we must rely on ledgers. To make ledgers reliable, unambiguous order is required. To estab­lish order, timestamps are neces­sary. Thus, if we want to have *trust­less* money in the digital realm, we must remove any entity that creates and manages timestamps and any single entity in charge of time itself. It took a genius like Satoshi Nakamoto to realize the solution:  ***“To imple­ment a distrib­uted timestamp server on a peer-to-peer basis, we will need to use a proof-of-work system similar to Adam Back’s Hashcash.”*** We need a proof-of-work system because we need something native to the digital realm. Once you under­stand that the digital realm is infor­ma­tional in nature, the obvious conclu­sion is that compu­ta­tion is all we have. If your world is made of data, manip­u­la­tion of data is all there is.  Proof-of-work works in a peer-to-peer setting because it is *trust­less*, and it is trust­less because it is discon­nected from all external inputs — such as the readings of clocks (or newspa­pers, for that matter).  It relies on one thing and one thing only: compu­ta­tion requires work, and in our universe, work requires energy and time. ### Bridging Times ***"I know it works for me. As we cross the bridge — the burning bridge — With flames behind us,***  ***We front the line. It's you and me, baby, against the world."*** - Kate Bush, *Burning Bridge* (1985) Without proof-of-work, one would always run into the Oracle problem because the physical and infor­ma­tional realms are eternally discon­nected. The markings on your list of sheep aren’t your sheep, the map is not the terri­tory, and whatever was written in yester­day’s newspaper isn’t neces­sarily what happened in the real world.  Similarly, just because you use a real-world clock to write down a timestamp doesn’t mean that this is actually what the time was. Put bluntly, there is no way to trust that data repre­sents reality, except if the reality in question is inherent in the data itself. The brilliant thing about Bitcoin’s diffi­culty-adjusted proof-of-work is that it creates its own existence, along with its own space and time. Proof-of-work provides a direct connec­tion between the digital realm and the physical realm. More profoundly, it is the only connec­tion that can be estab­lished in a trust­less manner. Every­thing else will always rely on external inputs. The diffi­culty of mining a new Bitcoin block is adjusted to ensure that the thin thread between Bitcoin’s time and our time remains intact. Like clock­work, the mining diffi­culty readjusts every 2016 ticks. The goal of this readjust­ment is to keep the *average* time between ticks at ten minutes. These ten minutes maintain a stable connec­tion between the physical and the infor­ma­tional realm. Conse­quently, a sense of human time is required to readjust the ticks of the Bitcoin clock. A purely block-based readjust­ment wouldn’t work since it would be utterly discon­nected from our human world, and the whole purpose of the readjust­ment is to stop us ingenious humans from finding blocks too fast (or too slow). As Einstein has shown us, time is not a static thing. There is no such thing as a universal time we can rely upon. Time is relative, and simul­taneity is nonex­is­tent. This fact alone makes all timestamps — especially across large distances — inher­ently unreli­able, even without adver­sarial actors. (This is why timestamps of GPS satel­lites have to be adjusted constantly, by the way.) For Bitcoin, the fact that our human timestamps are impre­cise doesn’t matter too much. It also doesn’t matter that we have no absolute refer­ence frame in the first place. They only have to be precise enough to calcu­late a somewhat reliable average across 2016 blocks.  To guarantee that, a block’s *“meatspace”* timestamp is only accepted if it fulfills two criteria: 1. The timestamp has to be greater than the median timestamp of the previous 11 blocks. 2. The timestamp has to be less than the network-adjusted time plus two hours. (The *“network-adjusted time”* is simply the median of the timestamps returned by all nodes connected to you.) In other words, the diffi­culty-adjust­ment is about keeping a constant time, *not* a constant level of security, diffi­culty, or energy expen­di­ture. This is ingenious because good money *has* to be costly in time, not energy. Linking money to energy alone is not suffi­cient to produce absolute scarcity since every improve­ment in energy gener­a­tion would allow us to create more money. Time is the only thing we will never be able to make more of. It is *The Ultimate Resource*, as Julian Simon points out. This makes Bitcoin the ultimate form of money because its issuance is directly linked to the ultimate resource of our universe: ***Time***. The diffi­culty adjust­ment is essen­tial because, without it, the internal clock of Bitcoin would tend to go faster and faster as more miners join the network or the efficiency of mining devices improves. We would quickly run into the coordi­na­tion problem that Bitcoin sets out to solve. As soon as the block time falls below a certain threshold, say, 50 millisec­onds, it would be impos­sible to agree on a shared state, even in theory. It takes light around 66 millisec­onds to travel from one side of the earth to the other.  Thus, even if our computers and routers were perfect, we would be back at square one:  Given two events, it would be futile to tell which event happened before and which event happened after. Without a periodic adjust­ment of Bitcoin’s ticks, we would run into the hopeless problem of solving the coordi­na­tion problem faster than the speed of light.  Time is also at the root of the problem of crypto­graphic insta­bility, which was outlined in Chapter 1. Cryptog­raphy works because of an asymmetry in time: it takes a short time to build a crypto­graphic wall and a long time to break it down — unless you have a key. Thus, in some sense, proof-of-work — and the diffi­culty adjust­ment that goes along with it — artifi­cially slows down time, at least from the perspec­tive of the Bitcoin network.  In other words: Bitcoin enforces an internal rhythm whose low frequency allows ample buffer for the latency of commu­ni­ca­tions between peers. Every 2016 block, Bitcoin’s internal clock readjusts so that — on average — only one valid block will be found every 10 minutes.  From an outside perspec­tive, Bitcoin funnels the chaotic mess of globally broad­cast asynchro­nous messages into a parallel universe, restricted by its own rules and sense of space and time. Trans­ac­tions in the mempool are timeless from the point-of-view of the Bitcoin network. Only when a trans­ac­tion is included in a valid block is it assigned a time: the number of blocks it is included in. ![](https://www.datocms-assets.com/56652/1690029416-bitcoin-alpha.png?auto=format) BitCoin v0.01 ALPHA (2009) It is hard to overstate how elegant a solution this is. Once you  are able to create your own defin­i­tion of time, deciphering what came before and what came after is trivial. In turn, agreeing on what happened, in what order, and, conse­quently, who owes what to whom, becomes trivial as well. The diffi­culty adjust­ment makes sure that the *ticks* of Bitcoin's internal metronome are somewhat constant. It is the conductor of the Bitcoin orchestra. It is what keeps the music alive.  But why can we rely on work in the first place?  The answer is three­fold. We can rely on it because compu­ta­tion requires work, work requires time, and the work in question — guessing random numbers — can not be done efficiently. ### Probabilistic Time ***"Time forks perpet­u­ally toward innumer­able futures."*** - Jorge Luis Borges, *The Garden of Forking Paths* (1958) Finding a valid nonce for a Bitcoin block is a guessing game. It is like rolling a die, flipping a coin, or spinning a roulette wheel. You are, in essence, trying to find a beyond-astro­nom­i­cally large random number. There is no progress toward finding a solution. You either hit the jackpot or you don't. Every time you flip a coin, the chance of it coming up heads or tails is 50% — even if you flipped it twenty times before, and it came up heads every time. Similarly, every time you wait for a Bitcoin block to come in, the chance that it will be found *this second* is ~0.16%.  It doesn't matter when the last block was found. The approx­i­mate waiting time for the next block is always the same: ~10 minutes. It follows that every individual tick of this clock is unpre­dictable. Relative to our human clocks, this clock appears to be sponta­neous and impre­cise.  This is irrel­e­vant, as Gregory Trubet­skoy points out:  ***"It doesn't matter that this clock is impre­cise. What matters is that it is the same clock for everyone and that the state of the chain can be tied unambigu­ously to the ticks of this clock."***  Bitcoin's clock might be proba­bilistic, but it isn't illusory. ***"Time is an illusion, lunchtime doubly so."*** - Douglas Adams (1979) The present moment, however, can absolutely be an illusion in Bitcoin. Since there is no central authority in the network, strange situa­tions can arise.  While unlikely, a valid block may be found simultaneously (again: apolo­gies to all physi­cists), which will make the clock tick forward in two different places at once.  However, since the two different blocks will very likely differ in their content, they will contain two different histo­ries, both equally valid. This is known as a chain split and is a natural process of Nakamoto consensus. Like a flock of birds that briefly splits in two only to merge again, nodes on the Bitcoin network will eventu­ally converge to a shared history after some time, thanks to the proba­bilistic nature of guessing. Nakamoto consensus simply states that the correct history is to be found in the heaviest chain, i.e., the chain with the most amount of proof-of-work embedded in it.  Thus, if we have two histo­ries A and B, some miners will try to build upon history A, and others will try to build upon history B.  As soon as one of them finds the next valid block, the other group is programmed to accept that they were on the wrong side of history and switch over to the heaviest chain — the chain that repre­sents what actually happened by defin­i­tion.  ***"In Bitcoin, history is truly written by the victors. The payee needs proof that at the time of each trans­ac­tion, the majority of nodes agreed it was the first received. […]***  ***When there are multiple double-spent versions of the same trans­ac­tion, one and only one will become valid. The receiver of a payment must wait an hour or so before believing that it's valid. The network will resolve any possible double-spend races by then."*** - Satoshi Nakamoto (2009) In this simple state­ment lies the secret of the distrib­uted coordi­na­tion problem. This is how Satoshi solved the problem of the *"simul­ta­neous payment"* our ficti­tious business partners encoun­tered previ­ously. He solved it once and for all, relativistic effects be damned! Because of this proba­bilistic nature of Bitcoin's clock, the present moment — what we call the chain tip — is always uncer­tain. The past — blocks buried below the chain tip — is ever more certain.  ***"The more thorough the under­standing needed, the further back in time one must go."*** - Gordon Clark, *A Chris­tian View of Men and Things*, p. 58. (1951) Conse­quently, the Bitcoin clock might rewind occasionally, for some peers, for a tick or two.  If your chain tip — the present moment — happens to lose to a competing chain tip, your clock will first rewind and then jump forward, overriding the last few ticks that you thought were history already.  ***"If your clock is proba­bilistic, your under­standing of the past has to be too.*** ***Tick tock tick tock tick — what is the time?*** ***Tick tock tick tock… it ends in*** [***c619***](https://www.blockstream.info/block/000000000000000000095eaf76a73a7986ea2e6a3b0d190fb10ab986b683c619)***.*** ***Are you sure this is fine?***  ***Are we probably late?*** ***Absolutes do not matter: before nine there comes*** [***eight***](https://www.blockstream.info/block/0000000000000000000318291249db2c9b658d087e4f06bcd2ed24481e81533c)***.*** ***The clock isn't exact; it sometimes goes in reverse.*** ***Exact time implies center; that's the root of this curse!*** ***Yet this clock keeps on ticking, tock-tick and tick-tock.***  ***There's no profit in tricking; just tick-tock and next block."*** - A Funny Little Rhyme on Bitcoin and Time (2020) ### Conclusion Time is still one of the great mysteries in physics, one that calls into question the very defin­i­tion of what physics is. ***Jorge Cham and Daniel Whiteson: We Have No Idea:*** *A Guide to the Unknown Universe*, pp. 117 – 118 (2017) Keeping track of things in the infor­ma­tional realm implies keeping track of a sequence of events, which in turn requires keeping track of time.  Keeping track of time requires agreeing on a *"now"* — a moment in time that eternally links the settled past with the uncer­tain future. In Bitcoin, this *"now"* is the tip of the heaviest proof-of-work chain.  Two building blocks are essen­tial for the struc­ture of time: causal links and unpre­dictable events.  Causal links are required to define a past, and unpre­dictable events are required to build a future. If the sequence of events would be predictable, it would be possible to skip ahead.  If the individual steps of the sequence aren't linked, it would be trivial to change the past. Because of its internal sense of time, it is insanely diffi­cult to cheat Bitcoin. One would have to rewrite the past or predict the future. Bitcoin's timechain prevents both. Viewing Bitcoin through the lens of time should make clear that the *"blockchain"* — the data struc­ture that causally links multiple events together — is not the main innova­tion. It is not even a new idea, as is evident by studying the timestamp liter­a­ture of the past. ***"A blockchain is a chain of blocks."*** - Peter Todd What is a new idea — what Satoshi figured out — is how to indepen­dently agree upon a history of events without central coordi­na­tion. He found a way to imple­ment a decen­tralised timestamping scheme that: (A) doesn't require a time-stamping company or server. (B) doesn't require a newspaper or any other physical medium as proof, and © can keep the *ticks* more-or-less constant, even when operating in an environ­ment of ever-faster CPU clock times. Timekeeping requires *causality*, *unpre­dictability*, and *coordi­na­tion*. In Bitcoin, *causality* is provided by one-way functions: the crypto­graphic hash functions and digital signa­tures at the protocol's core.  *Unpre­dictability* is provided by both the proof-of-work puzzle and the inter­ac­tion with other peers: you can't know in advance what others are doing, and you can't know in advance what the solution to the proof-of-work puzzle will be.  *Coordi­na­tion* is made possible by the diffi­culty adjust­ment, the magic sauce that links Bitcoin's time to ours. Without this bridge between the physical and the infor­ma­tional realm, it would be impos­sible to agree on a time by relying on nothing but data. **Bitcoin is Time** in more ways than one. Its units are stored time because they are money, and its network is time because it is a decen­tral­ized clock. The relent­less beating of this clock gives rise to all the magical proper­ties of Bitcoin. Without it, Bitcoin's intri­cate dance would fall apart.  But with it, everyone on earth has access to something truly marvelous: Magic Internet Money. "*Bitcoin Is Time*" is one of twenty-one chapters of [Gigi's](https://twitter.com/dergigi) upcoming book *21 Ways*. ### Gigi Gigi is the author of [21 Lessons](https://event.swanbitcoin.com/21lessons/), a popular book about lessons learned from falling down the Bitcoin rabbit hole. He launched various projects in the space such as bitcoin-resources.com, bitcoin-quotes.com, “Einundzwanzig”, and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. The article is protected under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) [license](https://dergigi.com/license/). # Am I Too Late For Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/am-i-too-late-for-bitcoin/ There are different levels of Bitcoin adoption. By segmenting BTC adoption, it becomes easier to see why the wide range of estimates exists but, more importantly, how early adoption of BTC as a preferred store of value. --- **Swan Bitcoin** · January 18, 2021 · Updated July 3, 2024 Thirteen years into Bitcoin’s existence, it’s easy to believe that most of its growth is behind it. Part of this is the result of the bias we all share that causes us to imagine the current state of things as their terminal stage of devel­op­ment. However, when we apply critical thinking to assess where Bitcoin is in its growth trajec­tory, we find the opposite is true: it is still very, very early. There are two ways to think about how early it is for Bitcoin as a store of value asset:  1. *Valua­tion as a percent of its full potential* 2. *Adoption as a percent of its full poten­tial (the focus of this article).*  ### Valuation The first and most common way to assess how early it is for Bitcoin is to look at its total value (currently ~$500B) and compare that to its full poten­tial.  The challenge with this is that [Bitcoin’s full poten­tial is a matter of specu­la­tion](https://www.swanbitcoin.com/bitcoin-price-prediction/). Those who deeply under­stand Bitcoin tend to view its poten­tial as at least that of gold (~$13T) but theoret­i­cally more like $200T (about half the world’s total value).  For a quick overview of this $200T poten­tial, let’s look at Bitcoin’s total address­able market.  For simplicity, we will look at the store of value role and ignore its poten­tial to eat market share from the [~$100T in total value sitting in the world’s various curren­cies](https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/). By taking stock of the different store-of-value assets and roughly estimating what % Bitcoin could capture from them, we get a result like this: ![](https://www.datocms-assets.com/56652/1690031630-sov-swan-image.jpeg?auto=format) While the path to [$200T is not a huge stretch](https://www.swanbitcoin.com/bitcoin-price-prediction/), at face value, it feels too good to be true. Since it’s unprece­dented for a store of value commodity to attain a value greater than gold, it’s simply uncharted terri­tory. But even if we stick with the lower target value by matching gold’s $13T, Bitcoin still has a lot of price growth ahead. ### Most of Bitcoin’s Upside Remains Anyone consid­ering storing some of their hard-earned money in Bitcoin asks themselves, “***Am I early or late?”*** Invari­ably, everyone feels late when they arrive. There are endless examples of people lamenting how late they were in 2011 or 2013, or 2016, when Bitcoin’s price was $5, $100, and $600, respectively. Like with any growing commu­nity where scarce real estate is involved, newcomers are envious of the claims that people have already secured without realizing that the people who have yet to come will be envious of them. This phenom­enon holds true when every frontier develops. For example, latecomers to the California gold rush would have been disap­pointed to find the rich gold fields already spoken for and might have settled instead for a few hundred acres of ranch land now worth a fortune. At the heart of this senti­ment is the fear that there is no more upside left, no more money to be made by staking claim to what’s still avail­able. Have we reached that point with Bitcoin? Well, no. It is the opposite. Based on the full poten­tial valua­tion range we estab­lished above, even in the low-end outcome ($13T), the vast majority of the wealth that will be gained by Bitcoin holders has yet to be made (96%). To match gold’s valua­tion, Bitcoin still has to grow 26x. ![](https://www.datocms-assets.com/56652/1690031793-gold-btc-jump.jpeg?auto=format) And if the high-end outcome is the case, a complete 99.7% of Bitcoin’s total wealth gener­a­tion remains ahead. This would mean Bitcoin still has 400x to grow, dwarfing the gold milestone. ![](https://www.datocms-assets.com/56652/1690031847-blue-chart.jpeg?auto=format) By putting Bitcoin’s current valua­tion into perspec­tive, it becomes clear that it’s still very early for Bitcoin.  While this analysis suggests there may be anywhere from 26x to 400x upside remaining for Bitcoin, it’s helpful to cross-check this conclu­sion through a different line of reasoning where the full poten­tial is known…  ### The Number of Bitcoin Adopters Estimates of the number of Bitcoin holders world­wide vary widely. This has led to a fair amount of ambiguity and uncer­tainty about the actual numbers and a certain degree of resig­na­tion that this number is simply too hard to accurately assess. While it is hard to nail down a defin­i­tive number, the main reason for the variance in estimates is a lack of standard­ized defin­i­tions of what Bitcoin adoption means. ![](https://www.datocms-assets.com/56652/1690031928-swan-s-curve.jpeg?auto=format) The truth is that there are different levels of Bitcoin adoption. By segmenting Bitcoin adoption, it becomes easier to see not only why the wide range of estimates exists but, more impor­tantly, how early adoption of Bitcoin as a preferred store of value still is.  For these purposes, let’s segment Bitcoin adoption into four different *“levels”*: 1. *Casual dabblers (toe dippers)* 2. *1% alloca­tors (ankle deep)* 3. *Signif­i­cant believers (waist high)* 4. *Bitcoin maximal­ists (gone snorkeling)* Before we begin, we need a denom­i­nator. We could use global popula­tion, but IMO this skews results. We’re really assessing what percentage of the world with some wealth to store in Bitcoin has done so. According to Statista, 2.2B people in the world have at least $10k in net worth, which seems like a reason­able threshold for having meaningful wealth to store.  In truth, impov­er­ished commu­ni­ties will also use Bitcoin as a store of value. They will arguably derive greater utility from it due to marginal access to tradi­tional banking infra­struc­ture as *“low value”* bank customers.  However, for our purposes, we are simply looking at how many people have adopted Bitcoin among the group with meaningful wealth to store, so $2.2B will serve as our full poten­tial market size. **Casual Dabblers** This segment of adopters includes everyone with any amount of Bitcoin — your friend with $20 of BTC in a wallet somewhere or your aunt who can’t remember her Coinbase password from 2017. In my opinion, much of the confu­sion around how many people have adopted Bitcoin comes from conflating *“casual dabbler”* adoption as full-fledged Bitcoin adoption. The reality is that these tinkerers are mostly just exper­i­menting, whether to get a sense of what everyone is talking about or to throw a few dollars into Bitcoin in the hopes that you might hit the jackpot like you might do with lottery tickets. For this reason, the *“casual dabblers”* are the red herring of Bitcoin adoption. Their behavior does not actually consti­tute adoption and, there­fore, should not be counted as meaningful Bitcoin adopters. In truth, when dabblers realize that Bitcoin is the best store of value assets in history, they won’t stick with their $20 of Bitcoin.  Instead, they will transi­tion their savings into more meaningful amounts. In terms of sizing this contin­gent, Willy Woo put together a reason­ably exhaus­tive and inclu­sive estimate of ~187M total Bitcoin adopters, meaning that they are *“casual dabblers”* at minimum.  Using this and our full poten­tial of 2.2B people as a denom­i­nator, 8.5% of poten­tial Bitcoin adopters have reached the *“casual dabbler”* level of Bitcoin adoption.  This is a relatively high number and entirely misleading of the true extent of meaningful adoption, as subse­quent segments will show. ![](https://www.datocms-assets.com/56652/1690032341-adoption-curve-graph.jpeg?auto=format) **1% Alloca­tors** For the remaining subcat­e­gories, accurate data is less avail­able. As such, all we can do is come up with reason­able estimates via triangulation. In my mind, the *“1% alloca­tors”* can be charac­ter­ized as Bitcoin adopters who want to have a small but not trivial alloca­tion to Bitcoin. For our purposes, I think a decent threshold for this group is anyone who has at least 0.1 Bitcoin can be consid­ered to have at least a small but not trivial Bitcoin position.  Looking at the Bitcoin blockchain, there are ~3M addresses with at least 0.1 BTC. On top of these on-chain numbers, we have to account for the consid­er­able number of people who have this amount in an exchange or GBTC. Combined, I think it’s reason­able to estimate that 10M people have reached the *“1% alloca­tors”* level of adoption or higher.  Based on these numbers, only 1⁄17 *“casual dabblers”* have reached the *“1% allocator”* level of adoption, meaning that this level of Bitcoin adoption has only achieved 0.5% penetra­tion to date. This steep drop-off is why it’s a red herring to label the large number of *“casual dabblers”* as full Bitcoin adopters. ![](https://www.datocms-assets.com/56652/1690035348-green-line-chart.jpeg?auto=format) **Signif­i­cant Believers**  This category includes anyone who has reached a level of under­standing of Bitcoin that a 1% or even 5% alloca­tion no longer seems suffi­cient. Broadly speaking, this group is in the 5 – 50% alloca­tion range. I would go so far as to say that most of the people who count themselves as believers in Bitcoin, including most of Bitcoin Twitter, are somewhere in this group.  Assessing the size of this group gets much fuzzier, but we can rely on on-chain data to work our way to a reason­able estimate. To start, let’s assert that most people who have reached this level of belief in and under­standing of Bitcoin have clawed their way to holding at least 1 Bitcoin.  Addition­ally, this level of adopter has probably secured their Bitcoin in an on-chain wallet that they control. Looking at on-chain data, ~820k addresses have at least 1 Bitcoin.  As a rough assump­tion, let’s say that 500k of these are owned by people who have reached the ***“signif­i­cant believer”*** level of adoption at minimum. If we then gener­ously round up to account for people who haven’t achieved whole­coiner status or who are holding their funds on an exchange, we get to a rough estimate of 2M ***“signif­i­cant believers.”***  ![](https://www.datocms-assets.com/56652/1690035519-orange-bitcoin-chart-scurve.jpeg?auto=format) **Bitcoin Maximal­ists** For our purposes, let’s say this group includes anyone who has dug deep enough into Bitcoin to conclude that more than 50% of their net worth should be stored in Bitcoin. Gauging the size of this group is nearly impos­sible, so we’ll get creative. 1. *“The Bitcoin Standard” sales* 2. *Let’s conser­v­a­tively estimate that only 20% of maximal­ists have purchased The Bitcoin Standard, and 50% of people who read it became maximal­ists. Based on the book’s Amazon US rank (6,681), online calcu­la­tors estimate ~15k copies have been sold.* 3. *Let’s gener­ously round that ~15k number up to 50k to account for inter­na­tional sales and non-Amazon purchases.*  This nets an estimate of 125k maximal­ists. To err on the side of caution, let’s double that and call it 250k. **Quali­ta­tive Triangulation** 1. *Purely subjec­tive, but it seems to me that there are maybe 10k actively engaged Bitcoin maximal­ists on Twitter, the primary home of maximalist commu­ni­ca­tion. To be very conser­v­a­tive, let’s say this repre­sents ~5% of maximal­ists (200k total).* 2. *Addition­ally, as a top-down assess­ment, it seems reason­able that ~10% of people who have reached 5 – 50% Bitcoin alloca­tion have made the leap to maximalism.* All in all, ~250k Bitcoin maximal­ists seems a conser­v­a­tive, if not generous, assumption.  That puts us at 0.01% penetration. ![](https://www.datocms-assets.com/56652/1690035519-orange-bitcoin-chart-scurve.jpeg?auto=format) ### Conclusion Either way, if you look at the numbers, it’s still very early for Bitcoin. By looking at Bitcoin’s valua­tion as a percentage of its full poten­tial, we see that Bitcoin’s current value is somewhere between 0.2% and 3% of its eventual end state, [meaning 30x to 500x upside remains](https://www.swanbitcoin.com/bitcoin-price-prediction/). By looking at Bitcoin’s adoption progress, we see that Bitcoin’s current adoption penetra­tion is between 0.01% and 8.5%, depending on what threshold of adoption you look at.  If you believe, as I do, that Bitcoin is on a path to becoming the dominant store of value and preferred money for the world, eventu­ally, the norm will be to have more than 50% of their net worth in Bitcoin. Since our analysis here suggests that only 0.01% of the world already meets this threshold, it stands to reason that 99.99% of the world remains to follow. Overall, while everyone who shows up to Bitcoin inevitably feels the pangs of regret for not investing sooner and wonders if they missed the boat entirely, it’s clear that most of Bitcoin’s growth remains ahead. To put this in context, since there will only ever be 21M Bitcoin, the average person (out of 8B people) will have just 0.0025 Bitcoin.  It is still so early that this average person’s total net worth in Bitcoin can be purchased for just $60. You are still very early, congrat­u­la­tions, and enjoy stacking those sats while they’re still this cheap! This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10.  [Sign up or learn more here](https://www.swanbitcoin.com/signup/). ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Bitcoin Misconception #1: “Bitcoin is a Bubble” URL: https://www.swanbitcoin.com/markets/is-bitcoin-a-bubble-2/ Bitcoin looks a lot more rational when you look at the long-term logarithimic chart, especially as it relates to Bitcoin’s 4-year halving cycle. --- **Lyn Alden** · January 7, 2021 · Updated June 26, 2024 Many people view Bitcoin as a bubble, which is under­stand­able. Especially for folks looking at the linear chart in 2018 or 2019, Bitcoin looked like it hit a silly peak in late 2017 after a parabolic rise that would never be touched again. This linear price chart goes from the begin­ning of 2016 to the begin­ning of 2019 and shows how it looked like a classic bubble: ![](https://www.datocms-assets.com/56652/1690036592-stockchsrts.png?auto=format) Maybe it is a bubble. We’ll see. However, it looks much more rational when you look at the long-term logarithmic chart, especially as it relates to Bitcoin’s 4‑year halving cycle. ![](https://www.datocms-assets.com/56652/1690036673-heat-map.jpeg?auto=format) Chart Source: Chart Source: PlanB @100trillionUSD, with annota­tions added by Lyn Alden My job here is simply to find assets that are likely to do well over a lengthy period. For many of the questions/misconceptions discussed in this article, there are digital asset special­ists that can answer them with more detail than I can. A downside of special­ists, however, is that many of them (not all) tend to be perma-bulls on their chosen asset class. This is true with many specialist gold investors, specialist stock investors, specialist Bitcoin investors, and so forth. How many gold newslet­ters suggested that you might want to take profits in gold around its multi-year peak in 2011? How many Bitcoin person­al­i­ties suggested that Bitcoin was probably overbought in late 2017 and due for a multi-year correction? I’ve had the pleasure of having conver­sa­tions with some of the most knowl­edge­able Bitcoin special­ists in the world, the ones that keep their outlooks measured and fact-based, with risks clearly indicated, rather than being constant promoters of their industry at any cost. Bitcoin’s power comes in part from how enthu­si­astic its supporters are, but there is room for indepen­dent analysis on bullish poten­tial and risk analysis as well. And as someone who isn’t in the digital asset industry myself but who has a background that blends engineering and finance that lends itself reason­ably well to analyzing it, I approach Bitcoin like I approach any other asset class; with an acknowl­edge­ment of risks, rewards, bullish cycles, and bearish cycles. I continue to be bullish here. If this fourth cycle plays out anywhere remotely close to the past three cycles since incep­tion (which isn’t guaran­teed), Bitcoin’s relative strength index could become quite extreme again in 2021. Here’s a chart from PlanB about Bitcoin’s histor­ical monthly RSI during the bullish and bearish phases of its 4‑year halving cycle: ![](https://www.datocms-assets.com/56652/1690036844-lyn-rsi.jpeg?auto=format) Chart Source: PlanB @100trillionUSD For that reason, Bitcoin going from $6,900 to $15,000+ in seven months doesn’t lead me to take profits yet. In other words, a monthly RSI of 70 doesn’t cut it as *“overbought”* in Bitcoin terms, partic­u­larly this early after a halving event. I’ll likely look into some rebal­ancing later in 2021, though. Each investor has their own risk toler­ance, convic­tion, knowl­edge, and finan­cial goals. A key way to manage Bitcoin’s volatility is to manage your position size, rather than try to trade it too frequently. If Bitcoin’s price volatility keeps you up at night, your position is probably too big. If you have an appro­pri­ately-sized position, it’s the type of asset to let run for a while, rather than to take profits as soon as it’s slightly popular and doing well. When it’s at *extreme* senti­ment, and/or its position has grown to a dispro­por­tion­ately large portion of your portfolio, it’s likely time to consider rebalancing. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Is Tether a Treat to Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/is-tether-a-threat-to-bitcoin/ It’s clear Tether is not the driver of Bitcoin’s rallies. Instead, Tether’s growth is evidence of the genuine demand for a digital dollar that arose naturally in the world’s first 24/7 global financial marketplace. --- **Daniel Matuszewski** · February 3, 2021 · Updated June 6, 2024 There has been a long-lasting concern that Bitcoin’s price appre­ci­a­tion is driven by the creation of an artifi­cial digital dollar called Tether. This partic­ular piece of FUD (fear, uncer­tainty, doubt) appeals to the popular intuition that Bitcoin is little more than a Ponzi scheme. Rather than dig deeper into questions like, *“What is money?”* and, *“What makes good money?”* these critics lead with the answer they want and find circum­stan­tial evidence later. However, it’s become evident that Tether is not the driver of Bitcoin’s rallies. Instead, Tether’s growth is evidence of the genuine demand for a digital dollar that arose naturally in the world’s first 24⁄7 global finan­cial marketplace. **Why Does Tether Exist?** Tether origi­nated as a digital dollar on Bitfinex, one of the older and larger Bitcoin exchanges that operate primarily in Asia. When a user deposited funds into their Bitfinex account, their dollars were deposited into the Bitfinex bank account, and the user was credited with an equiv­a­lent amount in Tether they could use freely on the trading platform Impor­tantly, these Tethers, an unforge­able digital asset, can be removed from the Bitfinex platform and stored in an individual’s self-custodied cryptocur­rency wallet. In essence, Tether was a way for Bitfinex to grant its users a bearer digital dollar that they could control themselves, gaining some of the digitized advan­tages of Bitcoin while remaining pegged to the U.S. Dollar’s value. **Why Were So Many Created?** In 2017, the demand for Bitcoin and other cryptocur­ren­cies spiked world­wide. But, it did not spike uniformly. Because of variances in interest and access to trading venues, different parts of the world experi­enced the 2017 bull market in different ways. In the United States, trading venues were flooded with demand for new accounts and hopelessly backlogged. Coinbase was the largest and most estab­lished, making it compar­a­tively easy to set up an account and buy without much delay. As a result, a dispro­por­tionate amount of new demand funneled into Coinbase, bidding up the price of Bitcoin there.  Other exchanges did not see such a stark influx of new demand. Because Bitfinex had one of the slowest new customer onboarding and approval processes, it saw a compar­a­tively small spike in demand relative to Coinbase. As a result, the price of Bitcoin on Coinbase was bid up to signif­i­cantly higher prices than on Bitfinex.  Profes­sional traders who had already estab­lished accounts with higher limits on both platforms stepped in to take advan­tage of this arbitrage opportunity.  These traders could sell Bitcoin on Coinbase at high prices and withdraw the dollar proceeds from their accounts. Then, they could wire these dollars to Bitfinex, which would be posted to their Bitfinex account as Tether. With their Bitfinex account funded, they could buy Bitcoin at market prices lower than on Coinbase. With these funds now converted to Bitcoin, they could send that Bitcoin from their Bitfinex account to their Coinbase account and sell at the higher market rates there. This same process could be repeated over and over, cycling up to $20M daily (Coinbase's highest withdrawal limit for profes­sional accounts). Over several months, profes­sional traders like Dan Matuszewski at Circle Trade deposited billions of dollars into Bitfinex through this mecha­nism, creating billions of 1‑to‑1 digital Tethers. **Why Have Tethers Accumulated?** Tether's utility is often overlooked: Tether is more beneficial to a digital asset trader than a dollar is. Every time a dollar moves, it is subject to slow tradi­tional banking processes and scrutiny. Traders looking to move funds between venues would instead transact with a digital dollar unencum­bered by tradi­tional banking rails. Because of the greater utility of Tethers compared to actual dollars, there was ample demand to use them outside of Bitfinex. Trading venues worldwide responded to the demand by creating Bitcoin/Tether trading pairs and allowing users to deposit and withdraw Tethers.  As a result, the use of Tethers prolif­er­ated across digital asset markets. With demand for Tethers exceeding users' interest in redeeming them for dollars, the number of Tethers in circu­la­tion soared. **Was Tether Creation Driving Bitcoin's Price Increases?** To a certain extent, Tether creation would be a leading indicator of demand for Bitcoin on Bitfinex, as users funding their accounts are creating new Tethers before they use them to bid for Bitcoin.  However, the bigger claim by skeptics, unfamiliar with an old saying about corre­la­tion and causa­tion, is that Tether's creation was the reason that Bitcoin's price was going up in the first place. Indeed, the number of Tether in circu­la­tion moves in lock-step with the price of Bitcoin during bull markets. However, the reason­able expla­na­tion is that Tether creation is the lagging indicator: a byproduct of new dollars coming into the market.  **Is Tether's Continued Growth Evidence That it is a Giant House of Cards?** At this point, 20B Tethers are in circu­la­tion in the global digital asset market. Tethers continue to be created at a rate faster than they are redeemed for dollars. Rather than evidence of some gigantic fraud, this continued growth is testa­ment to the utility of digital dollars.  Beyond its superior transfer quali­ties, Tether has increas­ingly been adopted by global citizens who would like to hold dollars despite their national banking systems forbid­ding it. For example, there is signif­i­cant demand in China for Tethers. Even though they are simply promis­sory notes for dollars held in a company's bank account, the demand for them is very real due to the restric­tions preventing individ­uals from holding real dollars.  This demand is evidenced by Tether trades above its $1/Tether issuance rate. Over the last year, Tether has traded on average at $1.0005/Tether, meaning a 5 bps premium. It's simple to see why the total number of Tethers in circu­la­tion keeps increasing: the global market views them as more valuable than dollars because of their broader utility and access compared with dollars. **Isn't Tether Mired in Legal Controversy?** Tether is involved in legal proceed­ings with the NY Attorney General's office. It is alleged that there was an improper loan of $850M from Tether to Bitfinex, allegedly made to cover a loss of customer funds as a result of fraud by one of Bitfinex's payment proces­sors, Crypto Capital.  These accusa­tions are serious but indepen­dent from the question of whether Tether themselves are properly collat­er­al­ized with bank account holdings. Indeed, it's worth noting the glaring lack of regula­tory action against Tether on this front, suggesting that author­i­ties do not have reason to believe that Tether has fraud­u­lently created unbacked digital dollars. With $20B in question, it's almost certain that United States author­i­ties are keeping a close eye on the banking activity under­pin­ning Tether's operation. **What's the Future For Tether?** Tether enjoys a large early lead in the digital synthetic dollar market, but competi­tors like USDC have sprung up and purport greater trans­parency and regulator-friendly gover­nance. The quali­ties of these newer entrants may chip away at Tether's lead and eventu­ally replace it as the preferred digital dollar in time.  However, it may be that Tether's scrappy origins and less open relation­ship with banking regula­tors provide it a subtle staying power. For users in China seeking to hold Tether as an alter­na­tive means to holding dollars, Tether's reputa­tion of being less cooper­a­tive with regula­tors than its competi­tors could be perceived as positive. For users seeking dollar exposure less resis­tant to govern­ment seizure or shutdown, that less friendly stance towards regula­tors may help keep Tether as the preferred digital dollar into the future. ### Daniel Matuszewski Dan is the principal and co-founder of CMS Holdings. Previously Dan was Head of Trade at Circle and on the early team at Kraken. # Sovereignism Part 1: Digital Creative Destruction URL: https://www.swanbitcoin.com/culture/sovereignism-part-i-digital-creative-destruction/ Exploring the digital disruption of the nation-state and the subsequent amplification of individual sovereignty during the digital age. --- **Robert Breedlove** · January 25, 2021 · Updated June 27, 2024 A 12-part essay series exploring the digital disrup­tion of the nation-state and the subse­quent ampli­fi­ca­tion of individual sover­eignty during the digital age. This series is based on the 1997 master­work: [*The Sover­eign Individual*](https://www.amazon.com/dp/B00AK9IXXM/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1)*.* ![](https://www.datocms-assets.com/56652/1690095260-bitcoin-moon-2.png?auto=format) ### Digital Creative Destruction ***"Technology is advancing much faster than our ability to under­stand its impli­ca­tions."*** *- Ken Goldstein* Statism is a system of socioe­co­nomic organi­za­tion that origi­nated in the Indus­trial Age. Statism includes all state imple­men­ta­tions of capitalism, commu­nism, fascism, and all other state-isms; it does not refer to these ideolo­gies in any pure sense. Statist imple­men­ta­tions arose in the 20th century when the only known mode of sustain­able human organi­za­tion was a top-down, centrally controlled nation-state. Like feudalism before it, which fell to the Guten­berg printing press, statism has fallen behind the techno­log­ical reali­ties of its era. In the 21st century, digiti­za­tion is devouring every ineffi­cient techno­log­ical imple­men­ta­tion: from media and dating to adver­tising and travel. In the sphere of statism, digital tools are antiquating analog nation-states by radically empow­ering individ­uals in novel and profound ways. All states are shaped by technology. Mankind exists in continual pursuit of more energy-efficient modes of self-organi­za­tion to preserve the produc­tivity liber­ated by the division of labor while minimizing expen­di­tures neces­sary for security. This is the purpose of society. By subdi­viding labor ever more deeply, mankind’s global treasury of knowl­edge grows ever-richer, informing the devel­op­ment of better tools and systems. As man has achieved more decen­tral­ized modes of securing property and persons, new states have emerged: the world has endured a long progres­sion from the tyranny of ancient Egypt to the repre­sen­ta­tive democ­ra­cies of Western Civiliza­tion. In succes­sion with these socioe­co­nomic *“phase changes,”* vast amounts of creative energy are freed in the form of produc­tivity, profits, and capital accumu­la­tion. Optimizing for individual choice is the most energy-efficient strategy for socioe­co­nomic organi­za­tion. Capitalism outcom­peted commu­nism (destroying the USSR in the process) for this reason: volun­tarily adopted rules (free markets) do not incur the same enforce­ment and security costs as systems with imposed rules (unfree markets). Capitalism triumphing over commu­nism is the classic Schumpterian process of *“creative destruc­tion,”* where innova­tion obsoletes older and less energy-efficient tools and systems, liber­ating energy for alloca­tion to other aims. Tremen­dous economic returns emerge in the wake of this destruc­tive yet creative process. Consider, for instance, that 84 times more man-hours (human energy) were neces­sary to construct the Great Pyramid of Giza than the Burj Khalifa skyscraper in Dubai, yet due to the knowl­edge special­iza­tion of moder­nity, the Burj stands at a staggering 830 meters — 7 times as tall as the ancient Pyramid. A spectac­ular testa­ment to modern (albeit margin­al­ized) capitalism, the Burj Khalifa was constructed by orders of magni­tude more efficiently than the Great Pyramid of Giza (498 times taller per man-hour). ![](https://www.datocms-assets.com/56652/1690095542-building-graphic-breedlove.png?auto=format) Socioe­co­nomic systems which best preserve produc­tivity by efficiently securing the division of labor, win. As a socioe­co­nomic system, capitalism allocates energy more intel­li­gently than commu­nism. Organi­za­tional wellbeing is maximized when individual sover­eignty is prior­i­tized. Capitalism did this well but was hampered by state inter­ven­tion in the monetary and legal spheres. Even more deeply rooted in free market princi­ples, sover­eignism promises to be an unrivaled allocator of energy toward the higher satis­fac­tion of human wants. ### Energy is Truth ***"If you want to find the secrets of the universe, think in terms of frequency, vibra­tion, and energy."***  *- Nikola Tesla* Harnessing energy for self-gener­a­tion is the aim of all life. Energy is more efficiently converted to mechan­ical work in strongly bonded systems. In physical systems, these bonds are molec­ular; in economic systems, these bonds are property. Stronger bonds equal greater energy efficiency. Consid­er­a­tions of energy efficiency shape the tools and systems mankind creates for itself. Thermo­dy­nam­i­cally sound struc­tures — those which maximize the utility of absolutely scarce energy — tend to become favored in free market compe­ti­tion. Stronger bonds trans­late into higher power capacity: the ability to retain energy over time without dissi­pa­tion. In a universe where life contin­u­ously competes for its share of finite energy, profli­gacy is ruinous. As the most accurate portrayal of reality, energy is truth. Conser­va­tion of energy, then, is conser­va­tion of truth — the key to success in compet­i­tive condi­tions for organ­isms and organi­za­tions alike. Trade and money are founda­tional to socioe­co­nomic organi­za­tion. People exchange their energy to produce the fruits of labor. Money is the medium through which people trade energy. Ideally, money is as scarce as the energy neces­sary to produce the fruits of labor to which it lays claims. As the base layer operating system of human cooper­a­tion, this *“thermo­dy­nam­i­cally sound”* money would have profound impli­ca­tions on the socioe­co­nomic systems it upholds. Such a monetary medium would need to be as agnostic to polit­ical machi­na­tions and criminal actions as the thermo­dy­namic reality of absolute energy scarcity it securi­tizes. Stopping the alloca­tion of human energy into *“manage­ment of”* (more accurately, politicking over the power to manage) the money supply, mankind liber­ates his energies to construct more robust socioe­co­nomic struc­tures on the unshak­able founda­tion of immutable money. ***"War is the contin­u­a­tion of politics by other means."*** - Clausewitz Thermo­dy­nam­i­cally sound money would estab­lish a *“neutral terri­tory”* where all that matters is how much you can contribute to the produc­tivity of society. Military rank, polit­ical affil­i­a­tion, and proximity to the printing press as deter­mi­nants of position in the global wealth hierarchy would be largely elimi­nated. By giving society a source of indis­putable truth around which it can self-organize, much violence in the world would be disin­cen­tivized and defunded. When rules can’t be bent, and money can’t be easily confis­cated through polit­ical measures, the pursuit of peaceful cooper­a­tion becomes the most produc­tive strategy. Immutable money enervates politics and its Clause­witzian contin­u­a­tion: warfare. ### Sovereignism Rises ***"All human rights may be distilled into one — choice."*** As you may have guessed by now, this ideal, thermo­dy­nam­i­cally sound, and apolit­ical money is Bitcoin. As a 12-year-old digital disruptor to one of the world's most ancient and impor­tant tools — gold — Bitcoin is a tectonic shift in human organi­za­tion. Gold is the 5,000-year-old base layer monetary operating system for all modern systems of human gover­nance: an ancient sover­eignty system corrupted by central banking. Breaking the central­ized stran­gle­hold on money by disrupting it at the base layer, Bitcoin forces a total revamping of the socioe­co­nomic systems derived from money — including the rule of law, private property rights, and various insti­tu­tional forms. Nobody knows what shape this mega-polit­ical transi­tion will take, but it will certainly be an organic, bottom-up emergence since top-down control over this paradig­mat­i­cally new sover­eignty system simply does not exist. To state it plainly: Bitcoin is a momen­tous monetary innova­tion enabling a new mode of non-nation-state human organi­za­tion, a *“purified”* form of capitalism free of nation-state inter­fer­ence and deserving of its own neolo­gism. Let us call the new mode of socioe­co­nomic organi­za­tion enabled by encrypted digital money *sover­eignism*. ![](https://www.datocms-assets.com/56652/1690095758-re-love-ution.png?auto=format) Bitcoin energizes a revolu­tion in socioe­co­nomic organi­za­tion known as sovereignism. To fully explore the impli­ca­tions of sover­eignism, let’s begin with the invio­lable first principle of socioe­co­nomics: *man must act.* Action requires energy and implies purpose, as all conscious decision-making involves the attempted achieve­ment of an aim. The aims of man are always toward the allevi­a­tion of anxiety (what Austrian econo­mists call *“want satis­fac­tion”* or *“reduced uneasi­ness”)*. Mankind is the dominant species on Earth because he uses technolo­gies and organi­za­tional systems to channel energy across space­time with more intel­li­gence and toward more profound purposes than any other animal. Our higher aims require the channeling of energy at larger spatiotem­poral scales, with more sophis­ti­ca­tion and with greater preci­sion. Used properly, technolo­gies and socioe­co­nomic systems help us alleviate anxieties more easily. Tools amplify the force of our work efforts, increasing the ratio of outcomes to energy expended. Systems of socioe­co­nomic organi­za­tion — like capitalism, socialism, and, now, sover­eignism — let us engage in concerted action to inten­sify collec­tive output through the concen­tra­tion of individual atten­tion on ever-narrower phases of produc­tion (the produc­tivity gains resulting from the division of labor). In this sense, tools are organi­za­tions, and organi­za­tions are tools: both are useful for enhancing the overar­ching purpose of human life — the execu­tion of action aimed at anxiety allevi­a­tion. The tools and organi­za­tions are best fit for energy conser­va­tion win over time. Tools and organi­za­tions are both means for more intel­li­gently channeling energy across space­time. The hydro­elec­tric dam and the nation-state have this in common — they are both intel­li­gently designed reser­voirs and alloca­tors of energy; the dam for hydraulic energy of water and the nation-state for the metabolic, polit­ical, and produc­tive energy of popula­tions. Both, at least temporarily, harness and channel the entropic onslaught of (ecolog­ical and human) nature. But in the end, both give way to the decen­tral­izing tenden­cies of the very nature they seek to contain: water always flows to the lowest places, and people always self-organize in ways that most favor their economic interests. The ultimate man-made tools for decen­tral­izing power away from top-down insti­tu­tional control are open-source digital organi­za­tions, like those composing the many layers of the internet protocol suite. Wikileaks, the Arab Spring, the George Floyd protests are just a few examples proving the internet poses a major threat to central­ized power struc­tures. Social movements like this are mere tremors of the coming nation-state collapse. As the only non-state digital money, Bitcoin is the value layer of the internet — the first viable competitor to the sover­eignty system gold provided historically. ![](https://www.datocms-assets.com/56652/1690095849-the-5th-layer.png?auto=format) Bitcoin is the monetary layer of the internet protocol suite, a sover­eignty system compet­i­tive to gold. Image credit: @anilsaidso An exten­sion of the self-organizing internet ecosystem, Bitcoin is the world’s first *self-sover­eign digital organi­za­tion*. These organi­za­tional forms are the most advanced way of harmo­nizing individual and collec­tive willpower.  A self-sover­eign digital organi­za­tion like Bitcoin is self-governing and can split in the event polit­ical differ­ences threaten organi­za­tional cohesion (see Bitcoin cash fork). As an intrin­si­cally more adaptive, fluid, and volitional system for allocating socioe­co­nomic energy across space­time, Bitcoin outcom­petes the closed-source, analog, and compul­sory organi­za­tion of nation-states. ![](https://www.datocms-assets.com/56652/1690095907-bitcoin-picture-breelove-neon-computer.png?auto=format) Bitcoin is an indis­putable sover­eignty system recon­ciling individual exchanges made within the socioe­co­nomic collec­tive. It obviates the need for nation-states and exists with absolute agnos­ti­cism to the man-made systems of law and order which incubated it during its early years. Lever­aging the power of human nature and incen­tives as two of its indis­pens­able operating compo­nents, Bitcoin harnesses human energy to scale its network. As a loss-minimized system for storing and trans­fer­ring the fruits of labor, Bitcoin’s fixed money supply gener­ates its own demand (validating [Say’s Law](https://en.wikipedia.org/wiki/Say%27s_law)) as ever-more wealth is plundered via infla­tion. This is why everyone ends up on Bitcoin’s payroll eventu­ally. A new breed of global citizen is now emerging: inhab­i­tants whose influ­ence, voice, and capital can completely transcend locality, and its various local author­i­ties. Compul­sion finally cedes to civiliza­tion as sover­eignism rises. ### Free Market Governance ***"Micro­pro­cessing will subvert and destroy the nation-state."*** **- The Sover­eign Individual** Sover­eignism succeeds by reducing the economic returns tradi­tion­ally associ­ated with violence and coercion. Citizens will demand contract law and property assur­ances of equal integrity to those offered by Bitcoin, other­wise they will not part with their money. In the same way, summoning a stranger to be your private driver for the evening would seem crazy 25 years ago; digital technology will continue to change the nature of trust and human inter­ac­tion. But when money digitizes, the impli­ca­tions are much more signif­i­cant.  Multi-signa­ture capabil­i­ties of Bitcoin are already being [explored](https://medium.com/@parabolicinvestor/introducing-bitcoin-contract-governance-d28eb046ce8b) as a means for facil­i­tating private contract gover­nance indepen­dent of state courts. This has the poten­tial of growing into a decen­tral­ized alter­na­tive to the tradi­tional justice system. Since money can no longer be censored or stolen, the socioe­co­nomic struc­tures devel­oped atop this base layer operating system will leverage encryp­tion to strive for an equiv­a­lent censorship-resistance. But like all new births, the transi­tion to this decen­tral­ized state of unpar­al­leled civiliza­tion is bound to be messy. When the economic returns of organizing violence at scale decline, the business models premised on protec­tion from violence (govern­ments and nation-states) neces­sarily shrink and become more local­ized. This macro­eco­nomic counter-swing of the pendulum means violence will become more small-scale and random­ized: akin to what prevailed in the (truly decen­tral­ized) age of hunters and gatherers. Like paleo diets, yoga, medita­tion, Ayurvedic medicine, entheogens, and even Bitcoin (Austrian economic money) — sover­eignism is yet another example of how ancient ways are resur­gent in the digital age. ![](https://www.datocms-assets.com/56652/1690096026-ancient-ways-grahpic.png?auto=format) Ancient ways — such as yoga, medita­tion, Ayurvedic medicine, paleo diets, entheogens, and even Austrian economics (Bitcoin) — are resur­gent in the digital age. As surely as capitalism outcom­peted commu­nism, sover­eignism will outcom­pete statism in all its forms. By empow­ering individual freedom in radically new ways, societies adhering to organi­za­tional princi­ples consis­tent with sover­eignism (broad indus­trial priva­ti­za­tion, debureau­cra­ti­za­tion, consen­sual taxation, Bitcoin, etc.) will generate more wealth than the command-and-control economies of more rigid nation-states, and attract more citizens. More compet­i­tive juris­dic­tions mean less toler­ance for bureau­cratic waste­ful­ness. As citizens wake up to this new reality, the modern obses­sion with state politics will fade into a relic of a bygone era. Contrary to modern miscon­cep­tions, economics drives politics; politics do not drive economics. The legislator’s pen does not create wealth, it can only distribute it. As polit­ical bureau­cra­cies swell to the point of being unsus­tain­able by their under­lying produc­tive economies, desper­a­tion will cause govern­ment overreach to explode, forcing market actors to shelter wealth any way they can. And in the 21st century, capital will find no more unassail­able domain than the digital. As capital flees into the digital domain to escape escalating taxation and infla­tion, govern­ment revenues will fall rapidly, causing them to fragment and fail. As a result, organized crime is likely to grow in scope during this transi­tion. In truth, the nation-state is *“organized crime”* — the apparatus of compul­sion and coercion intended to insulate the produc­tivity gains gener­ated by a peaceful division of labor. Legal and police systems protect market actors from endoge­nous threats to the economic wellspring of free trade while the military neutral­izes exoge­nous threats. The nation-state was 20th-century society’s best way of wielding violence to preserve peace. ![](https://www.datocms-assets.com/56652/1690096091-top-10-military-breedlove.jpeg?auto=format) But the techno­log­ical reali­ties of the 21st century signif­i­cantly change the calculus of violence. Since digital capital cannot be unilat­er­ally seized via taxation or infla­tion, the level of protec­tion services nation-states actually provide will come to reflect their actual produc­tion costs over time. Said differ­ently: in the digital age, nation-states will be forced to compete and *earn* the loyalty of their citizens, like any other free market enter­prise, and will there­fore only be able to charge market rates for their (decreas­ingly neces­sary) services. Tradi­tional legal and police systems required for enforcing contract law, preserving property rights, and peace­keeping in the Indus­trial Age may quickly find themselves facing irrel­e­vance in a world where these services are more efficiently provided by self-organizing digital networks. Coupled with the collapsing tax capac­i­ties of govern­ments, many former state-provided services will fall to software. ### Digital Darwinism ***"Efficiency will become more impor­tant than the dictates of power in the organi­za­tion of social insti­tu­tions."*** **- The Sover­eign Individual** As nation-states falter, barriers to market entry, partic­i­pa­tion, and exit will fall too, thereby exacer­bating free market compe­ti­tion and wealth gener­a­tion. In digitally enabled, hyper-compet­i­tive market­places, power law distri­b­u­tions predom­i­nate and winner-take-all effects prolif­erate: Facebook, Apple, Amazon, Netflix, Microsoft, and now Bitcoin are all examples of this Darwinian digital paradigm. Choice and exper­i­men­ta­tion will become the defining variables of redefining socioe­co­nomic organi­za­tion. New modes of securing life, liberty, and property will be tried, failed, and iterated upon. The ever-present threat of capital flight into unreach­able digital space will force insti­tu­tions wishing to survive to deal with citizens honestly. When govern­ments are demate­ri­al­ized by software, they will become almost unrec­og­niz­ably agile, innov­a­tive, and fragmen­tary. Encryp­tion embroils nation-states in digital acid: dissolving even their most rigid power struc­tures and trans­forming their incen­tive struc­tures from within. Only the most produc­tive and account­able govern­mental functions will remain. With the restric­tions of locality largely dimin­ished, only the most valuable services will earn customer capital and atten­tion. Meritoc­racy supplanting bureau­cracy is distinc­tive to sovereignism. Digiti­za­tion makes results matter more than decrees, meaning merit will ascend the social hierarchy of values. A world in which all spatiotem­poral bounds are lifted will become an *“age of excel­lence.”* For instance, it is (already) no longer good enough to be the best cover band in your city: thanks to YouTube, you now need to be the best cover band in the world, and across all time, to compete success­fully for the atten­tion of your target audience. Cover bands must even compete with the original band they’re covering in an era defined by digital media! When sales demon­stra­tions are conducted over digital media instead of in-person, execu­tives will deploy only their most adept sales­people no matter where they live. Minimized bureau­cratic barriers will maximize the promo­tion of merit and mitigate polit­ical force­ful­ness in business. With less to be gained from the use of force, efficiency becomes more impor­tant than magni­tude in terms of channeling energy across space­time. When effec­tive­ness trumps fiat in this way, insti­tu­tions disin­te­grate and reorga­nize, with the resul­tant economic gains largely accreting to the *“cogni­tive elite”* who success­fully presage and prepare for the mega-polit­ical shifts under­foot. Those who synchro­nize their affairs to adapt to this fluid, border­less, and self-organizing digital zeitgeist (largely by being among the first to move their savings into Bitcoin and diver­sify their citizen­ship options) will dethrone the *“ruthless capital­ists”* of the Indus­trial Age to crown themselves the *“sophis­ti­cated sover­eignists”* of the Digital Age. Digital technology broadens the scope of human possi­bility, making the manifes­ta­tion of sover­eignists’ imagi­na­tions in all their multi-faceted forms seem feasible. Streaming video, encrypted commu­ni­ca­tions, and unstop­pable money let man *“bend space­time”* to his will. But attached to these advanced capabil­i­ties are new costs and risks. Lacking social safety nets and other govern­ment welfare programs will force individ­uals to become more self-respon­sible than they were accus­tomed to being in the Agricul­tural and Indus­trial Ages (hereafter referred to as *The Analog Ages*). Successful sover­eignists will be those who embody the timeless wisdom of Voltaire: ![](https://www.datocms-assets.com/56652/1690096223-with-great-power.png?auto=format) Sover­eignists who rise to the occasion will no doubt be tested, as nation-states will fight back in an attempt to retain their tradi­tional powers over popula­tions. Nation-states will lose leverage over self-emanci­pated *“sover­eign individ­uals,”* who will be armed with the tremen­dous option­ality engen­dered by digital networks, markets, and capital. Increas­ingly desperate, targeted extor­tion may become the weapon of choice for failing govern­ments. Only those sover­eignists running the best opsec will survive such militaristic measures. As the reality of an existen­tially threat­ening digital future dawns on them, nation-states are unlikely to pull any punches in the subse­quent power struggle — as *The Sover­eign Individual* describes it: ***“Just as monarchs, lords, popes, and poten­tates fought ruthlessly to preserve their accus­tomed privi­leges in the early stages of the modern period, so today’s govern­ments will employ violence, often of a covert and arbitrary kind, in the attempt to hold back the clock. Weakened by the challenge from technology, the state will treat increas­ingly autonomous individ­uals, its former citizens, with the same range of ruthless­ness and diplo­macy it has hereto­fore displayed in its dealing with other governments.”*** Strive as they might, nation-states will succumb to software. Fighting the free flow of data is as futile as fighting the tide. ### Bursting of the Dams ***"In the digital age, the threats of physical violence that have been the alpha and the omega of politics since time immemo­rial will diminish."*** - The Sover­eign Individual Nation-states, like dams, can only inter­rupt the inexorable flow of nature’s self-organizing tenden­cies for so long. As taxing capacity plummets, disec­onomies of scale will ensue, making smaller nation-states more econom­i­cally compet­i­tive and, there­fore, attrac­tive to sover­eignists. Glimmers of this transi­tion are already evident, with cities like Miami announcing programs to draw forward-thinking entre­pre­neurs into residency. Due to a variety of techno­log­ical advances, the advan­tages of scale in a combat will be dimin­ished. Themat­i­cally, digiti­za­tion reduces the size that organi­za­tions must attain to be effec­tive in the use of violence. Guns can be 3‑D printed, cheap anti-aircraft drones can be launched, hackers can cripple militaries, and capital can be mobilized without a trace. Asymme­tries of cost and effect paradox­i­cally result in more symmet­rical power struc­tures. When the cost of defense plummets, offen­sive strate­gies become less lucrative. In this (re-)decentralization of sover­eignty, the world will undergo a rever­sion to a symmetry of violence last seen during the age of hunters and gatherers. However, this rever­sion will (somewhat counter­in­tu­itively) generate more peace on balance since sometimes the power to take an action is more impor­tant than actually taking it. Similar to the ever-present threat of capital flight forcing insti­tu­tions to be more honest in their dealings, the ever-present threat of local­ized violence will encourage peaceful inter­ac­tion among sover­eign­tists at scale. Armed with advanced weaponry enabling them to *“punch above their weight”* compared to nation-states, combat advan­tages will accrue to the most versa­tile and adaptive organi­za­tions. Equal access to armaments, download­able in digital space or buyable in unham­pered markets, means sover­eignists will mostly accord politely with one another. Although appealing at a civiliza­tional level, achieving this symmetry of power involves a recon­fig­u­ra­tion of insti­tu­tional struc­tures, an event likely to exhibit great turbu­lence: like nature restoring balance by bursting a dam. ![](https://www.datocms-assets.com/56652/1690096385-water-dam-breedlove.png?auto=format) Non-adaptive struc­tures never stand the test of time. As the most adaptive mode of socioe­co­nomic self-organi­za­tion, sover­eignism outcom­petes all others. Greater symmetry of and reduced incen­tives for violence mean less mass murders, less school shoot­ings, and less govern­ment war-mongering. However, sover­eignists will still face threats like extor­tion and ransom, which nation-states may wield indis­crim­i­nately as they struggle to remain relevant while dissolving in a flood of digital acid. Demand for protec­tion from failing govern­ments will grow. Opsec will be of paramount impor­tance for anyone of means. Private security details are likely to become increas­ingly common among sover­eignists. State-assigned identi­ties will be abandoned and aliases adopted. As digital technology revolu­tion­izes mankind in every respect, our laws will become antiquated, our insti­tu­tions inverted, our morals reshaped, and our percep­tions perma­nently altered. Sover­eignism will shake the (illusory) sense of socioe­co­nomic stability derived from violence monop­o­lies and portend a total break­down of the heavily politi­cized 20th-century nation-state organi­za­tional model. As *The Sover­eign Individual* words it: ***"Market forces, not polit­ical majori­ties, will compel societies to recon­figure themselves in ways that public opinion will neither compre­hend nor welcome. As they do, the naïve view that history is what people wish it to be will prove wildly misleading."*** *A popular counter­ar­gu­ment to the rise of Bitcoin-enabled sover­eignism is that “nation-states will never allow it.” Such a line of thought is inher­ently flawed since it considers nation-states to be single, indivis­ible, and autonomous organi­za­tions. In truth, nation-states are (more or less tightly) inter­woven constel­la­tions of individ­uals connected through common economic inter­ests, trade networks, socio­cul­tural similar­i­ties, or geopo­lit­ical affil­i­a­tions. Nation-states are not singular socioe­co­nomic aggre­gates, as the mental models of many dissenters falsely assume. The authority holding these outdated organi­za­tions together is, again, derived (either directly or indirectly) from their equity stake in the world’s only analog sover­eignty system: gold.* *As the level of service, these nation-state complexes render declines relative to its cost, the incen­tives for individual citizens to exit these violently imposed monetary monop­o­lies will increase commen­su­rately, causing an eventual “rush for the exits” into Bitcoin. State police, judges, and regula­tors alike will face these pressures in their roles as citizens, and only the most stupid or jingo­istic will ignore the economic pressures to exit failing fiat systems. As influ­en­tial state constituents start acquiring Bitcoin, they become aligned with its success, and the power struc­tures cohering every nation-state will be dissolved from the inside out. Self-sover­eignty is in unceasing and universal demand on the free market; Bitcoin immutably speaks this truth to power. Sover­eignism will see nation-state power struc­tures stand naked before truth.* Although this transi­tion may seem alarming and poten­tially chaotic, the end-game of sover­eignism is an [explo­sion of wealth and a commen­su­rate human flour­ishing in the wake of nation-state disso­lu­tion](https://www.swanbitcoin.com/our-most-brilliant-idea/). Self-organizing digital organi­za­tions stand to become the greatest testa­ments to Schumpterian creative destruc­tion known to history. The breaking of the nation-state dam — a complex of artifice, confis­ca­tion, and conscrip­tion — will unleash human ingenuity to a virtu­ally incom­pre­hen­sible extent. If this thesis holds true, history will regard the internet as merely a prereq­ui­site innova­tion for Bitcoin: the real catalytic break­through in the civiliza­tional conver­sion to sovereignism. Sover­eignism will eclipse statism in the 21st century. This mega-polit­ical transi­tion is already well underway, and its conse­quences are more evident by the day. In part 2, we will examine Bitcoin as a catalyst to sover­eignism. Functioning as *“the ultimate offshore bank”* for 21st century sover­eignists, Bitcoin is the key innova­tion in a world rapidly submerging into the ungovern­able waters of the digital high seas. Thank you for reading *Sover­eignism Part I: Digital Creative Destruc­tion*. Subscribe to my YouTube Channel: [bit.ly/321Lzm0](https://t.co/9M1Z1YghsG?amp=1) Follow me on Twitter: [https://twitter.com/Breedlove22](https://twitter.com/Breedlove22) Stack sats with me, get $10 in free Bitcoin through this link: [https://www.swanbitcoin.com/breedlove](https://www.swanbitcoin.com/breedlove) Journey with me as I write my first book: [https://bit.ly/3aWITZ5](https://bit.ly/3aWITZ5) If you enjoyed this, please send sats: [https://tippin.me/@Breedlove22](https://tippin.me/@Breedlove22) Or, send sats via Light­ning Network with Strike: [https://strike.me/breedlove22](https://strike.me/breedlove22) Or, send sats via PayNymID: +tightking693 Or, send dirty fiat dollars via PayPal: [https://www.paypal.com/paypalme/RBreedlove](https://www.paypal.com/paypalme/RBreedlove) Or, send dirty fiat dollars via Venmo: [https://venmo.com/code?user_id=1784359925317632528](https://venmo.com/code?user_id=1784359925317632528) ![](https://www.datocms-assets.com/56652/1690096507-breedlove-wallet-qr.png?auto=format) ### Robert Breedlove Robert Breedlove is founder, CEO, and CIO of Parallax Digital, a global Bitcoin-focused hedge fund and consultancy. He considers himself a freedom maximalist and believes he’s found his life’s work in Bitcoin. # Bitcoin, Perfect Money For Humanity - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-perfect-money-for-humanity-nozomi-hayase/ The Internet of Money transcends borders and protects people of all nations from resource wars, exploitation, and dictatorship. Bitcoin guards us against wealth confiscation, helping us steward our precious planet. --- **Nozomi Hayase** · July 23, 2021 · Updated June 27, 2024 The Covid-19 pandemic that blazed across 2020 has thrown the world into disarray. The economic damage that has triggered the break­down of the system signals a dire need for change. As the old system is getting disman­tled and global leaders jump in to fix the problems, Bitcoin is now gaining traction, increasing in price and welcoming new users daily. Born and raised on the internet, Bitcoin is state­less money that is now even [consid­ered to be](https://news.bitcoin.com/morgan-stanley-strategist-bitcoin-replace-us-dollar-worlds-reserve-currency/) the best candi­date for the world reserve currency. Some see the signif­i­cance of this innova­tion and its impact beyond finance. Billion­aire hedge fund manager Paul Tudor Jones, who became bullish on Bitcoin in 2020, [remarked](https://finance.yahoo.com/news/billionaire-hedge-fund-manager-paul-130000169.html), ***"A bet on Bitcoin is a bet on human ingenuity."*** The issues we now face, from poverty and climate change to conflicts among nations and human rights abuses, are global and cannot be resolved by any one country. In this article, I will argue how Bitcoin is a gift for humanity that can help ordinary people worldwide work together collab­o­ra­tively to meet those challenges and is perfect money that can guide us into the next stage of our civilization. ### Rejection of Nature’s God Bitcoin, invented during the finan­cial crisis in 2008, is free from the central authority of govern­ments and banks. In its 12 years of existence, the technology, with its unique feature of censor­ship resis­tance and permis­sion­less use, has allowed people to store value securely and transact with one another freely in a way that is unprece­dented in human history. The roots of the problems that now confront humanity have to do with our modern world’s loss of its connec­tion to nature. We now have created a highly techno­log­ical civiliza­tion, and our way of life has become out of tune with the natural world.  Society’s separa­tion from nature is traced back to the birth of the modern nation-state. The significant events that broke civilization’s harmony with nature took place in the conti­nent of North America when European settlers encoun­tered Native Ameri­cans. Back then, a true meeting of cultures did not occur. The possi­bility of creating a civiliza­tion through dialogue by opening and integrating other perspec­tives did not happen.  Led by the God-ordained manifest destiny, European colonists crusaded toward the westward expan­sion. They destroyed the lives of the indige­nous people and their culture and declared nature dead. Philoso­pher Jacob Needleman (2002) [eluci­dated](https://www.amazon.com/American-Soul-Rediscovering-Wisdom-Founders/dp/1585422266) how in their conquest of the land, men who were influ­enced by Enlight­en­ment ideas failed to under­stand the indige­nous culture that *“was resting on a different state of conscious­ness than does our modern civiliza­tion”* (p.202), one that was more deeply connected to the earth.  This placed America in the trajec­tory of its devel­op­ment away from the original vision that lived in the land. At the time of the revolt against the British monarchy, Thomas Jefferson [acknowl­edged](https://www.archives.gov/founding-docs/declaration-transcript) in the Decla­ra­tion of Indepen­dence that the separa­tion of 13 colonies from Great Britain was entitled by *“the Laws of Nature and of Nature’s God.”* In their assault on nature, founders of the consti­tu­tional republic betrayed the ideals that inspired their own indepen­dence and denied the source of legit­i­macy that granted them their sover­eign existence. ### American Monotheism  In America, the New World, which promised to liberate people from the arbitrary power of the King, a force of monarchy — the polit­ical system based upon the rule of a single figure has quietly persisted. In estab­lishing the US consti­tu­tional Republic, there was recog­ni­tion of the impor­tance of the state’s ability to function indepen­dently, free from the church’s influ­ence. This was [artic­u­lated](https://www.usconstitution.net/jeffwall.html) by Jefferson’s concept of a *“wall of separa­tion”* between church and state and was placed in the Estab­lish­ment Clause of the First Amend­ment as the premise of religious freedom that prohibits the govern­ment from either advancing or hindering religion. Despite this safeguard against the creation of a church-state, the European colonists’ uncon­scious bias against the indige­nous people’s way of life and a relation­ship to the land that was radically different from theirs, influ­enced the estab­lish­ment of a predom­i­nant religion in America.  Jungian psychother­a­pist Rafael López-Pedraza (1990) [noted](https://www.amazon.com/Cultural-Anxiety-Rafael-Lopez-Pedraza/dp/3856305203) how the Bible has become a basis of religious belief of Westerns and described its essence as *“monotheism: the worship of one God, and the jealousy and wrath of that God if any other is worshipped”* (p. 29). To the frame of mind shaped by Judeo-Chris­tian tradi­tion, Native American tribes’ animistic world­view that [regards](https://dialogueinstitute.org/native-american-religions) all things –animate and inani­mate possessing a living spirit as an embod­i­ment of the divine was consid­ered primi­tive and inferior.  This European’s one-sided beliefs and attitudes, without having been carefully examined, formed a religion of American monotheism. The federal govern­ment [worked to enforce](https://www.nationalgeographic.org/article/native-americans-and-freedom-religion/) this national religion by confining Native Ameri­cans to reser­va­tions, banning them from practicing their worship of nature, ceremo­nial dances, and rituals that were deeply woven into their everyday life. In the name of assim­i­la­tion, their children were put in boarding schools, and those First Nation people were made to adopt European cultural values, including conver­sion into Christianity. ### The Doctrine of Materialism One god that has now occupied America denounces the super­nat­ural world that under­lies the natural world. It preaches the doctrine of materi­alism – a belief that only the things that can be perceived through external senses exist and denies the reality beyond the physical. The republic, under monothe­istic persua­sion, has charted a path of devel­op­ment that stands in opposi­tion to nature and measures its progress through the advance­ment of physical comfort. In this, money became an instru­ment for the ruling elites to maintain their exclu­sive control over people’s choices of faith. The U.S. dollar that was declared as legal tender by govern­ment decree, with the symbol of [the Eye of Provi­dence](https://www.britannica.com/topic/Great-Seal-of-the-United-States) watching over humanity, began to circu­late across the nation. Later, through [the creation](https://www.federalreserve.gov/aboutthefed/fract.htm) of the Federal Reserve in 1913, private corpo­ra­tions took the power to create money away from the government.  Central banks have become the overlord to remake the world according to their own image. Econo­mists, with the idea of unlim­ited growth and the concept of gross domestic product (GDP), began their evange­lism to promote a materi­al­istic view of the world.  ### The Invention of GDP The GDP was created as a common denom­i­nator to assess the health of the nation’s economy. It [is defined](https://www.investopedia.com/ask/answers/what-is-gdp-why-its-important-to-economists-investors/) as *“the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.”* This concept has trans­formed economics into empir­ical science. Physi­cian and activist Vandana Shiva [spoke](https://www.youtube.com/watch?v=TLApM61XViA) about how the GDP was invented during the war as a part of the war machine and was used by econo­mists as a weapon to support the war economy. She explained how the GDP, called the *“Manhattan Project”* of economics, creates a very artifi­cial produc­tion boundary that says, “*If you produce what you consume, you don’t produce.”*  Shiva noted how nature produces and consumes in an amazing cycle that sustains life, yet according to this arbitrarily defined growth measure that excludes economic activ­i­ties such as services and goods for personal consump­tion, this nature’s regen­er­a­tion is treated as non-production. ![](https://www.datocms-assets.com/56652/1690110384-real-gdp.jpeg?auto=format) As a key concept in economics, the GDP was used to create a Pyramid Ponzi scheme that extracts from nature, turning it into lifeless objects to increase the material wealth of those on the top. It is a system of enslave­ment in which people are deprived of their ability to produce for themselves and be self-reliant. Instead, they are made to depend on large corpo­ra­tions to deliver the goods and services they need. ### Creation of Model Citizen This plunder economy has been accel­er­ated by 21st-century consumer capitalism. The state-sponsored ortho­doxy of materi­alism denied man's internal life, making people find value and meaning outside of themselves. Through sales marketing with adver­tising and branding, big business found a way to create in people a desire for consump­tion and manufac­ture a need for mass production. Through Holly­wood, celebri­ties became idols for people's worship. With their glamour, they presented to the public the myth of the American Dream that promises everyone equal oppor­tu­ni­ties to achieve a materi­ally affluent lifestyle. One by one, people were lured into the market and began to look for meaning through material acquisition. This abstract concept of the GDP that now drives this consumer economy has been used to set a standard for a model citizen. Now the market sends a message; 'the more one engages in mindless consump­tion, the more one contributes to the increase of the GDP and becomes virtuous.' Guided by the invis­ible hand of this engineered market that incen­tivizes passivity and obedi­ence, people were made to chase after products striving to become good citizens, to be accepted and be recog­nized as being valuable. ### Petrodollar Hegemony While keeping people insulated in a bubble of consumer culture, the US govern­ment, under the thumb of private corpo­ra­tions, carried on their missionary work around the globe to advance the dominance of their single-minded faith. In 1933, the US [abandoned](https://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard) the gold standard for domestic trans­ac­tions. Then, through the Bretton Woods Agree­ment in 1944, the dollar was [accepted](https://www.federalreservehistory.org/essays/bretton-woods-created) as the inter­na­tional currency for most trade.  What appeared to be the final victory of supremacy of matter over nature came in 1971 when Presi­dent Nixon [severed](https://www.youtube.com/watch?v=iRzr1QU6K1o) the final link between the dollar and gold by ending inter­na­tional convert­ibility of the dollar to gold. All those devel­op­ments led to the creation of the petrodollar, a hegemony of one currency backed up by the military, which was acknowl­edged by Nobel prize-winning econo­mist Paul Krugman’s telling [comment](https://www.youtube.com/watch?v=MJWi8VUHUzk) that US fiat currency is *“backed by men with guns.”* The all-seeing eye of the godhead that floats at the top of the currency index has a limited vision. It can only see a mecha­nistic view of the future and aims to create a world of machines that enslave humanity. In its own self-right­eous American excep­tion­alism, one nation under a single god acts as if it is the absolute moral authority of the world. ### Crisis of the Western View of the World With an abstract sense of moralism that creates a duality of evil and good, the US empire projects external enemies. By creating the axis of evil with lies of weapons of mass destruc­tion, the nation with the most powerful military power spreads fear and hatred, keeping the world under a perpetual state of war. With [an edict](https://www.nytimes.com/2001/09/21/us/nation-challenged-president-bush-s-address-terrorism-before-joint-meeting.html) of *“You’re either with us or against us,”* the super­power state divides the world, coercing all to accept the doctrine of War on Terror. They demonize countries that challenge their petrodollar moral superi­ority and ostra­cize them from the inter­na­tional commu­nity, subjecting them to sanctions and military invasion. In ways other than outright violence, this tyran­nical god weaponizes finance against innocent people. Calling it the *“Jihadi of banking,”* Max Keiser, a host of a popular show that reports on finance, [explained](https://www.youtube.com/watch?v=I9o18gdojRw) how the heads of central banks commit fraud and blow up the economy. He described that they are trained in madrasa of Ivy League schools, and they misin­ter­pret Adam Smith and use it instead of the Koran as a religious pretext to commit *“finan­cial terrorism.”* They lower interest rates for investors, allowing large compa­nies to take away jobs and people’s liveli­hood, and destroy the whole economy. As the expan­sion of West’s single vision of the world became destruc­tive, its extrac­tive war economy now meets the earth’s finite reality. As the end game for their money printing nears, and world leaders franti­cally try to reset the system to bail out their god, Bitcoin has begun to shine a light on a new path where the materi­al­is­ti­cally driven civiliza­tion reaches its limit. ### Separation of Money and State The inven­tion of Bitcoin made the separa­tion of money and state for the first time possible in history. This ended the oligarchy’s monopoly of faith that denied people an access to a true nature of reality, and freed people from the moral insanity that has turned the world upside down. This break­through in computer science revived Nature’s God that has been made to disap­pear from our society. Bitcoin is money backed by nature. While fiat money [is debt-based](https://www.youtube.com/watch?t=8m28s&v=4hgA9j-4dB0&feature=youtu.be) and subject to printing at will through ‘fractional reserve lending’, Bitcoin is a new asset class and as a digital gold, it has intrinsic value derived from energy that is required for compu­ta­tional work, in a way no different than the energy used to dig gold from the ground. Unlike the US dollar, which infinitely expands through the money printing press, Bitcoin, with its fixed monetary supply of 21M, has a built-in scarcity tied to real resources.  In the article *“Bitcoin and thermo­dy­namics,”* author Knut Svanholm [described](https://medium.com/the-bitcoin-times/proof-of-work-the-fundamental-laws-of-physics-and-nature-33d95167c57a) Bitcoin as a battery that was the best ever invented. He noted how Bitcoin *“offers a way of converting energy into a small part of a specific number.”* He describes it as a kind of *“mathe­mat­ical battery”* and how it converts electricity into digital scarcity,” which *“then can be programmed to express value.”* ### The World’s Truly Free Market At the heart of the creation of this mathe­mat­ical battery is Bitcoin mining. It is a broad­cast math compe­ti­tion engaged by a network of computers (called miners) around the world with clear rules, including the total number of bitcoin created and a predictable issuance rate. In a decen­tral­ized network where rules are applied to everyone equally, miners use their precious resources (harnessing compu­ta­tional power) to engage in Proof of Work- a process of solving diffi­cult mathe­mat­ical problems. With economic incen­tives that align everyone’s self-interest and make the rewards for playing by the rules higher than the value of attacking the network, it incen­tivizes all to act honestly and follow the rules of consensus. Every 10 minutes, a math problem is solved, and whoever solves the problem first wins a fixed number of bitcoins. This process creates bitcoin, clears trans­ac­tions, and, most impor­tantly, provides the security of a system. The creator of Bitcoin, known by the pseudo­ny­mous name Satoshi Nakamoto used Bitcoin as a token of value and, with a combi­na­tion of crypto­graphic hash functions and game theory, created the world’s first truly free market. While econo­mists, with their modern monetary policy, insulated the market from any feedback, Bitcoin regulates itself algorith­mi­cally and enables organic price discovery. The market adjusts mining diffi­culty according to demand with a tight feedback loop that resets every 2 weeks. It is programmed to regulate and maintain the rate of Bitcoin creation and corre­sponds more naturally with the demand and supply of the market, creating efficiency in the market. This brings an alter­na­tive to the existing model of the economy based on the idea of infinite growth that creates a destruc­tive cycle of endless consumption. ### Nature’s Economic Standard Bitcoin intro­duces a new economic standard that is different from a gold standard or any other economic model that came before. Mathe­matics that is enlivened through imagi­na­tion reunites matter that has fallen from its original source. With Bitcoin, money becomes energy. At the kernel of Bitcoin capital is the produc­tion of the mathe­mat­ical battery. It is based on non-material consump­tion in the form of energy, and this process is facil­i­tated by nature’s act of giving. ![](https://www.datocms-assets.com/56652/1690111034-fiat-standard-vs-bitcoin-standard-meme_rd-btc-3.jpeg?auto=format) Nature provides abundantly. With her selfless love, she both produces and consumes to regen­erate energies. Bitcoin invites us to partic­i­pate in an economy in a manner such that we all live up to this nature’s standard of altruism.  The genesis of Bitcoin was Satoshi’s generous act of [releasing](https://bitcoin.org/bitcoin.pdf) the open-source protocol online and making it freely avail­able to anyone in the world. In responding to this act of altruism, devel­opers worldwide brought their skills and intel­li­gence to work on Bitcoin. Miners began contributing their precious resources to build a network. This creates a new model of an economy based on reciprocity, in which everyone makes a contri­bu­tion to the network through volun­tarily sharing their labor, time, and resources and mutually benefit from each other’s gifts. ### Circle of Giving Bitcoin’s decen­tral­ized market is like a living organism that maintains the inter­con­nect­ed­ness of all partic­i­pants. In this ecosystem, the act of consump­tion simul­ta­ne­ously produces something of value, and this inspires a circle of giving.  Nature produces the energy of electricity that miners consume to generate their compu­ta­tional power, which is needed for them to solve mathe­mat­ical problems. Upon consuming that energy, miners convert them into producing security for the entire system.  Users who [run full nodes](https://bitcoin.org/en/full-node#special-cases) (a program that fully validates trans­ac­tions and blocks) use spare computing and bandwidth resources to store a full copy of the blockchain, which allows them to view and verify every trans­ac­tion. By consuming those energies, those nodes (computers connected to the Bitcoin network) deliver a service of ensuring all the rules of Bitcoin are followed. This way, they contribute to producing an immutable record of trans­ac­tions, keeping the system's integrity. Since Satoshi [sent](https://www.blockchain.com/btc/address/1Q2TWHE3GMdB6BZKafqwxXtWAWgFt5Jvm3?page=2) the first bitcoin in 2009, Bitcoin’s circle of giving has kept going without ever being inter­rupted. Bitcoin’s built-in scarcity (with issuance that decreases every 4 years that is guaran­teed to increase its value) facil­i­tates a network effect of wealth creation, with a math cap on its money base to prevent it from ever being popped like a fiat bubble. Bitcoiners respond to this gift of nature through the practice of HODLing (to hold bitcoin regard­less of its price, disen­gage in specu­la­tion). By disci­plining themselves not to buy things that they don’t need and withdrawing their partic­i­pa­tion in the extrac­tive economy, they express their respect for nature.  ### Individual Sovereignty Bitcoin, with its new economic standard, now frees us from the ortho­doxy of materi­al­istic economics and its scien­tific dogma of infinite growth that keeps people as passive consumers in the global debt Ponzi scheme. Global­iza­tion has created a race to the bottom where transna­tional corpo­ra­tions that do not have allegiance to any nations have abandoned workers by shipping jobs and manufac­turing bases overseas and lowering costs with cheap labor to maximize their own profit. As people become inden­tured servants being exploited in corpo­rate feudalism, Bitcoin restores the sover­eignty of people and nations, allowing them to claim their power to actively engage in the economy on their terms. The ecosystem fueling innova­tion and entre­pre­neur­ship has created oppor­tu­ni­ties for people to exit from this autocratic fiat control system that keeps them in slavery and steals from their labor. Many can walk away from 9 – 5 jobs and start up their own businesses to create values and share with one another through trade. Now, through a network of free and sover­eign individ­uals around the world, Nature’s God begins to reveal itself as the supreme judge of the world. New economic activ­i­ties that are emerging around this technology are creating a currency of revolt like a Tsunami against a warmon­gering god, whose legit­i­macy is backed by violence.  The *“survival of the fittest”* brutal mining market, channeling energies funneled into weapons manufac­turers, begins to defund the Pentagon and move a global society into building peace. From [Iran](https://www.coindesk.com/rouhani-bitcoin-mining-iran) to [Kazakhstan](https://www.trustnodes.com/2020/10/07/kazakhstan-enters-bitcoin-mining) and [Russia](https://www.coindesk.com/mystery-entity-just-set-up-20k-bitcoin-miners-in-siberia-report), nation-states have now joined the Bitcoin mining race, accel­er­ating the non-violent destruc­tion of the military indus­trial complex. The hash power gener­ated largely by [renew­able energies](https://coinshares.com/research/bitcoin-mining-network-december-2019), being subor­di­nated to the laws of thermo­dy­namics began to secure the sanctity of life for all beings. ### Natural State Relying on the faculty of reason, the founders of the modern nation-state pioneered a path, trying to estab­lish a world free from super­sti­tion and irrationality. The pursuit of knowl­edge through the ethos of objec­tivity has borne fruit that has enlight­ened the world in many ways. Branches of science, technology, engineering, chemistry, and medicine opened new poten­tials for humanity, making it possible for us to overcome natural disas­ters and disease and live more comfort­ably in what could be seen as a harsh physical plane. Yet in return, we have lost our vital relation­ship with nature and the Earth herself. Modern man has become estranged from the world that birthed him. But this separa­tion was neces­sary for us to develop and claim owner­ship of property- our own unique individ­u­ality.  The act of rebel­lion against Nature’s God was the right entitled by the Laws of Nature, granted to everyone for each of us to become indepen­dent and free. Now, through Bitcoin’s computer program­ming language, nature that has become silent begins to speak again.  The Gospel of Bitcoin reminds us that sover­eign individ­uals are free to exercise their own moral autonomy without permis­sion, finding within themselves motives for their actions to which they must submit. By creating money free from moral hazard, Satoshi allowed each of us to express ourselves freely and act authentically to each’s own nature. Every moment we choose to act according to the dictates of our own conscience, instead of succumbing to pressure from the outside or trusting external authority, we consent to our innate wisdom to govern our actions and live within the Province of nature. Only through each of us choosing to act freely and simply being in our natural state can we align ourselves with the Laws of Nature and contribute to increasing our moral value. Every 10 minutes, through distrib­uting account­ability across the network, the heart of Bitcoin performs checks and balances of power, keeping harmony among all living beings. [The Internet of Money](https://theinternetofmoney.info/) transcending borders protects people of all nations from resource wars, exploita­tion, and dicta­tor­ship. Bitcoin surrounding us every­where 24⁄7 can guard us against hyper­in­fla­tion, theft, and wealth confis­ca­tion, helping us steward this precious planet for the Seven Gener­a­tions to come. Our civiliza­tion has been operating in a monologue. For so long, we have tried to compete and outsmart nature. Now, Bitcoin, the genius of the consensus algorithm, opens up a dialogue. It calls us to become a co-creator with Mother Nature and invest in her wisdom to engineer a new economy. As the old fiat world begins to collapse, Bitcoin now provides a superior form of money that is secure, censor­ship-resis­tant, and self-sustaining. It is perfect money for humanity, for we are a part of the divine nature, and we are all Bitcoin. ![](https://www.datocms-assets.com/56652/1690111559-wallet-2.png?auto=format) Bitcoin accepted here: 34Bt7h4CuDyWFMhLTSUKscwmgiGtY4jyiZ ### Nozomi Hayase Dr. Nozomi Hayase is a highly accomplished author who specializes in the realm of Bitcoin. With a strong academic foundation in psychology and human development, she contributes her insightful writings to Bitcoin Magazine. Her primary areas of focus lie in examining Bitcoin's incentives and exploring its profound psychological and philosophical implications. Through her independent publishing platform called "The Way of the Heart," Dr. Hayase delves into the captivating journey down the Bitcoin rabbit hole, viewing it as a remarkable cultural phenomenon that nurtures profound personal transformations. For more information and her works, you can visit her website at https://nozomihayase.com/. # Bitcoin: Fee-Based Security Modeling - Swan Bitcoin URL: https://www.swanbitcoin.com/education/bitcoin-fee-based-security-modeling-lyn-alden/ The ideal state for the Bitcoin network is to reach equilibrium in the free market where blocks are always full, mostly with large transactions. Fees are high in absolute terms, low in percentage-of-value terms. --- **Lyn Alden** · March 9, 2021 · Updated June 26, 2024 Over the past decade, the Bitcoin network has been the most secure public blockchain. This is because it has by far the highest market capital­iza­tion and hash rate in the asset class, along with customized hardware required to mine it, meaning that the cost for a poten­tial attacker to try to control 51% of the hash rate for a lengthy period (which would allow for double-spending attacks and other security disrup­tions) is relatively high. However, in the decade ahead, Bitcoin will gradu­ally shift from paying miners primarily through Bitcoin block rewards to paying miners primarily through Bitcoin trans­ac­tion fees. So it has to navigate a gradual change in its security model. Some Bitcoin bears consider it inevitable that Bitcoin will fail in this transi­tion and encounter security problems. Many Bitcoin bulls consider the risk to be a non-issue. Like most things in life, in my analysis, I find the transi­tion to be middling in terms of risk poten­tial. It’s something to think about and monitor to see how it develops over time as one of Bitcoin’s final tests on its way to maturity, but not something that has insur­mount­able economic or technical issues. This article dives into some of the nuances, where I analyze the topic mainly from an economic point of view rather than a technical point of view. ### How Bitcoin Manages Security Bitcoin’s blockchain is a public and immutable ledger of past trans­ac­tions stored by count­less devices worldwide. Every ten minutes on average, another block is added to the blockchain by a miner that solves a puzzle from the previous block. In doing so, it processes up to a few thousand bitcoin trans­ac­tions and adds them to the blockchain, encased in that new block. Once several more blocks have been built on top of that block, the trans­ac­tions in that block become effec­tively perma­nent. As of this writing, there are over 670,000 blocks on the Bitcoin blockchain since its genesis in 2009. The primary reward for the miner who adds the block is a number of newly-gener­ated Bitcoins. That’s the only way that new Bitcoins are created. During the first 210,000 blocks (approx­i­mately 4 years), the reward was 50 new Bitcoins per block to the successful miner. During the next 210,000 blocks, the reward was 25 new bitcoins per block. It keeps getting cut in half every 210,000 blocks and is currently 6.25 new bitcoins per block. This process asymp­tot­i­cally approaches a total number of 21 million coins in existence sometime after 2100, although by 2030, the vast majority will have been mined. The secondary reward is trans­ac­tion fees. Users can add fees to their trans­ac­tions to incen­tivize miners, which during busy times (meaning too many trans­ac­tions trying to clear vs. the amount of avail­able block space) helps miners prior­i­tize high-impor­tance trans­ac­tions. If you’re trying to settle a $10 million trans­ac­tion, for example, you’ll be willing to pay a higher fee than someone trying to settle a $1,000 trans­ac­tion. This dynamic helps get the most trans­ac­tion value settled per block in a free market way. The fees are denom­i­nated in fractional bitcoins and paid by the sender as part of the transaction. Here’s an annual history of block rewards and fees for miners, in terms of dollar value, from back in autumn 2020: ![](https://www.datocms-assets.com/56652/1690112598-year-reward-amount.png?auto=format) Chart Source: NYDIG: The Power of Bitcoin’s Network Effect The numbers in this chart repre­sent the annual security and processing budget for the store of value and payment settle­ment network. As Bitcoin’s price has increased over time, miner revenue has increased, even though the block reward was cut in half every 4 years. In other words, miners receive fewer coins for their efforts but a higher dollar amount worth of coins and a small but growing amount of fees. Fees tend to spike during congested periods, in addition to having a struc­tural growth trend. Here in 2021, there will be about 330,000 bitcoins rewarded to miners as block rewards. At an average Bitcoin price of $40,000 as an example, the total amount of block rewards to miners would be approx­i­mately $13 billion. Fees would be added to that. We won’t know the total security budget until the end of the year, based on average prices and fees. Until then, we can monitor it over time. Looking back over the past decade, this chart shows the average market capital­iza­tion of Bitcoin, the annual security spend, and the percent of market capital­iza­tion spent on security: ![](https://www.datocms-assets.com/56652/1690112696-mcapyahoo.png?auto=format) Data Source: YCharts For the first two months of 2021, the average market capital­iza­tion was $740 billion, with an annual­ized security spend rate of $15.3 billion, repre­senting 2.0% of the market capital­iza­tion. This continued the trend of higher absolute security with a smaller percentage of market capital­iza­tion spent on security. Impor­tantly, the market decided how much security there would be, rather than some central authority. As bitcoin followed its algorithm, including diffi­culty adjust­ments and supply flow halvings, users purchased or sold bitcoin based on the prices they wanted, and miners allocated capital to mining based on risk/reward assess­ments. Miners could have mined other blockchains, or they could have done something entirely different with their capital. This chart shows what the average cost of trans­ac­tion was since incep­tion of the data, along with the fee portion of that cost: ![](https://www.datocms-assets.com/56652/1690112755-purple-orange-lyn-chart-graphic.png?auto=format) ### A Closer Look at 2020 If I take a snapshot of the full-year 2020, we can dig a little deeper and firm up the numbers of what a given year looked like. 307,439 trans­ac­tions were settled per day on average: ![](https://www.datocms-assets.com/56652/1690112794-btc-tix-per-day.png?auto=format) Since a single trans­ac­tion can send to multiple addresses, the total number of individual payments was higher, at over half a million. The average cost per trans­ac­tion was over $44, which includes fees and block rewards to miners: ![](https://www.datocms-assets.com/56652/1690112847-btc-average-cost-per-transaction.png?auto=format) With 366 days in the leap year, that gives us a total of well over 100 million trans­ac­tions and over $5 billion in miner revenue. The average market capital­iza­tion was $203.53 billion: ![](https://www.datocms-assets.com/56652/1690112978-btc-mc.png?auto=format) So, Bitcoin spent about 2.5% of its average market capital­iza­tion on security and processing that year. However, the vast majority of the cost per trans­ac­tion was in the form of block rewards, which is a form of infla­tion that doesn’t affect the sender directly, and instead affects the whole network. In terms of fees for the sender, the average trans­ac­tion took just $2.86 in fees: ![](https://www.datocms-assets.com/56652/1690113027-average-tix-fee-bitcoin.png?auto=format) The mean trans­ac­tion size was several thousand dollars, while the median trans­ac­tion was much smaller. ![](https://www.datocms-assets.com/56652/1690113065-coin-metrics.png?auto=format) Special thanks to Nic Carter for the Coin Metrics chart and his previous work on the subject of Bitcoin fees. He gave a [talk at MIT in 2019](https://www.youtube.com/watch?v=AyOyNF-bCkA) about this topic that remains relevant today. Overall, nearly $1 trillion in USD value was settled on the Bitcoin blockchain during the 2020 year. That’s impor­tant to note; annual settle­ment value was much higher than Bitcoin’s average market capital­iza­tion, and that’s true for prior years as well. If Bitcoin were running on a fee-driven model in 2020, with, say, $40 in fees per trans­ac­tion, the average $8,000-sized trans­ac­tion would have a relatively low fee (~0.5%). Still, many of the median-or-smaller trans­ac­tions would no longer make sense. Most folks wouldn’t want more than, say, a 1 – 2% trans­ac­tion fee, and so trans­ac­tions under $4,000-$8,000 would be less attrac­tive to do as a matter of normal operation. Bitcoin, there­fore, would be a base settle­ment layer rather than a frequent payment network. Payment networks can be built on top of it, as some appli­ca­tions are already done via the light­ning network and other solutions. This should work well if Bitcoin’s adoption continues to increase in the decade ahead. ### Incentives Against Attacks Small blockchains are often the victims of 51% attacks. With little hash power, few nodes, and small devel­oper commu­ni­ties, they have limited resources to deal with an attack. A profit-driven entity can invest a manage­able sum of money and perform a double-spend attack to steal millions of dollars worth of tokens. Bitcoin, however, is extremely resis­tant to 51% attacks, because the amount of dedicated hardware and electricity that an entity must acquire to attempt one is massive. In the early days, mining rigs believed to belong to Satoshi Nakamoto controlled over half of the bitcoin network, but he had no incen­tive to under­mine his own creation, and as the network prolif­er­ated, these rigs became less impor­tant and eventu­ally ceased. And in 2014, a mining pool [came rather close to the 51% threshold](https://www.coindesk.com/bitcoin-miners-ditch-ghash-io-pool-51-attack), but seemingly without intent to attack it. As bitcoin has grown larger, there haven’t been any more instances of entities coming near the 51% threshold. Besides the consensus node network, rational self-interest is basically the backup defense for a 51% attack. Miners invest a ton of capital into their rigs and gener­ally own a lot of coins; if they were to achieve a successful 51% attack on bitcoin and threaten the security of the system, it would likely damage the market capital­iza­tion of the network, resulting in a reduc­tion in their income and net worth, even if they were able to steal some coins in the attack. And the resulting pushback from the rest of the ecosystem in the wake of such an attack against them would be immense. As the network has grown larger and larger, and the Bitcoin network consumes as much electricity as a small country, the cost for coming anywhere close to a 51% attack threshold and holding it persis­tently is out of the reach of most entities. Only an extremely well-capital­ized attack, such as a consor­tium of state actors, could poten­tially be incen­tivized to attempt a credible attack of that magnitude. #### A Hypothetical State Attack For a sophis­ti­cated state entity to attempt an attack on Bitcoin in its current form (most likely for reasons other than profit, although they could also short the protocol to recoup costs and poten­tially make a profit), they’d have to do a bunch of things. First, they’d have to acquire the majority of dedicated ASIC hardware for Bitcoin mining. These are often in short supply. If they tried to buy up a signif­i­cant portion of new mining rigs from manufac­turers and old mining rigs from the second-hand market, they’d likely be unable to, and the market would notice. As I write this, new mining rigs are sold out months in advance. If they were to build their own mining rigs in some covert way, down to custom chips via their own foundry (and very few countries have sizable foundries), it would be a long and challenging process and require avoiding infor­ma­tion leaks. This would be a multi-billion dollar long-term effort in secret. If over half of the mining capacity exists within a single country, the govern­ment could theoret­i­cally confis­cate enough mining rigs to reach a 51% attack threshold without buying new rigs. The only country where this is a possi­bility is China due to their large hash rate exposure, although it’s only an estimate that China has over half of the hash rate. However, miners often keep their locations relatively secret because finding cheap sources of electricity is a key business advan­tage over competi­tors. In addition, many miners are mobile; they move around to wet seasons where hydro­elec­tric overca­pacity exists or to stranded shale energy. And if miners start getting confis­cated system­i­cally, the remaining miners would disap­pear. It would be exceed­ingly diffi­cult for the Chinese govern­ment to locate and *simul­ta­ne­ously* seize the vast majority of mining that occurs in its juris­dic­tion. And over time, if mining becomes more diver­si­fied across geogra­phies, it would take that unlikely mass-confis­ca­tion option off the table entirely. That’s the hardest part of doing a 51% attack on Bitcoin; getting the dedicated hardware. Folks often calcu­late the cost of a hypothet­ical attack based on electricity or per-hour rates, but the sheer amount of hardware that would have to be acquired is immense. This is unlike GPU-based blockchains where a user could conceiv­ably rent cloud GPU time (a use-case of gener­al­ized hardware rather than dedicated hardware) to perform an attack. Second, once they have this in place somehow, either through buying it, building it, or confis­cating it, the state actor(s) have to concen­trate more electricity than Singa­pore consumes and channel it at the Bitcoin blockchain through their dedicated ASIC hardware to try to do a constant series of double-spend attacks or other disrup­tive efforts. With their massive covert invest­ment, they could very well be successful at messing up a few blocks and performing double-spend attacks or similar disrup­tions. They could, for example, send an entity some bitcoins in exchange for money and then use their majority hash power to reverse that trans­ac­tion and keep the Bitcoins. They’d have to sustain this multiple blocks deep for it to have a sizable impact on trans­ac­tions that were thought to be fully confirmed. At that point, it would become a battle between nodes and the majority miner, with the possi­bility of nodes changing to another algorithm or taking other major steps to avoid the ongoing assault. A 51% attack does not undo the full blockchain; it reorga­nizes a few blocks deep or disrupts the process of ongoing blocks added to the blockchain, which gives time for counter­mea­sures. It would be one of the biggest tests that Bitcoin has ever faced. The diffi­culty and cost for this type of attack are why so far it has not occurred for Bitcoin and why only a large state actor, or collec­tion of state actors, who are partic­u­larly hostile to bitcoin’s existence and not concerned with the poten­tially unprof­itable nature of the attack, could conceiv­ably attempt it. The more broadly that Bitcoin spreads, including to a state’s own citizens, the more self-destruc­tive such an effort would be even if successful, which deters this *“James Bond villain”* secre­tive level of capital and effort the state would have to go through to attempt it. However, if it’s going to remain as successful as it has been, Bitcoin does have to grow a sustain­able fee market to keep those attacks very expensive. ### Determining an Appropriate Security Model As Bitcoin’s market capital­iza­tion has grown, the absolute amount spent on security has grown as well, but the percentage of the market capital­iza­tion spent on security has diminished. Indeed, that’s what we should expect to occur over time. Paying a huge percentage of the market capital­iza­tion in security each year made sense in the begin­ning when the protocol was small, vulner­able, and highly infla­tionary, but in the long run, from a large market size and low issuance rate, something more like 0.5% to 1.5% of market capital­iza­tion spent on security would probably be appropriate. And remember, bitcoin’s annual settle­ment value is a few times larger than its market capital­iza­tion. Relatively small fees on trans­ac­tions can poten­tially result in a sizable percentage of Bitcoin’s market capitalization. Ideally, the security spending rate should be large enough in absolute terms to deter most realistic attacks and large enough as a percentage of the market cap or annual settled value to make attacks uneco­nomic while not so large as to make normal settle­ment trans­ac­tions uneco­nomic due to needlessly high fees. The challenging thing is that there’s no firm number on what level would be appro­priate; it’s all an approx­i­ma­tion. In practice, Bitcoin doesn’t optimize itself for security, but rather security is a natural byproduct of the incen­tive mecha­nism for mining, which means there could conceiv­ably be times where security is quite high or relatively low compared to credible threats. Bitcoin’s network is not doing a quali­ta­tive or quanti­ta­tive assess­ment of the threat landscape and adjusting fees accordingly. After the next supply halving in 2024, bitcoin’s infla­tion rate will be less than 1% per year. It will continue dropping every 4 years from there asymp­tot­i­cally toward zero, so to maintain something like a 0.5%-1.5% ongoing security rate as a percentage of market capital­iza­tion, it’ll need to develop a sizable and persis­tent fee market. This chart shows the amount of fees per year and the percentage of the average market capital­iza­tion that the fees made up each year: ![](https://www.datocms-assets.com/56652/1690113438-average-mc.png?auto=format) Data Source: YCharts For the first two months of 2021, the average market capital­iza­tion was $740 billion, with an annual­ized fee spend rate of $1.85 billion, repre­senting 0.25% of the market capitalization. ### Inflation vs. Fees If security is paid for primarily through block rewards, then the holders of the coins are the ones primarily paying for it in the form of inflation. If security is paid for primarily through fees, then the senders of the coins are the ones primarily paying for it, in the form of the miner taking a cut from their transactions. So, over time, Bitcoin’s security model is programmed to shift primarily from charging the holders to those who transact. If, in some alter­na­tive design, bitcoin eventu­ally reached a point after a certain number of halvings where it had a constant issuance, like, say, 0.5% per year perpet­u­ally, then along with fees that senders pay, it would have a situa­tion where both holders and senders continue to pay for a base level of security. But as it was designed, bitcoin shifted over time to put all of the emphasis on sender fees for security, with holders paying virtu­ally nothing. Whether that’s good or bad is up for debate. On the one hand, it’s sensible to argue that both holders and senders should contribute to security since they both benefit from it. On the other hand, the hard supply limit has been a main selling point for people to buy system units. It likely increased its adoption rate and attrac­tive­ness as a store of value. A shift from a hard cap to low perpetual issuance would be the last resort among the commu­nity, so navigating to a fee model will be impor­tant for the ongoing success of the protocol. ### A Spectrum of Security This table shows the amount of money that would need to be spent on security to achieve a certain percentage of market capital­iza­tion for various market capitalizations: ![](https://www.datocms-assets.com/56652/1690113650-1-2-5.png?auto=format) Bitcoin, in its current form, can settle 120+ million trans­ac­tions per year on the base layer. Let’s call it 100 million as a round number since we’re talking orders of magni­tude here. And impor­tantly, a trans­ac­tion can send Bitcoin to multiple addresses, so you can batch multiple payments into a trans­ac­tion. So, the number of payments is realis­ti­cally up to a few hundred million per year. If Bitcoin reaches a state where the average trans­ac­tion fee is about $10, it will trans­late into $1+ billion per year for miners. If we add a zero, and the average trans­ac­tion fee gets to about $100, it would trans­late into $10+ billion per year towards miners. For refer­ence, as of the first couple months of 2021, the fee has been up to $20+. For payments of $10,000 or more, $100 or less in fees trans­lates into 1% or less of the trans­ac­tion value. So, the base layer would remain attrac­tive for large settle­ment trans­ac­tions but would be unattrac­tive for small payments. Bitcoin, in that sense, becomes something like a decen­tral­ized and permis­sion­less Fedwire system, relying on secondary layers to improve trans­ac­tion throughput for smaller users. We can also compare it to gold as a store of value. If you buy physical bullion, you would expect to pay a 2 – 10% or more markup over the spot price for your trans­ac­tion, depending on whether you’re buying coins or bars, and sometimes more during supply short­ages. And then you have to protect it yourself or pay a vault to store it safely. ### Payment Scaling Solutions If we look at the current finan­cial system, it consists of layers. There are deep settle­ment layers like Fedwire at the base, which process relatively low numbers of irreversible seven-figure trans­ac­tions between banks. On top of those deep layers, some layers optimize for more frequent and smaller consumer trans­ac­tions, which are reversible. When you spend with your Visa card, for example, that’s not a final settle­ment irreversible payment in and of itself; that’s merely a trans­ac­tion that the bank will later batch into a larger Fedwire payment with another bank. This is why the *“Bitcoin doesn’t scale; it processes only a fraction of what Visa can do”* argument is like comparing apples to oranges. Or, more specif­i­cally, it’s like comparing a whole­sale distrib­utor of apples to a retail apple-selling stand. The Bitcoin network has a trans­ac­tion count throughput capacity similar to Fedwire; when and if more and cheaper trans­ac­tions than that are needed, that’s what secondary layers are for. The various Bitcoin forks that attempted to increase trans­ac­tion throughput on the base layer didn’t work out well so far; they split the commu­nity, still didn’t achieve throughput anywhere near that of Visa, and sacri­ficed too much (acces­si­bility and decen­tral­iza­tion of node operation). ### Bitcoin Secondary Layers Not all or even most bitcoin trans­ac­tions have to settle on the base layer of the protocol. The base layer is ideal for final settle­ment for large trans­ac­tions, especially as trans­ac­tion fees grow as a percentage of the security budget. Above the base layer are various scaling solutions for higher-frequency trans­ac­tions, and they can be either trusted or trust­less or somewhere in the middle. For a trusted example, every central­ized exchange is basically a scaling mecha­nism. When you trade Bitcoin or various altcoins on an exchange, those aren’t on-chain trans­ac­tions. Those are trans­ac­tions within the internal ledger of that exchange. In other words, many trans­ac­tions occur back and forth, and some of the value is settled on-chain eventu­ally when entities withdraw or deposit coins. The custo­dian acts as a way to increase significantly trans­ac­tion volume since those intra-exchange trans­ac­tions are settling off-chain with occasional batching into bigger trans­ac­tions to actually move coins. For a trust­less example, there’s the Light­ning network. The Light­ning network lets users open multi-signa­ture channels with each other, and from there, they can send fractions of bitcoins back and forth without the cost of an on-chain settle­ment. If one of them wants to settle at any point, they can close the channel and settle back on the base layer with an on-chain trans­ac­tion. There­fore, you can fit many trans­ac­tions, for a nearly free cost, into one fee-driven large settle­ment. Impor­tantly, you don’t need a channel open with the person you’re trying to transact with. You only need to have a path from node to node to node that eventu­ally links to that person. The limita­tion of the Light­ning network is liquidity. If you don’t want to open a private channel with someone, you have to send fractional Bitcoins around from node to node to node to reach the target, and that means there has to be a sizable amount of channels between you and the target to make that possible, and there have to be suffi­cient tools to automate it. Public node opera­tors can place some Bitcoins on their channels and sell access to those channels for a tiny fee, thus earning a small ongoing yield on their Bitcoins. Light­ning Labs and other devel­opers continue to build tools to help apps and users enhance liquidity and usability on the network. The Light­ning network itself, like the under­lying base layer of Bitcoin, is owned by no one. If it continues to grow larger and larger, liquidity becomes less of a constraint, and usability increases. And then there are mixed solutions.  Some trusted proto­cols can use a set of private channels in the Light­ning network to provide fiat-to-BTC-to-fiat payment solutions to customers that don’t neces­sarily even know that they are using the Light­ning network, like with the Strike and Bottlepay apps. The total address­able market for that, partic­u­larly concerning small domestic and inter­na­tional payments, is enormous. Micro­pay­ments on the internet, such as through Sphinx Chat (which uses the Light­ning network), open up all sorts of revenue models for online businesses, as well as anti-spam measures in chat inter­faces (via a tiny but nonzero cost to post a message). ### Other Uses of Block Space Block space in Bitcoin’s blockchain is just infor­ma­tion; it doesn’t all have to be used purely for payment trans­ac­tions. Messages can be and have been included in various trans­ac­tions within blocks, including by Satoshi Nakamoto in the Genesis block. A given block on the Bitcoin blockchain, as an immutable distrib­uted public ledger, can be considered virtual real estate, and only 144 blocks are avail­able daily on average. Most uses are for settling Bitcoin payments, but the space within a trans­ac­tion can be used for other purposes, too, because any infor­ma­tion you put there becomes perma­nent and publicly available. There’s poten­tially a use-case for that because you can put something there as a matter of public record, as an arbiter of truth stored on count­less devices around the world that can never be changed once it’s buried under more blocks. Over time, various services have been willing to pay trans­ac­tion fees to secure messages inside the Bitcoin blockchain. Veriblock, for example, has a service that allows weaker blockchains to *“inherit”* Bitcoin’s security using the OP Return operator. Veriblock and similar solutions accounted for a double-digit percentage of Bitcoin’s ongoing trans­ac­tions for a couple years, although in recent years, this practice has tapered off. ![](https://www.datocms-assets.com/56652/1690114147-op-returns-ops.png?auto=format) Chart Source: transactionfee.info Overall, non-trans­ac­tional messages are no longer a big portion of Bitcoin’s block space usage, but in the future, this could conceiv­ably pop up again if new use cases are identi­fied. Many of the previous use cases have migrated to become Ethereum tokens, trading around in that space instead. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Why Bitcoin Will End the Worst Heist in History URL: https://www.swanbitcoin.com/politics/why-bitcoin-will-end-the-worst-heist-in-history/ The money stealing time machine is called “government decificts and debt.” Each annual theft called the deficit, and the total amount stolen across history is called the debt. --- **Tomer Strolight** · May 11, 2021 · Updated July 3, 2024 ### Time Traveling Thieves Here’s a cool idea for a movie: Crimi­nals from the past get their hands on a time machine that lets them travel to the present to steal money which they then take back to the past. Their victims are helpless to stop them. The crimi­nals can’t be prose­cuted or sued by the victims because they exist only in the victims’ past. Another cool twist is this: the victims wouldn’t remember they’d ever even had that money in the first place. They’d just be poorer by the amount that was stolen from them. But the victims would know they had been robbed because the crooks left a mark so obvious that the only possible expla­na­tion is that someone in the past had stolen this money. Everyone would know they had money stolen from them because they each owed money for things they never bought or agreed to buy. They simply found themselves owing money for something consumed before they were born. It, there­fore, had to be that someone in the past bought something they were now on the hook for. Ready to have your mind blown? This money-stealing time machine and the crooks who use it exist in real life. The thieves used it in the past to steal from you, and there are more crooks like them in the present using it right now to steal from people in the future. You can see the unmis­take­able mark of this crime: every person now born owes money for things they never bought and will never get to use. ### The Money Stealing Time Machine The money stealing time machine is called *“govern­ment deficits and debt”.* Each annual theft is called the deficit, and the total amount stolen across history is called the debt. Now there is nothing wrong with borrowing money if you have the inten­tion and the means to pay it back. If you need some money now that you don’t have, but will earn in the future, you can borrow it from someone who has some but doesn’t need to use it yet — As long as you pay them back. However, if you inten­tion­ally deceive that person by spending the borrow­ings without any inten­tion to pay them back, you’re commit­ting the crime of fraud. That crime carries with it a penalty of being fined, forced to make repay­ment, and poten­tially even jail time. If you acted even more outra­geously by borrowing money which you said someone else would pay back and that someone never agreed to paying it back and never even knew you’d made that claim on their behalf, you’d also be guilty of fraud, one that is easier to prove. Yet, **THIS DESCRIPTION OF FRAUD IS PRECISELY WHAT GOVERNMENT DEFICITS ARE**. Politi­cians keep borrowing and not paying back what they borrowed.  There is no evidence that they ever had any inten­tion of paying back what they borrowed. None of them have ever paid it back. Worse, they don’t person­ally assume the respon­si­bility of paying that money back but instead make the debts the oblig­a­tion of future gener­a­tions — gener­a­tions that couldn’t have agreed to take on the respon­si­bility of the debts because those people weren’t even born yet! Every baby born in the United States today is immedi­ately saddled with a debt liability of over $80,000, which they obviously never agreed to. Somehow nobody gets arrested or charged for this fraud. Nobody who commits this fraud is made to repay the money they stole, nor are they thrown in jail for their crimes. Why? Maybe it’s because everyone who should put a stop to the crime is an accom­plice to it. The police are paid with this stolen money. The judges are paid with it. The prose­cu­tors are paid with it. The lawmakers are paid with it. The econo­mists who say it’s okay to steal even more money in this manner are paid with it. Also, the recip­i­ents of govern­ment *benefits* are paid with this stolen money.  And so, for that matter, are banks that get handed this money to loan it out to more and more people who then find themselves even more helplessly in debt. Consider this: our money system is so thoroughly corrupted that theft from unborn children has become normal­ized. **This should cause moral outrage in any system possessing an actual spirit of justice.** ### Angry yet? There’s more than just money that’s being stolen from the future. Are you angry at this terrible injus­tice going on? If you’re not, is it because you’ve ratio­nal­ized that this was done to you so you can do it to others? Remember, just because you were abused does not give you the right to abuse others who have done you no harm. Let me ask you this instead: Do you sympa­thize with Greta Thunberg when she says, *“How dare you!”* as she accuses our leaders of stealing her future right to a planet with a sustain­able environ­ment? She is accusing them of stealing her future. Since we’ve already discussed in this article that time traveling crooks exist, let’s try another fact on for size too: in stealing the money from the future, it turns out the thieves are also stealing the sustain­ability of the environment. Human impact on the environ­ment and the economy are very much aligned. An overheated and exhausted economy is one side of a coin whose other side is an overheated and exhausted environ­ment. When the economy is forced in the present to over-produce and over-consume, it does so by using more resources in the present than are actually needed to satisfy its needs, leading to unnec­es­sary consump­tion of resources. And how do you think one overheats and exhausts an economy? Why, of course, with money stolen from the future. ### The Cost of Short Term Focus From 1971 until today, **politi­cians have been hell-bent on maximizing immediate consump­tion at all costs.** They have achieved that goal through reckless, fraud­u­lent borrowing from the future. You know this is true. The politi­cians and bureau­crats who try to manage the economy panic if even one month goes by without economic growth. If six months in a row pass by in which we don’t consume more than in the previous month, they call it a reces­sion. They use this as justi­fi­ca­tion to further increase their theft from the future, without any regard to either paying back that money or to the conse­quences this *“economic stimulus”* will have on the environ­ment.  And they keep stealing from the future until they get the results they are after, which is more consump­tion now. #### Why are we stealing what we don’t even need or want? Why doesn’t this madness of stealing from the future and damaging the environ­ment stop? Because our money system is broken. Because our money system allows this to happen. The system was broken on the day it was created. The date was August 13, 1971. It was the day that money worldwide ceased to be tied to the present supply of gold. Instead, **after that day, money could be conjured by bureau­crats and politi­cians and left as debts for people in the future to pay.** The US presi­dent at the time was Richard Nixon, whose most famous quote is, *“I am not a crook!”* What I hope this article demon­strates, in fact, is that he was such a crook that even though he died in 1994, people being born today owe money he stole from them before they were born. And the system itself is so crooked that this crooked­ness increases almost every year. **Here’s Exhibit A:** The Federal Deficit per year, also known as the amount stolen from the future per year in millions of dollars. ![](https://www.datocms-assets.com/56652/1690184806-0_u1gxwcdpkkhwezco.png?auto=format) Source: https://fred.stlouisfed.org/series/FYFSD If Nixon had told the truth and under­stood what he’d actually done, he would have said while holding both his hands up in a gesture of victory, *“I am the greatest crook in history!”* ![](https://www.datocms-assets.com/56652/1690184822-0_dsfpi_hridejjjvy.jpeg?auto=format) ### What We Need To Stop This Madness We have to replace our klepto­ma­ni­acal, environ­men­tally destruc­tive, broken system of money. However, we cannot go back to the system that existed before. That prede­cessor was called the gold standard. That system failed. Gold has been used as money throughout much of history, but it has an Achilles heel — a vulner­a­bility that has been exploited time and again throughout history. That vulner­a­bility is that gold is a physical asset that can be seized by force. ***"Watch this video for just a minute as Michael Saylor reviews history’s largest seizures of gold from ancient times until August 13, 1971 (from 39:39 to 40:35)."*** [Video](https://www.youtube.com/watch?v=coHC_9ApBdg) ### Bitcoin Smashes the Money Stealing, Environment Destroying Time Machine, Forever The good news is we have a solution to the broken money system and the vulner­able gold standard that preceded it. The good news is that we don’t have to ruin our children’s futures — neither finan­cially nor environ­men­tally. Thanks to Bitcoin. Unlike gold, Bitcoin is an unseiz­able asset. Liter­ally, neither all the military power in the world nor all the computing power in the world can seize even a single bitcoin. Nor can those forces conjure up non-existent bitcoins and make them a liability to future generations. Stealing money from the future only works because the thieves can seize real money that exists in the present and replace it with dishonest money that they can get away with lying about — a lie that they’ll pay back the money they borrow, which in truth they have no inten­tion of and no ability to repay. But without the possi­bility of seizing the honest money, they cannot replace it with dishonest money, and they cannot commit fraud in the first place. When the *Bitcoin Standard* replaces our current system, all of this destruc­tive behavior will end. We will benefit from a sane economy that is permitted to cool down when overheated. We will benefit from an economy that can become more efficient without having those efficien­cies pilfered away on unwanted and environ­men­tally harmful stimulus. We will benefit from Bitcoin’s incen­tives to generate abundant, clean energy. Bitcoin will rid the world of the insti­tu­tions and practices that dared to steal from the helpless, unborn citizens of the future. It will bring about the end of the econom­i­cally and environ­men­tally ruinous system that was imposed upon the whole world on that dark day in August 1971. You play a part in this. You should no longer be an accom­plice to nor a victim of the fraud. Your part in bringing about a Bitcoin Standard is to choose Bitcoin over today’s broken system. You do this by purchasing or earning Bitcoin and then using it instead of crooked, broken money. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Is Bitcoin’s Price Too High to Invest? - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/is-bitcoins-price-too-high-to-invest-in/ Whenever someone discovers Bitcoin there are twom phases that typically occur, the first is that wish they could buy it cheaper, and the second is that in hindsight, they should have bought more. --- **Sam Callahan** · June 29, 2021 · Updated June 27, 2024 ### Today, less than 2% of the world owns Bitcoin & Bitcoin’s price is $33,000 Not convinced you’re early to Bitcoin? Keep reading 👇 Whenever someone discovers Bitcoin, two phases typically occur, the first is that they wish they could buy it cheaper, and the second is that, in hindsight, they should have bought more. Everyone feels like they’re late to the game when they find out about Bitcoin. They feel like Bitcoin is too expen­sive and that they missed the boat, but this is flawed thinking. Take it from Greg in 2011: ![](https://www.datocms-assets.com/56652/1690185467-is-bitcoins-price-too-high-to-invest-in.jpg?auto=format) Nowadays, we laugh at the idea that somebody could think $8/Bitcoin is expen­sive. However, back then, it probably really did feel that way. Similarly, although 1 Bitcoin costing $32,500 might sound high today, that same price may look dizzy­ingly cheap years from now as Bitcoin adoption continues to grow globally. It’s key to remember that over long periods, Bitcoin has returned extra­or­di­nary gains for investors. That’s why it is more impor­tant to buy it and hold it for a long period of time rather than try to time the market to get in at a lower price. ### Zoom-Out What I am refer­ring to above is the concept of length­ening your time horizon. When investing in Bitcoin, you should view it as a long-term invest­ment rather than a short-term trade to get rich quickly. If you start thinking in years instead of weeks or months, it will change how you view the price of Bitcoin. Ask yourself this — if you plan to hold Bitcoin for 5 years, 10 years, or 20 years, are you really going to care if you bought Bitcoin at $30,000, $40,000, or $50,000? The answer is probably not. You expect it to be much, much higher by then. When looking at the price of Bitcoin, it helps to *“zoom out”* to get a general idea of how Bitcoin has continued to grow as an asset over time. One can easily observe this trend by looking at the all-time chart of Bitcoin. ![](https://www.datocms-assets.com/56652/1690185594-is-bitcoins-price-too-high-to-invest-in2.jpg?auto=format) The main takeaway is that it’s not about what price an investor buys but how soon they decide to buy Bitcoin at all. As they held it, they could benefit from the price appre­ci­ating as Bitcoin’s adoption continued to grow over the years. When it comes to Bitcoin, it is time in the market that matters, not timing the market. ### Adoption By buying Bitcoin today, what you are really betting on is that the usage of Bitcoin will continue to spread. It’s reason­able for investors to conclude that the price of Bitcoin will be magni­tudes higher years down the road if the positive trend of Bitcoin adoption continues. As more and more people find value in Bitcoin, the demand for the asset increases, resulting in the price rising due to Bitcoin’s fixed supply. Since we already know Bitcoin’s supply is fixed, let’s see what Bitcoin’s demand has looked like over the last 12 months. In the past year alone, we’ve witnessed public compa­nies, hedge funds, insur­ance compa­nies, and now countries all adopt Bitcoin. On top of that, payment providers like Paypal, Visa, and Square began offering access to Bitcoin for their millions of clients and merchants. Lastly, billion­aire investors like Bill Miller, Stanley Drunk­en­miller, Paul Tudor Jones, and Ray Dalio have all endorsed Bitcoin. The demand for Bitcoin appears to be healthy and growing, and thus we can expect the price to continue to increase with its adoption as the years tick on. ### You’re Not Late, You’re Early The truth is that despite Bitcoin being >$30,000, we are still extremely early in its adoption. Bitcoin is an ambitious technology that aims to one day allow for the free flow of trillions of dollars worth of value on its network. It’s attempting to become a widely accepted store of value which is why it is often compared to gold. Gold is frequently compared to Bitcoin because they share many of the same proper­ties. Like gold, Bitcoin is scarce, divis­ible, durable, and portable. Yet Bitcoin improves on gold’s proper­ties by being a natively digital technology. Bitcoin is a scarcer gold that you can divide up into millions of pieces and send through the internet with a tap of a finger. Thus, investors can reason­ably expect that Bitcoin may reach and perhaps even exceed the market cap of gold in the future. ![](https://www.datocms-assets.com/56652/1690185750-is-bitcoins-price-too-high-to-invest-in3.jpg?auto=format) In the graphic above, you can see that if Bitcoin reached gold’s market cap, then 1 Bitcoin would equal nearly $487,000 or ~15x higher than today! At its current price, Bitcoin’s market cap is not even larger than Facebook’s, a single public company. That’s how early you are. As you can see, even though the price of Bitcoin today might appear expen­sive, the poten­tial invest­ment oppor­tu­nity here is MASSIVE. Investors need to look at Bitcoin through a long-term lens to benefit from its growing adoption. We are still in Bitcoin’s early days. If it continues on its path to becoming a widely accepted store of value, then in the future, $34,000/Bitcoin will seem just as ridicu­lously cheap as $8/Bitcoin does today. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Why Every Investor Should Have Bitcoin in Their Portfolio URL: https://www.swanbitcoin.com/investing/why-every-investor-should-have-bitcoin-in-their-portfolio/ It doesn’t matter if you’re a young person starting to invest, a parent saving for their kid’s education or a retiree protecting your nest egg, Bitcoin has a place in everyone’s portfolio. --- **Sam Callahan** · June 30, 2021 · Updated June 27, 2024 ### If you ever invested just 1% of your money in Bitcoin, then you increased your portfolio’s returns while reducing risk 100% of the time over 3-year periods.  Sound too good to be true? Read on 👇 It doesn’t matter if you’re a young person starting to invest, a parent saving for their kid’s educa­tion, or a retiree protecting your nest egg; Bitcoin has a place in everyone’s portfolio. Bitcoin offers many unique benefits when added to a tradi­tional portfolio, including increased returns, decreased risk, and protec­tion from infla­tion. Where many see it as a specu­la­tive asset, in reality, Bitcoin is a top-performing asset where a little bit can make a significant impact on a portfolio. ### Rare in a World of Plenty Bitcoin is a new form of money where the supply is fixed by math instead of deter­mined by a small group of central bankers. It functions outside the control of any single govern­ment or entity. There will only ever be 21 million Bitcoin, and this programmed scarcity allows it to act as a store of value. As more people view Bitcoin as a store of value, the demand for it increases, and with it, the price. Bitcoin’s fixed supply could not be more opposite to what we’ve seen happen to the US dollar. The dollar’s supply increased by over 25% in the last year alone! The US printed > $12 trillion in just 2020. People are now starting to feel the effects of this printing ripple through the economy in the form of infla­tion. Investors are worried, and right­fully so. Take a look at some of the news headlines over the past few months. ![](https://www.datocms-assets.com/56652/1690186700-1a.jpg?auto=format) Infla­tion is defined as the rise in the prices of goods and services in the economy. Last month the main infla­tion measure, [the CPI](https://www.investopedia.com/terms/c/consumerpriceindex.asp), was reported at 5%. That may not sound like a lot on the surface, but when you frame it a little differ­ently, I think the number hits closer to home. ***"At a 5% annual infla­tion rate, your cash will lose 40% of its value in 10 years."*** *(Please read that again slowly)...* Infla­tion is watching every­thing around you get more and more expen­sive as your savings can buy less and less. Further­more, if your income doesn’t rise with the prices, well, then life starts to feel unafford­able. That’s why investors are looking for assets besides dollars to store their wealth to protect themselves against the risk of their savings being devalued, and more and more people are choosing Bitcoin. Let’s put it this way — if it’s been raining for weeks, and everyone is warning you that it’s about to flood, wouldn’t you buy a little flood insur­ance just in case? Bitcoin can be thought of the same way, except with Bitcoin, you’re buying wealth insur­ance. Since no more than 21 million bitcoin can ever be printed, the supply will never inflate like the US dollar, and each bitcoin will hold its value over time. Bitcoin is protec­tion against infla­tion, and every­body needs that protec­tion in their portfolio today. Infla­tion is already here. The only question now is, how long will it last? ### Spread Your Bets With finan­cial and polit­ical insta­bility, civil unrest, and a global health crisis, it’s never been more impor­tant to spread your bets out and diver­sify your money across different assets to protect yourself. Most people agree with the idea that you shouldn’t put all your eggs in one basket, so they invest in real estate, stocks, bonds, etc. But they fail to realize that all those assets are 100% exposed to the tradi­tional finan­cial system. Bitcoin is different. It functions all on its own, 24 hours a day / 7 days a week / 365 days a year, without any single entity control­ling it. Because of this unique indepen­dence from the old finan­cial system, Bitcoin histor­i­cally is not corre­lated to any assets. It marches to the beat of its own drum. This non-corre­la­tion makes it the perfect asset to add to a portfolio to diver­sify and reduce risk. Bitcoin can offer downside protec­tion when all the tradi­tional assets in your portfolio are falling because Bitcoin doesn’t histor­i­cally move with other assets. ***"Bitcoin’s corre­la­tion to other assets between 2015 – 2020 is an average of 0.11, indicating that there is almost no relation­ship between the returns of bitcoin and other assets."*** - Fidelity Digital Assets This unique trait of lacking corre­la­tion to other assets is extremely rare in investing and makes Bitcoin a must-have addition to everyone’s portfolio to decrease risk in the high-risk environ­ment we find ourselves in today. ### Bang For Your *“Buck”* The beauty of Bitcoin is because of its uncor­re­lated nature and perfor­mance record, an investor only needs to allocate a very small percentage of their funds for it to make a meaningful impact on their portfolio. Check out the graphs below. A 1% Bitcoin alloca­tion returned over 15% more than a portfolio of just stocks and bonds while decreasing the risk of the portfolio. In other words, it boosted the returns while making the portfolio safer at the same time. ![](https://www.datocms-assets.com/56652/1690188181-2-2.jpg?auto=format) Essen­tially you can receive all the benefits of Bitcoin, the infla­tionary protec­tion, the risk reduc­tion, and the huge gains with only using a small amount of your money. If Bitcoin goes to zero, you lose 1%. No big deal! But if the price of Bitcoin continues to soar, then you could benefit greatly from your 1% position. The risk-reward with Bitcoin is unpar­al­leled in the investing world. A 1% alloca­tion gives you a lot of bang for your buck because the perfor­mance of Bitcoin through the last decade is hard to match. It’s been the best-performing asset in nearly every year for the past 10 years. Plus, when you compare it to other stores of value that investors look to in times of infla­tion like gold and stocks, Bitcoin is the obvious winner. ![](https://www.datocms-assets.com/56652/1690188227-3-2.jpg?auto=format) By now, I hope you’re asking yourself — Can I afford to take 1% of my stocks/bonds/cash and put it into the best-performing asset of the past decade, knowing now that it also reduces risk and adds infla­tion protection? To me, this is an absolute no-brainer, and it’s exactly why everyone reading this should own some Bitcoin in their portfolio. Buy wealth insur­ance today. Buy Bitcoin. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # How Much of the World’s Population Owns Bitcoin Today? URL: https://www.swanbitcoin.com/analysis/how-much-of-the-world-s-population-owns-bitcoin-today/ One of the biggest blindspots investors have when they first come across Bitcoin is that they view it solely as an asset. Bitcoin is digital gold — you can send over the internet. --- **Sam Callahan** · June 30, 2021 · Updated June 27, 2024 ###  ~46 million American adults own Bitcoin today, and Bitcoin is currently at $35,000. What happens when 3 billion adults globally own Bitcoin? 🚀 Read more to find out 👇 One of the biggest blindspots that investors have when they first come across Bitcoin is that they view it solely as an asset. Bitcoin is digital gold that you can send over the internet. To be clear, if you think this, you’re not wrong. However, what people miss is that Bitcoin is more than just digital gold. It’s also a revolu­tionary technology. Bitcoin is an open monetary network that allows for the free flow of value between individ­uals across the globe without having to ask permis­sion from anyone. The internet allows for the free flow of infor­ma­tion, and Bitcoin will allow for the free flow of value. Distin­guishing between Bitcoin the network and Bitcoin the asset is an impor­tant step to better under­standing how early you are in Bitcoin’s story. By viewing Bitcoin through the lens of a disrup­tive technology that will disrupt one of the largest markets in the world, money itself, you can start to appre­ciate just how small Bitcoin is today compared to what it could become in the future. ![](https://www.datocms-assets.com/56652/1690188787-how-much-of-the-worlds-population-owns-bitcoin.jpg?auto=format) If you missed it, Bitcoin is that tiny red line in the bottom right corner there in the chart. The two main takeaways from the chart are: 1.) How young is Bitcoin as a technology 2.) The similar pattern of how these technolo­gies get adopted. Technolo­gies like the internet, cell phones, TV, and cars get adopted gradu­ally than suddenly by society. Bitcoin will be no different. This makes sense when you stop and think about it. Let’s use the example of email in the early ’90s. Back then, only a small percentage of the popula­tion was using it and could foresee its massive poten­tial. Even though email was a considerable improve­ment on the tradi­tional mailing system, it still took time for the majority of society to under­stand it and utilize its benefits. Fast forward a decade later, and everyone uses email every day. Bitcoin is a drastic improve­ment in the money that we use today. It can be accessed by anyone, it’s scarce, it can be divided into millions of pieces. It can essen­tially teleport anywhere, anytime, to anyone in the world. As the previous chart proves, it is only a matter of time before better technology makes its way into the mainstream. Right now — Bitcoin is email in the early 1990s. In the future, everyone will use it every day. ![](https://www.datocms-assets.com/56652/1690188890-how-much-of-the-worlds-population-owns-bitcoin1.jpg?auto=format) Today it’s estimated that 100 million people own Bitcoin or ~1.3% of the world’s popula­tion. As such, we are very much still in the *“Innova­tors”* stage in the adoption cycle of Bitcoin as a technology. An early Bitcoin investor, Wences Casares, made a keen obser­va­tion back in the day. Mainly he noticed that the amount of users of the Bitcoin network is directly propor­tional to the Bitcoin price. In other words, the more users, the more valuable the network becomes and the higher the Bitcoin price. Wences observed that histor­i­cally Bitcoin’s price closely follows the equation (how many people own Bitcoin) x $7,000. Now I don’t pretend to under­stand the calcu­la­tion behind this, but I do know that Wences’s equation remark­ably still holds true to this day. 100 million bitcoin owners today x $7,000 / 21 million Bitcoin = $33,333/Bitcoin. Crazy right!? So what does Bitcoin’s price look like at 3 billion owners using the same equation? 3 billion Bitcoin owners x $7000 / 21 million bitcoin = $1 million/Bitcoin. ***You read that correctly.*** So if Bitcoin continues to gain adoption at its current rate, and billions of people adopt it world­wide as a better form of money, then 1 bitcoin could possibly reach 1 million dollars per bitcoin or ~30x higher than today’s prices! You are so, so early. ### We’re Early, But it’s Growing Fast  When we consider Bitcoin as a technology rather than an asset, there’s no doubt that the people buying bitcoin today will be consid­ered early adopters. However, the growth Bitcoin has achieved in just 12 years has been nothing short of breathtaking.  ![](https://www.datocms-assets.com/56652/1690189019-3how-much-of-the-worlds-population-owns-bitcoin.jpg?auto=format) The chart above displays how Bitcoin has achieved the same number of users in 11 years that it took the internet to acquire in 14 years. Bitcoin’s network is growing faster than the internet did. If we assume that same growth rate and move it out into the future, Bitcoin will have roughly 1 billion users by 2025. If you’ve followed Bitcoin for several years, this growth rate shouldn’t surprise you. We’ve seen major adoption from public compa­nies like Micros­trategy and Square putting Bitcoin on their balance sheet, to large insti­tu­tions like insur­ance company MassMu­tual purchasing it, all the way to recently El Salvador adopting Bitcoin as legal tender. Bitcoin’s network is growing quickly because it’s a break­through technology that will have radical impli­ca­tions for the world. It allows for the free flow of money between anyone, anytime, anywhere in the world without restric­tion. We are lucky to be alive to witness its ascen­sion as a technology, but it’s growing fast. You might want to pick some up today because, at this pace, in just a few short years, Bitcoin could very well have billions of people using its network. As such, its price will likely be signif­i­cantly higher than it is today. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # 5 Ways To Earn Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/education/5-ways-to-earn-bitcoin/ What if I told you there are ways to earn extra Bitcoin or get off zero if you don’t own any? Whether you are just starting to stack sats or a Bitcoin veteran, here are 5 ways to add more BTC to your freedom stash. --- **Camila Campton** · July 29, 2021 · Updated June 26, 2024 One thing you may hear a lot is that to under­stand Bitcoin, you have to get some skin in the game and actually have some Bitcoin of your own. Well, what if I told you there are ways you can earn extra Bitcoin or get off zero if you don’t own any? Whether you are just starting to stack some [sats](https://www.finder.com/satoshi-to-bitcoin-conversion-calculator#:~:text=How%20many%20Satoshis%20are%20in,currently%20recorded%20on%20the%20blockchain.) or a Bitcoin veteran that is a relent­less stacker, here are 5 ways to add more Bitcoin to your [freedom](https://www.swanbitcoin.com/michael-saylor-and-danielle-dimartino-booth-swan-signal-live-e33) stash. ***"It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy.”***  - Satoshi Nakamoto  ### 1. Get Paid To Onboard New Bitcoiners with Swan Bitcoin ![](https://www.datocms-assets.com/56652/1690189653-12.png?auto=format) **Earning Poten­tial:** High **Category:** Affiliate/Referral **Location:** Global **Company:** Swan Bitcoin **Cost:** Free **Quick Bit:** Each person you refer will get $10 of free Bitcoin when they sign up with Swan, and as an affil­iate, you will receive 25% of Swan’s fees on every purchase they make for one entire year. Swan customers and non-customers qualify. [Sign Up Here.](http://swanbitcoin.com/enlist) As a Bitcoiner, our mission is simple. Onboard as many people on the Bitcoin train as possible. One of the most successful ways of doing this is by educating people and giving them their first *“orange-pill”*. This usually comes in the form of a book, podcast, or article that intro­duces Bitcoin to an individual.  Wouldn’t it be great if you could get paid for every time you orange-pilled someone? Well, you can with [Swan Force](http://swanbitcoin.com/enlist)! Swan Force is a global *Swan Bitcoin* referral program with payouts in Bitcoin. When you join [Swan Force](https://app.swanbitcoin.com/enlist), you’ll get a custom URL and landing page, which also offers Yan Pritzker’s book [***“Inventing Bitcoin”***](http://swanbitcoin.com/freebook) for free.  Each person you refer will get $ 10 of free bitcoin when they sign up with Swan, and as an affil­iate, you will receive 25 % of Swan’s fees on every purchase they make for **one entire year**. Affil­iate marketing programs, such as Swan Force, have become a popular way to earn extra Bitcoin. The Swan Force program was built for influ­encers and bloggers, as well as the everyday person that just likes to talk about Bitcoin with family and friends.  Our Swan team is also constantly working on ways that we can help you succeed with onboarding people. As a new member, you will get the chance to schedule a 1‑on‑1 call with our Swan Force managing director so that she can guide you through best practices and tips and tricks on how to get started sharing your custom Swan Force link once approved.  Swan Force can also become a very lucra­tive revenue stream for members that onboard affil­i­ates, [high-net-worth individ­uals](http://swanbitcoin.com/private), or even businesses with Swan. Our top Swan Force members have earned more than one full Bitcoin by spreading their links far and wide.  ### 2. Daily Earning Opportunities Straight From Your Phone  ![](https://www.datocms-assets.com/56652/1690189809-13.png?auto=format) **Earning Poten­tial:** Medium-High **Category:** Sats-back **Location:** USA **Compa­nies:** Fold and Lolli **Cost:** Fold (Free — $150 Annual Fee for Premium Users) Lolli (Free) **Quick Bit:** With the Fold Visa Debit Card at partic­i­pating retailers or buy a prepaid gift card from our selec­tion of top stores. Lolli gives you free Bitcoin or cash when you shop at over 1,000 top stores. Download the apps to your phone.  Earning Bitcoin for free sounds too good to be true, especially when you just need your phone. But it’s a reality with Fold and Lolli. Download both apps, create an account, and start earning today!  [Fold](https://foldapp.com/legal/terms-of-spinwheel-sweepstakes-daily-spinwheel) offers one daily spin for a chance to earn free [satoshis](https://www.finder.com/satoshi-to-bitcoin-conversion-calculator#:~:text=How%20many%20Satoshis%20are%20in,currently%20recorded%20on%20the%20blockchain.) and other prizes. Addition­ally, with the Fold Card, you can make sats back on your purchases and get multiple spins per day. (Several whole Bitcoins have been awarded to users of this app!) [Lolli](https://blog.lolli.com/users-can-now-earn-bitcoin-playing-daily-stack/) has a slightly similar offering, but instead of spinning a wheel, you’re presented with a treasure chest to open, which consis­tently gives out over 100 sats daily! If you have zero Bitcoin, this is an easy way to stack! **Pro Tip:** There are times when you can buy from a Lolli-approved store and then use your Fold card to pay. This means that you will get double sats back.  ### 3. Get Cash-Back in Bitcoin When You Shop Online ![](https://www.datocms-assets.com/56652/1690189900-14.png?auto=format) **Earning Poten­tial:** Medium **Category:** Cash-back, Sats-back **Location:** USA **Company:** Lolli **Cost:** Free **Quick Bit:** Lolli partners with top stores that pay us when you shop. Once you make a purchase, merchants pay us, and then they pay you, sending you free bitcoin or cash to your Lolli wallet.  [Download Chrome Exten­sion here.](http://lolli.com/) In addition to the free daily stack on the Lolli-app, earn Bitcoin back on purchases by [adding their exten­sion to your browser](https://www.lolli.com/). When you’re on a Lolli partner site, the exten­sion will turn green to signal it’s active (stay logged in to see this). The best part of the exten­sion is free.  Here are some of the retailers that partner with them: - Expedia - Chewy - Sephora - Nike - Adidas - Bloomingdale’s What’s incred­ible is that the cash back can be as high as 27%, and new retailers are added frequently.  ### 4. Get Paid in Bitcoin with Bitcoin-Only Jobs ![](https://www.datocms-assets.com/56652/1690189988-15.png?auto=format) **Earning Poten­tial:** High **Category:** Full-time, Part-time, Contrac­tors **Location:** USA/ Global **Quick Bit:** We Are ₿itcoiners, We Are Satoshi. Bitcoiner Jobs helps connect Bitcoiners with Bitcoin-only compa­nies. Many of these jobs will pay you in Bitcoin when hired.  [Apply Here.](http://bitcoinerjobs.co/) Now more than ever, people notice that Bitcoin is becoming more mainstream and, of course, wants to be paid in Bitcoin. There are a couple ways to achieve this: freelance contracts through a Bitcoin company and/or getting hired by a Bitcoin company. Whether you’re a hairstylist, social media manager, or handyman, you can earn Bitcoin for your services now. Some recom­mended job sites to check out are: - [Bitcoiner Jobs](https://bitcoinerjobs.co/) - [Angel­List](https://angel.co/bitcoin) If you’re a freelancer, create an account on platforms like [Cash App](https://cash.app/), and have customers send you Bitcoin through the app. Either have them scan your QR code or use the tag associ­ated with your profile (this will begin with $). Trans­ac­tions are instan­ta­neous since every­thing happens within Cash App’s internal system.  ### 5. Add a Bitcoin Plugin to Your Site ![](https://www.datocms-assets.com/56652/1690190087-16.png?auto=format) **Earning Poten­tial:** Low- Medium **Category:** Plug-ins/ Freelancing **Location:** Global **Cost:** $29+ **Quick Bit:** Create your own websites to promote your blogs/services and get donations in Bitcoin by [installing this plug-in](https://codecanyon.net/item/bitcoin-donate-a-wordpress-plugin/20707686) and adding it to your site. **Q:** What is a plug-in? **A:** A plug-in is a piece of software that acts as an add-on to a web browser and gives the browser additional function­ality. Simply download the Bitcoin plug-in and activate it on your website.  It’s quite easy to start a WordPress through one of their [website builder templates](https://wordpress.com/themes). Whether you want to start a blog or create a [dropship­ping business](https://www.wpbeginner.com/beginners-guide/ultimate-dropshipping-guide-for-wordpress/), a Bitcoin plug-in makes for a seamless addition to your site. If you’re a blogger, you may find yourself writing about popular topics and providing links to other sites that can add value to the audience. Bring your interest in Bitcoin to your audience! Add a donate button to your site with [Bitcoin Donate](https://codecanyon.net/item/bitcoin-donate-a-wordpress-plugin/20707686) for people to support your efforts.  Search [for the Bitcoin Plug-in on Envato](https://codecanyon.net/search/bitcoin%20plugin) for several options. All these are simple ways to stack extra stats! And when you are ready to start accumu­lating more Bitcoin, go to [swanbitcoin.com](http://swanbitcoin.com/) to set up an account with automatic recur­ring and instant buys. Our mission is to walk along­side you on your journey into Bitcoin, the future of money. ### Camila Campton Camila Campton is a passionate bitcoiner that disseminates Bitcoin education both in english and in spanish. She is the co-host of the Swan Bitcoin show “Bitcoin en Español” and also uses the social voice platform, Twitter Spaces, to cover Bitcoin topics and educational content. # Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why. URL: https://www.swanbitcoin.com/industry/bitcoins-energy-usage-is-not-a-problem-heres-why-by-lyn-alden/ Whether Bitcoin continues to be successful or fails, there’s no risk of the network using too much energy in the grand scheme of things. --- **Lyn Alden** · August 9, 2021 · Updated June 6, 2024 Bitcoin’s energy usage has been in the news for years. It’s often criti­cized for using too much energy, not making efficient use of its energy, or in extreme cases, being an outright climate/energy disaster. For example, back in December 2017, Newsweek ran a piece called, ![](https://www.datocms-assets.com/56652/1690190870-alden-bitcoin-energy-1.jpg?auto=format) “Bitcoin Mining on Track to Consume All of the World’s Energy By 2020” Well, here in 2021, I can obviously say that didn’t happen. The Univer­sity of Cambridge is the most-cited source for estimating Bitcoin’s energy consump­tion, and they [placed its estimated peak annual­ized rate](https://cbeci.org/) at under 140 TWh so far.  Since the world [uses over 170,000 TWh of energy per year](https://ourworldindata.org/energy-production-consumption), the entire Bitcoin network, at its peak estimated consump­tion level, uses less than 0.1% of the world’s energy consump­tion. That’s for a network with 100+ million estimated users.  ![](https://www.datocms-assets.com/56652/1690190934-alden-bitcoin-energy-2.jpg?auto=format) Source: Lyn Alden Bitcoin’s energy usage is a rounding error as far as global energy usage is concerned. And I mean that liter­ally when scien­tists estimate that the world uses a certain amount of energy in a given year, they can easily be off by a couple percentage points in either direc­tion, let alone a couple tenths of a percent. Bitcoin is estimated to use less than one-tenth of one percent. Plus, a large percentage of the energy that Bitcoin uses is from other­wise-wasted energy sources. In the very long run, if Bitcoin is wildly successful and becomes a system­i­cally impor­tant asset and payment system used by over a billion people at 10 – 20x its current market capital­iza­tion, it should max out at just several tenths of one percent of global energy usage. On the other hand, if it is unsuc­cessful and doesn’t grow much from current levels, its energy usage will stagnate and shrink as the block subsi­dies continue to diminish. I’ll dive into those numbers later in this piece. The point is that the Bitcoin network is and forever will be a rounding error as far as global energy consump­tion is concerned, whether it’s successful or not. Its energy usage won’t exceed its long-run utility (however high or low that utility ends up being). In fact, as someone with a background in electrical engineering, I was drawn to Bitcoin in the first place by seeing how efficiently its network uses energy. I could have picked any blockchain to invest in or could have avoided the digital asset space altogether, or could switch my invest­ment to another blockchain at any time. And yet, when I crunch the numbers, I think Bitcoin makes partic­u­larly elegant usage of energy and is getting more energy efficient over time because it was designed properly. If that’s the case and Bitcoin’s energy usage is practi­cally irrel­e­vant on the global scale, how can journal­ists make such large, sensa­tion­al­ized errors? The answer is that it often comes down to them not under­standing the scaling process that the network is going through. And it’s easier to sensa­tion­alize things for pageviews or polit­ical gain. For example, it’s commonly said that the Bitcoin network uses more energy than some countries. That’s true, but so does Google, Youtube, Netflix, Facebook, Amazon, the cruise industry, Christmas lights, house­hold drying machines, private jets, the zinc industry, and basically any other sizable platform or industry. From that list, Bitcoin’s energy usage is the closest to that of the cruise indus­try energy usage, but Bitcoins are used by more people, and the network scales far better. It’s impor­tant to under­stand whether or not Bitcoin is an environ­mental problem and whether or not it is energy efficient because these obviously affect its proba­bility of being a good invest­ment and a good payment network. If Bitcoin did indeed have serious energy scaling problems, it would eventu­ally fail against competi­tors in the private market­place by not offering enough utility for its energy consumption. From an engineering perspec­tive, Bitcoin’s energy usage isn’t a problem when you actually run the numbers. Still, it takes an under­standing of how it works to calcu­late it properly and what the trade-offs are if you use a different approach than what Bitcoin uses. Let’s take a look at how that works. **Article Chapters:**  - *Under­standing Bitcoin’s Purpose* - *Why Bitcoin Uses Electricity* - *Bitcoin’s Efficient Scaling Pattern* - *How Bitcoin Uses Other­wise-Wasted Energy* - *Bitcoin’s Proof-of-Work vs Alter­na­tive Methods* - *Final Thoughts and Summary* ### Understanding Bitcoin’s Purpose Before we dive into its energy usage, it helps to summa­rize what bitcoins are used for, and what problems the network was designed to optimize for. From there, we can then look at the energy usage and decide whether or not it’s achieving its goal. Bitcoin is not trying to be the cheapest payment network, although in many contexts it ironi­cally can be, when you consider the Light­ning network (one of Bitcoin’s second-layer scaling systems). Instead, Bitcoin is trying to be a decen­tral­ized bearer asset and payment network, and for 13 years, has been succeeding. In terms of the asset, bitcoins are something that users can self-custody with encryp­tion if they want to, and that has a fixed supply. This makes bitcoins infla­tion-resis­tant and diffi­cult to confis­cate. In terms of the payment network, Bitcoin can be used to send payments that don’t rely on the permis­sion or verifi­ca­tion from any central­ized entity. This makes the network censor­ship-resis­tant and inter­op­er­able with many different payment systems internationally. Almost anything that claims to be more efficient than the Bitcoin network at making payments or storing assets for you is also more central­ized. Central­ized things inher­ently tend to be efficient. Sending payments between parties and tracking peoples’ balances can be as simple as updating an internal database, which is nearly free. The problem, of course, is that central­ized things don’t tend to be resilient, so there is a trade-off between efficiency and resiliency. When you put all your eggs in one basket, give that basket to your friend, and she drops the basket or refuses to give it back, you’re out of luck. Relying on a central­ized entity cedes control to others, which rests on the premise that those others are moral and compe­tent. Plus, as far as payment networks go, they’re tied to fiat currency, which is useful as a medium of exchange but, over the long run, doesn’t hold its value. Bitcoin is a publicly distrib­uted ledger with a series of private and public keys. As long as they have access to the internet (including satel­lite internet if need be), users can send bitcoins (including fractional bitcoins) to others by using their private keys. They can hold their private keys offline and receive Bitcoin when offline; they just need an internet connec­tion to send them, confirm their balance, and those sorts of actions. This ranks Bitcoins among the most portable and hard-to-confis­cate assets in the world. They can be sent inter­na­tion­ally between different parties, can be memorized and brought anywhere in the world, and can be stored offline with no counter­party. Consid­ering that they also have a supply cap, it’s not surprising that folks in many emerging markets have turned to them rather than relying entirely on a local unsound currency that may be inflating at 10%, 20%, 50%, or 100%+ per year in some cases. Even in devel­oped markets, which have lower rates of infla­tion, the popula­tion has to deal with negative infla­tion-adjusted interest rates. For example, the following chart shows the interest rate of US Treasury bills minus the prevailing official infla­tion rate. When it’s below zero, it means that T‑bills (and usually bank accounts as well) are not paying enough interest to keep up with the official rate of inflation: ![](https://www.datocms-assets.com/56652/1690191192-alden-bitcoin-energy-3.jpg?auto=format) Source: St. Louis Fed While some countries can partially ban Bitcoin by disal­lowing banks to send money to crypto exchanges or by banning large-scale Bitcoin mining, it’s nearly impos­sible to stop peer-to-peer trading, especially in countries with reason­able property rights and freedom of expres­sion. Banning individual inter­ac­tion with Bitcoin is akin to banning infor­ma­tion or speech since it’s just an open-source public ledger. People can memorize numbers to access it and use satel­lite connec­tions to bypass local internet service providers if neces­sary. It would require a very author­i­tarian approach with draconian enforce­ment to truly stamp it out of use.  On the other hand, some countries have embraced it, such as El Salvador, which made it legal tender. This is in signif­i­cant part because El Salvador is highly reliant on remit­tance payments. It’s nearly free to send remit­tance payments via the Light­ning network that runs on top of the Bitcoin network since it is open source and keeps getting more devel­oped over time. Several other countries that have previ­ously banned or were about to ban it have stepped back their bans.  My [article on bearer assets](https://www.lynalden.com/gold-and-bitcoin/) included a large section on the practical use cases of Bitcoins, both in devel­oped and devel­oping countries. Aside from being an asset with a fixed supply cap, here are some example use cases of the censor­ship-resis­tant payment and porta­bility aspect:  1. Reuters [reported](https://www.reuters.com/article/us-russia-politics-navalny-crypto-curren/bitcoin-donations-surge-to-jailed-kremlin-critic-navalnys-cause-data-idUSKBN2AB2GR) in February 2021 how Russian opposi­tion leader and anti-corrup­tion lawyer uses Bitcoin as a censor­ship-resis­tant payment, as Putin’s author­i­ties block all of the tradi­tional permis­sioned payment rails:  Russian author­i­ties period­i­cally block the bank accounts of Navalny’s Anti-Corrup­tion Founda­tion, a separate organ­i­sa­tion he founded that conducts inves­ti­ga­tions into official corruption.  ***“They are always trying to close down our bank accounts – but we always find some kind of workaround,”*** *said Volkov.*  ***“We use Bitcoin because it’s a good legal means of payment. The fact that we have Bitcoin payments as an alter­na­tive helps to defend us from the Russian author­i­ties. They see if they close down other more tradi­tional channels, we will still have Bitcoin. It’s like insurance.”***  2. The Guardian [reported](https://www.theguardian.com/technology/2021/jul/31/out-of-control-and-rising-why-bitcoin-has-nigerias-government-in-a-panic) in July 2021 how Nigerian merchants and protest groups used Bitcoin’s censor­ship-resis­tant payment attrib­utes to go around FX currency blocks to carry out their business and receive funds even when their bank accounts were suspended. ***“The clamp­down was finan­cial too. Civil society organ­i­sa­tions, protest groups, and individ­uals in favour of the demon­stra­tions who were raising funds to free protesters or supply demon­stra­tors with first aid and food had their bank accounts suddenly suspended.***  ***Feminist Coali­tion, a collec­tive of 13 young women founded during the demon­stra­tions, came to national atten­tion as they raised funds for protest groups and supported demon­stra­tion efforts. When the women’s accounts were also suspended, the group began taking bitcoin donations, eventu­ally raising $150,000 for its fighting fund through cryptocurrency.”***  3. Alex Gladstein, with the Human Rights Founda­tion, [discusses the human rights angle](https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoins-international-impact-w-alex-gladstein/) of the Bitcoin network in April 2021:  ***“So for Venezue­lans to go through this has been nothing short of totally heart­breaking. However, there are a lot of folks who got involved early, like earlier, a lot of young people, a lot of young folks figured it out in 2015, ’16, they were mining at the time. One of these guys I inter­viewed, he actually helped start Ledn, which is one of the larger industry services now based out of Canada.***  ***But he and his brothers were mining bitcoin for a couple of years there and they ended up having to escape. The govern­ment came with like an armed squad and seized all their mining equip­ment. Thank­fully no one got hurt. The govern­ment was very perplexed. They saw the mining equip­ment and they thought that they meant they got the bitcoin. But that’s not how it works. So they were able to use the bitcoin to start a new life in Canada. I thought that was really amazing.***  ***I inter­viewed another guy who escaped to Argentina. He got involved in some sort of dispute with the govern­ment where they claimed he was a criminal, even though he wasn’t, but now he’s able to send money back to his mother who is in Venezuela in bitcoin. She uses it to support herself. There’s just so many stories like this.***  ***And I think for me, one of the most powerful things as someone whose family went through the Holocaust, was this idea of like, you could flee your country and back then you only brought what was on your back, like the clothing on your back. But today you can bring your wealth with you, which is truly remarkable.***  ***And I’ve given advice to people who are, for example, leaving Iran these days, help them out on this. People are selling their homes and they’re converting to bitcoin and they’re getting on a plane, getting the heck out, and they’re bringing it with them in this digital format. People are sending money in and out of Syria to people who are stuck there.***  ***People have escaped countries like Sudan. I inter­viewed a guy from Sudan, which has a horrible infla­tion problem that their infla­tion is in the hundreds. They have an infla­tion rate of something like 150 or 200%. And he’s living in Europe and he’s sending the hardest money around back to his family in Khartoum. And they’re able to get by through that. We’re early here. Again, I think the estimate based on Coinbase numbers is that maybe 10% of Ameri­cans have inter­acted with Bitcoin or cryptocurrency.***  ***The global number is lower than that, especially in these emerging markets. If the global is two percent and America’s 10%, it’s probably way less than that in a lot of these emerging markets, but hey, in some of them, look at Turkey, man, look at Argentina, look at Nigeria. These are huge countries, 200 million, 100 million, 45 million people. They’ve got the highest per capita usage in those countries. So it’s a changing world.”***  Perhaps more broadly and concisely, one of Alex’s best quotes about the topic is [this](https://www.thesgnl.com/2021/03/bitcoin-democracy-alex-gladstein/):  ***“We’re at the outset of great digital finan­cial trans­for­ma­tion, where the money we use on a daily basis is evolving from a bearer asset — one that doesn’t reveal anything about us — into a mecha­nism of surveil­lance and control.***  ***This is more urgent for some people in this world, and maybe less urgent for others, depending on the polit­ical regime they live under. When I’m looking at this new form of money that’s not controlled by govern­ments or corpo­ra­tions, I’m thinking about the big picture of today’s world, where we have 4.2 billion people living under author­i­tar­i­anism and 1.2 billion people living under double- or triple-digit infla­tion. When we talk about the fact that money is broken, this isn’t theoret­ical, and it isn’t just about one country.***  ***It’s much bigger than that. This is a world where hundreds of millions of people deal with 15 percent, 20 percent, 25 percent infla­tion, where their time and energy, and the currency that they earn their wages in, is liter­ally disappearing.***  ***At the same time, you have billions of people whose bank accounts can poten­tially be frozen based on their opinions or ideas.”***  **4. The Rise Third Layer Applications** The recent creation of several new third layer appli­ca­tions, such as Sphinx Chat and Imper­vious Technolo­gies, that use Bitcoin’s Light­ning network as a way to transmit data, in addition to just trans­mit­ting value. Sphinx Chat is a peer-to-peer messaging platform that runs on Light­ning and allows users to attach micro­pay­ments with their messages, while Imper­vious Technolo­gies is releasing a VPN powered by Lightning.  **“*****As an example of what can be devel­oped utilizing the Imper­vious API, Imper­vious is releasing a dynamic VPN that lever­ages the Light­ning Network to provide on-demand, high-bandwidth VPN services. The Imper­vious API can operate from behind hostile networks and denied access areas using the Light­ning Network as a creden­tial exchange and trans­port layer to estab­lish peer-to-peer, secured channels for censor­ship resis­tant data transmissions.***  ***Appli­ca­tions being built on the Impervious.ai API include peer-to-peer streaming video, podcasts, live events, news reporting, distrib­uted storage, and VOIP-based commu­ni­ca­tions.*****”** - [May 2021 Imper­vious Technolo­gies seed financing press release ](https://www.prnewswire.com/news-releases/imperviousai-closes-venture-round-301301942.html) To summa­rize, as digital property with a set of censor­ship-resis­tant payment rails, Bitcoin is the appli­ca­tion of software towards finance. And not just towards the surface layer like fintech, but towards the root layer of bearer assets and settle­ment networks, which is part of why it’s so controversial.  In addition, BTC/LN is emerging as a decen­tral­ized protocol for various layer-three appli­ca­tions focused on trans­mit­ting data in a secure and censor­ship-resis­tant way as well, similar to how it stores and trans­mits value.  The firm Chainal­ysis, which is used by law enforce­ment to track public blockchains, [has found across multiple years](https://blog.chainalysis.com/reports/2021-crypto-crime-report-intro-ransomware-scams-darknet-markets) that only 0.50% to 2% of crypto trans­ac­tions are for illegal activity, such as scams, ransomware, or drug purchases **(which happens to be lower than most estimates of the percentage of fiat currency trans­ac­tions that are for illegal purposes)**. The vast majority of the usage is estimated to be for invest­ment purposes or legit­i­mate payments.  As described above, there are many author­i­tarian regimes where protesting and certain types of speech are consid­ered illegal and where basic economic inter­ac­tions can be blocked, and so we could say that bitcoin facil­i­tates those types of *“moral yet illegal”* behav­iors. Oppressed people having access to open source software to aid in basic human freedoms and economic inter­ac­tions, making it more complex for author­i­tar­ians to deal with them, is not what I would consider uneth­ical, and indeed quite the contrary.  ### Why Bitcoin Uses Electricity The Bitcoin network is programmed to create a new block on average every ten minutes and add that block to the blockchain, which consists of hundreds of thousands of blocks since incep­tion in 2009. A new block is produced by a Bitcoin miner (a special­ized computer) solving a crypto­graphic puzzle that the previous block created, and the miner can package thousands of Bitcoin trans­ac­tions currently in the queue into that block. That’s how trans­ac­tions get settled. The network is programmed to target average block times of ten minutes, meaning, on average, every ten minutes, a block of thousands of trans­ac­tions is added to the blockchain. If miners drop off the network and new blocks, on average, start taking longer than ten minutes to produce, the network is automat­i­cally programmed to make the puzzle easier by a quanti­fied amount so that blocks go back to an every-ten-minute average schedule. Likewise, if a lot of miners join the network and blocks get added to the blockchain faster than every ten minutes on average, the network will make the puzzle harder. This is known as the *“diffi­culty adjust­ment”* and is one of the key program­ming challenges that Satoshi Nakamoto solved to make the network work properly. So, at any given time, millions of Bitcoin mining machines worldwide are looking to solve the puzzle and create the next block. There’s a natural feedback mecha­nism to ensure that blocks are created on average every ten minutes, regard­less of how many miners are on the network. We recently saw in the first half of 2021 that China banned crypto mining, and approx­i­mately half the network went offline and started moving elsewhere. Bitcoin’s payment network briefly slowed down a bit but other­wise kept working with 100% uptime. The diffi­culty adjust­ment then kicked in and brought the network back up to its target speed. Imagine if Amazon was told with one week’s notice that it had to move half of its server capacity inter­na­tion­ally; it would likely experi­ence uptime issues for its services for the rest of the year as it moved and rebuilt half of the system. If a miner creates an invalid block, meaning one that doesn’t conform to the consensus rules of the node network, the network discards it. If two miners produce a valid block at around the same time, the winner will be decided by which one gets found by the rest of the network first and has another block produced and added onto it, becoming the longer (and thus official) blockchain. This process is known as *“Proof-of-Work.”* Millions of machines are using electricity to apply processing power to solve crypto­graphic puzzles left by the most recent block. This may seem like a waste of energy, but it keeps the system decen­tral­ized. Work is the arbiter of truth in this case. There is no central authority that decides what consti­tutes a valid block or a valid set of trans­ac­tions; the longest blockchain is verifi­able at any given time and is recog­nized as truth by the rest of the network based on code. The longest blockchain is the one with the most work put into it, and that also meets the consensus criteria that the node network checks. The more energy Bitcoin’s network uses, the more secure it is against most attacks. Many of the tiny non-Bitcoin blockchains have been victims of 51% attacks, where a single entity temporarily or perma­nently gains control of over 51% of the processing power on the network and uses that majority of processing power to re-organize blocks and performs double-spend trans­ac­tions **(which is essen­tially theft).** This chart, for example, shows Bitcoin’s network processing power compared to the processing power of some of its hard fork copycats: ![](https://www.datocms-assets.com/56652/1690191713-alden-bitcoin-energy-4.jpg?auto=format) Source: BitIn­foCharts Both of those other blockchains only have 1 – 2% or less of the Bitcoin network's total processing power and have been hit by malicious block re-orgs. In fact, if just 2% of Bitcoin miners decide to do a 51% attack on either of those two hard forks, they can. The same is not true for the other direc­tion since the Bitcoin network has a far larger network of miners and energy usage than them, by two orders of magnitude.  That shows the impor­tance of [network effects](https://www.lynalden.com/bitcoins-network-effect/) in the blockchain industry and why Bitcoin's energy usage has kept it uniquely secure.  When someone asks, *"Can't you just copy Bitcoin?"*  *"That's why the answer is "no."*  You can repli­cate the open source code, but you can't repli­cate the fact that millions of ASIC miners are securing the Bitcoin network and not your copycat network, and you can't repli­cate the fact that thousands of devel­opers are working on making the Bitcoin network better every day rather than working on your copycat network. And Light­ning's number of open channels and liquidity can't be easily repli­cated either; it took years to build.  Trying to copy Bitcoin would be like if I copied the content from Wikipedia and hosted it on my website. Techni­cally it could be done, but it wouldn't do much. It wouldn't gain the real Wikipedia's traffic because it wouldn't have the hundreds of millions of links pointing to it from other websites. And it wouldn't be updated like the real Wikipedia because there's no way I could convince the majority of those volun­teer editors to come to work on my version instead. Unless I could somehow succeed in the Herculean task of convincing the majority of the network to move over to my version, it would always just be a shadow of the real one with a tiny fraction of the value.  The same is true if I made a poor mimic of Twitter or something. I could make it look like Twitter, but it wouldn't really be Twitter, full of users and developers.  ### Bitcoin’s Efficient Scaling Pattern When Bitcoin was created, it was designed so that every ten minutes, when a miner produces a new block of trans­ac­tions, the miner that produced it earns 50 Bitcoins. After four years, it was pre-programmed to drop to 25 new Bitcoins per block. Four years later, it was 12.5 Bitcoins per block. Four years after that, it’s down to 6.25 Bitcoins per block in the current era. This pattern will continue every four years until new bitcoin gener­a­tion asymp­tot­i­cally approaches zero, and the hard cap of 21 million bitcoins is reached sometime after the year 2100. Miners will earn a vanish­ingly small number of fractional Bitcoins for producing new blocks within a few decades. Out of the 21 million, 18.7 million Bitcoins have already been created. However, miners also earn trans­ac­tion fees. Senders pay trans­ac­tion fees, denom­i­nated in fractional bitcoin, to ensure their trans­ac­tion gets into the blockchain in a timely manner. In the early days, blocks were often not full, so trans­ac­tion fees were minimal. However, as Bitcoin became more widespread, blocks reliably became full, and trans­ac­tion fees became a small but more meaningful part of miner fees. So Bitcoin was highly infla­tionary in the begin­ning, but it has an increas­ingly disin­fla­tionary monetary policy until it approaches outright zero infla­tion, and its security budget scales similarly. Here is a table of the Bitcoin network’s average market capital­iza­tion, annual security spending (total miner revenue, including block subsi­dies and trans­ac­tion fees), and the percentage of the market capital­iza­tion spent on security each year: ![](https://www.datocms-assets.com/56652/1690192382-alden-bitcoin-energy-scaling.jpg?auto=format) Source: Lyn Alden Each year so far, the Bitcoin network usually spent more on security than the previous year but always spent a smaller percentage of its market capital­iza­tion on security than the previous year. This isn't a decision by any central­ized party; it's a combi­na­tion of the algorithm, the value of the network, and individual miner decisions whether to mine or not.  That's what journal­ists and other people who don't under­stand the algorithm often miss: the declining block subsidy. This results in Bitcoin's infla­tion rate going down, along with miner revenue as a percentage of Bitcoin's total market capitalization.  Any serious analyst that under­stands Bitcoin's algorithm would actually be more concerned about the [possi­bility of Bitcoin one day not using enough energy](https://www.lynalden.com/bitcoin-security-modeling/) for its security sometime in the future when it relies mostly on trans­ac­tion fees rather than using too much energy.  Since the security spending repre­sents miners' revenue, and miners spend most of their costs on electricity, that security spending repre­sents the high-end for how much energy the Bitcoin network is using in dollar terms. In reality, it is less than that, due to miners usually making a profit.  Looking at my own Bitcoin miners for example (I have some hosted via Compass Mining), my electricity costs are currently about 20% of my miner revenue. That will vary over time.  Next, we can look at just the portion of the miner revenue that comes from trans­ac­tion fees, which is a subset of the previous chart:  ![](https://www.datocms-assets.com/56652/1690192682-alden-bitcoin-energy-6-2.jpg?auto=format) Source: Lyn Alden We can see that trans­ac­tion fees are a tiny portion of Bitcoin’s market capital­iza­tion each year. The highest year in percent terms was 2017, during the bubble peak. Efficiency improve­ments have been made since 2017, so even in the heart of the early 2021 bull run, the network didn’t reach those levels again. The Bitcoin network is now down to less than 2% of its market cap being spent on miner revenue each year, including a fraction of one percent on fees. In 2024 there will be another block subsidy halving, which will probably bring miner revenue down closer to 1% of market capitalization. In 2028 there will be yet another block subsidy halving, and another around in 2032. After that point, the block subsidy will be so tiny that a large portion of miner revenue will be made up of trans­ac­tion fees, and miner revenue will likely be less than 1% of market capital­iza­tion, approaching a steady state of maybe 0.25% to 0.50% on average, depending on fee levels. Since we can’t know for sure what the steady state will be due to variable market-driven trans­ac­tion fees, here’s a table of poten­tial long-term Bitcoin market capital­iza­tions (vertical axis) and annual security spending (horizontal axis) in the future: ![](https://www.datocms-assets.com/56652/1690192759-alden-bitcoin-energy-7.jpg?auto=format) Source: Lyn Alden If Bitcoin fails to grow for one reason or another and becomes a failed project or perma­nently remains around its current market capital­iza­tion of less than $1 trillion, its miner revenue will signif­i­cantly decrease from current levels as block subsi­dies diminish. By the 2030s, Bitcoin miner revenue will probably be around 0.50% of market capital­iza­tion or less. So the network will be stuck at 2018 – 2020 energy spending levels or less. If Bitcoin becomes system­at­i­cally impor­tant, let’s say $5-$10 trillion (repre­senting a per-coin price of $250k to $500k) with hundreds of millions of users, then at a 0.50% annual security cost, that would be $25-$50 billion. That would be 2x or 3x as much energy usage as Bitcoin was using at an annual­ized rate in the first half of 2021. This would repre­sent approx­i­mately 0.3% of global energy usage. If we say it reaches an outra­geously high price of one million dollars per coin, for a criti­cally impor­tant market capital­iza­tion of $20 trillion, with billions of users, then at 0.50% annual security cost, that would be $100 billion, or about 6x as much energy usage as bitcoin was using at an annual­ized rate in the first half of 2021. This would repre­sent maybe 0.6% of global energy usage, which seems appro­priate for a network used by billions of people for multiple purposes, as it would need to be at that point to reach such a high value. By that point, it would be big enough that it’s likely replacing energy used by parts of the global banking system. There are tens of millions of people working in banks and fintech compa­nies worldwide. The appli­ca­tion of software to money at the root layer, just like other indus­tries, brings efficien­cies and reduces the need for employ­ment and real estate in certain parts of legacy infra­struc­ture, freeing up those human resources and corre­sponding energy usage for other produc­tive purposes. At the current time, the Bitcoin network is estimated to emit less CO2 than random things we don’t think about, like tumble driers or zinc production: ![](https://www.datocms-assets.com/56652/1690192847-alden-bitcoin-energy-8.jpg?auto=format) Source: Nic Carter, Demys­ti­fying Bitcoin If Bitcoin becomes wildly successful with trillions of dollars of utility for users, we could poten­tially see it emit an amount of CO2 that is compa­rable to or higher than zinc produc­tion and likely still below that of aluminum produc­tion. In other words, despite reaching a massive scale and serving numerous purposes, it would still be compa­rable to various other random industries.  #### Scaling By Layers and the *“Cost Per Transaction”* Fallacy  The Bitcoin network can do a maximum of a few hundred thousand base layer trans­ac­tions daily. That’s about five trans­ac­tions per second. This number has increased slightly over time due to occasional upgrades that improve trans­ac­tion density.  This trans­ac­tion limit is often unfavor­ably compared to a network like Visa, which can process tens of thousands of trans­ac­tions per second.  Due to that, critics often point out that Bitcoin’s energy usage per trans­ac­tion is very high, and thus the network is ineffi­cient and should be avoided for ESG reasons. There are two problems with that reasoning, however.  The first problem with that reasoning is that Bitcoin uses energy whether or not trans­ac­tions are occur­ring. The way to think about it is that a large portion of that energy is used simply for securing the network as a store of value. One block might have 1,200 trans­ac­tions. The next block might have 2,500 trans­ac­tions. The block after that might have 1,800 trans­ac­tions. Meanwhile, the same number of miners are hooked up to the network between those subse­quent blocks, verifying the blocks and paying for electricity. Whether blocks are full or not, they use roughly the same amount of energy.  Whether you make a trans­ac­tion or not does not materi­ally change how much energy the Bitcoin network is using at that time. Bitcoin’s energy usage comes from miners earning the block subsidy and average trans­ac­tion fees and is denom­i­nated in bitcoin and thus based on the value per bitcoin, which mainly comes from people holding bitcoin as a store of value, not spending it. Trans­ac­tion volumes only affect the trans­ac­tion fee portion, and only the longer-run trans­ac­tion fee average matters.  Think of it like running your dishwasher each night. Whether it’s 50% or 90% full when you run it, it still uses about the same amount of resources per run. The marginal extra dish or utensil doesn’t materi­ally affect the dishwash­er’s energy usage.  Another analogy would be keeping your computer on all day and either sending 20 emails or 100 emails. The marginal amount of energy *“per email”* that you send isn’t relevant because regard­less of how many emails you send that partic­ular day, your computer is on and using its baseline resource level.  The second problem with that reasoning is the idea that this limit of about 5 trans­ac­tion per second is the true limit, which it is not. In reality, the Bitcoin network has multiple layers, just like the current finan­cial system.  Visa is merely a layer on top of a deeper payment network. In the United States, for example, we have the Fedwire system. That’s the gross settle­ment layer that banks use to perform large trans­ac­tions with each other. This system only does about 10 trans­ac­tions per second on average and has scaled up slowly as needed, but those trans­ac­tion amounts are very large, repre­senting millions of dollars each. On top of that layer are things like Visa, PayPal, people writing physical checks to each other, and so forth.  If you send me a credit card payment, for example, that seems pretty instan­ta­neous to us, but in reality, it’s not. When the trans­ac­tion seems finished to us, in reality, our two banks just conversed and made an IOU between themselves. Sometime later, they will batch it with many other consumer trans­ac­tions and settle their books with a big Fedwire transaction. Effec­tively, tens of thousands of consumer trans­ac­tions per second get condensed down to 10 much larger inter­bank Fedwire trans­ac­tions at a later time. There’s no limit to how many surface-layer trans­ac­tions can occur because there is no limit to the size of those massive settle­ment transactions.  Similarly, the Bitcoin network has additional layers: Light­ning, Liquid, Exchanges, and more. However, unlike the banking system that depends on long settle­ment times and IOUs, many of Bitcoin’s layers are designed to minimize trust via software.  ##### Method 1: Lightning (Second Layer)  The Light­ning network is a trust­less smart contract layer that runs on top of the Bitcoin network and is suitable for smaller transactions.  Like the Bitcoin network itself, nobody *“owns”* the Light­ning network; it’s a set of open source standards that multiple compa­nies make open source imple­men­ta­tions of. Those Light­ning trans­ac­tions are instan­ta­neous and nearly free and have no upper limit in how many can occur per second as the network continues to grow. It went active in early 2018, and as of early 2021, it finally reached enough channel liquidity, with major apps and exchanges starting to use it, that it became truly functional and reason­ably mature:  ![](https://www.datocms-assets.com/56652/1690192997-alden-bitcoin-energy-9.jpg?auto=format) Source: Light­ning Explorer With Light­ning, two people can open a channel with each other using a base layer trans­ac­tion and then send any number of instant trans­ac­tions between each other. Days, weeks, months, or years later **(whenever they want to)**, they can close that channel with a second base layer trans­ac­tion. That means dozens, hundreds, or thousands of mini-trans­ac­tions can be combined into two base layer trans­ac­tions. It’s like keeping a bar tab open and settling at the end of the night, or the end of the month, except it doesn’t rely on trust but instead relies on programmed smart contracts that ensure the bar tab is settled.  In addition, you can send a Light­ning trans­ac­tion through the network to someone else. If Alice has a channel open with Bob, and Bob has a channel open with Cody, then Alice can send a payment to Cody through Bob as the inter­me­diary, even though she doesn’t have a channel with Cody. And it’s all trust­less; all based on programmed smart contracts using the Bitcoin base layer as the settle­ment assurance.  If someone has a couple Light­ning channels open with well-connected counter­par­ties, she could send and receive many trans­ac­tions to/from any number of people through the network (including all the vast numbers of people on the network that she doesn’t have any channels open with), and settle them in a small number of base layer trans­ac­tions when opening or closing those channels.  To give an idea of how efficient Light­ning is, there were some gaming demos at the 2021 Bitcoin Confer­ence in Miami involving *“sat streaming,”* and THNDR Games processed 13,571 Light­ning trans­ac­tions during the confer­ence for an average fee of 1.4 sats per trans­ac­tion, or roughly $0.0005 USD per transaction.  And as previ­ously mentioned, layer three devel­op­ments allow the Light­ning network to be used for secure, decen­tral­ized, and censor­ship-resis­tant data trans­mis­sion as well.  ##### Method 2: Liquid (Side Chain)  Liquid is an open-source side chain of Bitcoin, meant for large entities like exchanges to settle bitcoins with each other faster and less expen­sive than base-layer trans­ac­tions. Beyond that, it has many other uses as well.  With Liquid, bitcoins get locked up into L‑BTC tokens with a *“peg-in”* trans­ac­tion. Those L‑BTC tokens can run on this side chain with faster settle­ment times until an entity decides to unlock the bitcoins from that chain and bring them back to the base layer with a *“peg-out”* transaction.  ![](https://www.datocms-assets.com/56652/1690193083-alden-bitcoin-energy-10.jpg?auto=format) Source: Block­stream A feder­a­tion of nodes runs the Liquid network. The Liquid network can’t fully repli­cate the rock-solid security and decen­tral­iza­tion level of the bitcoin base layer, but it has a much faster trans­ac­tion throughput and has a reason­able degree of security and decentralization.  In other words, an entity can make a known trade-off to lock up some Bitcoin and get L‑BTC tokens in return. Those tokens use Bitcoin as their founda­tion of value but provide additional speed and features. Between each peg-in and peg-out trans­ac­tion, L‑BTC will typically be used for many transactions.  Similarly, any smart contract platform can lock up Bitcoin in a similar way that Liquid does. The largest one, Wrapped Bitcoin or *“WBTC,”* consists of Bitcoins that are wrapped in an Ethereum token and can, there­fore, trade-in Ethereum-based DeFi ecosys­tems, with any advan­tages or security downsides that may come with that. There are also DeFi projects that run on Bitcoin, using wrapped bitcoins in their ecosys­tems as well.  ##### Method 3: Exchanges (Custodial Relationships)  Custo­dial crypto exchanges and Bitcoin platforms are also scaling methods. When millions of people trade on Coinbase, for example, those are not millions of base layer trans­ac­tions. Those are trans­ac­tions within Coinbase’s central­ized database. Only when people deposit or withdraw Bitcoins to/from Coinbase, or Coinbase sends Bitcoins to or from cold storage or to another exchange in a big batch, would there be an on-chain transaction?  Anyone looking to efficiently accumu­late Bitcoin rather than *“trade cryptos”* should, of course, use Swan Bitcoin instead since the fees are lower, and the customer service is better. It’s optimized for automatic recur­ring purchases, one-time buys, and self-custody if desired.  As another example, millions of people use Cash App to buy and hold Bitcoins. They can send Bitcoins to another Cash App account for free. Those are not base layer trans­ac­tions; those are merely trans­ac­tions within Cash App’s database. It only becomes a base layer trans­ac­tion if they deposit or withdraw their bitcoins to/from Cash App with an external source or if Cash App moves its users’ Bitcoin around inter­nally, to or from cold storage in large batches. ***(As a note, Cash App has tight limits on withdrawals).***  ![](https://www.datocms-assets.com/56652/1690193236-alden-bitcoin-energy-11.jpg?auto=format) Unlike Light­ning and Liquid, those types of custo­dial accounts like Coinbase and Cash App require that you trust the central­ized platform, similar to how you trust your bank. Many exchanges and custo­dial services already use Liquid between themselves for rapid settle­ment. Some of them are also starting to use Light­ning for their retail clients, so even when people withdraw, it might not need to be a base layer trans­ac­tion anymore.  If Bitcoin continues to be successful and grows in users and market capital­iza­tion, base layer trans­ac­tions will become increas­ingly used for settle­ment trans­ac­tions, not day-to-day trans­ac­tions. The fee market is what modulates its usage.  If trans­ac­tion fees are averaging $1 for the base layer because block space hasn’t been heavily used, for example, then $100 amounts are fine to do base layer trans­ac­tions with. However, if trans­ac­tion fees are averaging $50 for the base layer, those small trans­ac­tions would be better with Light­ning. There are many trans­ac­tions worth hundreds of thousands or millions of dollars on the base layer, and they don’t mind paying a $50 fee.  Ultimately, Bitcoin is compa­rable to Fedwire as a massive settle­ment network that can do about 5 trans­ac­tions per second, with no limit to trans­ac­tion size and thus no limit to how much value it can settle per day. On top of that, multiple layers ranging from trust­less Light­ning to semi-trusted Liquid to fully-trusted exchanges can account for hundreds of thousands of trans­ac­tions per second, with no upper limit. As a result, the cost and energy per trans­ac­tion can become negli­gible over time.  #### The Tech Stock Comparison  When an investor is picking through early-stage unprof­itable tech compa­nies to invest in, they need to model out the future to ensure that, if successful, its revenue will scale faster than expenses.  Consider a new social network, for example.  It will typically be unprof­itable or minimally profitable in the begin­ning because it requires high base expenses to pay a team to run the service. Even if it has zero users in the begin­ning, it still has those base expenses to get it started and running.  However, if it’s successful and well-managed, it becomes cheaper to add each user. Expenses still grow over time (more employees, more facil­i­ties, more servers, etc.). Still, if the company is well-designed, those expenses should grow more slowly than users and revenue, which leads the company towards profitability and robust profit margins.  In other words:  ![](https://www.datocms-assets.com/56652/1690193349-alden-bitcoin-energy-12.jpg?auto=format) Bitcoin is not a company, but it is an efficient network. By design, its expenses scale more slowly than its utility due to its declining block subsidy that eventu­ally results in a security model based only on trans­ac­tion fees. We can’t know for sure how much energy Bitcoin will ultimately use since we don’t know how many people will use it or what the fee market will look like a decade or more in the future. If it’s successful, it will consume more energy than if it’s not successful, but due to its declining block subsidy, its utility will greatly outpace its energy usage in either scenario. That’s the key takeaway. ### How Bitcoin Uses Otherwise-Wasted Energy  Beyond a simple calcu­la­tion of how much energy Bitcoin uses, we should also consider the details of how it uses energy and the types of energy it uses.  People often imagine bitcoin miners competing with other indus­tries for electricity, as though bitcoin mining must push out some other electricity use. However, because bitcoin miners inher­ently require extremely cheap electricity sources, they *can’t* usually compete with normal electricity users. As a result, bitcoin miners seek out ineffi­cien­cies around the world where electricity is being under­uti­lized and wasted.  The vast majority of energy consumers can’t go to where the energy is; the energy has to be brought to them. Humans organize themselves based on geography, mainly around shipping channels. We live in coastal or river­side cities, in the suburbs of those areas, and around rural areas of fertile land, not around energy.  We don’t move to where the oil and gas and uranium deposits are; we send folks out to go get the oil and gas and uranium and bring it back to us for consump­tion in our homes and at gas stations and nearby nuclear stations.  Bitcoin miners are unusual energy consumers in that they can go wherever the energy source is, as long as they can get some sort of basic internet connec­tion, including a cellular or satel­lite connec­tion if needed. That means they use energy in quite efficient and unusual ways.  Fideli­ty’s first digital asset analyst and later founding partner of Castle Island Ventures, Nic Carter, [described](https://twitter.com/nic__carter/status/1022837882925539330) Bitcoin’s energy usage in an insightful way back in 2018:  ***“An inter­esting exter­nality of PoW coins – they are always-willing energy buyers at 3 – 5 cents/kWH. And some of the best energy assets are off the grid. This global energy net liber­ates stranded assets and make new ones viable.***  ***Imagine a 3D topographic map of the world with cheap energy hotspots being lower and expen­sive energy being higher. I imagine Bitcoin mining being akin to a glass of water poured over the surface, settling in the nooks and crannies, and smoothing it out.”***  - Nic Carter  Although some miners use cheap tradi­tional energy, here is a sampling of some novel ways that Bitcoin miners use other­wise stranded or unwanted energy to benefit themselves and their counterparties.  1. **Stranded Hydroelectric Power in China**  For a long time, China has been the largest Bitcoin mining juris­dic­tion. At one point, Chinese miners were estimated to account for over 70% of the network. However, by the spring of 2021, it was estimated to have gradu­ally dipped to under 50% as more compe­ti­tion arose elsewhere. Then, a 2021 ban on Chinese bitcoin mining, likely to enforce their capital controls, has sharply reduced Chinese bitcoin mining exposure, and those miners have gone elsewhere.  For many years, China was an inter­esting example of Bitcoin mobility. The province of Sichuan has a ton of overbuilt hydro­elec­tric capacity. During the wet season, they produce more clean electricity than they can possibly use. So it would other­wise be curtailed, wasted.  Since Bitcoin miners can go to where the energy source is, they used to flock to Sichuan during the wet season to use that other­wise wasted energy. Not because they are altru­istic environ­men­tal­ists, but simply because it is cheap and nobody else is making use of it. The electricity that would other­wise be wasted and generate no revenue for the operator can be sold for extremely cheap levels to someone who can find a use for it.  Here is an estima­tion by Cambridge of how much each Chinese province contributed to China’s overall Bitcoin hash rate throughout the seasons. Sichuan is in yellow at the top:  ![](https://www.datocms-assets.com/56652/1690193578-alden-bitcoin-energy-13.jpg?auto=format) Source: Univer­sity of Cambridge, Annotated by Lyn Alden With the Chinese Bitcoin mining ban that came shortly after the end date of this chart, that hash rate and billions of dollars worth of annual revenue is moving to North America and other countries. But this was a great example of Bitcoin miners mopping up stranded and wasted energy for many years. **2. Flared Gas Bitcoin Mining**  Many types of petro­leum deposits come with associ­ated natural gas.  If there is a suffi­cient quantity of this gas, it can be collected and sent via pipeline or other trans­port networks to be used as a primary energy source since, of course, natural gas is extremely useful for electricity and heating.  However, if it’s a small amount, then it’s not economical enough to build a pipeline or other­wise collect that gas.  So what happens?  It gets vented or flared into the atmos­phere, and there­fore wasted. Venting means letting it out into the atmos­phere, mainly as methane **(a stronger green­house gas than carbon dioxide)**. Flaring means it is burned and thus converted into carbon dioxide and emitted into the atmos­phere. A complete waste, either way and yet still contributing to global green­house gases.  In terms of scale, the US Energy Infor­ma­tion Admin­is­tra­tion [estimated](https://www.eia.gov/todayinenergy/detail.php?id=46176) in its 2020 natural gas annual report that 1.48 billion cubic feet of natural gas were vented or flared per day on average in the United States throughout 2019. That’s about 150 TWh of energy, which is higher than the estimated total peak level of Bitcoin’s annual­ized energy usage in 2021, according to the Univer­sity of Cambridge.  In other words, virtu­ally, the entire Bitcoin network in its peak 2021 form could hypothet­i­cally be run off of stranded natural gas in the US, let alone the rest of the world. Considering energy lost in the conver­sion process to electricity, that’s probably not completely the case, but the point is, this stranded energy source can power a huge chunk of it.  Several private Bitcoin mining compa­nies specialize in hooking up trailers of bitcoin miners to oil producers with stranded gas to use that other­wise-wasted energy.  It’s a win/win scenario for producers and the Bitcoin miners. The producers get to sell their gas rather than waste it while earning higher ESG scores and meeting state flaring limits. Bitcoin miners get a super cheap source of energy. Alter­na­tively, some of these Bitcoin miners are also willing to sell mining systems to oil and gas producers and set the hardware up for them so that the producer can directly capture any poten­tial upside in bitcoin’s price.  North Dakota, in partic­ular, is a major area for stranded gas mining. [According to the EIA](https://www.eia.gov/todayinenergy/detail.php?id=43435), nearly 20% of produced natural gas is flared in North Dakota rather than collected. That wasted gas alone is equiv­a­lent to tens of TWh of electricity gener­a­tion per year. Back in 2014, North Dakota’s wasted amount was more like 35% and the state imple­mented rules to try to get that number down. Bitcoin miners can soak up much of this other­wise wasted energy, and Bitcoin mining is indeed growing in that state.  I reached out to Marty Bent, the Director of Business Devel­op­ment for Great American Mining, to under­stand their opera­tions. Great American Mining is a private company that works with oil and gas producers to deploy mobile Bitcoin mining rigs onto the oil and gas produc­tion site to use their wasted gas to mine Bitcoin.  ![](https://www.datocms-assets.com/56652/1690193834-alden-bitcoin-energy-14.jpg?auto=format) Source: Great American Mining Marty gave a useful clari­fi­ca­tion on why pretty much only bitcoin miners can make use of this stranded gas, rather than similar indus­tries like data center server farms:  ***“Since the Bitcoin network is a distrib­uted peer-to-peer network that doesn’t depend on any one miner to facil­i­tate trans­ac­tions, bitcoin miners are better positioned to take advan­tage of the flare gas oppor­tu­nity compared to other energy inten­sive compute processes like server farms because they can stomach disrup­tions in the field without affecting the uptime of the network materi­ally. Whereas a server farm would not be able to because uptime disrup­tion could seriously affect critical business opera­tions. Beyond this, miners send the amount of data to mining pools is very small and doesn’t require much bandwidth, so they can operate in very remote areas using cellular data much more trivially than other energy inten­sive data processes.”***  - Marty Bent, July 2021, via email  I asked him which types of producers are better suited than others. His answers are the ones in chillier climates (current gener­a­tion Bitcoin miners need good air cooling, which uses energy) and/or in juris­dic­tions that have more strin­gent flaring require­ments. And due to various limita­tions, on-shore locations tend to be better suited than offshore locations:  ***“The oppor­tu­nity is partic­u­larly large in juris­dic­tions with strict flaring regula­tions because producers are highly incen­tivized to reduce their flaring. If they flare too much they are forced to shut in their wells for a period of time.***  ***[…]***  ***Yes, shale producers certainly have an advan­tage over offshore drillers as the electrical require­ments and permit­ting neces­sary to operate offshore are much more restric­tive than onshore drilling. On top of this, the amount of surface area to drop containers and gener­a­tors on offshore opera­tions is extremely small compared to onshore well pads, so scaling could be an issue. Beyond this, producers in states with relatively cool climates have an advan­tage, at least in the short to medium term, until immer­sion setups mature. Also, producers who own the natural gas minerals and the produc­tion are better positioned because they wouldn’t have to deal with the headache of paying out royal­ties to mineral rights owners.”***  - Marty Bent, July 2021, via email  In my view, Bitcoin miners using stranded gas (and stranded hydropower) are about the cleanest miners out there. It’s better than solar panels, wind energy, or similar sources because the energy they are using is liter­ally wasted and sent into the atmos­phere other­wise, by compa­nies that are extracting petro­leum for other purposes.  **3. Bitcoin Mining as a Grid Battery**  Electrical grids have to compen­sate for two things: changing supply levels and changing demand levels.  Some electrical sources are very consis­tent, like baseload nuclear power, which can run 24⁄7. Other sources, like wind and solar or hydro, are more variable based on what Mother Nature feels like providing in terms of wind, sun, and rain during a given timeframe. Due to this partial variability, electrical supply needs to be overbuilt, so that even on a partic­u­larly *“low”* day of supply gener­a­tion, it’s still suffi­cient to provide power to the community.  Moving to the demand side, certain days require more electricity than others. Looking at my gas and electric bill, for example, I use a lot more gas in winter than in summer, because in the summer it’s only used for cooking while in the winter it’s used for cooking and heating. Meanwhile, I use way more electricity in the summer since I’m using it for air condi­tioning in that season and for lights and electronics consis­tently throughout the year. Plus, there are peak days, such as the most danger­ously hot day of a given year, where just about every single house­hold has the air condi­tioning system on full blast. Days like that need to be accounted for.  So, due to variability on both the supply side and the demand side, electrical grids need to be overbuilt and have a lot more power gener­a­tion capacity than is used on an average day. Some of that capacity could be variable, like natural gas peaking plants that can be rapidly turned on or off as needed. Other types might be ones they can’t control, like solar panels and wind turbines. If you overbuild solar capacity and wind capacity and aren’t using the excess or selling it to another grid, you just waste it.  One of the problems with solar and wind power is that the cost of storage is very high. Despite all of our human ingenuity, we still can’t make very cost-effec­tive batteries at a utility-scale. It’s an extra­or­di­nary hard physics problem. We can make storage batteries for certain ideal condi­tions, but it’s not cost effec­tive to use them very broadly.  This chart shows the energy return on invest­ment from various energy sources. In other words, it measures the multiple of how much energy you get out of what you put in. The lower yellow bars include the energy cost of storage for variable energy sources. Nuclear is on the far right with a 75x energy multiple (and no buffer/storage costs), while wind and solar are low, especially when the storage costs are considered:  ![](https://www.datocms-assets.com/56652/1690194067-alden-bitcoin-energy-eroi.jpg?auto=format) Chart Source: “Energy inten­si­ties, EROIs, and energy payback times of electricity gener­ating power plants” 2013 Weiss­bach et al Bitcoin mining makes it profitable to overbuild renew­able sources of energy produc­tion, since it allows that surplus supply to be monetized. Every commu­nity that wants reliable power needs overbuilt electric capacity anyway, and for wind and solar and hdyro that’s even more impor­tant because they are variable. However, overbuilding is usually not very cost effec­tive, unless you can use it for something profitable and useful when it’s not other­wise needed.  Bitcoin miners are a unique solution to that problem, can make overbuilding profitable, and thus play the indirect role of an energy storage solution.  During the vast majority of the time when there is more supply than demand, bitcoin miners as one of the electricity consumers in the commu­nity can power their machines, earn revenue, and pay their electricity costs. If there is a surge in electricity demand or a reduc­tion in supply that would other­wise cause brown-outs in the region, those bitcoin miners can temporarily shut off.  A well-structed commer­cial rates contract can make this work smoothly. The utility could offer the miner the lowest possible rate in the area, in exchange for them having a higher toler­ance for variability and other points of contract flexibility.  Harry Sudock, VP of Strategy at a bitcoin mining company called Griid, explained this to Peter McCor­mack [on his podcast in June 2021](https://www.youtube.com/watch?v=vSkEgUsgP3E&ab_channel=WhatBitcoinDid):  ***“Curtailing is not the position you ever want to be in as the energy gener­ator. So, let’s use a wind turbine as a really easy example. The turbine goes around once, gener­ates electrons. The market price in some regions is negative, so what they’ll choose to do is just not to send the energy anywhere. It dissipates.***  ***So, if they’re able to strike a deal with another bidder on that energy who can tolerate some inter­mit­tent consump­tion, can use it some of the time, not the other part of the time, that’s a really valuable customer to be able to bring to a market that isn’t neces­sarily able to support the energy gener­a­tion on a broader basis.***  ***So, I think bitcoin miners are special and are a huge techno­log­ical upgrade from the tradi­tional consumers of electricity. We have two, I think of as “energy super­powers”: the first one is that energy is 80% or 90% of our monthly costs; the second is that we can consume on an inter­mit­tent basis without harming our business model partic­u­larly. So, if someone tells me I need you to shut off your miners 100 hours a year, or 500 hours a year, we don’t say no, we just say, “We need to reflect that in the energy price we pay.”*** ***So, when I’m looking to negotiate a power contract, the way that I frame this is, “I need you to get me the lowest possible cost that you know how to offer. I’m willing to negotiate on every other part of the profile of the load. How big are we going to build the mine; how often do you need that power back; do you need us to serve any other creative purpose within your energy mix or system; do you need us to split our facility into two and to go locate at two different points within place? Great. Do we need to be able to contribute to the security budget of these other pieces of the operation?”***  ***Our job is to drive that energy price as low and compet­i­tive as possible and work with producers on every other variable.”***  For clarity, I would add that their third super­power is their ability to co-locate with the source of electricity gener­a­tion and thus cut down on trans­mis­sion losses to help keep their electricity cheap. Bitcoin miners are unique in that: 1. *Almost their entire operating expense is electricity.* 2. *They can tolerate inter­mit­tent consump­tion.* 3. *They are flexible with their location.* As a result, they can sacri­fice variables that most other compa­nies cannot in exchange for rock-bottom electricity prices when electricity is abundant.  This is why Jack Dorsey, CEO of Twitter and Square, has made the contro­ver­sial state­ment that the Bitcoin network incen­tivizes renew­able power. Right now, Bitcoin is too niche for grid engineers to incor­po­rate it into their plans. Still, if Bitcoin miners become more regular and visible, they can be incor­po­rated into grid designs and rate markets more thoroughly.  In that podcast, for example, Sudock described this situation:  ***“This is an anecdote that we’re in the midst of working through right now. A commu­nity is zoned to have a new hospital built in their area. There are 17,000 energy customers, house to house, in that utili­ty’s juris­dic­tion. They are going to bring a hospital that will double the amount of energy that this region pulls down. We can all agree that a hospital is a very worthy use of electricity; there is no argument there.***  ***They rebuild the trans­mis­sion lines, they build a new substa­tion that’s bigger, that can handle the additional load, and after they do all that, the hospital project falls apart.***  ***So they’re left having invested millions of dollars in this area to attract this large customer. They now have to pass that cost back to those 17,000 house­holds unless they can find another use for that energy. So what did they do?***  ***They called our VP of Energy Manage­ment and said, “We’ve got an overbuilt supply here. If we don’t bring in a large-scale energy customer, these costs are going to get passed to these house­holds that don’t have the budget to support rising energy prices.”***  ***So, we have this beautiful oppor­tu­nity to come in, backstop this utility, provide a customer to come in on the back of this deal falling apart, and provide the backbone to this commu­nity and to stabi­lize their energy prices for a decade to come. And so these are the stories of Bitcoin mining that don’t get to rise to the surface. It also happens that this energy source is over 60% carbon-free.”***  Due to their ability to go to the source of power, ZBitcoin miners can also fill in unexpected holes in demand or other special situa­tions. **4. Advancing New Energy Technologies**  The flexi­bility of Bitcoin mining allows it to fill in gaps for new clean energy technolo­gies, to help them scale and provide a proof of concept. Here’s a real-world example, and it also fits into the previous topic of acting like a battery to profitably soak up excess capacity.  Oklo Inc is a startup that plans to make innov­a­tive new nuclear power facil­i­ties. Most existing nuclear facil­i­ties are massive multi-billion-dollar facil­i­ties. Still, Oklo plans to make micro-reactors with much smaller facil­i­ties, lower costs, lower energy output, and quicker construc­tion times.  In addition, Oklo’s reactors are a type that can use the waste of conven­tional nuclear facil­i­ties as their fuel source. It actually reduces the radioac­tivity of existing nuclear waste.  As [ZME Science](https://www.zmescience.com/science/oklo-microreactor-nuclear-waste-89236373/) reports:  ***“The startup Oklo plans to give us a reliable and cost-effec­tive source of power while also solving the issue of radioac­tive waste, which needs to be stored and managed in partic­ular condi­tions for hundreds of thousands of years. Their solution is to reuse the waste in autonomous reactors that don’t try to slow down the nuclear decay of the material. Effec­tively, such a reactor would be able to extract more power from fuel that has already been spent, giving us a use for the processes that happen naturally in a radioac­tive fuel dump, instead of letting them waste away as radioac­tive pollution.***  ***“What we’ve done is take waste that you have to think about managing for 100,000 or a million years … and now changed it into a form where you think about it for a few hundred, maybe thousands of years,” Oklo’s co-founder Jacob DeWitte told CNBC.”***  However, with any new technology, there’s always a catch. You have to ask yourself, *“Why hasn’t this already caught on?”* especially consid­ering that Oklo is using a proven type of fission technology that has already existed for decades.  Besides the process of going through regula­tion in an environ­ment that has not been very favor­able towards nuclear energy, the catch seems to be that Oklo’s small facil­i­ties naturally mean that profit margins are very tight. The company has proposed to operate them via automa­tion, unsuper­vised by any on-site humans. This has led regula­tors to raise their eyebrows; unattended facil­i­ties with nuclear materials are somewhat of a security hazard, to say the least.  Enter Bitcoin miners because, appar­ently, Bitcoin fixes this.  Oklo recently [announced a 20-year partner­ship](https://www.businesswire.com/news/home/20210714005433/en/Oklo-and-Compass-Secure-20-Year-Commercial-Partnership-to-Launch-Advanced-Fission-Powered-Bitcoin-Mining) with Compass Mining. Oklo will provide Compass with at least 150 MW of power starting in the early 2020s.  ***“Cryptocur­rency mining offers promising pathways to accel­erate the deploy­ment of clean energy technolo­gies, and Oklo is positioned to respond to commer­cial demands by offering end-users the conve­nience of buying clean, reliable, and cost-effec­tive power that they can depend on,” added DeWitte. Oklo’s path to deploy­ment strives to optimize its power plant designs to be cost-compet­i­tive with the cheapest forms of energy.***  ***Oklo’s advanced fission power­houses can produce reliable power for up to 20 years without the need to refuel and have the capabil­i­ties to turn nuclear waste into clean energy. This commer­cial project is scalable, and Oklo can add additional capacity to accel­erate Compass’ sustain­able mining efforts further while driving the economics of Bitcoin mining activ­i­ties powered by advanced fission.”***  I reached out to Compass’ CEO, Whit Gibbs, to get some details.  He explained to me that, for example, there might be a town that Oklo can do business with, to provide them clean power at a low cost by deploying one of their small facil­i­ties on the outskirts of the town. A given Oklo reactor might have 15 MW of output, in this partic­ular hypothet­ical example, but the town only needs 10 MW. So, Compass comes in and installs 5 MW of bitcoin miners, co-located with the Oklo facility, to monetize the remainder of the power output and make the project cost-effec­tive as a whole. As previ­ously described, bitcoin miners are uniquely suited for this, since they can go to where the power is and operate in remote areas if need be, to fill any gaps. In addition, all of that bitcoin mining equip­ment naturally needs some personnel and security onsite and would be co-located with the Oklo facility. Due to that combi­na­tion, Oklo’s facility now has enhanced security and onsite monitoring as a side-effect of being teamed up with the bitcoin miners that are paying for the extra portion of Oklo’s power. That appar­ently solves their margin and security problem. If the town needs more power years later, the Bitcoin miners could reduce their load and move their machines elsewhere. If the town ends up needing less power years later, Compass could bring in some additional miners to fill that gap. This reduces the risk for Oklo. I don’t know if the Oklo facil­i­ties in partic­ular, will catch on or not, but this sort of proof of concept and scaling approach for new clean types of energy will be inter­esting to monitor, thanks to the flexi­bility of Bitcoin mining. As another example, the [startup PRTI](https://www.prtitech.com/) converts wasted tires into hydro­carbon commodi­ties. The world produces over a billion wasted tires per year, made out of hydro­car­bons, and the majority of them are just burned or buried. PRTI devel­oped a unique sealed boiler process to take those wasted tires and boil them down into their various hydro­carbon commodi­ties, and sell those commodi­ties. However, they also produce some natural gas in this process, which they can use to generate electricity. Since their locations tend to be wherever the tires are rather than in dense popula­tion centers, their local electrical grid doesn’t gener­ally have very much use for that electricity. And it’s not enough spare gas to build a pipeline or other­wise use it for many purposes. So PRTI takes that extra natural gas that they generate and mines bitcoins (and ether, at least until Ethereum switches to proof-of-stake) onsite with it. As [DCD reports](https://www.datacenterdynamics.com/en/news/prti-makes-cryptocurrency-from-old-car-tires-in-northern-carolina/): ***“Product Recovery Technology Inter­na­tional (PRTI) is processing discarded tires at a site in Franklinton, north of Raleigh, to create oil, syngas, carbon char, and steel. It is then using the gas to generate electricity which it uses in Bitcoin miners in its onsite office. The process is scalable, the energy could be used for other purposes, and the company is planning to roll it out in other sites, including Europe.”*** The funny thing is that even that article gets it wrong. They went and stuck a random anti-bitcoin section later in the piece: ***“Of course, making Bitcoin isn’t an environ­mental benefit in itself, as cryptocur­ren­cies simply burn energy to produce abstract value. Crypto mining uses more energy than a country the size of Argentina and has a very large carbon footprint because not all the energy they use comes from renew­able sources. Even when it is done with renew­able energy, it diverts that energy from other uses, thereby increasing the carbon footprint of the human race.”*** If that author had researched the subject deeper, he would know why PRTI mines bitcoin and ether with their excess energy rather than send it back to the grid. As PRTI co-founder and former CEO Jason Williams [explained on the Investor’s Podcast Network](https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoin-mining-entrepreneurship-w-jason-williams/), the local grid providers offer an extremely low price per kWh to buy energy from PRTI since they don’t need that energy because these plants are located near waste sites, not in popula­tion centers. Market prices dictate a lack of demand like that. This stranded energy that PRTI creates from recycling tires that would other­wise be burned or buried is not *“diverting”* energy from other uses. Instead, PRTI merely keeps the relatively small amount of energy they create, which would other­wise be wasted or sent non-econom­i­cally into the grid, and mines bitcoin and ether. This helps keep their business profitable so that they can continue to grow to do the good work of recycling tires and cutting down on that massive global source of pollu­tants and litter. Crypto mining just happens to be the most economical use of the bit of energy they produce from their innov­a­tive process. **5. Old Power Plant Refurbishment** Since Bitcoin miners are mobile and can make use of energy that other sources cannot, sometimes previ­ously shut-off power plants can be refur­bished and turned back on to mine bitcoin and make money, create jobs in the commu­nity, and send electricity back to the local grid as well. A partic­u­larly popular region for this is Quebec and certain other regions of Canada. They have plenty of unused hydro­elec­tric capacity just like China, so Bitcoin miners have grown in that region.  As [Bitcoin Magazine reported](https://bitcoinmagazine.com/business/a-hitchhikers-guide-to-bitcoin-mining-in-north-america-part-two-seeking-stranded-energy): ***“For example, British Columbia and Quebec, two of Canada’s largest economies, were built on resource extrac­tion, mainly forestry and tradi­tional mining. But many of the region’s lumber and pulp and paper mills powered by hydro­elec­tric dams have moved on or closed,*** [***leaving power sources and infra­struc­ture behind.***](https://montrealgazette.com/business/local-business/crypto-craze-has-hydro-quebec-ceos-phone-ringing-off-the-hook) ***Areas of Washington State and Upper New York State have similar advan­tages — lots of cheap stranded energy from a time when manufac­turing dominated the region and facto­ries needed to be near power sources to be economical.”*** I can confirm this with Compass Mining.  Looking through their [facility list](https://compassmining.io/facilities), many of them are in Canada, using some of this under­used hydro­elec­tric power. However, not every old power plant is a stranded hydro asset. Some of them are old coal plants. A [May 2021 article from the WSJ](https://www.wsj.com/articles/bitcoin-miners-are-giving-new-life-to-old-fossil-fuel-power-plants-11621594803) gave a contro­ver­sial example of this: ***“One of the most ambitious — and contro­ver­sial — projects comes from private-equity firm Atlas Holdings. Based in Green­wich, Conn., the firm special­izes in turnarounds of troubled compa­nies. It bought the Greenidge coal-fired power station in 2014 after the plant in Dresden, N.Y., had been shut a few years earlier because it was econom­i­cally unattrac­tive to operate.*** ***Atlas first converted the plant to natural gas from coal. Then, last year, it launched a data center for mining Bitcoin using power the plant gener­ated. The company said it currently has 19 megawatts of mining capacity and plans to raise it to 85 megawatts by the end of 2022.”*** On one hand, that Greenidge power plant was unused, and thanks to Bitcoin, it was put back to produc­tive work as a natural gas plant (much cleaner than coal) and able to hire employees in the region. Plus, according to the article, it also sends electricity to the grid. On the other hand, some folks in the commu­nity have observed that the facility heats a portion of the lake nearby, causing a negative local environ­mental impact. Of course, that facility would have the same negative environ­mental impact if it was being used for something else, and it was origi­nally built for a purpose other than Bitcoin. Bitcoin miners merely resur­rected it. For any industry of this size, there will naturally be anecdotal examples of environ­mental issues. That’s for the local juris­dic­tion to decide whether it happens to be related to Bitcoin, aluminum refining, or anything else. While some juris­dic­tions push back on that activity for environ­mental reasons, other juris­dic­tions specif­i­cally want to attract bitcoin miners. Kentucky, for example, [signed a bill into law in 2021](https://www.nasdaq.com/articles/kentucky-governor-signs-bitcoin-mining-incentive-bill-into-law-2021-03-26) to give tax breaks for Bitcoin miners to come to the state. These activ­i­ties can use stranded power assets, add power capacity to the grid, hire workers, and give the state a new taxable stream of income. Indeed, Kentucky is one of the states receiving a sizable influx of miners this year. **6. Bootstrapping Developing Country Electricity** Many low-income countries have a lot of energy resources, including hydro­elec­tric capacity. However, they often have a chicken-and-egg problem. It’s often too expen­sive for them to build the electrical trans­mis­sion and distri­b­u­tion infra­struc­ture to move that power from where it is gener­ated to where it would be consumed. And they can’t get a lot of capital because there is not a lot of produc­tive capacity sitting there ready to use electricity. Bitcoin presents an inter­esting oppor­tu­nity for some of these devel­oping areas to build out their electrical capacity and generate revenue. If an energy source is devel­oped, bitcoin miners can come in and give that site immediate profits until that electricity is put to better use.  As Alex Gladstein of the Human Rights Founda­tion [described](https://bitcoinmagazine.com/culture/bitcoin-is-humanitarian-and-environmental): ***“Billions of people in devel­oping nations face the stranded power problem. In order for their economies to grow, they have to expand their electrical infra­struc­ture, a capital-inten­sive and complex under­taking. But when they, with the help of foreign aid or invest­ment, build power plants to try and capture renew­able energy in remote places, that power often has nowhere to go.***  ***In many*** ***countries across Africa, for example, there are vast solar, wind and hydro resources. These forces could drive economic activity, but local commu­ni­ties and govern­ments usually lack the resources to invest in the infra­struc­ture to kickstart the process.*** ***Foreign donors and investors are not keen to support projects that do not have a pathway to sustain­ability or profits. Without strong trans­mis­sion lines to deliver energy from harvest points to popula­tion centers, power plant builders could wait years before they can run without foreign subsidy.*** ***Here is where Bitcoin could be an incen­tives game-changer. New power plants, no matter how remote, can generate immediate revenue, even with no trans­mis­sion lines, by directing their energy to the Bitcoin network and turning sunlight, water or wind into money.*** ***As local author­i­ties or customers gradu­ally link up to the power plant, and are willing to pay more for the energy than what miners can afford, the Bitcoin load is lowered, and commu­ni­ties can grow. In this way, economic activity and renew­able grids can be bootstrapped by Bitcoin mining. And inter­na­tional aid could provide the spark.”*** - Alex Gladstein, May 2021 Overall, I think this is an inter­esting and under-explored area. The concept got atten­tion in June 2021 when El Salvador made Bitcoin legal tender. Gladstein asked Presi­dent Bukele during an online event if El Salvador would consider using some of the country’s under-utilized geothermal resources for Bitcoin mining. Bukele responded by saying that it would likely be a good idea and then days later announced that he directed his country’s state-owned geothermal operator to develop a plan for geothermal Bitcoin mining. It remains to be seen if it will pan out, but if it does, that would be a poten­tial revenue source for the impov­er­ished country, using clean energy. Once those sources are devel­oped for profitable Bitcoin mining, they could later hook up that power source for other purposes in the future if the popula­tion centers require more power at some point. ### Bitcoin’s Proof of Work vs Alternative Methods So far, we estab­lished that bitcoin uses only a sub‑0.1% fraction of global energy, and a signif­i­cant portion of the energy it does use is other­wise stranded or wasted, or renew­able. It can also help bring new types of energy to market thanks to its flexibility. But can we make a blockchain that is even more energy efficient? That’s what proof-of-stake purports to do, compared to Bitcoin’s proof-of-work model. Many newer cryptocur­ren­cies use proof-of-stake as their consensus and security model. As previ­ously-described, proof-of-work is a system where miners compete with electricity and processing power to build the longest blockchain, which becomes the accepted blockchain. In contrast to this, proof-of-stake is a system where holders of the cryptocur­rency lock up or *“stake”* their coins, use them to vote on the valid blockchain, and get rewarded with more coins for success­fully creating new blocks. Instead of commit­ting electricity and processing power to create new blocks on the blockchain, they’re commit­ting their stake of coins to do so. Proof-of-work is simple because there is no need to punish bad miners that try to validate the wrong chain or make invalid blocks that don’t fit the rules of the node network. Their punish­ment is simply that they spent electricity on blocks that weren’t valid or weren’t included in the longest eventual chain, and thus lost money. They self-inflict their own wound, and thus it rarely happens on purpose. There is a tangible connec­tion between the blockchain and real-world resources. Proof-of-stake is more complex because there is no connec­tion to real-world resources, and the system needs a way to punish stakers that improp­erly vote on the *“wrong”* chain. In addition, they need a way to ensure stakers aren’t voting on all possible chains (which can’t be done with proof-of-work because it takes real-world resources). So, proof-of-stake is a much more complex system that will take away stakers’ coins if they vote improp­erly and has ways of checking to see if they are voting on multiple chains. Ben Edgington, a devel­oper for Ethereum and someone who is in favor of Ethereum’s upcoming shift towards proof-of-stake, went on the [Compass Mining Podcast](https://compassmining.io/education/the-future-of-ethereum-mining/) and explained the long-term challenges that Ethereum has faced as it under­goes its multi-year (and long-delayed) shift from proof-of-work towards proof-of-stake: ***“The reason it has taken a while, you know we’ve relied on proof-of-work in Ethereum for five plus years, is that proof-of-stake is compli­cated. Proof-of-work is funda­men­tally very simple, is easy to analyze, is easy to imple­ment and deploy, and proof-of-stake has a lot of moving parts. You can code up a proof-of-work algorithm in a hundred lines [of code] or so. Our current clients are a hundred thousand lines or so for proof-of-stake.*** ***And I think the theoret­ical founda­tions for proof-of-stake have taken time to mature. It’s not obvious how to make it robust; there are attacks like long-range attacks and things that just don’t exist in proof-of-work that we’ve had to think through and come up with solutions to, so that’s just taken time. So we’ve relied on the tried and tested proof-of-work algorithm, which served Ethereum well.”*** The host in that podcast discussed how early propo­nents of the Bitcoin network were initially inter­ested in proof-of-stake but deter­mined it had too many attack vectors. He then asked Ben how Ethereum and the proof-of-stake model defends against those attack vectors. Ben thinks it is robust and is in favor of it, and described proof-of-stake’s workarounds as follows: ***“The initial diffi­cult one to solve was what we call “equiv­o­ca­tion” which means that it is basically costless to produce blocks, so if I am a proposer of a block, I can propose two*** ***competing blocks, or three, or a hundred, and broad­cast them to the network that has no real way to distin­guish between these blocks. That can be extremely disrup­tive and attack the chain, certainly split the chain, and so, we deal with this through a mecha­nism we call “slashing”. And so for a proposer to propose conflicting blocks, that is a slash­able offence. The network can detect that. Another proposer can come along and say here are two blocks that were proposed by the same validator at the same time, their signa­ture is on it, so that can’t be faked, so here is a proof that they acted incor­rectly. And then part of their stake is taken away from them and they are rejected from the network at that point. So you only get once chance.*** ***In proof-of-work, if your 51% attack fails, you can just crank it up and do it again and again. In proof-of-stake, you get one chance, you’re slashed, you’re out of the network, and your ETH is locked up for a while, and so it’s kind of self-healing, in that respect. So that was a major theoret­ical break­through that kind of made people think, “actually we can kind of do this, there are fixes to common attacks.”*** ***"Another one is called a long-range attack and this is kind of subtle, but the idea is that once you’ve exited the network as a validator, you can then go back in time, effec­tively. So I exit the network and I can go back a month in time, and produce (if I have enough validator keys) as many histor­ical blocks as I wish, I can write a different history for the chain, effec­tively, which conflicts with its current history, and I’ve exited so I can’t be slashed anymore. So that’s a longrange attack. We have an analysis of this, and an under­standing of this, which Bitcoiners will hate but we call it “weak subjec­tivity”.*** ***It’s the idea that anybody who is contin­u­ally online is always safe, because they are monitoring the chain and they always know what the correct chain is. If you sync from scratch, you know you sync from genesis, there is a danger that you follow an attacker chain, so you need a check­point, which guaran­tees that you are on the right chain, which you need to get from someone who has been online for the entire period or somebody who is guaran­teed to be on the right chain. Now that is called “weak subjec­tivity.”*** ***There are rules about how frequently these check­points need to be produced, how we can rely on them, and we are building “somewhat trust­less” mecha­nisms for getting hold of these check­points. It is, I under­stand, a deep clash with Bitcoin ideology in that sense that anybody in vacuo should be able to sync up from genesis and know they are on the right chain without trusting anybody in any way, shape, or form. We’re not doing that. That seems to be very diffi­cult with proof-ofstake, that’s a compro­mise we made, but we believe in practice this is completely workable and will not lead to any practical attacks of any sort.”*** Besides a larger amount of complexity, trust, and attack surfaces, the main issue with proof-of-stake is that it can be prone to central­iza­tion. The more coins you have, the more voting power you have, and those with the coins are also the ones earning the new coins from staking. Since they don’t need to expend resources to stake, they can simply increase their overall staking amount as they earn ongoing coins from staking rewards and exponen­tially grow their influ­ence on the network over time. It would be like a polit­ical system where you get a vote for every hundred dollars you have and then also get paid a dollar by the govern­ment for casting a vote. Mary, the high school science teacher with $20,000 in net worth, gets 200 votes and earns $200 from the govern­ment for voting. Jeff Bezos, with $200 billion in net worth, gets 2 billion votes and earns $2 billion from the govern­ment for voting. He’s a more valuable citizen than Mary by a factor of a million. Also, he gets paid more by the govern­ment for already being wealthy. That’s not a system many folks would like to live in. Eventu­ally it would likely consol­i­date into an oligopoly, with a handful of multi-billion­aires control­ling most of the votes. If it gets too central­ized, that kind of defeats the purpose of a decen­tral­ized blockchain. Instead, that proof-of-stake system mainly works well for stakes in private property, like corpo­ra­tions. In a corpo­ra­tion, each share is worth a vote for proposals and board seats since the owners decide what the company will do in propor­tion to their ownership. So, I don’t consider the proof-of-stake model bad for other cryptocur­ren­cies to use if they are more like a corpo­ra­tion. In fact, proof-of-stake can increase the cost of attacking the protocol since an attack or group of attackers would need to acquire more than half of the coins (unless they find and exploit a bug due to the greater attack surface). There are certain Defi projects or platforms, for example, that can operate like a company and use proof-of-stake to be efficient and costly to attack if all goes well. Instead, I just consider proof-of-stake to be unsuit­able for a democ­ra­tized, decen­tral­ized, censor­ship-resis­tant global money, especially as this article shows how negli­gible the negative impact of Bitcoin’s energy usage is for the world, along with bringing several positives. Or as Adam Back, co-founder and CEO of Block­stream [described](https://www.thebword.org/c/track-4-securing-the-bitcoin-network): ***“You see that with other commodity money, like physical gold. It’s a system that works because money has a cost. I think money that doesn’t have a cost ultimately ends up being polit­ical in nature. So people closer to the money, the so-called Cantillon Effect, will be advantaged.”*** In a proof-of-work system like the Bitcoin network, power is more distrib­uted between miners, devel­opers, and individual nodes. Your ability to be a miner is based on your ability to put forth capital and find low-cost electricity. Rather than the entrenched miners having an advan­tage and increasing their advan­tage over time, newer miners actually have the advan­tage over existing miners because they buy the newer machines with more processing power per watt, thanks to Moore’s law. Mining businesses, old and new, are all constantly refreshing themselves, making use of new cheap or stranded energy resources. Plus, the Bitcoin network’s designers went to great lengths to make it easy and cheap to run a full node (unlike almost any other cryptocur­rency).  In the Bitcoin network, the real power rests with the nodes rather than the miners. If miners try to collude and invalid mine blocks, the node network won’t accept them. Many other blockchains that have existed since the Bitcoin network make multiple trade-offs, including making the nodes require immense processing power, bandwidth, and storage so that only indus­trial-scale entities can run them, which central­izes the network into a handful of major providers. Bitcoin’s proof-of-work and small block design keep a lot of power with the individual users. Anyone running a full node can audit the entire blockchain, verify their individual trans­ac­tions, and partic­i­pate in the network effect that ensures consensus. ### How Bitcoin Survived By Not Being Proof-of-Stake I recom­mend that folks inter­ested in Bitcoin and the broader crypto space read The Block­size War, which is a 2021 book that chron­i­cles the history of the Bitcoin network as different factions strug­gled with each other to shape the design of the protocol and to see who had the power (devel­opers, corpo­rate miners/exchanges, or individual users/nodes). It was a real-world test of Bitcoin’s level of decentralization. Ever since the network’s early history, there was a growing divide between people who wanted to increase the block size and people who wanted to keep it small. Increasing the block size allows the network to process more trans­ac­tions per unit of time (not considering layer two solutions and side-chain solutions Light­ning and Liquid, which didn’t exist yet). However, increasing the block size also increases the bandwidth and storage required to run a full node. It thus puts it out of the reach of the everyday user on a laptop or Raspberry Pi. If users can neither mine nor operate a full node themselves, they have to trust large-scale network providers, and Bitcoin would cease to be a trust­less, decen­tral­ized system. After the seeds of this disagree­ment were laid from the proto­col’s incep­tion, it was from 2015 through 2017 that the block­size war went into full conflict. At one point in 2017, over 80% of miner processing power, the biggest maker of bitcoin mining equip­ment, prior lead devel­opers of Bitcoin, and several major custo­dians and exchanges, including Coinbase and Grayscale, were in favor of increasing the block size with an upgrade called SegWit2x (not to be confused with the normal SegWit update). That’s an overwhelming amount of support among the corpo­rate-level players in the industry. And yet, they failed. The existing core devel­opers and the individual node opera­tors were not on board with the plan. So along with multiple other reasons, it was aborted. *“****SegWit2x****, (abbre­vi­ated* ***B2X*** *or* ***S2X****, and origi­nally called* ***SegWit2Mb****),* ***was a failed contentious hardfork attempt outlined in the New York Agree­ment that intended to double the block size limit. The hardfork has been denounced as an attempt made by CEOs and owners of large Bitcoin businesses to intro­duce changes to the curren­cy’s protocol and devel­op­ment cycle with ulterior motives.*** ***Though over 80% of miners signaled inten­tion for SegWit2x and the New York Agree­ment, it failed to gain any consensus among the commu­nity and Core developers.”*** - [Bitcoin Wiki](https://en.bitcoin.it/wiki/SegWit2x) If Bitcoin had been proof-of-stake, and without the real power in the Bitcoin network being among the individual node opera­tors (with those nodes specif­i­cally being designed so that anyone can run them), those big corpo­rate players might have been successful at reshaping the Bitcoin network, and that would have put running a full node out of reach of normal users and further central­ized the protocol. If Bitcoin were built on a proof-of-stake model, where the more coins you have, the more votes you have on how the network functions, the large exchanges, and custo­dians could have used the millions of coins they held on behalf of clients to vote in their own favor. Some folks on the big block side also forked their own blockchains out of Bitcoin throughout this war, creating large-block versions of Bitcoin, including Bitcoin XT, Bitcoin Classic, Bitcoin Unlim­ited, Bitcoin Cash, and Bitcoin Satoshi Vision. All of those have fallen signif­i­cantly vs. Bitcoin in terms of market capital­iza­tion and hash rate, as they have been rejected by the market. Proof-of-work and small full nodes together are the main ways to keep a blockchain suffi­ciently decen­tral­ized and with the highest level of security, including the most hardened attack surface. If Bitcoin ever upgrades to a different system, it would only be with overwhelming consensus among users. Every existing proposal to make the Bitcoin network less energy-inten­sive, and every proposed new superior blockchain to the Bitcoin network, comes with trade-offs. Those trade-offs might make sense for other blockchains but don’t make sense for Bitcoin. ### Final Thoughts and Summary There is a split in the Bitcoin commu­nity about how they should respond to environ­mental concerns. Some of the larger compa­nies in the industry have formed the Bitcoin Mining Council to collect volun­teer data from miners on the sources of energy used. Their initial findings from Q2 2021 suggest that Bitcoin mining uses a higher ratio of sustain­able energy than just about any country’s typical electrical grid: ![](https://www.datocms-assets.com/56652/1690195368-alden-bitcoin-energy-final-thoughts.jpg?auto=format) Chart Source: Bitcoin Mining Council, Q2 2021 Global Review The general view of the Bitcoin Mining Council members and their supporters is that infor­ma­tion is useful to have, so collecting volun­teer data and presenting it to capital alloca­tors and policy­makers is inher­ently helpful. And as they found out from their surveys, bitcoin mining has a high ratio of sustain­able energy, which makes sense given the fact that bitcoin inher­ently seeks out cheap and stranded energy. This gives capital alloca­tors and policy­makers a useful set of infor­ma­tion to work with, rather than the hysteria that is often presented in media. Others, such as some smaller miners and some individual users, have pushed back against the framing of the discus­sion and the idea of an industry council. In their view, the network shouldn’t have to bend over backward to meet environ­mental concerns to a greater degree than other indus­tries. They’re concerned that regula­tors might try to push for certain types of energy to be prior­i­tized in the network without under­standing the details of how the network consumes energy.  For example, using stranded natural gas that would other­wise be burned away without use is about as clean as you can get, despite the fact that it’s a fossil fuel. Both sides make valid points in my view. As an analyst, I find it helpful to have the facts about the industry. Still, I also see why many in the industry would be cautious about the framing of the debate and any attempts made by policy­makers (often based on miscon­cep­tions) to change or centralize their activities. #### Research Summary Overall, the main takeaways from this long report are as follows: - *Bitcoin provides a service that people can use to store and transfer value. So far, the market of millions of partic­i­pants has decided that this network has value. Like anything of value, it consumes energy.* - *Bitcoin mining uses less than 0.1% of global energy and, by design, cannot use more energy than the utility it provides to users.* - *A sizable chunk of the energy used by Bitcoin is other­wise stranded and wasted energy. This is because Bitcoin miners have the unique capability to go to remote locations and deal with incon­sis­tent power that other consumers can’t use, as long as it’s cheap.* - *The network continues to be more energy efficient each year due to pre-programmed declining block subsi­dies (struc­tural disin­fla­tion). Plus, additional layers like the Light­ning Network dramat­i­cally expand its per-trans­ac­tion energy efficiency even further as they are built out and become increas­ingly operable. Like any functional finan­cial system, Bitcoin uses a layered scaling approach.* - *Blockchains that use other consensus models with lower energy require­ments, like proof-of-stake, make trade-offs to do so. There is no free lunch, and these other forms of consensus are not strictly “better” than Bitcoin’s proof-of-work model since they have more attack surfaces and greater risks of centralization.* For those reasons, whether Bitcoin continues to be successful or fails in broader adoption, there’s no risk of the network using too much energy in the grand scheme of things. By any metric, it’s a rounding error as far as global consump­tion energy is concerned, with a sizable chunk of its energy usage consisting of sustain­able or other­wise wasted energy. People focusing heavily on the environ­mental *“E”* side of ESG as it relates to Bitcoin often overlook the *“SG”* compo­nent- social and gover­nance. At the end of the day, I consider Bitcoin to be one of the most ESG assets around, just not in the corpo­rate sanitized concep­tion that the term ESG is often used in. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # The Bearish Case for Bonds - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/the-bearish-case-for-bonds/ Bonds are not as safe today as they are marketed to be. It’s time bond investors begin to protect themselves against the Fed policies that are leading to erosion of the real value of their bond holdings. --- **Sam Callahan** · October 4, 2021 · Updated July 3, 2024 Bonds are often touted as one of the safest invest­ments an investor can make. As such, retire­ment portfo­lios are typically more heavily weighted to bonds. In fact, if you Google *“Safe Retire­ment Invest­ments,”* bonds are recom­mended in nearly every search result. The 10-year US Treasury is even consid­ered a *“risk-free invest­ment”* in the finance world. Yet this couldn’t be further from the truth given today’s macro­eco­nomic backdrop. There are real risks associ­ated with bonds, but many investors are unaware of them, and these risks continue to grow. Bonds are consid­ered safe because they offer principal protec­tion. When you purchase a bond, you receive fixed interest payments over its duration, plus the principal you paid when the bond matures. This differs from a stock that can drop 30% or more and has no principal protec­tion. Investors are attracted to bonds because, unlike equities, they offer safety from a principal protec­tion stand­point and provide a stream of income via interest payments. However, there are other risks to consider. Bonds are consid­ered safe because they offer principal protec­tion. When you purchase a bond, you receive fixed interest payments over its duration, plus the principal you paid when the bond matures. This differs from a stock that can drop 30% or more and has no principal protec­tion. Investors are attracted to bonds because, unlike equities, they offer safety from a principal protec­tion stand­point and provide a stream of income via interest payments. However, there are other risks to consider. Infla­tion risk, also known as purchasing power risk, is the risk that infla­tion will reduce the real value of the bonds. Bonds are subject to the risks of infla­tion because interest payments are fixed regard­less of infla­tion. For instance, with a 5-year bond, you’ll receive every­thing you paid for the bond plus interest in 5 years, but if the interest payments don’t keep up with the rate of infla­tion during that time period, then you’ll lose purchasing power in real terms. In the past, the Federal Reserve had managed infla­tionary risks by raising interest rates when signs of infla­tion appeared. Today, the Fed finds itself in a position not seen in many decades. The debt levels in the economy are so high that they now constrain the Fed’s ability to effec­tively manage infla­tion risk for bond investors. In addition, history shows us that the Fed may even want this infla­tion to occur to stimu­late economic growth. Bond investors could find themselves hurt by the conse­quences of the Fed’s other priorities. ### Drowning in Debt The pandemic prompted unprece­dented policy responses from central banks and govern­ments worldwide. The result was an explo­sion of debt levels. The Fed and Congress claim these responses were neces­sary to save jobs and keep food on the table for families as the unemploy­ment rate rocketed to nearly 15% in 2020. The world now finds itself up to its eyeballs in debt. ![](https://www.datocms-assets.com/56652/1690268934-01-debt-as-percent-of-gdp.jpg?auto=format) U.S. govern­ment, house­holds, and corpo­rate debt-to-GDP hit a historic high of 281.7% ![](https://www.datocms-assets.com/56652/1690268972-02-total-public-debt-as-percent-of-gdp.jpg?auto=format) The U.S. govern­ment debt-to-ratio currently sits at 127%, levels not seen since WWII. When a govern­ment becomes highly indebted, like the US is today, the debt becomes a drag on economic growth. High debt levels require the govern­ment to service the interest payments of the deficit with a greater percentage of the tax receipts instead of reinvesting those funds in the economy.  To avoid this stagna­tion in growth, histor­i­cally govern­ments have utilized a few methods to overcome an enormous debt burden: 1. **Austerity measures** — cutting govern­ment programs and benefits. 2. **Defaulting on the debt or restruc­turing it** — not paying the debt back. 3. **Inflating the debt away in real terms** — printing money. The first two courses of action are extremely unlikely given the economic and polit­ical landscape the US finds itself in today. Politi­cians continue to spend money vigor­ously with no signs of slowing. A default on the debt would cause catastrophic bankrupt­cies throughout the highly lever­aged global economy. This leaves the only remaining option to drive interest rates lower while simul­ta­ne­ously letting infla­tion run hot. By keeping interest rates low, the Treasury’s borrowing costs stay down. The low rates also stimu­late borrowing across the economy. This results in increased infla­tion and allows nominal growth to accel­erate while reducing the real cost of the debt. By suppressing interest rates below the rate of infla­tion, the total debt is eroded in real terms. This is known as finan­cial repres­sion and is a tactic the Fed has utilized when US debt-to-GDP ratios have gotten this high. Let’s take a trip back in time. ### A Lesson From History World War II was expen­sive. In 1942 the US Govern­ment essen­tially abandoned its monetary policy goals and spent large amounts of money to pay for the war. After the war, soldiers were returning home, and policy­makers feared that we were headed for another depres­sion. As a result, govern­ment officials deployed stimu­la­tive fiscal and monetary policies, and by 1945, public debt exploded to 110% of GDP, as shown below. ![](https://www.datocms-assets.com/56652/1690269147-03-us-public-debt-as-percent-of-gdp.jpg?auto=format) This surge in debt-financed federal spending caused a rise in infla­tion, similar to what we’re seeing today from the fiscal stimulus for the Covid-19 recovery. Yet instead of responding to this rise in infla­tion by raising interest rates in 1942, the Fed imple­mented a strategy known as Yield Curve Control (YCC). With YCC, the Fed pegged short-term bills at 0.38% and long-term govern­ment bonds at 2.5%, meaning that if long-term rates rose past 2.5%, they would agree to buy bonds with lower yield until the rates fell below the threshold. They did this so that accurate interest rates would be profoundly negative and the debt would become a smaller percentage of the overall economy as the economy grew in nominal terms. This shrunk the debt-to-GDP ratio. In the previous chart, the green arrow shows how this strategy succeeded. The debt was never paid down, but infla­tion nearly cut the debt-to-GDP ratio in half from 1946 – 1955. Without a rise in interest rates from the Fed, infla­tion ran hot in the 1940s. Annual infla­tion from 1942 – 1951 was an average of 5.8%, and in March 1947, it surged to a high of 20.1%. This caused the real yield of bonds to be deeply negative over that period of time shown below. ![](https://www.datocms-assets.com/56652/1690269210-04-history-of-debt-and-negative-rates.jpg?auto=format) This ultimately resulted in the loss of purchasing power for bondholders during the post-WWII era, as shown in the following chart. ![](https://www.datocms-assets.com/56652/1690269359-05-10000-invested-in-10-year-treasury.jpg?auto=format) As you can see from the chart above, 10-year Treasury investors received all of their principal plus interest in nominal terms, but this was not nearly enough to keep up with the high rates of infla­tion. As a result, 10-year Treasury bondholders lost nearly 30% of their purchasing power in the decade following 1942. Bond investors were the big losers post WWII, under­per­forming nearly every other asset class between 1942 – 1952. **When consid­ering our current debt problems and the Fed’s recent policy choices, it’s hard not to feel like history is repeating itself for bond investors.** ### Back to the Present: Different Times, Same Playbook Similar to World War II, we recently saw the Fed and Treasury deploy extremely stimu­la­tive policies to fight the Covid-19 pandemic. A few months ago, the Fed announced one of the most significant changes to its monetary policy in recent memory. Chairman Jerome Powell declared that the Fed will change how they target infla­tion. Instead of targeting 2% infla­tion, they will now target an average of 2%. They will allow the infla­tion rate to run hotter before hiking interest rates. ***"(The Fed) seeks to achieve infla­tion that averages 2 percent over time, and there­fore judges that, following periods when infla­tion has been running persis­tently below 2 percent, appro­priate monetary policy will likely aim to achieve infla­tion moder­ately above 2 percent for some time.”*** - Federal Reserve State­ment on Longer-Run Goals and Monetary Policy Strategy amended effec­tive August 27, 2020 The Fed may be giving us their playbook here if we read carefully between the lines. They are explic­itly saying that they will allow infla­tion to run hot *“for some time”* by not raising interest rates or reducing their bond purchases. They will continue to suppress the rates even if infla­tion is high. This keeps the borrowing costs low for the Treasury Depart­ment allowing the spending spree to continue. This is the WWII playbook, but instead of calling it Yield Curve Control, we see massive bond purchasing programs under a different name yet with the same outcome— the reduc­tion of govern­ment debt as a percentage of GDP through infla­tion. As before, this comes at the expense of savers and bondholders. The Fed achieves keeping interest rates low through their bond purchasing programs, better known as Quanti­ta­tive Easing (QE). Simply put, the Fed purchases US govern­ment bonds to keep the interest rates low. Since bond prices and interest rates move opposite one another when the Fed buys bonds, bond prices rise, and yields fall. ![](https://www.datocms-assets.com/56652/1690269588-06-central-bank-qe-purchases-1.jpg?auto=format) The Fed continues to purchase $120 billion dollars worth of bonds every month to push bond yields lower. This equates to **$834 million dollars worth of bonds purchased every hour** for 18 months straight. The QE programs have accel­er­ated this trend in recent years, with the Fed doing every­thing in its power to keep rates low. As a result of this bond-buying spree, the Fed has now taken interest rates down to the lowest in 5,000 years. ![](https://www.datocms-assets.com/56652/1690269679-07-lowest-interest-rates.jpg?auto=format) Infla­tion is now at the highest level we’ve seen in decades (CPI remained at 5.4% YoY in July). The Fed continues to suppress interest rates, which are now at the lowest levels in recorded history. Unsurprisingly, we are seeing bond investors bear the brunt of this infla­tion in real terms. With all this in mind, let’s look at how bonds perform in today’s environment. Negative-yielding global bonds across the globe are at an all-time record exceeding $18 trillion. ![](https://www.datocms-assets.com/56652/1690269733-08-less-than-zero.jpg?auto=format) More and more bond investors are paying to lend out their own money and are taking a negative return on their principal when the bond matures. With negative-yielding bonds, they are giving up that principal protec­tion that made bonds an attrac­tive invest­ment in the first place. The 10-year Treasury real yield, adjusted for infla­tion, is at ‑4.125%, the lowest recorded yield since the early 1980s. ![](https://www.datocms-assets.com/56652/1690269786-09-real-10-year-treasury-yield.jpg?auto=format) The *“risk-free”* 10 yr Treasury isn’t looking that risk-free at all. At the current infla­tion rate, the owner of these bonds will lose 20.6% of their purchasing power in 5 years. Even corpo­rate high yield bonds, the riskiest type of corpo­rate bonds, and there­fore the highest yielding, crossed into negative real terri­tory for the first time in history in July. ![](https://www.datocms-assets.com/56652/1690269868-10-85-percent-of-us-hy-currently-yields-below-us-cpi.jpg?auto=format) Even 85% of the U.S. junk bond market, the riskiest type of corpo­rate bonds, and there­fore the highest yielding, has crossed into negative territory. ### Taper or No Taper: But Do They Really Have a Choice? From what we recog­nize about the history of highly indebted countries, it appears the Fed is achieving what it planned. They wanted higher infla­tion, and they got it. When taking into account history, it could be argued that the Fed has an incen­tive to keep its interest rates low in order to liqui­date its debt in real terms. As Charlie Munger famously said, ***“Show me the incen­tives, and I will show you the outcome.”*** When the Fed is incen­tivized to keep rates low and infla­tion high, we should not be surprised at the outcome we are seeing play out before us. The question then becomes, “***When will the Fed reduce its bond purchasing programs or taper in response to the infla­tion numbers?”*** This past Friday at the Jackson Hole Economic Policy Sympo­sium, Fed Chairman Powell hinted that tapering may come as early as the end of 2021 but will continue its bond purchasing program until the appro­priate condi­tions are met. ***"We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches condi­tions consis­tent with maximum employ­ment, and infla­tion has reached 2 percent and is on track to moder­ately exceed 2 percent for some time.”*** - Jerome Powell, August 27, 2021 The Fed is making it clear that they won’t be tapering unless they are 100% certain they can do so without causing an imped­i­ment to the economic recovery. Yet when we look at the Fed’s track record over the last 10 years, every single time they have tried to taper their bond programs, it has resulted in market chaos and a quick return to more QE at the first signs of trouble. Take a look at the chart below: ![](https://www.datocms-assets.com/56652/1690270044-11-history-of-fed-tapers.jpg?auto=format) This chart shows how every previous taper attempt has led to even more Fed bond purchasing down the road. With debt levels higher today than in the last decade, it is reason­able to conclude that the Fed will have difficulty tapering its QE programs. Further­more, if they do taper and markets start to fall, the Fed will be quick to restart their bond purchases once again. Thus, we can expect the finan­cial repres­sion of bond investors to continue. ### How to Deal With This Econo­mist Jim Grant said it best when he described bonds today as *“reward-free risk.”* If the Fed decides to taper in response to infla­tion, then bond prices will fall as interest rates rise. If bond rates fall to around zero or even go negative, then investors are essen­tially paying to lend their money and/or are receiving little income in the form of interest payments. If bond rates remain where they are, below the rate of infla­tion, then bondholders will lose purchasing power in real terms. This is the lose-lose-lose situa­tion that bondholders find themselves in today. So what can be done about it? In periods of high infla­tion, it is prudent for investors to consider divesting from assets like bonds that lose value in such environ­ments. They are better off instead allocating hard assets that are scarce. Today, that’s things like real estate, commodi­ties, and Bitcoin. Bitcoin has all the charac­ter­is­tics of an infla­tion hedge, given its fixed supply of 21 million BTC. This hedging charac­ter­istic of Bitcoin is evident when you look at the chart below, which shows a corre­la­tion between Bitcoin’s price and real yields. ![](https://www.datocms-assets.com/56652/1690270185-12-bitcoin-price-and-real-interest-rates.jpg?auto=format) As the real yield becomes even more negative, Bitcoin’s price rises. This is a loud signal that Bitcoin could make an excellent addition to a tradi­tional portfolio as an infla­tion hedge. Bitcoin has returned on average 155% every year, over the last 5 years, well above the current rate of infla­tion. With this return profile, even a small Bitcoin alloca­tion can make a world of differ­ence for a typical bond investor’s portfolio to hedge against inflation. ### Summary Bonds need to be viewed through the lens of the world we’re in today, not what they used to be. We find ourselves in an extra­or­di­nary time of histor­i­cally low rates and rapidly rising infla­tion. The fact is that bonds are not as safe today as they are marketed to be. It’s time bond investors begin to protect themselves against the Fed policies leading to erosion of the real value of their bond holdings. They can do so by divesting a portion of their bond holdings into infla­tionary hedges such as Bitcoin. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: The Bear Market King - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/bitcoin-the-bear-market-king/ A new crop of altcoins emerges with each Bitcoin bull cycle. Yet, they inevitably meet the same fate. By illuminating this cyclical trend, we can steer the public away from the risky gamble of altcoins. --- August 10, 2023 · Updated July 3, 2024 ### Analyses of Bitcoin’s Performance vs. Altcoins from Sam Callahan, Jimmy Song, Brad Mills, and Rapha Zagury Bear markets are often likened to a harsh winter, mercilessly laying bare the survivability of all players in the game. When it comes to the broader cryptocurrency industry, bear markets are when Bitcoin, the only real player in the game, always shows its strength. With every bear market, Bitcoin typically shines. At the same time, the other highly speculative altcoins fall to the wayside as investors realize that only Bitcoin has a unique value proposition that provides it with the lasting power all others lack. Back in June of last year, Swan CEO Cory Klippsten and [Lead Analyst Sam Callahan observed](https://www.swanbitcoin.com/bitcoin-vs-altcoins/) and showed in charts how altcoins tended to rise with the tide during bull markets but then crashed heavily during bear markets, never to return to their previous all-time highs against Bitcoin in subsequent cycles. ### Since Its Inception, Bitcoin Has Remained the Top Dog Across Bitcoin’s history, we’ve seen three major bull markets. During each of these runs, a multitude of centralized cryptocurrencies surfaced, promoted with promises of astronomical returns. They claimed their tokens were technologically superior to Bitcoin, captivating naive/gullible retail investors with their false claims. The result? A massive wave of speculation and excitement ensued as these investors were convinced they were buying the *“next Bitcoin”* early. However, reality tells a different tale. These altcoins became fleeting shooting stars; they burned bright in bull markets and then faded away, their sparks unable to ignite lasting interest. Why? Simply because they lack Bitcoin’s unique characteristics and value proposition. Unable to recapture the imagination of investors and lacking any real value or utility, a vast majority of these altcoins disappeared into obscurity or irrelevance, only to be replaced by new cryptocurrencies during the next Bitcoin bull market. Let’s pause for a moment and ponder over this nugget of wisdom from investor Howard Marks: > "Rule No. 1: Most things will prove to be cyclical. Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1." True to this quote, each Bitcoin cycle exposes altcoins for what they truly are – nothing more than volatile, inferior imitations of Bitcoin that surge quickly during favorable times, attempting to capitalize off of Bitcoin’s success, and then tumble just as fast when the tide turns, causing great financial loss to the investors who hold onto them long-term. But the bear market isn’t all doom and gloom. It offers a golden opportunity for investors to learn about how Bitcoin is different and why it manages to retain its value over multiple cycles as other cryptocurrencies collapse, never to recover. It also allows investors to scoop up cheap bitcoin at bargain prices once they understand this differentiation. This cyclical trend becomes crystal clear when one watches this fantastic animation that shows how the top 15 cryptocurrencies by market capitalization have fluctuated over the years, while Bitcoin has remained steadfast in the number one spot. Here are some historical snapshots to drive this point home further. Bitcoin has staying power, while other cryptocurrencies rarely survive multiple cycles. ![](https://www.datocms-assets.com/56652/1690202784-june-2013.png?auto=format) ![](https://www.datocms-assets.com/56652/1690202810-june-15th.png?auto=format) ![](https://www.datocms-assets.com/56652/1690202836-june-2017.png?auto=format) ![](https://www.datocms-assets.com/56652/1690202860-june-2019.png?auto=format) ![](https://www.datocms-assets.com/56652/1690202888-june-2021.png?auto=format) ![](https://www.datocms-assets.com/56652/1690202916-june-2023.png?auto=format) As you can see, whereas Bitcoin maintains its value over time, other cryptocurrencies rise and fall with each cycle. ### Bitcoin Outperformed Over 96% of Altcoins in This Cycle Bitcoin OG Jimmy Song recently ran some numbers and showed some more evidence of this trend when he revealed that only 7 tokens out of the top 200 coins in 2018 had a positive return when priced in satoshis since then. In other words, Bitcoin outperformed 96.5% of altcoins in that timeframe. Over the past year, we have seen this pattern continue to play out. During this bear market, Bitcoin has outperformed, while many of these altcoins are down massively from their all-time highs. ![](https://www.datocms-assets.com/56652/1690203087-jimmy-song-top-performers.png?auto=format) ### Bitcoin Delivered Over Double the Returns of All Other Cryptos Combined Since This Cycle’s Bottom Bitcoin investor, Brad Mills, created a Tradingview indicator that tracked the total market capitalization of the broader cryptocurrency industry (minus major stablecoins and Wrapped Bitcoin) to investigate how altcoins have performed compared to Bitcoin since the bottom in late 2022. ![](https://www.datocms-assets.com/56652/1690203632-total-2.png?auto=format) # The Bitcoin Breakthrough - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-bitcoin-breakthrough/ The changes Bitcoin will bring about to society will be significant. --- **Tomer Strolight** · July 27, 2023 · Updated June 27, 2024 ### The Bitcoin Breakthrough Bitcoin is a breakthrough. It breaks through barriers and dead ends that many of the most important institutions in our civilization find themselves facing. It finds paths through to the other side of problems that were thought to have no solution – problems that we thought we simply must live with as a part of life. But this is the very nature of what breakthroughs do. They create a tremendous runway for all kinds of progress, not just in the fields they directly affect but in almost everything that touches those fields. And the fields that Bitcoin represents a breakthrough in touch almost everything. ### Breakthroughs Take Time To Realize Their Potential In the early days of a breakthrough, it is often hard to understand it, predict its outcomes, or even recognize that it is a breakthrough at all. But history shows there is no stopping a breakthrough whose time has come. When such a dramatic breakthrough occurs, it takes time for civilization to come through to the other side and become undeniably transformed by that breakthrough. ### Preparing Our Minds By Looking at a Previous Breakthrough Let us consider the mass-produced automobile pioneered by Henry Ford. When the breakthrough of mass-assembled, personal transportation machines relying on oil as their energy source occurred, very few people foresaw that it would lead to the end of horses being used as the primary transportation method. Far fewer envisioned the total transformation of cities, homes, work, and nearly every aspect of human life that would result from this breakthrough invention. Nations that failed to adopt the automobile (and oil as its source of motive power), whatever their reason, fell far behind those that did. As cars became more abundant and advanced, criticism of their dangers and threats did not discourage their use. In fact, it only led to adaptations that made them safer, cleaner, more reliable, and ultimately, more widely adopted and more transformative upon our civilization. Back at the time of the automobile’s invention, there were few roads suitable for them, leading many people to criticize the invention as impractical. Today, our nation is paved with millions of miles of roadways optimized for automobiles — not horses, bicycles, and pedestrians. In short, there was no stopping this thing once it got started, and not getting on board meant being left behind in a world transformed by this breakthrough. Just try to imagine what life would be like if the automobile breakthrough had not succeeded. Living without clean, fast, affordable, and accessible travel seems unimaginably primitive to us. But a life with horses as the main transportation source did not seem primitive to those who lived in the era where that was the case – an era that lasted thousands of years. However, once the car came along, despite the early days being challenging for its early adopters, the die was cast, and the sun set on the long age of the horse and buggy, only to rise again on the age of the automobile The horse population of the United States peaked at roughly 27.5 million horses in 1910. It then fell by 84% to below 4.5 million horses by 1959. Meanwhile, there are now over 278 million registered automobiles in the US – more than ten times the population of horses at their peak. The legacy of horses lives on in the technological breakthrough that replaced them. We still refer to the energetic power of our automobiles in horsepower – how many horses’ strength we can magically muster up simply by pressing down on the right gas pedal of our cars. But there are no horses powering cars. Horsepower is just a mathematical equivalency, and what is really going on inside our cars’ engines is something most of us don’t understand nor need to. We can muster up the power of hundreds of horses without the effort of caring for a single one. Of course, not everything is better because of the car. There are many people who long for simpler times and simpler lives that the automobile breakthrough wiped away. We can’t return to those days or recover what was lost by abandoning the automobile, though, but perhaps another breakthrough might guide us in that direction... ### Bitcoin is Also a Breakthrough Bitcoin represents breakthroughs in at least several fields. ### A Breakthrough In Money First, and quite obviously, Bitcoin is a breakthrough in what money is. Bitcoin is engineered money – engineered for personal use and personal benefit. Just as the automobile was an engineered form of personal transportation replacing both the horse (a natural form of personal transportation) and steam-powered locomotives (engineered but not personal transportation), Bitcoin stands to replace forms of money it renders primitive. Bitcoin replaces gold, a natural form of money that has been widely abandoned in all monetary use cases except for store-of-value. Just as the horse was a suitable form of transportation until engineered replacements started to come along, Bitcoin is largely superior to gold in every attribute of money and the overall combined whole of the thing itself. Bitcoin is more easily divisible and verifiable than gold. It is precisely scarce, and its scarcity is knowable and provable to all. Bitcoin can be backed up. It can be programmed. Bitcoin is not just lighter than gold; it’s weightless. Bitcoin can be secured and stored in ways gold cannot – ways that make it nearly impossible to steal or seize with brute force. Those who genuinely long for a return to a sound money standard because they understand some of the ravages of what has been lost to our modern civilization through unsound money, and who are not merely romantically (or financially) attached to gold, are among the first to see Bitcoin’s tremendous breakthrough potential. Bitcoin also replaces fiat money, a man-made invention that does a great disservice to ordinary persons, especially when the powers it grants to those in control are abused. Fiat money inflates away people’s ability to save money, making them vulnerable to governments’ incompetence and corruption. It also makes many people, if not all in reality, dependent on government influence or control for the provision of crucial services such as healthcare, education, self-defense, and even food and shelter. The breakthrough in money that Bitcoin represents is such a tremendous leap that it leaves many in disbelief. The same was true of the automobile, which in the early days was often called a 'horse-less carriage' and left people scratching their heads as to how a carriage could move without a horse to draw it, or what the advantages of such an invention would be. Bitcoin is a 'government-less money', which for many, is even more difficult to imagine. ### A Breakthrough in Government This is perhaps the area where, in the long term, Bitcoin will have the most dramatic impact on our lives. Bitcoin is a liberating technology that will have a huge impact in reshaping, for the better, governments. This is because governments have themselves been reshaped by government monopolization of money, or as it is now commonly called, by fiat money. Just as the automobile reshaped transportation, so too has fiat money reshaped government. But in the case of fiat, it has not been for the better. In times before fiat, it was practically unheard of to hear politicians making promises to provide services they could not afford to provide with money they did not have. Instead, they often warned against making such things possible. - George Washington, in his farewell address, said: > "... disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors turns this disposition to the purpose of his own elevation on the ruins of public liberty.“ When the government took over money completely in 1971, the nature of the government itself changed. Spending money through deficits that would never be repaid and winning elections by promising to spend that money represented a breakthrough, albeit one with negative consequences outweighing the positive ones. It was a breakthrough of inflation, deficits, and the destruction of honesty in money. Just take a look at the long-term chart of deficits below. Even the deficits incurred in World War 2 in the mid-1940s are microscopic compared to what they snowballed since 1971. ![](https://www.datocms-assets.com/56652/1690211057-federal-surplius-or-deficit.png?auto=format) It only took five years of fiat money existing to pile up deficits larger than were necessary to fight and win the biggest and worst war in the history of the world – a war that took tens of millions of lives and whose victory required figuring out how to split the atom to invent the atom bomb. Today, deficits twenty-five or fifty times the size of the WWII deficits are commonplace. Unlike fiat, Bitcoin is money that cannot be effortlessly conjured up in wildly increasing quantities – even by governments. In fact, its supply and issuance schedule forever, is restricted to a publicly known and easily verifiable quantity. Moreover, the issuance is distributed not through political favor and power. Rather, it is issued to those who expend energy to earn that supply in a process that uses that expended energy to secure the previously issued and spent coins. This is so fundamentally different from the government-monopolized, energy-free production of fiat money, that when they first are made aware of it, many people immediately conclude that governments will therefore stop Bitcoin or outlaw it. It is amazing what such a statement reveals about what many people generally believe about government at this time in history. It demonstrates that people today implicitly accept that governments can and will dictate what money is, how much there will be, and who shall have it. But this was not true for thousands of years and will likely not be true for that many more either. This mistaken belief – this misbelief – is very understandable and excusable. We have all grown up in a world of government-issued money and, not coincidentally, a world of growing government power to dictate many things through its power to direct money towards some things and away from others. Perhaps it is more accurate to describe the more subtle method that has been used – directing floods of money towards some things and only trickles of money towards others. So it is not surprising that many people cannot envision a world where money is not something that the government issues, borrows, prints, taxes, and even freezes. Nevertheless, let’s recall that it being difficult for many people to imagine a carriage that moved without a horse did nothing to prevent automobiles from actually moving. Likewise, being difficult to imagine money that is not in the control of the government does not prevent Bitcoin from being outside of the control of the government, which it is. It might be useful to pause for a second here and revisit an earlier claim in this article, which stated that the government completely took over money. Perhaps it is equally accurate to say that money completely took over the government. Or perhaps it is most accurate to say that government and money became one and the same. Today, most of what we hear from politicians is about money, not political principles. So Bitcoin is then not just a breakthrough in money. It is a breakthrough in government itself. This may not be immediately obvious, but when one thinks about the link between money and government, one quickly realizes that a revolution in money must mean some kind of revolution in government since the two are inextricably linked today. Today’s democracies function on politicians getting elected by promising benefits that need to be paid for with money. And that money comes from a combination of taxation, borrowing, and issuing new money. In reality, it mostly comes down to issuing new money, as the debts only keep growing and are never paid down, and furthermore require their interest to be serviced with more newly issued money. Imagine what a revolution it would be if politicians couldn’t credibly promise to spend money the government doesn’t actually have and can neither seize nor print. What platforms would they even run on? Again, we find it hard to imagine because all we see today is the opposite. Politicians today are very powerful people - ordering entire industries to change how they operate, sitting atop large, nationalized, or highly-regulated industries, and handing out and withdrawing financial benefits to and from the masses. What if politicians were instead merely administrators of functions deemed necessary for the essential functions of government? What if they were evaluated and elected on their actual competence at these duties and not on the outlandish promises they made? Might not the field of politics attract radically different types of people to run for office? Might their campaigns rely on things other than dividing the population on the grounds of who should have their wealth taken away and who should be given wealth? Might many things which have become politicized and controversial simply become private matters between the people they involve? Might this not reduce our overall level of distress and anxiety as we then can judge a politician only on matters of proper government domain and not on every opinion they hold about every single issue that can be politicized because money can be spent on those issues through government decrees? The revolution in government that Bitcoin represents is that of putting the government back into a box it properly belongs in. At the end of World War 2, the West (and the rest of the world) was shocked by the evils committed by totalitarian governments in industrialized nations. *“Never again”* was one refrain that came out of it. More than seventy years later, however, a view that government can and should fix totally everything is becoming more pervasive leading to a growing threat of totalitarianism’s return. Even in the West, laws are regularly being passed that compromise freedoms, enlarge government surveillance and power, and move us all closer toward totalitarianism. Meanwhile, the promises of enlarging the government to bring us prosperity or security succeed only in enlarging the government. Government and money were fused into one single thing in 1971, with terrible consequences. Bitcoin’s breakthrough is that it divorces money from the government, ending this dysfunctional union and allowing both money and government to function properly once more. These two things should not be one. They need to be separated. And Bitcoin single-handedly and unilaterally is a rebirth of money outside the control of the government, never to be reunited. This will end the government’s co-dependence on power over money and restore it to healthy and proper function. This, of course, takes time. It took forty-five years from the launch of the Ford Model T until the first interstate highway was built. Just as we could not know how long it would take for automobiles to replace horses, we cannot know how long it will take for Bitcoin to replace fiat money. But the breakthrough is now underway, and Bitcoin is now even a talking point for many candidates campaigning for president. The breakthrough is afoot. ### A Breakthrough in Energy So much has been said about Bitcoin’s ties to energy that we can not avoid asking the question of whether Bitcoin is itself a breakthrough in our relationship with energy. Once again, drawing on the breakthrough that was the automobile, we can see that it (along with the energy-fueled industrial revolution) played a huge role in leading our civilization toward massive production, utilization, and energy dependence. Horses needed hay. The automobile required oil and gas. An undeniable breakthrough occurred between coal's use for heating and operating steam engines and gasoline to power automobiles and their internal combustion engines. With these highly scalable technologies, the population, life expectancy, and wealth of humanity skyrocketed. Life expectancy more than doubled. The human population of the planet increased sevenfold, and GDP per person also increased more than sevenfold from the levels they had been at for thousands of years. ![](https://www.datocms-assets.com/56652/1690211979-life-expectancy-population-gdp-per.png?auto=format) The more energy we were able to extract, store, generate, and distribute, the more we found we could do with it. However, we now find ourselves at a time when the previous breakthrough appears to be plateauing. Life expectancy is flattening out, and real GDP per person is too. The global reserve fiat currency of our day, the U.S. dollar, is often referred to as the petro-dollar, emphasizing its connection to petroleum-based energy. This stuff feeds cars (and ships, trains, trucks, etc...). This petro-dollar regime had been fuelled by the need to ship petroleum from areas where it was abundant, such as the Middle East, to areas where demand was greatest, such as the United States and Western Europe. But today, much of this is changing. Technological advancements in shale oil and alternative energy sources, as well as political movements aiming to restrict the use of fossil fuels like petroleum, are front and centre in energy. So is Bitcoin a breakthrough in energy? If it is, what kind of breakthrough? Although we are still in the early days, we already see one emergent application of Bitcoin’s relationship to energy production. It appears Bitcoin could completely turn the tables on the economics of how energy infrastructure is built. Although the explanation that follows is somewhat of an oversimplification, it does accurately describe the fundamental change that the existence of Bitcoin mining may make possible. Before Bitcoin mining, the broad infrastructure for generating electricity was to build out two types of generating facilities. The first, baseload power, uses technologies that generate a steady amount of power. These are technologies such as hydroelectric and nuclear. They are often referred to as base loads because they provide the load of electricity that is continually demanded. But electricity demand isn’t flat. It changes during different parts of the day, during different days of the week, and over the seasons. So, in addition to baseload power, we need sources of electricity that can be variably turned up and down to meet peak demand. These are technologies like gas and coal. For example, when it gets hot, and everyone needs to turn on their air conditioners, we can fire up a gas plant to generate the electricity needed until things cool down again. Finally, there are solar and wind, which are touted as renewables. However, these both have the drawback that they are neither reliable base loads nor reliable peak loads because the sun doesn’t always shine and the wind doesn’t always blow. Because of this inherent fact, they neither deliver a steady amount of power always nor can they be fired up at will when energy is needed. Using these latter two sources often creates undesired and unpredictable spikes or shortfalls in energy production. The problem of balancing this electricity production exists because electricity must be consumed as it is generated – no batteries are capable of storing surpluses of energy the size of a city. If too little is produced, we have brownouts. If too much is produced, we get transformer explosions and fires. Bitcoin mining fixes all of this. Bitcoin mining is an unquentiable demander for electricity. It allows for building out base load facilities whose production actually exceeds the minimum load, with the knowledge that the excess energy can be consumed by Bitcoin mining, thus stabilizing the demand and using the excess for generating income and securing Bitcoin itself. Fortunately, reliable, baseload technologies of hydro and nuclear are both safe and clean technologies that produce no carbon emissions. In contrast, the peak load plants are the very ones that are under pressure to be shut down because of their emissions. Moreover, as Bitcoin’s demand for electricity is perfectly elastic, both wind and solar can be built without the worry that they may overload the grid because it’s too sunny or windy at times. The positive feedback loop of Bitcoin mining adds to the financial case for building more base load and renewable energy sources could then lead to such a change in the composition of our energy infrastructure, resolving the dilemma currently faced. That’s just the tip of what we might expect, but again, we can see that Bitcoin is potential breakthrough technology in allowing us to build out cleaner and renewable energy sources because it could eliminate the tradeoff of having to rely on fossil fuels for peak power supply. ### A Breakthrough in Finance If Bitcoin is a breakthrough in money, it is bound to be a breakthrough in the industry of money that we call finance. One of the sad effects of fiat money has been the financialization of many things.  Financialization is just another way of saying that the finance industry has gotten deeply enmeshed in these other industries. Do you want a home? You have to finance it. Do you want a college degree? You have to finance it. Do you want to start a business? You have to get it financed to compete with people who are getting their businesses financed. Everything needs financing. But this financialization is actually an artifact of money that can be created out of thin air to finance everything financiers think they can get a return on. Under a fiat monetary system, financialization is another form of inflation – it is financiers creating money and then creating a need for that money to be able to access resources like housing, education, and operating a business. If the ability to inflate the money supply for these things did not exist, they would simply be provided without the added premium of financialization. We wouldn’t get housing bubbles, trillions of dollars of unrepayable student debt, or the destruction of small businesses that cannot access the kind of financing big businesses can. It’s really that simple. And Bitcoin eliminates the ability to inflate the money supply for financialization. ### A Breakthrough in Personal Lifestyle Finally, Bitcoin also affects us personally. Bitcoin requires that we take personal responsibility for the functioning of the monetary system and for our own storage and security of our money. It is a big part of the Bitcoin journey to experience what it means to custody money for oneself – to learn how to save it, store it, use it, and have to work for it. A pseudonymous Bitcoiner, going by the name Gunnar, wrote: > "When people are forced to take responsibility for their own actions, the production of goods and services will have to focus on quality, beauty, and durability. People saving in Bitcoin will simply refuse to give up their hard-earned time savings for junk." Many others have said similar things. Bitcoin is scarce and precious, and hodlers think very hard about what they are prepared to accept in exchange for parting with it. This is radically different from how we think about money that is easy to come by, can be borrowed easily, and loses its purchasing power – all leading us to want to spend it on nearly anything at all. ### Conclusion We are at the dawn of a breakthrough. In time, this breakthrough will change everything. It’s hard to predict the precise nature of those changes or how long they may take because those all depend on the combined creativity of all humanity to apply this breakthrough. However, just like the automobile represented a breakthrough that changed many aspects of our way of life that had been the same for thousands of years, rendering them primitive, we can expect the changes Bitcoin will bring about to be just as significant. The eventual changes will be historic, but to butcher, a common expression, don’t hold on to your horses. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Bitcoin Platform for Financial Advisors - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/the-bitcoin-platform-for-financial-advisors/ Swan Advisor Services Tailors Swan’s best in purchase and custody platform to the needs of financial advisors and wealth managers. --- **Cory Klippsten** · October 6, 2021 · Updated June 6, 2024 Bitcoin’s global adoption has been breath­taking since its intro­duc­tion in late 2008. What started as a blueprint for a peer-to-peer digital money has evolved into an asset with a trillion dollar market capital­iza­tion. External attacks, dismissal from legacy insti­tu­tions, and extreme volatility have been hallmarks of Bitcoin’s emergence into the mainstream conscious­ness. Despite constant adver­sity, the Bitcoin network has surpassed all but five sover­eign curren­cies in terms of dollar value, firmly claiming its spot as a legit­i­mate monetary asset on the global stage. The question now becomes, as a fiduciary, how do I safely and securely incor­po­rate Bitcoin into my clients’ portfolios? ![](https://www.datocms-assets.com/56652/1690270521-e9zismswyamo-cf.jpeg?auto=format) A July 2021 [survey](https://www.wsj.com/articles/thinking-about-adding-crypto-to-your-portfolio-read-this-first-11627413586) published by the Wall Street Journal indicates that 14% of finan­cial advisors use or recom­mend cryptocur­ren­cies. This figure is up from 1% from the same survey conducted in 2020.  To date, it’s been hard for those in the industry who have embraced Bitcoin to plug the asset into their day-to-day client reporting and portfolio manage­ment tools. It should be easier for finan­cial advisors to help their clients buy and hold Bitcoin directly and maintain that position within their fiduciary relation­ship. That’s why we are building Swan Advisor Services.  At Swan, we have chosen to build a Bitcoin-only business because Bitcoin is the only cryptoasset that truly is a respon­sible long-term invest­ment. That deep focus gives our advisor partners signif­i­cant advan­tages, as we extend your team with deep exper­tise, educa­tional infra­struc­ture, and world-class client services. Swan Advisor Services tailors Swan’s best-in-class purchase and custody platform to the needs of finan­cial advisors and wealth managers. It wraps the company’s core purchase, custody and client support functions within a layer of account manage­ment, reporting and analytics to give you clear visibility into your clients’ Bitcoin positions. Swan’s team of Bitcoin experts stands ready to partner with advisors as you get your clients up to speed on this emerging asset class. You can rely on Swan’s educa­tional and service exper­tise to educate and answer client questions about Bitcoin. We’re here to be your Bitcoin partner so you can focus on relation­ship building. Bitcoin repre­sents a rare asymmetric risk-return oppor­tu­nity that could be a corner­stone of wealth creation for decades to come. Swan Advisor Services is the key tool your firm needs to capture the growth of the asset class and make it action­able in driving fee revenue.  There are exciting devel­op­ments in the works and we can’t wait to share more details with you. In the meantime, [sign up](http://swanbitcoin.com/advisor) to get priority access to[ Swan Advisor Services.](http://swanbitcoin.com/advisor)  ![](https://www.datocms-assets.com/56652/1690270613-frame-2.png?auto=format) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Why I’m Driven to Build Swan Advisor Services URL: https://www.swanbitcoin.com/investing/why-im-driven-to-build-swan-advisor-services-andrewedstrom/ We will deliver the industry’s best education team to advisors so that when clients are ready to withdraw Bitcoin to cold storage or engage in collaborative custody, they’ll be armed with the knowledge to do it safely. --- **Andy Edstrom CFA, CFP** · November 16, 2021 · Updated June 25, 2024 Two years ago I sent a copy of my book, [Why Buy Bitcoin](https://www.amazon.com/Why-Buy-Bitcoin-Investing-Tomorrow/dp/B08XQXD3DN/ref=tmm_aud_swatch_0?_encoding=UTF8&qid=&sr=), to the offices of Electric Solidus, Inc. I had recently heard of Cory Klipp­sten, and I was keen to share my thoughts with him on Bitcoin. Not long after that he invited me to join him at a lunch hosted by one of his venture capitalist friends at the Napa Valley Grille in Westwood. We sprayed that room of middle-aged VC investors bright orange. At coffee after­ward, he pitched me his idea for a new Bitcoin accumu­la­tion service. The defining feature? No sell button. Brilliant. After a few more conver­sa­tions, I was sold. I wrote a check to Swan in February 2020. Over the next year of evange­lizing Bitcoin to friends, family, and finan­cial advisors, I found myself mostly shouting into the void. Finan­cial advisors were still allergic to Bitcoin. The rally of late 2020 — early 2021 began to thaw the ice over the finan­cial advisor industry, but the Chinese mining exodus and lever­aged liqui­da­tion in May put a pause on Bitcoin adoption by finan­cial advisors. But here in late 2021, after a recent all-time high in the Bitcoin price and consumer price infla­tion running rampant, the case for Bitcoin as a crucial part of every investor’s portfolio has never been clearer. Finan­cial advisors are finally ready for Bitcoin. And I feel compelled to help Swan answer this call. [Swan Advisor Services](https://www.swanbitcoin.com/advisor/) is unique in two ways. First, it’s Bitcoin-only. Advisors who are focused on altcoins needn’t contact Swan. We don’t want their business. We want advisors who under­stand that Bitcoin is the thing. Second, Swan has the best Bitcoin educa­tion team in the business. With two team members who have published Bitcoin books — [Yan Pritzker](http://twitter.com/skwp) and [me](http://twitter.com/edstromandrew); three team members with forth­coming Bitcoin books — [Tomer Strolight](https://twitter.com/TomerStrolight), [Cory Klipp­sten](https://twitter.com/coryklippsten), and [Brady Swensen](https://twitter.com/CitizenBitcoin); three of the best podcasters in Bitcoin – [Stephan Livera](https://twitter.com/stephanlivera), [Brady Swensen](https://twitter.com/CitizenBitcoin), and [Camila Campton](https://twitter.com/camilacampton); excep­tional Bitcoin analysts, writers and creators – [Lyn Alden](https://twitter.com/LynAldenContact), [Brandon Quittem](https://twitter.com/Bquittem), and [Brekkie](https://twitter.com/BVBTC); and the most knowl­edge­able Bitcoin sales­force around, there is simply no other Bitcoin educa­tion team that compares to Swan’s.   Most compa­nies selling Bitcoin are putting coins into the hands of investors who look at Bitcoin as just another ticker on their computer screen. Swan is different. As with our retail Bitcoin saving product, we will be deliv­ering clients outright owned coins, not a wrapped Bitcoin finan­cial product. Moreover, we will be deliv­ering the industry’s best educa­tion team to advisors and their clients so that when they’re ready to withdraw their coins to cold storage or engage in collab­o­ra­tive custody, they’ll be armed with the knowl­edge to do so safely. For most clients, this step is likely years away. But we’re building for the long run. With a laser focus on Bitcoin, a long-term view, and the best team of Bitcoiners in the business, how can we lose? Help us build and launch Swan Advisor Services by getting in touch with us [here](https://www.swanbitcoin.com/advisor/). Together let’s build a Bitcoin solution that’s great for clients and great for Bitcoin. ### Andy Edstrom CFA, CFP Swan Advisor Andy Edstrom makes frequent appearances in financial and Bitcoin media outlets, including The Wall Street Journal, Forbes, The Economist, Bitcoin Magazine, Stephan Livera Podcast, and Tales from the Crypt. # What Happens to Bitcoin if the Internet Goes Down? URL: https://www.swanbitcoin.com/education/what-happens-to-bitcoin-if-the-internet-goes-down/ While the Internet is by far the most efficient system of communication for the Bitcoin network to use, it could continue on with the reduced speed and functionality on any communcations systems known to man. --- **Rigel Walshe** · November 21, 2021 · Updated July 3, 2024 Human beings grow up around tangible things. So it’s normal to find it strange to store your wealth in something you can’t see or touch. It’s also normal to be concerned that since you can’t touch Bitcoin or see it, maybe it can somehow be blocked or that it might just disap­pear altogether. Does Bitcoin live on the Internet, and if the Internet goes down, then does it just disappear? #### The Internet Itself Was Designed to Not Go Down: Even in the Event of Nuclear War To start, we should define what the *“internet going down”* actually means. Like Bitcoin, the Internet was designed for maximum surviv­ability. It has no center. Any computer in the world running the Internet’s proto­cols, which are themselves open-source software that can connect to any other computer doing the same thing, is ‘on the Internet.’ It may not have access to every other computer on the Internet, but it really isn’t possible for the whole Internet to go down unless no computer in the world is running at all. ![](https://www.datocms-assets.com/56652/1690271530-37-1-wp-rigil.png?auto=format) So when we talk about ‘the Internet going down,’ we usually refer to something quite a bit different. Broadly speaking, the spectrum of scenarios includes: - **Local Outages:** a power cut or other technical problem causing electricity, data trans­mis­sion or another critical service to go offline in a certain area until techni­cians can fix the problem;  - **Censor­ship:** internet censor­ship where a company or govern­ment blocks selected parts of the internet but allows others to continue as normal; or  - **Total Collapse:** some sort of unfore­see­able techno­log­ical problem that causes every single device in the world to go offline for an extended period of time.  ### Local Outages Local outages of Internet service happen all the time. You’ve probably had your Internet connec­tion ‘down’ for some time at some time in the past year. Or you may have experi­enced an outage of some service who themselves suffered some kind of tempo­rary outage, like when all of Facebook’s services went down for over six hours on October 4th, 2021. If an outage like this was widespread in your area, you might be very annoyed, and your access to all kinds of services might be disrupted, including access to your bank website, the Visa payments network, and more. This is, as you’ve come to know, temporary.  If you are experi­encing a local outage, your ability to spend your Bitcoins might be delayed until you can access the Internet again to transmit trans­ac­tions to the network. However, since Bitcoin is decen­tral­ized and runs all over the world, neither your ability to receive or store Bitcoin is impaired at all. Your stored Bitcoins remain stored and secure. And if you are signed up for regular recur­ring purchases to be sent to addresses you control, **even if you do not have access to the Internet, your addresses will continue to receive the bitcoin you’re purchasing**, which will then be avail­able to you to spend when you regain access to the Internet. **Assess­ment:** In the event of a local outage, you will be unable to spend your Bitcoin during the duration of a tempo­rary local outage until you regain access to the Internet, but your funds are safe, and you will still be able to receive Bitcoin even without access! In this sense, Bitcoin is more robust than Visa or your bank, in fact.  ### Censorship It is very hard, to the point of practi­cally impos­sible, to censor or shut down Bitcoin. Bitcoin was designed to be *“Censor­ship-resis­tant.”*  The only things that are trans­mitted across the Bitcoin network are plain strings of text that comprise its trans­ac­tions and blocks. Govern­ments in various parts of the world have attempted to shut down Bitcoin locally, but none have succeeded. A text message can, after all, be hidden by encryp­tion, concealed in a photo­graph, spoken aloud, turned into a stream of ones and zeros, and count­less other methods of concealment.  ![](https://www.datocms-assets.com/56652/1690271787-39-1.png?auto=format) Individual Bitcoin trans­ac­tions are just a few hundred bytes of infor­ma­tion, and a whole Bitcoin block is smaller than the size of a photo taken on a smart­phone. Being small and hard to identify (or easily conceal) makes censoring Bitcoin a hopeless task even for govern­ments with consid­er­able resources to attempt this.  Also, as soon as one steps outside the juris­dic­tion of any censor, they will be able to transact freely, with none of their savings having been affected by censor­ship at all since preventing someone from accessing the network does not in any way confis­cate those coins or make them unspend­able when service is restored. Finally, Bitcoin’s mecha­nism intended for payments, The Light­ning Network, is entirely encrypted and private. There is no way for any censor to even detect its usage, let alone prevent it. **Assess­ment:** Censor­ship of Bitcoin does not appear to be feasible. ### Total Collapse of the Internet In the event of a total collapse of the Internet, the Bitcoin blockchain, which is the ledger of who owns what would be unaffected. The blockchain resides on tens of thousands of individual computers dispersed worldwide. It is run by anyone who wants to run a Bitcoin full node. Several of these are in under­ground nuclear and EMP-proof bunkers. Running a full node requires nobody’s permis­sion and only needs about 500GB of disk space and around $200 worth of computer equip­ment. As long as one of these computers exists, your Bitcoin exists. An internet outage will not make your Bitcoins disappear.  Even if the Internet went down and stayed down, there are contin­gen­cies that Bitcoiners have planned for. Like with the censor­ship example above, there are ways around being unable to access even the Internet itself. It is possible to commu­ni­cate Bitcoin transactions: - [via long-distance radio](https://satoshi.radio.br/wp/) - [short-distance radio and cellular Bluetooth](https://twitter.com/CoinsureNZ/status/1052022462790033408)) - [satel­lite](https://bitcoinmagazine.com/guides/how-to-run-a-bitcoin-node-from-satellite) - [sms](https://rusnak.io/how-to-send-bitcoin-transactions-via-sms/) - [in person or via mail](https://opendime.com/) - even via smoke signals, paper messages, or writing trans­ac­tions and blocks on a billboard.  Unlike a credit card trans­ac­tion, there is nothing secret in a Bitcoin trans­ac­tion; any method that human beings can use to share infor­ma­tion can be used to share Bitcoin trans­ac­tions or network messages. While the Internet is by far the most efficient system of commu­ni­ca­tion for the Bitcoin network to use, it could continue on with reduced speed and function­ality on any commu­ni­ca­tions system known to man.  **Assess­ment:** Even if the Internet did go down perma­nently (which would destroy much of modern civiliza­tion), there would be ways to route around this obstacle and keep Bitcoin opera­tional since Bitcoin relies only on the trans­mis­sion of text, and we have been trans­mit­ting text for longer than the Internet has been around. ### Summary Bitcoin is designed for maximum surviv­ability, and so is the Internet. The Internet itself is extremely unlikely to go down perma­nently. Bitcoin is largely unaffected by tempo­rary local outages of Internet service — with the only loss of service to those affected by outages being a tempo­rary inability to spend their Bitcoin. Bitcoin cannot be censored because it relies only on simple text transfer of very small bursts of infor­ma­tion that can be easily concealed. Even in the event of a catastrophic and perma­nent shutdown of the Internet, there would be ways to continue to operate the Bitcoin network using less efficient text trans­mis­sion technolo­gies, including things like handwritten messages on paper. ### Rigel Walshe Rigel Walshe is a software developer at Swan Bitcoin. He has a background in law enforcement and adult education. Rigel also holds the record for the worlds longest distance offline Bitcoin transaction (12.6km). Originally from New Zealand he now lives in Latin America. # A Review: the Great Hash Rate Migration of 2021 URL: https://www.swanbitcoin.com/industry/the-great-hash-rate-migration-of-2021-sam-callahan/ Bitcoin miners have relocated to safer pastures within the U.S. because the values and goals of America and Bitcoin are much more aligned compared to Communist China. --- **Sam Callahan** · November 23, 2021 · Updated July 3, 2024 ### China Bans Itself from Bitcoin ![](https://www.datocms-assets.com/56652/1690273681-screen-shot-2021-11-23-at-12-31-04-pm.png?auto=format) This should lead one to think, **“*****If a country has to ban something more than once, can they really ban it?*****”** However, regard­less of how ineffec­tive this ban will be, the Chinese author­i­ties proved to be more severe about this crack­down compared to previous ones.  After the announce­ment, Chinese Bitcoin mining opera­tions were forced to shut down entirely, and cryptocur­rency trading was made illegal. Chinese miners had no choice but to leave the country in search of a new home for their mining operations. In many ways, this was the scenario that Bitcoin critics had cautioned about for years. They warned that the Chinese govern­ment would attack Bitcoin, the network would fail, and Bitcoin’s price would fall to zero. Make no mistake, this ban was an attack on Bitcoin. With little warning, the Chinese govern­ment forced miners to shut down their equip­ment, drasti­cally reducing Bitcoin’s hash rate in the process. Shortly after­ward, the Bitcoin price dropped ~50%.  Yet, this did not result in Bitcon’s death like critics falsely predicted. On the contrary, it provided further evidence of Bitcoin’s resiliency. The network continued to function with perfect uptime despite the attack. On top of that, Bitcoin’s hash rate continued to make an impres­sive recovery since the ban. Bitcoin’s hash rate has now recov­ered to around 160 Exahash from its all-time high of 197 Exahash before the China ban.  ### Hash Rate Recovers ![](https://www.datocms-assets.com/56652/1690273849-screen-shot-2021-11-23-at-12-36-31-pm.png?auto=format) This chart is evidence of the healthy recovery the Bitcoin network has been experi­encing since July. Bitcoin’s energy usage is funda­mental to its security. The larger the hash rate, the more hash power an attacker would need to obtain to success­fully perform a 51% attack. This is no doubt a positive on-chain devel­op­ment to see. In addition to the hash rate recov­ering, the mining diffi­culty adjust­ment has increased 8 consec­u­tive times since July. This indicates that the unplugged Chinese miners are contin­u­ously coming back online. ### Difficulty is Rising ![](https://www.datocms-assets.com/56652/1690273917-screen-shot-2021-11-23-at-12-37-25-pm.png?auto=format) The diffi­culty adjust­ment working just as Satoshi Nakamoto intended is a beautiful thing to witness. As the Chinese miners turned off their machines, the hash rate fell abruptly. Like clock­work, the diffi­culty adjust­ment also dropped, making it easier for surviving miners to mine blocks. This incen­tivizes miners to stay on the network because it’s more profitable for them to do so. The diffi­culty adjust­ment is Bitcoin’s own internal mecha­nism to keep miners happy while at the same time enticing more miners to plug into the network. From this chart, we can clearly see that reinforce­ments have arrived. Meanwhile, during the largest state-level attack in its 12-year history, Bitcoin’s network has continued to run flawlessly. Approx­i­mately every 10 minutes, every block was mined right on schedule. Bitcoin’s elegant design and robust security have been on full display for all to see during this hostile stretch of time. ### Home Sweet Home When the Chinese miners got kicked out of their country, they abruptly had to unplug their equip­ment, trans­port all of it, locate viable energy resources, get polit­ical approval to deploy their equip­ment, then rebuild their opera­tions in a new country. This obviously takes time, but the on-chain data above indicates that many of these miners have found new homes. The question then becomes — where did all this hash rate go? The data finally arrived last month from the Cambridge Centre for Alter­na­tive Finance (CCAF), showing where the Chinese hash rate likely migrated to. ### A Redistribution of Bitcoin’s Hash Rate ![](https://www.datocms-assets.com/56652/1690274031-screen-shot-2021-11-23-at-12-43-13-pm.png?auto=format) The country that saw the greatest change in its hash rate relative to its pre-ban levels was actually the land down under Australia. Its hash rate has increased over 5x over the time period. This could be explained by the fact that Australia has close finan­cial and polit­ical relations with China and simply because Australia is in close proximity to mainland China. Exiled miners likely sought refuge in Australia to plug back into the network quickly.  The biggest winners in terms of share of the total hash rate were: - The USA welcomed 14% of the total hash rate, up 62% - Kazakhstan gained 10% of the total hash rate, up 106% - Canada received 4% of the total hash rate, up 60%  - *“Other”* increased their total share of the hash rate 0.51%, up 14%.  The biggest losers during this period were China (obviously), France, and Iran. Iran’s drop in hash rate can be explained by its own [short ban on Bitcoin mining](https://fortune.com/2021/05/27/iran-ban-crypto-mining-bitcoin-blackout-energy-use/#:~:text=Iran%20banned%20the%20mining%20of,on%20state%20TV%20on%20Wednesday.) after mining was blamed for unplanned black­outs across the country. France’s drop could be a result of the uncer­tainty surrounding its [cryptocur­rency tax laws](https://www.euronews.com/next/2021/10/14/france-is-grappling-with-how-to-tax-cryptocurrencies-such-as-bitcoin) that may have scared miners away from the country.  ***Note: There are some limita­tions with this data that I will address at the end of this piece.*** ### A New Leader is Crowned ![](https://www.datocms-assets.com/56652/1690274166-screen-shot-2021-11-23-at-12-45-38-pm.png?auto=format) The USA is now the undis­puted hash rate leader control­ling 35.40% of the total hash rate. The USA, Kazakhstan, and Russia combined now control 64.73% of Bitcoin’s total hash rate. The United States becoming the hash rate leader over China is no doubt bullish for Bitcoin long term. The United States has a history of embracing new innov­a­tive technolo­gies, plus there is a healthy rule of law there that theoret­i­cally supports and protects capitalism, democ­racy, and property rights. For all intents and purposes, this should be a safer home for Bitcoin miners compared to China, where the Chinese Commu­nist Party rules with an iron fist. China rules from the top-down and gener­ally dislikes things they can’t control. It makes sense that they dislike Bitcoin because they can’t wield it to exert their power and will over the Chinese people. Bitcoin and the princi­ples upon which the United States was founded are a match made in heaven. Namely, personal freedom, equality of oppor­tu­nity, distri­b­u­tion of power, and property rights. Bitcoin does not discrim­i­nate, is open to all, and allows individ­uals to take personal owner­ship of their wealth like no other asset in history. Many Bitcoiners call Bitcoin *“freedom money”* because it brings sover­eignty back to the individual and brings balance to the power between the state and the people. What better place for freedom money than the land of free? Bitcoin miners have relocated to safer pastures within the US because the values and goals of America and Bitcoin are much more aligned compared to Commu­nist China. ### The Disunited King of Hash Rate: There’s another benefit to consider regarding hash rate migrating to the U.S. Take a look at this graphic from Nic Carter’s [recent presen­ta­tion](https://niccarter.info/wp-content/uploads/txsummit_nc_oct08.pdf) at the recent Texas Blockchain Summit. It displays the U.S. hash rate distri­b­u­tion using data from the U.S.’s largest mining pool, Foundry USA Pool. ![](https://www.datocms-assets.com/56652/1690274298-screen-shot-2021-11-23-at-12-48-52-pm.png?auto=format) This image displays how Bitcoin is increas­ingly becoming more decen­tral­ized across state lines. Unlike most countries where one govern­ment rules over the entire country, the United States comprises 50 individual semi-sover­eign states with their own states’ rights and state laws.  States’ Rights are supported by the 10th Amend­ment of the U.S. Consti­tu­tion, which reserves for the states:  ***“The powers not delegated to the United States by the Consti­tu­tion, nor prohib­ited by it to the States, are reserved to the States respec­tively, or to the people.”***  Strong state govern­ment is funda­mental to the ideals this nation was founded on and more consis­tent with the vision of the republic put forward by the Founding Fathers.  To avoid tyranny and ineffec­tive central planning, every state is free to enact policies that work for its own popula­tion. Each state in America has its own property laws, taxes, politi­cians, and cultures. This has never been more evident than today. In other words, there’s a reason why every state has its own flag. ![](https://www.datocms-assets.com/56652/1690274409-screen-shot-2021-11-23-at-12-50-42-pm.png?auto=format) Recently I visited California and Texas, and I am not being dramatic when I say I felt like I was walking in two separate countries. This is the sad truth of America in 2021. America has become increas­ingly divided socially and polit­i­cally over the last decade. U.S. society as a whole no longer has a clear shared set of social and polit­ical values anymore. This division has made the idea of states’ rights more popular than ever. Ameri­cans are moving to states specif­i­cally because they align with the states’ values, freedoms, and laws. America is balka­nizing, and Bitcoin benefits from this.  For Bitcoin, this means the largest share of its hash rate is now being spread out across a nation that can be thought of more as a nation of nations today. This state decen­tral­izing dynamic within the USA is pretty unique and just another reason to be bullish about the hash rate migrating from China to the Disunited States of America.  ### Pro / Cons of the Hash Rate Migration  In the end, after analyzing the CCAF data, the China ban has been a huge net positive for Bitcoin. In a lot of ways, it was one of the best geopo­lit­ical outcomes to happen to Bitcoin in its entire history. Bitcoin went from having a large share of its hash rate within a single hostile juris­dic­tion to now having that same hash rate distrib­uted geograph­i­cally across dozens of juris­dic­tions. 34.5% of the hash rate just went from being located in one nation with one ruling govern­ment to being spread out amongst many different insti­tu­tions, cultures, and laws. Bitcoin’s hash rate is now more decen­tral­ized than it’s ever been before, making it much more resis­tant to attacks. Bitcoin has never been more de-risked than it is now after the China ban. Another bullish takeaway from the data was the growth in the share of the total hash rate of the *“Other”* nations. *“Other”* nations increased their total share of the hash rate by 0.51%, up 14%. This means that more and more small nations are hosting Bitcoin miners, and the hash rate is decen­tral­izing more. The CCAF data shows at least 5 nations now host a share of the hash rate in August that didn’t have a material share before the ban: Zambia, Cambodia, Myanmar, Afghanistan, and Honduras. 5 new mining nations that are now plugged into the Bitcoin network and are incen­tivized to protect it. This is good for Bitcoin. There are some reasons to be concerned here. It’s not a good thing for the majority of Bitcoin’s hash rate to be located in any one nation, no matter how good a juris­dic­tion may appear to be for Bitcoin. Foundry USA Pool just became the world’s largest mining pool in the world. The US has abundant energy resources, which makes it a logical desti­na­tion for Bitcoin miners. I see the miner migra­tion to the US, there­fore, accel­er­ating with the real risk being that the US eventu­ally acquires too much of the total hash rate. This central­iza­tion of hash rate would be a negative devel­op­ment for Bitcoin, no matter where it occurs. Ideally, we want to see the top countries’ shares of the total hash rate decrease over time as the hash rate distrib­utes spatially across more and more countries, further decen­tral­izing the hash rate. The good news is — the trend has been clear so far. Bitcoin’s hash rate IS becoming more decen­tral­ized over time. If that continues, Bitcoin will just harden and grow ever stronger over time. I expect the hash rate distri­b­u­tion to continue to change as some nations choose to embrace Bitcoin and benefit from it. In contrast, others choose to shut themselves off from it at their own expense. ### Conclusion As you can see, Bitcoin didn’t just survive this disorder; it thrived on it. Whatever doesn’t kill Bitcoin only makes it stronger. To all the investors who stayed away from Bitcoin because they believed miscon­cep­tions like *“China can control Bitcoin,”* *“China can ban it,”* or *“China can kill Bitcoin,”* perhaps it’s time to challenge your original assump­tions. China did ban it, but Bitcoin didn’t die. Instead, Bitcoin continues to grow more decen­tral­ized and more secure by the day. It’s amazing to see the resiliency of the Bitcoin network during this great miner migra­tion. The price crashed, but it’s now nearing all-time highs. The hash rate was cut in half, but it is slowly climbing with every miner that returns to the network. Bitcoin’s network uptime remained at 99.99% despite suddenly losing ~50% of its hash rate without warning. That’s simply incred­ible. Bitcoin is the most anti-fragile network in the world, and it has earned that title through proof of work. ### Limitations There are some limita­tions with this data that I would like to address here. First off, I highly doubt that 100% of the Chinese hash rate has left Mainland China, as the CCAF data claims. It’s much more likely that a small percentage of Chinese miners have gone under­ground since the ban and are mining off-grid secretly in the country. That being said, I think it’s safe to say that a majority of the Chinese hash rate has indeed migrated elsewhere. Another limita­tion is that it’s diffi­cult to ascer­tain exactly where the hash rate is coming from, given the rise in popularity of VPNs and other proxy services. The CCFA makes a specific note of this with regard to its hash rate record­ings from Ireland and Germany. There are no known major mining opera­tions located in these countries today, and yet the data shows that ~9% of Bitcoin’s hash rate is coming from there. These hash rate readings are likely the result of redirected IP addresses from VPN services, not from miners actually located in these countries. Despite this limita­tion, the CCFA combines data from many mining pools across the globe and remains the best resource avail­able today to gain insights into the geographic location of Bitcoin’s hash rate. Lastly, when looking at the hash rate distri­b­u­tion in the United States. The data above is only from the largest mining pool in the world, Foundry USA Pool (21.4% EH/s). This data fails to capture the hash rate contri­bu­tions from other smaller US mining pools such as Luxor, Marathon, and Rhodium. There­fore, this data should be viewed as incom­plete and only gives us a piece of the picture of domestic hash rate distri­b­u­tion today. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Saving with Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/saving-with-bitcoin-sam-callahan/ You should be investing in Bitcoin for its volatility — able to wait out price dips, even to accumulate during them, and celebrate the dramatic price rises when they take place. --- **Sam Callahan** · December 4, 2021 · Updated June 25, 2024 Bitcoin is a volatile asset. At this point, we should all accept that high volatility is a funda­mental charac­ter­istic of Bitcoin today. You’ve probably enjoyed this volatility as the price rocketed to ATHs. Although by now, you may have also experi­enced the downside of this volatility. Earlier in the year, Bitcoin was down >50% from its highs in a span of ~3 months. You should be investing in Bitcoin for its volatility — able to wait out price dips, even accumu­late during them, and celebrate the dramatic rises when they occur. In this piece, we will go over why it’s a fool’s game to try to trade a wild market like Bitcoin, why Bitcoin’s volatility repre­sents an oppor­tu­nity, and why steadily purchasing Bitcoin through recur­ring purchases is a great strategy to accumu­late Bitcoin for the long term. Bitcoin is a roller­coaster ride, and the wise move for most riders is to strap in, hold on tight, and don’t get thrown off. It may make you nervous and nauseous sometimes, but the right answer was never to jump off the roller­coaster. No, the answer is to always hold on tight and enjoy the ride. Despite the volatility, every single person who has held Bitcoin for +4 years has made money on it, and you can, too, by taking some small action­able steps today. ![](https://www.datocms-assets.com/56652/1690275132-screen-shot-2021-12-04-at-1-45-29-pm.png?auto=format) #### Don’t Trade BTC, Save BTC Bitcoin will chop you up with its volatility without mercy. One day it will make you feel doubt, fear, panic, and you’ll smash that sell button. The next day the price will soar, and you’ll feel elation, greed, and panic, and you’ll buy back impul­sively. Back and forth it goes. Bitcoin preys on the human emotions in all of us. Some rare traders have the ability to control these emotions and time the market success­fully. However, a vast majority of investors that trade Bitcoin don’t control their emotions; they fall victim to them. They overtrade, lose money, pay hefty capital gains taxes, and are left with less bitcoin than if they had just bought and done nothing. Beyond the emotional compo­nent, another reason trading bitcoin is a risky endeavor is **histor­i­cally** **a majority of Bitcoin’s** **annual gains come from ~10 days every year**. Said differ­ently, traders need to manage to time it right on 10 random days each year.  The conse­quence of missing those 10 days has proven to be severe. Take a look below at how much gains you missed out on if you missed the top 10 days 👇 ![](https://www.datocms-assets.com/56652/1690275234-1.png?auto=format) Source: https://www.investing.com/crypto/bitcoin/historical-data As you can see, the oppor­tu­nity cost of missing those big green days is HUGE. Further­more, ex-the top 10 days between 2013 — 2017, bitcoin was actually down annually 25%!¹ So if you missed the 10 best trading days during those years, you actually somehow managed to lose money despite the massive gains in Bitcoin over that time period.  The data here shows how the odds are stacked against you when you try to time this wild market.  This is why the recom­mended strategy for most to survive Bitcoin’s high volatility is not to attempt to trade it but rather learn to save in Bitcoin and then contin­u­ously build your position over time. Bitcoin is not for trading. It’s for saving. #### Bitcoin’s volatility is not your foe but your friend. To win in Bitcoin, you must learn how to mentally survive its volatility long enough in order to benefit from it. Allow me to explain… If there was no volatility, there would be no oppor­tu­nity. Bitcoin’s volatility results from its 21 million fixed supply and its fluctu­ating demand as it continues to gain adoption across the globe.  Bitcoin is still at the begin­ning of its adoption cycle. [Only a small percentage](https://www.swanbitcoin.com/how-much-of-the-worlds-population-owns-bitcoin-today) of the world’s popula­tion currently owns Bitcoin, let alone under­stands it. Many people are specu­lating on Bitcoin without fully compre­hending what they’re investing in. This volatility is a result of the infor­ma­tion asymmetry around Bitcoin today. Each day new people learn and buy Bitcoin for the very first time, and each day someone loses faith or simply needs to sell some. This results in short-term price spikes and sell-offs as the world collec­tively tries to make sense of this disrup­tive technology. As knowl­edge spreads and adoption accel­er­ates, more and more people will begin to under­stand Bitcoin for what it is: a premier savings technology. The infor­ma­tion asymmetry will fade away, and the volatility will wane with it. The world will grow accus­tomed to it, learn to love it, and Bitcoin will become as normal as using the internet is today. But today… Today, we are early. Their misun­der­standing is our oppor­tu­nity. As the Bitcoin network continues to grow in demand, coupled with the fact that we know that there’s a fixed supply, that means only one thing can happen if adoption continues at this pace — the price of Bitcoin will continue to rise. That’s exactly what we see in the data. When in doubt, zoom out.  #### If you take a look at Bitcoin’s historical growth, you will observe that the volatility has actually only been positive. Take a look at the fantastic chart below.  ![](https://www.datocms-assets.com/56652/1690275373-screen-shot-2021-12-04-at-1-49-27-pm.png?auto=format) Source: ARK Invest­ment Management As you can see, even though there have been several major price drawdowns, bitcoin has recov­ered every time and has been trending in one direc­tion: up and to the right.  The short-term volatility should be thought of as a distrac­tion as demand for Bitcoin continues to steadily increase. The winning move has always been to hold through the short-term volatility and keep buying Bitcoin as it continues to be adopted as the primary savings technology. But as I mentioned before, this is no simple task.  Volatility is hard. It’s easy to let emotions take control and make bad decisions when your life savings are involved.  So what can you do? #### When investing in Bitcoin, you have to know yourself. Know your own risk tolerance. Only invest what you can afford to lose and what allows you to sleep at night. If you are too overex­tended like the person below, you risk putting yourself in a stressful situa­tion that could lead to emotional decisions and poor outcomes. ![](https://www.datocms-assets.com/56652/1690275636-proudmoolie-tweet.png?auto=format) It’s hard to sit on your hands and survive Bitcoin’s volatility when you risk losing every­thing if the price falls in the short term. That’s why it’s vital to tailor your Bitcoin alloca­tion to your own risk toler­ance, your own finan­cial situa­tion, and your own convic­tion level. The good news is that an investing strategy has proven low-stress and profitable. It helps prevent emotional decisions benefiting from Bitcoin’s upward long-term volatility. ### Bitcoin Recurring Buys  Recurring buys is a tried and true way to build a position over time that can pay off in a big way. Not only can you accumu­late a lot of Bitcoin with recurring buys, but it’s also low stress, so it keeps you in the game. It’s a strategy that helps you survive the volatility we touched on earlier and benefit from Bitcoin’s growth.  Recurring buys is a strategy where an investor buys a pre-deter­mined dollar amount of an asset at regularly sched­uled time intervals.  For example — if an investor had $1,000 dollars, they could choose to recurring buys $100 worth of Bitcoin every week for 10 weeks.  Now recurring buys implies that you should start with a certain amount of dollars that you can invest, then buy daily/weekly/monthly until the funds are invested, and then you’re finished. However, with Bitcoin, the right strategy is to continue to save what funds you can indefinitely.  That’s why I think a more appro­priate term for this strategy is *Bitcoin recurring buys.* You should think of Bitcoin as a savings technology. It is a place to store wealth for many years in an asset that can’t be inflated away or taken from you by anyone.  When asking yourself how much Bitcoin you should buy, what you really should be asking yourself is, “*How much money can I afford to save this week/month/year?*” This strategy has been wildly profitable histor­i­cally. What may seem like a small invest­ment of $10/day can compound into tremen­dous wealth in the future.  Check out the statis­tics if you have contin­u­ously saved in Bitcoin over the last 2 or 4 years:  ##### Saving with Bitcoin for 2 years ![](https://www.datocms-assets.com/56652/1690275810-3.png?auto=format) ##### Saving with Bitcoin for 4 years  ![](https://www.datocms-assets.com/56652/1690275847-2.png?auto=format) As you can see, a seemingly small amount of savings can go a long way with Bitcoin.  An added benefit of this strategy is it allows you to take advan­tage of the short-term volatility and gives you peace of mind to accumu­late Bitcoin for the long term.  **Let’s use an example to help illus­trate this point:**  Meet Chad and Sally.  - They both discovered Bitcoin on the same day back in May 2021. - They both have the same amount of funds to invest, $27,000. - They decide on two very different invest­ment strategies. Chad decides to put every penny of his savings all in at once.  Chad purchases 0.54 BTC for $27,000 at a Bitcoin price of $49,838.  Sally decides to set up a Bitcoin Recurring Buys buying $1,000 worth of Bitcoin every week. 6 months later, Sally has accumu­lated 0.62 BTC at an average Bitcoin price of $45,364. The key takeaway from this example is that by using a Bitcoin Recurring Buys, Sally acquired ~15% more Bitcoin than Chad by accumu­lating at a lower average entry price.  Purchasing contin­u­ously over time, like Sally, allows an investor to take advan­tage of any downward volatility by steadily building a position as the asset falls in price. It takes human emotions out of the equation and helps investors pull the trigger when the price is low. All Sally had to do was stick to her plan.  ### Bitcoin Recurring Buys Bring Peace of Mind It’s impor­tant to also consider the differ­ences in the emotional journeys that both Sally and Chad experi­enced over these past 6 months. If we think about Chad above, he put all his savings in at once. He then had to watch those savings decrease in value by nearly half as the Bitcoin price dropped. This is no doubt a stressful situa­tion. Chad would likely be watching the Bitcoin price daily, have trouble sleeping, and wondering if he had made a mistake. He might doubt his invest­ment and be worried that his savings were gone. This can lead to panic selling right at a time when he should be buying. Then we consider Sally’s experi­ence. All Sally had to do was stick to her original plan. In fact, she was actually benefit­ting from bitcoin’s price drop. If Bitcoin goes up, great! Sally already owns some. If Bitcoin goes down, great! Sally can buy Bitcoin at a lower price and lower her overall entry price. That’s why setting up automatic recur­ring purchases is a win-win strategy. Set it and forget it. By now, you know that the winning strategy here is to survive the short-term volatility and hold Bitcoin for many years. Which of these investors do you feel were more likely to hold through the recent volatility, Chad or Sally? Sally’s experi­ence was much less stressful than Chad’s. As a result, she was likelier to not be shaken by the volatility and survive to reap the rewards today. The chart below puts the stress of each strategy in numbers. ![](https://www.datocms-assets.com/56652/1690276042-4.png?auto=format) Source: Hass McCook (@FriarHass) as of 09/20/21 This chart displays how long it took an investor of each strategy to break even from the cycle tops. If you consider Chad, he just broke even on his initial invest­ment this month. He has been under­water and sweating it this whole time. On the other hand, Sally broke even on her initial invest­ment months ago and has been in profit and feeling good about her investment. Bitcoin recurring buys allow people the peace of mind to not sweat the short-term price action and think for the long term. All you have to do is set it and forget it, go outside, enjoy life, and let Bitcoin continue on its path to global adoption. ### Conclusion Bitcoin is a volatile asset, and attempting to time this market is a fool’s game that often ends in ruin. I hope this piece helped open your eyes to the oppor­tu­nity that lies before you. We are still incred­ibly early in Bitcoin’s adoption cycle, and the majority of the world is still sleeping on this amazing savings technology. A strategy that encour­ages investors to contin­u­ously purchase Bitcoin on a recur­ring basis has proven to be effec­tive at growing a position, removing emotions from the equation, and lowering an average entry price, all while benefiting from the long-term price appre­ci­a­tion of Bitcoin. The beauty of creating a Bitcoin recurring buys strategy that gives you peace of mind as you consis­tently accumu­late Bitcoin for years and years to come. Here at Swan, we feel that this is the single best strategy to success­fully invest in Bitcoin. Create a Bitcoin recurring buys plan at Swan and start saving for your future, your kids’ futures, and your grand­kids’ futures, today. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Swan Bitcoin 2022 Gift Guide URL: https://www.swanbitcoin.com/industry/swan-bitcoin-gift-guide-kristin-thompson/ The HODLday season is a time for remembering the important things in life like family and friends and, of course, Bitcoin! Which is why we created the perfect gift guide for Bitcoiners. --- **Kristin Thompson** · December 15, 2021 · Updated August 2, 2026 The 2022 HODLday season is a time for remem­bering the impor­tant things in life like family and friends and, of course, Bitcoin! **And what better time to orange pill your family and friends or discuss the impli­ca­tions of Taproot than over a hot mug of eggnog or while spooning a dollop of sour cream on your potato latkes?** ![](https://www.datocms-assets.com/56652/1690276450-givebitcoin-blog.png?auto=format) Coming in at number 1, no surprise here.… #### 1. Bitcoin  This holiday season, give the gift of Bitcoin and finan­cial freedom to friends and family. Swan has enabled an all-new gifting feature, making giving Bitcoin safe and easy so you can rest assured your loved ones have access to educa­tion, support, and guidance on their Bitcoin journey. Swan makes Giving Bitcoin easy — as you create a custom message, tell us who to send it to, and hit send! From there, the Swan Team will help your loved one activate their account and claim their Bitcoin! Many Bitcoiners worry about sending Bitcoin to loved ones via third-party apps where a big red sell button constantly tempts people to sell at the first dip or all-time high.  With Swan, you can feel confi­dent that your recip­ient will receive Swan’s incom­pa­rable Bitcoin educa­tion and support along the way. ***Gift your loved ones Bitcoin*** [***here***](http://swanbitcoin.com/gifts)***.*** #### 2. THE BLOCKCLOCK mini  ![](https://www.datocms-assets.com/56652/1690276585-untitled.png?auto=format) At the top of our list of physical gifts is the Block­Clock Mini from Coinkite. A must-have for tried and true Bitcoiners, this is CoinKite’s second Bitcoin art piece with 7 E‑Ink screens. The Block­Clock Mini shows the current block height, tracks prices from exchanges, and you can connect Opendimes to display your Bitcoin balance, fiat value, and deposit QR codes. And it even shows the time in Moscow. 😉 *Buy the* ***Block­Clock Mini*** [*here*](https://store.coinkite.com/store/bc-mini)*.* #### 3. SATS BACK on SHOPPING ![](https://www.datocms-assets.com/56652/1690276656-visa-debit-pink-outline.png?auto=format) Next up on the list… and this is kind of a selfish gift (although we approve!).  Give almost anything you can imagine while using [Fold](http://www.foldapp.com/) or [Lolli](http://lolli.com/). What’s better than giving a gift and getting some sats in return?  We can’t think of much, to be honest. Fold and Lolli are great Bitcoin-only compa­nies, and they allow you to earn sats back on almost anything. **Check them out.** #### 4. BITCOIN MAGAZINE SUBSCRIPTION ![](https://www.datocms-assets.com/56652/1690276727-untitled-1.png?auto=format) Bitcoin Magazine is the oldest and most estab­lished source of news, infor­ma­tion, and expert commen­tary on Bitcoin, its under­lying blockchain technology, and the industry that has been built up around it. Since 2012, Bitcoin Magazine has provided analysis, research, educa­tion, and thought leader­ship at the inter­sec­tion of finance and technology. Your loved one will receive the latest news about the people, compa­nies, and techno­log­ical devel­op­ments that are changing our world. Whether your gift recip­ient is new to the space or a bitcoin-savvy devel­oper, investor, or entre­pre­neur, Bitcoin Magazine will inform and enlighten them with new issues every quarter. *Get the* ***Bitcoin Magazine Subscrip­tion*** [*here*](https://store.bitcoinmagazine.com/collections/magazines/products/bitcoin-magazine-annual-subscription)*.* #### 5. BITCOIN TEES by Cryptograffiti ![](https://www.datocms-assets.com/56652/1690276780-screen-shot-2021-12-08-at-10-21-51-am.png?auto=format) Dress your Bitcoiner in some of the coolest tees in town by Bitcoin fine artist CryptoGraf­fiti. You’ll find tees that troll the banks, Bitcoin happy faces, and honey badgers too.  *Get a* ***Bitcoin Tee*** *for the Gen Z and Boomer alike* [*here*](https://cryptograffiti.com/collections/womens-shirts-1)*.* #### 6. THE RIDGE WALLET ![](https://www.datocms-assets.com/56652/1690276906-untitled-3.png?auto=format) The Gold Ridge Wallet is a must-have for your safety-minded Bitcoiner. The Ridge is a minimalist, RFID-blocking wallet designed to help insulate you from electronic pickpock­eting. The primary cardholder uses elastic to expand to hold up to 12 IDs and credit cards.  Your typical leather bi-fold gets packed with faded receipts and unnec­es­sary cards, resem­bling something more like a suitcase than a wallet. The Ridge is minimalist without being limiting. It’s about carrying less but always having what you need. *Buy the gold* ***Ridge Wallet*** [*here*](https://ridge.com/collections/wallets/products/18-karat-gold)*.* #### 7. BITCOIN NOTEBOOK ![](https://www.datocms-assets.com/56652/1690276968-untitled-4.png?auto=format) Looking for a stocking-stuffer or fun addition to a *Bitcoin-themed gift*?  This fun [notebook](https://www.amazon.com/Bitcoin-Notebook-Cryptocurrency-Journal-Appreciation/dp/B09M58P6D2/ref=sr_1_28?keywords=bitcoin+notebook&qid=1637953003&s=books&sr=1-28) is just right for taking notes at meetings, setting goals for the new year, or tracking your Bitcoin purchases the old-fashioned way. *Buy the* ***Bitcoin Notebook*** [*here*](https://www.amazon.com/Bitcoin-Notebook-Cryptocurrency-Journal-Appreciation/dp/B09M58P6D2/ref=sr_1_28?keywords=bitcoin+notebook&qid=1637953003&s=books&sr=1-28)*.* #### 8. INVENTING BITCOIN ![](https://www.datocms-assets.com/56652/1690277024-untitled-5.png?auto=format) [*Pair some sats* ](http://swanbitcoin.com/gifts)with the best Bitcoin book for begin­ners & experts alike. Inventing Bitcoin is the must-read book on Bitcoin, walking readers method­i­cally through the basics of this world-changing technology without getting too bogged down by the nitty-gritty details.  Inventing Bitcoin is a book every Bitcoiner should keep on their bookshelf as a resource and reminder of what Bitcoin is, how it works, and exactly how it can change the world. No technical exper­tise required! Read it, then share it with your loved ones.  ***"Having read virtu­ally every Bitcoin explainer, I believe it’s the best from-scratch intro­duc­tion to Bitcoin, requiring no prior knowl­edge at all. I will be refer­ring newcomers to it from now on.”***  - Nic Carter, Castle Island Ventures *Download a* ***FREE*** *PDF and audio version of* ***Inventing Bitcoin*** [*here*](http://swanbitcoin.com/freebook)*.* *Buy the physical copy of* ***Inventing Bitcoin*** [*here*](https://www.amazon.com/Inventing-Bitcoin-Technology-Decentralized-Explained/dp/1794326316/ref=asc_df_1794326316/?tag=hyprod-20&linkCode=df0&hvadid=343974906210&hvpos=&hvnetw=g&hvrand=719149383558712899&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032883&hvtargid=pla-775108787459&psc=1&tag=&ref=&adgrpid=69543897272&hvpone=&hvptwo=&hvadid=343974906210&hvpos=&hvnetw=g&hvrand=719149383558712899&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032883&hvtargid=pla-775108787459)*.* #### 9. THE BITCOIN MACHINE WITH UMBREL ![](https://www.datocms-assets.com/56652/1690277119-untitled-6.png?auto=format) Is your Bitcoiner ready to run a node?  Full nodes maintain a complete copy of the Bitcoin blockchain, a key compo­nent of decen­tral­iza­tion. Running a node helps to strengthen the network. It allows a user to prove their owner­ship of Bitcoin without relying on any third party.  Get up and running seamlessly with this all-aluminum plug-and-play Umbrel node & server featuring a 1.8″ display powered by a Raspberry Pi 4 with 8GB RAM and a 1.6 Ghz quad-core CPU. Just connect the device to your router with an ethernet cable (included), turn it on, and open [http://umbrel.local](http://umbrel.local/) on any device connected to the same network to access your Umbrel. *Buy the* ***Bitcoin Machine with Umbrel*** [*here*](https://thebitcoinmachines.com/product/machine-with-umbrel/). #### 10. DIAMOND HANDS HODL FANNY PACK & BALL CAP ![](https://www.datocms-assets.com/56652/1690277212-screen-shot-2021-12-08-at-11-46-50-am.png?auto=format) This is the perfect gift for a loved one with diamond hands! Only insiders will know what this fanny pack and matching hat mean. These goodies will surely help your friend or loved one start the day with a smile through the bull and bear markets alike.  Even better, through the end of the year, *all proceeds will be donated to Bitcoin Core*: *Bug Reports & Security*.  So your gift will brighten someone’s holiday & help secure Bitcoin at the same! *Buy the* ***Diamond Hands HODL fanny pack and ball cap*** [*here*](https://bitcoinsavesgear.com/product/diamond-hands-fanny-pack/)*.* #### 11. TREZOR CRYPTOTAG TITANIUM SEED BACKUP ![](https://www.datocms-assets.com/56652/1690277270-untitled-7.png?auto=format) Cryptotag Zeus is the latest titanium backup solution from Cryptotag, designed to protect your recovery seed from damage. Easily record up to 24 BIP39-compat­ible recovery seed words and protect the backup of your hardware wallet private keys.  The 6mm thick bullet­proof, water­proof titanium Zeus is resis­tant to temper­a­tures of up to 3050 °F (1667 °C) and all kinds of high-pressure testing such as pneumatic hammers. *Buy the* ***Cryptotag Zeus*** [*here*](https://shop.trezor.io/product/cryptotag-zeus)*.* #### 12. BRIMSTONE FIREPROOF STORAGE BAG ![](https://www.datocms-assets.com/56652/1690278312-untitled-8.png?auto=format) Did you know that materials are not safe even inside a fireproof safe?! Crazy but true. These fireproof bags are designed to reflect intense heat and insulate against it. They are made from highly advanced materials…  Flame resis­tant velcro, kevlar thread, fireproof/needle punch felt, fiber­glass, and aluminized material. Brimstone bags are just the right place to store thumb­drives, documents, heirlooms, and your favorite cold storage device. *Buy the* ***Brimstone Fireproof Storage Bag*** [*here*](https://brimstonefireprotection.com/collections/fireproof-storage-bags/products/fireproof-bag-money-jewelry-pouch?gclid=CjwKCAiA4veMBhAMEiwAU4XRr8Dn05qltdINUUn63JGW1rza9on5SAjB3qNWmw7Jod354zGFcR-RUBoCfl0QAvD_BwE). #### 13. BITCOIN PINS AND MAGNETS ![](https://www.datocms-assets.com/56652/1690278484-untitled-9.png?auto=format) Looking for a few fun stocking stuffers?  Check out these Honey Badger, Citadel, or BTC magnets. These magnets are just right to spruce up your favorite office, refrig­er­ator, or even the toolbox in your garage. *Buy* ***Bitcoin pins*** *and magnets* [*here*](https://btcpins.com/product/honeybadger-magnet/)*.* #### 14. BITCOIN GRENADE: OPEN DIME STORAGE ![](https://www.datocms-assets.com/56652/1690278545-untitled-10.png?auto=format) Are you ready to store your Opendimes in one of the coolest ways?  We’ve got you covered. It’s time Bitcoin gets the atten­tion it deserves, and this piece is guaran­teed to get people talking. Each unit is printed in 6 different pieces. A few parts must be assem­bled to follow post office regula­tions for shipping.  **Notice:** This is not a real grenade, just an amazingly cool storage device. *Buy the* ***Bitcoin Grenade*** [*here*](https://www.cryptocloaks.com/product/bitcoingrenade/). #### 15. THE LIGHTNING STORE ![](https://www.datocms-assets.com/56652/1690278607-untitled-11.png?auto=format) Are you looking for a gift for a Light­ning Network aficionado?  Look no further! The Light­ning Store has some of the coolest Light­ning Network merch avail­able. But of course, they only accept Bitcoin.  So break out your Wallet of Satoshi or Light­ning wallet of choice, and get ready to spend some sats! If you’re new to Light­ning, they accept regular Bitcoin trans­ac­tions, but definitely no dirty dollars! *Buy* ***Light­ning Network merch*** [*here*](https://lightning.store/). #### 16. THE SEED SIGNER ![](https://www.datocms-assets.com/56652/1690278681-untitled-12.png?auto=format) For your favorite uber-nerd…  The Seed Signer lets you build an offline, air-gapped Bitcoin trans­ac­tion signing device using off-the-shelf compo­nents for less than $50! This gift satis­fies both the builder and the Bitcoiner in your life. *Buy the* ***Seed Signer*** [*here*](https://seedsigner.com/explainers/)*.* #### 17. THE ICONIC *“BITCOIN HATER’s TEARS”* MUG ![](https://www.datocms-assets.com/56652/1690278743-untitled-13.png?auto=format) #### 18. EMBASSY PLUG & PLAY PRIVATE SERVER ![](https://www.datocms-assets.com/56652/1690278773-untitled-14.png?auto=format) Embassy is a radical, uncom­pro­mising, plug-and-play private server, offering one-click instal­la­tion and simple config­u­ra­tion of a growing list of powerful, self-hosted, open-source services such as Bitcoin, Light­ning, Matrix, File Browser, Bitwarden, Mastodon, BTCPay Server and more. In The Box: - Raspberry Pi 4 (8GB) - 128GB SanDisk microSD, prein­stalled with EmbassyOS - GPIO mini speaker/buzzer for audio feedback - Power supply (US, UK, EU, AU) *Buy the* ***Embassy pr****i****vate server*** [*here*](https://start9.com/)*.* #### 19. BITCOIN BILLIONAIRE BOOK ![](https://www.datocms-assets.com/56652/1690278850-untitled-15.png?auto=format) Bitcoin Billion­aires is a fun read for OGs and new Bitcoiners alike. From Ben Mezrich, the New York Times bestselling author Bitcoin Billion­aires tells the fasci­nating story of brothers Tyler and Cameron Winklevoss’s big bet on crypto-currency and its dazzling pay-off. Two of the story’s iconic charac­ters are Harvard students Tyler and Cameron Winklevoss: identical twins, Olympic rowers, and foils to Mark Zucker­berg. Bitcoin Billion­aires is the story of the brothers’ redemp­tion and Bitcoin-fueled revenge in the wake of their epic legal battle with Facebook. On November 26, 2017, the Winklevoss brothers became the first bitcoin billion­aires. Here’s the story of how they got there―as only Ben Mezrich could tell it. *Buy the* ***Bitcoin Billion­aire book*** [*here*](https://www.amazon.com/Bitcoin-Billionaires-Genius-Betrayal-Redemption-ebook/dp/B07GN8HWZW/ref=sr_1_1?keywords=Bitcoin+Billionaires&qid=1637953472&qsid=135-5888743-2243757&s=digital-text&sr=1-1&sres=B07GN8HWZW%2CB079Z1KYVH%2CB0764CY9VK%2CB07D39WBD5%2CB07LCXJ5RW%2CB07CXXD5P3%2CB09MJTNPTY%2CB07T13GP1Q%2CB09MFTKVDN%2CB08BZY4C7T%2CB09BJXMYJP%2CB08X2X6SL8%2CB012C4AU10%2CB08RX8Q4ZQ%2CB09B2M2XWX%2CB000FBJGL8&srpt=ABIS_BOOK)*.* #### 20. SATOSHI SEES BACKPACK ![](https://www.datocms-assets.com/56652/1690278957-untitled-16.png?auto=format) Featuring the Satoshi Sees embroi­dered design, this backpack has padded back and adjustable shoulder straps, combining function­ality with subtle style. Use the two-way zipped main compart­ment to carry anything from a 15-inch laptop to books, and keep your phone and keys safe in the front zip pocket. Details: 100% polyester, 600D | Two-tone fabric | Large main compart­ment with padded back panel | Padded adjustable shoulder straps in matching fabric. *Buy the* ***Satoshi Sees backpack*** [*here*](https://luchopoletti.com/collections/accessories/products/satoshi-sees-backpack)*.* ### HAPPY HODLdays From the Entire Swan Squad!  We wish you and your family all the best and look forward to serving you in the new year.  Ready to Give Bitcoin? [Click here](http://swanbitcoin.com/gifts). Need help purchasing larger amounts of Bitcoin before the end of the year? [Click here](http://swanbitcoin.com/private). Just getting started with Swan? [Click here](http://swanbitcoin.com/). ### Kristin Thompson Kristin Thompson spent an award-winning decade in media sales for top-rated stations like CBS Radio and NBC Television. Then she launched her own company SpeakServeGrow, helping businesses generate a rush of leads and clients with events, speaking and live streams. After falling down the rabbit hole in 2017, Kristin now heads up Marketing and PR for Swan Bitcoin, combining her expertise with her love for Bitcoin and Bitcoiners. # How Bitcoin Really Works (5 minute read) - Swan Bitcoin URL: https://www.swanbitcoin.com/education/5-minute-reads-how-bitcoin-really-works/ A quick and accurate explanation on how Bitcoin really works. Suitable for beginners and experts alike. --- **Tomer Strolight** · December 20, 2021 · Updated June 27, 2024 Here’s a real quick yet accurate expla­na­tion of how Bitcoin works. ### Bitcoin Nodes If you run Bitcoin node software, like Bitcoin Core, it will estab­lish a connec­tion to other, random instances of Bitcoin Core, becoming part of a world­wide network of inter­con­nected Bitcoin nodes. Anyone can do this. The software is free, and its code is open source. Every new Bitcoin Core node is seeded with the first ever piece of data in Bitcoin called the *“Genesis block.”* It contains the details of the first piece of data upon which all the rest of Bitcoin’s history is built. Each new node then polls the other nodes for the next block. The node then uses Bitcoin’s math-based rules to check if that next block meets those rules. The rules check to see that every Bitcoin trans­ac­tion in the block is valid and contains a valid proof of work (explained later) for creating that block. It keeps retrieving new blocks until it catches up to the present. At that point, it is in synchro­niza­tion with every other Bitcoin node worldwide. Each Bitcoin node has verified the accuracy and truth of every single trans­ac­tion and block and Bitcoin’s history. They don’t just copy data — they verify every single bit of it. ### Bitcoin Transactions A Bitcoin trans­ac­tion is a text message. To be valid, it has to strictly adhere to specific rules, though: 1. It can only spend Bitcoin that hasn’t been spent.  2. It must provide a crypto­graphic signa­ture which can be used to verify that the sender is in posses­sion of the correct secret, randomly gener­ated, astro­nom­i­cally large number called a ‘private key.’ 3. It is also advis­able that the addresses of the recip­i­ents of the transaction’s funds are speci­fied. **(If they’re not, then the entire trans­ac­tion becomes a fee paid to miners.)** That’s it. It can include other data, like the date or time at which the trans­ac­tion will be valid (like post-dating a check), but it doesn’t have to. There’s one other type of trans­ac­tion, called a coinbase trans­ac­tion ***(nothing to do with the company of that name — that company stole its name from this term).*** That trans­ac­tion is explained in the Bitcoin Blocks section of this article. ### Bitcoin Addresses Bitcoin addresses are weird looking strings like:  **bc1qtxsjjjgupnccn2czvwaj5x3szc4hw75nc53hm8 or  16t8xf4MG1mHoKU1AbpT5QGKDfj5UYg1W5 or  3CwT3oXQVtwYwBGnsRVd1Juj2gqBxsfNpv** But they’re not arbitrary, and you don’t make them up. They are crypto­graphic finger­prints of either ‘public keys’ or of entire code scripts. When it comes time to spend coins from those addresses, the spender will have to provide the digital signa­ture associ­ated with the private key that corre­sponds to the public key or script. ### Bitcoin Blocks A Bitcoin block contains a bunch of data: 1. It contains a whole bunch of trans­ac­tions, each of which is verified to be a valid one. The first trans­ac­tion in it is called the **coinbase trans­ac­tion**. The coinbase trans­ac­tion rewards newly issued coins and fees paid in all the other trans­ac­tions in that block to the discov­erer of the block. People who discover blocks are referred to collo­qui­ally as ‘miners.’ All Bitcoins in circu­la­tion come into circu­la­tion by being rewarded to miners. No other Bitcoins exist. 2. It also contains a verifi­able crypto­graphic finger­print or digest of all these trans­ac­tions (called a merkle root). 3. It contains the crypto­graphic finger­print of the previous block — to prove that it was created only after the previous block was created. This is what chains this block to the previous block to create the famous *“blockchain.”* 4. It contains a current date and time. 5. It contains a couple of other small pieces of data (a version number and a target). 6. Finally, it contains a special number called a ‘nonce.’ Nonce is short for *“number used once.”* This nonce is used to prove that this block meets the proof-of-work require­ments at the time of its creation. Every node can run this block through the finger­printing algorithm (called SHA256) and check that the resulting number is smaller than the maximum allowed at the time (the target), thus making the block valid according to the rules of Bitcoin. ### Mining Miners work to discover nonces that satisfy the proof of work require­ments for the newest block to be added to the blockchain. This is basically just guess­work like guessing numbers in a giant lottery. The harder they try — that is, the more guesses they make — the sooner they’ll discover valid nonces to blocks and the faster they’ll produce blocks and be rewarded.  However, Bitcoin is designed to keep the pace of blocks coming in at one every ten minutes on average, so roughly every two weeks **(or precisely every 2,016 blocks)**, the diffi­culty associ­ated with finding a valid block **(also known as the target)** is recal­cu­lated with a precise formula, by every node, to make it harder **(or sometimes easier, if neces­sary).**  Because every node uses the same formula on the same data, every node ends up agreeing on the new diffi­culty target. Miners then need to work as hard as the new diffi­culty demands to earn the rewards of discov­ering new valid blocks. #### That’s (just about) all, folks: With just the above mecha­nisms, Bitcoin runs. People who have bitcoins, or fractions of them, can send them to anyone else who provides them an address. They prepare a valid trans­ac­tion and send it to any other node on the network, and that node sends it out to others, and it quickly ends up on every node, where each one ensures that it is, in fact, valid. Miners take these new valid trans­ac­tions that haven’t been added to a block yet and try to guess the nonce to a new block containing those trans­ac­tions **(and every­thing else a block must have).** Sooner or later, one of them finds a valid nonce and shares the whole block with other nodes, who then send it out to others, and it quickly ends up on every node, where each one ensures that it is, in fact, valid. Every­body adds this block to their identical copy of the blockchain as soon as they verify its validity. New coins get intro­duced into the system with the coinbase trans­ac­tion of each block. However, the number of new coins per block keeps getting cut in half roughly every four years **(or precisely every 210,000 blocks).** This formula ensures that there will only ever be 21 million full Bitcoins. Nobody can fake anything because everyone checks every­thing all the time. Any nodes that attempt to misre­port any data are unable to get away with any decep­tion because the math behind every trans­ac­tion and block is what deter­mines the true state of things, **And that’s how Bitcoin really works.** ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # How Bitcoin is a New Form of Property (5 Minute Read) URL: https://www.swanbitcoin.com/education/bitcoin-is-a-new-form-of-property/ Read how Bitcoin is unique and powerful property, which comes with certain responsibilities. --- **Tomer Strolight** · January 4, 2022 · Updated June 25, 2024 ### What is Property, and What is Ownership? Some things are property — like real estate, televi­sions, cars, sandwiches, and chairs. Some things aren’t — like the weather, the English language, math, and the planet Jupiter. Property can be *owned*, and to *own* something means to be able to deter­mine how it is used, consumed or disposed of.  ### Enforcement of Property Ownership Gener­ally speaking, owner­ship of property is something that is enforced, either through force or the threat of it. A televi­sion is yours because anyone who attempts to use it without your permis­sion will be forced to surrender their use of it by law enforce­ment agencies. They are discour­aged from stealing your tv because of the threat that they will be forced to return it and punished for having taken it. We have laws that prescribe how you come to own property and how the govern­ment will enforce your owner­ship of it. Some forms of property, like houses and cars, come with built-in technolo­gies to make it hard for people to try to take them from you in the first place, like keys and locks. But in the end, you must rely on the authority and force of law enforce­ment to protect your owner­ship. And you must rely on the justice system to protect your property rights if they are violated. ### Bitcoin Ownership is Unique #### Unseizable Property Like other properties, Bitcoin is something whose use can only be deter­mined by its owner. But Bitcoin has a *unique* feature that no prior form of property has ever had. Your owner­ship of Bitcoin does *not* rely on local laws or law enforce­ment agencies. Bitcoin has built-in technology that makes it *impos­sible* for anyone to take it from you by force – even law enforce­ment agencies cannot seize it. Bitcoin is the first ***unseiz­able*** property in history – unseiz­able by law-breakers or by law enforcers. #### Perfectly Portable Property **Bitcoin is Global:** it can be used as property anywhere on Earth. Even where there is no law enforce­ment or where govern­ments themselves violate property owner­ship, Bitcoin can be owned as property with its use solely decided upon by its rightful owner.  This means that Bitcoin is not just *unseiz­able* but completely ***portable***. You can send it to anyone in the world, and you can take it with you anywhere in the world. You can go anywhere and cross any border without having to ‘*carry*’ your Bitcoin with you. You can retrieve it for spending wherever you are, whenever you want. #### Indestructible Property Bitcoin is also property that can be backed up and kept in multiple places. Unlike your house, which will be gone if a fire burns it down if you kept your keys for your Bitcoin in your home, you could also keep spare copies of them elsewhere. Retrieving those keys from any of those places, even if your house burns down, allows you to spend those coins.  Bitcoins are essen­tially **indestruc­tible** property. This is because all the bitcoins themselves exist in tens of thousands of locations all over the world, but the right to spend them is granted only to a person in posses­sion of the keys. #### Perfectly Scarce and Easily Authenticatable Property Finally, as a result of how Bitcoins come into existence, the number of Bitcoins in circu­la­tion is perfectly *knowable* at any point in time. It is also *certain* that there will never be more than 21 million bitcoins – the supply is *knowably*, *certainly*, *provably* **scarce**.  Also, the **authen­ticity** of bitcoins is easy to deter­mine. You cannot pass off fake bitcoins, unlike a fake bill or coin, without easily and automat­i­cally being caught in the attempt to pass it off.  While there are other purely scarce things and even those that are one-of-a-kind, those things are not *indestruc­tible*, *unseize­able*, easily verified for *authen­ticity*, or perfectly *portable*.   #### Property that is Ideal as Money When combined with these other features, Bitcoin’s *scarcity* and easy *verifi­a­bility* make it a type of property very well suited to be used *as* money.  Bitcoin is *perfect* for exchanging for other things. And money, after all, is *not* the property you *consume* but the property you *exchange* for other property you intend to use in some fashion. #### Responsibilities of Owning Bitcoin Now, because of all of the above, owning this *unique* form of property comes with two special responsibilities.  First, an owner of bitcoins must *not* lose their keys. If keys are lost while the Bitcoins remain, they can never be spent. No govern­ment or law enforce­ment agency can inter­vene to help. Lost keys *cannot* be recreated. Second, an owner of Bitcoins must *not* let anyone else make a copy of the keys needed to spend their coins. If someone gets your keys, then *they* own your coins, and they can spend them. Once spent, coins cannot be unspent. There are no take-backs in Bitcoin. Bitcoin trans­ac­tions are **irreversible.**   It is possible to hire a company to look after your Bitcoins for you. Many people do. But, if someone else is holding your bitcoins for you, they really own the Bitcoins according to Bitcoin’s unique rules. What you own in that case is a legal contract with that company — a contract enforce­able by the law enforce­ment system of the juris­dic­tion in which they operate. This, then, as far as *you’re* concerned, is like all other forms of property owner­ship and you don’t benefit from nor do you take on the respon­si­bil­i­ties unique to bitcoin as property.  Holding Bitcoin directly is a **trust­less** form of property owner­ship, but it comes with *respon­si­bility*. Some firms make ‘partial’ custody avail­able where under certain condi­tions, they can produce one or several keys neces­sary to aid in moving your coins or all the neces­sary keys neces­sary to move your coins in case you pass away and want your heirs to be given the keys. ### Conclusion Bitcoin is property, but it has *unique*, *powerful*, and respon­si­bility-requiring charac­ter­is­tics that *no* other form of property on Earth has.  Use it wisely.  Enjoy it responsibly.  ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Why Bitcoin is What Millennials Are Looking For URL: https://www.swanbitcoin.com/culture/why-bitcoin-is-what-millennials-are-looking-for/ Bitcoin is the system that can make millennials' hopes and dreams come true, and this is becoming increasingly clear to more of them each day. --- **Tomer Strolight** · January 22, 2022 · Updated July 3, 2024 ### Millennials Have Been Given a Bad Rap Millen­nials have it bad. First, through the misfor­tune of being born last into a monetary system that is a pyramid-Ponzi scheme, they're the ones who most get burned as it comes crumbling down all around us. They are born into huge debt, forced to pay into social programs where others receive services that they never will, they must pay sky-high prices for homes, and they are forced to pay ridicu­lous prices for degrees whose under­lying knowl­edge can be learned for free by watching YouTube videos. It's outra­geous, and they've had to deal with it their whole lives! This disad­van­tage is deeply *unfair*. On top of all this injus­tice, they get labeled as bad employees – *"the worst gener­a­tion to have work for you."* And why are they slapped with this label? Appar­ently it is because millen­nials aren't as loyal to compa­nies as previous gener­a­tions were.  Appar­ently according to the surveys, millen­nials care more about finding a greater purpose than a company's success.  This, too, is a very unfair conclu­sion. How exactly does pursuing *a higher purpose* than profit make you *"the worst gener­a­tion"*?  Doesn't that, frankly, sound better? And yet, despite being treated like shit, millen­nials have not given up on finding a purpose. What an *unfair and* ridicu­lous inver­sion this is by those who came before the millen­nials – instead of taking respon­si­bility for the huge problems *they* created, these irrespon­sible gener­a­tions blame the gener­a­tion that was born into them.  These irrespon­sible gener­a­tions are, in fact, the ones that haven't been good stewards of our civiliza­tion. As business leaders, they pay lip service to social issues while hypocrit­i­cally indulging in the very things that worsen them. They even concoct fake issues to draw people into their 'solutions' of them, from which they profit. And, as polit­ical leaders, they manip­u­late emotions through exagger­a­tions and lies, with the only purpose of their actions being to satisfy their power lust. Frankly, they wouldn't recog­nize a higher purpose if it came up and punched them in the face. So what are millen­nials to do?  Are they trapped in a collapsing civiliza­tion, made to *unfairly* bear the brunt of the laziness, gluttony, dishon­esty, and sloppi­ness of previous gener­a­tions? Is there any hope for them?  ### Bitcoin is the Entity with the Bigger Purpose Bitcoin may be just the thing that the millen­nial spirit seeking a higher purpose is looking for. It could be the thing they want. It could be the thing they need. Bitcoin is not a company, and it's not a govern­ment. It has no leaders. It has no rulers. It is open to all. It is *fair*. And It has a very lofty purpose. Bitcoin has no share­holders, so unlike today's insatiable compa­nies, the purpose of Bitcoin is not to *maximize share­holder value* at all, let alone at the expense of every­thing else.  Bitcoin has no leaders, so nobody can change the game's rules to suit either themselves, the rich, or the powerful at the expense of others.  Bitcoin does not require you to have a degree costing hundreds of thousands of dollars and years of your life. It treats everyone equally. Bitcoin is not an indebted and insol­vent system. It does not hoist debt upon anyone, let alone those who weren't even born when debts were entered into. Bitcoin isn't trying to unfairly justify past mistakes or evil-doing by blaming anyone, so it doesn't unjustly judge the innocent as lazy or disloyal. Bitcoin isn't trying to get elected, so it doesn't make false polit­ical promises. Bitcoin isn't trying to seize power, so it doesn't advocate violence and property seizure against some group that stands in the way of power. Bitcoin has a *higher purpose* than any corpo­ra­tion or polit­ical party. Bitcoin's purpose is to give something very special to humanity – to everyone, not just those who have already been alive for a long time, and not just those who are young even, but also to those not yet born. It aims to provide them all with something *fair* and very badly needed.  Bitcoin aims to give all people the ability to *trade* the best they have to give in exchange for a reliable promise that will not be broken. That thing they trade their best efforts for is a promise that they will get someone else's best efforts in the future.  This is what fair money is – a promise to get something of equal value to what you gave, at a later time and in a different place. And this is what Bitcoin aims to be – *fair* money – a system where *when* you give your best, you receive something in exchange which you *can* later give to someone to get the *best* they can give. And the reason they'll accept this is because it is a promise that *they*, *too*, can later use to get the best that someone else can give to them. And so on. Bitcoin's promise is *fairness*. And man, oh man, is that something that millen­nials badly need.  Consider how *unfair* our current system is and how Bitcoin avoids that unfairness: Everyone born today instantly owes their *unfair* share of the money spent by previous gener­a­tions – in America, this is over $80,000 per newborn. But they don't owe anybody any Bitcoin.  Dollars themselves are *unfairly* conjured up out of nowhere by banks to inflate the prices of homes and educa­tions through loans – either putting these things out of the reach of millen­nials or forcing them to enter into a lifetime of debt payments. However, all the banks in the world cannot conjure up a single Bitcoin.  Politi­cians *unfairly* borrow money to buy votes – money they never repay – leaving the burden to younger gener­a­tions. But no politician's pen can make any more bitcoins or cause anyone to lend any to him. ### Millennials Have a Lot in Common with Bitcoin Just as millen­nials get *unfairly* criti­cized, so too does Bitcoin.  First, money itself gets an *unfair* charac­ter­i­za­tion:  *“Money is the root of all evil”* is one of those big lies. It’s so big – *“the root of all evil”* – that when you hear it, you think, *“Well, even if it’s only a little bit true, then money is still the root of some evil.”* But that’s not [what money is](https://www.swanbitcoin.com/what-is-bitcoin/). Money is just a way of getting something of value for doing something of value. How is that *evil*? If anything, it’s *fair.* Next, Bitcoin also gets slandered. Whether it is claimed that it is used by crimi­nals (as if the US dollar isn’t the main goal of crimi­nals), that it harms the environ­ment (which it actually benefits), or some other lie, Bitcoin is caught up in the same false blame-game as millen­nials are. It *seeks* to pursue a higher purpose and is *unfairly* criti­cized by those who created and benefited from the problems it aims to solve. But lies are eventu­ally caught out.  The truth rises to the surface. The virtuous rise above the vicious. And all the screaming and fear-mongering by those seeking something for nothing eventu­ally finds itself ignored and discred­ited. And that’s where all the bullshit that falsely blames millen­nials and Bitcoin is headed.  Bitcoin is a partner­ship with people seeking truth and *fairness* – across the whole planet – to insti­tute *fairness* throughout the global economy. It is a system restoring *fairness* to money itself, which is the medium used in every single economic exchange in the world!  For millennials that understand how table is tilted and rigged, investing in a Bitcoin IRA product is one of the best ways to get Bitcoin exposure. Every dollar to Sat conversion is one step closer in the [Race to Avoid the War](https://www.swanbitcoin.com/the-race-to-avoid-the-war/) and [Winning Time for Bitcoiners](https://www.swanbitcoin.com/bitcoiners-its-winning-time/). **Swan Bitcoin IRA** Our [Swan Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) product is an ideal path for a young Gen Z'er with a low-time preference investment horizon to get exposure to Bitcoin. Also take a look at our [comparison review](https://www.swanbitcoin.com/crypto-iras/) of the Top 6 Bitcoin and Crypto IRA options and [Why Bitcoin is the Ultimate Asset for Your IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) from our Swan Research department. No matter what questions you have, we have [the answers to help you avoid IRA icebergs](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) and make the most informed choice possible. Many, if not most, millen­nials have little interest in becoming winners in the *unfair* system rigged against them in the first place. They don’t want or need to get lousy, *unfair* treat­ment from others.  Instead, their interest lies in replacing that unfair system with a fair one: a system in which *they* and *everyone* else will be treated *fairly*; where they will all be able to create, grow, and develop; where they will be rewarded fairly for giving their very best; and, where they will be able to receive the very best from others. Bitcoin is the system that can make millen­nials’ hopes and dreams come true, and this is becoming increas­ingly clear to more of them each day. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Goldbugs Don’t Understand Money - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/goldbugs-dont-understand-money/ One of the most persistent falsehoods prograted by goldbugs is the idea that monetary goods must have direct utility. --- **Spencer Schiff** · February 21, 2022 · Updated June 27, 2024 One of the most persis­tent false­hoods propa­gated by gold bugs is the idea that monetary goods must have direct utility. Even those who concede that [Bitcoin](https://www.swanbitcoin.com/signup/?gc=schiff-goldbug01&utm_campaign=schiff-goldbug01) has strong monetary attrib­utes insist that its inability to repli­cate gold’s metallic proper­ties is a critical failure. This kind of reasoning stems from a funda­mental misun­der­standing of money. Firstly, it’s impor­tant to remember that a portion of the market value of monetary goods reflects demand that exists simply because holders expect demand from other holders. This charac­ter­istic is neces­sarily shared by *all* such goods. ![](https://www.datocms-assets.com/56652/1690284483-gold.png?auto=format) The idea of a money without a monetary premium makes as much sense as the idea of a book without pages. Yet, some gold bugs bizarrely argue that anything with such a premium is in a “bubble” destined to implode. The logical conclu­sion to this line of thought is that gold must have been overvalued for the past few thousand years and is long overdue for a crash. Moreover, it would follow that money itself should never exist and that humans should be forever stuck with a barter system. The more sophis­ti­cated gold bugs avoid such an obvious self-contra­dic­tion by instead arguing that it makes sense for money to have a monetary premium as long as it *also* has utility value. In a recent podcast episode, my dad ([Peter Schiff](https://schiffgold.com/)) made the following case:  ***“There is some monetary premium with respect to gold, but bitcoin doesn’t have a monetary premium because in order to have a premium, you have to have some value that the premium is built on. Bitcoin has no value. It’s 100% monetary premium. But without a base, it doesn’t matter because you can’t have a premium unless you build it on top of something.”*** Part of this argument is super­fi­cial and likely stems from Bitcoiners’ usage of the term *“monetary premium”* to describe the differ­ence between a good’s utility value and total market value. The word *“premium”* can be inter­preted to mean that the utility value is the base from which the monetary value grows. This concept is reinforced by charts such as the one shown above. However, the word *“premium”* can easily be avoided, and different charts can be used to illus­trate monetary value without showing utility value as a base. Putting aside seman­tics, the funda­mental under­lying argument is that a good’s monetary value is depen­dent on its direct utility. In this frame­work, the utility value is likened to the founda­tion of a building; without a founda­tion, a collapse is inevitable. Although super­fi­cially compelling, this analogy simply doesn’t stand up to scrutiny. While a good’s utility value is supported by its direct uses, such as indus­trial appli­ca­tions, its *monetary* value is supported by its monetary attrib­utes, such as credible long-term scarcity and censor­ship resis­tance. There­fore, the utility value and monetary value are *indepen­dent* from each other. Each can survive on its own because each has its own base of support. To illus­trate this point, we can imagine a scenario where all of gold’s indus­trial and ornamental uses suddenly vanish. Would its monetary value disap­pear as well? No, because its monetary attrib­utes would remain intact. But how would people have any concep­tion of what its purchasing power should be? That wouldn’t be an issue either; in *Man, Economy, and State*, econo­mist Murray Rothbard explained: ***“If on day X gold loses its direct uses, there will still be previ­ously existing money prices that had been estab­lished on day X minus 1, and these prices form the basis for the marginal utility of gold on day X.*** ***Similarly, the money prices thereby deter­mined on day X form the basis for the marginal utility of money on day X plus 1. From X on, gold could be demanded for its exchange value alone and not at all for its direct use”.*** Not only is it possible for money to have only monetary value, but it is actually the most desir­able situa­tion. Contrary to popular belief among gold bugs, direct utility is actually a hindrance to monetary goods because of how fluctu­a­tions in indus­trial demand can impact their purchasing power. There­fore, Bitcoiners who deride gold as being *“just a shiny rock”* are not only incor­rect (because gold does have indus­trial uses) but also are inadver­tently making gold seem like better money than it actually is. The conclu­sion of this analysis is that [Bitcoin’s](https://www.swanbitcoin.com/signup/?gc=schiff-goldbug01&utm_campaign=schiff-goldbug01) improve­ment on gold is two-fold: it *discards* the counter­pro­duc­tive non-monetary proper­ties while also *upgrading* the monetary proper­ties. The result is the creation of a good that is optimized to be supreme money. ![](https://www.datocms-assets.com/56652/1690284659-screen-shot-2022-02-21-at-1-33-00-pm.png?auto=format) ### Spencer Schiff Spencer Schiff is a Research Analyst and Educator at Swan Bitcoin. He is a former gold bug, turned Bitcoin advocate. For years now the well known economist and gold bug Peter Schiff has continuously spoken out against bitcoin. His son, Spencer, has taken the other side of that argument and continues to present ground breaking research to prove why Bitcoin is the ultimate asset to own in today’s world. # Bitcoin’s Real Energy Expenditure: A Comparative Analysis URL: https://www.swanbitcoin.com/analysis/bitcoin-real-energy-expenditure-nick-payton/ We must compare Bitcoin’s enivronmental and socio-economic impacts to the financical systems it aims to replace. --- **Nick Payton** · February 23, 2021 · Updated June 26, 2024 As Bitcoin continues to grow in market capital­iza­tion and energy expen­di­ture, it has been the cause of criti­cism. A common argument is that the mining network uses more energy than some small countries. The problem with that state­ment is that it fails to dive deeper into the critical analysis required to fully under­stand Bitcoin’s energy consumption. Nuances need to be explored, such as: What is the source of that energy?  Is it environ­men­tally harmful to mine Bitcoin (like gold mining)?  Is that energy consump­tion a sum zero to the energy already being wasted?  What utility does Bitcoin provide to society? #### Let’s First Examine the Utility Bitcoin Provides to Society: It is a finan­cial instru­ment that can be sent inter­na­tion­ally between different parties, can be memorized and brought anywhere in the world, and can be stored offline with no counterparty. Just 13 years into existence, it is the most portable, verifi­able, censor­ship resis­tant and divis­ible asset in the world. But perhaps most impor­tantly, it is the most scarce. #### Censorship Resistant We’ve all seen the headlines recently in attempts to cancel and silence anyone that goes against the media narra­tive. De-platforming, doxxing, and many other strate­gies have become the norm. Do we expect it to stop there?  What happens if the govern­ment moves forward with Central Bank Digital Curren­cies? **They’ll be able to turn off your account or freeze your money.** Bitcoin is in the full custody of the owner, assuming they keep it in the appro­priate storage and maintain their own private keys. Nobody can ever take it from you. #### Inflation Protection We’re living in an age of soaring infla­tion. [Over 40%](https://techstartups.com/2021/05/22/40-us-dollars-existence-printed-last-12-months-america-repeating-mistake-1921-weimar-germany/) of the total fiat money supply has been created out of thin air in the last couple of years. This was decided by a handful of politi­cians without input from the people who will feel the most significant effect of these policies. While that has benefited those holding assets like real estate and stocks, it has absolutely crushed those without. Meanwhile, wages are stagnant, and the cost of goods has also soared. If fiat curren­cies continue as our primary store of value and monetary system, we are heading toward the same inevitability that has plagued the citizens of Venezuela, El Salvador, and Zimbabwe (to name a few). ![](https://www.datocms-assets.com/56652/1690285053-d056593a04dbd223e3ed12fa7e6fbad7.jpg?auto=format) Bitcoin has a fixed supply of 21M. There will never be any more. It is essen­tially wealth creation and preser­va­tion that is 100% in the custody of the owner. #### Asset Forfeiture Seizing assets is a time-honored tradi­tion throughout human history. Whether it be through property taxation, real estate seizures, or the [1933 forced forfei­ture](https://en.wikipedia.org/wiki/Executive_Order_6102#:~:text=Executive%20Order%206102%20required%20all,in%202020)%20per%20troy%20ounce.) of all person­ally held gold under penalty of imprisonment. God forbid your country is invaded, overthrown, or any other number of possibilities…  Do you really think your real estate holdings or 401k would be safe? Since it is impos­sible for anyone to seize your Bitcoin without access to your private keys (which can be memorized), it is the only asset class that gives you 100% protec­tion from being confiscated. Now let’s dive into the energy conversation… ### Where Does Bitcoin’s Energy Consumption Come From? It is conser­v­a­tively estimated that as much as [74.1% of all Bitcoin mining](https://www.coindesk.com/tech/2021/04/22/everything-we-want-costs-energy-including-bitcoin/#:~:text=Investment%20in%20bitcoin%20mining%20has,as%20wind%2C%20solar%20and%20hydropower.) is produced from renew­able energy. Critics have said that using renew­able energy to power Bitcoin mining means it won’t be avail­able to power a home, a factory, or an electric car. However, the renew­able energy that Bitcoin miners utilize is typically linked to the excess energy output from these sources. For example, in West Texas, [miners buy excess wind and solar energy](https://www.bullishcaseforbitcoin.com/) from providers when energy is abundant. In so doing, the miners monetize a renew­able asset that would other­wise be wasted while maintaining gener­ally high uptime. The same is true in the recent surge in flair gas energy usage. Miners are contin­uing to adapt in search of more inexpen­sive output. To take it further, nuclear plants are being decom­mis­sioned around the world due to their diffi­culty in remaining profitable in compar­ison to substa­tions and tradi­tional power grids. What if energy compa­nies harness this untapped resource of wasted energy to power a massive adoption of Bitcoin mining infrastructure? All of this lends credence to the hypoth­esis that Bitcoin is galva­nizing the use of renew­able energy. Now imagine govern­ments wish to tame infla­tion in the future without plunging the world into a massive reces­sion. They can’t raise rates to do so, like they did in the 1980s, because most of the world would default on their massive low-interest loans. They will need to choose a new system to back their money. Destroy the economy or destroy fiat currency. That is the question they are currently faced with today. With its huge renew­able energy founda­tion, Bitcoin will be too good to pass up. #### Is Bitcoin Harmful to the Environment? When asking this question, it is impor­tant to not put it in a vacuum. While there is still room for improve­ment on the 26% non-renew­able Bitcoin mining sources, the expec­ta­tion is that this will continue. Conversely, we must compare Bitcoin’s environ­ment impact to its alternatives: #### Gold Based on a [2014 study](https://www.bullishcaseforbitcoin.com/), gold produc­tion expends roughly 132 terawatt-hours of energy per year. Compare that to Bitcoin’s 105 terawatt-hours as of 2021. These are fairly similar in energy output. However, the large differ­ence to be seen is just below the surface (no pun intended). Gold mining activ­i­ties lead to the gener­a­tion of large quanti­ties of heavy metal-laden wastes, which cause widespread conta­m­i­na­tion of the surrounding ecosystem. ![](https://www.datocms-assets.com/56652/1690285244-gold-king-mine.jpg?auto=format) Modern indus­trial gold mining [destroys landscapes](https://www.brilliantearth.com/gold-mining-environment/#:~:text=Modern%20industrial%20gold%20mining%20destroys,every%200.333%2Dounce%20gold%20ring) and creates huge amounts of toxic waste. Due to the use of dirty practices such as open pit mining and cyanide heap leaching, mining compa­nies generate about 20 tons of toxic waste for every 0.333-ounce gold ring. The waste, usually a gray liquid sludge, is laden with deadly cyanide and toxic heavy metals.  Gold doesn’t even come close to competing with Bitcoin in its preser­va­tion of the environ­ment or the energy required to create it. As the world is hungry for more wealth, gold miners are begin­ning to look to the sea bed and oceans to begin large-scale mining. How do we expect this to turn out, based on the damage already done with land mining?  **Answer:** Not good. #### Fiat Monetary Systems As Vijay Boyapati pointed out in his article, [The Bullish Case of Bitcoin](https://www.bullishcaseforbitcoin.com/), it is not just the finan­cial systems that must be accounted for, but every­thing that is needed to uphold it. That is the measure of the true environ­mental impact of today’s fiat monetary systems. On the surface, there are people, build­ings, banks, computers, and commuting systems to consider. But what backs fiat systems since it came off the gold standard? Bitcoin has Proof of Work. Fiat currency has politics and the military. Make no mistake, without the military and the polit­ical strength of the nation, there is no way the world accepts the dollar as the world currency. What is the environ­mental impact of war, planes, carriers, tanks, the gasoline to power them, the steel created to build them, and the millions of service men and women? It’s almost immeasurable. ![](https://www.datocms-assets.com/56652/1690285342-d83fpcvxkaavnkm-scaled.jpg?auto=format) Bitcoin is housed in data centers spread around the world, typically going where the most avail­able excess renew­able energy can be used. All you need is an internet connec­tion, and no military in the world can confis­cate it because it is decentralized. #### Conclusion We as respon­sible investors must look beyond the surface of energy expen­di­ture. Look at how Bitcoin’s energy is created, and the impact trail it leaves behind. We must compare Bitcoin’s environ­mental and socio-economic impacts to the finan­cial systems it aims to replace. We must look at who the current system aims to enrich, and how Bitcoin aims to fix that. It goes far beyond the surface. And once you under­stand those impacts, you realize there is only one true solution: buy, hold, set up a [recurring buy plan](https://www.swanbitcoin.com/signup) with Swan and leave the world a better place for future gener­a­tions of your family. ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # The Ultimate Safe Haven - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/the-ultimate-safe-haven-spencer-schiff/ Bitcoin will be considered the safest asset in human history, thanks to its resistance to debasement, censorship, and confiscation. --- **Spencer Schiff** · February 28, 2021 · Updated June 26, 2024 People who are antag­o­nistic towards Bitcoin have recently been calling atten­tion to how it behaves as a risk-on asset. Its price declines when uncer­tainty increases and rallies when the uncer­tainty abates. This asser­tion is under­lined by the obser­va­tion that bitcoin has been corre­lated with high-beta tech stocks and inversely corre­lated with *“safer”* invest­ments. This FUD came to a crescendo when Russia attacked Ukraine on Wednesday night. Immedi­ately after the invasion began, tradi­tional safe havens surged in value while bitcoin tanked. However, this does not reveal anything about the funda­men­tals. [Current price action doesn’t reflect what Bitcoin *is*](https://www.swanbitcoin.com/bitcoin-price-prediction/); it only reflects how traders *perceive* it. This distinc­tion is impor­tant because percep­tions can change, and in this case, they likely will.  ![](https://www.datocms-assets.com/56652/1690285712-unnamed.jpeg?auto=format) If [Bitcoin](https://www.swanbitcoin.com/signup/?gc=bitcoin-safe-haven&utm_campaign=bitcoin-safe-haven) becomes the global reserve currency, it’s reason­able to assume that it will be widely recog­nized as a safe asset. After all, there’s a sense in which holding cash balances is a hedge against uncer­tainty. This applies to everyone, from ordinary people who want to prepare for unexpected emergen­cies to large fund managers who boost their cash alloca­tion if they fear a market correction.  This means Bitcoin will be viewed differently than the U.S. dollar is today. It will actually be consid­ered to be the safest asset in human history, thanks to its resis­tance to debase­ment, censor­ship, and confis­ca­tion. This property can be especially attrac­tive in the face of geopo­lit­ical tensions such as those being experi­enced today.  There­fore, in *“risk-off”* market environ­ments, the purchasing power of Bitcoin will increase relative to other assets. This rise will have similar dynamics to how the dollar currently appre­ci­ates during times of uncer­tainty, but likely in a more pronounced way. Bitcoin will be viewed as the [ultimate safe haven](https://www.swanbitcoin.com/private/?gc=bitcoin-safe-haven&utm_campaign=bitcoin-safe-haven). The best way to prepare for this future market environ­ment is to ensure that you have some Bitcoin right now. ### Spencer Schiff Spencer Schiff is a Research Analyst and Educator at Swan Bitcoin. He is a former gold bug, turned Bitcoin advocate. For years now the well known economist and gold bug Peter Schiff has continuously spoken out against bitcoin. His son, Spencer, has taken the other side of that argument and continues to present ground breaking research to prove why Bitcoin is the ultimate asset to own in today’s world. # Why Bitcoin is Different (Part 1) - Swan Bitcoin URL: https://www.swanbitcoin.com/education/why-bitcoin-only-part-1/ Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where beginners run into confusion is in how Bitcoin differs from other cryptocurrency. --- **Sam Callahan** · March 4, 2022 · Updated June 26, 2024 Bitcoin is a brand-new technology that differs from anything else that has come before or after it. It’s a decen­tral­ized monetary system controlled by rules instead of rulers. This innova­tion is radically different from our tradi­tional finan­cial system, and people can typically under­stand this differ­ence easily. But where begin­ners run into confu­sion is how Bitcoin differs from other cryptocurrencies. New investors often get lured by the false promises and decep­tive narra­tives of altcoins. They get duped into selling their Bitcoin for scams and inferior systems that claim to be better than Bitcoin in some way. The running joke in the Bitcoin commu­nity is a newcomer first buys bitcoin, then finds altcoins, then loses money on altcoins, only to eventu­ally return back to only investing in Bitcoin. This is collo­qui­ally known as the *“Sh*tcoin Cycle.”*  New investors go through this Sh*tcoin Cycle because avoiding it requires a deep under­standing of the under­lying technology, the game theory, monetary economics, and network economics that reveal why there is only one Bitcoin. Failing to know all this makes one vulner­able to being unable to choose the best option. The goal of this series is to break the Sh*tcoin Cycle. The only way to do that is through educating begin­ners about what makes Bitcoin unique compared to all the other cryptocur­ren­cies. There is Bitcoin, and there are sh*tcoins — and here’s why.  #### Bitcoin Is Decentralized, Altcoins Have Management Teams Bitcoin solved a problem that plagued humanity throughout history: **the need to create a system of money that could not be captured and corrupted by anybody**. This problem has led to the fall of nations and empires throughout history. How Satoshi solved, it was ingenious. The solution involved not just the system’s design and code but how it was intro­duced to the world. Whoever Satoshi was or was, he was not after personal fame, power, or wealth. In contrast, the names of all of the founders of all major altcoin projects are publicly known. Those founders hold tremen­dous power over the partic­i­pants in their projects. Only Bitcoin has a founder, now disap­peared, who wields no influence over the protocol nor the people who use it, which is, when you think about it, a prereq­ui­site to incor­rupt­ible and uncap­turable money. Since Bitcoin has no active founder, founda­tion, or consor­tium that created or controls the coin, it has no single point of failure. There is no one to target, manip­u­late, or coerce. There is no one who is tempted by greed or self-interest that can affect the opera­tion of the system.  This lack of central authority makes it exceed­ingly diffi­cult to make changes to the rules of the protocol. It thus makes Bitcoin an extremely reliable [store of value](https://www.swanbitcoin.com/satoshi/?gc=why-bitcoin-part1&utm_campaign=why-bitcoin-part1). Since Bitcoin is truly decen­tral­ized and censor­ship-resis­tant, no one can change it unless everyone in the system volun­tarily agrees to the change. You never have to trust a group of individ­uals to keep their word in Bitcoin. Code is law.  By contrast, the network design of Ethereum, the altcoin with the highest market cap, is central­izing over time, both in its current proof-of-work form (where now almost no one can run a node, and that gets harder all the time) and in its future proof-of-stake form being planned by Ethereum manage­ment. It’s safe to say that Ethereum is centrally controlled today despite claiming other­wise. It is decen­tral­ized in name only.  Ethereum’s central­iza­tion makes it easy for the manage­ment team to make changes to the rules of the protocol. We saw it take place with yet another Ethereum [hard fork](https://cointelegraph.com/news/ethereum-london-hard-fork-goes-live) recently, and these events take place regularly, often [benefiting the manage­ment at the expense of the commu­nity](https://tomerstrolight.medium.com/the-problem-with-ethereum-af9692f4af95). Consider the charts below — Bitcoin’s monetary policy is hard to change because it’s decen­tral­ized and leader­less. So hard, in fact, that it has never changed. Its [monetary policy is predictable and machine-like because](https://www.swanbitcoin.com/bitcoin-price-prediction/) Bitcoin is truly run by math, not people.  ![](https://www.datocms-assets.com/56652/1690286771-image1.png?auto=format) Total Money Supply and Money Supply Growth Rate Now compare the chart above with the one below and notice the stark difference. ![](https://www.datocms-assets.com/56652/1690286813-image2.png?auto=format) Ethereum’s Histor­ical and Projected Issuance Rate Ethereum's monetary policy is controlled by humans, not computers, and thus its issuance reflects the unpre­dictability of human nature.  Due to its changing nature, Ethereum's long-term issuance schedule can't really be predicted. In contrast, Bitcoin's issuance is knowable with certainty for the rest of the time. With Ethereum, you are trusting people to respon­sibly control the money, which histor­i­cally has been a losing venture. Recall that this was the whole problem Bitcoin set out to fix.  If you have to trust that some oligarchy won't change the rules of the protocol, then you can't trust the monetary policy will stay the same. If you can't trust the monetary policy, then you can't trust the scarcity of the asset. Which begs the point, why do you have to trust anyone or anything at all?  And here, then, is the big differ­ence between Bitcoin and every imitator: besides Bitcoin, none of them have created anything new if their token is not decen­tral­ized and immutable. If you buy those tokens, you are simply trading your *centrally controlled dollars* for another *centrally controlled token*— trading one group of rulers for another group of rulers with the power to manip­u­late the money at their will.  Only Bitcoin has proven to be suffi­ciently decen­tral­ized and censor­ship-resis­tant over its history. Bitcoin's monetary policy and scarcity are programmed and predictable. Its monetary policy relies on predictable code, not unpre­dictable humans. *Rely* on Bitcoin, do not *trust* altcoins.  #### Bitcoin Is Scarce, Altcoins Are Abundant  There will only ever be 21 million bitcoin. The fixed supply and issuance schedule of Bitcoin was programmed in from the very begin­ning. It can never be altered without all the network nodes agreeing to the change. This programmed scarcity is verifi­able by every user of the network and knowable into the future because of the predictable nature of the monetary policy. As touched on previ­ously, this predictability is made possible due to the decen­tral­iza­tion and immutable nature of the Bitcoin protocol. It is these proper­ties that ensure Bitcoin's fixed 21 million scarcity remains intact.  Bitcoin is the first time in history that we have a provably fixed, scarce asset that we can rely upon to continue to be scarce. In other words, Bitcoin is the inven­tion of *absolute scarcity* because its supply will remain fixed regard­less of increased demand. Digital scarcity can only be invented once. This inven­tion occurred with Bitcoin. The cost of creating imita­tors with slightly different varia­tions in the code is zero, given Bitcoin's open-source nature. With no cost to produce a copy, this led to an explo­sion of altcoins, all trying to recreate their own version of Bitcoin. But what no single one of them can recreate is being first. Bitcoin's organic adoption and the grass­roots growth of its mining ecosystem cannot be (and there­fore has not been) repli­cated in this world where digital scarcity already exists.  When some group creates an altcoin, one must ask: - ***What does your new cryptocur­rency offer to a world where Bitcoin exists, and what does it sacri­fice that Bitcoin actually has?*** - ***Can you guarantee that the monetary policy is credible?*** - ***Can you ensure the distri­b­u­tion of money is an equal oppor­tu­nity and fair?***  - ***Is this new cryptocur­rency decen­tral­ized? How?***  Typically there are no answers to the hard parts of these questions because the true answers are that this is simply a group trying to get person­ally rich by issuing some new money, giving themselves a lot of it early on, and staying in control of its issuance and rules. Since the cat is out of the bag with digital scarcity, nobody can credibly create a new cryptocur­rency without it being more central­ized, unfairly distrib­uted, less credible, and less secure than Bitcoin. With decen­tral­iza­tion and censor­ship resis­tance being the key to maintaining the credi­bility of a cryptocurrency's monetary policy and, subse­quently, its scarcity, we can conclude that an altcoin is less scarce and less credible than Bitcoin because of they fail to be the first cryptocur­rency, which only Bitcoin can ever be, and also because they all fail to address these questions with satis­fac­tory answers. Only Bitcoin is the inven­tion of digital scarcity. It is optimized for credible scarcity due to its decen­tral­iza­tion and censor­ship resis­tance. Every­thing else that came after it is hopelessly trying to re-invent the wheel when the wheel we already have is working flawlessly.  #### Bitcoin Is Backed by Energy, Altcoins Are Backed by Promises Energy is the currency of the universe. To get anything done, you need to transfer energy and put in the work. Energy is something that can't be faked, that can't be created, but that can only be trans­ferred. This is the [first law of thermo­dy­namics](https://en.wikipedia.org/wiki/First_law_of_thermodynamics), and it sits at the core of the Bitcoin Proof of Work consensus algorithm.  Bitcoin's *"miners"* — those who perform the Proof of Work to discover the new coins and secure the history of trans­ac­tions — have no way around using energy. With Proof of Work, they must comply with the laws of the universe by trans­fer­ring energy in order to mine a block and get rewarded. This allows us to view the immutability of the Bitcoin blockchain objec­tively as truth. We can know with certainty that real energy was trans­ferred by miners when they include valid trans­ac­tions in a block and secure the blockchain. There­fore we can know with certainty that the ledger's history of trans­ac­tions is honest.  **The real innova­tion of Bitcoin is by utilizing the honest nature of energy, a perfectly compet­i­tive and auditable environ­ment is created where market partic­i­pants of a distrib­uted network can come to consensus in a manner that is trust­less and maintains integrity.**  Other consensus algorithms like Proof of Stake rely on someone else (a stalker) to subjec­tively say that the ledger is valid (true). With Proof of Stake, you are trusting another person's word to confirm the immutability of the blockchain instead of counting on the unbreak­able laws of nature. Proof of Work is backed by energy and finds truth by bridging the real world with the digital world, whereas Proof of Stake is backed by nothing but what someone else tells you is true.  What's the value of a promise when compared with the value of certainty? Another benefit of Bitcoin's energy use is it makes Bitcoin hard to produce, thus providing its scarcity. We touched on this topic earlier when we discussed how there is zero cost to produce copycat altcoins. What sets Bitcoin apart is there is a real external cost to produce new Bitcoin in the form of electricity. If you decide to shift that energy cost to something else that utilizes fewer resources, like Proof of Stake, you just made the money easier to produce. Said differ­ently, you took hard money and made it easy money that is more suscep­tible to being inflated, making it an inferior store of value. Bitcoin utilizes the honest nature of energy to come to a consensus rather than using people's promises to do it. This allows it to be a system that is orders of magni­tude more secure, more scarce, and more censor­ship-resis­tant than every other cryptocur­rency in existence today. Bitcoin's energy usage is a feature, not a bug, and it's a major reason why Bitcoin stands alone.  #### Bitcoin Can Be Imitated, But Never Duplicated Bitcoin is radically different from every other cryptocur­rency project in existence today. Its killer feature is the long-term credi­bility of its monetary policy. Bitcoin keeps its promises. Since the Genesis block, Bitcoin has kept its commit­ments: - ***There will only be 21 million Bitcoin.*** - ***Anyone can verify the ledger.*** - ***You can't spend what you don't have.*** It accom­plished this because Bitcoin is suffi­ciently decen­tral­ized in that no one can control it, censor it, or change its rules. This resis­tance to change has allowed more and more people to recog­nize Bitcoin's scarcity and relia­bility. This cannot be repli­cated by altcoins because it cannot be created by altcoins.  Altcoin promoters are either ignorant of all of the above or under­stand these concepts and push their wares on newcomers anyways. This is why the altcoin industry is a cesspool of fraud and scams. They are all desper­ately trying to justify their existence because they are building funda­men­tally broken solutions to problems that don't exist. Only Bitcoin brings incor­rupt­ible money and absolute scarcity to the world. Only Bitcoin is leader­less. Only Bitcoin is energy-backed money. Only Bitcoin is honest. For all these reasons and more, Bitcoin has already won.  ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Gifting Bitcoin — The Ultimate Orange Pill - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/gifting-bitcoin-the-ultimate-orange-pill/ As many people discover convincing a friend or family member to buy Bitcoin can be a challenging task. Swan Bitcoin makes it easier than ever with their gifting program. --- **Sam Callahan** · March 7, 2021 · Updated August 2, 2026 1. *Gifting Bitcoin Is a Great Way to Intro­duce People to Bitcoin* 2. *Bitcoin Makes a Great Gift Because It Keeps on Giving* 3. *Previous Methods of Gifting Bitcoin Had Their Limits* 4. *Swan Has a New Approach to Gifting Bitcoin that Overcomes These Challenges* ### Gifting Bitcoin Gets Things Going As many people discover, convincing a friend or family member to buy Bitcoin can be challenging. Sometimes it feels like no matter how compelling of an argument you make, certain people are just not ready to take these neces­sary steps that will put their wealth in their own hands. There are many reasons why a loved one might not feel comfort­able making their first Bitcoin purchase. Often they don’t under­stand what it is or why it’s impor­tant, or maybe they don’t know how to buy it, and the process intim­i­dates them. It’s common for Bitcoiners to feel like Morpheus from The Matrix when trying to convince a loved one to take the *“orange pill.”* ![](https://www.datocms-assets.com/56652/1690287662-image1-1.png?auto=format) As in the movie, we need to recog­nize that some people are simply not ready to reach out and swallow the pill themselves. The good news is, there’s a way around waiting for them to make the decision; you can do it for them…by gifting them Bitcoin. Over the years, the best methods to gift someone Bitcoin have evolved. Recently, Swan intro­duced Swan Gifting, which we believe is the easiest and safest way to gift Bitcoin today. ### Why Should You Give the Gift of Bitcoin?  Gifting a loved one bitcoin is one of the most effec­tive ways to facil­i­tate their owner­ship of bitcoin. Rarely will anyone reject a gift. In fact, they will often thank you for it.  And, with infla­tion [at the highest levels seen in decades](https://www.wsj.com/articles/us-inflation-consumer-price-index-december-2021-11641940760), there has never been a better time to gift someone some Bitcoin. Your loved one’s savings are at risk of eroding away rapidly from infla­tion. Most people don’t realize that although the amount of money in their savings account hasn’t changed, its purchasing power has.  Consider, for example, An example of this concept is the increasing prices of food and bever­ages at sports events or concerts. The amount of nachos or soda hasn’t changed; the dollar's purchasing power has.  One dollar today does not buy as much at the conces­sion stand as it used to. Infla­tion has eroded the purchasing power of those dollars. This is an impor­tant area where Bitcoin can help. Unlike dollars, bitcoin is money that holds its value over time. It’s a revolu­tionary savings technology that allows individ­uals to save for the future with money that cannot be inflated. In fact, bitcoin is likely to increase in purchasing power due to its network effect and scarcity. Histor­i­cally, Bitcoin’s average 5-year compounded annual growth rate is 107%!  Let’s face it, many gifts seem to find their way to trash eventu­ally. But Bitcoin is a gift that truly keeps giving.  Let’s take a look at some popular gifts over the last 5 years and see how much purchasing power your friend or family member would have today if you gifted them some Bitcoin instead.  ![](https://www.datocms-assets.com/56652/1690287791-screen-shot-2022-03-07-at-1-33-06-pm.png?auto=format) Bitcoin’s value vs Consumer products The moral of this story is that by gifting your friends and family Bitcoin, you are giving them a gift with the poten­tial to give them every­thing they want and more as it pays off later through Bitcoin’s price appreciation. Whereas you would be hard-pressed to find someone still using the same iPhone you gifted them in 2017, your Bitcoin gift would still be valuable that they would cherish today and beyond. By gifting them Bitcoin, you can give your loved ones something that may make a meaningful differ­ence in their futures. ### Ways to Gift Bitcoin  There are several common ways to gift Bitcoin. As a useful warning, it is impor­tant to note that if you are gifting it to someone who does not yet appre­ciate its poten­tial value, they might lose it or forget about it. You will want to be mindful of this fact and choose a method appro­priate for the recipient’s appre­ci­a­tion of Bitcoin at the time you give the gift. #### Paper Wallets In earlier days, gifting people with paper wallets was quite popular. A paper wallet stores [private keys](https://en.bitcoin.it/wiki/Private_key) on a piece of paper like the ones shown below.  ![](https://www.datocms-assets.com/56652/1690287899-image2-1.png?auto=format) Paper wallet Bitcoin These came with a whole host of risks. First, there were many instances where people lost funds due to mishan­dling the private keys on the paper wallet. Also, paper wallets have privacy concerns both upon creation and because they promote [address reuse](https://en.bitcoin.it/wiki/Address_reuse#:~:text=Address%20reuse%20refers%20to%20the,depended%20on%20to%20work%20reliably.). Lastly, since the paper wallet is made of paper, it is rather fragile and suscep­tible to damage or being lost by the gift receiver.  ![](https://www.datocms-assets.com/56652/1690287982-image3.png?auto=format) Water damaged Bitcoin Paper Wallet #### Hardware Wallets As time passed, paper wallets were phased out for more durable and secure hardware wallets such as [Trezor](https://trezor.io/). Hardware wallets are another way to gift Bitcoin by sending the Bitcoin to a hardware wallet and then gifting the person the wallet with the Bitcoin stored on it.  ![](https://www.datocms-assets.com/56652/1690288061-screen-shot-2022-03-07-at-1-33-59-pm.png?auto=format) Hardware Wallets: Coldcard and Trezor This method of gifting is an improve­ment from a paper wallet but still comes with its own setbacks. First, the wallets themselves cost money and could be consid­ered a gift in their own right. Wallets can be an expen­sive addition to a gift on top of the Bitcoin itself.  In addition to the cost, most begin­ners do not under­stand how to interact with these wallets and would require instruc­tion on how to access their gifted bitcoin properly. There is the risk that the receiver will lose the wallet or mismanage the private keys due to inexperience.  Most impor­tantly, if the gift giver sets up the wallet themselves, they have knowl­edge of the [seed phrase](https://en.bitcoin.it/wiki/Seed_phrase) associ­ated with the wallet.  In other words, the giver could access the gifted Bitcoin at any point in the future. Now if you are gifting a person some Bitcoin, you likely care about the person and would there­fore not be incen­tivized to steal from them but still, not exactly an ideal situation.  In general, we recom­mend using these hardware wallets to take self-custody. Still, there is a learning curve, cost, and other factors associ­ated with them that make them less than ideal for gifting purposes. #### Opendime Another way to gift is with a type of hardware wallet called an [Opendime](https://opendime.com/).  Here at Swan, we love to gift people Opendimes loaded with some Bitcoin. They are a way to gift Bitcoin on a USB-like stick without ever knowing their private key or seed phase. It is the first Bitcoin bearer instru­ment that allows someone to gift Bitcoin in physical form. When the gift receiver is ready to spend their Bitcoin, they can access the private key by breaking a seal on the device itself **(denoted by the white circle).**  ![](https://www.datocms-assets.com/56652/1690288189-image4.png?auto=format) Opendime Bitcoin Wallet Although Opendimes are a great gifting option, they still have some drawbacks. Opendimes themselves cost money and could be an expen­sive addition to a small gift. On top of that, because the private keys can only be unsealed on the device itself, if the gift receiver loses the Opendime, then the Bitcoin is lost with it too. An inexpe­ri­enced person without proper educa­tion may not under­stand how to use it, or they may mishandle or lose the small device. ### Gifting Bitcoin with Swan Recently, the Swan team decided to evolve the way people gift Bitcoin. [Swan Gifts](https://www.swanbitcoin.com/gifts/?gc=gifting-bitcoin&utm_campaign=gifting-bitcoin) is a new way to gift Bitcoin. It is a gift of bitcoin that comes with a customer support team attached and without the costs and risks involved in previous gifting methods.  When you gift Bitcoin through Swan, you are not just giving them Bitcoin; you are also gifting them a personal Bitcoin assis­tant that will be there to answer their questions, educate them, and guide them on the right path towards taking self-custody of their Bitcoin.  Swan will hand-hold your loved ones through the onboarding process, educate them on proper security practices to protect them against scammers or hacks and point them toward the right educa­tional resources.  You no longer need to worry about teaching someone all the ins and outs when gifting Bitcoin. You can outsource all of their questions to the educa­tion team at Swan.  In addition to the concierge benefits, there are zero costs or wait times associ­ated with gifting through Swan Gifts. Simply get the email address of the recip­ient, and you can send Bitcoin to them within minutes. ![](https://www.datocms-assets.com/56652/1690288289-image5.png?auto=format) Gifting Bitcoin with Swan One last thing – if you send a gift through Swan and are also a member of our [Swan Force Referral Program](https://help.swanbitcoin.com/hc/en-us/articles/360050055373-What-is-the-Swan-Force-Referral-Program-), you will be credited with the referral and receive 25% of all their fees for 1 year. Not too shabby.  ### Final Thought: The Gift of Skin in the Game The main reason that gifting Bitcoin is such a powerful way to orange pill someone is because what you are really gifting them is *“skin in the game.”*  **“*****Where your money goes, your mind follows*****.”**  - Robert Breedlove When someone has *“skin in the game,”* they are invested person­ally. Now that some of their net worth is tied to Bitcoin, they are much more likely to stay up to date with the industry and take the neces­sary time to learn about it.  Nothing will excite someone more about Bitcoin than seeing their [purchasing power increase](https://www.swanbitcoin.com/bitcoin-price-prediction/) as Bitcoin adopts continue to grow. Gifting Bitcoin should aim to get them to under­stand and get excited about it. Gifting Bitcoin is actually just a *“Trojan Horse”* to get your loved ones to finally start educating themselves about it.  Bitcoiners know what happens after someone becomes knowl­edge­able about Bitcoin. ![](https://www.datocms-assets.com/56652/1690288414-image6.png?auto=format) % --> Knowledge We are in this together. We’ve already sent thousands of gifts through Swan, and tons of those gift receivers are now buying more Bitcoin and setting up [Bitcoin Recurring Buy Plans](https://www.swanbitcoin.com/saving-with-bitcoin-sam-callahan/).  The question now is not whether or not to gift Bitcoin, but to whom will you send it? ![](https://www.datocms-assets.com/56652/1690288582-image7.png?auto=format) Orange pill your friends and family **In addition to** [gifting Bitcoin](https://www.swanbitcoin.com/gifts/?gc=gifting-bitcoin&utm_campaign=gifting-bitcoin) **to friends and family, if you’d like to buy Bitcoin for yourself we’re** [giving away $10](https://www.swanbitcoin.com/satoshi/?gc=gifting-bitcoin&utm_campaign=gifting-bitcoin) **for doing so!** ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoins! Get Yer Bitcoins! Get ’em While You Can URL: https://www.swanbitcoin.com/culture/bitcoins-get-yer-bitcoins-get-em-while-you-can-tomer-strolight/ The 'Window of Oppurtunity' to buy Bitcoin closes a little more every single day. --- **Tomer Strolight** · March 14, 2022 · Updated June 26, 2024 ### The Window of Opportunity to Buy Bitcoin Closes a Little More Every Single Day ![](https://www.datocms-assets.com/56652/1690289108-text-message-thread-1.gif?auto=format) ### A One Time Only Event: The Issuance of Bitcoin You can earn money. You can make money. You can save money. But it doesn’t really make any sense to ‘buy money.’ What would you buy it with? However, we are living through a unique time in history. The whole world’s money is changing from one form to another, and you can actually buy the new, incoming money with the old, outgoing one. We’ve heard those claims in count­less ads before, haven’t we?  So many ads try to frighten us into immedi­ately buying. They warn us that their product is running out, that the price will go up soon, and so we have to *“act now.”* Of course, we’ve grown wise to those exagger­ated claims. They never hold up. New shipments arrive, and new limited-time-only sales get announced to clear out that new inventory. However, [Bitcoin](https://www.swanbitcoin.com/satoshi/?gc=get-yer-bitcoins&utm_campaign=get-yer-bitcoins) is not like any adver­tised product you’ve seen before. ***“ACT NOW!*** ***This offer is avail­able for a limited time only, and supplies arestrictly limited.”*** ### A Brief Report from the Bitcoin Production Lines I have been to the Bitcoin produc­tion lines. I have inspected them closely. They are seven short lines of computer code. My findings are unequiv­ocal and startling. First, only 6.25 Bitcoin can be discov­ered about every ten minutes across all the Bitcoin mines in the world (at the time of this article). Second, no matter how many Bitcoin mines open up or how much energy they put into mining Bitcoin, that number will not go up. Third, the output of those mines — every last of them — will fall by 50% in a few years.  Then, four years later, output will be cut in half again. Finally, there’s absolutely nothing anybody can do to change these lines to increase the output. My conclu­sion: supplies of Bitcoin really are *strictly limited*! ### You’re One of the Early Few Over 90% of Ameri­cans have heard of Bitcoin. That’s not bad for a digital asset that nobody can see or touch; that isn’t a company; that has no employees; that never took a penny of invest­ment; whose founder vanished years ago and hasn’t been heard from since; and which itself has never spent a penny (or a satoshi) on advertising. It’s even better consid­ering nobody knew what a ‘digital asset’ was before Bitcoin defined it. How can Bitcoin have achieved such broad aware­ness so quickly? How can nearly everyone have heard of something so strange, different, and new? Here’s one reason: **People want scarce things and will act quickly if time compels them to do so.** The claims of scarcity and that it is increasing over time are entirely true about Bitcoin. That’s why millions of people all around the world, without being paid to do so, are telling each other something along the lines of: ***“Oh my god! There’s something whose quanti­ties really are strictly limited! And it’s not going to be avail­able at a price for very much longer!”*** Nearly everyone has heard of Bitcoin by now, but hardly anyone has any of it yet. That is going to change! Bitcoins are for sale, and they are truly, provably, irrefutably, avail­able only in strictly limited quanti­ties and only for a limited time. So as the saying goes, *“*[*Get ’em while you can*](https://www.swanbitcoin.com/satoshi/?gc=get-yer-bitcoins&utm_campaign=get-yer-bitcoins)*.”* This is not an adver­tising message. This is a fact of nature. **It’s still so very early.** Only about 10% of Ameri­cans own any Bitcoin, and around the world, less than 1% of people have any. The more that people realize just how scarce Bitcoin is, the more they will be stampeding to get their hands on some. **You Happen To Be In The Right Place At The Right Time. Do not take this all for granted.** Before Bitcoin was invented, there simply was nothing like it for thousands of years of human history. There was no truly, provably scarce asset. **There will never be an oppor­tu­nity like this again. It’s only avail­able now in the 21st century.** The number of new Bitcoin just gets smaller all the time. By 2032 there will be less than one Bitcoin mined every ten minutes. By 2044, less than one Bitcoin per hour. And by 2060, less than one per day. That’s for everyone in the whole world! At the begin­ning of the 22nd century, between the years 2100 and 2104, the total Bitcoin that will be mined will be 1.25 BTC. That’s not every ten minutes; that’s the total over the entire four-year period! How much longer do you think people will be *“selling”* their Bitcoins in exchange for money that has trillions of units created at ever-increasing rates? So don’t miss your oppor­tu­nity to make a historic purchase. ### History’s Greatest Purchases There’ve been some other great historical purchases in American history. Alaska was purchased from Russia for $7.2 million, or two cents an acre. The Louisiana Purchase cost $15 million and included the entirety of Nebraska, Kansas & Oklahoma, and signif­i­cant portions of Montana, Wyoming, Colorado, New Mexico, North Dakota, South Dakota, Texas, Minnesota, Iowa, Missouri, Arkansas, and Louisiana. It’s no accident that people often refer to [Bitcoin as digital real estate](https://www.swanbitcoin.com/bitcoin-price-prediction/). Early adopters of Bitcoin, like you, are staking their claim on the Bitcoin blockchain. ### Don’t be Fooled by Knock-offs and Scams At this extra­or­di­nary moment in history, it is absolutely crucial that you not be taken in by one of the oldest tricks in the book. This scam is extremely widespread.  Endless imita­tors are trying to trick you into buying their imita­tion of Bitcoin. There are *“cheap”* tokens that take advan­tage of ‘unit bias’ by creating a supply that ensures they cost just a few cents or dollars per token but are not Bitcoin. They are not provably limited in supply. They may be avail­able for only a limited time, but that’s not because they’re scarce like Bitcoin. It’s because nobody is going to want them at all soon. They are ‘here today, gone tomorrow’ projects that will vanish when the supply of suckers runs out. There is, in fact, not a single other project like Bitcoin. Only Bitcoin contains the features neces­sary to operate a truly decen­tral­ized, global, scarce digital asset that can be sent around the globe in seconds (and these are just a few of its unique qualities). Only Bitcoin has an anony­mous creator who gave the inven­tion to the world despite the fame, fortune, and power they could have had in return. Only Bitcoin had a creator who vanished, leaving the project uncon­trolled by any person or small group of people. ***“Psst, buddy, you wanna buy a watch? It says Rolex on this one hanging from the inside lining of my trench coat. You can have it for $50, even though a real Rolex is 30 grand.”*** Only Bitcoin. **Bitcoin is** ***for you*** **precisely because it has no leader to lead you and no one in power to exercise control over you.** Beware of imita­tors. They have leaders who are in control. They want more than just control over your money. They *want* control over you. ### Choose Your Own Adventure Recall the regretful story at the start of this article about the kids asking their grand­fa­ther about the times we live in now. Consider this alter­nate ending: *“Grandpa, what about you?*  *Did you* [*buy real Bitcoin*](https://www.swanbitcoin.com/satoshi/?gc=get-yer-bitcoins&utm_campaign=get-yer-bitcoins) *with pretend, made-up money?”*  Asked the children, their curious eyes wide open. Grandpa was old now. He was no longer the strong young man he’d been in his prime. But at this question, he seemed to suddenly grow younger. His neck straight­ened. His gaze focused. He stood up taller and straighter than they remem­bered in their whole lives. And when he spoke, his voice rang with a clarity and convic­tion they’d never heard from him. *“Kids!”*  He said, boldly and confi­dently, and also with just a hint of a chuckle.  “In those days, I stacked Bitcoin every chance I got. I stacked when I got paid. I stacked when I sold invest­ments. I stacked when the price crashed, and I stacked when it mooned. I stacked when Bitcoin was under attack and when hundreds of millions of people were buying. “I was a Bitcoiner! Full on. I didn’t care whether people laughed at the idea or insulted me. I didn’t panic when they tried to scare us, and I didn’t waver when they tried to stop us. I knew the future would be bright for those of us who had Bitcoin. I knew we could make life beautiful, safe, and fulfilling for ourselves and the people we loved and cared about. I knew we could protect and preserve the things that mattered most to us. “So you better believe I bought real Bitcoin with my dollars. I started saving for my future, for your parents’ future, and for your future, even though you weren’t going to be born for decades to come. *“And now, today, look at all we have. All the wonderful choices of where to spend our time, what to do with it, and who to spend it with. Bitcoiners forever, kids! Bitcoiners forever.”* Grandpa looked back down at the kids, and he saw admira­tion in their faces — the admira­tion of a hero. At that moment, he knew it had all been worth it. That every­thing he had done, he had done to make a beautiful future for them. ### Make Yer Choice Every day you get to choose between buying Bitcoin and passing on it. It is a choice offered to you only because you live in this narrow window in history where the choice exists. It wasn’t avail­able twelve years ago, and it probably won’t be avail­able in another couple of dozen. So what choice will you make? You can get started on your [Bitcoin buying adven­ture](https://www.swanbitcoin.com/satoshi/?gc=get-yer-bitcoins&utm_campaign=get-yer-bitcoins) today! We’ll give you $10 for free. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # My Path Towards Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/my-path-towards-bitcoin-stephanie-sprague/ Despite living in the Information Age, many people don’t know enough to buy Bitcoin. With this kind of thinking, no one would’ve ever shared personal details on Facebook or banked electronically. --- **Stephanie Sprague** · April 5, 2020 · Updated June 27, 2024 I wish I could say my decision to invest in Bitcoin was based on some cool fact or a piece of infor­ma­tion I discov­ered. Neither was the case. No person or spread­sheet was involved either. I wasn’t in investor mode in the final weeks of 2020.  I was in the opposite state of mind. After long days reporting on the US Presi­den­tial election for a public service broad­caster, I went into recovery mode.  By switching off, I came to the realiza­tion that digital curren­cies had arrived. It would be irrespon­sible *not* to buy Bitcoin.  I didn’t even know the price of Bitcoin. I hadn’t even heard of Michael Saylor. Within days, by coinci­dence, I met a HODLer who steered me in the right direc­tion (Swan Bitcoin).  I bemoaned my regrets about not getting involved even a few months earlier when Bitcoin was at $9,000. [*“Anything below $100,000 is a bargain,”* he said. When-the-student-is-ready-the-teacher arrives is how I view Bitcoin. ](https://www.swanbitcoin.com/bitcoin-price-prediction/) [You have to accept where you are on the journey. ](https://www.swanbitcoin.com/bitcoin-price-prediction/) ***Anything below $100,000 is a bargain”***  *- Bitcoin HODLer* There’s an insatiable need to know more and to be certain in the Infor­ma­tion Age. I hear many people say they don’t know enough to buy Bitcoin. With this thinking no one would’ve ever shared personal details on Facebook or banked electron­i­cally. Is it neces­sary to under­stand the complexity of Amazon before you buy something in less than a minute? The easier the end-user can inter­face with software and technology, the more complex the backend. Do you know what happens when you use your debit card to buy groceries? It might take days for that trans­ac­tion to process. How are checks processed? I got a crash course in this after someone created fake checks using my routing and account numbers. My decision about Bitcoin wasn’t based on a deep dive under the hood but on my experi­ence as a finan­cial reporter for thirty years. Finan­cial news didn’t feel like a great move when I began my career in the early ‘90s. Until then, business news was largely relegated to *“Wall Street Week in Review.”* But little did I antic­i­pate the Finan­cial Armageddon stories. Who needs to cover war zones when you are on a Chicago trading floor during a panic? Bitcoin was born after the 2007 – 2008 credit crisis and Lehman blow-up but seeded long before – I reckon sometime after Black Wednesday and before Long-Term Capital Manage­ment in what I call The Deriv­a­tives Debacles. The Deriv­a­tives Debacles have been overlooked in the annals of Armageddon history. But this was when states and munic­i­pal­i­ties, entrusted to invest public funds respon­sibly, lost money after specu­lating in futures, options, and swaps. The numbers pale in compar­ison with the 2001 DotCom bust or the 2007 – 2008 invest­ment banking subprime fiasco. But they were a turning point: They ushered in the era of the Greenspan put, *“Too Big To Fail,”* and destruc­tive excesses whereby each ensuing crisis would extract a bigger toll on society. ![](https://www.datocms-assets.com/56652/1691484399-red-arrow-steph.png?auto=format) As I covered these stories, I started to see the fragili­ties of the fiat monetary system. This affected me person­ally. While I was reporting on the god-like utter­ances of Greenspan, I was also buying gold.  I started buying below $400 an ounce and stopped at the turn of the Millen­nium when I found it a nuisance to store. I also found gold deeply unful­filling to keep under lock and key. It feels like a waste to keep beauty in the dark, out of sight, and useless like the troll counting coins under the bridge.  Gold is a conductor of electricity and heat, after all.  There might be reasons besides aesthetics that gold adorns cathe­drals. There might be reasons for Donald Trump to bedeck his NYC penthouse in gold. I’ve since limited buying precious metals; I joke that metals are for ingesting – colloidal – or wearing – jewelry.  The trends I saw in the last 30 years climaxed during the Covid-19 lockdowns. One pundit described them as *“a controlled demoli­tion of the economy,”* It’s a controlled demoli­tion of society, too.  Once Joe Biden became Presi­dent, re–opening economies isn’t happening with a snap of the fingers. Too many competing inter­ests have an agenda in enlarging the Bio-Security or Bio-Polit­ical State. Too many civil­ians have adapted quite well too. Some don’t want to return to the real world; some don’t want to work outside the virtual.  Just ask several mayors and school board super­in­ten­dents demanding teachers get back into class­rooms for full-time in-person instruc­tion. Speaking of which: I hear the adage, *“Kids adapt so well.”* Yes, but what do our leaders want them to adapt *to*?  I’ve seen the toll on kids, and some won’t recover. There are some losses from ever integrating into society, let alone supporting its struc­tures. The physical and mental devel­op­mental costs to our children will be studied in years to come.  Will future spending address these deeper long-term needs or prime kids for life on UBI? ![](https://www.datocms-assets.com/56652/1691484481-kid-mask-steph.png?auto=format) When Presi­dent Trump announced the CARES Act, I assumed it would be a one-off, not possibly a new way of life. More than $3 trillion in spending in 2020 and another $2 trillion in Q1 2021 may have met short-term survival needs – but also indulged luxury tastes. I met a Grubhub driver from Kalamazoo buying a Moncler coat on Oak Street in Chicago. I met minimum wage workers buying bling at Tiffany’s. On Biden’s Inaugu­ra­tion Day, I heard comments like *“mighty fine party there — now where’s my stimmy?”* The checks have barely gone out, and the White House is preparing another $3 trillion in spending. ![](https://www.datocms-assets.com/56652/1691484539-stimulus-steph.png?auto=format) The govern­ment largesse is being treated as a carrot, but it can be used as a stick too. It was no accident that Bitcoin rallied above $40,000 on the day Biden announced his $1.9 trillion spending plan, upping the handouts to $1,400 per couple. Bitcoin prices have been tracking funda­mental factors, rising on *“the waves”*: there’s talk of a fourth Covid-19 wave and the Biden Democ­ratic Wave. It was no accident either Bitcoin climbed above $60,000 after Biden’s prime-time TV address warning about what people *“can and cannot do once fully vacci­nated.”* Welcome to the Bio-Polit­ical State. Instead of vacci­na­tions providing a passport to freedom, expect yet more restric­tions on individual liber­ties and the economy. In retro­spect, I wasn’t the only one desperate to buy Bitcoin below $20,000. And the longer businesses, stores, and restau­rants are restricted in the G7 and Common­wealth countries, the more this will disrupt the global scale of produc­tion for food, drink, clothing, and textiles that have allowed these goods to be relatively cheap. U.S. CPI data and anecdotal evidence show prices for basic goods like food contin­uing to rise. A few months back, ECB Presi­dent Chris­tine Lagarde had an honest moment. Calling for global regula­tion of Bitcoin, she said, *“If there is an escape, an escape could be used.”* She didn’t say why a lawful person might need such an escape and what we’ll need to escape from. But with Bitcoin, I feel a little less power­less about whatever she has in mind. ### Stephanie Sprague s a freelance correspondent and anchor, currently on assignment with TRT World https:www.trtworld.com # The Diminishing Influence of Halvings on Bitcoin’s Price URL: https://www.swanbitcoin.com/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/ The price of any asset is determined by its supply and demand. Bitcoin’s programmed halving of supply has a diminishing effect its price. --- **GeertJanCap** · June 30, 2021 · Updated June 27, 2024 Author and analysis: [@GeertJanCap](https://twitter.com/Geertjancap) Co-author: [Cory Klipp­sten](https://twitter.com/coryklippsten) Special thanks to [@dilutionproof](https://twitter.com/dilutionproof) and [Tomer Strolight](https://twitter.com/tomerstrolight) [@GeertJanCap](https://twitter.com/Geertjancap) invites all analysts to repro­duce the graphs to *“peer-review”* the analysis. ### Abstract - *Price changes are always a function of supply and demand changes, and Bitcoin’s supply changes are fully predictable.* - *Never­the­less, we have seen trough-to-peak cycles in price across Bitcoin’s supply halvings that suggest they do affect the price.* - *The halving supply shocks, which diminish in propor­tion from one halving to the next, have been roughly matched by a corre­sponding year-over-year price shock.* - *Similarly, the size of the pre-halving trough price to the post-halving peak price has dimin­ished in scale with each subse­quent halving.*  - *The trend suggests that future halvings will lead to smaller price increases in subse­quent periods. Ultimately, this will lead to little impact from halvings and instead result in demand growth and overwhelming supply shocks as the primary driver of Bitcoin’s price going forward.* ### Introduction The price of any asset is deter­mined by supply and demand. Bitcoin is the only asset in the world for which future produc­tion is and always has been, perfectly predictable and known to all. Moreover, Bitcoin’s supply issuance follows a prede­ter­mined schedule. That schedule prescribes instan­ta­neous reduc­tions of its issuance by half the previous issuance roughly every four years (specif­i­cally every 210,000 blocks). These halvings continue until new issuance drops to zero, at which point no new coins are issued, and the total supply of 21 million coins is reached.  Much has been postu­lated about the impact of these halvings on the price of Bitcoin. This analysis aims to evaluate how signif­i­cant halvings have been, and are expected to be, on the price of Bitcoin.  We compare the relative size of the halvings (as a propor­tion of the 21 million coin supply) on year-over-year supply changes with the year-over-year price changes in Bitcoin and note a corre­spon­dence.  We also compare the magni­tude of price increases from the troughs before the halvings to the peaks after them and observe a corre­la­tion between the decreasing percentage of Bitcoins issued as a percentage of existing supply from one halving to the next. This article does not present a model predicting the future price of Bitcoin, which remains unpre­dictable precisely because the demand for Bitcoin remains unpre­dictable.  If you are interested in a more model-centric approaching, check out our [Bitcoin Price Prediction 2040: Top Experts Weigh In](https://www.swanbitcoin.com/bitcoin-price-prediction/) post. **Disclaimer:** *The Bitcoin price predictions below do not necessarily reflect the views of Swan Bitcoin. Swan does not make public Bitcoin price predictions. The purpose of this article is an attempt to show how several prominent figures reached their forecast, and is presented for the reader’s consideration.*  Instead, its main aim is to isolate and inves­ti­gate the impact that past and future halvings have had and may be expected to have on Bitcoin’s upward price reaction. ### *Year-Over-Year Impact of Halving's on Bitcoin Issuance* Every halving leads to smaller increases in the circu­lating supply of Bitcoin. According to the basic economic rules of supply and demand, a halving event repre­sents a supply shock.  In all other economic assets, products, services, or commodi­ties, prices increase when a supply shock occurs. This is true for both predictable and unpre­dictable supply shocks (e.g., fresh produce prices go up in winter even though we know supply will decline well in advance).  This fact about supply shocks permits us to explore the corre­la­tion of supply shocks on Bitcoin’s price, although there have only been three halvings and two complete halving periods. So what do we see? To begin with, we calcu­late year-over-year supply changes. We define *supply shock* as the change in annual year-over-year supply issuance relative to the final 21 million Bitcoin supply. At the halving of 2012, yearly produc­tion was reduced from 2.6 million to 1.3 million Bitcoin per year.  On a total of 21 million Bitcoin, that 1.3 million Bitcoin amounts to 6.2% of the total supply per year. We chart this supply shock below in Chart 1 below.  Immedi­ately following the first halving, the supply shock began to be felt, reaching its peak of 6.2% precisely one year after this halving and then declining back to 0% a full year later as the year-over-year change in newly mined coins per year returned to zero. Four years later, in 2016, the next supply shock reduced the annual number of Bitcoins issued to 650,000 per year. This repre­sents only 3.1% of the total 21 million coins per year or half the previous period’s supply shock. ![](https://www.datocms-assets.com/56652/1691489551-chart-1-yoy.png?auto=format) Chart 1: Year-over-year issuance of Bitcoins Chart 1 shows that the relative supply shock decreases by half following each halving. Since we define *“supply shock”* on an annual produc­tion basis, it takes a full year for it to reach its maximum and another year to return to zero. ### 2. Year-Over-Year Price Increases Having charted year-over-year issuance in Chart 1, we following chart year-over-year prices in Chart 2: - *The year-over-year price multiple is plotted in green. These data points are created by dividing the price at a given date by the price one year earlier. For example, if the price is twice the price of that one year prior, a value of 2 is shown in the chart.* - *The red vertical lines indicate the halvings.* - *For refer­ence Bitcoin’s actual price is also shown on a log scale in grey.* ![](https://www.datocms-assets.com/56652/1691489707-chart-2-yoy.png?auto=format) Chart 2: Year-over-year price increases Despite foreknowl­edge of the halving-induced supply shocks, we see a shaping of the price of Bitcoin corre­sponding to the supply shocks, with year-over-year price multi­ples peaking twelve to eighteen months after the halving itself. The shape is similar after each of the halvings but also clearly smaller in magni­tude for each subse­quent halving. This indicates a dimin­ishing upward price reaction between subse­quent halving cycles. ### 3. Comparing Supply Shock and Price Change Magnitudes Across Halvings Next, in Chart 3, we compare the actual supply shocks with the actual year-over-year price variances. First, chart 3 shows the year-over-year change in actual Bitcoin issuance in red. It still repre­sents the size of the supply shocks relative to the total 21 million coin supply defined in Part 1. Still, this plot differs slightly from the theoret­ical supply shock in Chart 1 due to variance in block discovery times that resulted from rapid changes in hash power, partic­u­larly between 2015 and 2016. Secondly, the green plot repro­duces the year-over-year price multiple changes from Chart 2. We can observe that the magni­tude of both of these plots is decreasing from one halving to the next and peaking at roughly the same time. ![](https://www.datocms-assets.com/56652/1691489803-chart-3-yoy.png?auto=format) Chart 3: Size of the supply shocks ### 4. Comparing Troughs to Peaks Across Halvings We now consider periods that span across halvings. We compare the lowest price of the pre-halving boom-bust cycle, which we call the trough price, with the peak price achieved in the post-halving boom-bust cycle. The boom-bust run of 2011 before the first halving saw Bitcoin reach a low of $2 after rising to $26 (no, this is not in thousands of dollars, just plain dollars).  After the first halving, the price rose to $1,100 in 2013. This was a **550-fold** increase over the $2 low of the previous cycle’s trough. The price then crashed back down to a trough of $200. After the second halving, the price peaked at $19,114 in 2017, a nearly **96-fold** increase. The price then crashed again to a trough of $3,150. The all-time high price following the third halving is $63,729, which repre­sents a **20-fold** increase so far.  We are not yet through this period, and Bitcoin may still achieve a higher price before the next halving. At the time of publi­ca­tion, we are 14 months into this halving period. Yet, even if Bitcoin were to reach a peak of $150,000 this cycle, it would still repre­sent only a **47-fold** increase compared to prior cycles’ 96-fold and 550-fold increases. This analysis demon­strates decreasing upward price reaction from one halving cycle to the next. Chart 4 below shows the peak returns across halving cycles, along with the peak halving supply shock in percentage terms.  The green columns repre­sent how much the price rose from one cycle’s trough to the next cycle’s peak. The red number repre­sents the ‘relative supply shock.’ Both can be seen to be dimin­ishing from one period to the next. ![](https://www.datocms-assets.com/56652/1691489927-chart4-pre-halving.png?auto=format) Chart 4: Pre-halving trough to post-halving peak price multi­ples vs supply shocks ### Conclusions Supply shocks may indeed impact the shape and magni­tude of the price of Bitcoin before and after each halving. However, the percentage of new supply in terms of existing supply has reduced as the size of the shocks themselves has reduced in magni­tude from one halving to the next. As time progresses, supply shocks could thus be expected to play a much smaller role in Bitcoin’s price increases. We should expect lower halving-induced trough-to-peak changes in magni­tude on Bitcoin’s price. Peaks will be smaller as the supply shocks themselves become smaller. This implies that price changes will become princi­pally and overwhelm­ingly driven by demand changes alone. Demand changes are not directly tied to halving cycles. This would thus lead to smoother, although still likely extremely high, returns for Bitcoin. ### GeertJanCap Mechanical Engineer R&D heavy and semicon industry, interested in disruptive technologies and (macro) economics. https://twitter.com/Geertjancap # Why Gen Z Needs Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/why-gen-z-needs-bitcoin/ Growing up marked by a decaying financial system, we have the chance to change the narrative set before us and create a world grwoing up in for future gnerations. --- **Sophie Tobert** · January 20, 2022 · Updated July 3, 2024 I was born six months before 9 – 11, with the icons of the legacy system of global finance crumbling before me. When I entered first grade, my young friends told stories of their parents losing their homes in the Great Finan­cial Crisis 2008. As I began to under­stand money, I got used to increasing prices and was fasci­nated by listening to stories of the 15-cent hamburgers my parents enjoyed when they were my age. ![](https://www.datocms-assets.com/56652/1691490349-9-11-sophie.jpeg?auto=format) More than any prior gener­a­tion, Gen Z has been a victim of increasing govern­ment regulations. We have seen freedom slowly slip away in all aspects of life. From the growth of content moder­a­tion within social media platforms in an attempt to censor free speech to invasive searches in airport security, and then lockdowns, curfews, and manda­tory Covid-19 vacci­na­tions, we’ve become accus­tomed to witnessing freedom crushing govern­ment regula­tions in every little aspect of our lives. **The Debt Challenge** Exploding college tuition prices and decreasing value of educa­tion have left us with insur­mount­able debt and no way to climb out of it. College tuition has risen almost twelve-fold since 1980, more than twice the rate of overall infla­tion. As a result, we’re on track to be the most indebted gener­a­tion, with current 18-to-23-year-olds holding an average of[ $16,043](https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/) in debt.  Addition­ally, according to a survey by[ Cengage](https://cengage.widen.net/content/e5oqtwwrw1/pdf/Graduate_Employability_Report---May-24-FINAL.pdf?u=fn2gt2), half of recent college gradu­ates chose not to apply to entry-level positions, feeling unqual­i­fied. [The Econo­mist](https://www.economist.com/graphic-detail/2019/02/27/generation-z-is-stressed-depressed-and-exam-obsessed) describes us as a more lonely, stressed, and depressed gener­a­tion compared to previous gener­a­tions, and we are projected to be poorer than our parents. Although personal debt is a problem, public debt is a catastrophe, and as we begin our careers, we face the real possi­bility that our currency could collapse. The M2 money supply, already growing rapidly, has gone[ parabolic](https://fred.stlouisfed.org/series/WM2NS) since the 2019 pandemic. The acknowl­edged [U.S. national debt](https://www.usdebtclock.org/) is about $30 trillion, $237,000 per taxpayer. Promises of Social Security, Medicare, and other social programs bring the United States govern­ment liabil­i­ties up to about $200 trillion, $500,000 per citizen (including kids!) Other countries’ finances are in similar shape.  Because this fiscal situa­tion is global, our gener­a­tion has no chance of keeping the world afloat using the current fiat system – we’re past our tipping point.  To make matters worse, our current leader­ship shows no signs of either under­standing the severity of our finan­cial problems or any willing­ness to do anything about it.  Our leaders have lost our trust. Collapse feels imminent. **Hope in Gen Z** However, there is hope in us, Gen Z. We are the [Fourth Turning gener­a­tion](https://www.amazon.com/The-Fourth-Turning-audiobook/dp/B00005UPTV/ref=sr_1_1?crid=3KZIA3F3JFPN7&keywords=the+fourth+turning+generation&qid=1641579731&sprefix=the+fourth+turning+gener%2Caps%2C354&sr=8-1), and we will change the world. We under­stand the need for radical change – and we’re not afraid of it.  Looking to history as a guide, it’s clear that there’s a gener­a­tional cycle that explains our current circum­stances. William Strauss writes, *“A Fourth Turning lends people of all ages what is liter­ally a once-in-a-lifetime oppor­tu­nity to heal (or destroy) the very heart of the republic.”*  Gen Z has the weighty task of disman­tling the current analog systems and recon­fig­uring to digital ones, and it’s our choice whether to heal or destroy what we know. Because we are digital natives, we have more insight and clarity into the connect­ed­ness of the problems set before us.  To restore society, young people must realize that fiat money is central to this coming era of creative destruction. **Bubbles, Big Macs, and Bitcoin** The unlim­ited printing of fiat money is the root of most of our problems. Many believe the attacks of 9⁄11 were in retal­i­a­tion for the unending war in the Middle East.  These wars cost trillions of dollars and were paid for by money printing; there is no way the citizens would pay for them in taxes. The Great Finan­cial Crisis was due to a housing bubble enabled by exces­sive money printing. A McDonald’s Big Mac now costs $5.65 due to this money printing.  Govern­ments have too much power because they can print money and use it to bring tyranny. College tuition is unafford­able because of uncon­trolled money printing. This extrav­a­gant printing of money is the epicenter of our problems, and Bitcoin fixes this. ![](https://www.datocms-assets.com/56652/1691490554-traits.png?auto=format) Bitcoin is the radical solution that we need. It is as different from the fiat system as night is from the day. Bitcoin’s hard cap of 21 million coins means it is impos­sible for anyone to print more – even govern­ments. This defunds endless wars. Also, without infla­tion to raise prices, when produc­tivity increases, so does Bitcoin’s value, meaning the costs of Big Macs and college tuition will fall over time. On a Bitcoin standard, borrowing money becomes far less attrac­tive as it’s more diffi­cult to pay off, so people and govern­ments will be encour­aged towards patience, hard work, saving up for purchases, and only purchasing things of high quality with lasting value. A college educa­tion has to get a lot more valuable for people to want to pay for it, or the industry will shrink dramatically. **Freedom is in Bitcoin** As a gener­a­tion, we value honesty, certainty, and stability – all charac­ter­is­tics of Bitcoin. Honesty is enforced by the blockchain, a trans­parent record of every trans­ac­tion to have occurred. With an exactly known supply and code that univer­sally verifies every trans­ac­tion, the nature of Bitcoin is much more specific than fiat, whose opera­tions are known and controlled only by the few in charge of the Federal Reserve.  Some mistake Bitcoin as an unstable form of currency while looking at its volatility in the market. This is a misin­ter­pre­ta­tion that can turn people away from the oppor­tu­nity that Bitcoin is. Because it’s still in its infancy and working through the growing pains of the price discovery phase, Bitcoin will be volatile in fiat currency terms.  However, an individual who owns one Bitcoin and stores the private key properly will forever own one 21 millionth of the total Bitcoin supply. Looking at it this way, it is the ultimate stable asset. As old insti­tu­tions break down and the national debt continues to make govern­ment promises a practical impos­si­bility, our gener­a­tion has the choice to be the heroes of the fourth turning; but we risk mistaking Bitcoin as a foolish invest­ment.  Bitcoin is rules without rulers. It takes power away from a small, central­ized group and gives it back to all individ­uals, with no one in between you and your money. Bitcoin restores freedom and inher­ently works to make money fully extri­cated from politics and uncon­fined by borders.  Bitcoin creates a society where govern­ments must provide value in exchange for taxes paid. The impli­ca­tions of this are unending. **Swan Bitcoin IRA** Our [Swan Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) product is an ideal path for a young Gen Z'er with a low-time preference investment horizon to get exposure to Bitcoin. Also take a look at our [comparison review](https://www.swanbitcoin.com/crypto-iras/) of the Top 6 Bitcoin and Crypto IRA options and [Why Bitcoin is the Ultimate Asset for Your IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) from our Swan Research department. No matter what questions you have, we have [the answers to help you avoid IRA icebergs](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) and make the most informed choice possible. **Bitcoin is Hope For Gen-Z** Growing up marked by a decaying finan­cial system, we have the chance to change the narra­tive set before us and create a world worth growing up in for future gener­a­tions. Bitcoin is the revolu­tionary solution to extreme problems.  Knut Svanholm says in his video, [Bitcoin: Every­thing there is, divided by 21 million](https://www.youtube.com/watch?v=2pDlaOGA2ac), “*Bitcoin is balancing on the edge of our under­standing of the world between what is tangible and what can be imagined. The more we allow ourselves to imagine, the more useful it becomes*.”  As Gen Z, let’s rise to become change agents by imagining a world that embraces Bitcoin. ### Sophie Tobert Sophie is a sister, daughter, friend, and student who is passionate about freedom. She studies Management Information Systems at the University of Minnesota and enjoys traveling, coffee shops, and introducing her friends to Bitcoin. # The Phoenix Trade - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/the-phoenix-trade/ Bitcoin isn’t just “not going away, ” it’s growing stronger every day. --- **Sam Callahan** · August 11, 2023 · Updated June 27, 2024 “*From the ashes, a fire shall be woken, A light from the shadows shall spring*.” — J.R.R. Tolkien Today, when investors look out on the economy, it isn't easy to be long-term optimistic. To be clear, I am talking about the economy, not financial markets. Financial markets have become completely distorted from underlying economic activity ever since central banks started to intervene in the markets whenever asset prices began to decline. But when one looks at the precarious U.S. fiscal situation, the amount of leverage in the system, the high levels of inflation, historic wealth concentration, and rising populism, it's easy to see why many Americans are feeling pessimistic about the future. A recent PEW study found that 40% of Americans believe that economic conditions in this country will be worse a year from now. ![](https://www.datocms-assets.com/56652/1691777089-1.png?auto=format) Survey of U.S. adults conducted Jan 18-24 2023 This is likely because the current system no longer serves most of the population. Only around 50% of Millennials and Gen-Xers are out-earning their parents when they were the same age. The American Dream feels increasingly elusive. As a result, a feeling of hopelessness permeates our world. There is a growing sense that the current financial system is broken, leading to division and tension in our society. This is likely why nearly 80% of U.S. voters, regardless of political party, agree that *“America is falling apart.”* ![](https://www.datocms-assets.com/56652/1691777524-2.png?auto=format) Much of these issues can be traced back to poor governance and the irresponsible monetary and fiscal policies that have compounded for decades to create the faltering system we have today. Central banks and governments have done immeasurable harm with their decisions to saddle future generations with debt and keep interest rates near zero for nearly a decade after the Global Financial Crisis. The result has been a highly leveraged, more fragile financial system that benefits the rich while hollowing out the middle class. America’s middle class has been slowly shrinking since the 1970s, and this trend has only accelerated. ![](https://www.datocms-assets.com/56652/1691777559-3.png?auto=format) Each time central banks and governments have intervened to *“save the day”* in the past, the debt in the system has inflated. This occurred during the famous *“Greenspan Put”* in 1987, the Long Term Capital Management collapse of 1998, the Global Financial Crisis of 2007/2008, and the recent pandemic response. This growing debt and accommodative monetary policy have a long-term drag on economic growth. It also results in rising asset prices, exacerbating income and wealth concentration. From $9 trillion at 2007’s end, the US national debt has skyrocketed to over $32 trillion. To truly grasp the enormity of this debt, consider the statistic below: ![](https://www.datocms-assets.com/56652/1691777593-4.png?auto=format) To make matters worse, the Federal Reserve’s decision to hike interest rates by 5.25% since April 2022 has caused the annual interest expense on the U.S. public debt to soar exponentially. It is expected to surpass a whopping $1 trillion by the end of the calendar year. ![](https://www.datocms-assets.com/56652/1691777625-5.png?auto=format) FRED At this juncture, barring some productivity miracle, the U.S. government has limited options to address this debt problem. The first solution is austerity, meaning it can cut spending. However, this isn’t the trend we’re observing. On the contrary, politicians continue to spend recklessly. The fiscal deficit for this year is at $1.4 trillion, a staggering 170% increase compared to 2022. It is currently at levels not seen since the Global Financial Crisis when considering it as a percentage of nominal GDP. ![](https://www.datocms-assets.com/56652/1691777697-6.png?auto=format) Furthermore, the Treasury provided more guidance regarding their plans for the remainder of the year, indicating an intention to borrow a *“measly”* $1.85 trillion. ![](https://www.datocms-assets.com/56652/1691777779-7.png?auto=format) The takeaway? Don’t expect the government to curtail its spending anytime soon, especially with an election year on the horizon. The second strategy for governments to escape this debt predicament is to bolster tax revenues. But despite the ongoing spending, state and local tax revenues have declined annually at a rate not seen since the Global Financial Crisis. ![](https://www.datocms-assets.com/56652/1691777826-8.png?auto=format) There has been a substantial decline in state tax revenues for the first 11 months of this fiscal year. Over this period, state tax revenues have declined 5.3% in nominal terms. Moreover, the forecast is not looking any better next year. State total revenue projections for the fiscal year 2024 are predicted to decline a further 1% YoY. ![](https://www.datocms-assets.com/56652/1691777864-9.png?auto=format) Interestingly, the government concurs with these forecasts. The Congressional Budget Office’s [own long-term projections](https://www.cbo.gov/system/files/2023-06/59014-LTBO.pdf) foresee this trend persisting. Government expenditures are projected to outpace revenues, primarily due to rising interest costs. ![](https://www.datocms-assets.com/56652/1691777896-10.png?auto=format) CBO It’s crucial to note that this reduction in tax revenues is occurring even as the stock market is making new highs seemingly daily. The Nasdaq is currently experiencing its best-ever start a year, surging 39.3%, yet tax revenues are dwindling. What happens when a recession comes around, asset prices fall, and tax revenues decline further? 🤔 A third avenue for improving the debt situation involves the Federal Reserve reducing interest rates to decrease the interest expense on the debt. Also, the Fed could keep real interest rates negative and allow inflation to run higher, inflating away the debt over time. Nevertheless, the Fed has signaled its intention to maintain rates higher for longer as inflation has declined. Unless there are significant disruptions in the Treasury or labor markets, we shouldn’t anticipate any rate cuts in the near future. That said, the market currently assigns an 89% probability that the Fed will pause its interest rate hikes at its next meeting after both headline and core CPI inflation continued to fall year-of-year this month. ![](https://www.datocms-assets.com/56652/1691777937-11.png?auto=format) So Congress continues to spend, tax revenues continue to fall, and interest rates are likely to stay around current levels barring some kind of deflationary impulse. All of this paints a dire picture of the state of the U.S. government’s fiscal affairs. This led to Fitch [downgrading U.S. debt](https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023) to an AA+ rating, citing: 1. *Erosion of governance* 2. *Rising deficits* 3. *Rising government debt levels* 4. *Fiscal challenges due to high debt and high-interest rates* 5. *Further Fed tightening* 6. *Risk of recession* All of these seem like pretty logical reasons for Fitch to downgrade the debt, but Treasury Secretary Janet Yellen disagrees. She called Fitch’s decision *“flawed”* and *“entirely unwarranted.”* She reported that she found the decision *“puzzling.”* Former Secretary Larry Summers also chimed in, “*The idea that this is creating the risk of a default on U.S. Treasury securities is absurd, and I don’t think that Fitch has any new and useful insights into the situation.”* This goes back to Fitch’s first reason for downgrading the debt… *“Erosion of governance.”* We have been led by incompetent leaders for far too long, who still lack the humility to admit their mistakes. As a result, we should expect the same m istakes to be repeated and the same negative consequences of those decisions to continue to compound. To be running these levels of fiscal deficits, with declining tax revenues, stock markets up, and the unemployment rate at multi-decade lows, poses a question, what happens to the deficit if a recession does come around? Well, if history is any guide, we know what will happen. The Federal Reserve will eventually take the role of lender of last resort, the Treasury will issue a bunch of new debt, and most of it will end up on the Fed’s balance sheet. The chart below highlights how the Fed’s balance sheet has grown exponentially since 2008. ![](https://www.datocms-assets.com/56652/1691778028-12.png?auto=format) In that scenario, the Fed and the government will flood the market with liquidity, and the release valve will, once again, be the dollar. In other words, inflation will return again with a vengeance. This will only worsen the long-term outlook for the economy and continue the worrisome trends that many Americans, specifically young Americans, are feeling today. Wealth will continue to be concentrated to a tiny portion of the population, the middle class will continue to shrink, the American dream will fade farther and farther out of reach, and tensions will rise. We are experiencing the end stages of the entire debt-based monetary system. The one asset that offers a value proposition of a brand new monetary system is Bitcoin. We are already seeing that play out today. As Entrepreneur and Author, Jeff Booth, likes to say… ![](https://www.datocms-assets.com/56652/1691778075-13.png?auto=format) Bitcoin has continued to impress this year in terms of price action and fundamentals. Bitcoin’s hash rate has soared nearly 50% year-to-date. ![](https://www.datocms-assets.com/56652/1691778112-14.png?auto=format) The number of addresses with a balance of over $1,000 recently hit an all-time high of 7.37 million. ![](https://www.datocms-assets.com/56652/1691778144-15.png?auto=format) The total amount of supply held by entities considered illiquid is currently at all-time highs, with 15.27 million BTC. Investors continue to hold onto their Bitcoin. ![](https://www.datocms-assets.com/56652/1691778178-16.png?auto=format) The fundamentals continue to paint a rosy picture for the new monetary system just as the fundamentals for the old system are deteriorating. These come as [demand for Bitcoin remains robust](https://www.swanbitcoin.com/bitcoin-price-prediction/). This time, it is the institutions that continue to buy up Bitcoin. Microstrategy recently [announced](https://www.coindesk.com/markets/2023/08/01/microstrategy-plans-up-to-750m-stock-sale-to-fund-bitcoin-purchases-other-things/) it had bought an additional 420 BTC and will raise up to $750,000,000 in equity to buy more Bitcoin and fund other initiatives. ![](https://www.datocms-assets.com/56652/1691778222-17.png?auto=format) USD stablecoin issuer Tether [announced](https://bitcoinmagazine.com/markets/exclusive-tether-purchased-1529-bitcoin-in-q2-cto-confirms#:~:text=Tether%2C%20the%20company%20behind%20the,BTC%20to%20its%20balance%20sheet.) that it had purchased 1,529 Bitcoin in Q2 alone. It continues to follow its new reserve strategy announced in May that it will purchase up to 15% of its net operating profits into Bitcoin every quarter. Lastly, Billionaire David Rubenstein, Co-Founder of the private equity giant Carlyle Group, recently [made positive comments](https://www.bloomberg.com/news/videos/2023-08-08/bitcoin-isn-t-going-away-says-david-rubenstein-video) on Bloomberg that *“Bitcoin is not going away.”* Bitcoin isn’t just *“not going away.”* It’s growing stronger every day. It is a function of the environment it finds itself in. Currently, debt levels are soaring, politicians continue to spend, and society suffers from these policies. Luckily, a new system that no one can manipulate, abuse, or control is rising like a phoenix from the ashes. ***Market Overview***  ![](https://www.datocms-assets.com/56652/1691778285-18.png?auto=format) Tradingview, Prices as of 08/11/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin — The Natural Choice For Artificial Intelligence URL: https://www.swanbitcoin.com/culture/bitcoin-the-natural-choice-for-artificial-intelligence/ AI agents will need to use money and Bitcoin is the best money for the job. This results in Bitcoin both benefiting AI and benefiting from AI. --- **Tomer Strolight** · August 14, 2023 · Updated July 3, 2024 OpenAI’s ChatGPT reached over [100 million users within 2 months](https://www.reuters.com/technology/chatgpt-sets-record-fastest-growing-user-base-analyst-note-2023-02-01/) making it one of the fastest growing apps in history.  By comparison, it took Instagram 30 months and TikTok 9 months to reach the same milestone.  What is ChatGPT? It’s a chat interface built on top of a large language model (LLM) which allows users to ask questions, and the AI answers instantly. If you haven’t already, it’s [worth playing around with](https://openai.com/blog/chatgpt).  ChatGPT is just one of many.  AI tools are rapidly advancing and specializing. They can already write, generate images, conduct research, offer advice, analyze documents, and more. New applications are being discovered every day, while existing ones continue to improve.  In the near future, we’ll have access to personal AI assistants who will know our individual hopes and needs. They’ll perform general tasks, such as scheduling appointments, ordering groceries, planning vacations, canceling Netflix subscriptions, and writing some code.  ### Ok, How is This Related to Bitcoin? Bitcoin already impacts today’s largest institutions, including [banking, energy, and government](https://www.swanbitcoin.com/the-bitcoin-breakthrough/).  We believe Bitcoin will play a significant role in the growing Artificial Intelligence industry as well. Let’s dig in.  ### AI Agents Will Need Money to Complete Their Tasks AI requires a significant amount of computing power today. Asking [ChatGPT a single question is estimated to incur 36 cents in computing costs](https://analyticsdrift.com/chatgpt-costs-a-whopping-700000-day-to-operate-says-research/#:~:text=The%20cost%20per%20query%20is,to%20run%20than%20GPT%2D3).  Of course, our AI assistants will do much more than just answer our questions. They’ll also be handling many of our annoying chores. To be effective, they will need to pay for storage, computing resources, internet bandwidth, and more.  Not to mention your personal AI assistant will likely need to hire specialist AI agents to perform niche tasks, such as creating a new website for your side hustle.  Consequently, AI Agents will require money to fulfill our requests.  ### Bitcoin is the perfect money for AI agents There are at least three requirements for money used by an AI agent. - *Permissionless - AI agents aren’t people and don’t have identities*  - *Instant settlement - AI agents need to instantly allocate resources without the risk of chargeback* - *Micropayments - AI agents need to send tiny fractions of a cent in real time (streaming money)*  What could possibly work better as money for AI agents than Bitcoin?  Bitcoin is permissionless. It is a bearer asset and requires no identity, so AI agents can autonomously send and receive it. In contrast, fiat money is debt-based which means it requires an identity to use. Fiat money excludes machines and many people ([over 1b humans are unbanked](https://ir.citi.com/pN%2BOlBahjzmphVliXxcaHdn%2BlkONN7NB7l3YKzlQvpsbYl%2Bril0LJyscLIG8hM%2FoOLl0CKhz8l0%3D) today). Bitcoin sent over the Lightning Network settles instantly. In order to unlock maximum value from AI agents, they will need to negotiate and pay instantly for resources they need. Fiat money takes days to settle and chargeback fraud happens at an alarming rate.  Bitcoin can send micropayments over the Lightning Network. For example, the artist Cryptograffiti [sold some digital art for one *“milli-satoshi”* worth $0.000000037](https://bitcoinist.com/lightning-network-black-swan-cryptograffiti/) over the Lightning Network. Fiat money has extremely high fixed costs and cannot be used for micropayments.  Fiat money is simply too slow, expensive to transact, cumbersome, unreliable, geographically constrained, and restricted for the needs of an AI agent. It’s almost as if Bitcoin was explicitly made for a world of AI agents that need to engage in commerce with each other. ### The Future is Already Here, it’s Just Not Evenly Distributed This idea of AI agents paying each other to accomplish tasks isn’t far-fetched. In fact, Lightning Labs recently released a set of tools that will [allow OpenAI to integrate with Bitcoin and Lightning](https://lightning.engineering/posts/2023-07-05-l402-langchain/) payments. This would enable ChatGPT to send and receive payments from various services worldwide.  There are already examples of [people instructing ChatGPT to make purchases](https://twitter.com/hmichellerose/status/1686481013386452992?s=20) using Lightning. If you squint hard enough, you can almost see a world with millions of autonomous AI agents processing billions of transactions every day with Bitcoin.  ### Buy Bitcoin Before the Machines Do Bitcoin is money native to the internet – as are AI agents.  AI agents will need to use money and Bitcoin is the best money for the job. This results in Bitcoin both benefiting AI and benefiting from AI.  If AI comes anywhere near realizing its potential, Bitcoin holders will be rewarded handsomely.  Front-run the machines by buying some Bitcoin today. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Tether: The New Big Bitcoin Buyer in Town - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/tether-the-new-big-bitcoin-buyer-in-town/ Tether has now become a significant, price-insensitive regular buyer of Bitcoin. --- **Sam Callahan** · August 16, 2023 · Updated June 6, 2024 If you have been closely following the broader cryptocurrency ecosystem, you have almost surely heard of Tether - the controversial USD stablecoin. Tether’s market capitalization has exploded from a little over $2 billion in the Spring of 2018 to an astounding $83 billion! ![](https://www.datocms-assets.com/56652/1692085591-sam-1.png?auto=format) As Tether has grown into a stablecoin behemoth, it has attracted its fair share of supporters and detractors. Some applaud Tether for increasing dollarization worldwide, promoting financial inclusion, and increasing accessibility to dollars in countries with unstable currencies and banking industries. Others believe that Tether is primarily used for illicit activities, and its issuers cannot be trusted due to the lack of transparency around its operations. Tether has been in the spotlight for its success and dubious history. It is often the target of speculators who theorize that Tether is a ticking time bomb that will soon collapse and bring down the entire ecosystem. Most of the FUD (Fear, Uncertainty and Doubt) revolves around the contents of Tether’s reserves, supposedly backing the amount of Tether (often referred to as USDT) in circulation at a 1:1 ratio. The underlying concern is that these reserves must always match (or exceed) the USDT in circulation for the stablecoin to uphold its claim of being backed by U.S. dollars. Note: These reserves have never been audited by an independent third party, leading many to question whether all of the dollars are truly present to back the stablecoins in circulation. Despite the lack of transparency around the reserves and the near-constant speculation around whether Tether’s demise might be imminent, Tether has defied the doubters, continued to meet investor redemptions, and has grown into the largest USD stablecoin in the market today. Today, Tether comprises over 50% of the global USD stablecoin market. ![](https://www.datocms-assets.com/56652/1692085889-sam-2.png?auto=format) In addition, Tether has continued to gain market share since March, when the second-largest stablecoin, USDC, became embroiled in the Silicon Valley Banking collapse. During this event, $3.3 billion of Circle’s reserves were temporarily inaccessible. Following this debacle, a growing number of investors have chosen Tether, as illustrated by the divergence in market caps since the banking crisis. ![](https://www.datocms-assets.com/56652/1692085965-sam-3.png?auto=format) As Tether has grown, it has become an extremely profitable enterprise for the issuer, a powerful player in Bitcoin. Tether makes money by collecting a 0.1% fee per transaction when minting and redeeming USDT. It also brings in massive profits through its investment strategies. Tether takes the actual USD used to mint USDT. It invests a majority into Treasuries and cash-like equivalents. Still, it also invests in other assets, including precious metals and Bitcoin. Tether’s reserve composition has always been under scrutiny since it settled a lawsuit in 2019 with the New York Attorney General. As part of the $18.5 million settlement, Tether was required to report the composition of its reserves every quarter in self-reported attestations, which it now publishes on its website. The first snapshot of Tether’s reserves dropped jaws, given the amount of commercial paper held. On March 31, 2021, 49% of its reserves were backed by unspecified, risky commercial paper. ![](https://www.datocms-assets.com/56652/1692086088-sam-4.png?auto=format) Commercial paper is short-term, unsecured debt issued by companies. It’s not as liquid as Treasuries or cash. It fluctuates with market conditions, which could have made it challenging for Tether to meet redemptions and maintain a full backing of Tether’s circulating supply at any given moment. In addition, Tether did not reveal the ratings of this commercial paper, the borrowers of the loans, nor the collateral backing them. The reaction from the first reserves breakdown led to Tether publicly declaring that it would phase out the commercial paper and replace it with Treasuries. To Tether’s credit, that is precisely what transpired. In October 2022, Tether revealed that it had reduced its commercial paper holdings to zero. ![](https://www.datocms-assets.com/56652/1692086179-sam-5.png?auto=format) They decided to sell the commercial paper and replace it with much safer and more liquid T-bills. T-bills now make up a majority of Tether’s reserves. ![](https://www.datocms-assets.com/56652/1692086231-sam-7.png?auto=format) As Tether sure up its reserves, demand for the stablecoin exploded during the bull market. Hypercharged by the rise of 'Decentralized Finance (DeFi),' the profits came rolling in. Despite the bear market wreaking havoc on most cryptocurrency industries, Tether’s profits increased. Even though 2022 devastated the entire cryptocurrency sector, Tether’s net profits increased by over $700 million in Q4 2022. It continued to bolster the composition of its reserves by adding more T-bills and ended the year with $960 million in excess reserves. Excess reserves are the additional funds on hand that Tether has above the required reserves to back its USDT tokens in circulation at a 1:1 ratio to dollars. As Tether continued to make money, its excess reserves continued to rise. Funny enough, Tether has benefitted handsomely from being pressured to reduce its commercial paper and buy Treasuries in the wake of its NYAG settlement. Ironically, they have been a beneficiary of the Federal Reserve’s actions. The Federal Reserve interest rate policy over the last couple of years has directly boosted the profits of Tether due to the substantial amount of Treasury bills it holds on its balance sheet as part of its reserves. ![](https://www.datocms-assets.com/56652/1692086647-sam-8.png?auto=format) As Tether’s excess reserves were invested heavily in T-bills, and the Fed continued to increase the federal funds rate, this only served to pump Tether’s profits even further. Tether now holds around 84% of its reserves in Treasuries. To recap, when investors want USDT, they swap their U.S. dollars for USDT. Tether receives the dollars, turns around, and lends those dollars to the US government for a risk-free 5.25%. **If you listen closely, every time the Federal Reserve raises interest rates, you can hear a bottle of champagne popping at Tether’s HQ.** By the end of Q1 2023, Tether’s profits stood at $850 million, and its excess reserves had ballooned to a whopping $2.5 billion. The beauty of having this excess reserve is that it creates a giant buffer to handle a large wave of redemptions. The question becomes, what should Tether do with all of its excess reserves? Well, there is one asset that comes to mind... Bitcoin. ### A New Buyer In Town As Tether was making nearly $1 billion in profits per quarter, it faced the decision of what to do with these excess reserves. Being self-proclaimed Bitcoiners, the Tether team made a logical choice. On May 17th, Tether announced [in a blog post](https://tether.to/en/tether-to-further-strengthen-reserves-through-purchase-of-bitcoin-with-realized-net-operating-profits/) that it would use up to 15% of net realized operating profits to purchase BTC. *"Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC). Tether anticipates that the current and future BTC holdings in its reserves will not exceed the Shareholder Capital Cushion and will further strengthen and diversify the reserves. As reflected in Tether's Q1 2023 Assurance Report, as of the end of March 2023, Tether already held approximately $1.5 billion in BTC in its reserves. While it is common practice among many institutional investors to third-party custody their Bitcoin, Tether believes in the philosophy "Not your keys, not your Bitcoin" and takes possession of the private keys associated with all of its Bitcoin holdings." – Tether.to* Tether CTO Paolo Ardoino was quoted as saying, "The decision to invest in Bitcoin, the world's first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset... *"Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential. Its limited supply, decentralized nature, and widespread adoption have positioned Bitcoin as a favored choice among institutional and retail investors alike. Our investment in Bitcoin is not only a way to enhance the performance of our portfolio, but it is also a method of aligning ourselves with a transformative technology that has the potential to reshape the way we conduct business and live our lives."* In essence, Tether just became one of the planet's largest dollar-cost averager's of Bitcoin. Tether will effectively be rolling over some of its profits from the interest earned on its nearly $72.5 billion in T-bills, money market funds, and overnight reverse repos every quarter into Bitcoin. To put this into perspective, Tether is holding more Treasuries than entire countries like Spain and Mexico. Its profits are so substantial that it has become a meaningful buyer in the Bitcoin market due to this new reserve policy. This buying strategy continued at the end of Q2 when Tether announced over $1 billion in net operating profits, up 30% quarter-over-quarter, and raised its excess reserves to $3.3 billion. **As part of its investment strategy, Tether added 1,529 bitcoin to its balance sheet or $45 million worth in Q2 alone. (Remember, this strategy will persist indefinitely as Tether continues to allocate up to 15% of its operating profits each quarter.)** As a result, Tether’s Bitcoin holdings have grown considerably. As of June 30th, Tether now holds approximately 55,000 BTC. ![](https://www.datocms-assets.com/56652/1692087401-sam-9.png?auto=format) 21Co Analyst Tom Wan delved deeper, identifying Tether’s suspected BTC address, and determined that Tether now controls the 11th largest bitcoin address. ![](https://www.datocms-assets.com/56652/1692087477-sam-10.png?auto=format) The point is, Tether has now become a significant, price-insensitive regular buyer of Bitcoin, joining the likes of MicroStrategy as an institution that acquires sats regardless of the price. ### But Is This is Good Thing? For Bitcoin investors, the prospect of a large institution like Tether consistently purchasing significant amounts of Bitcoin is enticing. But is this a healthy long-term development for Bitcoin? There are undeniable risks associated with Tether holding such a significant, concentrated Bitcoin position. One example is the risk of Tether being forced to liquidate its position. If Tether faces a large wave of redemptions, it could be forced to sell a portion of its Bitcoin holdings if things took a turn for the worse. Many market participants feel it’s only a matter of time before regulators target offshore USD stablecoin issuers like Tether. If Tether faces regulatory challenges, that creates a lot of uncertainty around its Bitcoin holdings and increases the risk of them being seized or sold off. While some might draw parallels between Tether buying Bitcoin and the algorithmic stablecoin Terra Luna’s actions before its epic collapse, the situations are vastly different. Tether’s CTO, Paolo Ardoino, emphasized that Tether uses excess reserves to bolster its already 100% reserve assets, which diversifies and adds resilience to its reserves. ![](https://www.datocms-assets.com/56652/1692087846-sam-11.png?auto=format) This is very different from Terra Luna, which used Bitcoin as collateral to back its stablecoin before it collapsed. But let’s assume Tether operates honestly and avoids regulatory repercussions. Is it optimistic that they control so much Bitcoin? Examining Tether’s history would lead some to answer *“yes.”* Tether has never sold its Bitcoin holdings and has consistently demonstrated its commitment to Bitcoin by supporting and investing in the ecosystem. - [Tether invests in sustainable Bitcoin mining facility in Uruguary](https://www.coindesk.com/business/2023/05/30/stablecoin-issuer-tether-invests-in-sustainable-bitcoin-mining-in-uruguay/#:~:text=Tether%20%E2%80%93%20the%20issuer%20of%20stablecoin,Tuesday%20in%20a%20press%20release.) - [Tether invests in *“Volcano Energy”* the largest Bitcoin mining facility in El Salvador](https://tether.to/en/tether-participates-in-1-billion-investment-to-build-the-worlds-largest-bitcoin-mining-farm-in-el-salvador/#:~:text=Tether%20Participates%20in%20%241%20Billion,Mining%20Farm%20in%20El%20Salvador) - [Tether runs the annual Plan B Forum conference in Lugano, Switzerland](https://tether.to/en/tether-city-of-lugano-announce-second-plan-b-forum-in-2023/) - [Tether launched Synonym to boost Bitcoin adoption through Lightning Network](https://cointelegraph.com/news/tether-launches-synonym-to-boost-bitcoin-adoption-through-lightning-network) - [Tether signed an agreement with the country of Georgia to support Bitcoin development](https://bitcoinmagazine.com/business/tether-and-georgia-sign-mou-to-develop-bitcoin-and-peer-to-peer-infrastructure) - [Tether launches Holepunch, a platform for fully encrypted peer-to-peer applications](https://tether.to/en/tether-bitfinex-and-hypercore-launch-holepunch-a-platform-for-building-fully-encrypted-peer-to-peer-applications/) Though Tether isn’t flawless, it has demonstrated its dedication to championing Bitcoin, funding Bitcoin education, and investing in Bitcoin infrastructure and development. This work accounts for something, but only time will tell if Tether will continue to be a good advocate for Bitcoin and help drive its adoption forward. ### Conclusion Tether continues to dominate the stablecoin market and has only grown stronger amidst regulatory pressure to be more transparent about the composition of its reserves. Since settling with the NYAG, it has divested all its commercial paper and heavily invested in Treasuries and cash-like equivalents. Tether has become a prime beneficiary of the Federal Reserve’s monetary policies as interest rates soared on its massive Treasury holdings. We are witnessing a dynamic where a USD stablecoin issuer accumulates profits and uses those gains to steadily purchase Bitcoin every quarter. With the Federal Reserve not planning to cut interest rates any time soon, we can expect Tether to continue buying millions of dollars worth of Bitcoin each quarter for the foreseeable future. While Tether comes with its share of controversies and risks, it has shown itself to be a staunch advocate for Bitcoin through its various investments and initiatives. Today, Tether’s investment strategy is capturing headlines as it has chosen to allocate to Bitcoin due to its diversification properties and upside potential as an emerging scarce, sound digital money. In the future, Tether, alongside companies like Microstrategy, will be seen as trendsetters. Fast forward several years and corporations worldwide will follow in these companies’ footsteps, turning to Bitcoin to enhance their investment strategies and safeguard the value of their corporate treasuries. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: An Endless Chain of Mysteries - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-an-endless-chain-of-mysteries/ There are so many mysteries that draw us into Bitcoin. And there always will be. --- **Tomer Strolight** · August 21, 2023 · Updated June 26, 2024 ![](https://www.datocms-assets.com/56652/1692635190-tomer-money.png?auto=format) ### The Irresistible Allure of Mystery There are so many great mysteries. Some are ancient. Some are modern. How did the universe begin? Does it have purpose? How did life arise on Earth? Who built the great pyramids? How did they do it? Why? Are UFOs and UAPs real? Will we ever solve these mysteries? Why do they fascinate us so deeply? Are we drawn to them because we suspect that their solutions contain answers that will reveal even more – answers to deeper secrets about our nature and origin; answers about our ability to achieve happiness and find meaning? Or are we just such curious beings that we cannot resist the desire to know what lies behind the unexplained? Whatever the cause, mysteries do draw our attention. They stimulate our problem- solving abilities. They encourage us to think, to talk, to experiment, to research, to hypothesize, and, eventually, to actually discover new knowledge. Moreover, almost every solution to some mystery opens the door to a new mystery that asks a deeper question. Explaining the mystery of lightning led Benjamin Franklin to discover electricity. Explaining the mystery of the rainbow led Newton to discoveries about the nature of light itself. Almost every such discovery is thus also accompanied by a legend of its discoverer’s journey toward solving that mystery. And often, many aspects of that discoverer’s journey are themselves shrouded in mystery. It seems we simply cannot resist great mysteries and the stories of those who solved them. ### Bitcoin Is Mysteries All the Way Down Let us now then focus our attention on a modern mystery – Bitcoin. Bitcoin is not a single mystery. It is, in fact, a great many mysteries, as we soon shall see. ![](https://www.datocms-assets.com/56652/1692635137-tomer-1.png?auto=format) ### The First Bitcoin Mystery: Solving a Problem That Can’t Be Solved The first people to be drawn to Bitcoin were not attracted to it because they were confident of its success as global, Internet money. They were mostly computer nerds, not investors, economists, or finance experts. Their attention was tweaked by the curious claims of its mysterious and pseudonymous creator, Satoshi Nakamoto, that he had solved a problem which computer scientists had already proven could not in fact be solved. The problem went by several names. *“The double-spend problem”* and the [*“Byzantine Generals’ Problem”*](https://www.swanbitcoin.com/byzantine-generals-problem/) were the two most common. The gist of the established proof was that it was impossible to maintain consensus over time in distributed systems without imposing a hierarchy in which one participant ultimately had authority over all the others. Thus, by implication, any truly decentralized system would fragment and fall out of consensus. **In short, experts had concluded that decentralized consensus was impossible to sustain.** Satoshi Nakamoto’s claim to have solved this problem through Bitcoin was a mystery that demanded examination. Here was this mysterious character making an extraordinary claim. Was it snake oil he was pushing? Was he mistaken? If so, could these first scrutineers of his claims find his mistake? After all, many claims and proposed proofs or solutions do turn out to be mistaken. If he was not mistaken though, what might be the implications of such a discovery? Remarkably, what these early investigators of Bitcoin discovered was that Satoshi had indeed found a solution. It wasn’t a perfect solution. His solution actually allowed for discrepancies in consensus to exist, but only briefly. His solution found a way to resolve any discrepancies after relatively short periods of time, allowing for consensus to exist on older data. Under Satoshi’s solution, while there might be some discrepancy between participants’ views about what happened most recently, over time, any such discrepancies would be resolved and the agreed historical consensus would be adopted by all participants. Satoshi’s solution was practical. And it was elegant. It used a concept called *“proof- of-work”* (in place of rank) to assign validity to new data and to resolve any discrepancies that occurred as a result of different participants trying to add conflicting data. Proof-of-work was a concept that had been formally documented as far back as 1993. It sat on the shelf mostly, until fifteen years later, Satoshi took it off that shelf and mixed it into Bitcoin. The mysterious Satoshi Nakamoto had indeed solved in practice a problem that was impossible to solve in theory. Instead of *“instant consensus”* he settled for *“eventual consensus”* and that turned out to be possible to create in a purely decentralized manner. The challenge that the [*“Byzantine Generals’ Problem”*](https://www.swanbitcoin.com/byzantine-generals-problem/) posed was *“Of all the participants in the system, which one will have the authority to add the next record to the ledger (or, in Bitcoin’s terminology, the next block to the blockchain)?”* ![](https://www.datocms-assets.com/56652/1692635110-tomer-2.png?auto=format) ### The Second Bitcoin Mystery: Bitcoin Works By Creating an Endless Chain of Mysteries In a delicious twist, Satoshi’s solution to the first mystery relies on creating an endless chain of mysteries that need to be solved. Satoshi’s solution essentially stated *“Whoever can solve the mystery of what number provides a valid solution to the puzzle for the next record (or block).”* Bitcoin mining is the act of solving a mystery and publishing the solution to that mystery! You’ve probably heard that Bitcoin miners *“solve complex mathematical problems.”* That’s more accurate than the notion of excavating minerals from the earth that the word mining conjures up in our minds (although it’s still not perfect). The whole idea of the word *“chain”* in blockchain refers to the fact that the solution to the prior block – the answer to the last mystery – becomes a part of the problem in solving the next mystery. Bitcoin’s solution to the [Byzantine General’s Problem](https://www.swanbitcoin.com/byzantine-generals-problem/) only works because nobody can start working on the solution to any block greater than the one immediately following the most recent one discovered. It accomplishes this because the solution to the previous block is needed to start working on a block’s solution. So if the latest block is block 810,000, any miner can start working on solving the problem for block 810,001, but none can begin working block 810,002. Only when the mystery of the solution for block 810,001 is published can anyone begin trying to solve the great mystery of what will be the solution for block 810,002. Bitcoin is thus a chain of endless mysteries, each of which is hard to solve, and each of which, when solved, creates a unique new mystery to solve. Nobody knows who will solve the next mystery, or exactly how long it will take to solve. While it takes on average, about ten minutes, sometimes it is solved in under a second, sometimes in over an hour. It is rather beautiful to consider how this endless chain of discoveries, each of which become a part of a new mystery reflects an idealized prototype for how human knowledge advances generally: We solve one mystery and benefit from its solution, yet are presented with more mysteries posed by the answer to the mystery we just solved. ![](https://www.datocms-assets.com/56652/1692635083-tomer-3.png?auto=format) ### The Third Bitcoin Mystery: Bitcoin is Autonomous Autonomous means self-governing. Living things are autonomous. But corporations, governments, and other man-made institutions are governed by people. Similarly, very few machines are themselves autonomous. Machines tend to require an operator, or at least a maintainer. One more mysterious attribute of Bitcoin is that it lacks these external governing bodies and individuals. This feature is a big part of its appeal, of course. As Satoshi himself said, *“The root problem with conventional currency is all the trust (in people and institutions) that’s required to make it work.”* He went on, *“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”* Satoshi didn’t set out to remove some of that trust, or even most of that trust. He developed something that removed *“all the trust.”* Bitcoin is therefore often referred to as *“trustless.”* But to be trustless meant that Bitcoin couldn’t rely on trusting people to govern it. That meant that if Satoshi succeeded in removing all the trust, Bitcoin would have to be an autonomous entity. And by all accounts, it sure looks like it is. There is no CEO. There is no board of governors. There is no head office. There are no employees. It isn’t incorporated. It just exists and operates. Satoshi somehow also solved the mystery of how to create an autonomous entity! ### Bitcoin Pays People to Keep It ‘Alive’ How does something like Bitcoin work to take care of itself? It’s hard to fully comprehend or explain. There are many moving parts. First, it isn’t the case that Bitcoin can exist entirely without people. (Not yet, anyway.) Bitcoin does need people. It needs them to run the software, to direct energy towards mining it, and to consider it money. Why do people do these things? Bitcoin doesn’t force them to do this, after all. For Bitcoin miners, they do the work of solving its never-ending chain of mysteries because Bitcoin pays them to do it. What does it pay them with? Not dollars. Not gold. It pays them in Bitcoins. In its first four years of its existence, Bitcoin paid out to miners half of the 21 million supply that would ever exist. Why so much? Another mystery? Well, Bitcoins were worth nothing at the time Bitcoin got going. Why should anyone pay real money to dedicate real energy to obtain money that might not be so real? There was a big risk premium involved. But Bitcoin promised to handsomely reward these early participants with half of all of the coins it would ever produce in exchange for then joining early. That proved enough incentive that thousands of people were drawn to the prospect of mining Bitcoin. Not only that – it turned out to be enough incentive to get them to figure out ways to mine as efficiently as they possibly could. Just in its first four years of existence the people engaged in Bitcoin mining went from using CPUs (central processing units) to figuring out how to use much faster GPUs (graphics processing units), to FPGAs (Field Programmable Gate Arrays), and finally to designing custom processors called ASICs (application specific integrated circuits) that could only do one thing, but do that thing very quickly and efficiently – mine Bitcoin. By the time this first four-year period was complete, Bitcoin’s estimated hashrate skyrocketed unlike any computer development beforehand. The hashrate is the number of attempted solutions per second dedicated to finding the solution to the mystery of the next Bitcoin block. It was originally estimated at about 68,000 attempts per second when Satoshi launched Bitcoin on January 3rd, 2009. It rose to over six million guesses per second within a week and stayed not too far from there for a year. That’s when things started to grow exponentially. By May, 2010 it was at over one-hundred million. And it hit one-hundred billion before 2010 was over. In May, 2011 it was over one trillion, and broke through ten trillion by July of that year. By the time of the first halving in November 2012 – the cutting of mining rewards in half when half of the original coins had been issued – the hashrate was at over 23 trillion attempted solutions per second! (At the time of writing, almost eleven years later, the hashrate is estimated to be roughly 375 quintillion guesses per second – we entered the quadrillions in September of 2013, and blew past them into the quintillions in early 2016. ![](https://www.datocms-assets.com/56652/1692645669-img_5283.jpg?auto=format) ### Bitcoin Is a Very Strict Boss You might be pondering another mystery: With quintillions of guesses per second aimed at solving Bitcoin’s latest mystery why didn’t the thing blow up? In what is a remarkably visionary solution to the problem of not knowing how much energy might eventually go into solving these sequential puzzles, Satoshi programmed Bitcoin with the ability to adjust itself for any outcome – literally any. This bit of programming is called Bitcoin’s *“Difficulty Adjustment Algorithm.”* It is a formula that Bitcoin uses once every 2,016 blocks, which, at ten minutes per block, is once every two weeks. Bitcoin uses this formula to determine how hard to make it to discover each of the next 2,016 blocks. It simply does this by determining how long it took to discover the last 2,016 blocks and it then adjusts the difficulty up or down accordingly so that it should now take ten minutes. If, for example, the blocks came in once every five minutes, the adjustment would make the required solution twice as hard to find. If blocks averaged 20 minutes, it would make finding solutions half as hard. (These examples are used for simplicity of demonstration. In practice, most adjustments are far less than a few percentage points in difficulty.) This difficulty adjustment is an essential part of how Bitcoin operates autonomously. Bitcoin makes a promise to deliver one block every ten minutes. But it does not create the next block itself. People do. People all over the world compete to do it. These people have invented new technologies to do this better, faster, and cheaper. But they have not been able to make Bitcoin break its promise. Every 2,016 blocks, Bitcoin looks inward and says *“Here’s my objective estimate for how difficult the block-solving mysteries must be for keeping solutions ten minutes apart per block for the next 2,016 blocks.”* It then turns outward and says to all people who consider mining, *“You must all then solve mysteries of this revised difficulty. I’ll revise this number again after the next 2,016 blocks.”* Bitcoin is a harsh master. But its value comes from it keeping its promises, no matter how strict it must be. While this is not everything that goes into making Bitcoin autonomous, it does cover a hugely essential feature, and the general template for how Bitcoin interacts with those other autonomous entities we call people, to incentivize them to do what it needs done but cannot do itself, without submitting to their control, and thus, remaining autonomous. When looking at this, the famed cryptographer, Ralph Merkle, pronounced *“Bitcoin is the first example of a new form of life.”* He went on to elaborate, saying *“It lives and breathes on the internet. It lives because it can pay people to keep it alive. It lives because it performs a useful service that people will pay it to perform. It lives because anyone, anywhere, can run a copy of its code. It lives because all the running copies are constantly talking to each other. It lives because if any one copy is corrupted it is discarded, quickly and without any fuss or muss. It lives because it is radically transparent: anyone can see its code and see exactly what it does.”* ### Merely the Tip of the Mystery Iceberg We have covered a few of Bitcoin’s most interesting mysteries here. There remain many more. Perhaps we will explore them in a subsequent article. I’ll leave that as an open mystery. Studying Bitcoin is often referred to as *“tumbling down the rabbit hole,”* since there are so many paths to go down. Some of these mysteries are solved. Some require solutions still. Some will likely never be fully solved. If you’re ready to explore more of these on your own, Swan has some excellent collections of essays and podcasts it calls *“*[*The Bitcoin Canon*](https://www.swanbitcoin.com/canon/)*,”* curated by some of the leading voices and intellects in Bitcoin. These collections tackle various topics of Bitcoin, which present their own mysteries, like why Bitcoin uses energy, how it achieves its security, how it relates to time, how it is life-like, and so much more. There are also two free books Swan offers that go into answering other Bitcoin mysteries in very accessible ways – Yan Pritzker’s *“*[*Inventing Bitcoin*](https://www.swanbitcoin.com/inventing-bitcoin/)*”* and the book I wrote, *“*[*Why Bitcoin*](https://www.swanbitcoin.com/whybitcoin/)*.”* On top of that, there are many Bitcoiners eager to share their discoveries, theories, experiences, and *“Eureka!”* moments all over the Internet. I wish you happy sleuthing in your exploration of Bitcoin’s many mysteries. ### An Unexplainable Yet Pleasant Chain of Mysteries - Epilogue, by Tomer Strolight No sooner had I finished writing this article, than out of the blue, I received a message from my friend, the artist FractalEncrypt, asking for my assistance naming a sculpture he had just completed designing. The sculpture’s theme was nothing other than *“Bitcoin’s many mysteries!!!!”* I like to joke that there are no COINcidences in Bitcoin, and this was a fascinating example of how he and I had both been inspired, independently, to direct our energies to the topic of mysteries in Bitcoin. As a result, the above article and his sculpture, pictured here, share the same name.This artwork will be up for auction at [scarce.city](https://scarce.city/auctions/bitcoin-an-endless-chain-of-mysteries) from August 21st to 26th, and will be on display at the [Bit Block Boom](https://bitblockboom.com/) conference in Austin, Texas starting on August 24th. ![](https://www.datocms-assets.com/56652/1692635054-tomer-4.png?auto=format) ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Speed of Transactions vs. the Speed of Settlements URL: https://www.swanbitcoin.com/economics/broken-money-chapter-8/ This draws from chapter 8 of Lyn Alden’s new book, Broken Money, and focuses on a key reason why the world became more and more financialized. --- **Lyn Alden** · August 24, 2023 · Updated June 27, 2024 From papyrus-based bills of exchange to double-entry booking and paper banknotes, the main purpose of banking was to enable transactions to move more quickly and frequently than the transportation and verification of physical gold would allow. Banking also allowed for the usage of more extensive credit systems, by allowing a third party (a money changer or a bank) to serve as a trusted intermediary between two non-trusting entities (buyers and sellers, or creditors and debtors). In other words, banking allowed for transactions (commerce) and settlements (money) to be separated. Transactions for individual goods and services could occur more frequently, existing for a period of time in a state of credit, until they were settled with precious metals in less frequent occurrences and in larger amounts. However, while this process of batching multiple transactions into fewer and larger settlements increased transaction efficiency and reduced the risk of theft, it couldn’t overcome a fundamental constraint: the speed of information. For thousands of years, transactions and settlements had the same maximum speed limit: the speed of foot, horses, and ships. Peoples’ ability to do transactions, and the bearer assets they transacted with (mainly gold and silver in advanced regions), had no inherent difference in terms of travel speed, although the transactions themselves were more efficient in practice. All of it was limited by the speed of physical human travel. Even the invention of banking couldn’t get around this basic limitation. The paper bills of exchange and banknotes, while easier and safer to transport than gold, still couldn’t move faster than foot, horses, and ships. Ledger-based account systems, while convenient, still couldn’t send information over long distances any faster than the existing modes of physical travel. However, with the invention of the telegraph, and then the telephone, the speed of transactions increased to nearly the speed of light. The first working telegraph was invented in the 1830s. Engineers then spent much of the 1840s and 1850s figuring out how to run cables over long distances, including under large bodies of water, during which time they were able to connect the various financial centers of Europe together, including London and Paris. After some failed attempts, the first long-lasting transatlantic telegraph cables were put in place in the 1860s, and the global banking system quickly became more interconnected in the decades that followed. From that point, people could transact across the world by updating each other’s bank ledgers over telecommunication systems nearly at the speed of light. Banks and central banks had full control over that process. Meanwhile, gold and silver as bearer assets still moved slowly, and thus had to be increasingly abstracted to keep up. Prior to the invention and usage of telecommunication systems, gold and silver were already frequently abstracted with paper claims due to divisibility limitations or security concerns or convenience or the desire to earn interest as described in prior chapters, but once telecommunication technology was invented, their slow speed made it even more necessary to abstract them to keep up. All around the world, people and institutions increasingly relied on interconnected bank accounts rather than coinage. And with currency units abstracted from the underlying metal, it turned currency units into an inherently political topic between creditor groups and debtor groups. In his 1875 book *Money and the Mechanism of Exchange*, which was published less than 25 years after the telegraph connection between the United Kingdom and France, and less than a decade after the completion of the transatlantic telegraph connection, the English economist and logician William Stanley Jevons described in detail the increasing centralization of the global financial system. He discussed the inherent challenges of physical coinage and bullion, including their various imperfections, inefficiencies, and the complexities of authentication, and how increasingly centralized financial centers were becoming more and more efficient at performing abstract transactions so that gold and silver diminished in their day-to-day roles. In that book, Jevons provided four separate diagrams (now in the public domain) shown together below to walk the reader step-by-step through an increasingly connected set of hypothetical banks and how this centralization was occurring over time. ![](https://www.datocms-assets.com/56652/1692902427-unnamed.png?auto=format) The first diagram showed how account holders of a single bank could send money to each other using the bank as a settlement layer. The second diagram showed a connection between two such banks, who accept each other’s paper payment instruments so that their accountholders can easily send money to each other across banks as well. The third diagram showed the introduction of a central bank, which allowed for more efficient settlement between many banks. The fourth diagram showed a base layer clearing house, either at a national scale or even a global scale centered in a major financial hub like London, to connect all banks. Throughout the book, Jevons excitedly described the increasing abstraction and efficiency of global commerce, as claims for payment could cancel out against other claims between banks and therefore render gold settlements rare and almost irrelevant. And toward the end of the book in a section called “The World’s Clearing House”, he described London’s increasing role as the centralized ledger administrator for the world. Banks from across the whole world had offices in London to connect with the financial network effects that existed there: England buys every year from America a great quantity of cotton, corn, pork, and many other articles. America at the same time buys from England iron, linen, silk, and other manufactured goods. It would be obviously absurd that a double current of specie should be passing across the Atlantic Ocean in payment for these goods, when the intervention of a few paper acknowledgments of debt will enable the goods passing in one direction to pay for those going in the opposite direction. The American merchant who has shipped cotton to England can draw a bill upon the consignee to an amount not exceeding the value of the cotton. Selling this bill in New York to a party who has imported iron from England to an equivalent amount, it will be transmitted by post to the English creditor, presented for acceptance to the English debtor, and one payment of cash on maturity will close the whole circle of transactions. Money intervenes twice over, indeed, once when the bill is sold in New York, once when it is finally cancelled in England; but it is evident that payment between two parties in one town is substituted for payment across the whole breadth of the Atlantic. Moreover, the payments may be effected by the use of cheques, or the bills when due may themselves be presented through the Clearing House, and balanced off against other bills and cheques. Thus the use of metallic money seems to be rendered almost superfluous, and, so long as there is no great disturbance in the balance of exports and imports, foreign trade is restored to a system of perfected barter. […] It might seem that in the use of cheques internally, and of bills of exchange in foreign trade, we have reached the climax in the economy of metallic money; but there is yet one further step to make. We found that so long as all the merchants of a town keep their cash with the same banker, they have no need to handle the money at all, but can make payments by transfers in the books of their banker. Let us imagine, then, that merchants all over the world agreed to keep their principal accounts with the bankers of any one great commercial town. All their mutual transactions could then be settled among those bankers. An approximation to such a state of things exists in the tendency to make London the monetary head-quarters of the commercial world, and the general clearing house of international transactions. All that is needed to secure economy of money is centralization of transactions, so that there may be the wider scope for the balancing of claims. Jevons’ book is remarkable in two ways. Firstly, it was excellent at describing the increasing role of technology as it relates to money, from ancient times until its publication in 1875, and how the next few decades would likely come together in even more centralized ways.  Secondly, it was prescient at identifying some of the catastrophic problems that such a centralized system could lead to, even though Jevons himself was highly supportive of this centralization for the sake of efficiency and thought that those problems could be managed appropriately. Specifically, in a series of instances throughout the book, Jevons identified the greater and greater number of claims for gold relative to the amount of actual gold in the system, due to the ease of dealing with claims rather than the metal itself. He cited numbers from his time showing that a mere four to seven percent of claims were held in reserves by the banking system of the United Kingdom, and that even those reserves were themselves fractional claims for gold: It is requisite, too, that our bankers, financiers, and merchants should regulate their operations with a thorough comprehension of the immense system in which they play a part, and the risks of derangement and failure which they encounter by over-severe competition. No one doubts that alarming symptoms have during recent years presented themselves in the London money market. There is a tendency to frequent severe scarcities of loanable capital, causing sudden variations of the rate of interest almost unknown thirty years ago. I will therefore in the next chapter offer a few remarks intended to show that this is an evil naturally resulting from the excessive economy of the precious metals, which the increasing perfection of our banking system allows to be practised, but which may be carried too far and lead to extreme disaster. […] The metals took the place of other commodities as currency, and delicate considerations began to enter concerning token and standard coins. From metallic representative money, we passed to paper representative money, and finally discovered that, by the cheque and clearing system, metallic money was almost eliminated from the internal exchanges of the country. Pecuniary transactions now present themselves in the form of a room full of accountants, hastily adding up sums of money. But we must never forget that all the figures in the books of a bank represent gold, and every creditor can demand the payment of the metal. In the ordinary state of trade no one cares to embarrass himself with a quantity of precious metal, which is both safer and more available in the vaults of a bank. But in international trade, gold and silver are still the media by which balances of indebtedness must be paid, and serious consequences may arise from any disproportion between the amount of transactions carried on, and the basis of gold upon which they are settled. […] It is quite apparent, therefore, that the tendency is to carry on a greater and greater trade upon an amount of metallic currency which does not grow in anything like the same proportion. The system of banking, too, grows more perfect in the sense of increasing the economy with which money is used. The competition of many great banks, leads them to transact the largest possible business with the smallest reserves which they can venture to retain. Some of these banks pay dividends of from 20 to 25 per cent, which can only be possible by using large deposits in a very fearless manner. Even the reserves consist not so much of actual coins or bank-notes in the vaults, as of money employed at call in the Stock Exchange, or deposited in the Bank of England, which again lends the deposits out to a certain extent. Now the larger the trade which is carried on, the larger will be the occasional demand for gold to make foreign payments; and if the stock of gold kept in London be growing comparatively smaller and smaller, the greater will be the difficulty in meeting the demand from time to time. Such is, I believe, the whole secret of the growing instability and delicacy of the money market in this country. There is a larger and larger quantity of claims for gold, and comparatively less gold to meet them, so that every now and then there is a natural difficulty in paying claims, and the rate of interest has to be suddenly raised to induce those who have gold to lend it, or to induce those who were demanding it to forego their claims for a time. […] Mr. R. H. Inglis Palgrave, in his important “Notes on Banking,” published both in the Statistical Journal, for March, 1873 (Vol. xxxvi. p. 106), and as a separate book, has given the results of an inquiry into this subject, and states the amount of coin and Bank of England notes, held by the bankers of the United Kingdom, as not exceeding four or five per cent. of their liabilities, or from one twenty-fifth to one twentieth part. Mr. T. B. Moxon, of Stockport and Manchester, has subsequently made an elaborate inquiry into the same point, and finds that the cash reserve does not exceed about seven per cent. of the deposits and notes payable on demand. He remarks that even of this reserve a large proportion is absolutely indispensable for the daily transactions of the bankers’ business, and could not be parted with. Thus the whole fabric of our vast commerce is found to depend upon the improbability that the merchants and other customers of the banks will ever want, simultaneously and suddenly, so much as one-twentieth part of the gold money which they have a right to receive on demand at any moment during banking hours. The more and more efficient the global banking system became at netting and clearing imbalances, the less and less it needed metal as a proportion of transactional volumes and saving volumes during the normal course of operation. And consumers happily went along with it as well, due to the greater ease that it provided them with. And yet this increasing efficiency is precisely what allowed it to become so unbacked and unstable at its foundation. The disinclination of most people to want to withdraw and secure the cumbersome physical metals allowed for the extreme proliferation of gold claims relative to the amount of actual gold. By the early 20th century, thanks to this extreme degree of monetary abstraction and the associated ease of claim creation for World War I approximately four decades after Jevons’ book, the global gold standard collapsed and never recovered. In the decades after that, governments eventually dropped gold and silver backing from their financial systems entirely, and that’s how we eventually got to this world of 160 different inflationary fiat currencies — each with a local monopoly in their respective jurisdiction. The difference in speed between transactional commerce and bearer asset commodity money gave governments and banks a huge opportunity for custodial arbitrage. A centralized and globally interconnected banking system with a monopoly on fast long-distance transfers of value became too powerful and convenient for gold to keep up with, even if gold could still make for better private savings. The introduction of credit cards in the 1950s, e-commerce in the 1990s, and smartphone-based payments in the 2010s further cemented the importance of fast telecommunication-based payments. This is the only time in history where, on a global scale, a weaker money won out in terms of adoption over a harder money. And it occurred because telecommunication systems introduced speed as a new variable into the competition. Gold, with its inherently slow speed of transport and authentication, couldn’t compete with the pound, the dollar, and other top fiat currencies with their combination of speed and convenience, despite gold being in scarcer supply. The combination of legal tender laws, taxation authority, and greater speed has allowed fiat currencies to outcompete their slower but scarcer precious metal counterparts all over the world in terms of usage. This mismatch or gap in speed has been a foundational reason for the greater and greater levels of financialization that the world has seen over the past century and a half. Monetary ledgers became increasingly detached from any sort of natural constraint or scarce units of settlement, because the only scarce monetary alternatives such as gold were too slow to present a complete alternative. Barry Eichengreen, in his book *Globalizing Capital*, pointed out that the international central bank gold standard as we know it began in the 1870s. This was right around the time of Jevons’ book quoted above. Prior to that, there were frequent uses of bimetallic standards and free banking systems. In the gold standard framework, central banks in Europe held gold, issued currency against that gold (which was fractionally reserved), and used the combination of telecommunication systems and bank ledger divisibility to create a rather fast-moving and convenient set of globally interconnected ledgers. The United States increasingly joined them as well, formally with the Coinage Act of 1873 and the Gold Standard Act of 1900. The rise of the credit theory of money in its various forms, also coincided with these technological developments in the second half of the 19th century. As currency claims or IOUs moved around the world at the speed of telecommunication, within a highly efficient globally connected banking system, many monetary theorists began to wonder, “why do we even need these metals?” In 1905, Georg Friedrich Knapp published *The State Theory of Money* which described and founded the monetary theory known as Chartalism. This school of thought was a precursor to what is now known as Modern Monetary Theory and argued that money originated with states’ attempts to direct economic activity, and that rather than commodities giving money value, the state gives money value due to the imposition of tax IOUs on the public that only the state’s money can satisfy. In his influential 1914 essay *“The Credit Theory of Money”,* Alfred Mitchell-Innes highlighted the writings of Henry Dunning Macleod from the late 1850s to the 1890s as the original formulator of the credit theory, and elaborately made the case that money had nothing to do with metal. I don’t view it as coincidental that these theories by Macleod, Knapp, Mitchell-Innes, and others were developed and rose in prominence as telecommunication-based ledgers increasingly became the norm. As Mitchell-Innes wrote: The present writer is not the first to enunciate the Credit Theory of money. This distinction belongs to that remarkable economist H. D. Macleod. Many writers have, of course, maintained that certain credit instruments must be included in the term “money”, but Macleod, almost the only economist known to me who has scientifically treated of banking and credit, alone saw that money was to be identified with credit, and these articles are but a more consistent and logical development of his teaching. Macleod wrote in advance of his time and the want of accurate historical knowledge prevented his realizing that credit was more ancient than the earliest use of metal coins. His ideas therefore never entirely clarified themselves, and he was unable to formulate the basic theory that a sale and purchase is the exchange of a commodity for a credit and not for a piece of metal or any other property. In that theory lies the essence of the whole science of money. But even when we have grasped this truth there remain obscurities which in the present state of our knowledge cannot be entirely eliminated. What is a monetary unit? What is a dollar? We do not know. All we do know for certain — and I wish to reiterate and emphasize the fact that on this point the evidence which in these articles I have only been able briefly to indicate, is clear and conclusive — all, I say, that we do know is that the dollar is a measure of the value of all commodities, but is not itself a commodity, nor can it be embodied in any commodity. It is intangible, immaterial, abstract. It is a measure in terms of credit and debt. Some economists such as Saifedean Ammous have argued that from a monetary perspective, World War I never really ended once it began in 1914. In prior wars throughout history, wars had to be funded with savings or taxes or very slow debasement of coinage. Physical coinage held by citizens could usually only be debased by their government gradually rather than diluted instantaneously, because a government couldn’t just magically change the properties of the coins that were held by households; it could only debase them over time by taxing purer coins, issuing various decrees to try to pull some of those purer coins in, and spending debased coins back out into the economy (and convincing initial recipients to accept them at the same prior value, despite the lesser precious metal content, which would only work for a time and might not even be noticed at first). However, with the widespread holding of centrally issued banknotes and bank deposits that were redeemable for specific amounts of gold, governments could change the redemptive value with the stroke of a pen or eliminate redemption all together. This gave governments the power to instantaneously devalue a substantial part of their citizens’ savings, literally overnight, and funnel that purchasing power toward war or other government expenditures whenever they determine that the situation calls for it. The pound sterling of the United Kingdom is the world’s oldest continuously used currency that is still in use today. In Anglo-Saxon England during the eighth century, the pound sterling was defined as a pound of silver. The definition of a pound back then differed slightly compared to its definition today, and so it was equal to about three-quarters of what we currently define as a pound. Over the next nine centuries, the pound sterling was gradually debased, and lost more than two-thirds of its value by the beginning of the 18th century. That’s quite a slow debasement rate, equal to less than 0.15% compounded debasement per year on average over the course of centuries, although it tended to occur in small stepwise bursts from time to time. By the 1800s, Britain had switched to a gold standard and maintained it until the early 20th century. It wasn’t until World War I, when the pound sterling was completely decoupled from precious metals, that the pound rapidly devalued and lost almost the entirety of its value within one or two human lifetimes. Today a pound sterling is worth less than two grams of silver. Even when we include the gradual expansion of the supply of precious metals and the proliferation of credit, the sheer magnitude of currency debasement that happened in the first major war of the telecommunication age, and that continues to occur, is at a whole different level than was previously the norm. ![](https://www.datocms-assets.com/56652/1692902521-unnamed-1.png?auto=format) Ian Webster, officialdata.org The 20th century and the beginning of the 21st century have been defined by a greater role of nation states, financed by their flexible ledgers. On one hand, this has allowed for centralized and widespread social safety net implementations, but they tend to be popular enough that they could be financed more transparently in some form or another through taxation. On the other hand, this has allowed for constant warfare and selective bailouts around the world by diluting the savings of others in continuous and non-transparent ways. Corporations can cozy up to governments, and shape legislation that determines where public deficit spending goes, with that spending being opaquely drawn out of peoples’ savings through ongoing debasement. Although above-ground gold increases in supply by approximately 1.5% per year on average, the broad money supplies of most major countries have grown at an annualized rate of between 6% and 12% since 1960, while the long tail of developing country currencies generally grew at double-digit rates or outright hyperinflated at some point within the period. As a result, people around the world have repeatedly seen their savings debased, especially in developing countries, and for most of this time they have not had an alternative. Gold can still be stored as a long-term niche asset for savings and jewelry, but due to its slow speed and lack of widespread acceptance in modern times — along with legal tender laws — gold is not a viable alternative to the global fiat currency system for payments, unless heavily abstracted via trusted counterparties. People often must interact with fiat banknotes and centralized banking system deposits on a regular basis if they wish to make and receive payments in our digital and globally connected world. Many critics of central banking or government monetary policy frame the departure from the gold standard as a moral failing: “If only the government had maintained the gold standard, things would be better,” summarizes many of their positions. Or to go back further, many will assert, “if only fractional reserve banking had never been used, we’d have a more honest and sustainable financial system.” However, while I sympathize with those views and I personally would like money to hold its value, I see things differently, and mainly through the lens of technological inevitability based on the gap in speed between transactions and settlements that widened over time. People shifted over to transacting in fast gold claims and didn’t withdraw gold frequently enough to keep the number of claims “honest.” Therefore, the number of claims proliferated far faster than gold, and then gold was abandoned by governments to keep those claims in circulation. And it happened everywhere. Out of nearly 200 countries in the world as of this writing, none of them use a gold standard. Switzerland was the longest remaining country on a gold standard, having dropped their gold standard in 1999. In most of the world it was gone far earlier during the 20th century. Something that existed in the past but does not exist anywhere in the present likely has a lack of fitness. The gold standard’s weak incentive structure along with the slow speed of gold itself hasn’t allowed the gold standard to exist in any form in the modern era. It became too easy for every country in the world to discard it, and so they did. And to the extent that people want to hold more scarce forms of illiquid savings than currencies, they now turn to real estate or corporate equities more-so than they turn to gold. Gold’s primary role has been reduced to being a non-correlated portfolio asset among many others, and to serve as a form of macroeconomic disaster insurance due to its ability to be *physically possessed* by the holder with a high ratio of value to size and weight. If we were to run this period of human development back a hundred times, I think almost every time we would end up in a similar place in terms of money, due to the path dependence of technological development itself. Once telecommunication systems were invented, bank-controlled ledgers dominated, and this gave nearly unassailable monetary power to the banks and central bankers that ran those ledgers. In order to move money quickly, people and banks came to rely on their country’s central bank as the underlying ledger, and in an international context, various countries also came to rely on the central bank ledger of the world reserve currency issuer, which was the United Kingdom at the start of the telecommunication age and then shifted over to the United States in the 20th century. Political decisions affect things locally and temporarily, while technological changes affect things globally and permanently. Every single government, whether authoritarian or democratic, has moved toward a fiat currency system, and has been debasing their unit of account at an accelerated rate. Due to the slow speed of transporting and authenticating gold, full-reserve banks inevitably turned into fractional reserve banks to tap into the arbitrage that this speed gap between gold and bank deposits provided. By making use of the fact that people rarely withdrew their gold, they built inherently unstable systems that work “most of the time” but occasionally required bailouts when they did not. From there, fractional reserve banks inevitably became centralized by their governments and globally interconnected with telecommunication systems, and then the underlying metals were dropped from the backing by governmental decree when the governments no longer wished to be constrained by them. Each time, in every jurisdiction, users of the currency went along with the transition and accepted it over the course of decades. Even when fiat currencies fail in a country, people in that country tend to turn to a newly issued fiat currency or use another country’s fiat currency — such as dollars — rather than falling back to gold as a medium of exchange. Nature’s ledger (gold) has robust parameters for supply and debasement but doesn’t move and get verified fast enough in the telecommunication age. Mankind’s ledger (the dollar) moves and gets verified fast enough but doesn’t have robust parameters for supply and debasement. The only way to fix this speed gap in the long run would be to develop a way for a widely accepted, scarce, monetary bearer asset itself to also be able to settle over long distances at the speed of light. That’s one of the major reasons why the discovery of digital scarcity and the invention of Bitcoin is so significant. [*Broken Money*](https://www.amazon.com/dp/B0CG8985FR) is now available on Amazon, and provides a thorough but accessible account of the past, present, and possible future of money. Lyn’s goal is for the reader to walk away with a deep understanding of money and monetary history, both in terms of theoretical foundations and in terms of practical implications. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Bitcoin Awakens from its Summer Slumber - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/bitcoin-awakens-from-its-summer-slumber/ This drawn-out period of low volatility serves as a coiled spring. The only question is in which direction will the price eventually break. --- **Sam Callahan** · August 25, 2023 · Updated July 3, 2024 This summer’s Bitcoin price action can be described as a yawn. After entering the summer with gusto following the excitement around BlackRock’s ETF filing, the price of Bitcoin has crawled sideways. Its 90-day rolling volatility recently hit its lowest level since 2016. Bloomberg described the Bitcoin market as one of “extreme apathy.” ![](https://www.datocms-assets.com/56652/1692994228-1.png?auto=format) This drawn-out period of low volatility served as a coiled spring; the only question was in which direction the price would eventually break. We got our answer last Thursday when the price of Bitcoin crashed back down towards $25,000 in dramatic fashion. ![](https://www.datocms-assets.com/56652/1692994657-2.png?auto=format) After this recent drop, Bitcoin remains essentially flat for the summer. This new bout of volatility led to plenty of speculation about what potentially drove this latest price action. Some analysts are speculating that this had something to do with the controversial offshore exchange, Binance. This has been a rough year for Binance. It has been sued by both the SEC and CFTC on various charges, has had several senior officials recently resign, and is currently under investigation by the DOJ for potential money laundering and sanctions violations all this year. Now, Binance’s token, BNB, is crashing.  Some are speculating that Binance may be selling the Bitcoin on their balance sheet in a desperate attempt to prop up the token that they printed out of thin air.  There has been an unusual amount of spot Bitcoin selling on Binance compared to other exchanges. ![](https://www.datocms-assets.com/56652/1692994689-3.png?auto=format) In addition, rumors are spreading on social media that Binance has a large BNB-collateralized loan at risk of getting liquidated at a certain price threshold. Binance CEO CZ has denied having BNB-collateralized loans in the past, however, the price action of BNB has been abnormal compared to the rest of the broader cryptocurrency ecosystem.  ![](https://www.datocms-assets.com/56652/1692994727-4.png?auto=format) The price of BNB has held up relatively well compared to other altcoins despite its issuer facing challenges from regulators, the shutdown of its fiat onramps, and global macroeconomic headwinds for risk assets.  The question becomes, who is buying massive amounts of BNB in this highly uncertain investing environment?  We know that Binance holds a large amount of BNB on its balance sheet and a significant amount of the supply is Binance-controlled wallets. Earlier in the year, [Cryptohippo65](https://twitter.com/cryptohippo65) tracked down addresses controlled by Binance and calculated that 67-81% of all BNB — equating to over 131 million BNB tokens — are held in wallets controlled by Binance. As a result, Binance is incentivized to keep the price of BNB elevated for the success of the business. To be clear, at the moment, all of this is speculation, but the incentives are there. Time and time again, we’ve witnessed this in the cryptocurrency ecosystem. An exchange issues its own token, it mismanages customer funds, a liquidity crisis ensues, it tries to pump up its token with funds on hand, withdrawals accelerate, liquidity dries up, and the token goes to zero. See – FTX and Celsius.  Outside of Binance rumors, others feel that this recent price drop is more related to macroeconomic headwinds. Fears of contagion spreading from China’s woes are beginning to spook investors. China's GDP growth has sputtered this year. The rebound in economic activity post-pandemic has not really come to fruition like many market participants anticipated. ![](https://www.datocms-assets.com/56652/1692994773-5.png?auto=format) In addition, Chinese banks extended the smallest amount of loans last month since 2009. Credit demand in China has dropped off a cliff, another sign of weak demand. ![](https://www.datocms-assets.com/56652/1692994832-6.png?auto=format) This comes as China's prices have slipped into deflation. The Chinese government has instructed journalists that they can't even mention the "D-word" in publications. One Chinese journalist said, “As the entire market isaware, there is no such thing as deflation in China...We could, however, talk about low inflation," ![](https://www.datocms-assets.com/56652/1692994888-7.png?auto=format) The fall in Chinese prices has never been more evident than in the real estate market. The great Chinese real estate bubble appears to be popping. According to Goldman Sachs, new home price data for July averaged an annualized MoM decline of 2.5% for the 70 cities measured. ![](https://www.datocms-assets.com/56652/1692994913-8.png?auto=format) This fall in asset prices can also be observed in the Chinese stock market indices as well. These indices are currently approaching yearly lows, with no signs of letting up in sight.  ![](https://www.datocms-assets.com/56652/1692994948-9.png?auto=format) When taken all together, the data coming out of China is concerning, and investors have taken note. The news out of China is alarming, but market participants were also concerned with the message coming out of the July FOMC meeting minutes that stated, “Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.” The market took that as a signal that the Fed could be set to hike interest rates higher to combat inflation. After the meeting minutes were released, yields on 10-year Treasurys rose to the highest levels in 16 years. ![](https://www.datocms-assets.com/56652/1692995049-10.png?auto=format) Now that investors can earn a decent yield in Treasury bonds or money market funds, they are shifting capital away from riskier assets and into these traditional safe havens. Money market funds saw $40 billion flow in the week of August 16th, and total money market fund assets currently sits at a record $5.57 trillion. ![](https://www.datocms-assets.com/56652/1692995160-11.png?auto=format) With money market funds and Treasury’s earning attractive yields, and the Fed potentially planning to lift rates even higher, this puts pressure on all other assets, including non-yielding assets like gold and Bitcoin. This too could have contributed to the drop in Bitcoin’s price last week. Lastly, leverage always exacerbates price drops like this. Many traders use leverage to amplify their holdings and place bigger bets with money they don’t have, but it comes with risks. If the price falls below a certain level, they can lose all their money, or get liquidated. This can cause rapid price declines. If the market starts to dip and leveraged positions get liquidated, it adds more selling pressure, causing the price to drop even more. This can lead to a domino effect where one liquidation triggers another, causing a rapid decline in the price. This is exactly what happened in this recent downward move. For those greedy individuals who levered their Bitcoin long positions – they got wiped out one-by-one.  Galaxy’s Head of Research, Alex Thorn, writes “*About $2.75 billion was wiped off bitcoin futures markets in the largest deleveraging event since the collapse of FTX in Nov ‘22....long liquidations accelerated the move lower*.” ![](https://www.datocms-assets.com/56652/1692995208-12.png?auto=format) This just goes to show you that using leverage is a dangerous game with a highly volatile asset like Bitcoin. Successfully trading Bitcoin is extremely hard, but doing it with leverage? Nearly impossible. As Matt Odell likes to say, “Stay humble. Stack sats.” ### Inflation is Coming Down, But Everything Still Feels Expensive This price drop in Bitcoin comes as the prices of seemingly everything have been dropping this year. From energy prices, to food prices, to used car prices, they all have been on the decline in 2023. And yet…people are still feeling like life is more expensive than ever before. A viral trend is taking over TikTok as millennials and Gen-Zers voice their frustration about the cost of living and their inability to afford basic essentials on their meager incomes. [https://twitter.com/WallStreetSilv/status/1691507588238549000?s=20](https://twitter.com/WallStreetSilv/status/1691507588238549000?s=20) If you’re wondering why everything still feels more expensive despite the CPI steadily falling this year, then you are not alone. The confusion comes from the fact when you hear that the CPI falling, it just means that the RATE of inflation is slowing. It doesn’t mean that the cost of groceries or gas has fallen back down to their previous levels. It just means the prices are still rising, albeit at a slower pace. For example, food prices both at home and away from home are still up around 20% since 2021. ![](https://www.datocms-assets.com/56652/1692995268-13.png?auto=format) The same goes for prices at the pump. Although the price of gasoline has dropped in 2023, the average gas price per gallon still remains well above pre-pandemic levels. ![](https://www.datocms-assets.com/56652/1692995293-14.png?auto=format) Unfortunately, the reality is, prices will never fall back down to pre-pandemic levels. Despite this, the slowdown in the rate of inflation has been a cause for celebration amongst central bankers and economists. Now, there is even an ongoing debate on whether central banks should just call victory now with inflation at 3% despite it still hovering above their historical target of 2%. American Economist Jason Furman, who served as the Chairman of the Council of Economic Advisers under President Barack Obama, penned an opinion piece in the Wall Street Journal that called for the Federal Reserve to raise its inflation target to 3% to “better stabilize the economy” and “cushion it against severe recessions.” This piece was supported by economist Paul Krugman who tweeted, ![](https://www.datocms-assets.com/56652/1692995327-15.png?auto=format) Furman’s article caused a strong reaction from both Bitcoiners and traditional financial participants alike. Investment Strategist Lyn Alden tweeted, “*Unit anchoring bias means that in inflationary environments, the burden is always on wage earners to keep up with inflation. They have to negotiate a 3% raise per year just to keep up with CPI, let alone raises for experience. Higher inflation = higher hurdle rate to keep up*.” Lyn is touching on the idea that inflation always tends to disproportionately hurt the working class. If their wages aren’t keeping up with inflation, then they are falling behind as the prices of everything they need to survive grows more expensive. For those keeping track, on average, wages have not been keeping up with the rate of inflation over the last several years. Wage earners have been losing out as inflation ran to multi-decade highs. Casa CTO Jameson Lopp replied, “*A 3% theft target means the value of your dollar gets halved every 23 years rather than every 34 years. It's the miracle of compound theft!*””  Lopp is highlighting that although a difference from 2% to 3% annual inflation may not sound significant, it actually has a major impact on the value of your savings over the long term. What these economists are essentially debating is at what rate central bankers should erode the dollar’s value. This is what makes Bitcoin so special. It is money that can’t be inflated away at some arbitrary rate chosen by central bankers. Because of this, it holds its value over time.  Peter Schmidt responded, “*Inflation is the surest way to fertilize the rich man's field with the sweat of the poor man's brow. He also wonders where wealth concentration comes from*.” Peter is touching on how inflation hurts the poorest amongst us the most. It’s the people who live paycheck to paycheck, who don’t own stocks and real estate, and who don’t benefit from the rise in asset prices who feel the sting of inflation. A 3% target inflation rate would only serve to cause more wealth concentration at the top, and erode the savings of those that are already being priced out of owning assets. The erosion of peoples’ savings is exactly what we are seeing take place – the US personal savings rate recently hit a 15-year low. The main cause? The higher cost of living. ![](https://www.datocms-assets.com/56652/1692995377-16.png?auto=format) This is an especially concerning statistic for young people given that they are finding it harder and harder to put away money for retirement. A recent Bankrate [survey](https://thehill.com/business/personal-finance/4041429-generation-z-wants-to-retire-early-but-isnt-saving-enough-to-do-it/#:~:text=A%20recent%20survey%20by%20Bankrate,born%20between%201981%20and%201996.) found that a stunning 31% of Generation Z workers have saved nothing for retirement over the past two years or so. Millennials were only slightly better at 23%. When you couple this data with the fact that 66% of investors in a [survey](https://www.bloomberg.com/news/articles/2023-02-21/saving-for-retirement-investors-say-you-ll-need-3-million-to-be-comfortable?sref=sBMxP0gT) responded that one needs $3-5 million to retire comfortably, you start to see the problem. Younger generations simply can’t keep up with the rate of inflation, aren’t saving, and are finding it harder to see a path toward retirement. However, some younger people are seeing Bitcoin as a way to change their circumstances. Recent [research](https://www.nber.org/system/files/working_papers/w31284/w31284.pdf) from the National Bureau of Economic Research found that age is a very strong predictor of Bitcoin ownership. Those under 40 are 13% more likely to own cryptocurrency than those over 60. Bitcoin has proven to hold its value over longer time frames and is resistant to inflation. Given younger generations have time on their side to benefit from Bitcoin’s ongoing adoption and subsequent price appreciation, Bitcoin represents one way they can potentially reach their retirement goals as every other asset class is growing more and more expensive and is increasingly becoming out of reach for young people to afford.  **Argentina** Speaking of inflation — Argentina knows a thing or two about it. Last week, we saw a full-on currency crisis unfolding in the South American country. The collapse in the Argentine peso comes after its economy has fallen into a steep recession, with now 40% of its population driven into poverty. As its debt piled up after decades of government and central bank mismanagement of the economy, the peso has collapsed in value against the dollar, down 92% over the last 5 years. ![](https://www.datocms-assets.com/56652/1692995443-17.png?auto=format) This all came to a head last week when a Libertarian presidential candidate, Javier Milei, unexpectedly won Argentina’s primary election campaigning on the message of ending the Bank of Argentina, dumping the Argentine peso, and adopting the more stable U.S. dollar instead. After Milei’s election win, Argentine officials only acted to help his cause by choosing to devalue the peso overnight by an additional 18%. Imagine you’re an Argentine citizen and the savings that you accumulated through your hard work and time were just devalued as you slept through no fault of your own. Poof – gone.  With Argentina’s year-over-year inflation now in the triple digits (115% YoY), it’s not difficult to understand why Argentines are resonating with Milei’s message. The Central Bank of Argentina has failed at its mandate to keep its currency stable, and it’s the people of Argentina who have suffered as a result.  In this time of high inflation, Argentines are looking for solutions. They are turning to alternative ways to store their wealth and protect their savings including dollars, US stablecoins, and Bitcoin. As a result of their currency losing its value, Argentines store more savings abroad than any other nation in Latin America. ![](https://www.datocms-assets.com/56652/1692995492-18.png?auto=format) Furthermore, Bloomberg reports that today around 200,000 skilled workers in Argentina's tech sector are already paid in US dollars or euros, citing an Argencon report. This comes as peso-based jobs suffer a turnover rate of over 30%. Argentines are beginning to demand payment in better money for their work. The problem is, the government has implemented restrictions on the amount of dollars citizens can hold and access, making it difficult for them to obtain. This is where Bitcoin’s accessibility and permissionlessness shines. Anyone can buy, sell, or hold Bitcoin with only a smartphone and an internet connection. This is likely why we have seen increased Bitcoin adoption in Argentina compared to other countries. According to Chainalysis Crypto Adoption Index, Argentina ranks 13th in the world in terms of its adoption rate. Argentines need Bitcoin, today. Javier Milei seems to agree. When asked in an interview whether or not Bitcoin could be a monetary alternative, Milei responded, “*What Bitcoin represents is the return of money to its original creator: the private sector. With legal tender, they scam you with the inflationary tax…*[ ](https://twitter.com/hashtag/Bitcoin?src=hashtag_click)*Bitcoin is the natural reaction against central bank scammers; to make money private again. In economies with high rates of inflation, the scam problem is bigger…that’s why, as I suggest, we should propose to close the central bank.*” It’s no surprise that Bitcoin is currently making all-time highs against the Argentine peso. ![](https://www.datocms-assets.com/56652/1692995540-19.png?auto=format) In Argentina, Bitcoin is considered a risk-off asset with the value of their local currency plummeting and the inflation rate soaring. The crisis in Argentina is a reminder of how fiat currencies can fail and how Bitcoin can act as a life raft.  ***Market Overview***  ![](https://www.datocms-assets.com/56652/1692995592-20.png?auto=format) Tradingview, Prices as of 08/25/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: More Relevant, More Urgent, More Ready — Part 2 URL: https://www.swanbitcoin.com/industry/bitcoin-more-relevant-more-urgent-more-ready-part-2/ Three more personas that inhibit Bitcoin adoption for themselves and others around them. --- **Ulric Pattillo** · September 1, 2023 · Updated June 6, 2024 Dante's Inferno reserved the deepest parts of his allegorical Hell for oathbreakers and betrayers. In medieval times, these were the worst types of offenses due to the importance of loyalty and trustworthiness in maintaining order in a much more hostile world than our own today. I don't think I take too big a leap, especially with the likely audience of this essay, in saying the softest walled rooms of fictional Arkham Asylum should be reserved for the deniers of empirical and rational evidence of the value proposition Bitcoin provides to early adopters. I will repeat what has likely resonated in your minds and across your Bitcoin research dozens if not hundreds of times: "We are still early." Yet still, many people hold fast to platitudes, traditions, methodologies, and irrational protest of the most quintessential writing on the wall we have ever seen. In a very short timeframe, our traditional economy has had 18 months of neck-breaking interest rate increases, the largest nations in the world cutting themselves off from the dollar rails, multiple banks imploding, and annualized US interest expense has spiked and is on the verge of spiraling out of control. Additionally, Bitcoin is going through very encouraging evidence that would lead one with very little research to suggest even better times ahead. These things include: - *90% recovery from a recent bottom* - *The best-performing asset YTD* - *Continually growing hashrate that transcends price* - *Major institutions like Blackrock are public with their desire to see Bitcoin and public Bitcoin companies perform well* - *Fed pausing interest rates with a likely reduction in time for the halving* - *Most importantly, the imminent halving itself* These bullet points don't even consider the true value of Bitcoin: trustless, immutable, transparent, permissionless, anti-theft, and digitally scarce. With the exception of hash power, they all focus on Price, the thing that pulled most of us on board in the first place. However, even with the evidence of analogous price performance in every epoch, there is a massive reservation from no-coiners to adopt before it reaches near all-time highs. It baffles me how few people there are who are willing to do research to break the mold of their worldview. The first part of this series discussed three personas (2 Bitcoiners, 1 No-coiners) that all believe in the important characteristic value Bitcoin delivers, but their actions work against Bitcoin adoption. Here, I will discuss 1 Bitcoiner and 2 No-Coiners whose mindsets prevent themselves from realizing Bitcoins' revolutionary impact on an individual's life. ![](https://www.datocms-assets.com/56652/1693499924-sir-2.png?auto=format) Friend D, a Bitcoin idealist in culture, has extreme reservations about adopting the infrastructure made for Bitcoin. He thinks the dollar is doomed to lose its control and that Bitcoin is a perfect heir. He has a desire for anti-statist money to become the world standard so governments weaken their coercive edge over individuals. However, he admittedly does not want to learn to run a node, set up a hardware wallet, participate in mining, or open/close a lightning channel. He gives the reason that he is not an engineer and is too old and busy to learn these new tools. He feels comfortable to rely on others to maintain the network. Most people's most impactful interaction with Bitcoin is the collecting part (stacking sats). However, it is important to remember Bitcoin is a tool. This tool enables many trustless mechanisms. But this can only be accomplished if you use it as provided. We cannot expect a kitchen to cook or store our food natively. A kitchen reaches its potential when you populate it with products like a stove and refrigerator. And those things also increase their value to the user with additions like a broiler and ice maker, respectively. Bitcoin is a sovereign individual system if enabled, but it can easily be captured by centralized forces. You are not required to self-custody Bitcoin. It's as optional to self-custody as buying or using it in the first place. So, could you rely on someone else's node to enforce the rules of the network? Could you use someone else's Lightning channel? Could someone else validate transactions and secure the network with miners? Could someone else hold your private keys for you? If the answer to these questions is all "yes," your Bitcoin trust barometer is almost as high as if you kept all your savings in a local bank. You are paying for ease of responsibility at the cost of the risk to your entire stack of satoshis. Taking this a step further, if nearly all "Bitcoiners" thought like this, then Bitcoin is no greater than a meme coin and fits the narrative that most no-coiners think. We would then be void of "intrinsic value," a "Ponzi scheme," and "rat poison" to a civilized society. Bitcoin is an opportunity that people just do not have in the traditional finance world. You are an administrator of your own monetary network. You get privileged rights to the inner workings of the most secure system in the world; that is also where you are storing your time-earned wealth. This is the furthest thing from a burden but rather a path of empowerment. Spiderman's Uncle Ben said, *"With great power comes great responsibility."* Just like common people learning to use the internet effectively in the 90s and early 2000s, we will step through processes that are analogous to nothing we have ever experienced. Teaching many old dogs new tricks is a part of the adoption journey and not an easy one. However, this evolution of human self-reliance is a major force involved in the death of the Dollar, where millions of people worldwide are actively preserving and participating in this network where there are no rulers. ![](https://www.datocms-assets.com/56652/1693500294-sir-3.png?auto=format) Friend E is a No-coiner and has experienced firsthand what large corporations can do to small businesses to force families out of business. She makes the argument that Bitcoin does not solve predatory pricing, so what difference does it make if we have hard money or not? Her general disposition is that the government is here to protect people and small businesses. If the government were to lose its power of the economy, corporations would drive prices down until all their smaller competition is suffocated. In a world of hard money, operating at a loss means opportunity cost. That is a profit you cannot see again. Profit (value creation) is the only way to survive. While it's a compelling narrative in stories to portray big business eating up the small businesses, realistically, $1M companies are not really recognized by $1B companies as legitimate competition. The UnderArmor clothing division is simply uninterested in [Represent Ltd](https://www.representltd.com/), a Southern California regional sports/culture brand (a Bitcoin company). Nike will compete with UnderArmor and vice versa. A big company lowering their prices to below profit margin is not feasible. It is not how monopolies are generally formed. With economies of scale, big businesses have the privilege of operating closer to the break-even point because they expect to sell an enormous amount of inventory. Their prices are already relatively marginal to smaller competition. Dropping prices to suicidal values would cause significant losses on their income statement. An explanation of economic incentive is much more realistic as opposed to believing the government is working around the clock protecting small businesses. In fact, monopolies or consortiums have still been formed despite the government's presence. Judging by how wealthy politicians become once in office (Nancy Pelosi, Dan Crenshaw, Liz Warren), it is clear that they don't really care if companies like Amazon, Microsoft/Google/Apple, NGC/Boeing/Lockheed, P&G/Pfizer/J&J can form monopolies or consortiums. Additionally, they [buy politicians](https://twitter.com/OKeefeMedia/status/1671262957748224001) to limit fair competition in the marketplace by creating barriers to entry in their industries. What Bitcoin does as a uniquely neutral money enables the true free market to take place. Can Apple lower their prices below profit to crush fictional start-up, "SerUlric Phones"?  Yea. But, messing with their bottom line risks losing economic power to Google. Does one risk vital market share against a direct competitor to bully a niche participant?  Generally, the answer is no. What about a hostile takeover?  Most hostile takeovers are enabled by banks, which are, in turn, sponsored by the government, enabling big businesses to buy out much smaller businesses with "no risk" to the acquirer. This is called "picking winners and losers," but you are told this is capitalism. ![](https://www.datocms-assets.com/56652/1693500813-sir-4.png?auto=format) We saw the consolidation of larger banks into the largest banks at the beginning of 2023 and, referenced in [Part 1](https://www.swanbitcoin.com/bitcoin-more-relevant-more-urgent-more-ready/) of this essay series. This year was not an anomaly but rather a continuation of the gradual reduction of competition in key industries like banking. But we should not forget how similar mergers have happened in the airline industry as well. [Airlines (up to 2020)](https://www.reddit.com/r/dataisbeautiful/comments/oof6g2/usbased_airline_mergers_between_1980_and_2020_oc/) ![](https://www.datocms-assets.com/56652/1693505930-sir-banks.png?auto=format) Consumers in a fiat world are required to take on risk for every transaction they make: a house, a car, a new phone. With each purchase, you have a chance of buying a money pit, lemon, or brick. Big businesses with big lobbying groups don't need to worry about that. They tend to have an infinite credit line with the government as long as they continue to pay the mafia boss. Look at [Janet Yellen's "speaking fees."](https://www.theguardian.com/business/2021/jan/01/janet-yellen-speaking-fees-us-treasury-secretary) When the government has power over where new money goes, monopolies form, consortiums form, and small businesses must compete with their market competition and the government. Individuals are simply fuel for their fires. Bitcoin takes the monetary power away from the privileged. There are no loans out of thin air, bailouts, credit expansion, or privileged economic participants. If you want to operate at a loss, there is no free money to backstop those silly games. So, the only incentive is to create value better than the next person. The game theory of an attrition economy is pointless because people would rather survive than risk dying to kill someone. The big company now must risk complex economic formulas just to kill a competitor that would likely never catch up to them in the first place. This is irrational behavior, but Bitcoin forces/incentivizes/encourages rational action in the market because the rules are known and predictable. The end result of prosperity through value creation is giving the consumer many quality choices. All we have had in our current system is an ever-decreasing number of choices for many industries. Notice all the banking collapses this year. Secretary of Treasury Yellen [stated](https://twitter.com/theemikehobart/status/1636494845144432643) her preference for larger banks over medium ones, and the state recommends consolidating deposits at the largest banks. That does not sound like the government is protecting market competition. Rather, the powers that be are quickly doing away with it. This is the epitome of fascism: government intervention in the market for the benefit of selected enterprises. You should be outraged but not shocked. No one is greater than their incentives. ![](https://www.datocms-assets.com/56652/1693506810-sir-5.png?auto=format) Friend F is another *"No-coiner"* mentally but still owns Bitcoin as a portion of her portfolio. However, she has outsourced her entire grasp on reality to media outputs that affirm her bias for a state-sponsored narrative. She thinks economics and finances are too complicated for a normal person to pursue knowledge. Therefore, she generally ignores those areas of knowledge even though she recognizes that her savings are dependent on someone's financial decisions. The evidence that systems are breaking down in front of her (social security, wages, prices, individual liberties) is happily pacified by escapism and platitudes from others that give her confirmation bias. The prospect of Bitcoin as anything more than a speculative investment vehicle is ridiculous to her because the media sources she consumes have not yet confirmed its legitimacy. Despite her acknowledgment that fiat is gradually debasing her purchasing power, her reluctant trust in the power of the government backing cannot be escaped. Even in 2023, the usage of years-old regurgitated mainstream platitudes spills from her mouth as she tries to rationalize the world that is falling apart because of the toxic money: - *"The YoY is underwhelming."* - *"I would 'invest,' but it's too volatile."* - *"The black market uses it.* - *"But if the government bans it, then what?"* - *"It's still ___% below its all-time high."* - *"What if I cannot sell it for dollars on the exchange?"* - *"It's bad for the environment."*  I do not intend to counter all of these points. These individual reactions resonate from a systemic, propagandized reaction to project resistance onto consumers against something that will make fiat obsolete. Because we have learned to hold the media in such high regard, their irrational defense of something that hurts its consumers does not register as an attack but as protection. Things that we would naturally see as a simple tool (money) for an end goal have been turned into a symbol of stability and nationalism. How odd would it be if you were to turn on the TV and someone claimed that your smartphone has a half dozen things about it that were bad, including "used by criminals" and is particularly "harmful to nature." Criminals use cars as well as houses, suitcases, and dollars. Any mineral mined to make a processor chip restructures the earth in some way. Why is the smartphone the focus? Then you realize the voice behind the narrative has a monopoly on the entire push-button, flip phone supply chain. It is no wonder why the monopolist would create these stories, but instead, you would wonder why they have not done even more to convince the public of the fabricated dangers of leaving their market. This is the chief reason for the FUD (fear, uncertainty, doubt) creation surrounding Bitcoin: dread of lost market share. And the propagator is none other than the most influential entity on the planet: the central bank-backed world governments. They are extremely fearful of losing the ability, privilege, and perceived right to manipulate from afar the money that they have in their hand. For the sake of their preservation, they use every tool at their disposal (news sources, private tech companies, local banks, celebrities) to subversively convince you that a decentralized, non-state, neutral money is actually poisonous to the existence of you and the world you reside in. ![](https://www.datocms-assets.com/56652/1693507305-sir-leo.png?auto=format) *"Once an idea has taken hold of the brain, it's almost impossible to eradicate."* - Dom Cobb, Inception The powers of this world understand how important it is to have sway over the mind. A convincing lie, half-truth, excuse, or distraction is enough to pacify the outrage of 80% of the population to the latent atrocities against humanity. The other 19.9% of people are on a journey at various stages to uncover the problems and develop solutions. The beauty of the Bitcoin Network is it's a complex system but a simple concept: Bitcoin is hard money that very powerful people must pay an irrationally high price to forge, hack, or manipulate. The only rational thing to do is to participate normally or opt-out. What makes Bitcoin so resilient to nefarious action is realized through hours of investing the time to understand the protocol. This decision is, of course, contradictory to what mainstream thought is about finances and economics. Common people are told to outsource that discipline to the experts. The experts have steered us wrong for decades; some would say purposefully, and some would say ignorantly. Whatever the case is, Bitcoin cannot do anything for you, Friend F, or anyone if they do not first seek knowledge. Just like the Proof of Work consensus mechanism of the Network, there is no shortcut to clarity as to why Bitcoin fixes the money in the world. Some could claim the earliest Bitcoin adopters are lucky to a degree. However, the ones that persisted through any time frame that experienced a fiat value drawdown emanated resiliency and stoicism. These attributes could not be attained without clarity about what they possessed. And that clarity could not have been acquired without a basis of curiosity. Remember, I mentioned that 19.9% of people are on a journey to uncover the problems. Some will uncover problems, and once they find it, they will try to rearrange it. They will flip it 180° and call the problem eradicated. Some will just get mad and throw complaints into the air, never to work for or support a better path. It is the “curious few” that found the problem, realized that the problem must be removed or neutralized, and replaced with something that people are incentivized to preserve and protect. The three personas above and the three personas in my previous essay are not beyond hope. They are each on the verge of being powerful members of the most important network the world has seen. However, each of them needs a healthy dose of curiosity. They must be curious enough to identify and investigate the fiat problem, study to recognize the many detractors that lead to its growth, recognize the potential solution in Bitcoin, and most importantly, act on the newfound understanding. As the reader of this essay, you will recognize these personas in your friends and family. Remember that these people are not lost but rather on the verge of a breakthrough, whether they are already Bitcoiners or not. Be the rational light in their lives that helps them move to greater individual sovereignty and Bitcoin maturity. They will never forget your impact on their lives. ### Ulric Pattillo Ulric Pattillo is a Bitcoin Essayist with contributions on several platforms. He is a co-author of the Declaration of Monetary Independence which was featured at the Miami Bitcoin Conference in 2022 and 2023. Ulric has a Bachelors in Computer Engineering, a Masters in Business Administration, and works as a Digital Systems Architect. He has appeared on several Bitcoin podcasts including Simply Bitcoin, Pleb Underground, and The Bitcoin Source. Ulric is also the co-host of the Bitcoin Ballers Podcast. You can find his works consolidated on his website serulric.com. # IBEX Joins Forces with Pacific Bitcoin Conference URL: https://www.swanbitcoin.com/industry/ibex-pacific-bitcoin-conference/ Swan is thrilled to announce our partnership with IBEX at the 2023 Pacific Bitcoin Conference. --- **Swan Bitcoin** · September 6, 2023 · Updated June 6, 2024 ### Lightning Strikes at the Pacific Bitcoin Conference Swan is thrilled to announce our partnership with [IBEX](https://www.poweredbyibex.io/) at the 2023 [Pacific Bitcoin Conference](https://www.pacificbitcoin.com/). The Pacific Bitcoin Conference provides an ideal platform for IBEX to showcase their Lightning-as-a-Service infrastructure, which facilitates swift and scalable deployments for businesses, unlocking the instantaneous transaction capabilities of the Lightning Network. ### Empowering Merchants In the quest to provide seamless solutions for businesses and individuals, Swan has partnered with IBEX at this year’s Pacific Bitcoin Conference. This collaboration will allow [IBEXPay](https://www.ibexpay.io/) retail and e-commerce merchants in the United States to easily convert Bitcoin payments into U.S. dollars. The result? A seamless and efficient way for businesses to manage their finances, ensuring they can harness the benefits of Bitcoin without the complexities of traditional currency conversion. IBEX and Swan understand that the adoption of Bitcoin is not just about technology; it's about empowering individuals and businesses to embrace a future where financial access knows no bounds. This partnership is a testament to our commitment to innovation, inclusivity, and the universal adoption of Bitcoin technology. ### Join Us at the Pacific Bitcoin Conference 2023 We invite you to join us at the [Pacific Bitcoin Conference](https://www.pacificbitcoin.com/) to learn more about how IBEX is lighting up the future of finance. Together with our partners and like-minded individuals, we'll explore the boundless possibilities that Bitcoin and the Lightning Network offer. This is an event you won't want to miss, as it marks a pivotal moment in the journey towards a world where financial freedom is truly universal. ### Connect with IBEX IBEX believes in the transformative power of Bitcoin and its Lightning Network. They stand as a pioneering Bitcoin infrastructure enterprise with a presence in the USA, El Salvador, Guatemala, and Mexico, committed to delivering financial freedom to 8 billion people worldwide. Their mission is to create a world where financial access and independence are universal and effortless, powered by the innovative technology of the Lightning Network. For more information about [IBEX](https://www.poweredbyibex.io/) or its Lightning-as-a-Service infrastructure, please reach out at hello@ibexpay.io. Together, we're lighting the way to a brighter financial future for all. ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Accounting for Bitcoin in a World of Rising Oil Prices URL: https://www.swanbitcoin.com/economics/accounting-for-bitcoin-in-a-world-of-rising-oil-prices/ These are thin markets right now, so when major news hits, expect the volatility to continue. And remember… volatility works both ways! --- **Sam Callahan** · September 8, 2023 · Updated July 3, 2024 We have seen CPI inflation steadily fall from over 9% YoY last summer, to 3% YoY today. This has occurred as the Federal Reserve has continued to hike interest rates at the fastest pace in history. Now that CPI inflation is *only* 3% YoY, many are wondering if the Federal Reserve’s tightening is close to its end. A couple of weeks ago, central bankers from around the world congregated in Jackson Hole, Wyoming to discuss the future of monetary policy and the broader economy. There was a common sentiment shared by many there: humility. Central bankers have been humbled over the last several years as they first missed inflation, and now are confounded by the disinflation we have experienced this year with no accompanying recession to speak of. According to their beloved models, unemployment should have moved inversely to CPI inflation, but today, it sits at only 3.8%. It has led to a realization that many market participants have alluded to for years – the Fed is not really in control. A Bloomberg [article](https://www.bloomberg.com/news/articles/2023-08-27/at-jackson-hole-post-inflation-challenges-vex-central-bankers) on the conference highlighted this: “*A key theme emerging from the formal conference proceedings and conversations on the sidelines was difficulties adapting to forces outside the control of monetary authorities. The attendees discussed topics including productivity and innovation, bond-market structure, global supply chains, and rising public debt levels*.” BIS Head of Research, Hyun Song Shin, was recently on a [podcast](https://www.bloomberg.com/news/articles/2023-08-31/hyun-song-shin-explains-the-new-financial-stability-risks) and echoed this message, “*So there are still many things that we don't understand fully. I think having gone through the pandemic and the shocks, especially the Russian invasion of Ukraine, shocks to commodity prices, food and energy, these were very unusual shocks that subjected the global economy to a really unprecedented combination of shocks. And so I think we have to be modest here, but I think one thing is for sure, which is that if we knew exactly what the channels of monetary policy transmission were, then probably we were a little bit too overconfident*. *We were overconfident there.*”  One area the Federal Reserve has no control over is fiscal policy. As the Fed has tried to bring down inflation, fiscal authorities have continued to spend like drunken sailors. The Federal deficit is expected to be nearly double the deficit of last year, and that excludes the impact of billions of dollars worth of student debt cancellations. ![](https://www.datocms-assets.com/56652/1694205149-1.png?auto=format) We are seeing war-time deficits in a period of peace and relative economic stability. This level of spending serves to inject liquidity into the system and is without a doubt inflationary. The Fed’s reaction to this will likely be more of the same – higher interest rates. The problem is this poses financial stability risks because it increases borrowing costs on a highly leveraged economy at the household, corporate, and sovereign levels. With U.S. debt-to-GDP still sky-high, and interest rates soaring, U.S. government net interest expense per day has doubled in three years to almost $2 billion per day. ![](https://www.datocms-assets.com/56652/1694205180-2.png?auto=format) Hyun Song Shin highlighted the risks that arise when monetary policy and fiscal policy clash, becoming counterproductive. He then argued that fiscal and monetary policies need to *“row in the same direction”* or else they could *“end up doing more harm than good.”* However, instead of the Treasury and the Fed *“rowing in the same direction,”* we are witnessing the opposite. The BIS’s [2023 Annual Report](https://www.bis.org/publ/arpdf/ar2023e.pdf) points out the risk, stating that a too-loose fiscal policy stance *“will risk higher inflation and sovereign crisis, as debt builds up.”* It went on further to say that the conflicting policies can become counterproductive for the Fed’s inflation and financial stability goals. “*Easy monetary policy can induce the government to build up more debt; expansionary fiscal policy can make it harder for monetary policy to be as tight as necessary*.” In short, if fiscal authorities keep spending, then inflation will remain elevated, which would result in the Fed raising interest rates further, which would increase financial stability risks and increase the deficits even more, causing more inflation. And the Fed can do nothing other than respond to crises only after they happen, as they did when multiple banks failed in March of this year, and the Fed announced a weekend emergency program – the Bank Term Funding Program (BTFP) – as a bandaid solution to protect additional banks from failing. Things are likely to come to a head next year as 31% of all US government debt will mature and will have to be refinanced at much higher borrowing costs. ![](https://www.datocms-assets.com/56652/1694205572-3.png?auto=format) This is why many market participants are expecting a Fed policy pivot even if they can’t get inflation down to their 2% target. Eventually, the finances of the government will take precedence over any monetary policy goals.  Another factor beyond the Federal Reserve’s control, which will impact its inflation goals, is the price of oil. The price of oil is positively correlated to overall inflation due to it being used in nearly every aspect of the economy. According to Commodity Analyst Alexander Stahel, the correlation between energy prices and core CPI is at levels not seen since the 1970s and 1980s and currently stands at 0.62. ![](https://www.datocms-assets.com/56652/1694205616-4.png?auto=format) The price of oil has surged this year, recently touching $90 for the first time. As Mr. Stahel notes above, a lot of this price action is being attributed to actions from OPEC+, the coalition of the Organization of the Petroleum Exporting Countries led by Saudi Arabia and Russia. ![](https://www.datocms-assets.com/56652/1694205639-5.png?auto=format) This came as Saudi Arabia announced it will continue to extend its production cuts of 1 million barrels a day to the end of December. Russia has also continued its own production cuts to the tune of 300,000 barrels a day. The headline states that these cuts and the subsequent increase in the oil price caused tensions with the White House, but there’s no doubt it also caused concern in the U.S. Treasury and Federal Reserve. WTI oil is now up over 20% in the last three months alone, reigniting inflation fears. ![](https://www.datocms-assets.com/56652/1694205677-6.png?auto=format) The last time oil hit these price levels, the White House took action, draining its Strategic Petroleum Reserve by over 50%. The reserve has yet to be refilled and now can’t provide the temporary cushion it did before. ![](https://www.datocms-assets.com/56652/1694205708-7.png?auto=format) Macro Analyst [Luke Gromen](https://twitter.com/LukeGromen) also recently shared an interesting chart that examines the global inventory and the impact of last year’s SPR release. One can clearly observe the temporary impacts of this action from the White House. ![](https://www.datocms-assets.com/56652/1694205741-8.png?auto=format) The inventory levels have fallen back down and now global oil supply stands at dangerously low levels as OPEC+ members announce further production cuts. On the other side of the equation, World Oil Demand has now returned to pre-COVID levels. ![](https://www.datocms-assets.com/56652/1694205783-9.png?auto=format) Just as supply is dwindling, oil demand is rising. This can only mean one thing for its price, and the Fed can do nothing about it. If oil continues to surge due to supply/demand dynamics, then inflation could remain elevated despite the Fed pulling on its interest rate lever harder. Sustained, elevated inflation could pose issues to U.S. consumers who have seen their savings continue to fall as the cost of living has steadily drained their nest eggs. Excess household savings have now fallen for 23 straight months and are close to being drained entirely. ![](https://www.datocms-assets.com/56652/1694205818-10.png?auto=format) This comes as the personal savings rate is currently at around the same levels during the Global Financial Crisis. ![](https://www.datocms-assets.com/56652/1694205859-11.png?auto=format) With household savings on the decline and with student loan payments set to resume next month, it’s easy to see why investors are getting concerned about the health of the consumer entering the fall. If fiscal spending and rising oil prices keep inflation elevated, it could result in the Federal Reserve overtightening, leading to more bankruptcies, bank failures, job losses, and potentially a recession. Though it’s only September, 2023 has already seen more U.S. corporate bankruptcies than the entirety of 2022. In this new era of high interest rates, leveraged companies are struggling to stay afloat. ![](https://www.datocms-assets.com/56652/1694205904-12.png?auto=format) On the whole, these developments highlight how the Federal Reserve may become constrained in its fight against inflation due to factors outside of its control. It could be forced to abandon its inflation goals in order to prioritize the health of the Treasury’s balance sheet as well as respond to potential financial instability risks. We saw an example of this earlier this year when the Fed enacted the BTFP and effectively reversed six months of QT in two weeks. The Fed might be forced into another similar action and potentially of greater magnitude. In that environment, inflation will continue, and investors will want to protect themselves by holding scarce hard assets that have historically performed well in periods of sustained inflation. It’s in this environment where investors will need to account for assets like Bitcoin, which has performed well since the pandemic-driven inflationary policies began in 2020. Speaking of accounting…lucky for corporations, they may find it easier than ever before to invest in Bitcoin, just as sustained inflation becomes a material risk for them. On Wednesday, Bloomberg [reported](https://news.bloombergtax.com/financial-accounting/long-awaited-bitcoin-accounting-rules-to-capture-rises-dips) that the Financial Accounting Standards Board (FASB) is expected to publish new accounting rules for companies that hold and invest in cryptocurrencies that will go into effect in 2025. This is a large step forward because current accounting rules make it difficult for corporations to put Bitcoin on their balance sheets. As the accounting rules are currently written, when companies like Microstrategy buy Bitcoin, they have to treat Bitcoin as an *“intangible asset.”* This poses challenges, as it requires companies to record the purchase price of the Bitcoin and subsequently mark any price declines every quarter. However, under current rules, they can’t adjust the price upward when it increases. With a volatile asset like Bitcoin, you can see how this becomes a problem. Often, these corporations have to mark the Bitcoin on their balance sheet below the current fair market value because it declined to a lower price the prior quarter. This causes impairment losses that don’t reflect the market value of bitcoin holdings. In a quarterly filing late last year, Block clearly stated this accounting predicament all companies that invest in Bitcoin face, “*Investment in bitcoin is subject to impairment losses if the fair value of bitcoin decreases below the carrying value during the assessed period. Impairment losses cannot be recovered for any subsequent increase in fair value until the sale of the asset. The Company recorded an impairment charge on its investment in bitcoin of $1.6 million and $37.6 million in the three and nine months ended September 30, 2022.*” It’s obvious that the current rules don’t make much sense for this new asset, and FASB agrees. It now will allow corporations to perform fair-value reporting, which will make it much easier and less costly for corporations to invest and hold Bitcoin. Microstrategy Chairman [Michael Saylor](https://twitter.com/saylor) tweeted in response to the news, ![](https://www.datocms-assets.com/56652/1694205963-13.png?auto=format) FASB previously rejected three requests for rule changes in regard to Bitcoin since 2017. Now FASB has finally agreed to create rules that treat Bitcoin fairly. What was once a barrier of entry for companies considering adding Bitcoin to their balance sheets is now close to becoming a thing of the past. For public companies that are currently sitting on historically large cash balances with inflation potentially set to remain elevated for a sustained period of time, this could open the doors for them to invest in Bitcoin. Last week, volatility returned to Bitcoin’s price after a summer of historically low volatility. This could be thought of as a result of leverage, low trading volume, and traders digesting major news events like [Grayscale winning its case against the SEC](https://www.wsj.com/finance/regulation/grayscale-wins-lawsuit-against-sec-over-bitcoin-etf-1b305cfa). Trading volumes on centralized exchanges are currently at their lowest levels since October 2020. These are thin markets right now, so when major news hits, expect the volatility to continue. ![](https://www.datocms-assets.com/56652/1694206021-14.png?auto=format) Grayscale’s court win potentially opens the door for a Spot Bitcoin ETF approval. The SEC has 45 days to accept or appeal the court’s decision, but in the meantime, it has [delayed its decision on other Spot Bitcoin ETF applications](https://www.coindesk.com/policy/2023/08/31/after-grayscale-victory-sec-kicks-the-can-on-latest-bitcoin-etf-applications/#:~:text=The%20U.S.%20Securities%20and%20Exchange%20Commission%20(SEC)%20has%20delayed%20until,earlier%20this%20year%2C%20according%20to) including ones from BlackRock, Fidelity, Invesco until at the earliest mid-October. On CNBC, former SEC Chair Jay Clayton said that a Spot Bitcoin ETF is *“inevitable.”* For institutional investors like pension funds and endowments, a Spot Bitcoin ETF could mark a turning point in that it would make it easier than ever before for them to gain exposure to Bitcoin because it fits into their investment mandates and regulatory requirements.  A Spot Bitcoin ETF would act as another on-ramp for institutional and retail investors to gain exposure to Bitcoin easily and in their traditional brokerage accounts. Unlike a Bitcoin Futures ETF, a Spot Bitcoin ETF would buy and hold real Bitcoin, increasing demand for the underlying asset. Although we advocate for holding Spot Bitcoin in self-custody due to the lack of counterparty risk, a Spot Bitcoin ETF would meet the needs of investors who may not be ready to take self-custody yet, but still want exposure to Bitcoin. It could serve as an entry point for beginners to start to learn about Bitcoin, benefit from its price appreciation, and then take self-custody of real Bitcoin when they are ready. Overall, Grayscale’s court win increases the likelihood of a Spot Bitcoin ETF gaining approval in the United States. This would serve as a milestone for the industry and could usher in a significant surge in demand for this highly scarce asset. And remember…volatility works both ways. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1694206072-15.png?auto=format) Tradingview, Prices as of 09/08/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # 2023 is a Ripe Environment for Central Bank Failure URL: https://www.swanbitcoin.com/economics/2023-is-a-ripe-environment-for-central-bank-failure/ The history of the Bank of Amsterdam underscores the vital role trust plays within the monetary system today. As more individuals choose Bitcoin over traditional fiat currencies, its adoption and significance will grow. --- **Sam Callahan** · September 13, 2023 · Updated June 25, 2024 In 2022, Agustín Carstens, the General Manager of the Bank of International Settlements gave a [speech](https://www.bis.org/speeches/sp220118.htm) titled “Digital Currencies and the Soul of Money.” In the speech, Carstens argues how important central banks are to money, why the “soul of money” is trust, and why decentralized alternatives are doomed to fail. He stated, *"At its core, trust in the currency holds the monetary system together. Like the legal system, this trust is a public good. Maintaining it is crucial for the effective functioning of societies.* *Trust requires sound institutions that can stand the test of time. Institutions that ensure the stability of the currency as the economy's key unit of account, store of value and medium of exchange, and that guarantee the safety and integrity of payments.* *Throughout a history measured not in years but in centuries, independent central banks have emerged as the key institutions that underpin this trust in money. Alternatives have often ended badly. It is for good reason that most countries have established central banks with a clear mandate to serve society. As public policy institutions, central banks have proven successful in upholding trust while adapting to societal and economic change."* For the purpose of this piece, I would like to focus on two of his assertions in the excerpt above: 1.) “Central banks have proven successful in upholding trust,” 2.) “Alternatives have often ended badly.” Carstens definitively states that central banks have succeeded in upholding trust, but this doesn’t appear to be based on any fact or reality. The truth is, one can argue that the credibility of central banks around the world has never been lower after they were blindsided by high levels of inflation after their aggressive monetary policies during the pandemic. Over the past several decades, people had more faith in central banks and the currencies they issue. But there was one major difference from then compared to today – inflation remained low. Since the pandemic began, trust in central banks has been eroding rapidly as inflation eats away peoples’ savings and purchasing power. Since 2020, we have seen the public discourse around central banks shift, and suddenly, headlines began to emerge questioning the credibility of these institutions. It was rare to see headlines like the ones below before 2020. ![](https://www.datocms-assets.com/56652/1694566095-01-the-age-of-credibility.png?auto=format) ![](https://www.datocms-assets.com/56652/1694566112-02-fallen-heroes.png?auto=format) A recent poll by Gallup showed that confidence in the Federal Reserve has its lowest level in 20 years. Americans do not trust its central bank. ![](https://www.datocms-assets.com/56652/1694457953-sam-2.png?auto=format) It leads to the question... Are Americans justified to feel this way? The Federal Reserve’s main job is to maintain price stability. Americans have seen inflation explode to levels not seen in four decades, and a big contributor to the recent bout of inflation is the Federal Reserve’s own policies. One can argue that the Fed has failed at its mandate since 2020. Even the BIS’s own [2023 annual report](https://www.bis.org/publ/arpdf/ar2023e.pdf) admits that the highly accommodative Central bank policies have contributed to the high levels of inflation people are suffering from today. *"With the benefit of hindsight, the extraordinary monetary and fiscal stimulus deployed during the pandemic, while justified at the time as an insurance policy, appears too large, too broad and too long-lasting. It contributed to the inflation surge and to the current financial vulnerabilities."* – BIS, 2023 Annual Report The BIS goes on further to say, *"The privileged powers of fiscal and monetary policy ultimately depend on an implicit social contract underpinned by trust in the state. People consent to paying taxes because they trust the government to use the proceeds for the public good. Similarly, people accept the use of money as a means of payment because they trust the central bank to preserve its value."* What the BIS is getting at here is that fiat currencies are backed by nothing but trust in the central bank that issues them. If that trust fails, so does the value of the money, and so does the issuer of that money (i.e., the central bank) with it. In another [speech](https://www.bis.org/speeches/sp230519.htm) titled “Trust and Public Policies,” given at a central banking seminar in Brazil in May 2023, Agustín Carstens stated, *"Fiat money is an asset with no intrinsic value... Thus, its value clearly comes from trust... This is why the issuer of money is so powerful. However, this power carries with it great responsibility: those who abuse their ability to issue currency, deprive money of its value and will be rejected from society.* *The trust gained can be lost if society doubts the central bank’s commitment to the objective of maintaining price stability. This is one of the reasons why the recent rise in inflation in virtually every country is cause for concern."* As I already mentioned, trust in the Federal Reserve is at two-decade lows as the cost of living soars. One dollar today can buy much less food, fuel, transportation, and shelter than it could three years ago. It leads to the question, where is the breaking point? When does trust get eroded so much due to mismanagement of the currency that Americans reject the Federal Reserve altogether? What conditions need to exist that increase the likelihood that a central bank like the Federal Reserve fails? It’s clear that the BIS is concerned about the erosion of trust in central banks today, given the sheer number of speeches and various papers written on the topic. But what’s interesting is the BIS itself published a paper earlier this year that aimed to answer some of the questions above. ### The Fall of the Bank of Amsterdam In a recent BIS paper titled “The Bank of Amersterdam: The Limits of Fiat Money,” researchers examined what it takes for an issuer of fiat money to fail. To better answer this question, BIS researchers looked to the lessons of history; specifically, they analyzed the fall of the Bank of Amsterdam. They chose the collapse of the Bank of Amsterdam because its money was used as the global reserve currency for nearly two centuries. It mimicked a modern central bank in that it issued fiat money, the Bank guilder, without any gold backing and attempted to use monetary policy to stabilize its value. The Bank of Amsterdam performed liquidity operations akin to today’s asset purchase programs by the Federal Reserve, to stabilize the exchange rate around a predetermined target, such as the Federal Reserve’s 2% inflation target. BIS researchers wrote, *"The monetary policy objective of the Bank of Amsterdam is to maintain a stable premium of Bank money relative to coins (the agio). This objective is attained by adjusting the money stock through asset purchases or sales so that Bank money supply is set equal to Bank money demand at the target agio."* These policies were similar to what the Federal Reserve does today with its Quantitative Easing (QE) and Quantitative Tightening (QT) programs. What BIS researchers found by analyzing the Bank of Amsterdam was that the central bank collapsed when these three factors were present: 1. The central bank had negative equity. 2. Deteriorating economic conditions were present with external shocks. 3. A monetary alternative was widely available to the public to escape to. In the case of the Bank of Amsterdam, the combination of war, poor economic conditions, and bad loans led to their downfall. One can see in the chart below how the shock of the Fourth Anglo-Dutch War from 1780-1784 led to an increase in the amount of loans on the Bank’s balance sheet. Loans ballooned to make up a greater and greater percentage of the assets backing the bank by 1790. ![](https://www.datocms-assets.com/56652/1694566481-03-asset-backing-of-the-bank.png?auto=format) Most of these loans became “non-performing” as the borrowers failed to pay the loans. On top of that, the Bank of Amsterdam lacked fiscal support, and individuals could escape from the fiat money with metal coins widely available. The result was the Bank eventually had to come clean to the public about the low level of metals backing it, and the Bank guilder was then devalued 30% on this revelation. Over the coming years, the Bank withered away as individuals continuously chose metal coins over the Bank-issued fiat. Finally, in 1820, the Bank of Amsterdam closed its doors for good. With these factors in mind, let’s look at the Federal Reserve today and the current environment it finds itself in to determine whether or not it’s at an increased risk of failing, just like the Bank of Amsterdam did over 200 years ago. ### 1.) The Fed is Losing Money In response to the pandemic, the Federal Reserve did what it has done whenever turmoil hit the market; it came in as the “buyer of last resort.” In this case, the Federal Reserve cut interest rates to zero and then went on a buying spree. It bought not only massive amounts of U.S. Treasuries and Mortgage-backed securities as part of its QE program, but it even ventured into the corporate debt market for the first time. What resulted was the Federal Reserve’s balance sheet exploded, adding over $4.5 trillion in debt in a two-year timespan. ![](https://www.datocms-assets.com/56652/1694566521-04-assets-total-assets.svg) Soon after, inflation surged. After months of denying that this was a problem, the Federal Reserve pivoted its monetary policy hard and began raising interest rates at one of the fastest rates in its history in an attempt to bring inflation down. Ironically, one of the consequences of the Fed’s interest rate hikes is that it caused the value of its own assets, its massive bond portfolio, to fall significantly. To make matters worse, the increase in interest rates hurt the Federal Reserve on the liability side as well. The liabilities of the Federal Reserve consist mainly of commercial bank deposits known as bank reserve, which the Federal Reserve must pay interest to. It also has to pay interest on the Reverse Repo facility. As the Federal Reserve raised interest rates, it also raised the interest expense on itself that it has to pay to these institutions. Back when the Federal Reserve bought all those bonds during the pandemic as part of its QE program, the Treasuries and MBS paid a higher interest rate than the interest on bank reserves and in the Reverse Repo facility. But now, that dynamic has been flipped on its head. The Fed now has to pay interest expenses on those liabilities at a rate of north of 5%, as its bond portfolio continues to pay out at pandemic-era low rates. The Fed has to pay more in interest than it is bringing in on its bond portfolio. The result? For the first time in its history, the Federal Reserve is now losing money. It has suffered operating losses of about $95 billion since September 2022. ![](https://www.datocms-assets.com/56652/1694566596-05-liabilities-and-capital.svg) This all came to ahead in April when the Fed’s net equity went negative. This means that the liabilities on its balance sheets exceed its assets. If the Federal Reserve was a commercial bank, it would be called insolvent. The Fed’s equity position sits at negative $44.4 billion. ![](https://www.datocms-assets.com/56652/1694566641-06-factors-affecting-reserve-balances.png?auto=format) Like the Bank of Amsterdam, the Federal Reserve currently has negative equity due to many underwater loans on its balance sheet. Ironically, it’s the loans they acquired through their own QE programs, and then they jacked up their own interest expense with their rate hikes. How rich. So why isn’t everyone running around talking about the Fed being insolvent? Simple — accounting tricks. The Fed can mark the losses as “deferred assets” on its balance sheet. This is essentially voodoo accounting that ultimately benefits the Fed and deprives the government and taxpayers of revenues. Investment Researcher John P. Hussman summarizes it well, *"The Fed recently indicated that it will create a new line called a “deferred asset” on its balance sheet. This “deferred asset” is a phantom accounting entry that represents the anticipation of future interest on the Treasury securities held by the Fed. This interest will not be paid back to the Treasury for the benefit of the public, as the Fed has historically done. Instead, the interest will be retained by the Fed.* *As Former Fed Chairman Ben Bernake indicated... ”It is an asset in the sense it embodies a future economic benefit that will be realized by reducing future cash flows."* *Let’s be clear about what Bernake is saying: “It is an asset in the sense that it embodies a future economic benefit [to the Fed] that will be realized as a reduction of future cash outflowed [to the public]."* So, instead of paying out profits to the Treasury once the Fed becomes profitable again, it will instead pay off its own losses first. If you’re still confused – don’t worry – you’re not alone. The Fed made up this new “deferred asset.” Here is another exchange between Lyn Alden and Preston Pysh that may clear things up more... All in all, it seems that the Federal Reserve expects to one day be profitable again soon, meaning that it, too is anticipating rate cuts down the line which will increase the value of its assets and drop its interest expense. When that happens, the Fed can pay down its losses. ![](https://www.datocms-assets.com/56652/1694566866-07-lyn-alden-tweets.png?auto=format) Make no mistake, if it wasn’t for accounting tricks, the Federal Reserve would be formally insolvent and working with negative equity, just like the Bank of Amsterdam years ago. The Fed could always try to print more money to get out of this hole and have the government backstop them if push comes to shove, but at that point, faith in the currency may erode to a level where it breaks entirely. In that scenario, the public may reach a point where they begin to lose all trust in the dollar, which would be the beginning of the end of the Federal Reserve. ### 2.) Poor Economic Conditions with External Shocks One aspect of the Bank of Amsterdam’s downfall was war, which caused them to expand their balance sheet greatly and make unproductive and riskier loans. This occurs when central banks use their balance sheet to pursue public policy objectives and incur financial losses as a result. This war was a large external shock that altered the central bank’s policy and economic conditions. Fast forward to 2023, and we had a similar external shock in the form of a global pandemic. The pandemic and economic lockdowns caused central banks to expand their balance sheets to truly historic levels. The chart below shows how balance sheet expansions typically occur in times of financial instability, war, and natural disaster. One can see how the pandemic response dwarves all the other expansions dating back to 1600 (in green). ![](https://www.datocms-assets.com/56652/1694566927-08-major-balance-sheet-expansion.png?auto=format) This is a prime example of the Federal Reserve prioritizing public policy over other factors, such as price stability or the long-term health of its balance sheet. Now, the Federal Reserve is grappling with the fallout from its extreme pandemic-era policies, facing high inflation and negative equity. In addition, economic conditions continue to show signs of deterioration. U.S. Manufacturing PMI has been contracting for nine straight months. ![](https://www.datocms-assets.com/56652/1694566992-09-manufacturing-activity-shrinks.png?auto=format) When we analyze the labor market, though the unemployment rate remains low at 3.8%, there are signs of strain. The first sign is that pay for new hires has decreased in 2023. The first thing companies reduce pay for new hires at the beginning of a labor cycle. The first issue is that pay for new hires has decreased in 2023. ![](https://www.datocms-assets.com/56652/1694567303-10-pay-cut.svg) Another sign is the observed reduction in average working hours. Average weekly hours of private-sector employees have been in steady decline. Before employers lay off workers, they will try to keep them on by reducing their hours. ![](https://www.datocms-assets.com/56652/1694567337-11-average-weekly-hours-private-sector-employees.svg) Lastly, we are seeing tightening lending standards. Analyst Michael Kantro notes that this typically precedes a drop in retail sales by two quarters. We have already been experiencing a steady decline in retail sales since the pandemic-highs when we zoom out. ![](https://www.datocms-assets.com/56652/1694567361-12-us-bank-willingness-to-make-consumer-loans.png?auto=format) The consumer has been resilient up to this point, but this strength has, in part, been driven by excess savings from the pandemic policies. These excess savings will be emptied soon. ![](https://www.datocms-assets.com/56652/1694567404-13-us-households-running-out-excess-savings.svg) Lastly, U.S. corporate bankruptcies show how businesses have faired in this new environment of high-interest rates. Bankruptcies have already eclipsed all of last year, and it’s only September. ![](https://www.datocms-assets.com/56652/1694567427-14-us-corporate-bankruptcies.png?auto=format) Of course, there are other more optimistic data points in the economy. GDP growth remains elevated, and there is still strength in the service sectors like travel and leisure, but at best, one can say the data is mixed right now. An important point to mention is the current fiscal predicament the U.S. finds itself in today. Currently, the U.S. is running war-time deficits in a time of peace with debt-to-GDP at levels not seen since World War II. As the Federal Reserve raises interest rates, this exacerbates the fiscal situation by increasing the interest expense on the debt, thereby widening the fiscal deficit further. The BIS highlights the repercussions when fiscal and monetary policies conflict and become counterproductive to one another: *"In that case, both policies end up narrowing their respective rooms for maneuver, shocks become increasingly damaging and policies increasingly destabilizing. The instability, in turn, threatens or reflects loss of trust in the policies themselves. A common feature is loss of trust in money – as a store of value, means of payment or unit of account – and in the sustainability of public debt."* This increasingly fragile environment – with massive amounts of debt, high levels of inflation, and deteriorating economic conditions – increases the likelihood of additional external shocks, such as a systemic banking or currency crisis. And as the BIS shows below, these crises often tend to happen together. ![](https://www.datocms-assets.com/56652/1694567513-15-crises-often-happen-together.png?auto=format) On the whole, it’s safe to say that the Federal Reserve finds itself in an uncertain environment with many economic metrics pointing toward a recession around the corner. These are exactly the kind of deteriorating economic environment that created a ripe environment for the collapse of the Bank of Amsterdam. ### 3.) Bitcoin is the Alternative One key assumption many central banks make is that there will always be demand for the currency they issue regardless of their policy decisions. However, this may not be the case if trust in the currency is completely lost and alternative forms of money exist that are easily accessible. The BIS’s research shows that “demand for fiat money may be negatively affected by economic shocks, the availability of alternatives, and network effects.” This contributed to the fall of the Bank of Amsterdam when individuals increasingly chose to hold and transact with metal coins as the fiat rapidly depreciated. Today, the Federal Reserve finds itself in an environment where there is more competition for money than there has been in centuries. Central bankers now have to compete with a global form of money that has a fixed monetary supply. A form of money that can’t be debased can be transported anywhere in the world with a click of a button and is accessible to anyone with a smartphone and an internet connection. ECB President Christine Lagarde said the quiet part out loud in an interview, a couple of years ago... Bitcoin represents an escape hatch for any citizen of the globe to use when they no longer trust their local currency or the central bank that issues it. ![](https://www.datocms-assets.com/56652/1694461217-sam-ecb.png?auto=format) In a paper from the IMF in October 2021, they introduced a new term called “cryptoization” referring to the use of cryptocurrencies as alternative assets in jurisdictions where the local currency is failing. The paper concluded, *“There are several driving forces for cryptoization. Unsound macroeconomic policies combined with inefficient payment systems in some emerging markets and developing economies boost crypto adoption... Weak central bank credibility and a vulnerable banking system can trigger asset substitution as domestic residents seek a safer store of value.”* Whereas metal coins were available to protect people’s savings in the 1800s when the Bank of Amsterdam failed them, today, we have a new form of digital money that can provide the same service for citizens globally. As long as Bitcoin continues to function, it will always be there as alternative money that people can turn to when they feel abused by central bank policies. Agustín Carstens argued that alternative forms of money have ended badly, but I would argue that all fiat currencies have ended badly. Bitcoin represents an alternative money that has never existed before. A new monetary system based on rules, not rulers that will bring sound monetary policies back to the digital age. The trust lies in the math underlying the protocol. Carstens and I may agree that trust is the “soul of money,” but I would rather put my trust in math than in fallible human beings who have shown time and time again that they will succumb to the temptation to debase the currency. ### Conclusion The history of the Bank of Amsterdam underscores the vital role trust plays within the monetary system today. As the Federal Reserve grapples with challenges eerily similar to those that precipitated the Bank of Amsterdam’s historic collapse, trust in it is eroding rapidly, exacerbated by poor policy decisions and surging inflation. With each misstep by central banks that leads to the debasement of fiat currencies, people around the globe are increasingly seeking refuge in alternatives. Bitcoin presents itself not just as another option but as a beacon of stability and trustworthiness. As more individuals choose Bitcoin over traditional fiat currencies, its adoption and significance will grow. Economist Friedrich Hayek insightfully remarked, *“The root source of trouble is precisely that the management of money has been the exclusive right and responsibility of central banks.”* In this pivotal moment, will the Federal Reserve address its faltering course, or will Bitcoin become the standard for a more resilient economic future? The ensuing chapters of this monetary tale are poised to reshape our financial world. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Best Bitcoin ETF Fees: Lowest to Highest (July 2024) URL: https://www.swanbitcoin.com/education/bitcoin-etf-fees/ In this guide, we analyze and present the top 11 Bitcoin ETFs with the lowest fees for cost-effective investing as of July 26th, 2024. --- **Matt Ruby** · July 13, 2024 · Updated July 26, 2024 Spot Bitcoin Exchange Traded Funds (ETFs) have arrived – so which (if any) are right for you? Before we dive in, here are the current spot Bitcoin ETF fees and BTC holdings... ### Spot Bitcoin ETF Fees and Holdings (As of July 22nd, 2024) ##### BlackRock iShares Bitcoin Trust (IBIT) - **Fee**: 0.25% for the first 6 months or $5 billion - **BTC Holdings**: 338,127 BTC with Coinbase - 0.12% fees for first 6 months or $5 billion - [More Information](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust) ##### Grayscale Bitcoin Trust (GBTC) - **Fee**: 1.5% - **BTC Holdings**: 270,770 BTC with Coinbase - Held 619K Bitcoin on launch - [More Information](https://etfs.grayscale.com/gbtc) ##### Grayscale Bitcoin Mini Trust - **Fee:** [0.15%](https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm) - **GBTC:** 10% of Grayscale Bitcoin Trust (GBTC) - assets invested in the Bitcoin Mini Trust (BTC) - [More Information](https://www.grayscale.com/blog/general-updates/what-is-grayscale-bitcoin-mini-trust) ##### Fidelity Wise Origin Bitcoin Trust (FBTC) - **Fee**: 0.25% (0% fee waived until Aug. 1, 2024) - **BTC Holdings**: 181,087 BTC in self-custody - [More Information](https://institutional.fidelity.com/advisors/investment-solutions/asset-classes/alternatives/fidelity-wise-origin-bitcoin-fund) ##### Ark/21 Shares Bitcoin Trust (ARKB) - **Fee**: 0.21% (0% fees for the first 6 months or $1 billion) - **BTC Holdings**: 49,225 BTC with Coinbase - [More Information](https://ark-funds.com/funds/arkb/) ##### Bitwise Bitcoin ETF (BITB) - **Fee**: 0.20% (0% fees for the first 6 months or $1 billion) - **BTC Holdings**: 38,643 BTC with Coinbase - [More Information](https://bitwiseinvestments.com/crypto-funds/bitcoin) ##### VanEck Bitcoin Trust (HODL) - **Fee**: 0.20% (Fee waived until Mar. 31, 2025 or first $1.5 billion in fund assets, whichever comes first) - **BTC Holdings**: 11,026 BTC with Gemini - [More Information](https://www.vaneck.com/us/en/investments/bitcoin-trust-hodl/) - [Fee Update](https://www.etftrends.com/crypto-channel/fast-start-hodl-leads-fast-fee-cut/#:~:text=HODL's%20new%20annual%20expense%20ratio,is%20important%20for%20another%20reason.) ##### Valkyrie Bitcoin Fund (BRRR) - **Fee**: 0.49% (0% fees for the first 3 months) - **BTC Holdings**: 8,487 BTC with Coinbase - [More Information](https://valkyrie-funds.com/) ##### Invesco Galaxy Bitcoin ETF (BTCO) - **Fee**: 0.25% (0% fees for the first 6 months or $5 billion) - **BTC Holdings**: 7,908 BTC with Coinbase - [More Information](https://bitwiseinvestments.com/crypto-funds/bitcoin) ##### Franklin Bitcoin ETF (EZBC) - **Fee**: 0.19% (Fee waived until Aug. 2, 2024 or first $10 billion in fund assets, whichever comes first.) - **BTC Holdings**: 6,818 BTC with Coinbase - [More Information](https://www.franklintempleton.com/investments/options/exchange-traded-funds/products/39639/SINGLCLASS/franklin-bitcoin-etf/EZBC) ##### WisdomTree Bitcoin Trust (BTCW) - **Fee**: 0.30% (0% for first six months of trading or first $1 billion in fund assets, whichever comes first) - **BTC Holdings**: 1,347 BTC with Coinbase - [More Information](https://www.wisdomtree.com/investments/etfs/crypto/btcw) ##### Hashdex Bitcoin ETF (DEFI) - **Fee**: 0.90% (converted from futures ETF to spot ETF on 03/27/24) - **BTC Holdings**: 178 BTC with BitGo - [More Information](https://hashdex-etfs.com/defi) Bitcoin ETF fee information is updated daily. For the latest updates, click [here](https://heyapollo.com/bitcoin-tracker/overview). ### Q1 Spot Bitcoin ETF Key Takeaways - The initial three months of trading for spot Bitcoin ETFs have ended, with the eleven offerings approved by the SEC collectively attracting about $12.1 billion in inflows. - Blackrock's IBIT has emerged as the leading beneficiary, securing $13.9 billion in flows since it started trading in January. - **IBIT is the fastest growing ETF in the history of ETFs.** - On March 27th, BlackRock CEO Larry Fink appeared on Fox Business to discuss the wild success of its spot Bitcoin ETF product, IBIT. **Fink's spot Bitcoin ETF comments begin at the 10 minute, 15 second mark.** - More than 30 Bitcoin ETFs collectively [owned](https://www.coinglass.com/bitcoin-etf) 1,002,343 BTC as of May 24. - BlackRock (IBIT) became the [fastest](https://malaysia.news.yahoo.com/bitcoin-etfs-resume-inflow-winning-180801483.html) ETF to reach $20B - added Bitcoin to its Strategic Income and Strategic Global Bond Funds. - BlackRock's iShares Bitcoin Trust has [become](https://www.reuters.com/technology/blackrocks-etf-becomes-largest-bitcoin-fund-world-bloomberg-news-reports-2024-05-29/#:~:text=May%2029%20(Reuters)%20%2D%20BlackRock's,Bloomberg%20News%20reported%20on%20Wednesday.) the world's largest Bitcoin fund, amassing nearly $20 billion in assets since its U.S. listing in January. [Video](https://www.youtube.com/watch?v=6zEJrQJKJCg) ### Bitcoin ETF Disclosure's - **Millennium Management** - [Total](https://www.sec.gov/Archives/edgar/data/1273087/000127308724000071/0001273087-24-000071.txt) investment: $1.9 billion - $844.2 million in BlackRock's iShares Bitcoin Trust (IBIT) - $806.7 million in Fidelity's Wise Origin Bitcoin Fund (FBTC) - $202 million in Grayscale Bitcoin Trust (GBTC) - $45.0 million in ARK 21Shares Bitcoin ETF (ARKB) - $44.7 million in Bitwise Bitcoin ETF (BITB) - **Schonfeld Strategic Advisors** - Manages $13 billion in assets - $248 million in BlackRock's ETF - $231.8 million in Fidelity's fund - [Total](https://www.sec.gov/Archives/edgar/data/895421/000089542124000355/0000895421-24-000355-index.html) investment: $479 million - **Susquehanna International Group** - [Total](https://www.sec.gov/Archives/edgar/data/1446194/000144619424000004/0001446194-24-000004.txt) investment: +$1.8 billion - **Morgan Stanley** - $269.9 million in [GBTC](https://www.sec.gov/Archives/edgar/data/895421/000089542124000355/0000895421-24-000355-index.html) - **Aristeia Capital** - $163.4 million in IBIT - [**Wisconsin Investment Board** ](https://www.wpr.org/news/wisconsin-pension-fund-bitcoin) - $162 million in [IBIT, GBTC](https://www.sec.gov/Archives/edgar/data/854157/000106299324010116/xslForm13F_X02/form13fInfoTable.xml) - **Other major investors** - [JPMorgan](https://x.com/JSeyff/status/1789026505013506157) - [Wells Fargo](https://www.sec.gov/Archives/edgar/data/72971/000007297124000139/0000072971-24-000139.txt) - UBS - [BNP Paribas](https://www.sec.gov/Archives/edgar/data/1166588/000116658824000009/0001166588-24-000009-index.htm) - Royal Bank of Canada ### Net Bitcoin ETF Inflows **Total Volume**: $1.67B **Total Marketcap**: $61.25B **Total AUM**: $52.14B **Last Update**: [July 26, 2024 - 1:56 PM UTC](https://www.coinglass.com/bitcoin-etf) ##### Important Fee Considerations **Discounted Fees** - Some ETFs may offer discounted fees for a limited period, so investors should know the terms. **Trustworthy Companies** - To ensure security and reliability, choose an ETF backed by a trusted company with substantial assets under management (AUM). Want to known more about spot [Bitcoin ETF fees](https://www.swanbitcoin.com/bitcoin-etf-fees/)? Check out our [complete overview](https://www.swanbitcoin.com/bitcoin-etf-fees/). ### Top 5 Bitcoin strategy ETFs by fee Below is a list of Bitcoin strategy ETFs and their fees, in order from lowest to highest fee: ##### Global X Blockchain & Bitcoin Strategy ETF (BITS) - **Fee:** 0.65% - Mostly invested in Bitcoin futures. Also invested in the Global X Blockchain ETF (BKCH) - [More information](https://www.globalxetfs.com/funds/bits/) ##### Valkyrie Bitcoin Miners ETF (WGMI) - **Fee:** 0.75% - Invested in Bitcoin mining stocks - [More information ](https://valkyrie-funds.com/wgmi/) ##### Bitwise Bitcoin Strategy Optimum Roll ETF (BITC) - **Fee:** 0.92% - Invested in Bitcoin futures. Fee reduced to 0.85% until Feb. 6, 2025 - [More information](https://bitcetf.com/) ##### ProShares Bitcoin Strategy ETF (BITO) - **Fee:** 0.95% - Invested in Bitcoin futures - [More information](https://www.swanbitcoin.com/bito-vs-gbtc-compared/) ### Types of fees There are four primary types of fees associated with these Bitcoin ETFs: 1. *Expense ratio fee* 2. *Total annual fund operating expenses fee* 3. *Bid-ask spread fee* 4. *Custodian fee* Let’s examine what each of these means… [Expense ratio fee](https://www.investopedia.com/terms/e/expenseratio.asp) This ratio measures the fund’s operational cost, expressed as a percentage of the fund’s assets. It directly affects the returns you might expect from the investment, as higher expenses mean lower net returns. Let's take a look at a few examples... 1. [ProShares Bitcoin Strategy ETF](https://www.swanbitcoin.com/bito-vs-gbtc-compared/) (BITO) expense ratio: 0.95%. 2. [ProShares Short Bitcoin ETF](https://www.proshares.com/our-etfs/leveraged-and-inverse/biti) (BITI) expense ratio: 0.97%. [Total annual fund operating expenses fee](https://www.investopedia.com/terms/t/tafoe.asp#:~:text=What%20Are%20Total%20Annual%20Fund,investors%20in%20a%20fund's%20prospectus.) These are all the fund’s annual expenses, including management, administration, and compliance fees. These expenses are expressed as a percentage of the fund’s assets and can significantly impact the returns on your investment. The [Simplify Bitcoin Strategy PLUS Income ETF](https://www.simplify.us/etfs/maxi-simplify-bitcoin-strategy-plus-income-etf) has total annual fund operating expenses of 11.18% with other costs, primarily composed of interest expense, estimated at 10.33% for the fund’s initial fiscal year​​. [![](https://www.datocms-assets.com/56652/1706578380-management-fees-simply.png?auto=format)](https://www.simplify.us/etfs/maxi-simplify-bitcoin-strategy-plus-income-etf) MAXI Simplify Bitcoin Another example is the [Bitwise Bitcoin Strategy Optimum Roll ETF](https://bitcetf.com/) (BITC), which has a gross expense ratio of 0.92%. [Bid-Ask Spread Fee](https://www.investopedia.com/terms/b/bid-askspread.asp) This is the price difference between buyers' willingness to pay and sellers' acceptance. It's an indirect cost for investors.  The bid-ask spread for a Bitcoin ETF represents the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). This spread is crucial for investors, as it can affect the overall cost of trading the Bitcoin ETF.  The size of the bid-ask spread in Bitcoin ETFs can vary based on several factors, including: - The liquidity of the Bitcoin ETF. - The underlying assets it holds. Highly liquid Bitcoin ETFs usually have tight bid-ask spreads, often just a few pennies apart. Bitcoin ETFs traded less frequently or with less liquid underlying assets can exhibit wider bid-ask spreads. **Example**: The [SPDR S&P 500 ETF Trust](https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-sp-500-etf-trust-spy) (SPY) is known for its tight bid-ask spread, often around 0.0032%. This is mainly due to its high liquidity.  [![](https://www.datocms-assets.com/56652/1706578115-spdr-etf.png?auto=format)](https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-sp-500-etf-trust-spy) State Street Global Advisors The average bid/ask spread for the more than 2,900 ETPs (Exchange-Traded Products) listed on U.S. exchanges is about 0.52%. However, the median spread is much lower (i.e., around 0.20%). [Custodian fee](https://www.investopedia.com/terms/c/custodian.asp) Custodian fees ensure your Bitcoin remains safe (reason: Bitcoin needs secure storage to prevent theft or loss). These fees can vary depending on the provider and the assets being stored. ### FAQs on spot Bitcoin ETFs #### What exactly *is* a spot Bitcoin ETF? The first thing to understand is exactly what an Exchange-Traded Fund (ETF) means. [Investopedia](https://www.investopedia.com/terms/e/etf.asp) An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs track or seek to outperform a particular index, sector, commodity, or other asset. ETFs differ from mutual funds in that orders are executed throughout a trading day, whereas mutual fund orders can only be executed after market hours. This means that you can place a buy or sell order with your broker during trading hours, and it will execute it. A mutual fund order placed during the day will be executed after the market closes. Now, let’s dive into spot Bitcoin ETFs. These exchange-traded funds directly track the price of Bitcoin, primarily by holding a large amount of the cryptocurrency itself. You can think of them as similar to a spot gold ETF, which holds physical gold bullion on behalf of its shareholders. #### Why do spot Bitcoin ETFs matter? Spot Bitcoin ETFs have finally arrived, and that’s big news for Bitcoin. In the past, Bitcoin has often been (**mistakenly**) lumped in with “*crypto*” as something mysterious and risky. Bitcoin ETFs change this narrative since *Bitcoin is now being sold by Wall Street to Main Street*. Basically, Bitcoin is now legitimate in the eyes of traditional finance. As a result, these ETFs will become an initial touchpoint for many future Bitcoiners. In effect, Wall Street will be the advertising engine for a new generation of Bitcoin investors.  ### What’s the difference between spot and futures Bitcoin ETFs? Spot Bitcoin ETFs directly hold Bitcoin, and their value reflects the current price of Bitcoin. Futures Bitcoin ETFs invest in contracts that ***speculate*** on the future price of Bitcoin, giving purchasers price exposure without direct ownership. One issue with futures ETFs is they can have price discrepancies due to the dynamics of the futures market. Apollo provides a nice overview that updates daily [on the different kinds of Bitcoin ETFs](https://heyapollo.com/bitcoin-etf): **Spot Bitcoin ETFs** Are simpler, mainly focusing on securely holding Bitcoin. They are more accessible and understandable for the average investor. **Futures Bitcoin ETFs** Are more complex, involving futures contracts and associated roll costs. They require a deeper understanding of futures markets and their risks. ### When did spot Bitcoin ETFs become available?  On Jan. 10, 2024, the U.S. SEC [approved 11 spot Bitcoin ETFs](https://www.reuters.com/technology/bitcoin-etf-hopefuls-still-expect-sec-approval-despite-social-media-hack-2024-01-10/#:~:text=WASHINGTON%2FNEW%20YORK%2C%20Jan%2010,and%20the%20broader%20crypto%20industry.), the [first spot Bitcoin ETFs](https://www.swanbitcoin.com/what-bitcoin-etfs-mean-for-you/) ever, including ones from Fidelity, BlackRock and Invesco. These are the first cryptocurrency funds to trade on a major exchange and hold Bitcoin directly. Btw if you’re not familiar with Bitcoin, CoinDesk [explains it this way](https://www.coindesk.com/learn/what-is-bitcoin/): - *"Bitcoin is the world’s first successful decentralized cryptocurrency and payment system, launched in 2009 by a mysterious creator known only as Satoshi Nakamoto."* The word “*cryptocurrency*” refers to a group of digital assets where transactions are secured and verified using cryptography – a scientific practice of encoding and decoding data. Those transactions are often stored on computers distributed worldwide via a distributed ledger technology called blockchain. [Learn more about Bitcoin at the Swan Signal Bitcoin Blog.](https://www.swanbitcoin.com/signal/) ![](https://www.datocms-assets.com/56652/1711919658-over-time.png?auto=format) Hey Apollo ### What are the pros and cons of buying Bitcoin ETFs vs. buying Bitcoin directly? With the arrival of these ETFs, it's logical to wonder about [the pros and cons of purchasing them as opposed to buying Bitcoin directly](https://www.fool.com/investing/2023/10/27/better-buy-bitcoin-or-a-spot-bitcoin-etf/). While spot Bitcoin ETFs [are a big boost](https://www.swanbitcoin.com/bito-vs-gbtc-compared/) for the overall Bitcoin market, that doesn't necessarily mean one is the best path *for you*.  #### *Pros of buying Bitcoin ETFs* They're easy to buy. You don't have to worry about creating a cryptocurrency exchange account, using a blockchain wallet, or figuring out crypto taxes.  *"Many investors can't currently get exposure,"* [said](https://www.nerdwallet.com/article/investing/spot-bitcoin-etf) Peter Eberle, the Chief Investment Officer of crypto investment firm Castle Funds.  - *"For example, many people with 401(k)s, IRAs, and similar accounts can't easily access Bitcoin. These investors will be able to allocate funds going forward. This will drive demand in coming years."* Also, there's more regulation provided since an ETF is audited, monitored, and tracked. #### *Cons of buying Bitcoin ETFs* With ETFs, you don’t actually own or have direct access to Bitcoin. An ETF means you own shares in a fund that holds Bitcoin. When you hold your own Bitcoin, you can do whatever you want with it.  Also, you’re paying fees. ETFs mean you wind up paying Wall Street pros (via fund management fees/expenses) for something that you could do on your own. On the other hand, you can buy Bitcoin directly (for example, [via Swan](https://www.swanbitcoin.com/)) in just a few clicks.  It’s also worth noting that Bitcoin ETFs may not track the price of Bitcoin *exactly*. There could be disparities between the performance of Bitcoin and an ETF.  Also, there may be custodianship issues since most spot Bitcoin ETFs rely on a third-party custodian to store their Bitcoin (usually [Coinbase](https://www.coinbase.com/)). If Coinbase were to, say, run into financial woes or get penalized by the government for some reason, it could potentially put Bitcoin ETFs at risk?  ### Will these fees remain the same? When it comes to fees, this newly minted spot Bitcoin ETFs are navigating the equilibrium between supply and demand. Currently, almost all of the Bitcoin ETF funds sport fees ranging from 0% to 0.25% ([Grayscale’s is an outlier at 1.5%](https://www.swanbitcoin.com/bito-vs-gbtc-compared/)).  That said, there may be ongoing volatility with these fees since Bitcoin ETFs are brand-new products. In fact, we’ve already seen a battle to lower fees among them – Ark-21Shares, Valkyrie, Invesco-Galaxy, and others showed higher fees initially but lowered them later. Bitwise, which opened with some of the lowest fees, dropped even lower, going from 0.24% to 0.20%. On February 14, news from ETF.com [revealed](https://www.etf.com/sections/news/fidelity-cuts-fee-bitcoin-etp) that Fidelity had cut the total expense ratio (TER) for one of its products from 0.75% to 0.35%. This reduction, however, pertains to Fidelity’s European offering, the Fidelity Physical Bitcoin ETP, and not to its US-listed Fidelity Wise Origin Bitcoin Fund (FBTC). VanEck [announced](https://www.sec.gov/Archives/edgar/data/1838028/000093041324000609/c108219_424b3.htm) plans to lower the fees for its spot Bitcoin ETF, as detailed in a document submitted to the U.S. SEC on February 15. VanEck also [announced](https://twitter.com/vaneck_us/status/1767227350108794991) it would temporarily eliminate the management fee for its spot Bitcoin ETF, HODL, due to its lower assets than competitors. This fee waiver will last until March 31, 2025, or until the fund's assets reach $1.5 billion, whichever comes first. **Why is Grayscale charging more at 1.50%?** CEO Michael Sonnenshein [said](https://www.cnbc.com/2024/01/11/what-will-it-cost-you-to-buy-a-bitcoin-etf-here-are-the-cheapest-and-most-expensive-funds.html) Grayscale’s experience in dealing with crypto justifies the higher price point of its ETF:  - *“We’re a crypto specialist. We’ve weathered all different types of speed bumps and advancements within the crypto ecosystem. For a lot of these asset managers and issuers, this is the first time they’re going to be dealing with the complexities that go into running these types of products.”* So, what should you expect going forward? That was the subject of [a recent Swan Signal monthly newsletter](https://go.swanbitcoin.com/index.php/email/emailWebview?md_id=3021&email=ODc1LVhLUS02MzQAAAGQ5b3RQPiiBCPknw2oWwB95emET_DALmCUuiGBGlGVckagkmRylrxKgCfrkieInKTkIocidQr5C9RMUC_8d5tM0KSGfkfe3gYV). These ETF issuers are viciously competing with one another for capital because, in the ETF world, liquidity is king. Typically, the largest ETF in an asset class dominates once it gains a significant market share and gathers momentum. From there, they have the pricing power to set their fees as they see fit. Once an ETF wins, it’s very difficult for another to take its crown. ### So which Bitcoin ETF should I get?  It depends. Bryan Armour, editor of Morningstar, [argues](https://www.morningstar.com/etfs/spot-bitcoin-etfs-are-here-should-you-invest) that Buy-and-Hold investors should focus on fees while active ETF traders should prioritize liquidity. He writes:  - *“Investors can pick the best option for themselves by focusing on three fund criteria: fees, liquidity, and fund trading costs. Buy-and-hold investors should emphasize fees, those actively trading ETFs should focus on liquidity, and everyone should keep an eye on how trading costs affect performance.”* Also, keep in mind buying Bitcoin directly may still be the best answer. Buying real Bitcoin – which you can hold for the long term free of annual fees and do with as you please, whenever you want – keeps you in charge.  [Learn more about the benefits of holding real Bitcoin in self-custody with Swan.](https://swan.com/) ### Which of these Bitcoin ETFs will survive? It’s tough to say. It all depends on the success of the firms promoting these ETFs and the demand for the product. Advertising has just begun, and the conservative nature of traditional finance means many advisors and investors will want to see a track record for ETFs before increasing allocations.  In fact, Grayscale Investments CEO Michael Sonnenshein [told CNBC](https://www.cnbc.com/2024/01/19/grayscale-ceo-all-approved-bitcoin-etfs-wont-survive-defends-fees.html) that most of the approved Bitcoin ETFs won’t survive saying, - *"Two to three of the spot Bitcoin ETFs will maybe obtain some kind of critical mass” of assets under management, but the others may be pulled from the market. I don’t ultimately think that the marketplace will have these 10 spot products we find ourselves having.”*  Spot Bitcoin ETFs smashed records on their first day trading seeing over 4.6 billion in trading volume, the highest ever for an ETF launch. [Video](https://www.youtube.com/watch?v=SnukRMpLefM) ##### Swan Bitcoin Daily Series To stay on top of all the daily inflow and outflow changes, check out our new [Daily Bitcoin Show](https://www.youtube.com/watch?v=1voKhumF_1c&list=PLoB1eZWSVHVaCOtrrbq79F2JXVgV2Xz-J&pp=iAQB), hosted by Dante Cook. You can watch his most recent episode below. Find the entire playlist from the series [here](https://www.youtube.com/playlist?list=PLoB1eZWSVHVaCOtrrbq79F2JXVgV2Xz-J). [Video](https://www.youtube.com/watch?v=fu5RK5G8ziA) ### Which Bitcoin ETF has the cheapest fees? Franklin Templeton [reduced the fee](https://www.coindesk.com/markets/2024/01/12/franklin-templetons-bitcoin-etf-now-the-cheapest-after-10-basis-point-reduction/) of its Bitcoin ETF to become the cheapest among the new investment products. Until Aug. 2, 2024, the fund manager will also waive off fees for its ETF till the fund reaches AUM of $10 billion. ### What are the best reasons to buy Bitcoin ETFs? Bitcoin ETFs offer a more regulated and mainstream way to access Bitcoin if that’s important to you.  [Forbes](https://www.forbes.com/advisor/au/investing/cryptocurrency/us-bitcoin-etfs-australian-investors/#:~:text=Investing%20in%20a%20Bitcoin%20ETF,a%20wider%20range%20of%20investors.) Unlike the direct ownership of Bitcoin, which involves technical challenges such as managing wallets and cryptographic keys, investing in ETFs offers a more conventional and straightforward way to gain exposure to Bitcoin’s market movements.  ### What will happen to Bitcoin now that these ETFs have been approved? It means Bitcoin is leveling up. As Swan Bitcoin CEO Cory Klippsten [told](https://finance.yahoo.com/video/spot-bitcoin-etf-could-mean-204307210.html) Yahoo Finance: - *"The top-of-funnel for investor class is going to change from something that is contrary to Bitcoin, which is all of the crypto scams and pump-and-dumps of the last six years, FTX and the like... Now you're going to see a new era where some of the most credible, some of the most well-funded, trust brands in the world are going to be shouting from the rooftops with tens, maybe hundreds of millions of dollars of marketing expense, just talking about Bitcoin."* [![](https://www.datocms-assets.com/56652/1706723349-everything-changed.png?auto=format)](https://twitter.com/coryklippsten/status/1751284666710245509) Twitter ### Final Words Bitcoin was designed as peer-to-peer money without the need for intermediaries. When opting into a Bitcoin ETF, investors can leverage price action, but at the cost of [self-sovereignty](https://www.swanbitcoin.com/sovereignism-part-i-digital-creative-destruction/) and long-term returns.  We urge you to research to fully understand the [trade-offs](https://www.swanbitcoin.com/bito-vs-gbtc-compared/) between owning Bitcoin and currently purchasing a Bitcoin ETF.   If you don't think a Bitcoin ETF or private key [cold storage wallet](https://www.swanbitcoin.com/bitcoin-cold-storage/) option suits you, perhaps a [Bitcoin IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) and the tax advantages it presents do. If you need assistance or would like to discuss your individual retirement portfolio with one of our IRA specialists [book a call here](https://calendly.com/d/yvk-2sq-x59/swan-ira-consultation?utm_medium=organic&utm_source=blog&utm_campaign=blog). If a Bitcoin IRA isn't for you but you are still looking for an [alternative to Coinbase](https://www.swanbitcoin.com/coinbase-alternative/), find out how to [break free of Coinbase](https://www.swanbitcoin.com/delete-coinbase-account-in-three-easy-steps/) in just three easy steps. [Join](https://www.swanbitcoin.com/drewswanbitcoin/) Swan Bitcoin today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # Alto Crypto IRA Review 2024: What +1.2k Trustpilot Reviews Tell Us URL: https://www.swanbitcoin.com/education/altoira-review/ Alto Crypto IRA is a well-know self-directed Bitcoin and crypto IRA platform. Alto lets investors trade altcoins in their retirement account. But how does it stack against Bitcoin-only Swan IRA in July 2024? --- **Drew** · June 11, 2024 · Updated October 21, 2026 In this comprehensive Alto Crypto IRA review, we will look closer at its features, fees, the pros and cons of investment, and a review of Alto Crypto's Trustpilot reviews. We will also compare the competitive benefits of Bitcoin-only options compared to broader crypto IRAs, providing you with the confidence to make informed investment decisions. **TL;DR: Below is a quick summary of the Alto Crypto IRA product** ### Alto Crypto IRA **Pros of Alto Crypto IRA** - **Low Entry Barrier:** A low account minimum of just $10, making it accessible to a wide range of investors. - **Wide Range of Options:** Offers over 200 cryptocurrencies, catering to diverse investment preferences. - **High User Ratings:** Excellent ratings on Trustpilot and the Apple App Store reflect strong customer satisfaction. - **FDIC Insurance:** The FDIC insures cash held in accounts up to $250,000, providing an extra layer of security for fiat currency deposits. **Cons of Alto Crypto IRA** - **Mixed Reviews on Google Play:** Lower ratings on the Google Play Store indicate user dissatisfaction, particularly with the app's functionality on Android devices. - **Legal Uncertainties:** The SEC has recently sued major exchanges like Binance and Coinbase over cryptocurrencies included in Alto's offerings, which might affect the stability or availability of these assets. **Fees** - **Trading Fee:** [1%](https://www.altoira.com/pricing) on all trades. - **Account Fees:** Options between $10 monthly or $100 annually, with two months free on the annual plan. [Fee FAQ](https://help.altoira.com/pricing-and-account-fees). - **Additional Fees:** $50 account closure fee, $25 for outbound wire transfers. [Alto's Fee Structure](https://www.altoira.com/cryptocurrency/) **Customer Ratings** - **Rating:** 4.3 / 5 from 1,238 reviews on [Trustpilot](https://www.trustpilot.com/review/altoira.com) - 4.7 / 5 from 13 ratings on the [Apple App Store](https://apps.apple.com/us/app/alto-cryptoira/id1619373944) - **Positive Feedback:** Users appreciate the low investment threshold, variety of cryptocurrency options, and the overall user experience. - **Negative Feedback:** Some concerns about app functionality on Android devices are highlighted by lower ratings on [Google Play](https://play.google.com/store/apps/details?id=com.altoira.mobile.crypto&hl=en&gl=US). **Unique Solutions Offered by Alto Crypto IRA** - Alto leverages partnerships with leading exchanges like Coinbase for asset security, combining a broad array of cryptocurrency choices with robust security measures to offer a comprehensive IRA product that includes traditional, Roth, and SEP IRA options. **Recent Developments** - Faced with regulatory challenges as the SEC scrutinizes the crypto market, including some assets offered by Alto, which could have implications for investors. [SEC Lawsuit Information](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm) ### A Closer Look **Introduction to Alto Crypto** Established in 2018 and based in Nashville, Tennessee, Alto Crypto was one of the first self-directed Individual Retirement Account (IRA) products on the market. The platform enables investors to leverage their tax-advantaged retirement funds to invest in various cryptocurrencies through Bitcoin IRA and crypto IRA products. ### What is a Bitcoin IRA? Unlike traditional IRAs that focus on stocks, bonds, and other conventional assets, Bitcoin IRAs and crypto IRAs allow individuals to diversify their retirement portfolios by investing in Bitcoin and other digital currencies.  This diversification can potentially enhance portfolio growth through the dynamic and evolving landscape of digital assets. ### Alto Crypto IRA Options Alto Crypto offers a range of IRA choices to suit different investment needs: - **Traditional IRAs**: Invest before tax, pay taxes on withdrawals. - **Roth IRAs**: Invest after-tax income, enjoy tax-free withdrawals. - **SEP IRAs**: Designed for self-employed individuals and small business owners. - **401(k) Plans**: Tailored for small business owners, offering robust retirement solutions. **Availability and Customer Base** Alto Crypto IRA serves nearly 30,000 customers across the United States, with the exception of residents in Hawaii. The platform's inclusive approach makes it accessible to all eligible U.S.-based investors, fostering a broad and diverse investor base. **Bitcoin and Cryptocurrency Options** Investors on Alto Crypto can choose from over 200 cryptocurrencies, allowing for a wide range of investment options within their tax-advantaged retirement portfolios. For a detailed list of available cryptocurrencies, visit their official site at [Alto Crypto's Cryptocurrency Page](https://www.altoira.com/cryptocurrency/). ![](https://www.datocms-assets.com/56652/1702594536-alto-crypto.png?auto=format) ### Alto Crypto IRA's Target Customer Base Alto Crypto IRA specifically caters to a niche group of investors who are: - **Risk Tolerant**: Ideal for individuals who are comfortable with high-risk investments. - **Fee-Conscious Yet Flexible**: Suitable for those who understand and accept potentially higher fees associated with specialized investment opportunities. - **Experienced with Self-Directed Accounts**: Best for investors experienced in managing self-directed retirement accounts and navigating investments in unfamiliar or complex assets. ### Key Advantages of Investing with Alto Crypto IRA Alto Crypto IRA offers several compelling benefits for eligible investors: - **Tax Advantages**: Investors enjoy multiple tax-advantaged options such as Traditional, Roth, and SEP IRAs, maximizing the potential tax benefits of retirement investments. - **Diversification**: Provides an opportunity to diversify retirement portfolios beyond traditional assets by including a variety of alternative cryptocurrencies. - **24/7 Trading Access**: The platform allows investors to trade cryptocurrencies 24/7, taking advantage of market fluctuations whenever they occur. - **User-Friendly Platform**: Alto Crypto IRA's user interface is easy to navigate, making it accessible to both experienced and novice investors. ### Challenges Faced by Investors in Alto Crypto IRA While Alto Crypto IRA has numerous benefits, there are several challenges and drawbacks to consider: - **Market Volatility**: The cryptocurrency market is known for its significant price fluctuations, which can result in substantial gains or losses. - **Regulatory Uncertainty**: The evolving regulatory landscape for cryptocurrencies may impact Alto Crypto IRA's operations and the variety of assets offered. - **Limited Account Options**: Currently, the platform does not support solo 401k or SIMPLE IRA setups, and some products are only available to accredited investors. - **Lack of Educational Resources**: Unlike Swan Bitcoin and other competitors, Alto Crypto IRA does not offer dedicated educational materials to help users understand and navigate the complexities of cryptocurrency investments. ### Alto crypto IRA fees **Initial Setup and Annual Maintenance Fees** 1. **Initial Setup Fee**: Alto Crypto IRA requires a one-time setup fee of $250. This fee covers the cost of establishing your cryptocurrency IRA account. For more details, visit their [pricing page](https://www.altoira.com/pricing/). 2. **Annual Maintenance Fee**: There is an annual maintenance charge of $360. This fee is for the ongoing administration and operation of your account throughout the year. More information can be found on their [pricing page](https://www.altoira.com/pricing/). **Transaction Fees** Alto Crypto IRA applies transaction fees when buying and selling cryptocurrencies. These fees vary depending on the specific cryptocurrency involved in the transaction. The variability of these fees reflects the different costs associated with trading diverse cryptocurrencies on the platform. **Outbound Wire Transfer Fees** - **Wire Transfer Fee**: For every outbound wire transfer, Alto Crypto IRA charges a fee of $25. This fee is applicable whenever funds are transferred out of your IRA. Understanding the fee structure is crucial for anyone considering Alto Crypto IRA for retirement savings.  **Fees include** - A $250 initial setup fee. - A $360 annual maintenance fee. - Variable transaction fees based on the cryptocurrency traded and a $25 fee for outbound wire transfers. These fees are essential to planning your investment strategy with Alto Crypto IRA, ensuring that you are fully aware of the costs associated with managing and diversifying your retirement funds through cryptocurrencies. ![](https://www.datocms-assets.com/56652/1700271680-starter.png?auto=format) ### Alto Crypto IRA's Pro Plan Alto Crypto IRA's Pro Plan is designed for investors seeking expanded opportunities and more comprehensive access to cryptocurrency investments. This plan not only includes everything from the Starter Plan but also offers additional investment options beyond the traditional partner network. ##### Key Features of the Pro Plan 1. **Extended Investment Options**: With the Pro Plan, investors can access a wider array of investment opportunities, stepping outside Alto Crypto's existing partnerships to explore a broader market. 2. **Inclusion of Starter Plan Benefits**: All the benefits and features available in the Starter Plan are also included in the Pro Plan, ensuring that investors do not miss out on foundational investment opportunities. ##### Fee Structure of the Pro Plan While Alto Crypto's IRA generally boasts a competitive fee structure, highlighted by its no-custody fee policy, there are aspects that investors need to consider: - **No Custody Fees**: Alto Crypto stands out by not charging any custody fees, which can be a significant saving for investors. - **Monthly/Annual Account Fees**: Although starting costs are competitive, the Pro Plan involves monthly or annual fees that could accumulate significantly over time. These fees are essential to consider when budgeting for long-term investment growth. - **Cost of the Pro Plan**: The Pro Plan, offering broader investment opportunities, comes at a higher cost compared to the Starter Plan. Investors should weigh the benefits of expanded investment options against the increased fees. ![](https://www.datocms-assets.com/56652/1700271694-pro-plan.png?auto=format) Alto Crypto's IRA fee structure appears competitive initially, especially with its no-custody fee policy. However, investors should carefully weigh the monthly or annual account fees, which can significantly increase over time. The Pro Plan offers more investment options **but comes at a higher cost.** ![](https://www.datocms-assets.com/56652/1700271820-fees-alto.png?auto=format) ### Alto crypto IRA vs. Swan Bitcoin IRA  Swan Bitcoin IRA stands out for its: - [User-friendly interface](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) - [Exceptional customer support](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) - [Focused investment strategy](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) - [Industry-leading security practices](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) ### Trustpilot reviews **Trustpilot Rating:** [4.3 / 5 from 1,238 reviews ](https://www.trustpilot.com/review/altoira.com)**Apple App Store**: [4.7 / 5 from 13 reviews](https://apps.apple.com/us/app/alto-cryptoira/id1619373944) [ ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)**Google Play Store**: [1.9 / 5 from 21 reviews, +1,000 downloads](https://play.google.com/store/apps/details?id=com.altoira.mobile.crypto&hl=en&gl=US) However, Alto Crypto IRA scores a dismal 1 out of 5 stars with the [Better Business Bureau](https://www.bbb.org/us/tn/nashville/profile/financial-services/alto-solutions-inc-0573-37323185). ![](https://www.datocms-assets.com/56652/1697212956-alto-ira-bbb.png?auto=format) ### Educational content comparison Educational resources are essential for investors looking to navigate the complexities of cryptocurrency IRAs. This comparison assesses the quality and quantity of educational content provided by Swan Bitcoin and Alto Crypto, two prominent platforms in the crypto IRA space. ##### Swan Bitcoin's Educational Ecosystem Swan Bitcoin excels in providing comprehensive educational resources for its users: - [***Swan Studio’s***](https://www.youtube.com/playlist?list=PLoB1eZWSVHVZUb_8JiGpreAiEVjhl0O31) - [***Swan YouTube channel***](https://www.youtube.com/@Swan_Bitcoin)  - [***Swan Signal Blog***](https://www.swanbitcoin.com/signal/)  - [***The Daily Bitcoiner***](https://dailybitcoiner.substack.com/) - [***Swan Private Insight***](https://www.swanbitcoin.com/private/) - [***Welcome to Bitcoin: 101 Series***](https://welcome.swanbitcoin.com/) - **High-Quality Information**: Swan Bitcoin's ecosystem is rich with detailed, high-quality content to educate investors about the benefits and mechanics of investing in Bitcoin through an IRA. - **Insightful Content from Industry Leaders**: The platform offers insights from industry leaders, explaining why Bitcoin is considered the ultimate asset for retirement accounts. More information can be found on their detailed page[, Why Bitcoin is the Ultimate Asset for Your IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/). ##### Research Materials On April 24th, 2024 - Swan Mining released their first in-depth report on “[The Current State of Bitcoin Mining](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGSsFxvHYNK0h1UhGvexHawL18KWBFAUhA45L46_jqCswZrkU2kCbYRKhkg2qsZj1EsJtTQls4=)”.  [![](https://www.datocms-assets.com/56652/1714844931-current-state.png?auto=format)](https://www.datocms-assets.com/65699/1713969648-the-current-state-of-bitcoin-mining-1.pdf?mkt_tok=ODc1LVhLUS02MzQAAAGSsFxvHZA_-fuOhx0JBebmlz8W4PyP7M7MHzzaIvxs8YqrEoDiU0PHivKGBszik22Zm49XzuYyN9CdHpQ184YmyHxinvv5M40xB6PkXQ) It’s filled with insights, charts, and analysis that will provide useful information regardless of your experience. The thirty-four-page report prepared by Swan Mining includes: - *Bitcoin mining overview* - *The economics of Bitcoin mining* - *What’s happening with mining equipment makers* - *The latest developments in mining pools* - *How mining interacts with energy producers and enhances grid stability* - *… And, more!* ##### Alto Crypto's Educational Offerings In contrast, Alto Crypto's approach to educational content appears more limited: - **Blog Activity**: Despite maintaining a blog on [Alto IRA's Blog](https://www.altoira.com/blog/), the last post was published on December 22, 2022, indicating a significant lack of recent updates. - **YouTube Channel**: The Alto Crypto YouTube channel [Invest with Alto](https://www.youtube.com/@investwithalto) has 138 subscribers and 32 uploads, with the latest content over a year old, indicating minimal activity and engagement. ##### Research Materials Alto Crypto has published one substantial report titled *"Alto's 2022 Alternative Investing Report: How Millennials See Their Financial Future,"* which can be accessed [here](https://grow.altoira.com/hubfs/Alto%202022%20Alternative%20Investing%20Report.pdf). However, this 17-page PDF is the sole research document listed, indicating a limited depth of research output. Each provides some of the best insight and content from industry leaders about why Bitcoin is the [ultimate asset for your IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#:~:text=Gains%20Grow%20Tax%2Ddeferred%20(IRA,case%20of%20a%20Roth%20IRA).). Alto Crypto does have a [blog](https://www.altoira.com/blog/), but has not made a new post since December 22nd, 2022. They provide very little education on its website or social media accounts for its customer base. Its [YouTube channel](https://www.youtube.com/@investwithalto) only has 139 subscribers with 32 uploads. Their last upload happening **over a year ago.** Alto Crypto's research section is limited to only one 17-page PDF report titled [Alto’s 2022 Alternative Investing Report: Alto IRA.com How Millennials See Their Financial Future.](https://grow.altoira.com/hubfs/Alto%202022%20Alternative%20Investing%20Report.pdf) ![](https://www.datocms-assets.com/56652/1697765453-alto-ss.png?auto=format) ##### Social media presence Swan's YouTube [channel](https://www.youtube.com/@Swan_Bitcoin/videos) has +109k subscribers and provides new uploads daily - with +1.8k uploads. Alto Crypto's [Twitter page](https://twitter.com/investwithalto) only has +4k followers, despite having an account since 2018. Although they tweet regularly - most of their posts only usually receive a small handful of likes with little to no engagement or re-tweets. Swan has multiple Twitter handles. All of them experience a much higher engagement rate than Alto Crypto and have a focused approach. The Swan Client Services [account](https://twitter.com/SwanBitcoin) has 94.1k followers and the primary [Swan account](https://twitter.com/Swan) has more than 38.6k followers. ##### Compliance and risk focus Swan prioritizes minimizing potential risks associated with investing in and holding Bitcoin in a [legal trust in your name](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/), expertly handling regulatory and compliance concerns concerning your IRA. ##### Tailored for Bitcoin With Swan Bitcoin IRA, you embrace a Bitcoin-only strategy, avoiding exposure to volatile altcoin securities as seen with Alto Crypto. Alternative cryptocurrencies always carry significant regulatory and counterparty risks, exemplified by [recent SEC actions](https://www.forbes.com/advisor/investing/sec-crypto-regulation/). ##### No promotion of altcoins Unlike Alto Crypto IRA and many other Bitcoin and crypto IRA providers, Swan does not promote alternative cryptocurrencies to encourage excessive trading activity and fees. While trading altcoins in your IRA tax-free is possible, it’s crucial to recognize that the primary beneficiary of such trading, in the long run, is likely the IRA provider. ##### Helpful support The Swan Support [team](https://www.swanbitcoin.com/swan-customer-support/) of Bitcoin experts is readily available, responsive, and enthusiastic about discussing everything related to Bitcoin. ### What are the risks of Alto Crypto IRA? ##### Market comparsion Alto Crypto IRA [offers](https://www.altoira.com/cryptocurrency/) +200 alternative cryptocurrencies, presenting a diversification strategy that may seem appealing but carries inherent risks including: - Market volatility - Regulatory and legal challenges - Security and fraud vulnerabilities - Tax implications  When considering your retirement, the primary objective should be preserving and growing your wealth over the long term. ##### *Treating your retirement portfolio like a trading account, constantly chasing crypto market trends, is a recipe for disaster.*  Swan encourages customers to use a low-time preference mindset of recurring and smash buying the significant correction periods instead of trading.  ### Important considerations when selecting an IRA provider Bitcoin presents itself as a [typical](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/) investment, with numerous advantages and promising growth potential. Before making any investment, it is crucial to conduct thorough research and prioritize the protection of your savings while positioning yourself for long-term price appreciation in the secure asset that Bitcoin offers. - Mixing your Bitcoin portfolio with unregistered securities and altcoins is **very risky**. - It's prudent to consider opting for a “Bitcoin-only” approach when choosing an IRA provider. - Make sure to have a clear understanding of the fees associated with the IRA and [how](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) they might impact your long-term retirement objectives. ### Alto Crypto IRA FAQs - what to know before you invest **Who owns Alto Crypto IRA?** [Eric Satz](https://www.crunchbase.com/organization/alto-solutions) **How does Alto Crypto IRA work?** The platform offers a self-directed IRA, enabling investors to integrate digital assets into their retirement portfolios.  **Can I invest my 401(k) in Bitcoin?** You have the option to initiate a new account with Alto Crypto IRA or transfer funds from an existing IRA or retirement account, like a 401(k), and allocate those funds to various cryptocurrencies. **What are some Alto Crypto IRA alternatives?** [Swan Bitcoin](https://www.swanbitcoin.com/bitcoin-ira/), [Unchained](https://unchained.com/bitcoin-ira), [iTrustCapital](https://www.swanbitcoin.com/itrustcapital-review/), [BitcoinIRA](https://www.swanbitcoin.com/bitcoinira-review/) and [Broad Financial](https://broadfinancial.com/self-directed-ira-llc/). **What are the investment limits for Alto Crypto IRA?** There are no maximum investment limits. **Is Alto Crypto IRA tax-exempt?** The funds and assets within your account remain tax-free as long as they stay within the IRA. ### Recent developments On November 21st, 2023 Alto Crypto announced an expanded partnership with Farmland LP. Farmland is one of the largest fund managers specializing in organic farmland. Farmland LP is making its [Vital Farmland Fund III ](https://pr.report/dqt6ok8J)available on the [Alto Marketplace](https://pr.report/8spUyS1t), allowing accredited investors to invest in a real asset-managed farmland fund. [![](https://www.datocms-assets.com/56652/1704141903-farmland-fund.png?auto=format)](https://www.altoira.com/marketplace/farmland-lp) Altoira.com ### Advantages of option for a Bitcoin-only IRA platform vs. crypto IRA **Simplicity and focus** Bitcoin-only platforms provide a straightforward user experience, directing all their resources towards Bitcoin-related services. If your sole interest lies in investing in Bitcoin, a streamlined platform that avoids the complexities of managing multiple cryptocurrencies is the ideal choice for you. **Specialized expertise** Platforms like Swan Bitcoin possess in-depth knowledge of Bitcoin’s technology, market dynamics, and trends. Our [specialized expertise](https://www.swanbitcoin.com/advisor/) allows for tailored advice, research, and support exclusively focused on Bitcoin investments. **Enhanced security** Bitcoin-only platforms prioritize and optimize security measures specifically designed for Bitcoin. This may include robust encryption, multi-signature wallets, [cold storage](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/) solutions, and other security practices to safeguard Bitcoin holdings. **Access to specific Bitcoin features** These platforms grant access to unique features or services exclusive to Bitcoin. For instance, opportunities like [Bitcoin lending](https://www.swanbitcoin.com/institutional/), staking, or other specialized investment options are unavailable on broader platforms. **Lower fees** Bitcoin-only platforms often come with lower fees than broader platforms that support multiple cryptocurrencies. By choosing a [Bitcoin-only IRA platform](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/), you can capitalize on the platform’s expertise and tailored services while focusing solely on your Bitcoin investments in a secure and cost-efficient manner to help you avoid the complex jargon and [hidden fees](https://www.swanbitcoin.com/bitcoin-ira-fees/) of crypto IRAs. ### Which is right for you? Including unregistered securities and [altcoins](https://www.swanbitcoin.com/bitcoin-vs-altcoins/) in your Bitcoin portfolio carries an exceedingly high risk. A *“*[*Bitcoin-only*](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/)*”* approach when selecting a crypto IRA provider should be among your top priorities. To gain a deeper [understanding](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) of Swan Bitcoin IRA and its capacity to assist you in attaining your retirement aspirations while optimizing your savings. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today! ***For additional information, please don’t hesitate to contact our team at ira@swanbitcoin.com.*** ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Bitcoin: A Buoy in the Waves of Inflation - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/bitcoin-a-buoy-in-the-waves-of-inflation/ As uncertainty remains the status quo in the traditional financial system, Bitcoin’s system remains predictable and reliable. --- **Sam Callahan** · September 22, 2023 · Updated June 26, 2024 This was a significant week in terms of macroeconomics. It was one of the eight times a year when the central bankers, who control the price of money, are kind enough to share their upcoming plans with the rest of the world.  The FOMC meeting on Wednesday did not have many surprises. The market largely expected the Federal Reserve to keep rates unchanged, and that’s just what they did. Jack Farley noted that there were only a few small changes from the Fed’s prepared statement at this FOMC meeting compared to the last one. ![](https://www.datocms-assets.com/56652/1695413148-1.png?auto=format) The market expected the Federal Reserve to keep interest rates where they are partly because the bond market has already been doing a lot of the tightening without their help. Yields have been spiking across the entire Treasury curve for the past couple of weeks. Notably, the two-year Treasury yield has spiked to levels not seen since 2000. ![](https://www.datocms-assets.com/56652/1695413190-2.png?auto=format) The 10-year Treasury yield has increased to 16-year highs. ![](https://www.datocms-assets.com/56652/1695413352-3.png?auto=format) When pressed about the recent moves in the Treasury market, Jerome Powell responded simply with *“increased supply.”* To decode Powell’s answer – the Treasury continues to issue record levels of Treasury bonds to fund trillion-dollar deficits. The increased supply of Treasuries is driving bond prices lower and yields higher. This has resulted in rising interest rates even as the Fed has decided to pause. Ironically, the Fed’s own interest rate hikes have widened these deficits more as it has increased the interest expense on the existing debt. TheHappyHawaiian broke down this dynamic well in the tweet below. ![](https://www.datocms-assets.com/56652/1695413485-4.png?auto=format) The worry here is that the Fed is not in control of yields, and if yields rise too high, then there are financial stability risks for a highly leveraged economy. This is likely why Jerome Powell seemed so wary to hike interest rates any further in the FOMC press conference. In the presser, he used the words *“proceed carefully”* six times. The last time he said those words? – The banking crisis last Spring. This rise in yields also coincided with CPI inflation that rebounded again this month to 3.7% YoY in August, up from 3.2% YoY. ![](https://www.datocms-assets.com/56652/1695413832-5.png?auto=format) Much of the inflation gains were attributed to the rise in energy prices, up 5.6% on the month. The price of gasoline spiked 10.6%. Americans are feeling it once again at the pump. This comes as oil crossed $90 for the first time since November 2022. This led to US Treasury Secretary Janet Yellen stating in an interview that the White House is *“monitoring oil prices closely.”* Increases in food and shelter prices also contributed to the rise in inflation. However, to economists like Paul Krugman, this is irrelevant. In his eyes, inflation is defeated. That is, as long as you remove all of the things that people actually need to survive. ![](https://www.datocms-assets.com/56652/1695413864-6.png?auto=format) All of this is to say that inflation continues to rise despite the Fed’s best efforts to bring it back down. Part of this is due to structural reasons that are beyond the Fed’s control, like the price of oil, fiscal spending, and demographics. We have talked about how a rising price of oil and a high level of fiscal spending risk keeping inflation elevated, but what we haven’t talked about is how wages can do the same in a structurally tight labor market. It’s true that wages have not kept up with the pace of inflation over the past couple of years. In fact, the US Census Bureau published its latest report on income trends and shared that real median household income declined by -2.3% to $74,580 from 2021 to 2022.  Real median earnings for men fell by -5.5%, and for women fell by -5.2% in 2022 compared to 2021. ![](https://www.datocms-assets.com/56652/1695413897-7.png?auto=format) In the chart below, one can observe that, although nominal wages have been steadily increasing, real wages have been on the decline since January 2021. ![](https://www.datocms-assets.com/56652/1695413926-8.png?auto=format) However, this trend has reversed after 25 consecutive months of negative real wage growth as CPI inflation has declined. Over the last four months, real wages have been positive. ![](https://www.datocms-assets.com/56652/1695413958-9.png?auto=format) Powell noted this in the press conference. Yet, overall, nominal wage growth still remains elevated compared to pre-pandemic levels.  The Federal Reserve Bank of Atlanta’s Wage Growth Tracker shows how the three-month moving average of median nominal wage growth has declined, but still remains at the highest level in 22 years. ![](https://www.datocms-assets.com/56652/1695413987-10.png?auto=format) Elevated wage growth means more money in the pockets of consumers who can spend it on goods and services in the economy, aka, increased demand, aka, inflationary pressure. Jerome Powell noted the risk of elevated wage growth in keeping inflation high in his speech in Jackson Hole last month stating, “*While nominal wage growth must ultimately slow to a rate that is consistent with 2 percent inflation, what matters for households is real wage growth. Even as nominal wage growth has slowed, real wage growth has been increasing as inflation has fallen. We expect this labor market rebalancing to continue.*” What Powell is saying here is that nominal wage growth must slow to bring inflation back down to 2%. The CIO at Unlimited Fund, Bob Elliott, has been warning about the risk of elevated nominal wage growth and low worker productivity in keeping inflation elevated for many months now. Note the large gap in the chart below between worker productivity and nominal wages. Also, note the last time we saw a similar gap – 1970s – the last time we saw high levels of inflation.  ![](https://www.datocms-assets.com/56652/1695414033-11.png?auto=format) When worker productivity rises, it means that for each hour of work, more goods and services are produced. If nominal wages rise faster than worker productivity, it means consumers will have more money to spend at a time when the supply of goods and services does not increase correspondingly. In other words, demand outstrips supply, causing prices to rise. Powell noted in the FOMC press conference that nominal wage growth has *“shown some signs of easing,”* but he likely wants to see more *“rebalancing”* in this metric (to put it in his words) to feel better about the inflation picture moving forward. Certainly, the headlines around worker strikes have not helped Powell sleep better at night when it comes to these inflationary pressures around the labor market. Thousands of United Auto Workers members are currently on strike after three Detroit automakers failed to reach an agreement with the union, which represents about 146,000 workers at Ford, GM, and Stellantis. The workers demand a 40% wage increase over the next four years along with other significant benefits. Yet, these strikes are not just isolated to the auto industry. Workdays lost due to labor strikes and lockouts have increased to the highest levels since the early 2000s. ![](https://www.datocms-assets.com/56652/1695414074-12.png?auto=format) Workers continuing to demand higher wages does not bode well for the Fed’s fight against inflation. The question becomes, should the Fed be laying off the brakes with its rate hikes with inflation still above their 2% target? Are they celebrating pre-maturely, especially given these inflationary pressures (energy prices, large fiscal deficit spending, and elevated nominal wage growth) in the economy? History shows that in periods of inflationary shocks, typically, central bankers do make the mistake of celebrating too early, only for inflation to plateau at elevated levels or reaccelerate. A recently published IMF paper analyzed over 100 inflationary episodes in 56 countries since the 1970s. They found that inflation was brought back down within 5 years in only 60% of the episodes, and even in *“successful”* cases, inflation took an average of over 3 years to return to what is considered normal levels. In addition, most unsuccessful episodes involved *“premature celebrations”* where inflation declined, central bankers relaxed, and then inflation came roaring back. This is what occurred in the 1970s. ![](https://www.datocms-assets.com/56652/1695414115-13.png?auto=format) In this environment, Bitcoin can be thought of as an orange buoy in a sea of inflation. With each wave, Bitcoin will rise and fall, but it will act like a steady beacon in the fluid, ever-changing fiat landscape. This week in Bitcoin, we saw continued developments of institutional interest. $1.5 trillion dollar asset manager Franklin Templeton threw its hat in the ring with its own spot Bitcoin ETF application. Also, Deutsche Bank, the eighth largest European bank, will now offer crypto custody services for its institutional clients. Lastly, Laser Digital, a subsidiary of Nomura, the $500 billion Japanese asset manager, launched a new long-only Bitcoin Adoption Fund. The uncertainty around the long-term inflation picture continues to make Bitcoin’s value proposition more evident to investors each day it persists. There are structural inflationary pressures that are outside the Federal Reserve’s control. As inflation continues to erode the savings and treasuries of households and corporations, they will look to other alternatives to store their wealth. In time, many more will discover the monetary properties that make Bitcoin an attractive asset to hold in an inflationary regime. In the meantime, long-term holders who have already figured this out continue to accumulate. The chart below shows the Holder Net Position Change. Notice how these holders typically move their coins around speculative tops like in 2017 and 2021. ![](https://www.datocms-assets.com/56652/1695414159-14.png?auto=format) When these coins move, it can be interpreted that a percentage of them are being sold as these holders take some profit. Today, they are not moving coins, they are accumulating them. Long-term holders do not think this is a top, they think it is a bottom, and are choosing to hold with the expectation that Bitcoin’s price will appreciate in the future. As uncertainty remains the status quo in the traditional financial system, Bitcoin’s system remains predictable and reliable. As Benjamin Franklin once said, there are only three certainties in death, taxes, and there will only ever be 21 million Bitcoin. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1695414291-15.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Is Binance in Trouble? Yes, Here Is Why… (July 2024) URL: https://www.swanbitcoin.com/education/is-binance-in-trouble/ The uncertainity surrounding Binance hasn’t become any clearer in July of 2024. How much trouble might Binance find itself in and what can we expect from the world’s most popular exchange? Let’s dive in! --- **Drew** · July 1, 2024 · Updated July 26, 2024 The CEO of Binance Holdings Limited (aka Binance), the largest cryptocurrency exchange in the world, pleaded guilty in November 2023 and agreed to pay $4 billion to resolve the investigation into violations related to the Bank Secrecy Act (BSA)—i.e., failure to register as a money-transmitting business. How did this happen? Let’s dive in. ### TL;DR: **Settlement Terms** - Zhao agreed to pay a personal fine of $50 million. - Binance will pay a fine of $4.3 billion as part of the plea deal. - Zhao was released on a $175 million bond and will be sentenced in February 2024. **CZ's Response** - On the same day, CZ [announced](https://twitter.com/cz_binance/status/1727063503125766367) the news on Twitter: ![](https://www.datocms-assets.com/56652/1700605812-cz-steps-downn.png?auto=format) ![](https://www.datocms-assets.com/56652/1700606060-on-note.png?auto=format) ### Impact on Binance Despite the settlement allowing Binance to continue its operations temporarily, the exchange's legal challenges remain unresolved. Internal communications from 2018 (just a year after Binance launched) disclosed that compliance issues were acknowledged early on. ![](https://www.datocms-assets.com/56652/1696364033-b1.png?auto=format) ![](https://www.datocms-assets.com/56652/1696364112-b2.png?auto=format) ### Reduced Market Access  Non-compliance has led to Binance being denied access to markets, facing operational restrictions, and encountering reluctance from governments and financial institutions to engage with them or their partners. ![](https://www.datocms-assets.com/56652/1696364161-b3.png?auto=format) ##### What Do These Troubles Mean to Investors? The SEC emphasizes the risks and lack of transparency associated with these platforms. As a result, existing customers risk experiencing a range of adverse outcomes, including but not limited to:  - Increased scrutiny of operations - Potential disruptions in services - Withdrawal halt/pause - Increased KYC requirements to fulfill withdrawal requests - Potential legal and financial consequences for the exchange significant loss of liquidity ### Main Takeaways for Investors Regarding Binance #### Legal Concerns A notable observation from recent legal documents is that Bitcoin was mentioned only six times in the 136-page document, none of which had negative implications. #### Key Issues Investors Should Be Aware Of **Serious Legal Concerns:** Growing uncertainty about Binance's compliance has led many investors to withdraw Bitcoin from the exchange while seeking clarity on its legal troubles. **Potential Violations:** Multiple government lawsuits suggest possible breaches of laws and regulations, including: - Fraud - Wash Trading - Money Laundering #### Expert Insights In an April 17th blog post, Swan Lead Analyst Sam Callahan published an in-depth report, *Binance: Raising Eyebrows Since 2017*, shedding light on long-standing concerns surrounding Binance's operations. You can access this detailed analysis [here](https://www.swanbitcoin.com/binance-raising-eyebrows-since-2017/). **Exclusive Report Access:** The original report was provided exclusively to [Swan Private clients](https://www.swanbitcoin.com/private/) on April 14, 2023. **Binance Liquidity Concentration Confirmed by Kaiko** ### Key Findings According to Kaiko's latest *Crypto Liquidity Concentration Report*, Binance: - **Market Depth:** Accounted for 30.7% of the global market depth in 2023. - **Trading Volume:** Controlled a significant 64.3% of global crypto trading volume. #### Insights for Investors **Market Dominance:** The report reveals that the eight largest exchanges collectively control 91.7% of market depth and 89.5% of trading volume. **Market Impact:** Binance's dominance means changes in its liquidity, regulations, or operations can significantly impact the broader crypto market. Learn more details in the [Kaiko Insight Report](https://research.kaiko.com/insights/the-crypto-liquidity-concentration-report). [![](https://www.datocms-assets.com/56652/1703700686-kaiko.png?auto=format)](https://research.kaiko.com/insights/the-crypto-liquidity-concentration-report) Kaiko Research #### Insight into the Latest Filing - The SEC's recent filing raises concerns about the audit of Binance.US and highlights difficulties in ensuring the company was fully collateralized. - The filing further alleges that Binance has used BAM, the entity managing Binance.US, for unlawful purposes. ![](https://www.datocms-assets.com/56652/1696364238-b5.png?auto=format) ![](https://www.datocms-assets.com/56652/1698080256-f5skmhfxeaa5-km.png?auto=format) #### Wall Street Journal Exposé - The Wall Street Journal published an exposé over the Christmas 2023 weekend [titled](https://www.wsj.com/finance/currencies/the-crypto-queen-pulling-the-strings-at-binance-1e6dfeb5) *The Crypto Queen Pulling the Strings at Binance*, shedding light on Yi He's significant influence over Binance's marketing and investment operations. - Yi He is a former talk show host and Changpeng Zhao's longtime romantic partner. ### Several Key Executives Have Left Binance in 2023 1. **Sept. 6, 2023**: Helen Hai announces her resignation. 2. **Sept. 6, 2023**: Vladimir Smerkis announces his departure. 3. **Sept. 6, 2023**: [Gleb Kostarev](https://cointelegraph.com/news/top-binance-execs-in-russia-leave-as-firm-considers-exiting-the-market) announces his resignation. 4. **Sept. 4, 2023**: Mayur Kamat, product lead at Binance, announces his resignation. 5. **Aug. 31, 2023**: Leon Foong, head of Asia-Pacific at Binance, [announces](https://www.binance.com/en-NG/feed/post/1064298) his resignation. 6. **July 7, 2023**: Steven Christie, senior vice president for compliance at Binance, [announces](https://twitter.com/SKChristie9/status/1677116795499712512?s=20) his resignation. 7. **July 6, 2023**: Patrick Hillmann, chief strategy officer of Binance, [announces](https://twitter.com/PRHillmann/status/1677070523740884992?s=20) his resignation. 8. **July 6, 2023**: Han Ng, general counsel at Binance, [announces](https://twitter.com/tier10k/status/1677060315438100483?s=20) his resignation. 9. **July 6, 2023**: Steve Milton, global vice president of marketing and communications at Binance, announces his resignation. 10. **July 6, 2023**: Matthew Price, senior director of global investigations and intelligence at Binance, announces his resignation. 11. **October 19, 2023**: Stéphanie Cabossioras [stepped down](https://www.bloomberg.com/news/articles/2023-10-18/binance-france-director-stephanie-cabossioras-exits-in-latest-senior-departure?utm_campaign=socialflow-organic&utm_content=crypto&utm_medium=social&utm_source=twitter) from her position as the Executive Director of Binance France. 12. **October 19, 2023**: Saulius Galatiltis has stepped down as chief executive officer of [Bifinity UAB](https://www.binance.com/en/blog/ecosystem/understanding-bifinity-your-gateway-to-secure-fiat-transactions-7874534313044949201), a payment processor that serves as a gateway for fiat transactions by customers of the Binance cryptocurrency exchange. ### Key Developments Surrounding Binance.US Workforce Cuts and Regulatory Issues ##### Workforce Reductions **September 13, 2023:** Binance.US [laid off one-third](https://apnews.com/article/binance-us-ceo-shroder-departs-layoffs-crypto-5cad2ad5fa8b6a385a4c85992a9ae508) of its workforce and lost its CEO Brian Shroder. **Employee Concerns** - At a summer meeting after the layoffs, employees voiced their concerns to Changpeng Zhao (CZ). According to messages reviewed by the Wall Street Journal, one anonymous employee criticized the lack of advance notice and the two-week severance package, asking if it was a *"respectful"* way to treat laid-off employees. ##### Regulatory Obstacles **Russian Bank Involvement** - In late August, the Wall Street Journal revealed that some Binance customers were involved with sanctioned Russian banks. Binance has faced scrutiny over potential violations and addressed the issue by fully exiting the Russian market. **Discontinuation of RUB Support** - On September 27, Binance [published](https://www.wsj.com/finance/currencies/the-worlds-biggest-crypto-firm-is-melting-down-338b8e17) a blog post explaining its sale to CommEx and the decision to discontinue support for the Russian Ruble (RUB). - Binance [denied](https://www.binance.com/en/support/announcement/notice-regarding-the-discontinuation-of-russian-ruble-rub-support-on-binance-p2p-3016096ace174be381fa22b6636e2c5f) media claims that it helped customers transfer funds from sanctioned Russian banks out of the country. The decision follows the exchange's denial of media reports, two months ago, suggesting its involvement in assisting customers in transferring funds from sanctioned Russian banks out of the country. ![](https://www.datocms-assets.com/56652/1699422010-commex.png?auto=format) **SEC's Concerns Surrounding Ceffu and Binance's Operations** ##### Investor Points of Interest **Ceffu's Role** - The SEC is scrutinizing Ceffu, an institutional crypto custodian and Binance partner. - The regulator suspects Ceffu facilitated the transfer of U.S. customer funds between Binance.US and Binance Holdings, potentially moving these funds outside the U.S. jurisdiction. ##### Financial Transactions Under Investigation **Convertible Note Details** - Legal documents from Binance.US's legal team reveal that BAM Management U.S. Holdings issued a $250 million convertible note to Changpeng Zhao (CZ) in December. - The documents also state that Zhao used Binance USD (BUSD), allocating $183 million to Paxos Trust Company (issuer of BUSD) to convert the stablecoin into USD. ##### Implications **Regulatory Scrutiny** - These activities have attracted regulatory attention due to potential financial improprieties, emphasizing the importance of compliant fund management practices within Binance. **Investor Awareness** - Keeping up with these developments is crucial for investors to understand the evolving landscape of crypto regulations and potential risks associated with Binance's global operations. Learn more about Ceffu [here](https://www.ceffu.com/). ##### Twitter Allegations and CZ's Response **Allegations by Dylan LeClair** - On Twitter, crypto analyst Dylan LeClair [criticized](https://twitter.com/DylanLeClair_/status/1703907909644484646) Changpeng Zhao (CZ) for the $250 million BUSD transfer between Binance.US and Binance's international exchange. ![](https://www.datocms-assets.com/56652/1696364338-b6.png?auto=format) ![](https://www.datocms-assets.com/56652/1696364375-b7.png?auto=format) **CZ's Response** - CZ responded by stating that "Binance.US has never utilized Ceffu or Binance Custody." ![](https://www.datocms-assets.com/56652/1696364407-b8.png?auto=format) ##### Contradictory Findings from SEC Documents **Unsealed SEC Documents** - Newly [revealed](https://www.sec.gov/files/litigation/complaints/2023/brief-pr2023-103.pdf) documents contradict Zhao's claims, indicating that Binance.US *"obtained custody software and support services from Ceffu,"* an institutional custodian. ![](https://www.datocms-assets.com/56652/1696364443-b9.png?auto=format) ##### Historical Financial Transactions **Earlier Reports** - In February, Reuters reported that Binance.US transferred $400 million from its platform to Merit Peak Ltd., a trading firm managed by Zhao, based on bank records and internal messages. ##### Impact on Binance.US Operations **October 16th Announcement** - On October 16th, Binance.US [announced](https://www.binance.us/terms-of-use) that it would stop supporting USD withdrawals. **Updated Terms** - Find the updated terms of use, including the PDF version, [here](https://www.binance.us/terms-of-use). ![](https://www.datocms-assets.com/56652/1697763468-binance-1.png?auto=format) ### Binance's Shift Away from Bitcoin Dominance ##### Initial Focus on Bitcoin Trading Initially, Binance had a limited selection of tokens, featuring cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and its native coin, Binance Coin (BNB). However, it later gained fame for offering an extensive range of cryptocurrencies and digital assets. Binance continues to expand its token offerings and supports launching new projects through programs like the Launchpad platform. Binance's initial shift away from Bitcoin to a mostly altcoin-dependent exchange and business model can be attributed to several factors: - By expanding its altcoin offerings, Binance attracted traders interested in a broader range of cryptocurrencies. - Altcoins often provide different features, use cases, or technologies than Bitcoin, which can appeal to traders seeking varied investment opportunities. - Binance recognized the growing interest and demand for altcoins among traders and adjusted its business model to cater to these preferences. - Binance has actively supported new altcoin projects through [Initial Coin Offerings](https://www.sec.gov/securities-topics/ICO) (ICOs) and token launches on its platform. ICOs provide the ideal conditions for a [Cantillon Effect distribution](https://www.swanbitcoin.com/cantillon-effect/) of network control by the token team. ### Binance's Shift Away from Bitcoin Dominance: Understanding Its Business Model Evolution ##### Initial Focus on Bitcoin **Early Days:** Binance initially focused on popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and its native Binance Coin (BNB), offering a limited selection. ##### Transition to a Diverse Altcoin Portfolio **Expanded Offerings** - Binance gained popularity for listing many cryptocurrencies, evolving its business model to feature many altcoins. - Programs like Launchpad facilitate new project launches, offering token-based fundraising. ##### Reasons for the Shift **Broader Asset Options** - By offering more altcoins, Binance enabled traders to diversify their investments. **Market Demand and Trends** - Responding to the growing demand for altcoins, Binance tailored its offerings to align with emerging market trends. **Innovation and Token Launches** - Binance actively supported new altcoin projects through Initial Coin Offerings (ICOs) and token launches, providing an innovative platform for network growth. **Competitive Advantage** - Expanding its altcoin offerings gave Binance a competitive edge, attracting users interested in varied investment opportunities beyond Bitcoin. ##### Supporting New Projects **Initial Coin Offerings (ICOs)** - Binance facilitated ICOs, which enabled altcoin teams to distribute tokens and control the network. Learn more about ICOs [here](https://www.sec.gov/securities-topics/ICO). **Cantillon Effect** - The distribution of new tokens often mirrors the Cantillon Effect, where initial participants gain the most benefits. Learn more about the Cantillon Effect [here](https://www.swanbitcoin.com/cantillon-effect/). ### Overview of Binance Launchpad **Crowdfunding Platform** - Binance Launchpad is a Binance-owned crowdfunding platform that helps crypto startups raise funds by offering their tokens to Binance users. **Birth of the IEO Model** - Launchpad was the first to [introduce](https://coinmarketcap.com/alexandria/glossary/initial-exchange-offering) the *Initial Exchange Offering* (IEO) model, a popular fundraising method many crypto startups use across exchanges. ##### How Binance Launchpad Supports Startups **Global Access** - Startups can leverage Binance's global user base to reach a large audience and secure funding. **Secure and Trusted** - Users trust the IEO process because Binance vets each project, reducing the risks often associated with other fundraising methods. **Comprehensive Support** - Launchpad provides startups comprehensive resources, from project assessment to technical advice and marketing support. ##### The Impact of IEOs **Efficient Fundraising** - IEOs offer a streamlined fundraising process through the exchange, giving projects immediate access to funds and participants. ![](https://www.datocms-assets.com/56652/1696364489-b10.png?auto=format) The Launchpad has come under increased scrutiny in recent years for several reasons:  1. Regulatory compliance concerns 2. Questions about project quality and due diligence 3. Allocation and fairness issues 4. Market volatility and speculation 5. Investor protection concerns ### Definition and Implications of Unregistered Securities ##### SEC's Charges Against Binance - On June 5th, the SEC [filed charges](https://www.sec.gov/news/press-release/2023-101) against Binance Holdings Ltd., its U.S. affiliate BAM Trading Services Inc., and CEO Changpeng Zhao (CZ) for violating securities laws. - Binance was accused of misleading investors by claiming it restricted U.S. customers from accessing Binance.com while secretly allowing high-value U.S. customers to trade on the platform. ![](https://www.datocms-assets.com/56652/1696364527-b11.png?auto=format) ##### Failure to Restrict U.S. Investors From Accessing Binance.com  ![](https://www.datocms-assets.com/56652/1696364817-b12.png?auto=format) ##### Misleading Investors  ![](https://www.datocms-assets.com/56652/1696364655-b13.png?auto=format) ### Know Your Customer (KYC)/Anti-Money Laundering (AML)  - Binance has a notorious reputation for allowing actors to use its exchange for various money laundering schemes, terrorist financing, and other illicit activities. - Exchanges must enforce strong KYC and AML measures to deter money laundering, terrorist financing, and illicit activities. - The U.S. has found evidence that American investors could easily access and use the platform due to lax KYC/AML account setup and maintenance standards. ### SAFU?  ##### SAFU: Secure Asset Fund for Users - Binance [created](https://academy.binance.com/en/glossary/secure-asset-fund-for-users) the 'Secure Asset Fund for Users' (SAFU) in July 2018 to protect user funds. - Binance allocates a portion of its trading fees to this fund, which includes BNB, BTC, USDT, and TUSD wallets. During unexpected maintenance, CZ tweeted a reassuring message to users: ![](https://www.datocms-assets.com/56652/1696364703-b14.png?auto=format) **Origin of the Term** - In 2018, a [viral YouTube video](https://www.youtube.com/watch?v=DelF6zEHXpE) by Bizonacci popularized the phrase *"Funds Are Safu"* after CZ reassured users during unexpected maintenance. This meme evolved into a community term meaning user funds are secure ##### *"Not Your Keys, Not Your Coins"* - Despite SAFU, user funds are never completely secure on any exchange because withdrawals can be halted at any time for any reason. Users are left with no recourse if this happens. ***NOTE: There is nothing the end user can do once this happens.***  ### Binance Proof of Reserves and Security Measures ##### Proof of Reserves **1:1 Asset Backing** - Binance claims its user assets are fully backed at a minimum ratio of 1:1. - However, most of Binance's corporate holdings are stored in separate wallets not included in proof-of-reserves calculations. ![](https://www.datocms-assets.com/56652/1705343709-binance-por.png?auto=format) ### Binance Chain Hack ##### Binance Chain Hack **October 2022 Attack** - In October 2022, Binance Chain suffered a hack involving the withdrawal of $2 million BNB, valued at $570 million. - Learn more about the hack and ecosystem update from BNB Chain [here](https://www.bnbchain.org/en/blog/bnb-chain-ecosystem-update/). ##### Importance of Due Diligence for Investors **Protecting Against Scams** Thorough due diligence helps investors safeguard themselves by providing insights into a project's: - Legitimacy - Team - Technology - Use case and financial health **Due Diligence Criteria** Comprehensive research and analysis should cover the following: - **Fundamentals:** Key financial and market factors. - **Technology:** Quality and security of the technology involved. - **Team:** The qualifications and experience of the project team. - **Market Viability:** Demand, growth potential, and competitive landscape. - **Regulatory Compliance:** Adherence to relevant regulations. ##### Binance's Legal Battles and Compliance Challenges **Regulatory Challenges** Binance has faced numerous legal issues, including: - Alleged regulatory violations. - Non-compliance with securities laws. - Challenges adapting to evolving regulatory standards.  ### Legal Challenges Faced By Binance in Various Jurisdictions Binance operations have faced regulatory scrutiny and legal challenges in several jurisdictions, including: ##### United States (U.S.) **Regulatory Concerns** - Binance had been operating in a limited capacity in the U.S. through its subsidiary, Binance.US. - U.S. regulators have scrutinized Binance's subsidiary, Binance.US, over compliance issues with local laws, such as registration requirements and potential securities violations. - In June 2023, the SEC [charged](https://www.sec.gov/news/press-release/2023-101) Binance with misleading U.S. investors ##### United Kingdom (U.K.) **FCA Scrutiny** - The Financial Conduct Authority (FCA) [demanded](https://www.osc.ca/en/news-events/news/statement-undertaking-given-binance) that Binance halt its regulated activities and expressed concerns over regulatory compliance, due diligence, and anti-money laundering (AML) measures - The Financial Conduct Authority (FCA) demanded that Binance halt its regulated activities and expressed concerns over regulatory compliance, due diligence, and anti-money laundering (AML) measures. - On October 8, 2023, Binance [tried](https://www.binance.com/en/feed/post/1300908) restoring some local services via a partnership with a regulated entity, Rebuildingsociety.com Ltd. - A week later, on October 16, Binance [stopped](https://www.binance.com/en/feed/post/1374655) onboarding new U.K. users. ##### China **Initial Ban** - In 2017, China's government banned domestic crypto exchanges, prompting Binance to relocate its headquarters. - Despite the ban, Binance continues to handle $90 billion in monthly transactions involving Chinese traders, [accounting](https://www.osc.ca/en/news-events/news/statement-undertaking-given-binance) for 20% of global volume ##### Japan **FSA Warning** - In March 2018, the Financial Services Agency (FSA) [warned](https://www.osc.ca/en/news-events/news/statement-undertaking-given-binance) Binance of operating without proper registration - Binance plans to obtain a license to operate in Japan and comply with local regulations. ##### Canada **OSC Investigation** - In March 2021, the Ontario Securities Commission (OSC) [accused](https://www.osc.ca/en/news-events/news/statement-undertaking-given-binance) Binance of violating securities laws by operating an unregistered trading platform.  ##### India **Government Crackdown** - In late December 2023, India began blocking local access to international exchanges like Binance, as [reported](https://www.bloomberg.com/news/articles/2023-12-28/india-to-block-crypto-exchange-websites-in-widening-crackdown?embedded-checkout=true) by Bloomberg. - Apple [removed](https://timesofindia.indiatimes.com/gadgets-news/apple-has-removed-crypto-exchange-apps-binance-kucoin-okx-from-app-store-in-india-after-government-order/articleshow/106691353.cms) Binance, Kucoin, and OKX apps from its App Store after a government order. - On January 12, 2024, Google [removed](https://techcrunch.com/2024/01/13/google-pulls-binance-other-global-crypto-apps-from-india-store/) Binance and other global crypto apps from its Play Store in India. ### Recent Developments: Key Updates ##### Prominent Delisting **Monero Delisting** - On February 6, Binance [announced](https://www.binance.com/en/support/announcement/binance-will-delist-ant-multi-vai-xmr-on-2024-02-20-f73b083ba6834771b07dbe5319917ae5) that it would delist Monero (XMR) from the exchange on February 20, 2024. **CZ's Guilty Plea** - On November 21, 2023, Changpeng Zhao (CZ) [pleaded guilty](https://storage.courtlistener.com/recap/gov.uscourts.wawd.328551/gov.uscourts.wawd.328551.9.0.pdf) in U.S. court to violating the Bank Secrecy Act by failing to implement adequate KYC and AML protocols for U.S. customers. - As part of the plea deal, he placed $15 million in a trust account and secured guarantors pledging $250,000 and $100,000. CZ is scheduled for sentencing on February 23, 2024. **Fines and Penalties** - Zhao and the DOJ agreed to a $50 million fine without prison time mentioned. - Binance will pay $4.3 billion in penalties to various federal agencies and will undergo oversight from multiple monitors for five years. **Settlement Agreements** - Binance [settled charges](https://www.cftc.gov/PressRoom/PressReleases/8825-23) with FinCEN, OFAC, and the CFTC, addressing issues related to money laundering, sanctions, and commodities regulations. ##### Leadership Changes and Restrictions **CZ's Resignation** - As part of the DOJ settlement, Zhao [resigned](https://www.binance.com/en/square/post/395374141338#:~:text=CZ%2C%20real%20name%20Changpeng%20Zhao,the%20right%20thing%20to%20do.) from Binance and cannot participate in its operations or management for three years following the appointment of a monitor. **Yi He's Influence** - Yi He, Zhao's romantic partner and the mother of his three children, is now the largest Binance shareholder currently working for the company. - She oversees Binance's marketing and investment departments and significantly influences the company's overall operations. ### So, is Binance in Trouble? Even though CZ is stepping down, the exchange is not out of the woods yet. Act accordingly. **Get your Bitcoin off ALL exchanges today and consider moving it into a** [**Bitcoin IRA**](https://www.swanbitcoin.com/bitcoin-ira/)**.** **Holding your Bitcoin in a Swan Bitcoin IRA gives you full control over your Bitcoin.** Learn more about the top 6 Bitcoin and crypto IRA options [here](https://www.swanbitcoin.com/crypto-iras/)! *For more information, please visit* [*swan.com*](http://swan.com/)*.*  ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Swan Support: Best Ways to Contact Swan Bitcoin Support URL: https://www.swanbitcoin.com/industry/swan-customer-support/ Swan Support is the best in the industry for Bitcoin customer service. We are here for all your inquiries and issues. Learn the best ways to contact Swan Support in July 2024! --- June 1, 2024 · Updated July 22, 2025 ### Best way to reach Swan Support The best way to quickly reach a Swan Support team member is by [**Submitting a Help Request online**](https://help.swanbitcoin.com/hc/en-us/requests/new). Swan Support actively monitors and responds to requests **within one business day.** ### Best Ways to Contact Swan Support For fastest service please submit a [help request ticket](https://www.swan.com/support). We offer limited phone support during business hours, you can read more [here](https://help.swanbitcoin.com/hc/en-us/articles/360055129133-Do-you-have-a-phone-number-I-can-call). Our official social media channels are [X](https://twitter.com/swan), [Facebook](https://www.facebook.com/SwanBitcoin/), Telegram, [LinkedIn](https://www.linkedin.com/company/swanbitcoin/), and [Instagram](https://www.instagram.com/swanbitcoin/). (Please note we can only answer questions and help requests through the [help request ticket](https://www.swan.com/support) link above.) For Bitcoin news, shows, memes, & culture follow us [@Swan](https://twitter.com/Swan). ### Swan Support Account Basics - [Why is my Swan Bitcoin account frozen?](https://help.swanbitcoin.com/hc/en-us/articles/17350001826711-Why-is-my-account-frozen-) - [How do I change the email address associated with my Swan Bitcoin account?](https://help.swanbitcoin.com/hc/en-us/articles/18147291234583-How-do-I-change-the-email-address-associated-with-my-Swan-account-) - [How does Swan Bitcoin store my Bitcoin and should I self-custody?](https://help.swanbitcoin.com/hc/en-us/articles/17381827984535-How-does-Swan-store-my-Bitcoin-and-should-I-self-custody-) - [Swan Bitcoin uses which qualified custodian?](https://help.swanbitcoin.com/hc/en-us/articles/17381827984535-How-does-Swan-store-my-Bitcoin-and-should-I-self-custody-) - [What is Swan Force?](https://help.swanbitcoin.com/hc/en-us/articles/17382395564823-What-is-Swan-Force-) ### Bitcoin & USD Withdrawals - [How do I withdraw USD from my Swan Bitcoin wallet to my Bank Account?](https://help.swanbitcoin.com/hc/en-us/articles/17349946083735-How-do-I-withdraw-USD-to-my-Bank-Account-) - [How long do withdrawals take to complete?](https://help.swanbitcoin.com/hc/en-us/articles/17513409749143-How-long-do-withdrawals-take-to-complete-) - [What is an XPUB?](https://www.swanbitcoin.com/whats-in-an-xpub/) Sometimes, buying and selling Bitcoin can be very confusing. Our Swan Support team is here to help you with any buying and selling issues. ### Funding My Swan Account - [How do I deposit Bitcoin into my Swan Bitcoin account?](https://help.swanbitcoin.com/hc/en-us/articles/17337306734999-How-do-I-deposit-Bitcoin-into-my-Swan-account-) - [Where are my direct deposit instructions?](https://help.swanbitcoin.com/hc/en-us/articles/17337225382039-Where-are-my-direct-deposit-instructions-) - [How do I wire funds to Swan Bitcoin using Bank of America's online portal?](https://help.swanbitcoin.com/hc/en-us/articles/1500010350622-How-do-I-wire-funds-to-Swan-using-Bank-of-America-s-online-portal-) - [What happens to my purchases if an ACH transfer fails?](https://help.swanbitcoin.com/hc/en-us/articles/18147704439191-What-happens-to-my-purchases-if-an-ACH-transfer-fails-) Swan Bitcoin is active on [multiple](https://twitter.com/Swan) [social media platforms](https://twitter.com/swanbitcoin). ### Social Media - [**Twitter**](https://twitter.com/SwanBitcoin) - [**LinkedIn**](https://www.linkedin.com/company/swanbitcoin/mycompany/) - [**Facebook**](https://www.facebook.com/SwanBitcoin) - [**Telegram**](https://t.me/swansignal) - [**YouTube**](https://www.youtube.com/channel/UCl4takhOQtiyprismCPsa2Q) ### Recent Swan Support customer reviews Swan maintains an excellent rating on [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com). Swan Support regularly receives very positive feedback from customers. **Recent Swan Customer Reviews** [![](https://www.datocms-assets.com/56652/1706128586-jim-hov.png?auto=format)](https://www.trustpilot.com/reviews/65a044c9623248ed7f3e93cb) Trustpilot [![](https://www.datocms-assets.com/56652/1703710814-terrific-service.png?auto=format)](https://www.trustpilot.com/users/6554f6484fd8db0012d6b38c) Trustpilot [![](https://www.datocms-assets.com/56652/1703710698-customer-service-4.png?auto=format)](https://www.trustpilot.com/reviews/6568f61742c17cbae1b28a49) [The Bitcoin Benefit Plan](https://www.swanbitcoin.com/benefit/) makes it easy to recruit, reward, and retain top talent with Bitcoin. We handle all the heavy lifting, like creating wallets, converting currency, and routing payments. Swan Support is always available to help with:  - *Wallet setup* - *Currency conversion* - *Payment routing* - *... more!* ### Swan Support in the event of an outage If Swan is having an outage, or if Swan Support is unavailable: Please visit [this page](https://swanbitcoin.statuspage.io/?utm_source=embed) to stay up-to-date regarding an outage that Swan Bitcoin or Swan Support may be experiencing. Outage or not, you can always visit our [FAQ page](https://help.swanbitcoin.com/hc/en-us) for more information. We also have many helpful [step-by-step](https://help.swanbitcoin.com/hc/en-us/articles/1500002360362-How-do-I-buy-Bitcoin-on-Swan-) video explanations about how to [Buy Bitcoin](https://www.swanbitcoin.com/) and solve any wallet or service problems you may be experiencing. [![](https://www.datocms-assets.com/56652/1703627711-swan-stepxstep-video.png?auto=format)](https://help.swanbitcoin.com/hc/en-us/articles/1500002360362-How-do-I-buy-Bitcoin-on-Swan-) Swan Bitcoin If you can't resolve your problem, please submit a request [here](https://help.swanbitcoin.com/hc/en-us/requests/new) anytime.  *For more information, please visit* [*swan.com*](http://swan.com/)*.* # Bitcoin: Demystifying Money - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-demystifying-money/ Only Bitcoin completely demystifies how money works and, even more importantly, will continue to work. --- **Tomer Strolight** · October 12, 2023 · Updated July 3, 2024 ### Transparent, fair, quantifiable, verifiable, and unalterable money has never existed before. Now that it does, things will never be the same. **Conversations About Bitcoin Typically Cast Doubts on Bitcoin** Discussions about Bitcoin with people who do not own any quickly enter familiar territory. There’s always the discussion about its price volatility. Often also, there’s the *“But I can’t touch it”* objection. Some version of *“It’s only been around for a short while; how do you know it will last?”* eventually works its way into the conversation. And for a finishing touch, you get some varieties of *“The government will stop it,”* *“Satoshi will come back and take it over,”* or *“Someone’s got to be in charge.”* Experienced Bitcoiners have responses to all these concerns. However, while we are on the defense answering this familiar litany of questions, there are some bigger and more important matters that often go undiscussed. That’s because most people, including those who claim to be experts on money, simply do not have an integrated, non-contradictory, and practical theory of what money is and how it works or how it should work. ![](https://www.datocms-assets.com/56652/1697130401-t11.png?auto=format) For the overwhelming majority of people, they simply haven’t studied the nature of money. To them, money is the national currency. They don’t know who issues it, how much of it exists, how it comes into being or goes out of existence, who is in charge of it, how those people got to be in charge, what their responsibilities are, how they carry out those responsibilities, or anything detailed at all really. For those who know some things about it, they may have a theory about them, but they can’t actually verify that what they’re told about these things is entirely true. In fiat, the whole operation of *“the money”* is shrouded in opaque institutions and roles, with unclear accountability and dubious statistical data. ### Questioning the Questioners Imagine turning around the questions that come up about Bitcoin back onto the interrogators. ### 1. Bitcoin’s price is volatile they allege? True, but it’s gone way up over time. You need a log scale chart to observe it really as it’s gone from 1 cent to a dollar, to a hundred, to ten thousand and beyond. ![](https://www.datocms-assets.com/56652/1697128457-t1.png?auto=format) The dollar, on the other hand, priced in almost any good or service, including Bitcoin, is down tremendously. This famous chart below shows how one dollar went from buying thirty chocolate bars in 1913 to ten bottles of beer in 1933, to ten bags of pretzels in 1953, to seventeen oranges in 1971, to only two lemons by 2008. Now, it only buys you a single cup of coffee at McDonalds. ![](https://www.datocms-assets.com/56652/1697128565-t2.png?auto=format) ### 2. You can't touch a Bitcoin? What do you think you’re touching when you hold a dollar bill? Is there real value in a piece of paper. Why is a blank piece of paper worth less than the piece of paper money? Has the questioner of Bitcoin seen the pictures of piles of money in the streets of nations that debased their paper currency? Those are countries where the paper is worthless garbage. ### 3. Bitcoin has no ‘intrinsic’ value? So what makes the dollar valuable? Ask this back to the person who asks you “What makes Bitcoin valuable?” Chances are you’ll completely blindside your interrogator with this question. There is no one theory shared by all experts. And it is good to accompany the question of “what makes the dollar valuable” with its sibling “Why then has it lost so much of its value over time?” Now you’re talking. ### 4. Oh, and Bitcoin’s only been around for a short while? Which version of the dollar are we talking about? The one that’s been backed by nothing since 1971, or the one that ceased to be redeemable for gold much earlier, when gold was, in fact, confiscated by the government in 1933. Be careful, however, that you don’t terrify your conversation partner here with more reality than they can handle. Chances are that your friend doesn’t know that the Euro, which is the currency of thirty-six countries, including France, Germany, Italy, and Spain, has only been around for ten years longer than Bitcoin. And the Euro isn’t holding up in purchasing power any better than the dollar. ### It’s Important to Question Money – Especially the One You’re Using Let’s get right to the heart of the matter now, shall we? None of us know precisely what money is, even though we use it every day. We work for it. We save it. We buy stuff with it. We judge whether we should or shouldn’t buy a thing based on what its price is, what value it might bring to us, and how much money we have. This seems to work. Everybody else does it the same way. Even Homer Simpson gets this. ![](https://www.datocms-assets.com/56652/1697128913-t3.png?auto=format) However, there is something obviously wrong. The lack of transparency in how money works means your friend who is questioning your embrace of Bitcoin can’t answer many basic questions like *“Why should we trust the people in charge of money to not conjure lots of it for themselves?”* and *“Who are the people in charge of it?”* Your friend may label you a conspiracy theorist for asking such simple questions. Or, perhaps, they’ll humbly and curiously admit they don’t really know the answers themselves. You might ask the person questioning you on Bitcoin about the Federal Reserve. What kind of entity is it? How did it come to be? Who’s in charge? What exactly are they in charge of, and who are they accountable to? What are its policies, and what ensures that they are being followed? The main thing I’m getting at is that this someone who is questioning you about Bitcoin, an alternative system of money, does not have good answers for these very same questions if they are framed up in the context of the system of money they are currently using, often without question. Perhaps one of the most revealing things about the Federal Reserve is that they have gone to great lengths to be more concealing than revealing. Every effort to pass a bill to audit the Federal Reserve has met with objections from its leadership. On July 12, 2017, then Chair of the Federal Reserve, Janet Yellen, testified before the House Financial Services Committee, stating, *“I am strongly opposed to auditing the Fed.”* One onlooker in the wings behind her held up what he thought was the solution to the problem of the lack of transparency. The two words on it: “Buy Bitcoin.” ![](https://www.datocms-assets.com/56652/1697129096-t4.png?auto=format) ### Why Is Fiat Money So Complicated? Why is the current system of money so complicated and shrouded in such mystery? That’s a very hard question to answer in detail and one that invariably raises a lot of other questions about the intentionality and necessity of all this complexity. Is it merely there to confuse and conceal, or is it necessary to keep the economy going? Didn’t economies work before all this complexity was added? In the end, however, fiat is a system in which we must trust politicians, appointed bureaucrats, committees, and who-knows-who-else to decide what money is. We are forced to rely on their somehow-agreed-upon conclusions. And their conclusions are ones that they modify from time to time. For example, In 2020, Jerome Powell said, *“We’re not even thinking about thinking about raising rates.”* But his conclusion about this changed. The Fed not only thought about it, they raised rates from 0.25% to 5.5% in roughly one year, which is a **twenty-two-fold increase in the interest rate!** How’s that for volatile? Maybe they should have thought about thinking about raising interest rates sooner? But they didn’t. Why didn’t they? There’s no answer. ![](https://www.datocms-assets.com/56652/1697129253-t5.png?auto=format) ### Bitcoin: Demystifying Money Now, what all this brings us to is something particularly unique about Bitcoin as a system of money. It’s something that Bitcoin’s doubters tend to overlook regarding their own preferred or accepted system of money. All the mechanisms of how Bitcoin works are: - **Completely public** - **Completely auditable** - **By anyone** - **At any time** There is no mystery as to how Bitcoin issues its units of currency. There is no committee that meets behind closed doors to decide upon changes. There are thus no public announcements that everyone must eagerly and anxiously await to see what changes have been made. There are no leaders that must testify before Congress to defend their decisions. Bitcoin doesn’t rely on unpredictable people and institutions to decide what it will be. There are, in fact, no decisions for people to make. As such, anyone who studies the basics of Bitcoin knows exactly what all the policies and workings of Bitcoin are. It’s remarkably straightforward, in fact: - Bitcoin is a ledger of units called Bitcoins (or, alternatively, their sub-units called satoshis, of which there are one-hundred million of per Bitcoin) - Anyone in the world can keep track of this ledger by running the software. - Everyone who runs the software agrees on the state of the ledger because consensus is achieved through Bitcoin’s breakthrough *“Nakamoto Consensus”* algorithm. This algorithm states that any discrepancy between two versions of the ledger will, in short order, be settled by the version that demonstrates more proof of work than another version. And this test is easy to conduct and has no ambiguity. - Spending Bitcoin requires transmitting a transaction that spends only never-spent entries in the ledger, signed with a valid cryptographic digital signature. Such signatures cannot be forged and can only be created by someone in possession of a secret key that itself is impossible to guess. - Bitcoins are issued on a precisely predefined schedule. The issuance began with fifty coins issued per block, and it gets cut in half every 210,000 blocks so that the final total of all Bitcoin in existence can never exceed 21 million coins. - Bitcoin has an internal adjustment system called the *“Difficulty Adjustment Algorithm”* that ensures blocks of transactions get added only roughly once every ten minutes. - Anyone can try to discover new blocks, but they must compete to do so on the basis of solving the proof of work challenge for a new block that gets issued only when the previous challenge is solved. It may not be super-simple, but it’s absolutely clear. None of the rules come in the form of *“There are people trusted to keep the rule but who can also change the rule.”* If you think about it, that form of governance really says, *“The rules can change at any time.”* History shows this to be true about the dollar and other national currencies. One day, President Nixon showed up on TV and said, *“I have directed Secretary Connelly to suspend temporarily the convertibility of the dollar into gold or other reserve assets...”* That’s all it took. The rules immediately changed. And that temporary suspension, which began over fifty-two years ago, is still in effect. ### Nixon *“Temporarily”* Suspends Convertibility of Dollar Into Gold [Video](https://www.youtube.com/watch?si=Trm71Ydc_J4Q3sFe&t=52&v=iRzr1QU6K1o&feature=youtu.be) Did people know that such a rule change was possible with the dollar the day before it happened? In hindsight, they should have. But once it did happen, it became clear that there were people who could change the rules of the money and who would, in fact, do so frequently. But it was now too late. No election was even held. There was nothing anyone could do about it. Not until Bitcoin came around, that is. ### Bitcoin Fixes the Rules, (Literally Fixes Them In Place) All kinds of shenanigans might take place in secret meetings to change the rules of money issued by decree. But none can affect Bitcoin’s rules. All manner of *‘pomp and circumstance’* and ceremony can be paraded out to try to make changes seem legitimate in fiat money. None of these can affect Bitcoin’s rules. **There’s simply no ambiguity about the rules of Bitcoin. But the rules of fiat money can be whatever the authorities in charge say they are.** What a dramatic contrast this represents. ![](https://www.datocms-assets.com/56652/1697130192-t6.png?auto=format) Bitcoin takes money out of the arbitrary realm of decree and puts it squarely in the deterministic realm of science, technology, engineering, and math (STEM). It’s no wonder that this was first recognized and appreciated by those who tend to appreciate the reliability of the STEM disciplines. It’s also no wonder that it is also appreciated by those who recognize the fallibility and fragility of systems based on the arbitrary, unpredictable, unreliable, changing opinions of humans with absolute power. Bitcoin demystifies how money works. Everyone in the world can see how Bitcoin works, how much of it there is, and can verify the authenticity of any quantity of it. And everyone can also rely on it to continue working according to these rules. Nothing like this has ever existed before. Gold, too does not have this level of transparency. For one, nobody really knows how much gold there is. Estimates vary dramatically. That’s actually a big mystery about gold. And then, to use gold, even between two consenting parties, requires trust in the coinage (i.e., the mint) or trust in the issuers of gold-back notes if those are being used or very expensive and difficult-to-use equipment. So there’s always the question of gold being real, untainted, base gold. Only Bitcoin eliminates all doubt about all of these factors – which are all the weaknesses of all of the things that have been used as money before. Bitcoin is even immune to inflation caused in hard monies when innovation occurs in the method by which they are created. No matter how much more efficient mining Bitcoin gets, no more Bitcoin is discovered. Only Bitcoin completely demystifies how money works and, even more importantly, will continue to work. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Best Bitcoin Exchanges for May 2025: Which Wins & What to Know URL: https://www.swanbitcoin.com/education/bitcoin-exchanges/ With so many Bitcoin exchanges to choose from, how do you know which is right one for you? We are here to help choose between three of the best Bitcoin exchanges in July of 2024: Swan Bitcoin, Coinbase and Binance. --- **Drew** · July 4, 2024 · Updated May 16, 2025 Choosing the best Bitcoin exchange is essential. The following review breaks down two of the most popular exchanges Coinbase, Binance, and Swan Bitcoin, a Bitcoin-only exchange in the United States. Let's get started... ### TL;DR Overview ##### Swan Bitcoin ***Account Minimum:*** *No minimum balance requirements* ***Investment Options:*** *Bitcoin-only* ***Fees:*** [*0.99%**](https://www.swanbitcoin.com/fees/) ***Custody Provider:*** [*BitGo Trust Company*](https://www.bitgo.com/swan/)[ ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)***Trustpilot Rating:*** [*4.6 / 5 from 1,136 reviews* ](https://trustpilot.com/review/swanbitcoin.com)***Apple Store App:*** [*4.8 / 5 from +1.5k reviews* ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)***Google Play Store:*** [*4.5 / 5 from 61 reviews, +50,000 downloads*](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1) ##### Binance **Most Popular International Bitcoin Exchange**  ***Account Minimum:*** [*None, but $10 trade minimum*](https://www.binance.com/en/feed/post/143536) ***Investment Options:*** [*137 cryptocurrencies (changes often)*](https://www.binance.com/en/markets/overview) ***Fees:*** [*Start at 0.6%. fees of 0.5% for instant buys and debit card fees of 3.75%*](https://www.binance.com/en/fee/trading) ***Custody Provider:*** [*Ceffu*](https://www.ceffu.com/blog/binance-custody-is-now-ceffu) ***Trustpilot Rating:*** [*2.1 / 5 from 4,4779 reviews* ](https://www.trustpilot.com/review/binance.com)***Apple Store App****:* [*4.2 / 5 from +108.5k reviews (#61 in Finance)*](https://apps.apple.com/us/app/binance-us-buy-bitcoin-eth/id1492670702) ***Google Play Store****:* [*4.6 / 5 from +2.21M reviews, +100M downloads*](https://play.google.com/store/apps/details?id=com.binance.dev&hl=en&gl=US) ##### Coinbase  **Most Popular U.S. Bitcoin Exchange** ***Account Minimum:*** *$2* ***Investment Options:*** [*+150 alternative cryptocurrencies*](https://www.coinbase.com/explore) ***Fees:*** [*0.5% to 4.5%*](https://help.coinbase.com/en/coinbase/trading-and-funding/pricing-and-fees/fees) ***Custody Provider:*** [*Coinbase Custody Trust*](https://www.coinbase.com/prime/custody) ***Trustpilot Rating:*** [*1.9 / 5 from 9,351 reviews* ](https://www.trustpilot.com/review/coinbase.com)***Apple Store App****:* [*4.7 / 5 from +1.7M reviews (#13 in Finance)* ](https://apps.apple.com/us/app/coinbase-buy-bitcoin-ether/id886427730) ***Google Play Store****:* [*4.5 / 5 from +838k reviews, +10M downloads*](https://play.google.com/store/apps/details?id=com.coinbase.android&hl=en_US&gl=US) ### Bitcoin-only Exchanges vs. Cryptocurrency Exchanges Cryptocurrency exchanges are online platforms that facilitate the buying, selling, and trading Bitcoin, altcoins, stablecoins and other digital assets. Exchanges serve as intermediaries, connecting buyers and sellers and providing a marketplace for individuals to exchange their fiat currency (U.S. dollars, Euros, etc.) for Bitcoin and vice versa. Altcoins refer to **ANY** cryptocurrency other than Bitcoin. These alternative digital assets are often funded through pre-sale token agreements and usually do not have clear legal definitions. Many of these ICO-launched networks are [Ponzi-like](https://www.swanbitcoin.com/when-investing-in-crypto-beware-of-ponzi-tokens/) and [one-hit wonders](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/). Several types of exchanges exist for different investors, making choosing the best Bitcoin exchange even more challenging. ### Swan Bitcoin Founded in 2019 and headquartered in Los Angeles, California, [Swan Bitcoin](https://swanbitcoin.com) has made buying and owning Bitcoin a breeze. Swan removes the complexity and confusion surrounding [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) investing and is accessible to a broader audience for low fees and offers investors **free withdrawals into self-custody of purchased Bitcoin** with a secure, non-custodial wallet. [Video](https://www.youtube.com/watch?v=OhuBMuM61k0) This gives investors complete control over their digital assets and an added layer of security. ![](https://www.datocms-assets.com/56652/1697142189-invest-in-swan.png?auto=format) ##### Key Features 1. **Enhanced knowledge base****:** Swan's knowledge base includes comprehensive [educational resources](https://www.swanbitcoin.com/signal/), [in-depth market analysis](https://www.swanbitcoin.com/private/insight-reports/), and up-to-date information on Bitcoin. 2. **Unparalleled expertise in Bitcoin****:** Whether understanding technical aspects, market trends, or potential risks, Swan's experts work round the clock to guide you every step of the way. 3. **Advisor services****:** Besides its expert team, Swan now offers [Swan Advisor Services](https://www.swanbitcoin.com/advisor/) to help financial advisors integrate Bitcoin into their clients' investment portfolio's seamlessly. 4. **Personalized consultation****:** Investors get advice and strategic recommendations tailored to their financial goals and risk tolerance, ensuring Bitcoin becomes an accessible and beneficial asset. 5. **Reliable self-custody options****:** [Swan's Specter Labs](https://www.swanbitcoin.com/swan-acquires-specter-solutions/) offers a range of safe and easy-to-use self-custody options for Bitcoiners who prefer to be in direct control of their wealth. [**Best Bitcoin exchange alternative to Coinbase**](https://www.swanbitcoin.com/coinbase-alternative/) One of Swan's key features that makes it easy for newcomers is the ease of setting up automate recurring Bitcoin purchases (with private key ownership) at regular intervals, helping create a disciplined, low-time preference investment strategy to build wealth over time. Coinbase offers this feature, **BUT** the exchange maintains control over the private keys. ##### Swan Education [**Swan Signal Blog**](https://www.swanbitcoin.com/signal/) [**Swan YouTube Channel** ](https://www.youtube.com/@Swan_Bitcoin) [**Swan Private Insight**](https://www.swanbitcoin.com/private/) [**Welcome to Bitcoin: 101 Series**](https://welcome.swanbitcoin.com/) [![](https://www.datocms-assets.com/56652/1701302307-swan-education.png?auto=format)](https://welcome.swanbitcoin.com/) ##### Swan Bitcoin IRA Swan[ Bitcoin IRA](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work) offers a tax-deferred or tax-free solution to incorporating Bitcoin into a retirement portfolio. Swan offers self-managed Traditional or Roth IRAs, with Bitcoin [held in a legal, regulated trust account ](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-#:~:text=The%20Swan%20IRA%20holds%20Bitcoin,Yes.)maintained by a qualified and authorized custodian. ![](https://www.datocms-assets.com/56652/1697148420-swan-ira.png?auto=format) **What to know:** The best Bitcoin exchanges provide unique products and services like an IRA product to help them differentiate themselves from major competitors. **Neither Binance nor Coinbase offer a tax-free IRA product.** ##### Swan Support: Best in Industry Customer Support **Exceptional customer service** Swan uses a chatbot feature and instantly connects users to a Swan representative. This functionality allows users to engage in real-time conversations, enabling swift access to assistance and support.  [Swan Support](https://www.swanbitcoin.com/swan-customer-support/) is rated the best in the industry by many. If you ever have any problems, you can usually reach a Swan Support customer service representative in 10 minutes or less. **What to know:** For U.S. citizens, this is not possible on Coinbase. The best Bitcoin exchanges offer exceptional levels of customer service. ##### Swan Private If you’re a high net-worth individual, family office, or corporation looking to buy $100,000 or more worth of Bitcoin, you can sign up with [Swan Private](https://www.swanbitcoin.com/private/) for customized services. The Swan Private team produces a monthly research report to keep you updated and educated about the latest Bitcoin developments and the broader financial world. ![](https://www.datocms-assets.com/56652/1701138835-swan-private.png?auto=format) ##### Swan Force [Swan Force](https://help.swanbitcoin.com/hc/en-us/articles/360050055373-What-is-the-Swan-Force-Referral-Program-) is another Swan entity to earn Bitcoin by helping other users and businesses engage with the Bitcoin ecosystem. ##### Swan Bitcoin-only Trust On September 14th, 2024, Swan [revealed plans](https://www.prweb.com/releases/bitgo-and-swan-announce-plans-for-usas-first-bitcoin-only-trust-company-301928557.html) for the first Bitcoin-only trust company in the United States. ![](https://www.datocms-assets.com/56652/1697145656-bbbgtt.jpeg?auto=format) This strategic partnership aims to meet the increasing demand for Bitcoin-specific solutions while addressing the crucial security and custody needs within the Bitcoin ecosystem. [BitGo](https://www.bitgo.com/swan/) has been safeguarding Swan users' Bitcoin in cold storage custody since June, 2023 - a practice that will continue.  ##### Swan Vault On October 5, Swan Bitcoin and Blockstream announced [Swan Vault](https://www.swanbitcoin.com/vault/). With Blockstream Jade's support, Swan Vault provides Bitcoin investors with robust and user-friendly solutions to the complex challenges of secure and safe Bitcoin custody. ![](https://www.datocms-assets.com/56652/1697146128-swan-vault.png?auto=format) [See the press release here.](https://bitcoinmagazine.com/business/swan-seeks-to-boost-custody-offerings-with-blockstream-partnership) ##### The Daily Bitcoiner One curated piece of Bitcoin content, a job listing in the Bitcoin industry, thought provoking quote and Bitcoin-only event - [published every weekday](https://dailybitcoiner.substack.com/). Only the highest quality articles, podcasts, and videos make the cut. [![](https://www.datocms-assets.com/56652/1701302908-tdb-banner.png?auto=format)](https://dailybitcoiner.substack.com/) ##### Employee Bitcoin Benefit Plan The [Bitcoin Benefit Plan](https://www.swanbitcoin.com/benefit/) makes it easy to give your team **Bitcoin**. Swan will automatically deposit a set amount of Bitcoin into your team's accounts every month. [![](https://www.datocms-assets.com/56652/1701303094-benefit.png?auto=format)](https://www.swanbitcoin.com/benefit/) ##### Fees Swan charges **ZERO** on your next or first $10k purchase - only a 0.99% fee on all Bitcoin buys thereafter; that’s all. **No deposit fees, no withdrawal fees, no hidden fees.** **Low and transparent fees** Swan's exclusive focus on Bitcoin allows it to cut costs and pass on the savings in **lower fees**, making it a [great Coinbase alternative](https://www.swanbitcoin.com/coinbase-alternative/) for users who prioritize low fees and wish to focus on Bitcoin-only. Let's take a look at the two leading alternative cryptocurrency exchanges: Binance and Coinbase. ### Binance Founded by Changpeng Zhao (CZ) in 2017, [Binance](https://www.binance.com/en) is a pioneering cryptocurrency exchange, considered by many to be the best Bitcoin exchange that has quickly grown into one of the industry's largest and most influential platforms since its launch. ##### Key Features Binance boasts a variety of key features that have contributed to its popularity: 1. **Wide range of cryptocurrencies****:** Binance provides access to an extensive list of cryptocurrencies for trading, allowing users to diversify their portfolio. 2. **Binance Launchpad****:** A platform within Binance that [hosts](https://www.binance.com/en/markets/coinInfo-Launchpad) token sales for new projects, enabling users to invest in promising blockchain startups. 3. **Binance Smart Chain****:** A parallel blockchain network that supports decentralized applications (DApps) and smart contracts, offering an alternative to Ethereum. 4. **Binance Earn****:** A [service](https://www.binance.com/en/earn) allowing users to earn interest or rewards by participating in cryptocurrency-related activities, such as staking or lending. 5. **Binance Visa Card****:** A cryptocurrency [debit card](https://www.binance.com/en/cards) that allows users to spend their cryptocurrencies at merchants that accept Visa. [Video](https://www.youtube.com/watch?v=6uw8MtyKSVI) ##### Fees Binance operates with a competitive fee structure, offering some of the lowest trading fees in the industry, making it attractive for retail and institutional traders. - Binance charges different fees based on trading volume and whether users hold its native cryptocurrency, Binance Coin (BNB). - By using BNB to pay trading fees, users can enjoy additional discounts.  - You’ll incur 0.1% trading fee, and Instant buy/sell will incur a 0.5% fee. Binance has a number of hidden fees such as different withdrawal fees for every type of currency. - For BTC this fee is 0.0001 - 0.0005 of the amount you are withdrawing.   The fees start to get more complex and higher once you start trading odd altcoins and cryptocurrencies. - Trade fees start at a 0.6% taker and 0.4% maker fee for trading non Bitcoin crypto worth less than $10,000 in a 30-day period.  You can check out the complete [fee schedule](https://www.binance.com/en/fee/trading) on their website. ##### Customer Service - Comprehensive and fast customer support. - Extensive FAQ section, a ticketing system for specific inquiries. - Live chat feature for real-time assistance. **What to know**: The best Bitcoin exchanges include a live chat feature for their customer base.  ![](https://www.datocms-assets.com/56652/1706658841-binance-reviews.png?auto=format) Trustpilot ##### Custody Binance offers a range of custody solutions for institutional clients and high-net-worth individuals who require secure storage for their digital assets. Binance Custody became [Ceffu](https://www.ceffu.com/blog/binance-custody-is-now-ceffu) in February of 2023. [![](https://www.datocms-assets.com/56652/1701385327-is-now-ceffu.png?auto=format)](https://www.ceffu.com/blog/binance-custody-is-now-ceffu) ##### Regulatory Clarity A significant portion of the cryptocurrency industry operates in a regulatory gray area in many jurisdictions. Binance has faced scrutiny from regulatory authorities in different countries. Recently, the SEC filed lawsuits against [Binance](https://www.docdroid.net/I02zzqT/sec-v-binance-4-pdf). In the suit, the SEC names at least (67) alternative cryptocurrencies it believes are unregistered securities. ### Coinbase  Founded in 2012 by Brian Armstrong and Fred Ehrsam, [Coinbase](https://www.coinbase.com/) emerged as a response to the need for a secure and user-friendly platform for buying, selling, and storing cryptocurrencies. Coinbase provides a straightforward interface and services catering to individual retail investors and institutional clients. Many consider Coinbase the best Bitcoin exchange for U.S. citizens.  ##### Why Coinbase is So Popular **Coinbase Wallet** A [digital wallet](https://www.coinbase.com/learn/wallet) for securely storing cryptocurrencies.  ![](https://www.datocms-assets.com/56652/1697146227-wallet.png?auto=format) **Coinbase Pro**  A [platform](https://www.coinbase.com/learn/wallet) designed to cater to experienced traders who require more sophisticated trading tools than what is offered on Coinbase's basic platform. - Advanced order types - Real-time market data - Charting tools - High liquidity  **Coinbase Custody** - Offers secure storage solutions for institutional investors and high-net-worth individuals. - Designed to meet clients' needs, requiring a highly safe and reliable [custodial solution](https://www.coinbase.com/custody/assets) for their digital assets. ##### Fees Coinbase fees are considered much higher than other exchanges, like Swan. Still, Coinbase's ease of use makes it an attractive option for users looking for a reliable onboarding experience and most new retail investors don't pay close attention to the fee difference. ##### Coinbase Security Measures Coinbase has implemented several security protocols and practices to protect user funds and safeguard against hacking attempts and cybersecurity threats.  **Two-factor authentication (2FA)** Coinbase encourages[ users to enable 2FA](https://help.coinbase.com/en/coinbase/getting-started/verify-my-account/how-do-i-set-up-2-factor-authentication), which adds an extra layer of security by requiring a unique code generated on a mobile device and a password.  **Third-party audits** Coinbase undergoes[ regular security audits](https://help.coinbase.com/en/coinbase/getting-started/verify-my-account/how-do-i-set-up-2-factor-authentication) conducted by reputable third-party firms. **What to know**: The best Bitcoin exchanges conduct multiple audits annually.  ##### Coinbase Issues with User Funds Protection  **Offline storage (cold storage)** Coinbase employs multiple layers of security to store and secure user funds. The majority of customer funds held by Coinbase are stored in[ offline, cold storage wallets](https://help.coinbase.com/en/prime/trading-and-funding/cold-storage-transaction-faqs). **What to know**: The best Bitcoin exchanges hold their customers' funds in cold storage wallets. **Multi-signature technology** Coinbase previously offered a multi-signature mechanism for its wallets. However, it[ no longer provides](https://help.coinbase.com/en/coinbase/managing-my-account/other/the-multisig-vault) this service.  **Insurance** In case of a security breach or loss of funds, Coinbase has specific options available to users. It provides [insurance coverage](https://www.coinbase.com/legal/insurance) for cryptocurrency holdings stored in its custody provider.  ![](https://www.datocms-assets.com/56652/1697144310-cash-balances.png?auto=format) Coinbase carries crime insurance that protects a portion of digital assets held across our storage systems against losses from theft, including cybersecurity breaches. However, its policy ***DOES NOT*** cover any losses resulting from unauthorized access to your personal Coinbase or Coinbase Pro account(s) due to a breach or loss of your credentials. It is your responsibility to use a strong password and maintain control of all login credentials you use to access Coinbase and Coinbase Pro.  - Cryptocurrency is not legal tender and is not backed by the government. - Coinbase is ***NOT*** an [FDIC-insured bank.](https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured) - Cryptocurrency is ***NOT*** insured or guaranteed by or subject to the protections of the Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“[SIPC](https://www.sipc.org/)”), and may lose value. **Account recovery** Coinbase has account recovery procedures in place to help users regain access to their accounts in case of unauthorized access or loss of account credentials. Users can follow the [account recovery process](https://www.swanbitcoin.com/security), which typically involves identity verification and account ownership confirmation. ##### Coinbase Customer Service: Problematic, At Best Coinbase has a [notorious reputation](https://www.cnbc.com/2021/08/24/coinbase-slammed-for-terrible-customer-service-after-hackers-drain-user-accounts.html) for its poor customer service. Many users have reported issues with frozen or suspended accounts without explanation and no ability to receive personalized responses. In August, 2021 CNBC wrote a [highly shared article](https://www.cnbc.com/2021/08/24/coinbase-slammed-for-terrible-customer-service-after-hackers-drain-user-accounts.html) about Coinbase customer support problems. ![](https://www.datocms-assets.com/56652/1697144760-cnbc-complaints.png?auto=format) Customers regularly complain about this on Twitter, Trustpilot, and forums like Reddit. Coinbase offers no live chat feature other than a bot with limited capabilities.  Many users have to wait several days for answers if they receive them at all. **Outages and technical issues** Coinbase regularly experiences: - [Slow loading times](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) - [Long outage periods](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) - [Transaction delays](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) - [Server errors](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) [... ](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm)especially during periods of high volatility, making taking advantage of market volatility a massive pain point for investors.  **Recent examples** In 2021, [hackers stole crypto assets and user information](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) from at least 6,000 Coinbase customers.  On February 28th, 2024 Coinbase [suffered](https://www.cnbc.com/2024/02/28/coinbase-users-see-0-balance-after-crypto-trading-app-suffers-glitch.html) another [glitch](https://status.coinbase.com/incidents/qlpwww1zsm2y) that left many users seeing a zero balance in their account. [![](https://www.datocms-assets.com/56652/1709147226-investing.png?auto=format)](https://status.coinbase.com/incidents/qlpwww1zsm2y) Coinbase **Frozen and suspended accounts** Coinbase has[ sometimes frozen or suspended user accounts](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm) due to suspected fraudulent or suspicious activity. Many users have expressed frustration over account freezes, citing difficulties in resolving such issues. **Help center** - Coinbase provides a ‘[Help Center](https://www.cnbctv18.com/cryptocurrency/coinbase-solana-suffer-downtine-a-weekend-of-outages-14858481.htm)’ on its website. - Offers customer support through email and a ticketing system. - Many Coinbase customers complain about the poor service and response time they receive from the Help Center.  If you are looking for a Binance or [Coinbase alternative](https://www.swanbitcoin.com/coinbase-alternative/), Bitcoin-only Swan Bitcoin might be right for you. **Regulatory clarity** A significant portion of the cryptocurrency industry operates in a regulatory gray area in many jurisdictions. [Video](https://www.youtube.com/watch?v=ZFLQg-z2F8c) - Recently, the SEC filed lawsuits against [Coinbase](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm). - In the suit, the SEC names at least (67) alternative cryptocurrencies it believes are unregistered securities. - Coinbase platforms and markets many of the tokens included in the lawsuit. - Some of these tokens are included in Coinbase education rewards for watching videos and answering questions correctly. ![](https://www.datocms-assets.com/56652/1699421329-least.png?auto=format) Altcoins are highly speculative and carry numerous unique risks. When investing in a non-Bitcoin crypto IRA, understand that the development team typically retains a guaranteed token stake at launch, similar to how an initial public offering ([IPO](https://investopedia.com/terms/i/ipo.asp)) operates in the traditional stock market.  ### Swan Bitcoin Advantages > Binance and Coinbase Using Swan and buying only Bitcoin has several advantages: **Clear blue regulatory skies**  The SEC has publicly stated that Bitcoin isn't a security and doesn't fall under the SEC's regulatory mandate. Swan Bitcoin focuses on recurring Bitcoin purchases for long-term investments, emphasizing simplicity and regulatory clarity. **What to know**: The best Bitcoin exchanges are completely transparent about their regulatory standing and avoid cryptocurrencies that could present significant legal problems. **Bitcoin-only is better** Being a [Bitcoin-only company](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/), Swan avoids the risks of volatile altcoins. **Fewer account restrictions** Unlike Binance and Coinbase, Swan has a [few account restrictions](https://www.swanbitcoin.com/terms/) and a transparent framework openly [available to the public](https://help.swanbitcoin.com/hc/en-us/articles/360059653973-What-are-the-minimum-and-maximum-purchase-amounts-).  ### Let's Wrap Up   So, what is the best Bitcoin exchange for you?  A Bitcoin-only exchange. Bitcoin is a fully decentralized, legally recognized commodity with no central authority, issuer, or single point of failure. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today! ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Running the Numbers: How Fiat Pushed the American Dream Away from Millennials URL: https://www.swanbitcoin.com/industry/fiat-american-dream/ Bitcoin symbolizes hope for a generation who increasingly feel as though their futures have been stolen from them by the traditional fiat system. --- **Sam Callahan** · April 28, 2024 · Updated June 21, 2024 It’s no secret that younger generations increasingly feel like they are falling behind. Millennials face an affordability crisis. They are on track to be the first-generation not to exceed their parents in terms of job status and income. It’s no wonder that a recent study published in JAMA Psychiatry on well-being across generations found that younger generations’ life satisfaction scores were lower across the board compared to their older counterparts. ![](https://www.datocms-assets.com/56652/1697480665-01-satisfaction-scores.svg) Part of this widespread dissatisfaction is related to financial instability. I would argue a lack of financial security could be one of the most significant contributors to the negative sentiment felt by younger generations today. Millennials are a generation that has already experienced two *“once-in-a-lifetime”* global financial crises since they entered the workforce. They were just starting to accumulate savings as the Federal Reserve pumped asset prices to the moon with their accommodative policies. Instead of benefitting from that asset appreciation, most millennials were left behind. In Neil Howe’s recently published book, *“The Fourth Turning is Here,”* he touches on how millennials are the most likely to believe that the current regime is fundamentally broken and needs to be overhauled, if not replaced entirely. He explains how young people don’t have hope today. They don’t feel like a future exists. In this piece, I will break down some statistics that help illuminate why millennials feel this way, how the fiat system has failed them, and why Bitcoin could act as a saving grace for these younger individuals. ### A Fading American Dream Homeownership is often considered the cornerstone of the American Dream. It is how households have historically built generational wealth, and it provides individuals with the space necessary to build families and create a legacy. Homeownership is deeply ingrained in the American psyche as a symbol of stability and success. Today, due to central bank and government policies, home affordability stands at the lowest level in history. ![](https://www.datocms-assets.com/56652/1697480486-02-us-housing-affordability.svg) This is a result of a combination of two things: 1.) Soaring home prices boosted by policy responses in the wake of the Global Financial Crisis 2.) the Federal Reserve hiking interest rates to combat soaring inflation. Below is a chart highlighting the Federal Reserve’s balance sheet and the median U.S. home price since 2010. The trend is clear. As the Federal Reserve has performed massive amounts of Quantitative Easing over the last decade, buying up billions in mortgage-backed securities, the price of homes has sky-rocketed almost in tandem. ![](https://www.datocms-assets.com/56652/1697480289-03-feds-balance-sheet-home-prices-have-risen-together.svg) For older generations who already owned homes, this was fantastic. Central bankers pumped the value of their homes (and their net worth) without them lifting a finger. But for millennials who were still looking to purchase their first home after just entering the workforce, this was a catastrophic development. The Federal Reserve has been directly complicit in pushing the American Dream of homeownership out of reach for a large portion of millennials. This is confirmed in the data when comparing millennial homeownership to that of previous generations. According to Apartment List, millennials have had the slowest transition from renters to homeowners. By age 30, 42% of millennials owned their homes, compared to 48% of Gen Xers, 51% of baby boomers, and nearly 60% of silents at the same age. ![](https://www.datocms-assets.com/56652/1697480610-04-millennial-homeownership-trails-previous-generations.svg) Millennials have been forced to become renters due to the high cost of homeownership today. This significantly impacts their ability to build long-term wealth. According to a [2019 Survey of Consumer Finances](https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building) from the Federal Reserve, the median homeowner has 40 times the household wealth of a renter – $254,900 for the former compared to $6,270 for the latter. Homeownership is not just about building wealth, though. A British study looked at data spanning multiple decades and found that being a homeowner has consistently been linked to a higher probability of conceiving a first child than those who rent over the last 30 years. ![](https://www.datocms-assets.com/56652/1697480537-05-homeowners-more-likely-to-have-first-child.svg) This corroborates a recent trend we’ve witnessed -- the rapid decline in fertility and birth rates. Millennials are simply not having babies like previous generations. A 2021 Pew study found that 44% of non-parents ages 18 to 49 say it is not too or not at all likely that they will have children someday, an increase of 7 percentage points from 37% in 2018. ![](https://www.datocms-assets.com/56652/1697480038-06-share-of-non-parents-younger-than-50.svg) The number two cited reason behind medical reasons? *“Financial reasons.”* Instead of starting families and owning homes – two critical milestones for financial success and long-term fulfillment – younger people are moving back in with their parents. According to a recent Bloomberg study, a whopping 50% of people aged 18 to 29 live with their parents today and cite financial woes as the number one reason they choose to move back in. ![](https://www.datocms-assets.com/56652/1697480002-07-why-adults-say-they-live-with-mom-and-dad.svg) Young people are moving back in with their parents to try to save money to maybe own a home one day. But they might be disappointed with how long they will have to stay there. Today, it’s estimated that buying an average-priced home takes nearly 7 years of saving an average incomee. To put that into perspective, it took 2.4 years of time and labor to save for the cost of an average home in 1970. ![](https://www.datocms-assets.com/56652/1697479968-08-how-long-does-it-take-to-save-for-a-house.svg) Younger folks are moving back in with their parents instead of focusing on starting families because living costs have soared. Inflationary policies have not only made homes unaffordable, but they have also increased the cost of essentials like food, healthcare, education, and transportation. Having and supporting a family has never been more expensive than today. According to American Compass Executive Director Oren Cass, it now takes 62 weeks for a single-income family working at the median wage to afford essentials. ![](https://www.datocms-assets.com/56652/1697479919-09-number-of-weeks-needed-at-a-median-wage-to-afford-essentials.svg) Given that there are only 52 weeks in a year, it’s not hard to see why this estimation is problematic. This has occurred in part because nominal wages have remained stagnant. When comparing median income and median wealth between generations at 40 years old, one can see how wages have gone nowhere for millennials, while median wealth has declined, and median debt has soared. ![](https://www.datocms-assets.com/56652/1697479891-10-millennial-wealth-woes.svg) When taking into account inflation, the picture gets worse. One can see that wage stagnation has been an ongoing trend for decades. A 2018 Pew research study showed how paychecks may have increased nominally, but they haven’t moved much in terms of purchasing power. ![](https://www.datocms-assets.com/56652/1697479849-11-americans-paychecks-bigger-than-40-years-ago.svg) So, as wages have gone sideways, the cost of everything millennials need, like healthcare, education, and housing, has skyrocketed. ![](https://www.datocms-assets.com/56652/1697479795-12-price-changes.jpg?auto=format) This has led to millennials acquiring more debt than any other generation before it, as they took on student loans, auto loans, mortgages, and credit card debt to try to make ends meet. Total household debt for individuals aged 30-39 has increased 27% since 2019. It is the fastest pace of debt accumulation over a three-year period since the 2008 financial crisis. ![](https://www.datocms-assets.com/56652/1697479764-13-change-in-total-debt-from-three-years-ago.svg) Millennials are going into more and more debt to desperately try to achieve the American Dream that is moving farther and farther out of reach. ### So what are millennials to do? One viable option is investing in an asset with a strong potential to appreciate significantly in the coming decade. This would allow millennials to finally feel like they have caught up, and if it outperforms the rate of inflation and home prices, it could improve their quality of life and potentially allow them to finally purchase that home. Bitcoin is an asset with a relatively small market capitalization. It’s still early in its adoption cycle, but if network adoption continues at its current trajectory, Bitcoin will demand a higher price, potentially much higher. Given that the supply is fixed at 21 million, the more users that join the network, the higher the price of Bitcoin will go. Since Bitcoin’s supply is set in stone, only the demand side of the equation matters, and demand for a scarce, censorship-resistant, private, and digital monetary good seems to be increasing. The chart below shows how the number of addresses holding at least $100 worth of Bitcoin has been growing at a steady rate. ![](https://www.datocms-assets.com/56652/1697479712-14-bitcoin-number-addresses-with-balance-100.svg) Bitcoin is considered an *“asymmetric bet”* in the investment world. An asymmetric bet is an investment with a significant upside gain than the potential downside loss. In other words, you can invest a little to potentially return a lot. Bitcoin’s track record is impressive. It has outperformed nearly all asset classes over long periods. Bitcoin’s compound annual growth rate far exceeds other asset classes like gold and the S&P 500 over longer time frames. ![](https://www.datocms-assets.com/56652/1697479533-15-bitcoins-cagr-far-exceeds-other-asset-classes.svg) Not only is the potential return on investment attractive to millennials, but the beauty of Bitcoin is that they wouldn’t need to get approved for a mortgage to buy some. Millennials don’t need to buy a whole Bitcoin; they can purchase a fraction of one. And they can actually own Bitcoin without any debt attached. For many millennials, Bitcoin could be a way to build wealth when all other alternatives feel out of reach. ... And this is where millennials find themselves today. The fiat system has given them two recessions, stagnating wages, artificially inflated the price of homes, and has saddled them with copious amounts of debt just to keep up with the soaring costs of essentials like healthcare, food, energy, education, and transportation. Bitcoin represents an opportunity to improve the well-being of this generation that has been dealt a bad hand. As such, Bitcoin symbolizes hope for a generation who increasingly feel their futures have been stolen from them by the traditional fiat system. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin for Beginners in 2026: Top 5 Steps to Get Started URL: https://www.swanbitcoin.com/education/bitcoin-for-beginners/ This blog post aims to explain in simple terms exactly what Bitcoin is, how it works, and why it has become so popular. --- **Mickey Koss** · July 4, 2024 · Updated October 22, 2026 This beginner’s guide covers the basics, from understanding what Bitcoin is and how it works to setting up a wallet, choosing an exchange, making your first transaction and how to store it safely. Ready? Let’s get into it... ### What is Bitcoin?  Bitcoin is a decentralized digital currency, created in 2009, aimed at creating a monetary asset that is outside the control of banks and governments… Bitcoin does not exist in physical form like traditional paper money. Instead, it is a digital monetary network through which transactions are verified and recorded on a distributed public ledger called the blockchain. Units of Bitcoin are created and exchanged electronically through a decentralized peer-to-peer network, with no central bank or government authority controlling it. The total supply of Bitcoin is limited to 21 million coins. ### How does Bitcoin work?  When people refer to Bitcoin, they usually are talking about the Bitcoin network and the digital currency (bitcoin with a lowercase b) that exists on that network. The Bitcoin network relies on a technology called blockchain. Imagine a public spreadsheet that everyone can see but nobody can change without consensus. In Bitcoin’s case, this consensus involves tens of thousands of computers distributed worldwide.  The spreadsheet is updated on average every 10 minutes as computers, known as miners, race to verify transactions and amend the ledger. The miner who solves the problem first wins the ability to update the spreadsheet based on the last batch of transactions.  These transactions are validated by a network of thousands of nodes who maintain a copy of the spreadsheet and the ruleset that governs it. As long as the transactions in the last batch match Bitcoin’s rules, they are adopted, and the spreadsheet is updated.  As these updates are made, they are stored in a block of data which is added sequentially to a chain of prior transaction blocks… a block… chain.. Get it?  ### How does Bitcoin increase in value and make money?  Bitcoin derives its value from several factors: - **Scarcity** — Bitcoin's total supply is limited to 21 million coins, so it cannot be devalued by excessive production like fiat currencies.  - **Utility** — Bitcoin's blockchain technology and permissionless nature make it useful for payments, investments, and other use cases. The more it is adopted, the more utility and value it has. - **Perception** — Bitcoin is worth what people think it is worth. If confidence and demand grow, the price increases. Some view it as digital gold to hedge against inflation. - **Speculation** — Speculation on future price appreciation is a major driver of Bitcoin's value. If people believe the price will go up long-term, they may buy and hold. Like gold or other scarce assets, Bitcoin can increase in value and be sold later for a profit. Early Bitcoin investors who bought or mined coins years ago have seen massive gains. ### How is Bitcoin Different From Money? While Bitcoin resembles money in many ways and can be exchanged for goods and services, it has some significant differences from fiat currencies like the U.S. dollar: - **Bitcoin is** [**decentralized**](https://www.swanbitcoin.com/canon/the-political-economy-of-decentralization/) — No central bank or government controls the Bitcoin network, while fiat currencies rely on central banks. - **Fixed supply** — Only 21 million bitcoin will ever exist. Central banks can freely print national currencies, inflating the money supply. It's fixed supply has lead industry experts to make some lofty [Bitcoin price predictions](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/). - **Transaction irreversibility** — Bitcoin transactions are immutable once enough confirmations are recorded on the blockchain. Cash transactions can be reversed. - **Borderless** — Bitcoin can be sent globally with no restrictions. Moving national currencies across borders is often restricted. - **Pseudonymous** — Bitcoin ownership is not linked to real-world identities by default. Fiat currency is tied to identities via bank accounts.  In summary, bitcoin functions like money but has different properties and governance. This gives bitcoin unique advantages, and risks compared to fiat money. ### Is Bitcoin a good investment?  The potential returns from Bitcoin [investing](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/) can be astronomical, but it also comes with significant risks and volatility. Here are some of the key pros and cons: ##### Bitcoin Pros - Large potential upside if adoption grows. - It can serve as an inflation hedge and store value like gold. [Is it even better than gold?](https://www.swanbitcoin.com/physical-gold-vs-digital-gold/) - Decentralized and immune from government manipulation. - Finite supply and deflationary nature increases scarcity over time. ##### Bitcoin Cons - Volatile - prices can crash rapidly, erasing gains. - Regulatory risks, as governments are still assessing how to treat them. - Hackers and scammers target Bitcoin investors, exchanges, and wallets. Whether bitcoin is a good investment depends on your goals and risk tolerance. It offers a high-risk, high-reward asymmetric bet. Bitcoin allocations should match your knowledge and volatility tolerance proportionately.  Learn more about the best Bitcoin investment sites [here](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/). ### Storing Your Bitcoin with Cold Wallet vs. Hot Wallet Once you acquire bitcoin, your next step is [learning how to store](https://www.swanbitcoin.com/bitcoin-cold-storage/) it securely to protect it from hacking or theft. Here are the main options: ##### Hot Wallet A hot wallet refers to any bitcoin wallet connected to the internet. This includes: - *Mobile, desktop, and web wallets provided by exchanges.* - *Mobile apps like* [*Blue Wallet*](https://bluewallet.io/) *and* [*Sparrow*](https://sparrowwallet.com/) *offer hot wallet functionality.* Hot wallets are convenient for frequent transactions but have higher security risks.. The keys are stored online and may be vulnerable to hacks or malware.  ##### Cold Wallet  A cold wallet stores bitcoin offline on devices not connected to the internet. **Examples**: - *Collaborative Multi-sig like* [*Swan Vault*](https://www.swanbitcoin.com/vault/) - *Hardware wallets like* [*Passport* ](https://bitcoin.org/en/wallets/hardware/passport/)*and* [*Blockstream Jade*](https://help.blockstream.com/hc/en-us/categories/900000061906-Blockstream-Jade) - *Paper wallets* Cold wallets provide superior security via offline storage. However, they are less convenient for frequent transactions. A combination of hot and cold storage is recommended for large Bitcoin holdings. For safety, keep a small spending balance in hot wallets while storing the bulk of coins in cold storage. Check out our Top 5 Bitcoin Wallet Review for 2026 [here](https://www.swanbitcoin.com/best-bitcoin-wallet/). ### Why Invest in Bitcoin? Despite the risks, there are compelling reasons why bitcoin has become such a popular investment asset class: - Large growth potential if adoption continues. Bitcoin is still in the very early innings. - Rising inflation and currency debasement make Bitcoin's finite supply attractive. - Decentralization solves the problems of government manipulation and quantitative easing. - Bitcoin's brand and first-mover advantage give it staying power. It would be very hard to displace at this point. - An alternative store of value and portfolio diversification from stocks and bonds. ##### Does Bitcoin burn a TON of energy and is not good for the environment? A common criticism of Bitcoin is that mining coins consumes excessive amounts of electricity and is environmentally destructive. This is a nuanced issue with arguments on both sides: - Yes, Bitcoin mining does use large amounts of electricity. It is resource-intensive by design to ensure network security. - However, Bitcoin incentivizes using renewable energy sources like solar and hydropower. Miners hunt for the cheapest power, which is often renewable. Studies show much of Bitcoin's energy comes from renewables. - Bitcoin's energy usage must be weighed against the benefits of a secure, global financial system that grants anyone access. Almost any human system uses energy. Bitcoin [consumes](https://www.youtube.com/watch?v=sr-RGdbyRDQ&t=7s) significant amounts of electricity but is rapidly evolving in the energy space. Its energy usage enables a decentralized system with unique benefits. [Video](https://www.youtube.com/watch?v=sr-RGdbyRDQ) *In the first episode of a new series called 21 Voices, Daniel Batten, a pioneering entrepreneur and climate tech leader, reveals how Bitcoin mining can significantly mitigate methane emissions, turning the entire Bitcoin network carbon-negative.* *Discover the untold environmental benefits of Bitcoin mining and how it combats negative press while driving renewable energy infrastructure. Learn about Bitcoin's true potential in shaping a sustainable future.* Learn even more about why Bitcoin's energy usage [isn't a problem](https://www.swanbitcoin.com/bitcoins-energy-usage-is-not-a-problem-heres-why-by-lyn-alden/). ### Bitcoin is so volatile; why invest in it? Bitcoin's frequent and wild price swings can deter some investors. Why invest in an asset that can lose 20% of its value overnight? Here are some counterpoints for why Bitcoin volatility isn't necessarily bad: - Volatility works in both directions - Bitcoin often gains value rapidly, too. - Smart investors use price dips when Bitcoin is oversold to accumulate more coins at a discount. - Bitcoin's long-term trend has been consistently upward despite volatility. - New technologies often stabilize as they mature. The internet was once very volatile, too. **Amazon lost 90% of its stock valuation -** [**twice**](https://finance.yahoo.com/news/one-point-amazon-lost-more-160000492.html)**!**  - Short-term volatility is just noise for true believers in bitcoin's long-term potential. - Other hedging assets like [gold are volatile](https://www.swanbitcoin.com/physical-gold-vs-digital-gold/) too but remain popular investments. So Bitcoin's volatility requires strong nerves, a [long-term savings mindset](https://www.swanbitcoin.com/saving-with-bitcoin-sam-callahan/) and smart position sizing. But volatility alone is not necessarily a reason to avoid bitcoin, especially if holding long-term. Learn more about whether [recurring buys vs. lump-sum investing](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/) is the right strategy for you. ### What is a Bitcoin ETF?    A Bitcoin ETF (exchange-traded fund) is an investment vehicle that would hold Bitcoin and derive its value from the price of Bitcoin. It seeks to provide exposure to bitcoin prices for stock market investors. Here are some key facts about Bitcoin ETFs: - Provides easy exposure to bitcoin prices by purchasing a stock instead of buying coins directly. - Bitcoin ETFs are traded on major stock exchanges and held in brokerage accounts like regular stocks. - Investors won't have to worry about securely storing Bitcoin themselves with an ETF (instead you place trust in another entity) - However, unlike owning Bitcoin directly, you don't have possession or control with an ETF. - Fees vary greatly. For the latest fee information check out our Swan guide [here](https://www.swanbitcoin.com/bitcoin-etf-fees/). Overall, Bitcoin ETFs allow mainstream stock investors to get bitcoin exposure via traditional brokerage accounts. The [ETF Race is On](https://www.swanbitcoin.com/the-race-is-on-eleven-bitcoin-etfs-launch/)... Learn more about what Bitcoin ETFs mean for [Wall Street](https://www.swanbitcoin.com/wall-street-bitcoin-what-it-means-for-bitcoin-and-you/), [you](https://www.swanbitcoin.com/what-bitcoin-etfs-mean-for-you/). and ETF [fees](https://www.swanbitcoin.com/education/bitcoin-etf-fees/). ### What are Bitcoin IRAs? A [Bitcoin IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) allows investors to hold bitcoin in a tax-advantaged Individual Retirement Account. Here's how it works: - A Bitcoin IRA is self-directed and held by a custodian specializing in alternative assets. - Within the IRA, you can buy and sell Bitcoin without triggering capital gains taxes. - Bitcoin enjoys tax-deferred or tax-free growth inside the IRA, just like other investments. - There are no mandatory RMDs (required minimum distributions) for Bitcoin IRAs after age 72 to force you to sell. - However, stricter IRA contribution limits apply vs. regular bitcoin purchases. And penalties apply for early withdrawals. Overall, Bitcoin IRAs provide meaningful tax benefits for long-term, buy-and-hold bitcoin investors who want to save for retirement. Learn more about the best Bitcoin IRAs [here](https://www.swanbitcoin.com/bitcoin-iras/). ### Step by Step of How To Start Buying Bitcoin Ready to become a bitcoin owner? Here is a step-by-step guide to purchasing your first bitcoin: ##### Step 1 - Bitcoin storage: Self-custody or custodial? First, decide whether to hold Bitcoin directly or via a custodian. With [self-custody](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/), you control your own private keys, if you use a custodian they handle storage and security.  ##### Step 2 - Bitcoin buying - find & pick an exchange To buy Bitcoin and transfer it to your own wallet, you need to [open an account on an exchange](https://www.swanbitcoin.com/bitcoin-exchanges/) like Swan. You can compare fees, security, payment options, and verification requirements there. ##### Step 3 - Bitcoin fees to consider Watching out for network fees is one of the most important parts of taking self-custody. Every time you withdraw Bitcoin into self-custody, you are making an on-chain Bitcoin transaction which requires a network fee paid to the miners. ##### Step 4 - Storing & Safety of your bitcoin Store your bitcoin in a digital hot wallet or cold wallet. Use strong, unique passwords and enable 2FA for protection against hacking. For large amounts, use a [hardware wallet](https://www.swanbitcoin.com/bitcoin-cold-storage/). The[ BTC Sessions](https://www.youtube.com/c/btcsessions) YouTube channel is popular place to learn how to use Bitcoin tools like hardware wallets.  ##### Step 5 - HODLing your Bitcoin Now that you've bought Bitcoin, decide on your investing strategy. Since Bitcoin moves in bursts over short timeframes, it's generally not advisable to try to trade it! The best mindset in the Bitcoin space is to treat it as a long-term savings vehicle.  With applications like Swan, we make it easy to calculate a ['recurring purchases'](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/#:~:text=Some%20clients%20decide%20to%20purchase,and%20investing%20it%20all%20immediately.) on autopilot to grow your Bitcoin stack over time.   ### Top 10 Bitcoin for Beginners FAQ ##### Q1: What is Bitcoin? **A:** Bitcoin is a digital currency or cryptocurrency operating on a decentralized network using blockchain technology. It allows users to conduct transactions directly without the need for intermediaries like banks. ##### Q2: How does Bitcoin work? **A:** Bitcoin transactions are recorded on a public ledger called the blockchain. Miners use specialized computers to validate transactions, and add them to the blockchain. In return, miners are rewarded with new Bitcoin and network fees. ##### Q3: Is Bitcoin legal? **A:** Bitcoin's legality depends on your country. Buying, selling, holding, and transacting in Bitcoin is perfectly legal in most places. However, a few countries have restrictions or outright bans on using cryptocurrencies. ##### Q4: How can I buy Bitcoin? **A:** You can buy Bitcoin on cryptocurrency exchanges using traditional money or trading with other cryptocurrencies. After setting up an account and undergoing a verification process, you can purchase Bitcoin through these platforms. ##### Q5: How do I store my Bitcoin safely? **A:** Bitcoin can be stored in digital wallets, which come in various forms, such as hardware wallets, software wallets, and mobile wallets. We recommend using hardware wallets that store your Bitcoin offline for maximum security. ##### Q6: Can Bitcoin be converted into cash? **A:** Yes, you can convert Bitcoin into cash through exchanges like Swan, Bitcoin ATMs, or peer-to-peer transactions. Once sold on an exchange, you can withdraw the USD to your bank account. ##### Q7: What are the risks of investing in Bitcoin? **A:** The primary risks include high price volatility, potential regulatory changes, and security vulnerabilities in exchanges and wallets. It's essential to perform thorough research and consider your financial situation before investing. ##### Q8: What are the advantages of Bitcoin over traditional money? **A:** Bitcoin offers lower transaction fees, enhanced security through cryptography, no need for banking intermediaries, and the ability to make transactions anonymously. It's also accessible to anyone with internet access, regardless of geographical location. ##### Q9: How is the price of Bitcoin determined? **A:** The price of Bitcoin is determined by supply and demand dynamics. Market sentiment, technological developments, and geopolitical events can influence its price. ##### Q10: What is Bitcoin mining? **A:** Bitcoin mining is the process of confirming transactions to secure the network. Miners are reworded for their "work" but receiving newly issued Bitcoin and network fees. And that's it! With these steps, you can buy your first (or next) bitcoin and become part of the Bitcoin revolution. As with any investment, it's wise to educate yourself thoroughly first and not risk more than you can afford to lose. Bitcoin offers huge potential but also carries risks. Take it slow and be cautious initially. Swan is here for you every step of the way... ### Welcome to Bitcoin: 101 Series Swan understands that learning about Bitcoin can be daunting, and articulating its concepts to your loved ones can often appear like an insurmountable task. So, we created this free 1-hour [Welcome to Bitcoin: 101 Series](https://welcome.swanbitcoin.com/). It’s the best way to orange-pill your friends and family. [Video](https://www.youtube.com/watch?v=sZvhLDWjD_I) With host Natalie Burnell, you’ll learn the many ways Bitcoin can benefit you, such as: - **​Inflation Protection:** Protect your savings from inflation and manipulation. - ​**Investment Opportunity:** Potential for substantial returns driven by its scarcity and growing adoption. - ​**Prosperous Future:** Decentralized money that serves as a store of value for your hard-earned wealth. Help kickstart your and your loved ones Bitcoin journey - [sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today. ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. # Financial Advisors: It’s Time to Study Bitcoin URL: https://www.swanbitcoin.com/industry/financial-advisors-it-s-time-to-study-bitcoin/ This is an open letter to financial advisors and their firms about the dangers of ignoring Bitcoin and the opportunity of embracing it. --- **Matt Golliher** · June 24, 2024 · Updated October 21, 2026 Dear colleagues, Clients first started asking me about Bitcoin in 2017, and I told them it was digital Beanie Babies. I explained that although Bitcoin’s supply may be capped at 21 million, that doesn’t make it scarce because anyone can create an unlimited amount of new *“crypto”* tokens. I told them that Bitcoin was a hype-fueled bubble, a purely speculative asset, and a foolish long-term investment. I was wrong. After ignoring Bitcoin for the next three years, I noticed in 2020 that it wasn’t dead yet. I decided that if I was going to continue dismissing it, I needed to at least read a book about it. So I read The Bitcoin Standard by Saifedean Ammous and Inventing Bitcoin by Yan Pritzker. I quickly learned that brilliant people from multiple industries and disciplines had answered all my initial objections to Bitcoin dozens of times. In two years, I read more than 40 books about Bitcoin, monetary history, computer science, Austrian economics, and central banking. I listened to podcast interviews like [The Saylor Series](https://www.youtube.com/watch?v=4rvTppy1qLI&list=PL2jAZ0x9H0bQFY6wIbQfnrnIlqMcSHd6X) and read blogs like Nick Szabo’s [Unenumerated](https://unenumerated.blogspot.com/). Today, I believe Bitcoin is the most important financial innovation that will happen in my lifetime. It took me hundreds of hours of research to conclude, so I do not expect to convince you of it with this letter. My goal is to convey a simple message to the wealth management industry: **You need to study Bitcoin.** Bitcoin will impact every area of financial services. If you’re a financial advisor, it will disrupt your business and your career. That may sound like a bold claim. If you’re skeptical, I invite you to accept this letter as a challenge. Do what I did: I thought Bitcoin was stupid, but I wanted to know it was stupid, so I started researching it. And I discovered something far more interesting. I think you’ll discover that too. ### Judging New Technology In 1911, Marshal Ferdinand Foch declared that airplanes were *“Interesting toys, but of no military value.”* A few years after that, Foch served as the supreme allied commander during the First World War (1914-1918). The [Imperial War Museum](https://www.iwm.org.uk/history/the-air-raids-that-shook-britain-in-the-first-world-war) webpage for *“The Underworld”* notes that: *“Between May 1917 and May 1918, more than 300,000 people used the tube to shelter from German aeroplane attacks.”* ![](https://www.datocms-assets.com/56652/1719242916-its-time-to-study-bitcoin-1.jpg?auto=format) In hindsight, it’s easy to mock Marshal Ferdinand Foch, but it’s worth noting that airplanes had only existed for eight years when he said that. Bitcoin had only existed for eight years when clients started asking me about it in 2017, and back then, the most common opinion I heard about it from financial professionals was eerily similar: *“Bitcoin is interesting technology, but it has no real value as an asset.”* I still hear financial professionals saying this. Like Foch did with airplanes, they judge Bitcoin based on how it fits within the existing paradigm. Because of that, they fail to understand Bitcoin fundamentally and do not see what it is becoming: a new paradigm altogether. ### Bitcoin’s Innovation Bitcoin is digital money. It’s easy to overlook how profound that is. After all, most U.S. dollars don’t exist in physical form. They exist only as digital entries in a bank’s ledger. So don’t we already have digital money? We already make digital payments without Bitcoin, so what problem is it solving? We, in fact, did not have digital money before Bitcoin. We had digital credit. In her book Broken Money, Lyn Alden describes how new telecommunication technologies like the telegraph and the telephone created a massive divergence between the speed of payments and the speed of settlement. In the late 19th century, it became possible to transmit payment information worldwide at the speed of light. Gold, however, can’t move that fast. As a result, the global monetary system evolved as an interbank credit network with gold at the base layer. This enabled the high-volume, high-frequency exchange of bank-issued credit claims on gold, while the burdensome final settlement of physical gold only needed to occur periodically between banks. However, this system had a major flaw: Expanding the gold supply requires significant time, energy, and resources. Issuing additional credit claims does not. This led to a fractional reserve banking system that granted a small number of institutions the enormous privilege of expanding the credit-money supply at virtually no cost. The result was that credit claims on gold in circulation vastly exceeded the amount of physical gold backing those claims. Every central bank in the world eventually defaulted on its obligation to redeem credit claims on gold, culminating in Richard Nixon closing the gold window permanently in 1971. This ushered in the modern age of fiat money -- currency backed by nothing, with no connection to the real world to limit its supply. This is the fundamental problem Bitcoin solves. In the words of Bitcoin’s pseudonymous creator: *"The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.“* – Satoshi Nakamoto Bitcoin is a bearer asset. It is no one’s liability. Delivery of Bitcoin constitutes the final settlement of a payment. Unlike gold, Bitcoin can be sent across telecommunication channels because the payment information is the money. Bitcoin is often described as *“digital gold.”* That’s a helpful analogy for someone trying to wrap their head around what it is, but it’s insufficient. It would be like describing the internet as a digital newspaper in 1990. It isn’t wrong, but it fails to capture the significance of the new technology and what the existence of that technology implies for the future. Like gold, Bitcoin’s scarcity is enforced by the unforgeable costliness of energy. Anyone can expand the gold supply, but it costs energy to do so, and there is no way around that cost. The same is true for Bitcoin, except Bitcoin has a supply cap of 21 million. At the time of this writing, about 19.7 million Bitcoin have been mined so far, and it will take over a century to mine the rest. This makes Bitcoin the scarcest monetary good in human history. Because it’s digital, it can be divided, stored, verified, and moved at a marginal cost that approaches zero—all without the use of a trusted intermediary. We have never seen anything like that before! The debate over the military usefulness of airplanes got settled pretty quickly when bombs started falling from the sky. Adopting superior military technologies, such as gunpowder and the airplane, is not optional. Nations either adopt them or they get outcompeted by those that do. The same is true for superior monetary technology. As Saifedean Ammous has said, *“History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours.”* Rather than trying to convince you of Bitcoin's theoretical merits or of its future prospects, I invite you to simply look up. The *"bombs"* are starting to fall. ### Institutional Adoption In 2020, MicroStrategy became the first public corporation to adopt Bitcoin as its primary treasury reserve asset. Michael Saylor, the founder and Chairman of MicroStrategy, described his company's dilemma in 2020 as *"hundreds of people working as hard as they can and going backward."* Saylor has noted that the U.S. dollar money supply expanded by a historical average of about 7% per year over the last century, and that expansion accelerated in 2020. Saylor recognized that the cash and credit instruments MicroStrategy held on its balance sheet could not generate a yield as high as the rate of monetary debasement. This meant that the corporate treasury was dilutive to shareholders. Saylor also recognized that, except for a few technology companies with large network effects, it is not reasonable to expect a mature business to continue growing its cash flows at the rate of monetary debasement every single year. MicroStrategy made an initial investment of $250 million of its corporate treasury into Bitcoin. Today, MicroStrategy holds 214,400 Bitcoin worth about $15.2 billion, acquired at a total cost of $7.538 billion. It acquired most of that by issuing equity and convertible debt, yet the company's Bitcoin per share continues to increase. While MicroStrategy's treasury of cash and credit was dilutive to shareholders, Saylor makes the case that its Bitcoin treasury is accretive. MicroStrategy published their [Bitcoin Initiative Roadmap](https://www.microstrategy.com/bitcoin/documents/bitcoin-initiative-project-roadmap) for any corporation to use. A recent change to the [FASB accounting rules](https://www.fasb.org/news-and-meetings/in-the-news/fasb-issues-standard-to-improve-the-accounting-for-and-disclosure-of-certain-crypto-assets-397718) for Bitcoin also allows GAAP-compliant corporations to hold Bitcoin on their balance sheets without artificially impairing their financial statements through indefinite intangible accounting (which used to be the rule for Bitcoin). On May 28th of this year, [Semler Scientific](https://ir.semlerscientific.com/news-events/press-releases) became the latest public company to adopt Bitcoin as its primary treasury asset. Pension funds and endowments have the same long-term treasury problem as corporations and are also adopting Bitcoin. For example, in the first quarter of 2024, the State of Wisconsin Investment Board [added](https://www.wpr.org/news/wisconsin-pension-fund-bitcoin) $160 million of exposure to its state pension fund. And on June 3rd, the University of Austin (UATX) [announced](https://www.bloomberg.com/news/articles/2024-06-03/bari-weiss-university-is-creating-a-bitcoin-fund-for-endowment) the creation of the first long-term Bitcoin endowment. On January 10th, 2024, the SEC approved 11 spot Bitcoin ETFs. This made it possible for financial advisors in the US to offer clients exposure to Bitcoin through a traditional security. As of market close on June 6th, 2024, the combined AUM of these ETFs had grown to about $61.5 billion. I believe introducing these ETFs has reversed the burden of proof for financial advisors and Bitcoin. Instead of fighting to justify offering Bitcoin to clients, advisors and their firms now need a good reason not to offer it. ### Performance Track Record When the Bitcoin protocol began in 2009, the asset had no monetary value whatsoever. Bitcoin monetized organically on the global free market. Now, there’s over a decade of reliable price history. Bitcoin’s price has increased by about 60% per year for the last 10 years, from around $600 in June 2014 to around $70,000 in June 2024 at the time of this writing. Bitcoin’s market cap is now around $1.4 trillion. This sometimes causes people to believe they *“missed out,”* but that is a mistake. While no one knows what returns will be in the future, I believe the majority of Bitcoin’s returns lie ahead. That’s because Bitcoin is not a tech stock. **It’s an entirely new asset class**. It competes as a store of value with gold, bonds, stocks, and real estate, but it is still tiny compared to those asset classes. Bitcoin’s price behaves differently from those of other assets. Roughly every four years, the Bitcoin issuance rate gets cut in half. When the protocol began in 2009, Bitcoin miners generated 50 new Bitcoin every 10 minutes on average. In 2012, that got cut in half to 25. Most recently, in April 2024, it reduced from 6.25 to 3.125. So far, Bitcoin’s price has seemed to follow a 4-year cycle corresponding to the issuance halving. If you rank historical asset class returns from best to worst by calendar year, it’s clear that Bitcoin does not behave like any other asset. Based on this historical price behavior, its potential to enhance the diversification and risk-adjusted returns of a portfolio should be obvious. ![](https://www.datocms-assets.com/56652/1719242878-its-time-to-study-bitcoin-2.jpg?auto=format) ### Bitcoin is Your Competitor You may not care about Bitcoin, but if you’re a financial advisor, you do not have the luxury of ignoring it. The last five decades of fiat money have stimulated a massive artificial demand for wealth management services. A large portion of our industry only exists because the currency bleeds purchasing power every year. I won’t pretend to know precisely how large that portion is, but if you reflect on all the clients you’ve ever worked with, I suspect you’ll see that what I’m saying is true. Many clients would avoid investments altogether if they could, but they know that if they want to become or remain wealthy, they can’t simply save in a savings account. Inflation forces would-be savers to take investment risks they otherwise wouldn’t, and many of them hire professionals (like us) to help them navigate the complexities of the investment world. Bitcoin may be volatile, but it is not an investment. Bitcoin is money. For the first time in at least 50 years, saving money over the long term is a winning proposition again. Bitcoin provides an alternative to investing, and more and more people are embracing that alternative. I talk to investors almost every week now that fit the following description: - Within 10 years of retirement - 7-figure investable net worth - More than 50% allocated to Bitcoin Some are 100% allocated to Bitcoin (besides short-term savings). Of course, we discuss diversification. They’ve all thought about that. However, many of these investors held their net worth in Bitcoin from the 2021 peak of $69,000 to the 2022 low of $16,000, then back up to over $70,000, and they never panicked. They know what they own. They often ask me: *“Why would I want to own anything else?”* Sometimes, there’s a very good reason why they should own non-Bitcoin assets. Sometimes there’s not. Either way, I enjoy having these discussions with investors, and the only reason I can have them is because of my knowledge of Bitcoin. That’s why these investors reached out to me in the first place. To modify a quote I used earlier: *“History will show it is not possible to insulate your advisory practice from investors choosing to hold an asset that is harder than anything you can offer them.”* It’s happening now. If you are serious about understanding how you can embrace Bitcoin to best serve your clients and grow your business, please get in touch. I’d be happy to share what I’ve learned with you. --- You can reach out to Matt at [matt.golliher@vistainvestment.net](mailto:matt.golliher@vistainvestment.net) *Vista Investment Partners (Vista), a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Vista, Form ADV Part 2A & 2B can be obtained by visiting: https://adviserinfo.sec.gov and search for our firm name. Neither the information nor any opinion expressed is to be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.* *The information herein was obtained from various sources. Vista does not guarantee the accuracy or completeness of information provided by third parties. The information in this report is given as of the date indicated and believed to be reliable. Vista assumes no obligation to update this information, or to advise on further developments relating to it.* ### Matt Golliher Matt Golliher is a Financial Advisor with Vista Investment Partners. He lives in Richmond, IN, with his wife, Devra. Matt became a Bitcoiner in 2020. Along with educating his clients, colleagues, and community about Bitcoin, Matt focuses on helping Bitcoiners who need traditional wealth management and financial advisory services. If you have any questions or would like to contact Matt, you can do so using the contact information below. Email: matt.golliher@vistainvestment.net # The Sunshine Manifesto - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/the-sunshine-manifesto/ Rather than being something to be avoided, sunlight has many health benefits that most people are unaware of, from reducing chronic illnesses, to prolonging your life. --- **Steven Lubka** · June 10, 2024 · Updated October 21, 2026 ### Light and Sunlight I've been structuring my life around light cycles for the last 9 years. During that time I have come to believe it is likely the most significant variable in human health outcomes. This may seem enormously counterintuitive to many, however, due to an abundance of evidence combined with the personal life-changing effects that embracing sunlight had on me, I'm convinced it’s true. Like most other Americans, I grew up applying sunscreen anytime I went to the beach. The idea that the sun was healthy, or necessary, was never discussed. In my early twenties, I began to encounter individuals and research which claimed the exact opposite – that sunlight was essential to all-around, good health. I also realized I had never experienced a true “dark phase”. Our entire culture was illuminated with artificial light. And yet, according to what I was learning, this abundance of artificial light was anything but beneficial for human health. The research was persuasive, and I began to spend much more time outdoors and limit artificial light at night. The effects were nothing short of transformational. The only way to truly explain it was as a massive increase in vitality itself. What do I mean by vitality? I mean a sense of energized vigorousness; a robustness to stressors; a passionate, focused drive.  I am reminded of this simple truth when we go through several rainy weeks, or when I travel across the country for work. After a few days without the sun, deprived of the right light habits, I noticed a profound difference in myself. When the light returns, the same vitality and drive is restored. I would imagine most people can understand a bit of this from the first day of spring, that moment when winter yields to the returning sun. A glorious day – one celebrated around the world via myriad festivals and religious rituals. This essay will focus on the evidence and the science. Although I will make my argument in the language of empiricism (linking to peer reviewed studies, and the mechanisms of science), my personal experience of sunlight and what it has given me is far from the neutered, abstracted language of scientific journals. It is not improved blood work numbers or hormonal panels (although both are also true). It is a visceral and profound transformation in my lived experience.  My goal with this essay is to once and for all answer a single question here: Does the cost-benefit analysis support having more sunlight in your life, or does it support avoiding sunlight? I review many of the countless mechanisms by which sunlight acts on human health and address the concerns put forward by dermatologists and individuals who fear the effects of the sun’s UV radiation. ### Why does Light even matter? Let's start by building a general framework for why light and Sunlight matter for human health.  The average person thinks the answer is summed up by “Vitamin D”. However, the truth is far more nuanced. Light is one of the most bioactive substances in existence. It is a nutrient and it is a drug. Both of these statements are literally, and empirically true. Vitamin D can be thought of as a hormonal compound, however, even beyond  of this, light can also be understood as: 1. A critical input in biological timekeeping (circadian rhythm) 2. A key element in biophysics (various wavelengths have interactions with the body best thought of under the lens of physics) 3. Gene therapy (about half of your genes are modified by light)  Some of these interactions we understand well – others not so well. Our true understanding of light's impact on biology is still in its infancy, but there is a large body of robust work we can lean on presently. I would personally estimate that non-Vitamin D-based benefits of light account for 80%+ of all its health benefits – this is far more than a Vitamin D story.  (Also, many studies show supplementing Vitamin D **does not** in fact convey the same benefits as the endogenous production of Vitamin D via sunlight. More on this later.) ### UV Radiation: Cancerous Toxin, Photo-Nutrient, or both? I want to start by jumping into the most controversial part of the sunlight story. Is UV radiation going to give you skin cancer and cause your skin to look wrinkled and decrepit? Or, is it a beneficial and necessary “nutrient” that humans need for optimal health? The real answer is both, but it depends on how, and even more importantly, in what context you are exposed to it. ![](https://www.datocms-assets.com/56652/1718050682-1714063745518.jpg?auto=format) The abstract [from this paper](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X) in The Journal of Investigative Dermatology states it excellently: “UVR is a skin carcinogen, yet no studies link sun exposure to increased all-cause mortality. Epidemiological studies from the United Kingdom and Sweden link sun exposure with reduced all-cause, cardiovascular, and cancer mortality. Vitamin D synthesis is dependent on UVB exposure. Individuals with higher serum levels of vitamin D are healthier in many ways, yet multiple trials of oral vitamin D supplementation show little benefit. Growing evidence shows that sunlight has health benefits through vitamin D-independent pathways, such as photomobilization of nitric oxide from cutaneous stores with a reduction in cardiovascular morbidity. Sunlight has important systemic health benefits as well as risks.” UVR in isolation is proven to increase skin cancer rates. However, all studies of cumulative UV exposure (how much UV people get) show that people who get more UV radiation live longer, and experience less disease often by significant margins (including less cancer overall). Since no one gets isolated UV radiation in real life, this tends to suggest one should simply get more sun. **Sun exposure also provides significant benefits for cardiovascular health and diabetes.** Out of 100,000 people in a standard American population, 233.3  are expected to die from cardiovascular disease (CVD), 20.9 from diabetes, and 3 from skin cancer. Many more will live a less fulfilling and vibrant life due to diabetes and CVD as well, but not die from them. High amounts of sunlight exposure have also been shown to reduce cancer rates of countless other cancers, such as cancer of the pancreas, colon, stomach, brain, and more. When you add up the overall risks of all of these diseases and compare them to skin cancer, it's not even close. The total burden of disease that sunlight alleviates is an order of magnitude worse than those it causes. [Studies](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib74) have continually shown this relationship. *“In the Melanoma in Southern Sweden study, 30,000 Swedish women were followed for 25 years, with sun-seeking behavior and relevant confounders recorded at baseline. Twenty-five years after enrolment, sun-seeking behavior was inversely correlated with all-cause mortality, despite a higher incidence of cases of melanoma in those with more sun exposure (Lindqvist et al, 2014). The reduction in all-cause mortality was particularly related to lower rates of cardiovascular death (Lindqvist et al, 2016).”*  This means that after twenty-five years, these 30,000 women lived longer the more sun they got despite higher rates of skin cancer. It's worth noting that it is rare to find a study following this many people for this long!  A much larger [UK Biobank study](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib7) followed 377,000 white-skinned Europeans and monitored their sun habits and the latitudes at which they lived. They also studied the use of tanning beds (which I do not recommend). For all methods and relationships, they too found the more sunlight or UV exposure these white-skinned Europeans had (this detail is important), the longer they lived. Additionally, every 18 miles further south they lived added about 16 days to their average life expectancy.  You read that right, fair-skinned Europeans lived longer in Egypt than in their ancestral environments. As I was researching this essay, this result surprised even me! While these individuals are clearly more vulnerable to sun damage than native Egyptians, being in a higher UV environment was nevertheless health- promoting. Why did these individuals live longer? Reduced mortality from cardiovascular disease, cancer, AND **skin cancer.** How is this possible? Generally, the trend appears to be that people with higher UV exposure are more likely to **get** skin cancer but less likely to **die** from it. Let's be clear, light-skinned individuals are more vulnerable to UV damage. The average light-skinned redhead may not want to bake in the Egyptian sun for 4 hours. Yet, within reason, more UV exposure from the sun continues to be associated with a longer life and less disease. While increased UV exposure does result in more skin cancer (but less skin cancer death), what about all of the seemingly conclusive research on skin cancer? Should it be taken at face value? I believe there is a good reason why it should not. Skin cancer studies generally take two forms: isolated cell cultures and population-based studies. Isolated cell studies have limited generalizability due to the fact that humans are not merely a clump of cells, and sunlight is not isolated UV light - it is a whole spectrum. Red light, for example, has been shown to mitigate UV damage when applied to the skin prior to UV.  ![](https://www.datocms-assets.com/56652/1718051250-image-18.webp?auto=format) We need more whole-spectrum studies on cell cultures to get better data, but even these would obviously be limited, as the human body has many mechanisms that mitigate UV damage. The whole human system is robust, with myriad mechanisms to adapt to stressors. Hormesis, an adaptive response to stress, is the rule of human biology.  While exploring the effect on cells of UV in isolation can certainly provide valuable insights, it would be foolish to blindly extend those findings to human biology. Scientists even struggle to replicate research done on mice to humans, let alone clumps of cells! Population-based studies are limited for a different reason – the subjects do not exist in the isolation of a laboratory, but out in the dynamic, unpredictable, real world.  In that environment, your habits influence how much damage you will receive from UV. Additionally, these population-based studies stop short by merely showing that a given population has a higher rate of skin cancer. However, individuals who get more sunlight have a much higher chance of surviving skin cancer, and individuals in the lowest sunlight exposure groups have a much higher chance of dying from skin cancer. Few papers tackle this whole picture! #### The Circadian Cycle The human body operates on a circadian cycle – it has a daytime phase and a nighttime phase. Properly aligned, this cycle is conservative and protective of DNA during the daytime, where UV is high, while during the dark phase, it focuses on the repair of DNA. DNA is more vulnerable to damage during the repair phase. If someone's circadian clock is out of alignment DNA may be getting UV exposure during the repair phase. Early morning sunlight exposure makes you less likely to burn, and you suffer less damage from the UV. Light receptors in the eyes signal to your skin the presence of intense light and allow the skin to protect itself from the negative effects of UV. What if you are wearing sunglasses, though? If you wear sunglasses you deny your body this signal to the skin from the eyes, and potentially increase your risk of skin damage. This is a huge reason to avoid sunglasses unless driving or operating heavy machinery. There are some diseases of the eye that may warrant sun protection, but eye health itself is also deeply supported by sunlight.  Consistency in sun exposure crucially influences cancer rates. [Studies show](https://pubmed.ncbi.nlm.nih.gov/1561794/) that inconsistent sun exposure, like working indoors all week and then getting intense sunlight on weekends, increases the risk of melanoma. In contrast, regular and consistent sun exposure **decreases** the risk of melanoma. This aligns with the biological concept of hormesis, where moderate, consistent exposure to stressors strengthens the body's adaptive responses. Skin cancer studies do not adjust for chronic vs intermittent exposure when looking at broad populations. Consider, for example, a study on Australian Surfers. How many people in Australia work indoors 40 hours per week, under artificial light, with misaligned circadian clocks and then go to the beach on the weekend? These individuals are at greatest risk for UV damage, and they most likely compose the bulk of such a population-based sunlight-induced study. Now, does this mean that UV exposure isn't a skin cancer risk? Not inherently. It very well might be. However,  it almost certainly is *less* of a risk than such studies show. I am not here to wave my hands and say there is literally nothing to worry about. I am here to say we live in the real world, and even if the risks were as bad as the worst studies say (which it almost certainly isn't) the research continually shows that the people who get the most sunlight are much less likely to die from any factor than people who get the least sunlight. The disease burden that is mitigated by high sunlight exposure is an order of magnitude or more than the risk the population faces from rising skin cancer rates. There are many studies I could cite which dispute the melanoma and sunlight relationship ([here](https://pubmed.ncbi.nlm.nih.gov/1561794/), [here](https://pubmed.ncbi.nlm.nih.gov/9920435/), [here](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3828598/), [here](https://t.co/FfYiwmeoAD), [here](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5129901/#cit0012), [here](https://pubmed.ncbi.nlm.nih.gov/15617990), [here](https://pubmed.ncbi.nlm.nih.gov/19155143/)). Sunburns are specifically related to melanoma, but many researchers dispute that non-burning sun exposure is related to melanoma risks. In fact, many would argue consistent non-burning exposure is protective against melanoma. I am not discussing those studies here because, even without disputing melanoma results, I believe that the case for sunlight is overwhelming. However, one could make a solid argument that melanoma is materially less sunlight induced than most people think. Melanoma rates have risen rapidly even while humans avoid the sun more than ever, and many studies show that office workers are at particular risk for melanoma (one theory is UV-A via windows without Vitamin D being produced in the skin itself makes these individuals particularly vulnerable). **Circadian Rhythms and Life on Earth**  A huge part of the sunlight story is that our biology relies deeply on circadian rhythms to do everything from managing hormones to metabolizing fat.  To set this story in its proper context, let's explore the story of Melatonin. Most people know of Melatonin as a compound that helps humans fall asleep. The real story of Melatonin is far more interesting. ![](https://www.datocms-assets.com/56652/1718051372-melatonin-is-believed-to-exist-in-most-possibly-all-animal-and-plant-species-it.png?auto=format) Melatonin first emerged 3.2 billion years ago and has existed since **without any alterations across almost all life on Earth.** It is believed to exist in **most or all animal and plant life.**  How important and central could such a compound be to be shared by almost all life and survive 3.2 billion years in an unaltered state? Most Melatonin is produced within mitochondria as the most potent antioxidant known to man, far surpassing anything from food. Mitochondria produce more Melatonin when Infrared Light penetrates the body and strikes the mitochondria directly. The brain also produces melatonin which is involved in sleep, and suppressed by artificial light at night. Countless plants and animals have circadian rhythms. A huge portion of all human genes have circadian factors. One must ask why so much life relies on a light-dark cycle and how central this suggests circadian biology is to life on Earth. I personally believe this is because sunlight is the most widely accessible source of energy in nature, and everything has evolved to take advantage of the free solar energy we receive every day. In the next section, we will explore how UV light is literally a usable form of biological energy, just like food, but also how this energy comes with a cost. My belief is that circadian rhythms emerged to utilize this free energy as much as possible, and then to mitigate the downsides during the dark phase. Obviously, the reality is much more complicated than this and defies such a simple explanation, yet this may be a functional model to start to think about why circadian health matters so much. [Circadian biology manages](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9920183/#:~:text=A%20gene%20mutation%20encoding%20a,disease%20%5B14%2C25%5D.) both glucose and fat metabolism. It is also central to bone health and preventing osteoporosis. Furthermore, circadian disruption is [intimately linked](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10146651/#:~:text=Impaired%20circadian%20rhythms%20are%20associated,rhythms%20commonly%20improves%20psychiatric%20symptoms.) to mental health disorders ranging from depression to schizophrenia. Circadian rhythms [govern the activation and inactivation of countless](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10146651/#B9-ijms-24-07579) genes governing immune function, metabolism, and homeostasis. Diabetes is [increasingly being understood](https://www.mayoclinic.org/medical-professionals/endocrinology/news/an-emerging-connection-between-circadian-rhythm-disruption-and-type-2-diabetes-mellitus/mac-20429399) as a circadian illness.  Hundreds of pages could be filled with all of the circadian system’s biological impacts and all of the health effects it has. For now, merely keep in mind that circadian processes touch most biological processes, and light is the primary way your body manages its circadian processes. ### UV Mechanisms and Benefits Beyond Vitamin D, which we will explore later, UV light has specific health benefits and mechanisms which are, to put it lightly, fascinating.  The human body possesses the ability to perform the transduction (converting one form of energy into another) of UV electromagnetic energy (these are high-energy wavelengths) into chemical, hormonal, and neural signals!   It's worth exploring the physics of this for a moment. The energy of UV is comparable to the energy of covalent bonds (these are the electromagnetic bonds that hold atoms together within a molecule). This means that any electron excitement by UV is enough to generate or break a covalent bond. This means that in a biological system it can supply necessary energy for countless processes, and some scholars believe it may even have played a critical role in the development and evolution of life itself. A simple example is the production of Vitamin D (which is actually many different compounds and a multistage process) which requires UV-B-induced carbon bond cleavage to initiate.  If this description made your eyes glaze over, let me state it more simply. The sun literally donates energy to biology – including human biology. It is a source of usable energy. Looking at the role of UV radiation in biology, the portrait increasingly becomes one of **energy.** In biology, the production and usage of energy is both necessary and constructive yet it also bears costs and damages. In this way, it is similar to oxygen. You both need oxygen to live, and it is slowly killing you. UV donates tremendous biological energy to the organism, which is used in productive and health-promoting ways. Yet, this very process has certain costs, which the organism must repair and balance post-exposure. Your body, fortunately, has countless well-defined mechanisms to counteract the negative effects while optimizing the positive.  When UV radiation strikes your skin, the skin functions as a neuroendocrine organ. This means UV is a critical component of your neurological system and your hormonal system. The skin, in response to UV, produces steroids, thyroid hormones, endocannabinoids, POMC, oxytocin, melatonin, growth hormone, and countless other compounds. All of these interactions occur in addition to Vitamin D pathways. UV-B is also absorbed and utilized via the eyes, not just the skin, and plays a key role in the global homeostasis of the body. Exposure of the eye to UV radiation modulates pituitary function and has distinct impacts on internal organs and skin. [One fascinating example](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5905393/#B157) is the exposure of the eyes to UV-A mitigated cancer of the colon. UV-B activates the opioidergic system, producing natural endogenous opioid effects, and this has been shown to be effective at improving addiction outcomes. UV radiation activates nitric oxide pathways which lower blood pressure, and reduce cardiovascular disease. This is one of the largest ways increased UV exposure reduces mortality. The UV radiation spectrum is one of the most bioactive parts of the light spectrum and far from being seen merely as a carcinogen, it should instead be seen as necessary for health and even fundamental in the development of biology itself. Like any source of energy, UV has costs and benefits. But much like how digesting food and inhaling oxygen actually deteriorates your body, you would never actually want to go without these things.  Harnessing energy always comes with costs, but the goal of biology is to do this very thing as well as possible. ### Vitamin D Vitamin D is the one benefit of sunlight everyone is aware of. As such there is a lot written on its benefits. It is a hormone that is positively associated with many beneficial health outcomes.  However, this is because it often functions as a proxy for sun exposure. Most research doesn't adequately distinguish between the effects of sunlight via non-vitamin D pathways and via Vitamin D itself. In this section, I will spend more time exploring what you don't know about Vitamin D, rather than reiterating the benefits which are plastered all over the internet. Vitamin D became popular when it was discovered that cod liver oil, which contained vitamin D, was able to prevent rickets. From this moment onward, everyone assumed the dietary compound and the process induced via sunlight exposure were largely synonymous.  However, much research on this topic is confounded by the fact that most people's Vitamin D levels are a representation of their sunlight exposure. How many health influencers and doctors have promoted Vitamin D supplements as an easy solution? What if they are all, mostly, wrong?  The two largest randomized studies of Vitamin D supplementation, [the Vital Study](http://www.vitalstudy.org/), with 25,000 participants, and the ViDa study, with 5,000 participants, both demonstrated [no benefit](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib84) from Vitamin D supplementation on cardiovascular disease, cancer incidence, or many other endpoints. The New England Journal of Medicine in 2022 [concluded that](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib31) the general population should stop taking Vitamin D supplements. The bulk of data shows that supplementing Vitamin D is not beneficial, and may be actively detrimental.  Vitamin D’s pristine reputation comes from correlation studies that find higher vitamin D levels associated with better health outcomes, yet a reasonable observer must conclude this is because it is sunlight that is actually beneficial. ### Nitric Oxide and Cardiovascular Outcomes [Studies have shown](https://www.ahajournals.org/doi/full/10.1161/JAHA.119.013837#:~:text=While%20epidemiological%20data%20suggest%20a,24%20in%20healthy%20human%20volunteers.) that people living in higher UV areas have lower blood pressure. [Other studies](https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-023-16439-4) have shown that individuals who try to limit sun exposure have higher blood pressure and are more prone to hypertension.  Sunlight has been shown to reduce blood pressure by about 10% after 30 minutes of exposure. However, these results didn't persist all day. This immediate response is likely due to Nitric Oxide release. Yet, even though this immediate drop reversed itself, sunlight habits are positively associated with lower blood pressure, better cardiovascular outcomes, and less stroke and heart disease. ### Sunlight and Genes Up to 20% of genes in mammals are circadian coded, they function differently at different points in our circadian cycle. Moreover, [up to 50%](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4758938/) of all protein-encoding genes show circadian-dependent transcription. Despite being on the inside of your body, your cells and genes have light receptors and respond to light. Light, which does penetrate your skin and is also produced internally in intercellular communication. Scientists at MIT [used a new light device](https://news.mit.edu/2013/controlling-genes-with-light-0722#:~:text=To%20take%20advantage%20of%20this,binding%20and%20initiate%20DNA%20copying.) to manually turn genes on and off. The sun does the same thing when you are in it. Genes also show seasonal variations. For example, in the winter, pro-inflammatory genes get increased to prepare the body for infection at the expense of cardiometabolic health. However, when people live indoors they are sending their body a signal that it is winter all year round. Perhaps these genetic components explain why sunlight improves our cardiovascular systems’ health! ### Myopia and Sunlight  Myopia, or nearsightedness, is rising rapidly globally, affecting 80%- 90% of East Asian children. Sunlight and time outdoors [is strongly associated](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib136) with preventing nearsightedness and eye-related issues. Myopia is also associated with doing work where you are looking at something close to your face for long hours. However, [new research](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib88) shows that sunlight is a much stronger predictor of avoiding nearsightedness than near work.  The American Academy of Ophthalmologists and the International Task for Myopia now recommend children spend 8-15 hours outdoors per week. ### Multiple Sclerosis, Type 2 Diabetes MS is a disease whose rate of incidence increases the further north you get from the equator. [The effect is material and robust.](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib117) Equatorial regions have massively lower rates of MS than northern latitudes. [Vitamin D supplementation does nothing to prevent MS](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib64). Type 2 Diabetes (T2D) is increasingly being understood as a circadian illness. Higher vitamin D levels [have been shown to be robustly related](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib41) to a lower chance of developing T2D while Vitamin D supplementation [does not provide the same benefit.](https://www.sciencedirect.com/science/article/pii/S0022202X2400280X#bib104) T2D is also [linked to disruptions](https://www.frontiersin.org/journals/endocrinology/articles/10.3389/fendo.2023.1156757/full#:~:text=In%20addition%2C%20T2DM%20is%20linked,diabetes%20(159%2C%20160).) in circadian rhythms and processes. Even organizations as institutionally well-known [as the Mayo Clinic](https://www.mayoclinic.org/medical-professionals/endocrinology/news/an-emerging-connection-between-circadian-rhythm-disruption-and-type-2-diabetes-mellitus/mac-20429399) are now discussing the relationship between T2D and light.  The body's insulin response to food is highly influenced by the light environment. Bright light at night [increases the body's insulin response](https://www.bhf.org.uk/informationsupport/heart-matters-magazine/news/behind-the-headlines/light-and-blood-sugar) when one consumes food. People who lived in areas with the highest levels of outdoor artificial light [had a 28% higher chance of diabetes](https://diabetologia-journal.org/2022/11/15/new-study-reveals-that-exposure-to-outdoor-artificial-light-at-night-is-associated-with-an-increased-risk-of-diabetes/). Human biology is circadian biology. ### All-Cause Mortality and Cancer Lack of sun exposure [has been estimated](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/) to be responsible for up to 340,000 excess deaths per year in America and 480,000 deaths per year in Europe along with increased risks of countless diseases. [One study](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B8-ijerph-17-05014) estimated that 12.8% of all deaths in the US could be attributed to avoidance of the sun. Whereas [another study demonstrated](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B9-ijerph-17-05014) that avoidance of the sun is a risk factor of the same magnitude as smoking. [Researchers](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B12-ijerph-17-05014) found individuals in the lowest segment of Vitamin D levels had a 400% increased risk of breast cancer compared to individuals in the highest segment. While [others found](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B13-ijerph-17-05014) that among individuals with breast cancer, those in the highest segment of Vitamin D levels had a 79% reduced chance of dying from the cancer.  However, keep in mind it is not Vitamin D levels that are the causal variable here, as Mendelian randomization analysis [has shown](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B14-ijerph-17-05014). Vitamin D levels just serve as a representation of how much sun exposure the individual got.  Humans had a [104% higher risk of colorectal cancer](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B15-ijerph-17-05014) with the lowest sun exposure habits. Similar results have been shown [for many other types of cancer](https://www.sciencedirect.com/science/article/pii/S0079610706000095#:~:text=While%20the%20evidence%20that%20sunlight,individuals%2C%20and%20other%20studies%20in). Higher sunlight exposure dramatically reduces your chances of getting cancer and improves your chances of surviving cancer. **Neurological Conditions** Sunlight avoidance [resulted in an increased](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B33-ijerph-17-05014) risk of both Alzheimer's and Dementia by 125% and 122% respectively. Sunlight avoidance [by mothers resulted](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7400257/#B39-ijerph-17-05014) in a 142% increased risk of Autism in their children.  **Infrared Light and Red Light**  Infrared light is another bright spot for the benefits of sunlight and red light. Red and infrared therapy have become very popular via medical devices for skin health, recovery, and even for neurological treatment via lasers.  Infrared is unique in that it penetrates deeply into tissue and actively reaches the inside of cells and organs. It acts on a photoreceptor called cytochrome C and [participates in the electron transport](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2996814/#:~:text=The%20mitochondrial%20electron%20transport%20chain%20has%20been,cause%20transient%20increases%20in%20reactive%20oxygen%20species) chain, a foundational component in the production of energy on a cellular level. Once cytochrome C is activated by infrared light, electron transport is accelerated and ATP is produced at an increased rate. This story gets even more interesting. The mitochondria, which produce energy for the body, do so via a literal rotator motor inside the cell. This motor is the subject of much fascination, but the relevant part is that it sits within water. It was assumed this water functioned similarly to bulk water, but in fact, there is interfascial water (the surface layer of water attracts the liquid, creating additional friction) which increases the viscosity of water within the cell. When the water within the mitochondria reaches a higher level of viscosity the energy production of the cell is impaired. Infrared light penetrates the body, enters the cell and the water in the cell, and reduces the viscosity of this water, [increasing ATP production.](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4495567/)  In other words, sunlight makes mitochondria go brrrrrr (the technical term). Increased ATP production at the mitochondrial level supplies the entire body with more energy, for all processes from top to bottom. **Photobiomodulation**  Building on this mechanism of Infrared and near-infrared light to penetrate the body and produce cellular and mitochondrial benefits is the field of photobiomodulation. Photobiomodulation is the process of shining medical-grade lasers on parts of the body to produce local and systemic outcomes. Photobiomodulation has been shown to [affect 7 major categories of disease](https://bmcneurol.biomedcentral.com/articles/10.1186/s12883-024-03593-4): neuropsychiatric diseases, neurodegenerative diseases, ischemia, nerve injury, pain, paresis, and neuropathy. Interestingly, [it has been shown](https://bmcneurol.biomedcentral.com/articles/10.1186/s12883-024-03593-4#ref-CR11) to also treat depression and anxiety. It has even been used to treat the neurological impacts of COVID more recently. What is particularly compelling is the apparent ability of photobiomodulation to produce **local outcomes**, meaning it specifically improves the tissues and organs it shines infrared radiation on. This may suggest we are on the way to inventing a targeted light therapy paradigm. **Mental Health**  Circadian Rhythm disruptions [have been found](https://www.nature.com/articles/s41398-022-02028-3) to impact everything from depression and anxiety to autism, ADHD, BPD, Bipolar disorder, and schizophrenia. Light is critical to mental health.  This goes beyond simply disease pathologies and extends to otherwise healthy people who experience better mental health, motivation, and focus with increased sunlight exposure. Viewing morning sunlight can increase dopamine, epinephrine, and serotonin in huge amounts. Mental health is in many ways, a derivative of your light environment. They are intimately linked. If you do not believe this and wish to verify it for yourself, go sit in a dark room for 72 hours and see what your mental health is like. **Sunscreen and Sunglasses** Many people have questions about sunscreen and sunglasses. Obviously, individual recommendations vary, some people may have family members who died of skin cancer. Some people have light skin and some have dark. All of these factors must be considered to truly arrive at personal recommendations, which I cannot make here. That being said, here is a broad way to think about it. 1. Many commercial sunscreens have been shown to be toxic, these should be avoided in all circumstances  2. Zinc and Titanium Oxide sunscreens appear to be consistently safe. Any sunscreen usage should be Zinc or Titanium 3. Getting a sunburn **is** more harmful than wearing sunscreen. If you are in a situation where you will be forced to burn, use sunscreen! 4. However, while sunscreen can protect you from a burn it will also negate and alter many of the mechanisms of sunlight. You will not produce much Vitamin D and the light spectrum will be altered  5. There are many currently unknown interactions of sunlight, the various compounds in sunscreens, and the skin barrier.  However, most people with good circadian habits and consistent sun exposure will generally adapt to their environment. Consistent non-burning sun exposure is the gold standard. It is easy to simply go under shade if you have gotten too much sun. For most cases, the easiest way to manage sun exposure is simply gradual adaptation. What about sunglasses? Sunglasses have even less place in the average person's habits. Barring severe eye conditions or edge cases, the only reason people feel like they need sunglasses is a lack of adaptation (or they are on the water). One should obviously wear sunglasses as needed while driving or operating machinery. You aren't getting benefits behind the windshield anyway. However, the eye detecting all wavelengths of light (including UV) is an incredibly important part of the health benefits of sunlight. You want your eyes to see daylight. Do not stare at the sun however…. Please note, contact lenses and glasses are not neutral. I highly recommend wearing glasses instead of contacts as light can still get around the glasses from the top and aides. I am substantially distrustful of contact lenses, but there is little research here. Even clear glass alters the wavelengths of light you are receiving from the sun, and it blocks UV-B entirely. So what should you do if you have very poor vision? I would recommend a practical middle ground. It is imperative you see early morning light directly via the eye with no medium in between. At sunrise take your glasses off and sit in a chair and watch the sunrise for 30 minutes. For the rest of the day, you can wear your glasses. Specific wavelengths and spectrums are more central during the early morning wake cycle, whereas general brightness is more critical during midday which glasses will not alter. ### A Practical Guide to Getting These Benefits Yourself What should you actually do if you want to get these benefits? It's actually fairly simple. Let's be clear, obviously simply living 100% outdoors with no artificial light is “optimal”, but you can get most of the benefits with a few simple steps. Benefits increase past these, but I'm going to share the bare minimum. I get it, people have whole lives and responsibilities! Not everyone gets to work for a company like mine! That being said, if you are serious about this, get a remote job and build an outdoor workspace. **Circadian protocol:** 1. Wake up with the sun or close to sunrise 2. Immediately go outside and see the sun directly on your eyes (no contacts or glasses). Do not stare at it, just see the light. Do this for at least 25 minutes. Getting light in the eyes is the crucial part but on the skin is beneficial too 3. Take sun breaks throughout the day. At Least 3-4 15-minute outside slots during your workday. It's important to get non-burning skin exposure at this time for Vitamin D 4. After work, spend some time outside and later view the sunset  5. Within one hour of sunset switch all lights and screens in your home to red. You can get color-changing lightbulbs online inexpensively and all devices have apps that manage color filters now. I recommend f.lux and twilight. Now, I personally get substantially more sun than this and spend hours each day outside. You will certainly get more benefits doing this, but I share this as a starting point for the average person. As you start to feel the difference, you will naturally want to do a bit more than these recommendations above. Just make sure to avoid sunburns at all times.  ### Conclusion  I hope this exploration of the myriad and varied impacts of sunlight on human health has helped set the stage for a fuller understanding of the health questions surrounding sunlight. Avoiding or embracing sunlight is not a minor question, nor only dermatologists, nor something that can be satisfied with Vitamin D supplementation. It is a profoundly deep question that is pivotal to most aspects of human health and likely implicated in the origin of biological life itself. This is not a comprehensive summary of the research nor even all of the areas sunlight impacts. Our current knowledge is incomplete in many ways. However, this should be sufficient for the reasonable reader to answer one question, and one question alone: Do the risks and rewards skew in favor of more sunlight in one's life or should one avoid the sun for optimal health and a long life? The dermatological argument and the skin cancer argument pales in comparison (pun intended) to the dominant and critical role sunlight plays in regulating almost every element of human health. The dermatological argument is weak and flimsy when situated properly in a robust cost-benefit analysis. It only appears persuasive when rhetorically isolated and allowed to focus solely on skin cancers.  It is worth noting that each section in the article above represents only the tip of the iceberg, and a reasonable reader should conclude there are many more mechanisms to be discovered and evaluated. The conclusion, one should walk away with is that sunlight touches every aspect of human health, and saying we should avoid it is like saying we should avoid movement or food. While exercising you may sustain an injury, and yet no doctor would say we should avoid exercise for this reason. I will leave you with a conclusion restated, for the argument against sunlight hinges on this eternal UV radiation boogie-manning. It increasingly looks like UV radiation is simply another biologically accessible form of energy organisms use. It is similar to oxygen or food. When we breathe oxygen it produces free radicals which are detrimental to our health. When we use energy in the human system we also produce detrimental outcomes. The production and use of energy in systems produce entropic byproducts. This is as true in engines burning fossil fuels as it is true in biology.  UV radiation shares many similarities with these other systems. It donates energy directly to biology which is usable in many key processes. The same is true for infrared light and other spectrums. This energy is essential and critical to numerous processes in human health. It also produces negative byproducts. Humans have countless systems to mitigate these byproducts, just like the free radicals produced by oxygen metabolism. In fact, sunlight avoidance actually impairs our ability to repair UV damage - imagine that! I do not believe there is any review or interpretation of the literature that should lead someone to conclude avoiding sunlight or even avoiding UV radiation is optimal for health - lifespan or healthspan. As our understanding of the biological impacts of light continues to deepen I believe the evidence will only increasingly lean towards sun exposure being seen as healthy and necessary in an overall wellness regimen. ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # Bitcoin: Too Volatile To Be Money? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bitcoin-too-volatile-to-be-money/ BTC’s price volatility is due to its smaller market cap. Although its been decreasing over time, it could spike during a fiat currency collapse, similar to the unpredictability of gold prices during the Weimar Republic. --- **Matthew Kratter** · July 8, 2024 · Updated October 21, 2026 ### Is Bitcoin too volatile to be money? This came up in our discussion of Bitcoin's HODL culture late last week. There was this question: ![](https://www.datocms-assets.com/56652/1720471990-hello-bu.png?auto=format) Let's compare a weekly chart of Bitcoin versus the U.S. dollar with the yen versus the U.S. dollar... ![](https://www.datocms-assets.com/56652/1720472091-btcusd-bu.png?auto=format) We can conclude that the Japanese yen is too volatile to be money. [![](https://www.datocms-assets.com/56652/1720472150-bitbo-btc-vl.png?auto=format)](https://bitbo.io/volatility/) Bitbo Just look at that. How do people survive in Japan? This is probably why Japan no longer exists; it only exists in anime. ![](https://www.datocms-assets.com/56652/1720472078-japan-bu.png?auto=format) But Bitcoin's volatility has gone down over time. It was much higher in the first five years of its history, and we can see that volatility trending down over time. Now, why is Bitcoin as volatile as it is? One way of thinking about it is you can think of Bitcoin as a swimming pool with a fairly small amount of capital, just $1.1 trillion at this point, while other global assets are really the ocean. We have:  - *Gold: $13 trillion* - *Equities: $130 trillion* - *Bonds: $315.5 trillion* - *Real Estate: $375 trillion* These are global approximate numbers. Bitcoin currently accounts for roughly 0.13% of global investment assets.  It only takes a few small inflows and outflows from the ocean of these global assets going into Bitcoin for the ocean to completely overwhelm the swimming pool, both going in and going back out. 1% of the global bond market cap moving into Bitcoin would be approximately $3.15 trillion worth of inflows, which is almost three times Bitcoin's current market cap. That would be if 1% of bonds globally entered Bitcoin. Some common misconceptions about this:  - *$3 trillion moving into Bitcoin does not just increase its market cap by only $3 trillion. This isn't true.* - *There's usually some multiplier effect that various people try to attach permanent numbers to, but it depends on how aggressive buyers are compared to sellers.* As we always say on this channel, prices are always set at the margin by the marginal buyer and seller coming to an agreement on where to exchange fiat for Bitcoin. If sellers pull their offers, an asset like Bitcoin can instantly increase its market cap by much more than the inflows. We see this all the time with gap-ups and gap-downs after aftermarket stock earnings reports, where all the people offering at certain prices pull their offers. Then, the price gaps go up in this case. Something like this can happen to Bitcoin… $3 trillion worth of market cap bleeding out of bonds into Bitcoin would make Bitcoin go up two, three, four, five times rather than just the $3 trillion. Either way, Bitcoin's market cap is still quite small relative to the ocean of global assets, which greatly contributes to the volatility. Also, the fact that Bitcoin is a purely free market is not manipulated; it's not controlled by a central bank. The price is set globally, and no one can control the price of Bitcoin. Now, the world is slowly moving away from analog assets and poor stores of value like bonds and real estate and toward Bitcoin, the world's preeminent digital asset. It's not a smooth linear path; it never is, and it never was for the big tech stocks, for example, in their early years. Amazon is another example of an asset that started extremely volatile and became less volatile over time as its market cap grew. So, it's never a smooth linear path; there's always volatility and chop as the market constantly alternates between fear and greed. But we can be sure of two things about Bitcoin:  1. *Fiat money like U.S. dollars, euros, and pounds will continue to die.* 2. *Bitcoin will continue to take market share.* Fiat's death rattle may lead to even greater volatility over the medium term. If you've read the book *When Money Dies,* this happened in Weimar, Germany, after World War I. It's a great book. There's a 1975 and revised edition, which is quite good and came out in 2010. ![](https://www.datocms-assets.com/56652/1720471949-when-money.jpg?auto=format) Here, we can see the price of physical gold in Papiermark in Weimar, Germany, from the start of World War I in 1914 to the terrible years of 1923 and 1924, when the Papiermark was essentially demonetized. [Post on X](https://twitter.com/DylanLeClair_/status/1396518689177063429) This changed the price of gold in Papiermark from one mark per whatever the measurement of gold is, to one ounce of gold. Then it went to a trillion here over just about 10 years. But we can see here that the black line is the appreciation of gold priced in Papiermark. But the path was extremely volatile, and that's what this lighter color shows; this is the percentage change in gold's price in Papiermark monthly, and we can see there were gigantic melt-ups and gigantic drawdowns. This is why it's very important. Bitcoin will follow a similar path. As the fiat currency, the local fiat currency, or whatever you're pricing Bitcoin in dies, you can end up with a lot more volatility than you might expect, even though the end goal is guaranteed. The end goal for gold priced in Papiermark would always be infinity. It went to a trillion, then 10 trillion, and now Papiermarks are completely worthless, obviously. The path was uncertain and volatile, not the end goal for gold priced in Papiermark. **The same is true for Bitcoin priced in fiat**: the end goal is certain, which is a world on a Bitcoin standard. But the path to that end goal is volatile and unpredictable. This is why we always use the dollar-cost average in Bitcoin. We don't try to time the market. As Jack Bogle used to say about the stock market, *"Time in the market beats timing the market."* So, this is why Bitcoiners HODL and why we've developed this huddle culture we've been talking about. This is why we don't trade in and out of Bitcoin and don't use leverage. We're expecting a path like this to a $10 million Bitcoin. We will get there and go beyond that, but it will be a very volatile path. People always get the framing wrong here. It's not about protecting your money by picking when to enter and when to exit Bitcoin. It's more about protecting your money by exiting fiat completely. As Michael Saylor says, *"Bitcoin is the exit you never come back from,"* because you'd be exchanging very strong money for very weak money if you came back. This is a very important warning to remember: keep only as much money in U.S. dollars and other fiat money as you are willing to lose. This seems absurd, just as it would have been an absurd thing to say in 1914 in Germany, right as World War I was breaking out. **But, this is what will also happen to the U.S. dollar.**  So, keep only as much money in U.S. dollars as you're willing to lose. Eventually, the whole world will wake up to this reality, and that's when Bitcoin's price will go to infinity in fiat terms. A countervailing force to price volatility, as we experience it, this price volatility that's being caused and will be caused by fiat's death rattle, as we saw in Weimar Germany, a countervailing force to this volatility is the move to a Bitcoin circular economy, which is something eventually everyone will do.  A lot of us are in the process of moving to live on a Bitcoin circular economy or Bitcoin standard. For many of us, Bitcoin's price volatility is becoming more and more relevant as we move our financial lives onto a Bitcoin standard. **Eventually, everyone will be there.** In the future, you won't buy Bitcoin; you'll earn it. In the future, you won't sell your Bitcoin for fiat; you'll spend it on goods and services. As more and more Bitcoin comes in and flows out of your personal and business coffers, its fiat exchange rate will matter less over time because you'll just be pricing everything in Bitcoin.  It was those few people in Weimar Germany who were earning gold and spending gold if these people, in fact, existed. They did not have to worry as much about the fiat exchange rate of the Papiermark. In conclusion, the funny thing is that even when measured in fiat, most of Bitcoin's volatility has always been on the upside. **So you have a choice**: You can learn to live with Bitcoin's fiat price volatility as you gain purchasing power over time, or you can have a nice, comfortable, non-volatile life as your net worth and purchasing power trend to zero. [![](https://www.datocms-assets.com/56652/1720471827-purchasing-power-of-the-u-s-dollar-over-time.jpg?auto=format)](https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/) Visual Capitalist This is the path of holding U.S. dollars, other inferior currencies, and fiat money compared to Bitcoin. You'll have a nice, non-volatile life, but you will get poorer over time as inflation eats into your purchasing power. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Is Bitcoin A Giant PsyOp? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/is-bitcoin-a-giant-psyop/ Fiat money, not Bitcoin is the true psyop, controlling money supply to fund bureaucrats. Opt out and choose Bitcoin, the freedom money. --- **Matthew Kratter** · June 25, 2024 · Updated October 21, 2026 ### Is Bitcoin a giant scam?  This question was [inspired](https://www.youtube.com/watch?v=VdauERKEW-Q) by Bach Co, who asked me, *"How do you know you're not the victim of a massive psychological operation that is Bitcoin?"* Psychological operations, or psyops, are part of modern psychological warfare and is one of the main forms of warfare that countries use to brainwash and propagandize their own citizens, as well as the citizens of other countries.  [![](https://www.datocms-assets.com/56652/1719350914-psy-war.png?auto=format)](https://en.wikipedia.org/wiki/Psychological_warfare) Wikipedia So, who's running the supposed psyop against Bitcoin anyway? Well, it appears to be people like:  - *Elizabeth Warren* - *Christine Lagarde* - *Warren Buffett* - *Paul Krugman* - *Bill Gates* - *Jamie Dimon*  These people are literally the elites and the establishment, and yet all of them have been violently anti-Bitcoin, very publicly for years now.  So, how exactly is this supposed to work as a psyop? You get powerful fiat people to badmouth Bitcoin. Exactly what you would already expect fiat people to do when they see their fiat wealth and fiat system threatened. For example, when Warren *"Big Bank Bailout"* Buffett says that Bitcoin is *"rat poison squared,"* everybody already knows what he really means—that Bitcoin is rat poison for his beloved banks. Or maybe the psyop against the masses works like this: *“Let's really stick it to the commoners.”* *“Let's give them censorship-resistant money that they can send to anyone in the world without our permission.”* *“And then let's give them a powerful bearer asset that they can self-custody and thus hold gigantic amounts of money outside of the banking system.”* *“And in the process, let's help to defund the U.S. federal government by putting an end to the Fed's ability to print money.”*  *“That'll really show those commoners."* We can see how absurd this is. This is not how you would run a psychological operation against the people and against Bitcoin by giving them such a powerful tool. Now, what's actually a psyop is, of course, fiat money. This is it:  1. You have to work for U.S. dollars. 2. You have to sit in traffic, sit in a cubicle, be away from your family all day, and destroy your health trying to keep up with inflation.  3. While we get to print up USD for free and spend it to fund unproductive bureaucrats and politicians. 4. By the way, if you want to escape from this modern form of slavery, you're a bad person.  5. You're a right-wing extremist, you're a drug dealer, you're a money launderer, you're a terrorist, you're a destroyer of the environment. By the way, the U.S. economy is strong, and our debt is not a problem because we owe it to ourselves. So don't listen to the fearmongers. You need to trust the science and experts, you distrustful bigot. **Exhibit A**: Human weasel [Yuval Harari](https://twitter.com/harari_yuval/status/1792934757325553797): - *"Bitcoin is based on distrust of human institutions. It's basically a return to gold. It assumes that we shouldn't trust human institutions like central banks and governments and shouldn't allow them to create money at will. It is an alarming development."* [Post on X](https://twitter.com/harari_yuval/status/1792934757325553797) That's what a human weasel looks like. Fortunately, we can all just relax because our very best and brightest are in charge of the fiat system and are oh-so-competent. This is why we should trust the system.  We played this video of Jared Bernstein, who sits on the chair of the Council of Economic Advisers for Biden, talking about money printing before - but, it’s worth playing again:  [Video](https://www.youtube.com/watch?v=WzwV79pqSFk ) - *"The U.S. government can't go bankrupt because we can print our own money. It obviously begs the question: why exactly are we borrowing in a currency that we print ourselves? I'm waiting for someone to stand up and say, why do we borrow our own currency in the first place?" Like you said, they print the dollar, so why does the government even borrow?* *Well, um, the, uh, uh, so the, I mean, again, some of this stuff gets some of the language that the, um, some of the language and concepts are just confusing. I mean, the government definitely prints money, and it definitely lends that money, which is why the government definitely prints money, and then it lends that money by, uh, by selling bonds. Uh, is that what they do? They, they, um, they sell bonds. Yeah, they sell bonds, right? Because they sell bonds, and people buy the bonds and lend them the money. Yeah.* *So a lot of times, a lot of times, at least to my ear, with MMT, the language and the concepts can be kind of unnecessarily confusing. But there is no question that the government prints money, and then it uses that money to, um, uh, uh, so, um, yeah, I, I guess I'm just, I don't, I can't really talk. I don't, I don't get it. I don't know what they're talking about. Because it's like the government clearly prints money. It does it all the time, and it clearly borrows. Otherwise, we wouldn't be having this debt and deficit conversation. So I don't think there's anything confusing there."* This is what it sounds like when some has no idea how the money is created. And this is the guy who's literally the chair of the Council of Economic Advisers to the current administration, the main agency advising Biden on economic policy. The original Tweet also [linked](https://twitter.com/RnaudBertrand/status/1786272981058220187) to another video from the ECB, this time Peter Praet. It's important to demonstrate this incompetence spans both sides of the Atlantic, of course. [Video](https://www.youtube.com/watch?v=tY8rsXD6L_8 ) So it's really fiat, not Bitcoin; that's the real psyop.  And if you don't own any Bitcoin but keep your savings in U.S. dollars instead because you're scared that Bitcoin is secretly controlled by the CIA, or the NSA, or BlackRock, or Tether, or any of these groups, you're really a complete fool, and you're the one who's the victim of a psyop—in fact, the biggest psyop in human history. This crazy idea that we should give a small group of insiders the power to print money and that this absurd, unfair, unjust financial system is somehow good for humanity because it's definitely not.  **Fiat** money is the money of child trafficking demons, soulless banksters, and sociopathic politicians.  **Fiat** money is the psyop.  **Fiat** money is lies and wars and darkness.  **Fiat** money is economic slavery.  **Fiat** money is death. And by contrast… **Bitcoin** is life.  **Bitcoin** is hope.  **Bitcoin** is money for a better world.  It's money for the people.  **Bitcoin** is freedom money.  And it's really fiat that's the real psyop.  --- *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Crypto’s Fatal Flaw Discovered? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/crypto-s-fatal-flaw-discovered/ A critical flaw in cryptocurrency, based on a series of tweets by Miles Deutscher — highlighting a major fundamental issue that is beginning to surface in the crypto world. --- **Matthew Kratter** · June 21, 2024 · Updated October 21, 2026 ### Crypto's Fatal Flaw Today, I want to [talk](https://www.youtube.com/watch?v=Y8N6K2CmPq0) about crypto's fatal flaw. This article is based on a series of tweets by Miles Deutscher, in which he asserts that a major fundamental flaw in crypto is starting to emerge. [Post on X](https://twitter.com/milesdeutscher/status/1803071315257254211) - *“It's the number one reason why altcoins are underperforming this cycle.”* Currently, there seems to be no fix. I just dug through all the data, and what I found was shocking. If we dig down a couple of tweets, it wasn't just the old projects deciding to launch. This was at the beginning of 2024, talking about different crypto projects being launched by venture capitalists.  Many new players saw the new bullish conditions as an opportunity to launch a project to make a quick buck. As a result, 2024 has seen a historic number of new crypto launches. Here are the stats; they're crazy. Over 1 million new crypto tokens have been launched since April alone, half of which are meme coins created on the Solana Network. [Post on X](https://twitter.com/milesdeutscher/status/1803071315257254211) You could argue that these numbers are inflated by the ease of deploying a meme on-chain, and yes, that's true, but it's still an insane figure. For more accurate numbers, see the image below from CoinGecko, which excludes many of the smaller memecoins. [![](https://www.datocms-assets.com/56652/1719006327-5-7.png?auto=format)](https://twitter.com/milesdeutscher/status/1803071762818646452/photo/1) Twitter This is important: we now have 5.7 times the number of crypto tokens we did during the peak bull in 2021. So, currently, we have 2.5 million crypto tokens versus 443,000 back in 2021. [Post on X](https://twitter.com/milesdeutscher/status/1803071762818646452) As Miles Deutscher points out, this is a big problem, and it's one of the major reasons why crypto has been struggling this year despite Bitcoin hitting new all-time highs. Why is this? The more tokens that launch, the more cumulative supply pressure it puts on the market. This supply pressure stacks. Many projects from 2021 are still unlocking, with supply stacking across every subsequent year. Current estimates suggest there's around $150 million to $200 million of new supply pressure annually.  This constant sell pressure takes a huge toll on the market. Think of it as token dilution or inflation. Miles has seemingly rediscovered an ancient truth here, and that is that Bitcoin is one of a kind, and shitcoins are not. This is why Bitcoin has been hitting new all-time highs while all these other coins have not. And this is why all shipcoins trend to zero against Bitcoin over time, because Bitcoin is special and scarce, whereas anyone can print up their own shipcoin. It's really easy to print up your own money and dump it on noobs, especially when the SEC is in retreat mode in an election year like 2024. It's really these retail investors who are the noobs at the poker table who don't realize that they are the exit liquidity. What the VCs and other insiders want to do is they want to dump their shipcoins and buy Bitcoin with the proceeds. This is exactly what the EOS scammers did in 2017. They raised over $4 billion in an ICO selling this EOS token junk, and then what they did once they had their money is they bought Bitcoin with it. ![](https://www.datocms-assets.com/56652/1719006474-b1-btc.png?auto=format) Block.One So Block One, the company behind it, now has 164,000 Bitcoin. And what did the retail noobs have? [![](https://www.datocms-assets.com/56652/1719006681-eos-holding.png?auto=format)](https://bitcointreasuries.net/entities/42) Bitcoin Treasuries They were the exit liquidity, and EOS has gone to zero against Bitcoin since 2017. [![](https://www.datocms-assets.com/56652/1719006760-eos-btc.png?auto=format)](https://www.coingecko.com/en/coins/eos) CoinGecko So, what is Miles Deutscher's main solution for this problem? It's this: We need more institutional crypto funds to buy this garbage from crypto VCs so that retail investors can sometimes get a pump and not be permanently disillusioned and leave the market. I'm not kidding; this is his main solution. This is eerily reminiscent of the U.S. Treasury and the Fed trying to find new places to stuff their toxic sludge treasuries so that they can keep issuing them.  This is because crypto just recreates the fiat system, complete with money printing by insiders, and seniorage and dumps on those who don't understand the game being played. So this really is Miles Deutscher's solution. *“I must emphasize the need for more liquid funds in crypto.”* [Post on X](https://twitter.com/milesdeutscher/status/1803072017782206816) There are comparatively too many VCs, and by extension, there are too few rubes at the table who are hoovering up this garbage. So, we need more institutional investors to take it down. This reminds me of Zender's bet with Eric Vorhees three years ago. They bet the market cap of a bag of shipcoins Eric posted on his account to his followers would decrease in value if held over three years compared to just holding Bitcoin. [Post on X](https://twitter.com/zndtoshi/status/1802635058706096614) This was put together in June of 2021. It's now coming due. In 2021, there was a euphoric bull run, but as always, the shipcoins dumped more than Bitcoin. Many people who hold these coins do not have the conviction that Bitcoiners have, and that's a very important point that Zender makes. [Post on X](https://twitter.com/zndtoshi/status/1802635062128587252) Since then, the ratio of the bag of coins compared to the Bitcoin market cap has decreased from 56% to 47%. These coins were handpicked by Eric Vorhees, an OG in the space who owns an exchange and has the highest knowledge about all the tech and the crypto world. [Post on X](https://twitter.com/zndtoshi/status/1802635065223958842) You're better than him, right? And so it turns out that that bet was actually won by Zender, and it's not surprising. Meanwhile, elsewhere in cryptoland, we have the founder of Cardano, Charles Hoskinson, saying, *"I don't see how Bitcoin survives. It's a religion, not an ecosystem. It will die a slow death."* [Post on X](https://twitter.com/Vivek4real_/status/1793604687628800199) But it turns out that what's actually dying a slow death is the exchange rate between Cardano and Bitcoin. And even despite all this positive news for crypto, Cardano is still hitting new lows because people are realizing it's absolute garbage. ![](https://www.datocms-assets.com/56652/1719007035-ada-btc.png?auto=format) When you look at the Cardano ecosystem, you can see that in terms of the apps, the most popular app is MinSwap, and the next most popular app is Dex Hunter; they have just a few thousand users, so about 3.3 thousand users and 1,300 users. [![](https://www.datocms-assets.com/56652/1719007067-dappradar.png?auto=format)](https://dappradar.com/rankings) DappRader This is a tiny, tiny ecosystem for such a large market cap coin. But Chucky doesn't care because he has his private jet on the backs of working men and women who have been dumped on by him. So think of him, you Cardano holders, as your Cardano continues to trend to zero against Bitcoin. At least he got a private jet out of it. [![](https://www.datocms-assets.com/56652/1719007207-charles-hop-jets.png?auto=format)](https://climatejets.org/wrapped/charles-hoskinson) Climate Jets - *“Charles Hoskinson, founder of the Cardano blockchain, runs a private jet business that services clients like Metallica. His private jet is ranked as the 15th biggest polluter in the U.S., emitting around 2,895 metric tons of carbon dioxide in 2022. His private jet emissions exceed those of billionaires and Hollywood celebrities including Mark Zuckerberg, Ken Griffin, and Kim Kardashian.”* I also wanted to give a quick update on the SEC closing of its investigation into Consensys. This parent company controls the MetaMask wallet and many of the nodes running in the Ethereum ecosystem. It was started by Joe Lubin, a co-founder of Ethereum, so it's a significant piece of infrastructure in the space and has founders involved. It's a very incestuous space, but the good news is that the SEC has closed its investigation into Consensys. Vitalik, Buterin, Joe Lubin, Consensys, and other Ethereum insiders will now be able to continue to dump on retail investors who don't understand the game being played here. As I've often said on this channel, Ethereum clearly passes the Howey test. You can apply it yourself; I've done it in videos [here](https://www.youtube.com/watch?v=YLxVjSjVYPI). [Video](https://www.youtube.com/watch?v=YLxVjSjVYPI) Ethereum is thus an investment contract and a security, but for election-year reasons, the SEC is giving Ethereum, along with other crypto, a free pass. And that definitely removes some headwinds for ETH. But the real question is, does any of this change ETH's fundamental properties? And the answer to that is no. ETH is still a stupid shipcoin without any credible forward monetary policy or credible supply cap. ETH also does a new hard fork every couple of months, which is impressive for an inert digital *"commodity."* Meanwhile, the market doesn't seem to care about the Consensys ruling. ETH is not even hitting new highs for the move on the backs of that; so much of this is priced in. ![](https://www.datocms-assets.com/56652/1719007436-eth-to-btc.png?auto=format) ETH is not a digital commodity, no matter what a government bureaucrat tells you in an election year. It is important to note that the SEC still has not ruled on this question - it has only stopped suing Consensys and approved the introduction of spot ETFs. None of these things necessarily require ETH to be a commodity. ETH is not a commodity because, as we said, it's still controlled and managed by a small group of insiders who benefited from the large pre-mine and now use their ill-gotten gains to achieve outsized influence in block production and transaction selection, thanks to Ethereum's move to proof-of-stake. [![](https://www.datocms-assets.com/56652/1719007563-report-from-fidelity-compares-the-supply-of-bitcoin-and-v0-ow1brd4nurjc1.webp?auto=format)](https://www.fidelitydigitalassets.com/research-and-insights/understanding-bitcoin-and-ethereum-supply?ccmedia=owned&ccchannel=social&cccampaign=ei_bitcoin_ethereum_supply&cctactics=twitter2&sf271402067=1) Fidelity: Understanding Bitcoin and Ethereum Supply Commodities are neutral assets. They're not assets controlled by insiders.  Commodities haven't changed their fundamental nature for seven years by completely changing their consensus mechanism from proof of work to proof of stake, as Ethereum did in 2022. Commodities don't have a leader, a roadmap, or a foundation, and they also don't have a legal team that tries to fight everyone to prove to the world that they are commodities. Eventually, everyone learns that only one digital asset matters and that is here to stay. This is what Miles Deutscher was slowly learning in that tweet thread. The only digital asset that matters is Bitcoin, which has all of these advantages that other coins do not: - *Immaculate conception* - *First-mover advantage* - *Lindy effect* - *The most powerful Proof-of-Work network in the world* - *Best global brand* - *Deepest liquidity* - *Absolutely maniacal HODLers who still won't sell after 90% drawdowns* By contrast, with shipcoins like Ethereum and other shitcoins: - *Crypto insiders can't wait to dump and buy Bitcoin with the proceeds.* - *Crypto retail investors are uneducated degen's with lettuce hands and zero understanding or conviction. This is really the difference between crypto HODLers and Bitcoin HODLers. In fact, there really are no crypto HODLers.*  When you hear them online, they're crypto gamblers who still think in terms of fiat. **And this is what makes Bitcoin so special.** It's the ultimate prize that everyone, even crypto VC's, is scrambling to get their hands on. Bitcoin—you also might want to get your hands on some. There really is no second best. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Swan Bitcoin and Equity Trust Collaboration Unlocks New Retirement Account Features for Bitcoin Investors URL: https://www.swanbitcoin.com/industry/swan-bitcoin-and-equity-trust-collaboration-unlocks-new-retirement-account-featur/ Equity Trust and Swan collaborate to bring new IRA account types and features to Swan’s IRA product. --- **Brady Swenson** · August 29, 2024 · Updated October 21, 2026 Equity Trust Company, a leading provider of alternative asset custodial services, and Swan Bitcoin, a leading Bitcoin financial services company, today announced an exciting new integration to offer clients seamless access to Bitcoin IRAs via the Swan platform. This collaboration brings together Equity Trust's 50 years of financial services experience with Swan's expertise in Bitcoin, providing a powerful platform for clients to invest in Bitcoin, the best-performing asset of the past decade, within their Individual Retirement Accounts (IRAs). The arrangement will also enable new services and account types for Swan's clients, including Solo 401(k)s, Roth Solo 401(k)s, SEP IRAs, SIMPLE IRAs, Coverdell Education Savings Accounts, and Health Savings Accounts, dramatically expanding Bitcoin savings to more tax-advantaged accounts. "This integration marks a significant step forward in our mission to make Bitcoin accessible to everyone. By offering new Swan IRAs in collaboration with Equity Trust, we provide a safe and reliable way for our clients to include Bitcoin in their retirement planning." Swan Bitcoin is also building a premium IRA feature that provides clients with a specific watch address to see IRA transactions and balances on-chain. This is an industry-first IRA structure that combines direct on-chain visibility and verification while also following the principles and precedence of IRA custodians and unfettered command. As part of the integration, Swan Bitcoin and Equity Trust are committed to providing the highest levels of client service and security. Equity Trust, known for its robust custodial services, ensures that all transactions are securely submitted. "We are thrilled to support Swan in bringing this innovative solution to bitcoin investors seeking tax-advantaged retirement accounts," said George Sullivan, CEO of Equity Trust. Cory Klippsten, Founder and CEO of Swan Bitcoin, added, "This integration marks a significant step forward in our mission to make Bitcoin accessible to everyone. By offering new Swan IRAs in collaboration with Equity Trust, we provide a safe and reliable way for our clients to include Bitcoin in their retirement planning." **About Swan** Swan is a leading Bitcoin financial services company with more than 130,000 clients. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts. For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and inheritance planning. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit [swan.com](https://swan.com). **About Equity Trust Company** Equity Trust Company is a leading self-directed IRA custodian with a 50-year legacy of offering innovative retirement solutions. It evolved from a predecessor brokerage firm founded in 1974 to a directed custodian with $52 billion in assets under custody and administration, as of June 1, 2024. Equity Trust empowers investors to take control of their retirement accounts with unparalleled flexibility and experience. For more information, please visit [trustetc.com](https://trustetc.com). ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Swan Bitcoin is Live in New York URL: https://www.swanbitcoin.com/product-updates/swan-bitcoin-is-live-in-new-york/ With its launch in the center of global finance, Swan Bitcoin empowers New Yorkers to build lasting wealth with Bitcoin financial services and expert guidance. --- **Brady Swenson** · January 9, 2025 · Updated October 21, 2026 America’s premier Bitcoin wealth platform has launched in the heart of global finance. Swan Bitcoin is excited to begin operations in New York, offering comprehensive Bitcoin solutions to the state’s residents. Buys, sells, and USD withdrawals are active. Bitcoin withdrawals are pending NYDFS approval.  “We are thrilled to bring Swan’s Bitcoin products and services to the Empire State,” said Cory Klippsten, CEO. “New York is the center of the financial world and home to so many who deserve the best in Bitcoin. As investors gain more appreciation for this asset class, they require products tailored to their needs, and many prefer to be served by a specialist firm with deep Bitcoin expertise.” Swan offers various services to meet New Yorkers' needs, whether for personal wealth, retirement, or institutional use. For high-net-worth individuals, Swan Private provides white-glove services for large purchases, inheritance planning, and more, with reps based in New York City. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts. The Swan app is the safest and easiest way to start buying and learning about Bitcoin. Swan is excited to partner with Bakkt to power many of its Bitcoin services in New York. Ray Kamrath, Bakkt’s Chief Commercial Officer, said, “Swan Bitcoin’s return to New York, in partnership with Bakkt, is a perfect example of how leading institutions can unlock growth in the world’s largest capital market leveraging Bakkt’s compliant and scalable brokerage infrastructure for Bitcoin. We are thrilled to support Swan on this expansion and look forward to continuing to grow together for years to come.” Swan is also collaborating with Equity Trust to bring their 50 years of custodial services experience with Swan’s expertise in Bitcoin. The two have combined to provide a powerful platform for clients to invest in Bitcoin, the best-performing asset of the past decade, within Individual Retirement Accounts (IRAs). “We are thrilled to support Swan in bringing this innovative solution to bitcoin investors seeking tax-advantaged retirement accounts,” said George Sullivan, CEO of Equity Trust. The partnership will also enable new services and account types for Swan’s clients, including Solo 401(k)s, Roth Solo 401(k)s, SEP IRAs, SIMPLE IRAs, Coverdell Education Savings Accounts, and HSAs, dramatically expanding Bitcoin savings to more tax-advantaged accounts. **About Swan Bitcoin** Established in 2019, [Swan](http://swan.com) helps individual investors and businesses understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts. Swan Private provides white-glove services for large purchases, treasury solutions, actively managed Bitcoin strategies, and inheritance planning. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Swan is rated highly for its exceptional client service, making Bitcoin accessible with the support of Bitcoin experts. For more information, please visit [swan.com](http://www.swan.com/). **About Bakkt** Founded in 2018, Bakkt builds solutions that enable our clients to grow with the crypto economy. Through institutional-grade custody, trading, and onramp capabilities, our clients leverage technology that’s built for sustainable, long-term involvement in crypto. Bakkt is headquartered in Alpharetta, GA. For more information, visit: [bakkt.com](https://www.bakkt.com) | X (Formerly Twitter) [@Bakkt](https://x.com/Bakkt) | [LinkedIn](https://www.linkedin.com/company/bakkt/). **About Equity Trust** Equity Trust Company is a leading self-directed IRA custodian with a 50-year legacy of offering innovative retirement solutions. It evolved from a predecessor brokerage firm founded in 1974 to a directed custodian with $52 billion in assets under custody and administration, as of June 1, 2024. Equity Trust empowers investors to take control of their retirement accounts with unparalleled flexibility and experience. For more information, please visit [trustetc.com](http://trustetc.com).  ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Why We Chose Blockstream Jade for Swan Vault URL: https://www.swanbitcoin.com/product-updates/why-we-chose-blockstream-jade-for-swan-vault/ After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan’s CTO opens up the hardware behind Swan Vault and answers it. --- **Yan Pritzker** · August 7, 2026 · Updated October 21, 2026 A five-year-old bug in Coldcard firmware has drained more than [a hundred million dollars](https://x.com/glxyresearch/status/2084411904924045370?s=20) from roughly 7,300 addresses in a matter of days. The people who lost that money did everything they were supposed to do. Our team, like so many other Bitcoiners, has been busy helping those affected get their coins to safety. But the messages I'm getting aren't only from Coldcard owners. Everyone is asking the same question: is my setup safe? If you hold a Swan Vault, the short answer is that your setup is sound, and we are not recommending that anyone migrate in response to the Coldcard incident. However, a few clients have asked us about adding a second hardware vendor. That decision comes with its own set of tradeoffs. It's the right question, and I'm answering it the way I'd want it answered for my own family's savings. First, let’s understand how the Swan Vault is secured today. ### Why the Hardware Wallet Matters Every Bitcoin private key is a very large random number, picked from a set of numbers roughly the size of the number of atoms in the universe. You usually see it represented as seed words, a 12 or 24-word phrase. Your bitcoin lives on the blockchain, while the key gives you the ability to spend it. The device doesn't actually hold your bitcoin, only the key, which is why engineers often call it a signing device instead of a hardware wallet. As long as that number is genuinely random, the list of possible keys is so large that no one, using all the computing power on Earth, could ever guess it. A hardware wallet exists to store and manage that key securely, and to permit you to spend your Bitcoin by generating signatures for every transaction. One of the most important moments of your self-custody journey, therefore, is the few milliseconds when your device generates that number. If the randomness, what engineers call entropy, is weak, the setup is compromised before you've received a single transaction. This class of failure is not new, but it has almost always been software: mobile operating systems, browser code, developer tools. Purpose-built signing hardware has a considerably better record, which is exactly why the Coldcard vulnerability is so painful. When we evaluate any hardware wallet, we break the risk into primarily three categories: 1. **Key Generation Risk.** The device produces keys an attacker can guess or reproduce, because the entropy was weak or manipulated. 2. **Key Extraction Risk.** An attacker with your device in hand, or with compromised firmware on it, extracts or leaks the keys. 3. **Vendor Risk.** The company behind the device disappears, ships low-quality firmware, stops delivering security updates, or was never trustworthy to begin with. ### Key Generation Risk: Where Blockstream Jade's Entropy Comes From [Blockstream Jade / Jade Plus](https://blockstream.com/jade/) takes an approach modeled on Bitcoin Core's randomness architecture, which is as battle-tested as any system on the Internet. Rather than trusting any single source of randomness, Jade maintains an entropy accumulator: think of a bucket that is continuously stirred, hashing (SHA-512) the previous state together with fresh input from up to nine independent sources, including: - Raw radio noise sampled at boot, even on radio-disabled firmware - Noise from the camera taking images at boot time - CPU timing counters - Battery state - Ambient temperature sensors - User input on the device - Additional optional entropy contributed by a companion app Or instead of relying on all these, you can [input your own](https://help.blockstream.com/blockstream-jade/add-more-security-functionality/create-a-recovery-phrase-using-dice). Why does mixing sources matter? Because a cryptographic hash of many independent sources is at least as strong as the strongest input. Weak sources cannot poison strong ones. To rig the outcome, an attacker would need to predict or control several independent physical noise sources at the same time. The Coldcard bug is a lesson in why none of this counts until you check the path the seed actually takes. That device had good entropy sources too. However, the developers shipped a bug that disabled the random generator in the device, and caused it to fall back to a software based one that wasn’t really random at all. This allowed attackers to search through all the possible private keys without having their hands on the device.  After any industry incident, our standard practice is to review any impacts to our systems. We have begun an independent review of the Jade firmware, focused on how it calls the hardware entropy generator and our preliminary findings are consistent with [Blockstream's own statement](https://blog.blockstream.com/jade-unaffected-coldcard-vulnerability). We will publish full results once complete. ### Key Extraction Risk: The Blind Oracle Many hardware wallets store your secrets inside a proprietary closed-source secure element, a chip whose design is confidential and which no outside researcher can fully inspect. This is a reasonable design, but it does require some trust in the manufacturer and their certification bodies. Secure elements are routinely used in bank-grade and military-grade systems, so they should not be dismissed as insecure. However, Jade made a different trade-off by not using a traditional secure element. Instead, your seed is stored on the device only in encrypted form, and the decryption key is split between the device and a remote server, Blockstream calls a blind oracle. The split makes a stolen Jade worthless to whoever took it, and it removes the reliance on a closed-source chip you would otherwise have to trust. Here's what happens when you set up a Jade: 1. You choose a PIN. Your Jade and the oracle then agree on a shared secret, without either one ever transmitting it.  2. That shared secret becomes the key that encrypts your seed on the device. Neither the device nor the oracle can decrypt it alone. 3. The oracle keeps only a scrambled version of your PIN. It never learns the PIN itself, your keys, your addresses, or anything else about your wallet. That is what makes it blind. 4. To unlock, you enter your PIN and the oracle supplies its half. Enter it wrong too many times and the oracle stops answering, and the encrypted seed on the device can never be recovered. A stolen, locked Jade is effectively a paperweight. An attacker with physical possession cannot access your seed, because the seed is not recoverable from the device alone. Extracting keys requires compromising both the physical device in your possession and a hardened server running at Blockstream, two entirely different attack surfaces. Blockstream calls this a virtual secure element. Because there is no closed-source chip, the entire device, firmware, and hardware are fully open source and independently auditable. You can even run your own oracle rather than Blockstream's, or build a Jade from off-the-shelf parts if you are so inclined. Combined with encrypted flash, secure boot that refuses unsigned firmware, and Bitcoin-only firmware with a deliberately small attack surface (no altcoins, no DeFi integrations, no external browser extensions), the device presents very little for an attacker to work with. ### Vendor Risk: The Company Behind the Device A hardware wallet may require updates after initial purchase. All things being equal, you want a mature, well-funded company with a long operating history, and a deeply security-minded team. Blockstream was founded in 2014 by Dr. Adam Back, inventor of Hashcash, the proof-of-work scheme cited directly in the Bitcoin whitepaper, alongside longtime Bitcoin Core contributors including Pieter Wuille and Greg Maxwell. The company has funded core protocol development and foundational research for over a decade, through multiple brutal bear markets. Its business appears durable with hundreds of millions of dollars raised, multiple business lines besides the Jade, and Bitcoin on its balance sheet since the beginning.  That said, avoiding vendor dependence is best. We looked for a partner whose work we could recreate if they were gone. Blockstream Jade's stack is fully open source, so the hardware and firmware can outlive the company. Even if Blockstream goes away and the oracle is gone, your Jade can be restored with your seed backup. Your seed words follow a standard called BIP39, which is compatible with any other wallet. Along with the descriptor on your backup sheet, you can rebuild the wallet in other software or hardware. If Blockstream disappeared tomorrow, you would have some work to do, but you would not have a loss. ### How Swan Vault Puts It Together Swan Vault is a 2-of-3 multisig. You hold two keys on two Jade devices, kept in separate physical locations. You manage the third key, your Swan Vault cloud key, through your Swan account. Any two keys can move your bitcoin, but no single key can. Here's what this structure eliminates: **Swan as a point of failure.** Swan has access to one key, and one key cannot move anything. The Swan Vault cloud key resides at BitGo, one of the industry's longest-standing custodians. BitGo launched the industry's first multisig wallet in 2013 and recently obtained an OCC banking charter. If Swan or BitGo became unavailable, you would sign with your two Jades and sweep your funds. We maintain the open-source[ Swan Vault Recovery Assistant](https://github.com/swan-bitcoin/swan-vault-recovery-assistant), which you can download and save for later, or you can use community-maintained open source tools such as Specter Desktop. Swan acquired Specter, one of the first and most popular multi-sig coordinators in the industry, in 2022, and the Specter team of cryptography and Bitcoin specialists helped build what Swan Vault is today. In 2025, Swan donated the Specter project back to the community, and it is now maintained by the Specter Association, a Switzerland-based nonprofit. The Swan-side key is managed by you, in your account, and is secured by multiple login factors, a waiting period, and risk and security checks by human and machine agents. **You as a point of failure.** Lose a Jade to fire or theft, lose your seed, or lock yourself out with failed PIN attempts, and you still have your second device plus the Swan Vault cloud key. A 2-of-3 quorum ensures that you always retain access to your funds, even if one of your devices or seeds is lost. **Blockstream as a point of failure.** Your two Jade keys share a vendor and a firmware codebase, so the quorum deliberately includes a third key generated and secured on entirely separate infrastructure at BitGo, on custom hardware security modules. Different hardware, different software, different organization. This protects from certain classes of attacks because it requires the attacker not only to obtain both of your seeds, but also the descriptor of the setup by monitoring your on-chain spending activity. ### Seeds, Descriptors, and Self-Recovery A multisig wallet is defined not by just its private keys, but by its descriptor: a small piece of text specifying the extended public keys of all three participants, the derivation paths (this instructs the wallet on how to generate addresses), and the 2-of-3 spending policy. It contains no private keys and cannot spend anything, but it is the map that tells wallet software how to reconstruct your addresses. Two sets of seed words without the descriptor is like holding two vault keys without knowing which building the vault is in.  Your descriptor is available from your Swan account, and our self-recovery process walks you through restoring your wallet in open-source software with no participation from Swan whatsoever. We recommend storing a copy of the descriptor on your backup sheet alongside each set of seed words. Swan Vault defaults to 12-word seed backups rather than 24. Some assume 24 words are twice as secure, but a 12-word phrase represents 128 bits of entropy, unguessable by all the computing power on Earth over the lifetime of the universe. The smaller backup reduces the chance for a transcription error, which is a common way that users lose access to seed materials. ### How We Think about Adding a Second Vendor There is one more layer of redundancy available: hardware wallets from more than one manufacturer inside the same quorum. If your two keys live on devices from different vendors, running independently developed firmware, then no single vendor's mistake, however catastrophic, can reach a spending threshold. Plans are already in motion to add support for a second hardware vendor. However, a second vendor is not necessarily a panacea, and if the wrong vendor is chosen, it could make the setup more insecure, as the recent Coldcard hack reveals. A second vendor adds a second supply chain, a second setup flow, and a second recovery procedure. We have an exceptionally high bar for vendor selection in the Vault, which is why Swan Vault launched with two Jades rather than two vendors.  Since our initial launch, a handful of clients asked us to add Coldcard as the second vendor. We decided against it. Our vendor selection criteria weighs device design, security, user experience, engineering team depth, and company longevity, among other factors. A combination of these factors led us to our decision at the time. We didn’t necessarily believe the Coldcard was insecure, but we did believe that going with anything but the most reputable vendor with the deepest cryptography experience in the space could introduce additional risk we were not prepared to take. The July 2026 vulnerability was that concern realized: a single insufficiently reviewed line of firmware silently weakened five years of seeds, and because the flaw was in seed generation itself, no update could repair an affected wallet. This was a sad day for many Bitcoiners, and we have been working around the clock with clients and non-clients alike to get them to safety. Real people lost real Bitcoin, and they did nothing wrong except trust a device the community broadly endorsed. But the wallets drained at scale were single-signature. The same compromised key inside a multi-vendor 2-of-3 would have been one key in a quorum requiring two: an urgent migration, not a loss. However, in light of the Coldcard vulnerability, client requests, and the significant advancements that have been made in the hardware market, we are once again engaging in a vendor selection process to decide whether another vendor meets our bar to participate in the Swan Vault quorum. ### What If Jade Had a Catastrophic Entropy Bug? Let's do what any good engineer does to their own work: try to break it. Suppose Jade shipped a seed-generation flaw of the same class as the Coldcard bug, and every Jade seed became brute-forceable. What happens to Swan Vault clients? Consider how the Coldcard attack actually worked. Attackers discovered that the Coldcard wasn’t actually generating properly random keys, but rather predictable ones in a much smaller search space. Notably, it wasn’t that Coldcard’s hardware entropy source was broken or badly designed, it was that the bug led them to stop using it entirely, falling back to a software generator that was not truly random. Attackers looped through the space, found matching single-signature addresses, scanned the blockchain for funded ones, and swept them. That type of attack fails against Swan Vault. Every Vault address is a 2-of-3 script built from three extended public keys: your two Jades and the Swan Vault cloud key, which is generated on entirely independent infrastructure hosted by BitGo. Each client gets a separate Swan cloud key - not a single key for the attacker to obtain.  Even if an attacker was able to get every Jade seed in existence, they could only derive those seeds' single-signature addresses and would find them empty, because your bitcoin has never lived on one. Without the third public key, which never came from a Jade, the attacker cannot even locate your coins on-chain, let alone reconstruct the spending script. However, an attacker who separately obtained your descriptor and could brute-force both of your Jade seeds could still assemble a spending quorum. That is why the descriptor should not be disclosed casually, and why a second hardware vendor is a valid concern. There is one edge case here, which occurs exactly at the moment of your on-chain withdrawal from the vault, at which point a part of the vault design, known as the witness script, is revealed on chain, and may give the attacker the third piece of information they need, provided they have already cracked the private keys of the other two seeds (which we believe is impossible today, to be clear). Swan Vault offers additional protections such as a 72-hour spending delay, and risk and security checks that allow Swan’s intelligent systems and personnel to hold transactions. If a Jade bug, however unlikely, became known in the wild, such checks could act as a deterrent to prevent our clients from spending funds immediately, which would prevent the attacker from receiving the on-chain information they need about the third key, and would allow us to communicate with our clients and help them with an orderly migration. ### Our Independent Audit of Jade Firmware Blockstream recently put out a statement that the Jade is not affected by an entropy bug [here](https://blog.blockstream.com/jade-unaffected-coldcard-vulnerability/). Following the Coldcard incident, as with any industry incident, Swan has undertaken a thorough audit of our entire multi-sig stack including the Jade firmware. We also have received statements from our partners at BitGo that they are undergoing the same and are not affected by the incident. Our preliminary findings, which include human analysis of deep AI scans by Kimi K3, a frontier open weight AI model, are consistent with the statements that Blockstream put out regarding the Jade and its robust entropy design with a diverse set of sources is extremely robust against failure. You can read our [full technical report here](https://www.datocms-assets.com/56652/1789154549-swan-security-review-jade-entropy-report.pdf). ### The Bottom Line Swan Vault clients do not need to migrate, rotate keys, or change anything in response to the Coldcard incident. As always, we encourage you to periodically review your security setup. Two Blockstream Jades in a 2-of-3 with an independent Swan Vault cloud key is a secure setup, and it’s the setup I use and recommend to friends and family. When we add support for a second hardware vendor, it will be a choice available to you along with clear education about the issue, so that you can weigh the trade-offs yourself. We will not be forcing a migration. We expect to support one additional device rather than a multitude. We believe supporting too many devices leads to poor user experience, and increases the likelihood that the setup suffers a security issue or user error. This would make Vault worse, not better. We take vendor selection seriously and plan to publish our selection process once we have identified the second partner, so that you can make an informed decision.  If you want a setup we do not offer, a particular device, or a different quorum or your own coordinator, that is what Swan Sovereign is for. Swan Sovereign is guided self-custody, where you choose the architecture and we guide as you build it. If anything about your setup still nags at you, whether it’s a Swan Vault or not, ask us. Walking through it together is why we’re here. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Swan’s Agentic Software Factory: Cygnet Evolved URL: https://www.swanbitcoin.com/technology/swans-agentic-software-factory-cygnet-evolved/ How Swan built an agentic software factory that finds production bugs, reaches consensus on the fix, opens the PR, and proves it works before a human merges. --- **Yan Pritzker** · September 16, 2026 Two years ago, there were no agentic commits at Swan. Today, the vast majority of our code is produced by autonomous or human-driven agents powered by agentic security and QA pipelines. Bookmark this and feed these ideas to your agent to build your stack. Back in March, I [wrote about Cygnet, our in-house agentic coworker](https://x.com/skwp/status/2034332391301361742?s=20): Slack thread partner, Linear project manager, and unattended code pipeline. That first version was an agent you had to tag in Slack. Since then, we've built it to find bugs on its own, work out what's wrong, and build the fix for human review before anyone asks. We’ve added routines, reporters, and pipelines to help us ship faster and more accurately.  Let’s take a look at Cygnet in action today: On July 9th, a partner webhook started sending a massive number of events to our database, so the job failed, retried, and failed again. A Cygnet job automatically queried Datadog, found the burst, and opened a ticket that included the query it had run, the version, the time window, and a guess at the cause. A second job picked up that ticket and sent out three investigators. Each one re-ran the query, counted how many events matched that shape, and proposed a hypothesis. Two of them landed on the same answer while the third disagreed, and all three write-ups went onto the ticket along with the dissent. After that, another group of agents designed a fix. An engineer read the resulting spec and approved it by adding a label. That afternoon, the pipeline opened a PR and tried to prove the fix worked. The proof run failed, so the agent handed the PR to a human, who reproduced the bug in a local container, confirmed the fix, pushed a test, obtained a second approval, and merged the change. A post-deploy routine verified that the fix was in by automatically reviewing logs and reporting back. In March, every run began with someone tagging Cygnet on a ticket. Anyone on the team can still do that, though most of what it does now begins on its own. A discovery job opens tickets for production errors. Feeder jobs pull those tickets through triage, spec, implementation, and review. A human is tagged in at the stages where we need oversight. Cygnet now also operates a set of automated workflows that cover weekly domain watchtowers, daily release checks, invariant checks, security news alerts that ask whether Swan is in the blast radius, and a nightly knowledge cycle we call Dreaming. Smaller jobs handle chores like refreshing the product wiki and updating knowledge for the bug pipeline to self-improve. ![](https://www.datocms-assets.com/56652/1789581079-cygnet-agentic-full-chart.png?auto=format) ### The bug-fix pipeline Our original code pipeline takes a ticket all the way to a PR in a single job. The bug-fix pipeline was designed to have more human input because the bug triaging process itself is automated, so we use ticket labels as the state machine tracker. A stage claims a ticket, does its piece of work, and exits by writing whatever label the next stage is waiting for.  Discovery runs on a cron powered by GitHub Actions. Triage, spec, implement, and review get dispatched as tickets become ready. If something stalls, a resume job retries a couple of times before parking the ticket somewhere a human will notice it. A canceled or timed-out job puts its ticket back in the queue. Stale labels get swept off closed tickets, and a wrong diagnosis gets cleaned up so it can't confuse the next stage.  Bug tickets come with evidence attached, which usually includes a monitor, an error signature, and a time window. Three investigators run in parallel. Each one re-runs that evidence against live data, works out a root cause on its own, and comes back with a structured verdict covering whether the evidence held up, what it thinks the cause is, and a confidence score. A script reads those verdicts and decides where the ticket goes. If two or more say the evidence is bad, the ticket gets canceled. If the root causes agree at high confidence, the findings are merged, and the ticket advances. Anything in between goes to a human with the competing candidates listed, so whoever picks it up doesn't have to redo the investigation. Spec production works the same way, with three bugfix designers. Each verifies the root cause against the code, proposes a fix, and answers whether the change would actually ship: which flags guard the path, whether each file is part of a release build, and which versions are affected. A proposal missing that section fails the stage. If the proposals diverge, or reachability couldn't be established, the ticket goes to a human even if the original bugfix looked easy. Using consensus for the fix helps prevent us from accidentally bandaiding a bigger problem with a simple fix, which is a common problem with AIs maintaining our systems. Once a pipeline opens PRs by itself, you need a number that tells you how often it's right. Every PR gets a single verdict from the human reviewer: correct fix, wrong root cause, or not a real bug. Precision is calculated as the number of correct fixes divided by the total, and that's the figure we look at when building pipelines so that we don’t create too much AI noise and can increase the confidence for human reviewers. Once the fix is accepted, the diagnosis is counted based on the label. But that doesn’t always tell us if the diagnosis was arrived at efficiently, or whether we ended up merging something slightly different from what it suggested. To plug that gap, another job investigates what actually merged. It compares the recorded diagnosis with the merged diff and the reviews. This helps us understand if we had to tweak the code at the end in relation to the original diagnosis. If a gap is found here, we add a lesson to the product knowledge base to avoid making a similar mistake in the future. This knowledge is then loaded into future consensus loops. ### Automated Proof of Work and PR Response Before we ship changes to production, we provide a Proof of Work, usually in the form of unit test output, screenshots, videos, or other artifacts demonstrating that the feature is working. We used to do this by hand, but we have increasingly been experimenting with an automated stage. The Proof of Work stage boots an offline environment, drives the changed flows through a real browser, takes screenshots, and posts them on the ticket. Anyone can point to that same workflow from any PR. Backend changes typically get quick smoke tests, while UI changes go through slower browser-based testing. Not all Proof of Work is equal, and sometimes the agents may struggle to produce it. This happened on July 9th, and we automatically flagged the ticket for human follow-up. Several review systems touch our PRs, including a multi-stage deterministic QA pipeline that covers about nine different categories from security to semantics. The bug-fix review stage responds to these comments. It fixes failing CI and implements every actionable comment, declining only when a comment is wrong or out of scope, and then it replies to explain why. It resolves the threads it addressed, reviews the full diff, and posts one verdict: ready for a human to merge or not, with a reason. ### Slack reactions and Cygnet Dreaming After a few months of running Cygnet, we came up with a few improvements. A freeform request with no Linear ticket now creates one, starts an agent that explores the codebase and writes a spec, and lets that agent ask questions back in the thread.  We added reactions. A green check tells Cygnet to build the plan it proposed in the ticket, directly from Slack. A downvote makes the bot open a ticket describing what went wrong. A trash can reaction redacts a bot message in case it produced something sensitive.  "Remember this," writes a memory page, gated behind an approval that needs a human reply and hard-blocks anything that looks like a secret. We wanted to have human approval for memory writes because memory poisoning can lead to security issues or worse outcomes once an incorrect memory is written. The live memory index sits in the chat prompt, so what one person taught it last week is in context for everyone this week. Sessions are keyed by Slack thread, so that Cygnet doesn’t lose context while talking to multiple people in multiple threads. Every session ends with a short retrospective on the thread, which is later used for knowledge building during the Dreaming cycle. Dreaming is the process of digesting a bunch of runs from the day that contain raw experience: retrospectives, corrected threads, canceled tickets, skills that loaded and then got overruled. It runs overnight on the larger models with a large pre-fetched bundle of Slack, tickets, skill telemetry, and its own observations log. It gathers signal, lints for contradictions, catalogs candidates, writes the wiki, and logs its dreams so that we can inspect the cycle. Most observations are noise and live in an append-only log. An observation that hardens into a rule becomes a memory page, and each cycle appends supporting or contradicting evidence. When a block has enough evidence from enough sources, it gets promoted into a skill, through a ticket and a PR that a human reviews. Skills have the greatest potential to impact a large number of agents and humans, so we treat skill updates with care to avoid poisoning. Every skill load is logged and matched to the thread it happened in. If it loaded and the session succeeded, we leave it alone. If it loaded and a human corrected the result, the content is wrong. If nothing loaded and a human had to step in, the trigger is too narrow. If the wrong skill is loaded, the trigger is too broad. One human correction is enough to create a block, because when someone says "no, not like that," we don't need to wait for it to happen again. Each skill lives in one home, the repo whose domain it serves. An hourly sync publishes it into a plugin that agents and human agent sessions can load in as needed. When Dreaming is unsure, it asks questions in the Slack summary. Once humans reply, the next cycle reads the whole thread. A canceled Dreaming ticket counts as negative evidence, since someone looked at the idea and said no. ### Reporters and routines One of the major upgrades we made to Cygnet since we launched it as an on-demand coworker was the concept of routines and reporters. We used GitHub Actions to kick these off and built a framework that makes adding new jobs as simple as writing a YML file, which agents are very good at. Here are a few that we use regularly: Watchtowers gather domain-specific data on Monday morning, and a composer turns those rows into an exec summary an hour later. For example, they might look at the new user pipeline or trading activity to ensure that things are running smoothly. They help us spot anomalies and trends across various business domains, using real-time data from Datadog and other tools. They write reports and give us color-coded summaries in Slack channels for teams to investigate. Shipwatch checks that recently shipped tickets actually work in production and can test whatever hypothesis the change was meant to prove. Security News Alerts is event-driven, based on a security feed. It triages security news, assesses whether it could affect something at Swan given our technology stack, and flags the news item for human review when it thinks we should look more closely. We are also experimenting with an agentic security response, where agents can gather security signals from a half-dozen security systems, investigate patterns, and enhance the reports with prior knowledge. This saves humans significant time in gathering context to investigate a security alert. ### Agentification is a Journey We started the agentification of our business back in April of 2025, and we’ve found that the more reliable we make our tooling, the more people use the tooling to deliver business value. We’ve also found that making our baseline experience better, e.g., by putting a Slack agent in right away, empowered many more people to solve their own problems. For example, we have observed humans in client services directly ask questions of Cygnet instead of tagging ops personnel as they would have in the past. They get their answers faster and with more context, which lets them get back to clients with the right solutions sooner. The people who used to work in a "go-between" role, such as ops, now increasingly produce their own tooling to automate their jobs. To help people transition into engineering, we instituted a program called Wingspan, which pairs experienced engineers with new agentic coders. It seems very easy to build prototypes with LLMs, but getting them to the level that would pass muster with Swan’s secure coding standards and operate within its secure coding environment is something else entirely. Over the past two years, we went from zero committers using AI-marked commits to the entire engineering team using agents to deliver code, plus ten people with no prior engineering experience from across the company. Having a guided pairing program is important for organizations that are considering empowering people with little or no engineering experience to ship code with LLMs. This program helped us educate and provide resources to people building internal tools for themselves, while freeing up more time for senior and experienced engineers to actually build the pipelines, guardrails, and tooling so that more people could ship. We know there are more and more off-the-shelf enterprise agentic systems, but every enterprise is different, and there is a lot of value in building a system that suits the shape of your company. It also keeps us independent from the frontier labs or third-party vendors so that we don’t end up building too much infrastructure directly on top of a company that can raise its prices or suffer an outage. We recommend using some of the ideas in this article to bootstrap your own agentic system and play around. Building is now cheap, but security is still hard and expensive, so we devote a disproportionate amount of time to ensuring that things are secure. If you’re just getting started on this effort, please refer to some of our prior articles: [Supply Chain Security Hardening Against Shai-Hulud Class Attacks](https://x.com/skwp/article/2060154464913273079) [Using Deterministically Orchestrated PR Review Pipelines](https://x.com/skwp/status/2085475419386519875) ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # You Are Here: The $40 Trillion Debt Map - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/you-are-here-the-40-trillion-debt-map/ Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. --- **Jeremy Showalter** · August 26, 2026 · Updated September 4, 2026 Last week, the total federal debt crossed $40 trillion. Headlines quoted Treasury Secretary Scott Bessent and showed charts. But $40 trillion is more useful as a map marker than as a milestone. It tells us where we stand. The full debt picture shows how we got here and where the path leads. ### How we got here First, look at the past 126 years on one chart. The shape is a classic ‘hockey stick’. ![](https://www.datocms-assets.com/56652/1788470989-forty-trillion-debt-map-1.png?auto=format) In 1900, the federal government owed $2.1 billion. The First World War took it to $28 billion. The Second World War pushed it to $259 billion. Wars stepped the level up, and for a while, peacetime paid some of it back down. Then came 1971, the year the gold window closed, with the debt at $398 billion. $1 trillion by 1982. $10 trillion by 2008. $27 trillion by 2020. $40 trillion today. On a linear axis, the first seven decades barely register above the axis. It is roughly 8% growth compounded annually from 1900 to 2026. This is what compounding looks like once the constraint of a hard money gold standard is removed. Big numbers lose their meaning; past a certain point, we can’t picture them. And the units themselves lose value as the supply of the money grows. The speed of debt increase is also part of the story. The first trillion took 191 years to accumulate. [The most recent trillion took 154 days](https://x.com/Swan/status/2090198129291509885?s=20). The annual increase shows the trend more clearly. ![](https://www.datocms-assets.com/56652/1788471221-chart-2.png?auto=format) For eight decades, the annual change was a rounding error at this scale. WWI peaked at +$13 billion a year and WWII at +$64 billion. From 1920 to 1930, the debt fell eleven years running, the last sustained paydown in American history. The only declines since then occurred in 1947, 1948, 1951, 1956, and 1957. The debt has now risen for 69 consecutive years, including straight through the surpluses of 1998 to 2001. Those four years retired about $450 billion owed to markets, and every dollar of it was replaced by new Treasury securities issued to the Social Security trust fund. That is still debt. A bond held by a trust fund is a claim that is redeemed later with money borrowed from the public, which is what is happening now as those funds are drained. The best fiscal run in modern American history, four consecutive surpluses in a boom, did not reduce what the government owed by a single dollar. The financial crisis added $1.9 trillion in 2009. COVID added $4.2 trillion in 2020, and then the increment never came back down. Every year since 2022 has added $2.2 to $2.5 trillion, approximately a trillion dollars every five months. No federal administration since 1971 has ever reduced the debt. Pick your favorite (or least favorite), and the debt gets bigger. Why constrain spending when you can just print it? The dollars themselves changed underneath the chart. A dollar today has roughly the purchasing power of 13 cents in 1971. So the honest reading is a double debasement. The government owes vastly more units, and each unit is worth vastly less. Nominal is the point. These are the actual dollars that were borrowed, and the actual dollars that must be created to service and roll them. ### When a penny was valuable Is a dollar really a dollar if it’s not worth what it was? We use the same word, but it doesn’t mean the same thing. Look at the expressions handed down from when a penny held value. “A penny for your thoughts.” - John Heywood’s 1546 collection of English proverbs “A penny saved is a penny earned.” - Thomas Fuller, 1661 “One cent saved here and another saved there will eventually amount to a considerable sum.” - 1889, Georgia “Save the Pennies.” - 1918, Texas The penny has gone from a meaningful unit of value and a fixture of popular expression to a coin the Mint no longer produces. Does every price eventually round to a quarter, and then a dollar? ### “Nothing stops this train.” –Lyn Alden The carrying cost followed the same curve as the debt levels, just later. In fiscal 1971, the interest bill was $15 billion. It stayed below $400 billion every year through 2019. Then it crossed $500 billion in 2023, and it will cross $1 trillion this fiscal year, more than the country spends on national defense (and roughly the total amount of debt added in 2008, just 18 years earlier). In 1991, net interest consumed 3.2% of GDP, a record that stood for 34 years until fiscal 2025 broke it. It is likely to be broken again every year from now on. ![](https://www.datocms-assets.com/56652/1788471229-chart-3.png?auto=format) ### You are here. Now back to that red marker on the map. The path to today was exponential. How might the future look? The Congressional Budget Office (CBO), Congress’s nonpartisan budget agency, projects interest costs reaching $4.8 trillion by 2050, 6.1% of GDP. An ever-larger share of each year's new borrowing exists to pay interest on the old borrowing. History says it will continue. And if so, it compounds on itself. Four institutions have published debt paths to 2050. CBO's current-law baseline puts total federal debt at roughly $129 trillion. Penn Wharton's model says $135 trillion. Treasury's own long-term projection and GAO's simulation, which assume today's policies continue, land near $152 trillion and $163 trillion, respectively. ![](https://www.datocms-assets.com/56652/1788471237-chart-4.png?auto=format) These projections originate directly from the federal government's budget group (CBO), its accountant (Treasury), its auditor (GAO), and the University of Pennsylvania. They agree on the ballpark and the hockey stick, and disagree only on the steepness. ### The broader federal obligation is already about $55 trillion The Treasury’s balance sheet reports $15.5 trillion in federal employee and veteran benefits already earned but not yet paid. Add that accrued liability to $40 trillion of gross debt, and the broader federal obligation is about $55 trillion. It is not all debt today, but it is money the government has already promised. The benefit payments are already reflected in the four projections. Because the budget remains in deficit, those payments add to borrowing as they come due. The $15.5 trillion, therefore, belongs alongside current debt when measuring the broader federal obligation. And it keeps growing. After accounting for all benefits paid, the liability still rose by $439 billion last year, as it has every year on record. If it grows at last year’s 2.9% rate, the slowest in the series, and discount rates remain unchanged, it reaches $31.6 trillion by 2050. At the 7.1% annual rate it has averaged since 1999, it reaches $85.9 trillion. That is a range of more than $50 trillion. ![](https://www.datocms-assets.com/56652/1788471245-chart-5.png?auto=format) ### State and local governments must be fine, since they have balanced budgets, right? State and city bonded debt is $3.7 trillion, and it has been essentially flat since 2010. Every state but Vermont operates under a balanced-budget rule, so the state and local government debt fell from about 22% of GDP in 2010 to under 12% today, over the exact span in which federal debt tripled. States cannot print their own money or create their own currency, so fiscal stress surfaces instead as spending cuts (rare) and tax increases (common). ![](https://www.datocms-assets.com/56652/1788471253-chart-6.png?auto=format) But the obligations from past promises are real even where the borrowing is capped. Public pensions are underfunded by $1.5 trillion as the plans report it, and closer to $4.6 trillion when the same promises are discounted honestly at market rates. GAO, one institution that models the sector, projects the operating balance staying negative through the 2060s and says closing the gap would take a 20.7% cut in state and local spending, maintained every year, forever. How likely is that where you live? No federal projection includes any of these obligations. No baseline assumes a bailout. But the structural pressure runs one direction, as we have seen throughout history in banking, insurance, and other industries. Congress created the Pension Benefit Guaranty Corporation (PBGC) in 1974 to insure private-sector pensions, obligations that were never federal, and wrote directly into the statute that the United States is not liable for what the corporation owes. Then the American Rescue Plan of 2021 created Special Financial Assistance for failing multiemployer plans, and roughly $78 billion has now been approved for 161 plans covering 1.8 million participants. Held at its current share of the economy, state and local bonded debt would reach about $9 trillion by 2050, with $1.5 to $4.6 trillion in unfunded pension promises. None of that sits on the federal balance sheet today. The PBGC is the precedent for how quickly that changes. ### “It’s just math.” –Greg Foss Today, the federal government owes $40 trillion in debt and another $15.5 trillion in benefits already earned. About $55 trillion, all in. By 2050, the total is projected to reach $161 trillion at the lower bound: CBO’s current-law debt path plus the slowest year of benefit growth on record extended for a quarter century. At the upper end, it reaches $249 trillion: GAO’s current-policy path plus the benefits’ average growth rate since 1999. That is three to four and a half times today’s total in 24 years. ![](https://www.datocms-assets.com/56652/1788471261-chart-7.png?auto=format) The top of that range has a tension in it. The two components move in opposite ways with interest rates. Higher rates push the debt projections up, because the Treasury pays more to borrow. And higher rates also push the accrued liability down, because those future benefit payments are discounted at Treasury yields. So $249 trillion requires a slightly contradictory world with rates high enough to hit GAO’s debt path and low enough to keep the present value of the promises elevated. Even the $161 trillion lower bound assumes best-case forever, so the real number is above that. Either way, the shape does not change; it’s only a question of how fast it increases. ### What this means for savers The projections above assume no future wars, no recession, no bailout, nothing but the laws and policies already on the books. Every surprise of the last fifty years has pushed the number higher. Without a gold standard, debt lost its anchor, and the dollar lost its floor. The government owes more units, and each unit buys less. No vote. No choice. It is simply what happens when money can be created at will, and every incentive in a political economy says print more. Every number in this article is denominated in dollars, and that is the whole point. When obligations compound faster than the economy servicing them, governments do not repay. They inflate, and they hold rates below inflation for as long as it takes. An interest bill of $4.8 trillion is not paid at market rates. It is paid by making the dollars worth less. That arithmetic sets the price of everything else. Equities make new highs. Housing makes new highs. Both look considerably weaker when measured against assets whose supply cannot be expanded to meet the demand. The denominator is doing the work, and almost nobody is measuring it. Which is why hard assets absorb the pressure, and why the hardest of them responds first and moves furthest. Gold cannot be printed. Neither can Bitcoin. Only one of them has a supply schedule fixed by consensus and knowable to the final unit. Federal obligations are about $55 trillion today. The lower bound path reaches $161 trillion by 2050. There will only ever be 21 million bitcoin. ### To learn more - [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/) - [Broken Money](https://a.co/d/0ij9Fr1I) - [The Big Print](https://a.co/d/09sKJwJ8) - [Luke Gromen Podcast](https://podcasts.apple.com/us/podcast/why-bessent-blinked-luke-gromen-on-doubling-of/id1769093906?i=1000784642589&l=es-MX) ### Glossary **Accrued liability.** An obligation recorded when it is incurred, before any cash moves. The opposite of cash accounting, which the federal budget uses. The budget, and therefore every debt projection, records these benefits only in the year each check is written. **Baseline.** A projection of spending, revenue, and debt assuming no new legislation. A benchmark for measuring change, never a forecast of what Congress will do. **Current law vs current policy.** Current law assumes statutes are executed exactly as written, including tax cuts expiring on schedule; the CBO projects this way. Current policy assumes today’s arrangements simply continue; GAO, Treasury, and Penn Wharton project this way, which is why their paths run higher. **Debt held by the public.** Treasury securities held outside the federal government by individuals, pension funds, banks, the Federal Reserve, and foreign governments. The measure most projections publish. About $32.2 trillion today. **Deficit.** The annual gap between what the government spends and what it collects, financed by issuing new debt. **Defined benefit vs defined contribution.** A defined benefit plan promises a specified monthly payment in retirement, so the sponsor carries the investment risk and can fall short. A defined contribution plan, such as a 401(k) or the federal Thrift Savings Plan, promises only the contributions, so it cannot become underfunded. Every liability discussed in this piece is of the first kind. **Federal employee and veteran benefits payable.** The balance sheet line for benefits soldiers and civil servants have already earned for service already rendered, including pensions, veterans’ disability compensation, retiree health. An accrued liability, recognized when earned rather than when paid. It becomes debt only as each payment comes due and is financed. $15.5 trillion as of FY2025. **Fiscal year (FY).** The federal budget year, October through September. FY2026 ends September 30, 2026. State and local figures from the Federal Reserve run on calendar years. **Gross federal debt (called total federal debt in this piece).** Every Treasury security outstanding, consisting of debt held by the public plus intragovernmental holdings. This is the measure subject to the statutory debt limit. $40.0 trillion as of August 2026. **Intragovernmental holdings.** Treasury securities one arm of the government owes another, mostly trust funds of Social Security, the military and civil service retirement funds, the Thrift Savings Plan’s G Fund. About $7.8 trillion, the difference between gross debt and debt held by the public. **Net interest.** Interest paid on debt held by the public, net of interest income the government receives. Excludes the interest the government credits to its own trust funds. **Nominal dollars.** Dollars of the year in which they are spent, unadjusted for inflation. Used deliberately throughout the article. These are the actual dollars borrowed, and the actual dollars that must be created to service them. **Present value and discount rate.** A stream of future payments expressed as one number today by discounting at an interest rate. Treasury discounts benefit obligations at Treasury yields, about 3.1%, under federal accounting standard SFFAS 33. Lower rates swell a present value and higher rates shrink it; the payments owed do not change. **Statutory debt limit.** The legal ceiling on total federal debt issuance, set in dollars by Congress. It applies to gross debt, which is one reason gross is the right measure to track. **Unfunded pension liability, accounting basis vs market basis.** Promised benefits minus plan assets. On the accounting basis, plans discount at their own assumed investment returns, near 7%. On the market basis, the same promises are discounted at market rates. Identical obligations, $1.5 trillion versus $4.6 trillion. ### Institutions and source terms **CBO, Congressional Budget Office.** The nonpartisan agency that produces budget and economic projections for Congress. Projects on a current-law basis, which is why its path runs lowest of the four. **Debt to the Penny.** Treasury’s daily publication of the exact outstanding public debt. Source of the $40.0 trillion August 2026 figure. **Derived.** Any figure in this article that was calculated rather than published by an institution. For example, the conversion from debt held by the public to gross debt, the 2.9% and 7.1% benefit growth paths, the state and local path, and the combined 2050 range. Each is flagged where it appears. **ERISA, Employee Retirement Income Security Act of 1974.** The law governing private-sector retirement plans, which created the PBGC. **Fed Z.1.** The Federal Reserve’s quarterly Financial Accounts of the United States. Source of state and local debt outstanding. **GAO, Government Accountability Office.** Congress’s audit and evaluation arm. Publishes long-term fiscal simulations for the federal government and, separately, for the state and local sector. **GDP, gross domestic product.** The annual output of the economy, used here as the denominator when debt and interest are expressed as shares. **LTBO, Long-Term Budget Outlook.** CBO’s 30-year projection, published as shares of GDP alongside its own nominal GDP path. Source of the figures past 2036 here. **MTS, Monthly Treasury Statement.** Treasury’s monthly report of federal receipts and outlays. Source of the net interest actuals. **OASI and OASDI.** Old-Age and Survivors Insurance, the Social Security retirement trust fund, and the combined program, including Disability Insurance. OASI reserves reach zero in FY2032 on CBO’s baseline. **OMB, Office of Management and Budget.** The White House budget office. Its Historical Tables are the standard source for federal budget series back to 1940 and earlier. **PBGC, Pension Benefit Guaranty Corporation.** The federal corporation was created in 1974 to insure private-sector defined benefit pensions. It covers about 30 million participants across 23,500 plans. It is funded by employer premiums, and by statute, the United States is not liable for its obligations, a limit Congress set aside in 2021 when it appropriated Special Financial Assistance to failing multiemployer plans. **PWBM, Penn Wharton Budget Model.** The nonpartisan economic and budget modeling group at the University of Pennsylvania’s Wharton School, led by Kent Smetters. The only non-government source among the four projections here. Projects on a current-policy basis. **SFFAS 33.** The federal accounting standard governing how agencies select discount rates and valuation dates for pension and benefit liabilities. This is why Treasury discounts these obligations at Treasury yields rather than at an assumed rate of return. **Treasury SLTFP, Statement of Long-Term Fiscal Projections.** The long-range projection inside the Treasury’s audited annual Financial Report of the U.S. Government. ### Sources **Federal debt levels.** Treasury Fiscal Data, [Historical Debt Outstanding](https://fiscaldata.treasury.gov/datasets/historical-debt-outstanding/), fiscal years 1900 to 2025; [Debt to the Penny](https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/) for the August 2026 figure. Charts 1, 2, 4, 7. **Net interest.** OMB Historical Tables via FRED series [FYOINT](https://fred.stlouisfed.org/series/FYOINT), FY1971 to 2014; Treasury Monthly Treasury Statement, table 9, FY2015 to 2025. Chart 3. **Federal projections to 2050.** Congressional Budget Office, February 2026 baseline and Long-Term Budget Outlook, via the [CBO open data repository](https://github.com/US-CBO/cbo-data); Penn Wharton Budget Model, January 2025; Government Accountability Office [GAO-26-108610](https://www.gao.gov/products/gao-26-108610); Treasury, FY2025 Financial Report of the U.S. Government, Statement of Long-Term Fiscal Projections. Charts 3, 4, 7. **Accrued federal employee and veteran benefits.** Treasury, FY2025 Financial Report, [Note 13](https://fiscal.treasury.gov/system/files/2026-04/2025-note-13-financial-statements.pdf), with the FY2024, FY2023, and FY2017 vintages for the historical series; [executive summary](https://fiscal.treasury.gov/accounting/us-financial-report/results-in-brief) for total liabilities. Growth paths beyond 2025 are derived. Charts 5, 7. **State and local.** Federal Reserve Financial Accounts (Z.1) via FRED series [BOGZ1FL214104005A](https://fred.stlouisfed.org/series/BOGZ1FL214104005A); Reason Foundation [Annual Pension Report 2025](https://reason.org/policy-study/annual-pension-report/); [Hoover Institution](https://www.hoover.org/research/status-and-trends-unfunded-liabilities-state-and-local-pension-funds) (Giesecke), market-basis valuation, FY2023; Equable Institute, State of Pensions 2025; GAO [state and local fiscal model](https://www.gao.gov/americas-fiscal-future/fiscal-outlook) and GAO-20-269SP. Chart 6. **Pension Benefit Guaranty Corporation.** [PBGC FY2025 Annual Report](https://www.pbgc.gov/about/reports/annual/pbgc-annual-performance-financial-report-2025); Congressional Research Service, [PBGC: A Primer](https://www.everycrsreport.com/reports/95-118.html) (95-118), for Special Financial Assistance totals and the ERISA liability language. **Purchasing power.** Bureau of Labor Statistics Consumer Price Index, 1971 to 2026. **The penny.** [U.S. Mint](https://www.usmint.gov/news/press-releases/united-states-mint-hosts-historic-ceremonial-strike-for-final-production-of-the-circulating-one-cent-coin), final circulating one-cent strike, November 12, 2025. **Derived figures.** The following are calculated, not published by any institution: the conversion of debt held by the public to gross debt using a flat $7.5 trillion intragovernmental wedge; the 2.9% and 7.1% growth paths for accrued benefits; the state and local path held at 11.6% of GDP; and the combined $161 trillion to $249 trillion range. Method and assumptions for each are recorded in the data payload of the companion chart files. ### Jeremy Showalter Jeremy is the Chief Business Officer at Swan. He founded Weave Savings and co-founded Pique (AI/ML personalization), acquired in 2021 by MoMo. Before startups, he spent 13 years at Microsoft in Ireland, Vietnam, and at HQ. # Introducing Swan Guard and Elevated Service Tiers for the Bitcoin-based Investor URL: https://www.swanbitcoin.com/product-updates/introducing-swan-guard-and-elevated-service-tiers-for-the-bitcoin-based-investor/ Today we announce a new suite of security enhancements and elevated service tiers, reflecting our commitment to serving the Bitcoin-based investor. --- **Cory Klippsten** · April 16, 2025 · Updated August 20, 2026 Over the past five years, Swan has helped more than 150,000 clients navigate and benefit from Bitcoin’s rapid growth, price volatility, and the evolving regulatory landscape. We’ve also guided millions of people away from crypto scams and collapses through our unwavering commitment to education. Swan delivers **elite service** from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by **world-class research** that helps investors build lasting conviction. We bring our community together through **exclusive events** that connect clients with industry leaders and fellow investors in sophisticated settings. Today, we announce a new suite of security enhancements, and elevated service tiers that reflect our commitment to serving the Bitcoin-based investor. ### Swan Guard: A New Standard in Bitcoin Security and Service Swan dedicates extensive attention, budget, and engineering resources to securing our systems and client assets, resulting in industry-leading protection against account takeovers and scams. - Client protection calls for dynamic risk-based situations  - Dedicated escalated support from US-based security agents for urgent cases - Identity fraud detection and device risk signals  - High-risk activity and global blocklist monitoring - On-chain monitoring for scam addresses  - Client-initiated lockdown for account protection in two taps - Bitcoin security and personal operational security education - Enhanced screening for dynamic fraud and risk situations - SOC 2 Type 2 compliant platform We continually build new security features to enhance Swan Guard. Here's what we're working on now: - Annual security reviews with personal guidance - Device, location, and wallet whitelisting  - In-product secure messaging - Passkeys for faster and more secure logins with device-based authentication ### Updated Custody Options for Maximum Security and Flexibility Swan’s refined custody offerings give every client access to secure and flexible Bitcoin storage, with Swan Guard providing extra layers of safety and support. - **Self-Custody** – Swan continues to encourage all clients to take full ownership of their Bitcoin with complimentary withdrawals and extensive self-custody education and guidance. - **Swan Safe** – For clients who prefer segregated custody with regulated financial institutions, Swan partners with industry leaders Bakkt, Bitgo, and Equity Trust, with additional security layers provided by Swan Guard. - **Swan Vault** – Empowers clients with total control of their Bitcoin without having to go it alone. Funds are safeguarded by a collaborative multisignature setup with keys stored offline. Swan Vault includes a complimentary onboarding call with a Bitcoin expert to ensure optimal setup. ### Elevated Service Tiers: Swan Premium, Swan Private, and Swan Legacy Swan Premium is our new foundational service level. Every **Swan Premium** client will benefit from: - Access to the Swan Card, our Bitcoin rewards credit card  - Expert service from our team of Bitcoin specialists  - US-based phone support - Complimentary weekly withdrawals to self-custody - Auto-withdrawals to unique addresses for optimal privacy - No charge for inbound / outbound wires - Exclusive market insights and educational content - Proactive monitoring for tax-loss harvesting opportunities* - Priority access to Swan events We offer **Swan Private** for those who prefer personal service from a dedicated Bitcoin expert. Swan Private includes all the benefits of Premium, plus: - Concierge services from a dedicated Swan Private representative - Asset management options - Curated HNW products and services - Exclusive research - Private events - Access to a network of Bitcoin professionals in estate planning, tax, legal, and investment advisory These tiers are designed to scale with Bitcoin investors as their wealth grows, providing increasing levels of service, guidance, and financial tools. **Swan Corporate Treasury Services** **Swan Private is now included for all entity accounts**. Effective today, **all Business, Trust, and Family Office clients** have direct access to dedicated Bitcoin experts and all benefits of Swan Private. ### 2025 Pricing With the introduction of **Swan Guard** and **Swan Premium**, we are updating our pricing to reflect the **expanded suite of services** now available to every Swan client. - **Trading Fees**: Simplifying from 0.99% to 1% (going into effect in Q2) - **Swan IRA**: 0.02% of AOP (assets on platform) per month, $20 minimum - **Swan Safe**: 0.03% AOP per month (waived for clients with auto-withdrawals enabled) - **Swan Vault**: 0.02% AOP per month, $30 minimum, capped at $500/month; now includes complimentary assisted onboarding (previously $200) - **Self-Custody**: Complimentary weekly withdrawals to self-custody - **Inbound / Outbound Wires**: Complimentary (your financial institution may charge a fee) - **Swan Private**: Swan Private is a *service tier* that is included automatically with a qualifying product (IRA, Vault, Swan Generations, or Swan Sovereign). - **Bitcoin-backed Loans**: Available for Swan Private and Swan Legacy clients; variable rates - **Asset Management**: Available for Swan Private and Swan Legacy clients; AUM-based fees - **Financial Advisory**: Available for all clients; AUM-based fees The simplified 1% trading fee will go into effect in Q2 for all clients. The rest of the pricing updates will go into effect in **Q2 2025 for new clients** and **July 1, 2025, for existing clients**. If you have any questions or comments, please let us know at [swan.com/support](http://swan.com/support), or get in touch with your Swan Private advisor. ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # How Bitcoin Actually Works: A First Principles Guide URL: https://www.swanbitcoin.com/education/how-bitcoin-actually-works/ From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. --- **Conor Chepenik** · August 19, 2026 Ask ten people how Bitcoin works and you get ten slogans. Digital gold. Money without banks. An immutable ledger. Each one holds some truth, and none of them shows you the whole picture. ![](https://www.datocms-assets.com/56652/1787169201-btcfromdifferentperspectives.png?auto=format) Bitcoin asks something unusual of you. It offers money you can hold without anyone's permission, and in exchange it hands you responsibility for understanding what you are actually trusting. In January 2009, days after the network launched, the cryptographer Hal Finney posted two words on twitter: "Running bitcoin." A second computer had started receiving the same data as the first and checking it against the same rules. Seventeen years later, that is still the whole idea. Here is the tour in five pieces: who controls the ledger, what protects your coins, where that protection comes from, how coins move, and why 21 million holds. No price talk, and no pretending the trade-offs do not exist. ### Who controls the ledger? Every form of money has a ledger, meaning a record of who owns what and a process that decides when the record changes. The interesting question is never whether a ledger exists, but who gets to write in it. Lyn Alden frames this beautifully in [*Broken Money*](https://www.lynalden.com/broken-money/). With gold, nature controls the ledger, and supply grows only as fast as people can dig. With dollars, euros, and every other national currency, central banks and the commercial banking system control it. When your banking app shows $4,000, that is a row in a database, and the institution can edit the row. Bitcoin does something genuinely new. Its ledger is a shared copy held by tens of thousands of independent computers around the world, each one checking every rule for itself. No company hosts it. No board approves changes to it. Three jobs make that work, and they get blurred together constantly, so it is worth separating them now A **wallet** is software, hardware, or both, and it stores your secrets and builds transactions. A **miner** is a computer that bundles pending transactions into a block and competes for the right to add it. A **node** is a computer running the full rulebook, checking every block and every transaction, and rejecting anything that breaks a rule. Miners propose. Nodes decide. A miner can spend a fortune in electricity producing a block, and if that block contains one invalid transaction, every node on the network throws it away. Mining power buys a place in line for the block subsidy and the transaction fees. It never buys permission to break the rules. A node runs on hardware cheaper than a phone, and anyone can run one. That open door is the point, whether or not you personally walk through it. ### Your bitcoin is protected by a secret Now to the part that touches you directly. Bitcoin has no accounts and no passwords. What it has are secrets. Every coin on the ledger is locked to a secret number called a private key, and the rule is blunt: whoever knows the secret can move the coins. There is no fraud department, no chargeback, and no password reset. That is what makes Bitcoin portable and permissionless, and it is also the single biggest responsibility it hands you. So the security of your bitcoin comes down to one question. How hard would it be for someone else to discover your secret? Most people never handle a raw private key. Modern wallets hide it behind a list of recovery words, usually twelve or twenty-four of them. Those words are the master secret. From them, your wallet mathematically derives a whole family of private keys, and from those keys it derives public addresses you can safely share. Only the first step in that chain involves chance. Everything after it is pure arithmetic, which is why twelve words on paper can restore a wallet containing thousands of addresses. It also means anyone who obtains those words can rebuild your wallet, and losing the only copy can cost you the ability to rebuild it yourself. One more correction to the folk model, because it clears up a lot of confusion. Your coins are not inside your wallet, and they are not inside an address. Coins live on the shared ledger. Your wallet holds the keys that unlock them. ![](https://www.datocms-assets.com/56652/1787169303-btcexplainergraphic.png?auto=format) ### Where the secret comes from If security depends on nobody guessing your secret, then a lot depends on how that secret was created. Cryptographers measure this with a word worth learning: entropy, which simply means unpredictability. Picture a fair coin. Before it lands, two outcomes are equally likely and you cannot do better than guessing. Now picture a weighted coin that lands heads ninety-nine times out of a hundred. Still two outcomes, almost no unpredictability. Guess heads every time and you will be right nearly always. A private key works the same way. The key is a container built to hold 256 bits. Entropy is what fills it. If the process that generated your key could only ever draw from a small set of possibilities, an attacker never has to search the astronomical space of all possible keys. The attacker only has to replay the broken machine that built yours. This is not a thought experiment. In 2013, a flaw in Android's random number generation caused values that should never repeat to repeat, and the repetition exposed the keys behind the affected signatures. Funds were swept. The[ bitcoin.org advisory from August 2013](https://bitcoin.org/en/alert/2013-08-11-android) is still online, and[ Google's own postmortem](https://android-developers.googleblog.com/2013/08/some-securerandom-thoughts.html) confirmed the underlying generator was improperly initialized. The same failure returned in July 2026. A firmware change in COLDCARD devices routed seed generation away from the device's hardware random number generator and into a software fallback, which is a far more predictable source than the hardware it replaced. The affected seeds carried substantially less entropy than the 128 bits they were supposed to hold. The devices themselves were never remotely accessible. The problem was that the keys they generated were weak enough that an attacker with sufficient computing power could feasibly search the reduced keyspace and recover them. The most important detail is that the risk follows the seed. If you generated your recovery words on affected firmware, that seed may be weaker than intended even if you have since moved it to a different wallet, and updating the firmware corrects future seed generation without repairing a seed that already exists. Version numbers are the thing to check, and the version that matters is the one running the day the seed was created.[ ](https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/) If you think you might be affected, read the[ official COLDCARD security advisory](https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/) first, and get there by typing the address yourself rather than following a link from an email or a sponsored search result. The advisory carries a narrow exception for seeds built from at least fifty independent private dice rolls, and notes that a strong, unique BIP-39 passphrase creates a separate barrier an attacker would also have to defeat. Everything outside those cases points toward generating a fresh seed on fixed firmware and moving the funds.[ ](https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/) Move deliberately. Within days of the disclosure, attackers were sending spoofed emails inviting holders to complete a "hardware audit," linking to a cloned site staffed by a live chat operator who walked victims through installing remote-access software. Fake support accounts and seed-checking tools followed, all designed to collect the one thing the original flaw never needed. No legitimate party will ever ask for your recovery words. There is no audit tool, no verification portal, and no support agent who needs to see your seed. Coinkite's own advisory makes the same point: mistakes made during recovery can cause more damage than the vulnerability itself. Urgency is the attacker's best tool right now, so refuse to supply it. If you are unsure how to proceed, reach out to our team at[ swan.com/support](http://swan.com/support) and we are happy to walk through a safe migration with you.[ ](https://decrypt.co/374891/hardware-wallet-firms-warn-of-phishing-surge-as-coldcard-losses-near-130m) For everyone else, the lesson generalizes cleanly, and it is the most useful principle in Bitcoin security: **A secret is only as strong as the process that created it.** Done properly, the math is overwhelming in your favor. A truly random 256-bit secret sits somewhere in a space around 78 digits wide, and no machine that could physically exist will search it. That is why good wallets draw randomness from dedicated hardware, and why some people add their own dice rolls on top. Entropy is far from the only thing that can go wrong in self-custody, but it is the one thing that cannot be fixed afterward. Meaning if your wallet does not have sufficient entropy you need to move funds asap to one that does. ### How coins actually move Spending bitcoin works a little like spending cash. Hand a cashier a hundred-dollar bill for a thirty-dollar item and the bill does not get shaved down to seventy dollars. The hundred-dollar bill is spent, and you receive change. Bitcoin works similarly. Your wallet controls discrete chunks of bitcoin called unspent transaction outputs, or UTXOs. Each UTXO was created by an earlier transaction and can be spent only once. If your wallet controls a UTXO worth 0.001 BTC and you want to send someone 0.0003 BTC, that UTXO may be spent in full. The transaction could create one output paying 0.0003 BTC to the recipient and another returning most of the remaining bitcoin to you as change. The small difference between the total value of the inputs and outputs becomes the transaction fee. Your wallet usually handles this automatically, but you can have more control than the cash analogy suggests. You choose how much bitcoin you want to send, and some wallets offer **coin control**, which lets you choose exactly which UTXOs will be used as inputs. This can matter for privacy, fees, and how you organize your bitcoin. You can also choose the transaction’s fee rate. Bitcoin fees are determined primarily by how much block space your transaction consumes, measured in virtual bytes, and how many satoshis you are willing to pay per virtual byte. A transaction using several UTXOs is generally larger than one spending a single UTXO, so it can cost more even if both transactions send the same amount of bitcoin. When a wallet offers options such as low, normal, or high priority, it is estimating a fee rate based on current demand for block space. In a typical transaction with change, a higher fee means slightly less bitcoin comes back to you as change. Miners generally favor transactions offering higher fee rates. Thus, if you pay a competitive rate your transaction is more likely to confirm quickly. Pay less and it may remain unconfirmed until demand falls. An unconfirmed transaction can also eventually disappear from mempools, or in some cases be replaced with a higher-fee version, so it is better to think of the mempool as a market for scarce block space rather than a permanent line. Your displayed balance is simply your wallet adding up every UTXO your keys can spend. Bitcoin does not keep an account in your name. It keeps a record of coins, and possession of the right keys determines who can spend them. ### Why 21 million holds The first transaction in every block is special. It creates new bitcoin, and it lets the miner claim the reward permitted at that point in the schedule plus the fees from that block. The miner does not choose the number. Every node independently calculates the maximum allowed and rejects the entire block if the miner claims even one satoshi more. The reward started at 50 BTC in 2009 and halves every 210,000 blocks, roughly every four years. It fell to 3.125 BTC in April 2024. Around the year 2140 it rounds down to zero, and the schedule sums to just under 21 million. So the supply cap is an arithmetic check performed continuously by machines that answer only to their owners. Could it change? Anyone can edit the software this afternoon. What nobody can do is force other people to run it. A version with different supply rules produces a different asset, and existing nodes reject the extra coins. This has been tested. In 2017 a faction split off to raise the block size, and the chain enforcing the original rules kept the name, the liquidity, and the economic weight. Call the cap what it honestly is. Not a law of physics, and not a promise either. It is a published rule that millions of people can verify at almost no cost, which is a stronger guarantee than money has ever had before, and it lasts exactly as long as people keep checking. ### What you still have to trust Nobody audits every chip, compiler, and line of code they depend on. You might generate your own keys and use somebody else's node. You might run your own node and trust the silicon underneath it. You might use a hardware signer and trust that the firmware does what its documentation says, which is exactly the assumption that broke in 2026. That failure was cruel in a particular way. The people it caught had followed the advice. They bought reputable hardware, generated their keys offline, kept the words off any screen, and the device failed them at the one step they had no practical way to inspect. What kept it from being worse is the same property that made it visible at all. The firmware source was published, which let outside researchers inspect the implementation and reproduce release builds rather than take a product description on faith. Open code did not prevent the failure. It made the failure legible. So verification is less a wall than an accounting. You never reach zero trust. What you decide is where yours sits, how much of it rests in any single place, and how quickly you would learn if it had been misplaced. Every custody choice moves that trust somewhere. Leave bitcoin with a custodian and you are trusting an institution to safeguard keys and honor your claim. Move it to your own wallet and the whole responsibility transfers to you, including backups, firmware, physical security, and the discipline to keep all three current for as long as you hold. Multisignature spreads the exposure so that no single key and no single device can lose everything, at the price of a setup you need to understand well enough to recover from under stress. Collaborative custody divides the work between you and a provider, which can help remove single points of failure. The useful question is which specific failure you could survive, and whether you would notice it in time. There is no arrangement with zero trade-offs. There are only trade-offs you understand and trade-offs you have not looked at yet. ### Where this leaves you Here is what makes Bitcoin remarkable once the pieces come together. Randomness makes keys unguessable. Signatures prove authorization without revealing anything. Mining makes writing history expensive and rewriting it far more expensive. Verification is nearly free, so a machine in your closet can audit the entire money supply of a global network. Nobody had that before, at any price. You do not need to run a node to own bitcoin, and you do not need to understand elliptic curves to buy your first satoshi. Understanding the machine changes something else. It changes how you hold through a drawdown, and how deliberately you choose who holds your keys. That is why Swan is Bitcoin-only, and why education comes before product selection here. Automatic recurring buys let you accumulate steadily without watching charts. The[ Swan IRA](https://swan.com/ira) covers tax-advantaged holding.[ Swan Vault](https://swan.com/vault) supports collaborative self-custody with a real human on the other end to answer your questions. If you want the longer technical version of everything above, our co-founder Yan Pritzker's book[ Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/) is free. See the whole picture. Understand where you moved your trust. Then choose the setup that fits the risks you actually face. --- ### Frequently asked questions **Where is my bitcoin actually stored?** On the shared ledger, as transaction outputs. Coins never sit inside a wallet, an address, or a hardware device. Your wallet stores the private keys that can unlock those outputs, which is why losing a device is survivable when your backup is intact. **What is the difference between a seed phrase and a private key?** A seed phrase is recovery information from which a wallet derives many private keys. A private key is one individual secret used to authorize one spend. Twelve or twenty-four words can correspond to thousands of keys and addresses. **What is the difference between a miner and a node?** Miners assemble candidate blocks and spend energy competing to add the next one. Nodes check every block against the rules and reject violations regardless of how much work is attached. Miners propose, nodes verify. **Why is Bitcoin limited to 21 million?** The block reward halves every 210,000 blocks and eventually rounds down to zero around 2140. Every node calculates the maximum reward allowed and rejects blocks that create more, so the cap is enforced continuously by the whole network rather than promised by anyone. **Do I need to run a node to use Bitcoin?** No. Without one you rely on someone else's infrastructure for your view of the blockchain, which can be a reasonable choice depending on the situation. Running a node lets you verify Bitcoin's rules independently. Whether that is worth the effort depends on your holdings and your comfort with the setup. --- *This article is for educational purposes only. It is not investment, tax, legal, or security advice, and it is not a recommendation to buy, sell, or hold any asset. Third-party products and disclosures referenced here are described as reported by their publishers as of August 2026, and Swan is not affiliated with those companies and does not endorse or evaluate their products. Details of ongoing security investigations may change. Always consult the manufacturer's official guidance and a qualified professional before making decisions about your own holdings.* ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # A Brief History of Bitcoin Forks - Swan Bitcoin URL: https://www.swanbitcoin.com/education/a-brief-history-of-bitcoin-forks/ A history of every Bitcoin hard fork, from Bitcoin Cash and Bitcoin Gold to the 2026 BIP-110 split, and why each new coin collapsed against Bitcoin. --- **Yan Pritzker** · August 17, 2026 There’s a new faction in town about to create a Bitcoin hard fork, also known as an altcoin, led by Luke Dashjr, a long-time Bitcoin developer, following the failure of a soft fork known as BIP 110 to gain consensus. But this is not a new pattern. Bitcoin has seen a number of forks in its history, each time led by someone who wasn’t happy with the way things were going, or wanted to get rich by dumping their new forkcoin on unsuspecting buyers, or both. What followed in every case was severe economic destruction of their newly created coin relative to Bitcoin. Today I aim to illuminate some of that history for people who weren’t around to see it firsthand. ![](https://www.datocms-assets.com/56652/1786968736-fork-timeline-16x9-light-selection.png?auto=format) ### The Blocksize Wars (2015–2017) The first big explosion of Bitcoin forkcoins came as a result of or in the wake of the Blocksize Wars. Bitcoin's transaction capacity was capped by a 1 MB block size limit, which affected how many transactions could be stuffed into a Bitcoin block, which occurs once every ten minutes on average. As blocks filled and fees rose, the community split into two irreconcilable camps: the "big blockers," who wanted to raise the limit and scale on-chain, and the "small blockers," who argued that bigger blocks would centralize the network by making it too expensive for ordinary people to run a node. A non-obvious key issue in the debate was that increasing the block size in the way that the big blockers wanted would have led to a *hard fork,* meaning that all Bitcoin nodes would *have* to do a mandatory upgrade or be kicked off the network. The big blockers included a large portion of miners as well as Bitcoin businesses such as exchanges and payment processors. In fact, they appeared to represent a huge majority of the industry: the May 2017 New York Agreement was signed by 58 companies in 22 countries representing 83% of hash power and 20.5 million wallets. The small blockers consisted mostly of technical developers and users, both groups that vehemently opposed the centralization of bigger blocks and, more than that, the need for a hard fork, which would potentially disrupt the key value proposition of Bitcoin, its immutability. In my view, the *way* to do the block size increase (a forced hard fork, or an optional soft fork), and not actually the block size itself, was a key crux of the debate. The reason I hold this to be true is that the “small block” developers were proposing a change called Segwit, which effectively doubled the block capacity anyway, and paved the way for scaling using the Lightning network, *without* a hard fork. Instead, their change was implemented as a *soft fork*, which means that any nodes that chose not to upgrade would continue functioning as normal, processing the new information as if it didn’t exist. It seems difficult to believe that the main debate was whether the block size should be doubled or quadrupled, or 8x’ed, as no amount of on-chain scaling would have permanently solved the Bitcoin scaling issue anyway, considering that it was to be adopted as global money by 8 billion or more people. The non-technical public reduced the debate to small and big blocks, but really it was a governance debate: should a group of companies, even representing the vast majority of miners and custodial users, be able to change the Bitcoin protocol in a hard fork, non-backward compatible way? The big blockers believed that they had to implement this change “for the good of the network” so that Bitcoin could scale. Alternatively, on a more cynical reading, they wanted to increase the throughput of the network so that it could process more transactions and they could earn more fees for their business. The small blockers believed, by and large, that changes had to be implemented in a conservative fashion that is backward compatible with a soft fork, that hard forks were an unpalatable approach, and that on-chain scaling would lead to node centralization. The first real breakaway client was Bitcoin XT in 2015, championed by early Bitcoin developers Mike Hearn and Gavin Andresen, which proposed raising the block size by 8x to 8mb. It never captured any serious network share, and its failure produced Bitcoin’s first great rage-quit: on January 14, 2016, Hearn published a widely-read Medium post, "The resolution of the Bitcoin experiment," declaring Bitcoin a failure, writing that he had "sold all my coins," and was leaving entirely. Bitcoin was around $400 at the time. Today it trades more than 150x that value. Hearn, thankfully, did not launch an altcoin; he went to work on corporate blockchains instead. Bitcoin Classic and Bitcoin Unlimited followed in 2016 as successive big-blocker clients, each trying and failing to muster enough miner and node support to change the rules. None of them split the chain into a rival coin. But they hardened the trenches, and they introduced the pattern that would become a staple in the forks that followed: a figurehead, a technical grievance, and the conviction that Bitcoin needed to be saved.  ### Bitcoin Cash: The Great Schism (August 2017) The wars finally threatened to crack the chain in half on **August 1, 2017**. The big blockers gave up on changing Bitcoin and forked their own network into existence: **Bitcoin Cash (BCH)**, launching with 8 MB blocks and a promise to be "peer-to-peer electronic cash" for the world. The two chains were identical up to block 478,558, so anyone who owned one bitcoin at the fork automatically owned one BCH: free money, on paper.  It had the closest thing the fork world would ever get to a dream team of patrons. Roger Ver, an early Bitcoin investor evangelical enough to have earned the nickname "Bitcoin Jesus", became its loudest promoter, using his control of the domain bitcoin.com to present Bitcoin Cash as the true Bitcoin to a generation of newcomers who didn't know the difference. Bitmain, the mining-hardware giant co-founded by Jihan Wu, backed it with hash power. Amaury Séchet led the Bitcoin ABC team that wrote the software. They even got it listed on major exchanges all over the world.  For a few intoxicating weeks, the plan looked like it might work. After a chaotic launch, Bitcoin Cash ripped high enough in November 2017 that believers openly forecast "the flippening," the moment BCH would dethrone BTC. BCH supporters astroturfed online forums like Reddit and 4chan, claiming that Bitcoin would enter into a ‘mining death spiral as soon as Bitcoin miners saw the light and switched to the BCH chain. On November 12, 2017, BCH briefly ran up to an all-time intraday high of roughly 0.4-0.5BTC. Then the economic incentives kicked in. Since all users of Bitcoin prior to the fork had received the fork coins as an *airdrop*, in other words, *for free*, it stood to reason that selling them for anything above zero would be a win. After pumping BCH to an astronomical value of approximately 0.4BTC, sell them they did. The bleed was slow and relentless. Today Bitcoin Cash trades around $205, roughly 0.0032 BTC, about a third of one percent of a bitcoin. ### Bitcoin Gold: “Mining Is Too Centralized” (October 2017) BCH showed that it was possible to create new value out of thin air and pump-and-dump the coin using Bitcoin affinity marketing. This opened the door for more coins following the same formula. Two months later, Bitcoin Gold (BTG) forked on October 24, 2017, at block 491,407, replacing Bitcoin's SHA-256 proof-of-work with the Equihash algorithm.  The pitch: Bitcoin mining has been captured by industrial ASIC farms, so let's make it mineable on ordinary GPUs and "make Bitcoin decentralized again." Sound familiar? It’s one of the pitches now being used by the upcoming BIP110 / Luke Dashjr coin. Ironically, by choosing an algorithm with no dedicated mining industry behind it, Bitcoin Gold made itself *cheap to attack*. In May 2018, it suffered a 51% attack in which an estimated $18 million was double-spent, getting it delisted from Bittrex that September after the Bitcoin Gold team refused to cover part of the exchange’s loss; it was hit again in January 2020.  Bitcoin Gold peaked at roughly 0.068 BTC shortly after launch. Today it trades for pennies, and on many days its 24-hour trading volume is literally zero. ### The Scambrian Airdrop Explosion (Late 2017–2018) The 2017 bull market taught opportunists a simple trick: fork Bitcoin, "airdrop" a free coin to every holder, list it on a few exchanges, pump it, then cash out. What followed was an explosion of Bitcoin affinity scams. Bitcoin Diamond, Super Bitcoin, Bitcoin God, Bitcoin Private, Lightning Bitcoin, Bitcoin Atom, and more. Dozens of forks, all with near-zero uptake.  Early Bitcoin developer Jeff Garzik, who first proposed a block size increase way back in 2010, only to be rejected by Satoshi himself, launched United Bitcoin (UBTC) on December 12, 2017, promising smart contracts, Lightning support, and 8 MB blocks. In a sick twist, it assigned balances of *dormant, inactive* wallets (including the dormant Satoshi coins) to a "UB Foundation". It’s obviously impossible to steal Satoshi’s coins, but if you launch your own version of the ledger, you could do whatever you want. Obviously, nobody wanted to live in that world. Like almost every coin in this wave, it has effectively vanished from the market. The attempt to steal Satoshi’s dormant coins on a fork recently repeated with another long time Bitcoin personality with ongoing grievances due to the Bitcoin network not adopting his Drivechains technology: Paul Sztorc who announced plans to launch an “eCash” fork of Bitcoin, targeted at August 2026, which would leave 600k of Satoshi’s coins at their original addresses and reassign the remaining 500k to “investors” who fund the project before launch. This fork, like Garzik’s, combined impressive-looking “technology upgrades” with coin reassignment to early investors. Not quite Satoshi’s vision, but I digress.  Strangely, the name eCash is already taken by another fork of BCH, and is confusingly a generic name for a legitimate Bitcoin adjacent technology, Chaumian Ecash, such as that implemented by Cashu. Maybe the confusion is intentional. It makes you wonder. ### Bitcoin SV: The Fork of a Fork, and Its Prophet (November 2018) The most operatic breakaway wasn't a fork of Bitcoin at all. It was a fork *of Bitcoin Cash*. By 2018, the Bitcoin Cash camp had its own irreconcilable schism, between Amaury Séchet's Bitcoin ABC and a faction led by Craig Steven Wright and the billionaire online-gambling magnate Calvin Ayre, who wanted even bigger blocks and a return to what Wright insisted was "Satoshi's Vision." On November 15, 2018, at block 556,766, they split off Bitcoin SV (BSV) — the "SV" for Satoshi's Vision — handing every BCH holder a fresh pile of BSV. The split was fought as a literal "hash war," two chains burning money to out-mine each other. No fork leaned harder on a cult of personality, because BSV's entire premise was a personality: Craig Wright's claim to be Satoshi Nakamoto himself. In early 2019, Wright began issuing libel threats against anyone who publicly doubted the claim, including the pseudonymous Bitcoiner "Hodlonaut," on whose identity his camp effectively placed a bounty, plus podcaster Peter McCormack and Ethereum's Vitalik Buterin. The industry's response was swift. On April 12, 2019, Binance CEO Changpeng Zhao tweeted, "Craig Wright is not Satoshi. Anymore of this sh!t, we delist!"  and Binance, Kraken, and other exchanges cut BSV loose under a #DelistBSV banner, severing much of its liquidity. BSV's key moment came in January 2020, when Wright claimed a "bonded courier" had finally delivered the keys to a mythical "Tulip Trust" holding over a million early bitcoins. On that rumor, the price rocketed from about $95 to over $400 in days, briefly overtaking Bitcoin Cash by market cap, before the proof failed to materialize, and it gave everything back. The story ended in a British courtroom: in a March 2024 ruling later expanded into a scorching written judgment, the High Court of England and Wales found that Craig Wright is not Satoshi Nakamoto, did not write the white paper, and had forged documents "on a grand scale."  The chart followed the prophet. BSV started life worth something like a sixtieth of a bitcoin, spiked to roughly 0.05 BTC in the January 2020 mania, and today trades near $15, or 0.00024 BTC after printing an all-time dollar low of $10.49 on June 25, 2026. Priced against Bitcoin, "Satoshi's Vision" has lost well over 99% of its value. The pattern is fractal. Three years after helping fork Bitcoin Cash out of Bitcoin, Amaury Séchet drove another split, this time over an "Infrastructure Funding Plan" that would divert a slice of every block reward to a development fund under his team's control. Again, a play familiar to those who followed the ideas in United Bitcoin and many other projects.  On November 15, 2020, Bitcoin Cash divided again: the majority rejected the plan and kept the BCH ticker, while Séchet's minority chain, Bitcoin Cash ABC, limped off on its own and rebranded to eCash (XEC) the following July. The same eCash name is now being claimed by Paul Sztorc’s fork. This BCH eCash also now trades for pennies. ![](https://www.datocms-assets.com/56652/1786968904-fork-prices-chart-16x9-light-selection.png?auto=format) ### The BIP110 Fork (2026) Fast forward to today, August 2026. Many of us have thought the forking days of Bitcoin are over. Didn’t everyone learn their lesson in 2017-2018? Apparently not. What’s driving today’s fork is another presumably aggrieved clan, and another leader with a penchant for saying exceptionally misleading things. What’s the grievance? It starts with spam. Over the last few years, Bitcoin has started becoming popular for non-monetary use cases. A variety of individuals and companies started popularizing embedding images and other data into the blockchain. The concept of NFT’s (Non-Fungible Tokens) arguably became popularized by Cryptokitties on Ethereum, which went to zero. The idea was to embed various data, such as images, on the blockchain, and then sell those images as “unique” to speculators who hoped to dump them on the next person before the party ran out. And the party did essentially run out. The parallel to Eth’s Cryptokitties was Bitcoin’s Quantum Cats. When they launched, I warned people about their guaranteed demise based on the history of Cryptokitties. This came to pass. After a number of pump and dumps, the Quantum Cats have achieved near-zero trading volume. Nonetheless, many users of Bitcoin during this time became agitated at the non-monetary use of Bitcoin. Some even became vocally concerned that arbitrary data embedding could lead to the storage of illegal information on Bitcoin (never mind that it is impossible to truly remove all arbitrary data storage from the protocol). This faction, led initially by nym Dathon Ohm and supported by Bitcoin Knots developer Luke Dashjr, started a movement called BIP110, which was a *soft fork* that would have placed a temporary, twelve-month restriction on certain types of data storage on the chain. While soft forks are, on the surface, backward compatible (meaning that miners of BIP110 blocks would produce blocks that other nodes would just accept), the BIP110 fork came with an ultimatum. Not only did it restrict the data going into the block, but it also said: “If you miners do not also signal that you are doing this, I will reject your blocks.” This was an attempt to coerce miners to follow the mandate of this group of users, also known as a User Activated Soft Fork (UASF). The logic of this group was that a UASF of this sort was used to game theoretically force miners to comply and activate Segwit back in 2017, so it could be done again. The miscalculation appeared to be that there was no economic incentive for miners to restrict themselves to processing only certain types of transactions, and that the UASF of 2017 was not the lone factor that encouraged miners to follow the Segwit upgrade. After mandatory signaling opened on August 8, 2026, at block 961,632, roughly 2.5% of blocks signaled for BIP110 against a 55% activation threshold. The BIP110 chain had essentially zero support from any miners except a small group known as Roughnecks, which mined exactly two blocks, 961,632 and 961,633, before the chain stalled out, while Bitcoin continued. The Rougnnecks have since resumed mining, presumably at a very bad loss to themselves, since the coins are not spendable yet.  This led to increasingly erratic rage-quit behavior by Luke Dashjr, who became the leader of a splinter movement to create a hard fork from the BIP110 chain. He started calling the minority fork (the stalled out chain), “Bitcoin”, while referring to the main Bitcoin chain (which has continued unaffected) as “Bpedo” in reference to his allegations that it will be used to distribute CSAM material. He posted that all the miners were “attacking” Bitcoin, where the reality is that the miners were just doing their normal business. He also said that he would hard fork the chain in just about two weeks (Sep 1, 2026). He selected a new mining algorithm (BLAKE2b) by a bizarre cryptographic ceremony that was gameable because it used a test network anyone could control, and which had to be abandoned and restarted once onlookers began producing testnet4 blocks to steer the draw. While BIP110 started out as an attempt to gather consensus, it ended in a faction that decided that they would no longer seek consensus. Their actions will create a new forkcoin. My prediction for this new fork is that, like other forks before it, it will be used by opportunistic insiders to pump and dump and sell their coins to the unsuspecting “community” that is following them into this disaster. That is, if they convince some exchanges to list it. In a society increasingly driven by nihilistic gambling, I wouldn’t be surprised if even some of the major exchanges pick it up. Unfortunately, the buyers of these coins are going for a one-way ride to zero, driven by millions of Bitcoin owners, sellers who had a cost of zero to acquire the same coins for which the buyers are now paying a non-zero price. I hope that some of them will read this history and avoid making the mistakes that others have made in the past. ### Replay Protection: Accessing Forked Coins Could Lead to Permanent Loss of Funds Bitcoin holders should be extremely cautious about attempting to claim or sell coins created by contentious Bitcoin forks, particularly when the fork does not provide strong, automatic replay protection. The danger is that the two chains begin with the same coins, keys, and largely the same transaction rules: if you sign a transaction intending to move your fork coins to an exchange to sell them, that transaction may also be valid on Bitcoin and can potentially be rebroadcast there, causing your real BTC to move as well. This will almost certainly lead to irrevocable loss of real Bitcoin. This is the replay-attack problem, and it means that “free” fork coins can create a risk vastly greater than their market value. Until a fork has demonstrated robust replay protection, reliable coin-splitting procedures, and mature wallet support, holders should generally avoid importing seed phrases or private keys into fork software, avoid signing fork-chain transactions with wallets containing valuable BTC, and treat any instruction to “claim your free coins” as potentially capable of putting the corresponding bitcoin at risk. The complexity of safely working with forked coins means that typically, the most technically advanced Bitcoiners, who are building their own wallet software early on in the fork game, including the developers of the fork, are accessing their coins first. They are likely going to be the first ones to dump them while new buyers are being marketed to and told that this is the “new Bitcoin” or “real Bitcoin”.  Further, during forks, scammers, including fork insiders, capitalize on the confusion by putting out urgent notices that you *have* to do something *mandatory*. This is all entirely false. Doing nothing is the safest move in Bitcoin, and why Bitcoin works as generational wealth that you can leave alone for decades. If you are scammed into doing something urgent like putting your seed phrase into a fake wallet, you will lose your Bitcoin permanently.  ### What Happens to Forks? Of the roughly some hundred coins that have forked from Bitcoin over the years, all have become dead, irrelevant, thinly traded, and/or abused by opportunistic pump and dumpers and insiders. The takeaway isn't that the founders didn’t have legitimate (at least in their eyes) technical grievances, or that all of them were motivated by getting rich, wanting a cult following, or outright fraud, though some combination of those factors does seem to be in play for most of the cases. It’s much deeper - it doesn’t matter what your motivation is.  You can fork the code. You can fork the ledger. You can even fork the brand. What you cannot fork is the thing that actually gives Bitcoin its value: the network of people who agree, without being told to, that Bitcoin *itself can never change*. That is the reason people buy it, trade hard assets like real estate for it, and leave it to their grandchildren. That agreement is the Schelling point, and it doesn't split when the chain does. It only makes the value proposition of Bitcoin stronger: it is impossible to violate the rules of the Bitcoin protocol and create Bitcoin for free, but it is completely free to create Bitcoin clones outside of the protocol. Caveat emptor. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Bitcoin Concierge Services for High-Net-Worth Families URL: https://www.swanbitcoin.com/investing/bitcoin-concierge-service-high-net-worth/ Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. --- **Conor Chepenik** · August 14, 2026 Once a family owns a meaningful amount of Bitcoin, buying it becomes the easy part. The harder questions tend to arrive afterward. Who should legally own the Bitcoin? Should it sit in personal custody, a trust, an IRA, a business account, or some combination? Should the family use professional custody, single-signature self-custody, or multisig? If the person who designed the entire setup died tomorrow, would the spouse, trustee, executor, or children know what to do? Then life changes. A business gets sold. An old 401(k) needs to move. A trust gets amended. Another child is born. The family moves to another state. A hardware wallet gets replaced. What looked perfectly organized five years ago gradually becomes a collection of decisions that somebody has to understand. That is where a Bitcoin concierge service should earn its keep. For a high-net-worth family, the valuable version of concierge service is organized around the Bitcoin position over time. Execution matters, but so do custody, retirement accounts, trusts, inheritance, security, and coordination with the attorneys, CPAs, trustees, and other professionals already advising the family. A trade may take minutes, but the structure around it may need to survive generations. ### What Should a Bitcoin Concierge Service Actually Do? “Concierge” can mean anything from access to a large-order desk to a faster support queue. Both can be useful. Neither necessarily solves the harder problem. The real complexity often appears as the Bitcoin position matures. A family might begin with Bitcoin in a personal account, then establish a trust. Some retirement savings may sit in an old employer plan. Part of the Bitcoin may eventually move into self-custody. Another portion may use multisig. A business could own Bitcoin separately. Years later, the estate documents and family circumstances may look completely different. A serious private-client relationship should help maintain continuity through those changes. The Bitcoin specialist should not replace the estate attorney, CPA, or financial advisor. Those professionals have their own responsibilities. The specialist's role is to understand the Bitcoin infrastructure well enough to help connect it to the rest of the family's financial life. That distinction matters because Bitcoin has several layers that can drift apart: **Legal ownership:** Who or what entity owns the asset? **Technical control:** Which keys can authorize a transaction? **Operational knowledge:** Does somebody know how the system actually works? **Succession:** Can the authorized people still operate it after death or incapacity? A trust can clearly state who inherits the Bitcoin while nobody in the family knows how to access it. Someone can also possess a seed phrase without having clear legal ownership of the asset. Good planning has to connect both worlds. ### Custody Should Be Evaluated by Failure Modes “Segregated custody,” “self-custody,” and “multisig” all sound reassuring until you ask what can actually go wrong. Professional custody reduces the family's day-to-day key-management burden while introducing dependence on another institution. Single-signature self-custody gives the owner direct control, while concentrating enormous responsibility in one credential. Multisig can distribute that authority across multiple keys, although the additional components create their own operational burden. There is no custody architecture with zero risk. The better question is: **Which risks does this arrangement reduce, and which risks does it ask my family to manage?** Before placing substantial Bitcoin into any custody arrangement, understand: 1. Who legally owns the Bitcoin? 2. Who controls the keys? 3. How many keys are required to move funds? 4. What happens if a key or signing device is lost? 5. What happens if the provider disappears? 6. Can the Bitcoin be withdrawn? 7. What happens if the owner dies or becomes incapacitated? 8. Can the spouse, trustee, or executor actually follow the recovery process? 9. Are backups geographically separated? 10. Has anyone tested the recovery plan? The most technically advanced setup is useless if the family cannot operate it reliably. ### Bitcoin Estate Planning Has Two Separate Problems Bitcoin inheritance planning becomes much easier to reason about once you separate the legal problem from the operational one. The legal plan establishes who is entitled to the Bitcoin and who has authority after death or incapacity. The operational plan determines whether that authorized person can actually access and move it. Bitcoin makes the distinction unusually clear. The network does not know what your will says. It cannot read your trust. It does not know who the executor is. It only knows whether a transaction satisfies the spending conditions attached to the Bitcoin. Your family has to bridge those two systems. A mature inheritance plan should make it possible to answer basic questions without exposing sensitive key material unnecessarily. Which accounts and wallets exist? Who owns each one? What custody model protects them? Who gains legal authority after death? Which people need operational knowledge? Where can they obtain trustworthy help? Putting a seed phrase on steel and telling your spouse where you hid it may be part of a recovery system. It is not, by itself, an estate plan. ### Service Can Become Part of the Security Model Bitcoin security conversations usually focus on hardware wallets, backups, multisig, withdrawal verification, and geographic redundancy. Those matter. Wealthy families also face an organizational security problem. Who understands the system? Suppose a family sells a company, purchases Bitcoin, later creates a trust, replaces two hardware devices, rolls retirement assets into a Bitcoin IRA, changes custody arrangements, moves states, and updates its estate documents. Each decision may be perfectly sensible on its own. Fifteen years later, someone still needs to understand why everything is structured that way. If every account relationship, recovery path, legal structure, and historical decision exists only inside one person's head, the family has created another single point of failure. Documentation helps. Educating a spouse or heir helps. Good legal and tax professionals help. A long-term Bitcoin relationship can add something else: institutional memory around the Bitcoin side of the family's financial life. Nobody should have to reconstruct fifteen years of Bitcoin decisions from a pile of generic support tickets during the worst week of their life. ### Large Bitcoin Transactions Are Often Bigger Than the Trade At meaningful size, clicking “buy” can become the least interesting part of a Bitcoin purchase. Maybe the capital came from selling a business. Maybe a trust or LLC is making the purchase. Maybe a seven-figure wire has a deadline. Maybe part of the Bitcoin will remain with a professional custodian while another portion moves into self-custody. Maybe an IRA transfer is happening at the same time. Consumer software is designed around normal cases. Significant wealth has a habit of creating abnormal ones. That is where human expertise earns its place. Routine transactions should be automated. A recurring purchase should not require a phone call every week. The human becomes valuable when the standard workflow stops matching reality and somebody needs enough context to solve the actual problem. ### Where Swan Fits [Swan Private](https://www.swanbitcoin.com/private/) is built around this longer relationship. Clients work with Bitcoin specialists across large transactions, custody, trusts and entities, retirement accounts, and inheritance or estate-planning coordination. The important distinction is that Swan does not offer only one custody path. For clients who want professional custody,[ Swan's custody platform](https://www.swanbitcoin.com/custody/) includes a segregated model in which assets are held through a regulated financial institution under an account relationship in the client's name. For clients who want collaborative self-custody,[ Swan Vault](https://www.swanbitcoin.com/vault/) uses a 2-of-3 multisignature structure. Two keys are required to move the Bitcoin, and the client controls two hardware signing keys while a third key is managed through the Swan dashboard. For experienced holders who want to retain every key themselves,[ Swan Sovereign](https://www.swanbitcoin.com/sovereign/) provides guided self-custody, ongoing education, custody check-ins, and access to a dedicated Swan Private representative. Swan does not hold or access the client's keys in Sovereign. Retirement capital creates another set of operational questions.[ Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/) supports real Bitcoin in Traditional and Roth IRA structures through a self-directed IRA custodian. The appropriate tax and retirement strategy depends on the individual, so those decisions should be made with qualified tax or financial professionals. The point is not that every wealthy family should use every product. Quite the opposite. A good Bitcoin wealth system should fit the family. Someone comfortable running a sophisticated multisig setup may need very little custody help. Another family may value professional custody. A third may want collaborative multisig because they want more control without making recovery completely dependent on one person. The useful relationship is one that can evolve as those needs change. ### 10 Questions to Ask Any Bitcoin Concierge Service Before trusting a provider with a meaningful part of your family's Bitcoin life, ask: 1. **Will I have a named person who understands my history?** If every conversation begins from zero, you have priority support rather than much of a long-term relationship. 2. **How exactly is Bitcoin custodied?** Ask who owns the asset, who controls the keys, and what happens if the provider fails. 3. **Can I withdraw into self-custody?** Understand that path before moving substantial assets onto a platform. 4. **What custody models do you support?** Different families may need professional custody, single-signature self-custody, multisig, or collaborative custody. 5. **Do you support trusts and business entities?** Large Bitcoin positions often intersect with real-world ownership structures. 6. **Can you work with my CPA, attorney, trustee, or family office?** Bitcoin should fit into the family's professional infrastructure rather than live in isolation. 7. **What happens when a client dies or becomes incapacitated?** Learn the process while everybody is alive, healthy, and under no time pressure. 8. **How do you handle unusually large or time-sensitive transactions?** Large financial events rarely fit perfectly into automated workflows. 9. **Can the relationship evolve if my custody preferences change?** The setup that fits today may not fit ten years from now. 10. **Who will understand why my Bitcoin is structured this way five years from now?** That last question may reveal more than all the others. ### The Relationship May Need to Survive Generations Buying Bitcoin is an event. Owning substantial Bitcoin is an ongoing system. Over decades, hardware changes. Families change. Laws change. Estate documents change. Businesses are created and sold. Children grow up. People move. Custody preferences evolve. The Bitcoin itself may sit quietly through all of it. The real test is whether the structure around it still makes sense. Does the custody model still fit the family? Does legal ownership match the way the Bitcoin is actually held? Do the right people know enough to act if something happens? Is there somebody they can call who already understands the broad picture? That is what wealthy families should demand from a serious Bitcoin concierge relationship. Execute the trade well. Help the family understand custody. Coordinate with the professionals handling legal and tax matters. Keep the operational structure intelligible as circumstances change. The trade takes minutes. The relationship needs to survive generations. ### Frequently Asked Questions #### What is a Bitcoin concierge service? A Bitcoin concierge service provides high-touch support for people, families, trusts, businesses, or other clients with substantial or complex Bitcoin needs. Services may include large transactions, custody guidance, retirement accounts, entity structures, inheritance planning, and access to a dedicated Bitcoin specialist. #### What should high-net-worth families look for in a Bitcoin concierge service? Look beyond transaction execution. Understand the provider's custody architecture, withdrawal policies, trust and entity support, inheritance process, retirement capabilities, and whether somebody will retain enough context to understand your Bitcoin structure over time. #### What is segregated Bitcoin custody? The exact meaning depends on the provider. Ask who legally owns the assets, how client property is separated from company assets, who controls the keys, which institution actually holds the Bitcoin, and what happens if either company fails. #### Is multisig useful for Bitcoin inheritance? It can be. Multisig can reduce dependence on a single key by creating multiple signing or recovery paths. It also adds operational complexity, so the setup should be documented carefully and coordinated with the family's legal and inheritance plans. #### Does a Bitcoin concierge replace an estate attorney or CPA? No. A Bitcoin specialist can help coordinate the operational Bitcoin side of the plan, while legal, tax, estate-planning, and individualized financial advice should come from appropriately qualified professionals. *Bitcoin is volatile. This article is for educational purposes only and does not constitute individualized financial, investment, tax, or legal advice. Tax, estate, custody, and inheritance outcomes depend on individual circumstances. Consult qualified professionals before implementing a strategy.* ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # Billionaires Boosting Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/billionaires-boosting-bitcoin/ Larry Fink’s CNBC interview, retweeted by Michael Saylor and Michael Dell, pitches Bitcoin as a legitimate hedge against monetary debasement with non-correlated returns. Bitcoin is HOPE! --- **Matthew Kratter** · June 1, 2024 · Updated August 2, 2026 ### Billionaires Boosting Bitcoin Billionaire Michael Saylor recently reposted a tweet by billionaire Michael Dell, who himself is highlighting an interview with another billionaire, Larry Fink of BlackRock, who happens to run the world's largest and most important asset manager. [Post on X](https://twitter.com/MichaelDell/status/1812895900068442621) All three billionaires are laser-focused on Bitcoin. Maybe your drunken uncle, who rants about Bitcoin being a scam every Thanksgiving, should start paying attention soon? Michael Dell has a net worth of +$100B, and there's some evidence that people like him have been quietly accumulating Bitcoin for years. ![](https://www.datocms-assets.com/56652/1721297654-md-nw.png?auto=format) Forbes There is some evidence people like Michael Dell have been quietly accumulating Bitcoin for years. As early as July 2014, Dell announced Dell computers had begun to accept Bitcoin. I hadn't realized this. [Post on X](https://twitter.com/michaeldell/status/490171653570052097) Other than this, I can't find any public announcements that he's accumulated Bitcoin, but it's extremely likely. Larry Fink's careful sales pitch in this CNBC interview, which Michael Dell has retweeted, makes some interesting points I want to highlight. This is a sales pitch for many people and why they should be interested in Bitcoin, particularly the BlackRock Bitcoin Spot ETF. [Video](https://www.youtube.com/watch?v=WpGIp4gOrGI) In [this](https://www.cnbc.com/video/2024/07/15/blackrock-ceo-larry-fink-major-believer-theres-role-for-bitcoin-in-portfolios-cnbc-crypto-world.html) interview with CNBC, Larry Fink says: - *"Bitcoin is a legitimate financial instrument that allows you to have maybe uncorrelated or non-correlated returns."* It is essential to hear this from his lips. You and I don't need to listen to it at this stage, but this legitimizes Bitcoin for many people. Calling Bitcoin a *"legitimate financial instrument"* gives Larry Fink the blessing to RIA's and other financial planners to safely recommend Bitcoin to clients. They can always say, *"Larry Fink says it's okay,"* and so it is okay. He also alludes to the fact that Bitcoin offers uncorrelated or non-correlated returns. Assets with returns uncorrelated to traditional assets like stocks and bonds are the Holy Grail for portfolio diversification. You want things that zig while the rest of your portfolio is zagging. This is no longer a concern. Still, it's hard to overemphasize its importance in portfolio construction. Larry here is saying the magical words: **uncorrelated and non-correlated.** In reality, Bitcoin has gone through periods where it's more correlated with equities and periods where it's less correlated with equities. Central bank money printing has a way of pumping most assets denominated in the currency that's being printed. So, you have a tendency for real estate, stocks, bonds, and everything to pump at once, including Bitcoin. However, depending on how you measure it, we still have various correlation periods. The real point here is that Larry Fink is saying the magic words, as we noted: uncorrelated and non-correlated, even if he hedges his statement with a weasel word like "maybe" to give him legal cover in case it's not always uncorrelated. Larry Fink says Bitcoin is an instrument you invest in when you're more frightened. It's an instrument for when you believe that countries are debasing their currency by excess deficits, and some countries are. The way he says this, you can tell he's talking about the U.S. He hints at U.S. deficits being monetized by Fed money printing, where the U.S. government is not bringing in enough taxes, so it needs to issue bonds. At the margin, those bonds are being bought by the central bank, put on the central bank's balance sheet, and bought with freshly printed money. This is what it means to debase the currency through excess deficit spending and the debt issuance and money printing that follows in the wake. Larry Fink says: - *"It is an instrument that you invest in when you're more frightened, though... [I]t is an instrument when you believe that countries are debasing their currency by excess deficits - some countries are." (Hints at U.S. deficits being monetized by Fed money printing."* *Fink continues:* - *"I believe we have countries where you're frightened of your everyday existence and [Bitcoin] is an opportunity to invest in something outside of your country's control."* I think this was an interesting statement, but I would say that owning a Bitcoin IOU like the BlackRock Spot ETF, ***(like Larry Fink does)*** where the real Bitcoin is stored at Coinbase custody under U.S. jurisdiction and regulation, is probably not the smartest thing you can do if you're worried about evil governments. We're really at ground zero here when it comes to evil governments. That being said, it is an opportunity to own an asset if you own the real thing outside your country's control. Fink says: - *"If you want to hedge hope, Bitcoin is not an instrument for hope unless you're hopeful you're going to make a lot of money on it."* This shows that Larry Fink has yet to go that deeply down the Bitcoin rabbit hole. He is obviously still valuing his wealth in fiat and other people's wealth in fiat. Bitcoin is not just a way to make a lot of money, though it can be that, too. Bitcoin really is the end goal. It is the money you'll want to have forever, so accumulating a lot of money means accumulating a lot of Bitcoin. No matter what price you pay for it, you should value your wealth in Bitcoin, not fiat. One of the goals that I set myself at the outset of the last bear market was to end up with more Bitcoin at the end than I had at the beginning, not even worrying about the fiat value of that Bitcoin. This is an important way to approach Bitcoin accumulation: **value your wealth in Bitcoin, not in fiat.** If you want to hedge hope, Larry Fink says: - "*If you want to hedge hope, Bitcoin is not an instrument for hope unless you're hopeful you're going to make a lot of money on it."* This is obviously not true. We have Michael Saylor's wonderful website [hope.com](https://www.hope.com/). A great resource. [![](https://www.datocms-assets.com/56652/1721298921-bitcoin-is-hope.png?auto=format)](https://www.hope.com/) Hope.com Bitcoin is **HOPE**: - for the global unbanked. - for people who live in weak fiat currency systems and who would not otherwise be able to store their economic energy for the long term. - for activists who work under totalitarian regimes that have tried to cut off all funding to them. ... and, for you and me. Bitcoin turns the black pill into a white pill for those living through the Fourth Turning. It allows many of us to opt-out and not follow things like politics as closely as we used to. **Bitcoin has become our politics.** Bitcoin came on the scene in 2008 and 2009, just as the Fed began to embark on endless money printing, and the wheels started to come off the U.S. political system and American global geopolitical dominance. Bitcoin is **HOPE** now for 8 billion humans and their progeny. [![](https://www.datocms-assets.com/56652/1721299594-bitcoin-michael-dell.png?auto=format)](https://x.com/MichaelDell/status/1803738385590231505) Twitter But if you want to experience the purest form of that hope, don't buy the BlackRock ETF or any other spot ETF or futures ETF. Buy real Bitcoin and learn to hold your private keys. Learn how to run your own node as well. This is how you'll get the fullest expression of the hope that Bitcoin offers humanity. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bitcoin Cold Storage: How to Protect Your Assets in 2024 URL: https://www.swanbitcoin.com/education/bitcoin-cold-storage/ Should you use Bitcoin cold storage wallet? Yes! In this guide we provide step by step process on how to setup and use your cold storage wallet to protects your assets in July 2024! --- **Mickey Koss and Drew** · June 2, 2024 · Updated August 2, 2026 With an electronic form of money that exists only in cyberspace, how could we ever be sure our private keys are secure from hacks and bad actors? Cold storage is **THE** most secure method, allowing users to have self-custody of their Bitcoin and control it through private keys, thus mitigating risks associated with exchanges. ![](https://www.datocms-assets.com/56652/1705624895-overvidw.png?auto=format) ***TL;DR****: While keeping Bitcoin on exchanges offers some protection, it also carries risks like potential hacks or legal issues, as experienced by Mt. Gox and FTX users.* ### Understanding Bitcoin cold storage - *Leaving Bitcoin on an exchange can keep it relatively safe from self-inflicted wounds but poses an entirely new set of risks to savers.* - *Exchange hacks like the infamous* [*Mt. Gox*](https://www.coindesk.com/business/2024/01/23/mt-gox-moves-seemingly-closer-to-bitcoin-repayments-for-2014-hack-victims/) *or the collapse of* [*FTX*](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/) *could leave you fighting to regain control of your funds for years, only to be left with scraps of your initial stack.* **The cold storage solution** Cold storage is the gold standard for Bitcoin security. Its the best way to live a sovereign existence by leveraging Bitcoin's native [properties](https://www.swanbitcoin.com/bitcoin-is-a-new-form-of-property/). As a digital bearer asset, Bitcoin can (and should) be withdrawn from [exchanges](https://www.swanbitcoin.com/bitcoin-exchanges/) and secured in [self-custody](https://www.youtube.com/watch?v=saGSThfjAP8). [Video](https://www.youtube.com/watch?v=dgJunF1vUYs) That's all well and good, but what does it actually mean? Let's dive into self-custody, cold storage and how they work in 2024. ### Definition & importance of Bitcoin cold storage Cold storage is a type of self-custody where individuals hold their private keys in a manner that keeps them off devices that are connected to the internet. It's a similar concept to physical two-factor authentication devices like [Yubikey](https://www.yubico.com/). You can essentially create your own vault in cyberspace, accessible anytime, anywhere, but only unlock it with a physical private key that could be hidden anywhere. ![](https://www.datocms-assets.com/56652/1705614444-btc-wallet-ex.png?auto=format) Bitaddress.org ### Types of Bitcoin cold storage solutions There are several [different](https://www.swanbitcoin.com/best-bitcoin-wallet/) cold storage solutions. Some of the most popular physical device options include: - [Passport](https://foundationdevices.com/passport/) - [Bitkey](https://bitkey.world/en-US/products/bitkey) - [Blockstream Jade](https://help.blockstream.com/hc/en-us/categories/900000061906-Blockstream-Jade) ***NOTE****: You can score yourself a FREE Blockstream Jade wallet by joining us for Pacific Bitcoin 2024.* [*Details*](https://www.pacificbitcoin.com/collections/tickets)*.* [![](https://www.datocms-assets.com/56652/1715901431-jade-tix.png?auto=format)](https://www.pacificbitcoin.com/collections/tickets) ### Key Benefits of Bitcoin Cold Storage - **Offline Security**: - Your private keys are stored offline, eliminating the risk of online hacks. - Even if your phone or computer is compromised, bad actors can only view your balances, not move your Bitcoin. - **Physical Security** - Offline devices used for signing transactions remain secure. - Attackers need physical access to these devices to move your Bitcoin. - **National Security Measures** - Bitcoin cold storage is so essential to safeguarding Bitcoin that on March 18th, 2024, El Salvador officially took [self-custody](https://twitter.com/nayibbukele/status/1768425845163503738) of a large portion of its national Bitcoin treasury. [Post on X](https://twitter.com/nayibbukele/status/1768425845163503738) ### Setting up Bitcoin cold storage Setting up cold storage can be intimidating... but it is actually quite simple. The most comprehensive library of instructional videos resides on [YouTube](https://www.youtube.com/playlist?list=PLxdf8G0kzsUVkZ5_Jc6PyG_j4K8htg-i3), created by Bitcoin Legend [BTC Sessions](https://www.youtube.com/@BTCSessions). [Video](https://www.youtube.com/playlist?list=PLxdf8G0kzsUVkZ5_Jc6PyG_j4K8htg-i3) Below, we will walk you through a broad overview of the steps involved.  ### Step-by-Step Guide to Setting Up a Hardware Wallet Once you purchase your hardware wallet, you need to set it up. ##### Steps to Set Up a Hardware Wallet 1. **Power Up and Create a PIN** - Upon power-up, devices will ask users to create a PIN. - It's important to remember the PIN, but it's not a critical mistake if you forget it. 2. **Generate and Secure Your Seed Phrase** - After a PIN is created, the device will generate your seed phrase. - The seed phrase is a string of 12 or 24 words cryptographically [hashed](https://www.swanbitcoin.com/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/) into your public key or receive addresses. - The seed phrase is your private key, the secret that allows you to control your Bitcoin. - It is recommended that seed phrases be backed up to protect them from fire or water damage. 3. **Backup and Confirm Your Seed Phrase** - The seed phrase allows you to restore your wallet if you forget your PIN or if the device breaks. - Recording and securing your private key properly is the most important step in this process. - Devices often allow you to reenter your private key to confirm you recorded it correctly. If optional, take this extra step for another security check. - Do not, under any circumstances, enter your private key or seed phrase into any internet-connected device. 4. **Export a Public Key** - Wallets will allow you to export a public key into Bitcoin wallet software to generate an interface with your wallet. This is often called uploading a *"watch-only wallet."* - After confirming your key, you can export your extended public key ([XPUB](https://www.swanbitcoin.com/whats-in-an-xpub/)) from your device to whatever Bitcoin wallet software you choose. 5. **Choose Wallet Software** - When you export your XPUB, a new address is generated. - Wallets require a signature from your device to send Bitcoin. - Popular software options include: - [Sparrow](https://sparrowwallet.com/): A popular desktop option with a lot of functionality. - [Blue Wallet](https://bluewallet.io/): A good mobile option for those who want to keep tabs on their Bitcoin on the go. 6. **Learn from BTC Sessions** - [BTC Sessions](https://www.youtube.com/c/btcsessions) has helpful demonstrations for both [mobile](https://www.youtube.com/playlist?list=PLxdf8G0kzsUUE7HHNTGTWBFxzt2oudiyS) and [desktop](https://www.youtube.com/playlist?list=PLxdf8G0kzsUVkZ5_Jc6PyG_j4K8htg-i3) options. [Video](https://www.youtube.com/playlist?list=PLxdf8G0kzsUUE7HHNTGTWBFxzt2oudiyS) ##### Important Considerations - **Redundancy**: - Bitcoin exists everywhere all at once; users can upload their XPUBs to multiple software wallet interfaces simultaneously. - The same private key can be used on multiple hardware devices for redundancy. - However, this is not recommended because it increases your attack surface. ### Creating & Safeguarding a Paper Wallet The first step to creating paper wallets is to **NOT DO IT**. Set up a hardware wallet instead. ##### Risks of Using Paper Wallets - **Exposure to Damage**: - Paper wallets expose you to an increased risk of loss due to fire or water damage. - **Dependency on Websites and Software** - Paper wallet generators depend on websites and software downloads. - These may contain malware that can steal your private keys. ##### If You Still Prefer a Paper Wallet 1. **Choose a Reliable Website**: - Use websites like [bitaddress](https://www.bitaddress.org/). 2. **Disconnect from the Internet** - Make sure to disconnect your computer from the internet before generating your keys. 3. **Run Virus and Malware Scans** - Run virus and malware scans before generating keys. 4. **Generate Keys Offline** - Access a computer not connected to the internet. - Run the software through a USB drive and generate your keys. - This will provide you with a public and private key pair, typically presented as two QR codes with strings of [hashed](https://www.swanbitcoin.com/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/) data. 5. **Print and Secure the Keys** - Print the keys on a piece of paper to create your Bitcoin wallet. - Ensure you delete all digital copies of the wallet once you’ve printed them out. If they remain cached on your device, it leaves you open to theft if your devices become compromised. 6. **Store Your Private Keys Securely** - Store the private keys similarly to valuables or jewelry. - A fireproof safe or safety deposit box are both great options. - However, it cannot be guaranteed that your paper keys will remain viable when exposed to water, humidity, or heat. ##### Final Warning - **Generate Paper Keys at Your Own Risk** - Be aware of the potential risks and take necessary precautions if you use a paper wallet. ![](https://www.datocms-assets.com/56652/1705614579-paper-wallet-ruined.png?auto=format) Oopsie daisies. This person used a paper wallet and is now poor. ### Tips for Maintaining the Security of Bitcoin Cold Storage Solutions The best option for securing your private keys and hardware wallets is immediately taking them on a boating trip, accidentally throwing them away, or losing them at the bottom of a large body of water. Joking aside, it's not a big deal if you lose access to your hardware wallet, provided you backed up your seed phrase correctly. However, losing access to your seed phrase means you lose access to your Bitcoin. ##### Key Tips for Cold Storage Security 1. **Verify Your Seed Phrase Backup** - After setting up hardware wallets, send a small amount of Bitcoin to your address. - Wipe your device and restore it with the seed phrase to ensure you can regain your wealth if the hardware is lost or no longer functional. 2. **Physical Security of Private Keys** - The key to maintaining security in your cold storage is to ensure that private keys remain secret and secured. - Signing devices or hardware wallets should also be hidden and secured, but in a different location from their private keys or seed word backups. 3. **Secure Storage Options** - Many people lock their keys in safes or hide them in unusual locations. - Companies like [Crypto Cloaks](https://www.cryptocloaks.com/product-category/hard-wallet-mounts/) make products that allow you to mount your hardware wallets wherever you want. 4. **Creative Hiding Places** - Some Bitcoiners are known to hide their seed phrases inside walls or furniture. - Be mindful that the most secure setups may add complexity, resulting in unforeseen errors that prevent you from recovering your Bitcoin. ### Considerations & Best Practices for Bitcoin Cold Storage When setting up your Bitcoin cold storage, there are a few hard and fast rules to follow. ##### Basic Rules for Cold Storage Security 1. **Treat It Like a Valuable Asset** - Treat your Bitcoin cold storage as you would treat any valuable bearer asset like jewelry, large amounts of cash, or ammunition. 2. **Plan for Long-Term Security** - Treat your Bitcoin as if it's worth at least [10 times more](https://www.swanbitcoin.com/bitcoin-price-prediction/) than it currently is. - Bitcoin's value tends to explode in short periods of time. Plan your security for the long term so you're not scrambling in the bull market to make your storage safer. ##### Advanced Security Practices 1. **Geographical Distribution** - Geographical distribution is a popular method for enhancing security. - Hide your seed phrase in your friend's or family member's home. - Divide the seed phrase into several pieces and distribute those to multiple parties. 2. **Follow Proven Guidelines** - Follow these two guidelines, and you should be all right. - For those seeking more specificity, consider additional best practices detailed below. ##### Best Practices for Enhanced Security 1. **Backup and Verify Your Seed Phrase** - Always back up your seed phrase and verify it by restoring your wallet. - Ensure your backups are stored in a secure, fireproof, and waterproof location. 2. **Use High-Quality Hardware Wallets** - Invest in high-quality hardware wallets known for their security features. - Regularly update the firmware of your hardware wallets to protect against vulnerabilities. 3. **Keep Hardware and Keys Separate** - Store your hardware wallet and seed phrase in different locations to minimize risk. - Avoid storing digital copies of your seed phrase on internet-connected devices. 4. **Educate and Train** - Educate yourself and anyone else involved in your Bitcoin security about best practices. - Regularly review and update your security measures as needed. By following these considerations and best practices, you can ensure the long-term security of your Bitcoin cold storage. ### Pros & cons of different Bitcoin cold storage method [Video](https://www.youtube.com/watch?v=EeRSOIr_v1Y) ##### Hardware Bitcoin Wallets **What**: Users store private keys on a purpose-built piece of hardware. #### Pros - **Enhanced Security**: Private keys never touch the internet, which reduces the risk of losing them. - **Long-Term Storage**: Suitable for long-term storage. - **Recoverability**: If you lose your hardware wallet, you can use the backup seed phrase to restore your wallet. #### Cons - **Seed Phrase Security**: Users must secure a seed phrase backup, requiring a thoughtful strategy to protect it. - **Physical Theft Risk**: If your hardware wallet is stolen, your funds risk being hacked. Protecting seed phrase backups is standard practice for wallets where the user controls the private keys. #### Examples - [Blockstream Jade](https://blockstream.com/jade/) - [BitBox](https://shiftcrypto.ch/) - [Bitkey](https://bitkey.world/en-US/products/bitkey) ##### Paper Bitcoin Wallets **What**: Typically involves printing out your Bitcoin public and private keys on paper. #### Pros - **Secure and Offline**: Reduces online hacking risks. - **Full Control**: Offers full control over private keys and Bitcoin assets. - **Cost-Effective**: Easy to create with just a printer and paper. - **No Hardware Failures**: Not prone to hardware failures like digital devices. #### Cons - **Physical Damage Vulnerability**: Secure but vulnerable to physical damage. - **Inconvenient for Frequent Use**: High risk of irreversible loss if lost or stolen. - **Lack of Recovery Options**: Require secure storage and carry a risk of key interception during printing if the printer is not secure. #### Fun Fact - Paper wallets are not very reliable. Imagine a baby with a book: sometimes it's cute, but other times they just tear it apart or try to eat it. Now, picture that baby with your paper wallet after just hitting your first full Bitcoin. It's not a great option if you want to store wealth long-term. ### Understanding the Risks & How to Mitigate Them Bitcoin cold storage rules are similar to Fight Club. Don't talk about it unless you completely trust the person, like a spouse or next of kin. No device is perfect; all will inevitably have vulnerabilities that can be exploited. ![](https://www.datocms-assets.com/56652/1705628734-cold-storage.png?auto=format) #### Pro Tips - **Beware of Phishing Scams**: Downloading software updates from emails is a surefire way to get your coin jacked from a [phishing scam](https://www.swanbitcoin.com/is-coinbase-safe/). - **Keep Seed Phrases Offline**: Once your key is generated and backed up, NEVER type it into a device connected to the internet. Your phone or computer's notepad is not a great place to store seed phrases. ### Let's wrap up! Now that you have a clearer understanding of the importance of securely storing your Bitcoin, it's the perfect time to [start](https://www.swanbitcoin.com/) your Bitcoin journey. If you already have some Bitcoin but are seeking an [alternative to Coinbase](https://www.swanbitcoin.com/coinbase-alternative/), because you are unsure if its [safe](https://www.swanbitcoin.com/coinbase-is-in-trouble-4-reasons-to-avoid-it-in-2024/) to use anymore learn how to delete your Coinbase account in only [3 easy steps](https://www.swanbitcoin.com/delete-coinbase-account-in-three-easy-steps/). Thinking about Bitcoin retirement options? Consider a [tax-free](https://www.swanbitcoin.com/crypto-iras/) Bitcoin IRA option with [Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/). ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Why some Coldcard seeds were compromised: false randomness URL: https://www.swanbitcoin.com/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/ Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. --- **Yan Pritzker** · July 31, 2026 *On July 30th, 2026,some Coldcard hardware wallets were compromised due to false randomness. Coinkite, the company behind the Coldcard, has posted a security advisory here:* [*https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/*](https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/)  Every bitcoin wallet is built from a large secret random number, represented as a set of words and known as a seed phrase. If that number is truly random, the search space (i.e. the total list of such numbers) is so large that it is nearly impossible for anyone to try them all, even with the computing power of the entire world. But if that randomness is affected, an attacker can easily search for valid keys. The problem is that computers are bad at randomness, since they are generally deterministic devices. Computers routinely use what are called Pseudo-Random Number Generators (PRNGs) which essentially take some starting number(s) and do mathematical operations to achieve something that *looks* random but in fact, can be derived if you know the starting conditions.  For true randomness (TRNG), computers rely on special chips that try to measure external physical entropy such as tiny variations in temperature. The Coldcard has a proper hardware randomness generator built into its main chip, whose entire job is producing unpredictable numbers from physical noise. Until March 2021, the wallet-creation code used it directly. In March 2021, Coldcard moved its cryptography onto libsecp256k1, the same library Bitcoin Core uses; a sound decision. To do it they added a supporting library, and wallet-seed generation started requesting randomness through that library instead. The library was supposed to work with the same hardware TRNG. However, due to a single mistaken line of code, it reached a *software* substitute (a PRNG), which looked like it produced randomness, but actually was based on a fixed set of conditions. This set of conditions significantly reduced the total space of randomness, making it possible for an attacker to cycle through all the possible values in a reasonable amount of time. ### People who added their own randomness were not affected Coldcard supports adding your own randomness on top of theirs, to avoid precisely this type of issue (trusting the vendor with randomness). If you created your own seed by drawing words out of a hat, rolling dice, or similar, you were not affected. Coldcard supports two key options to add randomness: 1. [Adding a “BIP39” passphrase](https://coldcard.com/docs/passphrase/) - this is basically a phrase that comes from your own randomness, outside of the device. If you used a short passphrase like “dog”, that would add very little randomness; an attacker can easily cycle through the dictionary. However, if your passphrase consists of six BIP39 words, it is adding a significant amount of entropy, and making the attack implausible. 2. [Using dice](https://coldcard.com/docs/master-seed/#dice-rolls-only). You can roll physical dice, which are a source of true randomness. Note that the company recommends at least 50 dice rolls, but ideally 99 for sufficient entropy. There are some posts saying that commercial dice could be biased, but even a biased source of real world entropy flipped enough times can be sufficient.  ### Multisig - a safer alternative to relying on a single device A normal bitcoin wallet holds essentially one secret (the 12 or 24 word seed phrase). Whoever holds that secret controls the money. That means one thing has to go wrong for the money to be gone: the secret is stolen, lost in a fire, guessed, or written down somewhere it shouldn't have been. Multisig replaces the single secret with several, and requires a minimum number of them to move funds. The common arrangement is 2 of 3: three separate keys exist, any two can authorise a spend, and no single key can do anything on its own. Think of a safe that needs two different keys turned at once, held by two people who keep them in different buildings. Here at Swan, we offer [Swan Vault](https://www.swanbitcoin.com/vault/), where you hold two hardware keys, and you manage the operation of the third backup key via the Swan platform. This makes the setup highly resilient to theft and loss. Our supported device, the Blockstream Jade, [is not affected by the Coldcard bug, according to Blockstream](https://x.com/Blockstream/status/2083030032927306010). In fact, the Jade relies on [several totally independent sources of randomness](https://help.blockstream.com/blockstream-jade/faqs/how-does-jade-generate-my-recovery-phrase?ref=blog.blockstream.com) to avoid precisely this type of issue. Astute readers may notice a catch – if the same type of device running the same firmware was used to create the majority of the multisig setup’s keys, and a flaw similar to the Coldcard flaw was found, an attacker could potentially re-create the seeds of those devices. A multisig setup generates multiple addresses like any other Bitcoin wallet. Each address is a fingerprint of a lock design, not a list of keys. When you receive Bitcoin to an address, you reveal nothing about which keys open it, how many are needed, or who holds them.  An attacker cycling through random Bitcoin keys in a large scale attack doesn’t necessarily know they belong to a multisig. Even if they accidentally stumbled on your specific two keys, they can’t compute your address, because computing it requires the third key as well, and they don't have it. However, when you *spend* from a multisig address, you have to publish the lock design so the network can verify it. That publication reveals the public versions of all three keys, which is the information the attacker needs (along with the two private keys they already presumably cracked). This information is available to the attacker as soon as you initiate the spend, because your transaction enters into the Bitcoin mempool, a temporary holding place on every Bitcoin network node that processes transactions, and thus becomes visible to all. An attacker could duplicate your transaction, but pay a higher fee, to get their transaction included. Because of this, if you created a multisig with two vulnerable Coldcards (i.e. not using passphrases and dice, Mk3 version 4.0.1 or later), you should transfer your funds to a safer setup. However, although relatively unlikely, the act of sending the Bitcoin could itself expose it to the attack. For this reason, you may consider using a private Bitcoin relay service such as MARA Slipstream ([https://slipstream.mara.com/](https://slipstream.mara.com/)) to submit the transaction. This is an advanced operation, but most people who have set up multisig quorums using Coldcards are probably advanced enough to proceed with this.  ### Self custody is the preferred path for Bitcoiners, but you don’t need to rush into it If you are worried about the safety of your setup, you may want to consider placing your assets with a custodian. There are a number of options on the market. Here at Swan, we have partnered with reputable regulated financial institutions such as BitGo, Bakkt, and Equity Trust, each of which holds funds directly in your name, and in highly secure facilities.  Swan offers a spectrum of custody options due to the trade-offs of all the options,  - self custody, - guided self custody with Swan Sovereign,  - regulated institutional custody with Swan Safe,  - collaborative multi-sig custody with Swan Vault,  - and additional layers of protection with video baseline and verification of Swan Safe Plus and Swan Vault Plus.  Many clients move between these options or split their Bitcoin holdings between them. See [https://www.swanbitcoin.com/custody/](https://www.swanbitcoin.com/custody/) to learn more.  And all these custody options are further secured by Swan Guard, our suite of advanced security features and protocols that protects all Swan accounts.  As always, we are here to help. Reach out to us at [hello@swanbitcoin.com](mailto:hello@swanbitcoin.com) or your Swan Private rep.  ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # The Battle for Monetary Independence - Swan Bitcoin URL: https://www.swanbitcoin.com/essay/the-battle-for-monetary-independence/ A 50-day campaign to advance freedom and sovereignty through Bitcoin adoption --- **Cory Klippsten** · July 21, 2026 > It should make history, cause it’s a really big operation. > > — Phillip Klippsten, February 14, 1945 My grandfather Phillip Klippsten wrote those words aboard the USS *Yorktown*, 300 miles offshore from Tokyo, two days before the ship began launching strikes against the Japanese home islands. He was 34 years old, married to my grandmother, Lily, the father of two young children, and desperate to get home to the ordinary life he had left behind in Kansas City. He did not know when the war would end, whether the operation would succeed, or whether he would live to see his family again. He knew only that an enormous force had been assembled, that the moment had arrived, and that the work in front of them could bring the war to its conclusion. ![](https://www.datocms-assets.com/56652/1784483492-screenshot-2026-07-19-at-12-51-14-pm.png?auto=format) The opening pages of Phillip Klippsten's war journal His journal is compelling because it was written without the benefit of hindsight. History now compresses those months into a familiar sequence of battles, victories, surrender, and homecoming, but he experienced them as a long series of uncertain days filled with hard work, false starts, rumors, bad weather, fear, boredom, exhaustion, and an almost unbearable longing for his wife and children. He had no way to know which operation would prove decisive or which day would later seem important. He simply continued doing his job while thousands of other ordinary Americans did the same. Little we do today compares with the sacrifices of his generation, and Bitcoin adoption is not a literal war. In fact, the entire purpose of our work is to help produce a peaceful transition to a better monetary system, without the destruction and human suffering that usually accompany the collapse of an old order. But his journal carries a lesson that applies to every great historical change: history looks inevitable only after the people living through it have done the work required to make it happen. This summer, the United States celebrates 250 years since the Declaration of Independence. We rightly honor the founders, the soldiers who secured the new nation, and the generations of Americans who strengthened and defended it ever since. But America was not founded by people celebrating independence. It was founded by people acting to achieve it, at considerable risk to themselves, because they had concluded that free people should no longer live as subjects of a distant and unaccountable power. Political independence was the great achievement of their generation. Monetary independence is the great unfinished work of ours. ### The Work That Wins > All those guys can see are the glamour and heroics not the damn hard monotonous work and cleaning that always goes on. > > — June 6, 1945 My grandfather wrote that after watching visiting newspaper men report from the comfort of the officers’ quarters while paying little attention to the sailors whose repetitive, exhausting work kept the carrier operating. The public would see the heroic pilots, the great battles, the photographs, and the victories. It would rarely see the endless cleaning, loading, repairing, watching, practicing, and maintaining that made those victories possible. ![](https://www.datocms-assets.com/56652/1784482465-screenshot-2026-07-19-at-12-33-13-pm.png?auto=format) Phillip Klippsten (center) Bitcoin has its own version of this dynamic. Bull markets receive all the attention because they deliver the spectacle: new all-time highs, breathless media coverage, institutional announcements, political conversions, suddenly popular conferences, and millions of people discovering that they have always been interested in sound money. We should recognize those moments, but they are the visible result of work performed earlier, during the periods when Bitcoin was quiet, unpopular, and declared dead once again. Bear markets are when developers improve the protocol and the tools around it, miners become more efficient, companies strengthen their products, educators refine their arguments, and committed Bitcoiners continue converting the fruits of their labor into better money. They are when tourists leave, distractions fade, and conviction deepens. The bull market gets the glory, but the bear market does much of the work. In 2020, when we launched Swan, I wrote *Ten Million Bitcoiners: The Intransigent Minority*. Drawing on Nassim Taleb’s observation that a stubborn minority can flip an entire system, I argued that Bitcoin would become politically irreversible once the United States had roughly ten million committed Bitcoiners. I did not mean ten million people who had purchased twenty dollars of Bitcoin, snagged some ETF shares, or downloaded an app. I meant ten million Americans who owned a meaningful amount, understood why Bitcoin matters, and would strongly oppose any attempt to take it away from them. At the time, I estimated that we had perhaps 100,000 Americans who met that standard. We needed a hundredfold increase, and I argued that driving adoption must therefore dominate every other priority. The greatest remaining threat to Bitcoin was not a technical failure, because Bitcoin had already proved remarkably resilient. The greatest threat was that the incumbent system might decide to coordinate an attack while the number of committed Bitcoiners was still small enough to isolate, demonize, and overpower. Two years later, I wrote *The Race to Avoid the War*. My argument was that Bitcoin is going to win, but the manner in which it wins remains profoundly important. Bitcoin can emerge as the orderly, antifragile alternative to a failing monetary system through education, voluntary adoption, better products, and the steady growth of a constituency that makes political confrontation obviously futile. It can also win the longer, harder way, after capital controls, monetary chaos, collapsing currencies, and attempts by desperate governments to hold on to the power of the money printer. We are still running that race, and the work still happens one person at a time. Every committed Bitcoiner was once someone who did not understand Bitcoin. Every meaningful position began with a first purchase. Every person willing to defend Bitcoin began by learning why 21 million matters, why ownership differs from exposure, and why money controlled by transparent rules is preferable to money governed by institutional discretion. ### Independence Must Be Won > Unless the folks at home get riled up and make the government do something. > > — September 7, 1945 The American founders did not merely replace a British government with an American government. They advanced a radical proposition about the relationship between the individual and the state: people possess rights that precede government, legitimate authority derives from the consent of the governed, and the purpose of political institutions is to secure liberty rather than dispense it as a privilege. The constitutional system they subsequently built reflects a realistic understanding of human nature and concentrated power. Authority was divided among branches and levels of government because even good people should not be trusted with unlimited discretion. The system did not depend on finding a permanently virtuous ruler. It attempted to establish rules, incentives, and institutional checks that would restrain every ruler. Bitcoin applies this proposition to money. It does not ask us to search endlessly for wiser central bankers, more disciplined politicians, or a sufficiently responsible committee with the power to determine the value of everyone else’s savings. It replaces discretion with rules that are transparent, predictable, and extraordinarily difficult for any individual, institution, or government to change. No man can vote himself a privileged allocation from Bitcoin’s issuer, because there is no issuer. No president can create more Bitcoin to fund a favored project. No central bank can change the supply schedule in response to political pressure. No corporation can dilute every existing holder to finance an acquisition. The network applies the same rules to everyone, whether they own $10 of Bitcoin or $10 billion. This makes Bitcoin the most powerful tool for monetary independence ever created, but its existence does not guarantee its adoption. Bitcoin does not buy itself, explain itself, defend itself in Congress, teach your children, help your friend take custody, or persuade your family to convert a portion of its savings. Those are human actions, undertaken by individuals who decide that monetary independence is worth pursuing. The founders did not believe that independence could be secured by spectators, and neither should we. Freedom is not a condition we passively inherit and permanently possess. It is a way of organizing society that must be continually understood, exercised, strengthened, and passed forward. This is true of political freedom, and it is equally true of monetary freedom. ### Killing the Bear > If we had let up even a little they would have knocked the hell out of our fleet. > > — August 14, 1945 Let’s be clear about what we mean when we talk about killing the bear market. No company can command Bitcoin’s price to rise, and no single campaign, purchase, or group of people determines the market. We cannot promise a date, a price target, or a magic incantation that will turn every chart green. What we can do is reject the passivity that allows a bear market to become a state of mind. That passivity takes hold when people begin waiting for someone else to act. They assume adoption will resume only after Wall Street gives permission, Washington offers encouragement, the media discovers a fresh story, or the price has already risen enough to make buying feel safe again. It produces the strange but familiar spectacle of people becoming more enthusiastic about acquiring Bitcoin as it becomes more expensive and less enthusiastic as it becomes cheaper. We are repeatedly told that Bitcoin needs a new narrative before the next bull market can begin. This gets the causality backward. Narrative follows price. Bitcoin does not need journalists and bankers to invent a new reason for it to succeed. When the price rises, they will write the narratives for us, because journalists need stories that sell ads and bankers need stories that sell deals. They will announce that Bitcoin has been transformed by institutional adoption, sovereign accumulation, monetary instability, geopolitical fragmentation, artificial intelligence, or whatever explanation fits the moment. The underlying case for Bitcoin will not have suddenly changed. More people will simply have acted on it. Bitcoin already has the only narrative it needs. Governments continue to spend more than they collect, central banks continue to debase currencies to sustain the system, and people everywhere continue to need a form of money that cannot be printed, censored, frozen, or altered for the benefit of the powerful. The contest is not between two competing political programs for administering the same broken monetary order. There is a third option outside the endless struggle between kleptocrats and communists: money governed by rules rather than rulers. The Bear Army is made up of defeatism, distraction, exhaustion, cynicism, and short-term thinking. It tells companies to retreat and stop investing. It tells individual Bitcoiners that their purchases are too small to matter, their conversations persuade no one, and their efforts will have no effect on history. It teaches people to stare at the price while ignoring the steady expansion of the network, the infrastructure, the knowledge base, and the committed constituency around it. Most damaging of all, it persuades Bitcoiners to stop evangelizing at precisely the moment when evangelizing can do the most good. This is the BEST time to bring someone into Bitcoin. Would you rather persuade a friend to begin buying while the market is quiet and prices are low, or wait until the next all-time high, when the media is screaming, everyone is chasing, and your friend reasonably wonders why you did not tell him sooner? Would you rather wear the Bitcoin shirt when everyone suddenly thinks it’s cool, or wear it proudly now, when it communicates real conviction? Would you rather reconnect with the Bitcoin friends who helped you through the last cycle, or leave the old group chat dormant until price makes everyone care again? We reject that posture. Bitcoiners do not need to wait for the bull market to return before we resume building the intransigent minority in earnest. The next bull market will be fueled by the people who learn, buy, build, organize, and commit during the bear market. Bull markets do not descend from the sky as gifts, and they do not begin because a banker discovers a clever phrase. They emerge from the cumulative actions of human beings who have decided that the future is worth building before everyone else can see it. > The enemy came down... they shot down 13 enemy planes. It was a funny thing, but most all the officers hit the deck when the enemy came in close to Flag Plot. The Admiral just stood there giving out orders, so I just stood up too, and we smiled at each other. He's a swell guy. > > — April 29, 1945 My grandfather never says he stopped being afraid. He says he looked at the man responsible for leading the battle, saw him calmly doing his job, and decided to do his own. Courage is contagious. So is conviction. When leaders remain focused instead of panicking, other people discover they can stand up too. That is why Swan is launching 50 Days for Freedom, a campaign to accelerate Bitcoin adoption, grow the ranks of committed Bitcoiners, and advance the cause of monetary independence 250 years after America's declaration. We are not taking the summer off. Every weekday on X Spaces, Café Bitcoin will bring together old friends, new voices, builders, educators, founders, and committed Bitcoiners who are ready to coordinate, generate ideas, launch campaigns, and make things happen. Swan will be in the trenches all summer long, and we invite the entire Bitcoin ecosystem to join us. For the next 50 days, Swan is cutting Bitcoin purchase fees to 0.50%, with Swan paying our clients’ withdrawal fees as always. We committed to this rate for the duration of the campaign because urgency is the point. Swan is putting its economic energy behind adoption for 50 days, and we ask Bitcoiners everywhere to put their own energy behind it as well. ![](https://www.datocms-assets.com/56652/1784502670-screenshot-2026-07-19-at-6-10-20-pm.png?auto=format) USS Yorktown October 1945 We want people who are hesitating to make their first purchase to get off zero. We want existing Bitcoiners to increase their recurring buys, to make that big purchase they’ve been postponing, to take advantage of low fees while the campaign is live. We want every Bitcoiner to recruit someone, answer questions, share the best educational material, explain the difference between Bitcoin and crypto, and help another person move from curiosity to genuine understanding and ownership. Buy the Bitcoin shirt and wear it. Pick up a children’s book about Bitcoin and read it to your kids. Reopen the group chat. Schedule the video call. Get the posse back together. They want to hear from you, and you want to be there for them. We also want people to take possession of real on-chain Bitcoin rather than settling for financial exposure that leaves the actual asset somewhere else. Swan has always paid the network fee for our clients’ withdrawals, because we want our clients to own Bitcoin and develop the confidence to secure it appropriately. Buying Bitcoin is the beginning of monetary independence, but understanding and controlling what you own is what makes it real. This is how we will reach ten million Bitcoiners, and this is how the race to avoid the war will be won. We do not need one heroic action from one extraordinary person. We need sustained action from millions of ordinary people who understand that the work matters even when the world is not yet paying attention. The Bear Army is counting on us to wait for a new narrative, a higher price, or permission from the very institutions Bitcoin was built to route around. We intend to disappoint those bears. ### What Freedom Is For > I’m so happy life is worth living again. Everything I’ve been missing can come true again. I can be with Lily and live. Just live again. What a wonderful thought. > > — August 10, 1945 My grandfather wrote those words by flashlight with a picture of Lily in front of him, after the captain announced that Japan had asked for peace. What he wanted after months of battle was not glory, power, or a permanent life of heroic struggle. He wanted to go home to his wife and children, return to work, and live an ordinary life as a free man. ![](https://www.datocms-assets.com/56652/1784482697-screenshot-2026-07-19-at-12-37-38-pm.png?auto=format) Lily and Phillip back home in Kansas City That is what freedom is for. Bitcoin is not the purpose of life, and accumulating money for its own sake is not a worthy substitute for living. Sound money is valuable because it helps people preserve the results of their work, make plans across time, support their families, build institutions, take risks, and devote more of their lives to purposes they choose. Your savings represent hours you worked, risks you accepted, businesses you built, time spent away from people you love, and consumption you postponed for the sake of the future. When the monetary system allows others to dilute those savings without your consent, it weakens your claim on that future. Bitcoin offers a peaceful alternative, giving every individual access to property that cannot be created without limit, altered for political convenience, or administered according to a different set of rules for the powerful. Two hundred and fifty years ago, Americans declared that they would no longer live as subjects. We have inherited the political institutions, cultural traditions, and extraordinary prosperity made possible by their courage, but the best way to honor that inheritance is not merely to look backward and celebrate what they accomplished. It is to identify the unfinished work of freedom in our own time and do our part to advance it. This summer, Swan will spend 50 days lowering the cost of buying Bitcoin, educating new Bitcoiners, supporting existing Bitcoiners, and recruiting the intransigent minority that will make monetary freedom irreversible. We invite you to buy, learn, take ownership, increase your commitment, and bring someone else with you. The Bear Army is counting on us to remain passive until the price tells us it is safe to act, but history has never been made that way. It is time to finish the job in front of us. Let’s defeat the bear, build toward ten million Bitcoiners, and win the race to monetary independence. ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Is Bitcoin Safe for Generational Wealth? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/is-bitcoin-safe-for-generational-wealth/ Is Bitcoin safe for generational wealth? Learn why custody, inheritance planning, and patience matter more than price when building lasting family wealth with Bitcoin. --- **Conor Chepenik** · June 27, 2026 People ask whether Bitcoin is safe for generational wealth. I think they are asking the wrong question. Safe compared to what? A currency that loses purchasing power every year? A banking system that runs on counterparties? A portfolio that rewards constant activity and punishes patience? Every asset carries risk. The real question is which risks you are choosing to accept. Most fortunes are not destroyed by one catastrophic investment. They leak away. Inflation chips at purchasing power. Taxes compound. Families overspend. Portfolios get traded too often. Estate plans are written once and never updated. Wealth built over decades disappears through a thousand small decisions, and almost nobody notices until it is gone. Bitcoin flips that equation. For the first time in history, anyone with an internet connection can own a finite monetary asset that cannot be diluted, can be held without a bank’s permission, and can be handed directly to the next generation. That freedom comes with a cost. Bitcoin does not forgive emotional decisions, careless custody, or a missing inheritance plan. So is Bitcoin safe for generational wealth? Yes. Just not for the reasons most people assume. Bitcoin’s greatest risk is rarely Bitcoin itself. It is us. The families most likely to hold Bitcoin across generations are not necessarily the sharpest traders or the ones watching charts at midnight. They are the families with the patience to accumulate, the discipline to secure their keys, the foresight to prepare their heirs, and the restraint to leave the Bitcoin alone. The hardest part of owning it may be doing nothing at all. **Technology Creates Abundance. Our Money Doesn’t.** Every year, technology makes the world more abundant. Computers get faster. Software gets cheaper. A single smartphone now does the work of a camera, a GPS unit, a calculator, an encyclopedia, a music library, a television, and a dozen other things people once bought separately. The real cost of producing goods and services keeps falling. In a free market, families would feel that abundance as rising purchasing power. Saving would mean your money buys more next year than it does today. Most people experience the opposite. Why? Because technology is naturally deflationary and our monetary system is intentionally inflationary. As productivity climbs, the money supply expands to support debt, government spending, and financial markets. Much of technology’s abundance gets absorbed by monetary expansion before it ever reaches an ordinary saver. We live in the most advanced civilization in history, and millions of people still feel like they have to run faster every year just to stay in place. The greatest threat to generational wealth may not be volatility at all, but silent dilution. People say Bitcoin is risky. So is trusting politicians with a monopoly on money. Bitcoin was built differently. Its supply does not stretch to fit election cycles or debt burdens. Twenty-one million coins is not a target somebody can revise. It is a monetary rule that every participant in the network enforces together, which makes Bitcoin one of the few assets aligned with a world where technology keeps producing more with less. **The Hardest Thing to Do Is Nothing** There is a story that has circulated in investing circles for years. It claims Fidelity once reviewed its accounts and found that the best performers belonged to people who had either forgotten they owned them or passed away. Here is the honest version. No public Fidelity study has ever confirmed it, and the writers who went looking for the source, [Morningstar among them](https://www.morningstar.com/columns/rekenthaler-report/archives-praise-dead-investors), came back empty-handed. Treat it as a parable. The reason the parable refuses to die is that the lesson underneath it keeps appearing in real research. Study how investors actually behave and you find the same pattern again and again: the heaviest traders tend to post the worst returns. Activity feels like progress. Usually it is just friction with fees added on top. Bitcoin magnifies the lesson. Most people who lose money in Bitcoin were not failed by Bitcoin. They simply could not sit still. They panic sell during drawdowns. They chase leverage. They rotate into the newest alt-coin. They leave long-term savings on an exchange because convenience feels safer than responsibility. They confuse movement with progress. The protocol never panics. Only people do. Generational Bitcoin does not need active management. The ideal behavior is almost embarrassingly simple. Buy real Bitcoin. Move it to cold storage. Protect the keys. Write down the inheritance plan. Then let time do what it has done across every Bitcoin cycle so far, which is compound. That sounds easy. It is not. Bitcoin will test your conviction more than almost any asset you will ever own. It tests you through fifty percent plus drawdowns, through friends who tell you you are crazy, through politicians who attack it, through headlines that declare it dead for the five hundredth time. The families who survive don’t need to have perfect timing, they just need a plan that survives the fear surrounding true digital scarcity. **What “Safe” Means Over Thirty Years** Safety over one year and safety over thirty years are different problems. A dollar savings account feels safe because the number on the screen barely moves. The purchasing power behind that number is another story. It gets eaten from the inside, quietly, the way termites hollow out a house long before anyone notices the floor has gone soft. Bitcoin behaves in the opposite direction. Loud in the short term, structurally scarce over the long term. For a family thinking in decades, the questions worth asking are simple. Can the asset survive thirty years of political change and institutional failure? Can it pass cleanly to heirs? Can it resist dilution? Can it be held without depending on a fragile intermediary? Can the family avoid being forced to sell at the worst possible moment? Bitcoin answers some of these better than any asset in history and a few of them worse, and pretending otherwise helps no one. It has no CEO, no board, no central issuer, and no committee deciding how many new coins should exist next year. Its supply is capped at 21 million by consensus rules the network enforces. It also hands you responsibilities that no other asset does. Lose your keys with no backup and there is no recovery department to call. If your heirs do not know the Bitcoin exists or cannot reach it, the wealth dies with you. With Bitcoin, the danger moves away from monetary policy and toward personal responsibility, and unlike inflation, that is a risk you can actually control. **Why Bitcoin Works for Long-Term Family Wealth** The generational case rests on four properties that grow more valuable the longer your time horizon. The first is fixed supply. There will only ever be 21 million bitcoin under the current consensus rules. That ceiling is enforced by code and by the economic self-interest of the nodes, miners, and users who run the network. Fiat does the reverse, expanding whenever demand rises or a government decides to spend beyond its means. The second is direct ownership. A family can hold Bitcoin in cold storage with no bank, broker, or custodian sitting between them and their money. Counterparty risk is one of the oldest ways wealth quietly disappears, and history is full of the institutions that proved it. Banks fail. Brokerages fail. Currencies come and go. An asset you hold directly plays by different rules. The third is portability. Real estate is bolted to a location. Gold is heavy, slow to move at scale, and difficult to verify. A bank account runs on rails that answer to a jurisdiction. Bitcoin moves as information. It is hard to stop someone from writing down twelve words, and harder still to stop them from memorizing them. The fourth is divisibility. A family does not have to sell the whole position to share it. Each bitcoin divides into one hundred million satoshis, which makes it practical to gift, inherit, or distribute wealth gradually across generations. None of these properties guarantees higher returns. They create a different foundation, one built on ownership instead of permission and scarcity instead of expansion. And all of it holds on a single condition, the one people love to skip: it has to be paired with serious custody and a genuine estate plan. **The Main Risks** Start with volatility. Bitcoin is the wrong place to park money you need soon for tuition, taxes, medical bills, or any near-term obligation. Size a generational allocation so the family is never forced to sell into a bear market. Generational wealth should not depend on perfect timing. It should depend on surviving full cycles. Next is custody failure. Exchange custody is convenient, but the platform holds the keys. Self-custody hands you control and key-loss risk in the same motion. There is no customer support line for a lost seed phrase. Collaborative custody multisig, like[ Swan Vault](https://www.swanbitcoin.com/vault/), are a great option to soften both edges at once. Then comes inheritance failure. Plenty of Bitcoiners build airtight theft protection on top of a flimsy inheritance plan and call themselves secure. They are not. Security that dies with its owner is incomplete. If your spouse, your children, your executor, or your trustee cannot recover the Bitcoin when the moment comes, the work is unfinished. Finally, regulatory and tax complexity. Bitcoin is treated as property for U.S. tax purposes, and any estate plan that touches it deserves review by qualified legal and tax advisors. At Swan, our [private advisors ](https://www.swanbitcoin.com/private/)work alongside that legal and tax team, because digital assets do not slot neatly into processes built for houses and brokerage accounts. **Cold Storage Is the Foundation** For generational Bitcoin, cold storage is the base layer. It keeps the private keys offline, usually on dedicated hardware, which shrinks exposure to hacks, exchange collapses, and online compromise. People describe cold storage as a security feature. It is also a psychological one. When Bitcoin sits on an exchange, it always feels one click away from being sold. When it lives on hardware secured offline, it starts to feel less like a trading position and more like family property, and people protect family property differently than they trade a position. Selling should require a real decision. Cold storage builds in that healthy friction. For families who want another layer of resilience, Swan Vault uses a 2-of-3 multisig design. Moving the Bitcoin requires two of three keys. The client holds two of them on separate hardware devices, and the third is managed through the Swan account. Swan cannot move a single sat of Vault Bitcoin alone, because Swan only ever holds one key. The family keeps control, and this allows for a documented path to help if heirs ever need it. That is the balance a generational plan needs: sovereignty and continuity at the same time. **Plan Inheritance Before You Need It** Bitcoin inheritance has two halves. The legal plan decides who inherits. The operational plan decides how they actually get to it. Skip either one and the whole thing fails. A will, a trust, or a beneficiary designation can name the right heir and still leave them stranded if nobody can find the keys. A seed phrase can do the reverse, granting full access while settling nothing about whether the coins are lawfully theirs. That second gap is the one people underrate. There is an old saying that possession is nine-tenths of the law. Bitcoin takes it almost literally. Whoever holds the keys can move the coins, and the network will never ask to see a will. In that narrow sense, possession is closer to ten-tenths. The keys are control, full stop. Control and clean title are not the same thing. An heir holding the keys to Bitcoin that was never legally put in their name can spend it and still inherit a mess: a contested estate, other beneficiaries with a claim, an executor who never signed off, a cost basis nobody can prove to the IRS. Holding the keys settles who can touch the coins. It does not settle who is supposed to. Get both halves right and your heir can actually use what they inherited instead of being locked out of the wallet or tied up in court. A complete plan should document: - Which wallets or accounts hold the Bitcoin - What custody setup is in use - Who holds legal authority after death or incapacity - Where the key materials live - Who heirs should call for help - How to keep private keys out of public probate records - How the executor or trustee verifies and transfers the coins Swan Vault is built to support exactly this. With planning in place, heirs need legal authority plus access to at least one locally held key, and Swan can assist with its key signature once proper authority is established. One conversation today can save your family years of confusion later. **Where Swan Generations Fits** [Swan Generations](https://www.swanbitcoin.com/generations/) is built for this kind of long-horizon planning. Swan built this product as a way for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin for long-term family wealth, combining custody, estate planning guidance, and dedicated support so when the child comes of age they can take control of the bitcoin that was gifted to them. The work does not end at the purchase. The harder part is making sure the asset outlives the person who bought it, so the next generation inherits wealth instead of an operational problem during an already difficult time. **Bottom Line** Bitcoin can be safe for generational wealth when it is treated as long-term savings rather than a trading vehicle. The most dangerous strategy is careless custody stacked on emotional decisions. The strongest strategy is almost boring. Buy real Bitcoin. Secure it in cold storage. Plan the inheritance path. Teach your children why it matters. Then leave it alone unless the family plan says otherwise. Bitcoin is volatile. Volatility and danger are not the same thing. For a family measuring in decades, the larger threat is usually the quiet one: holding assets that are slowly diluted, intermediated, or trapped inside systems that can fail. The greatest fortunes are rarely built by reacting to the world as fast as possible. They are built by understanding how the world works, making a few exceptionally good decisions, and giving those decisions enough time to compound. That may be Bitcoin’s greatest lesson. Wealth tends to belong to the families patient enough to stand still. For a lot of them, the best-performing Bitcoin portfolio will end up looking a great deal like the one in that Fidelity parable. The one nobody touched. *This article is for educational purposes only and should not be considered legal, tax, financial, or investment advice. Every family’s situation is different. Before making decisions regarding Bitcoin custody, estate planning, trusts, inheritance, or taxes, consult with qualified legal, tax, and financial professionals familiar with your circumstances.* ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # Bitcoin Estate Planning: The Risks Most Holders Aren’t Addressing URL: https://www.swanbitcoin.com/education/bitcoin-estate-planning/ Bitcoin estate planning is the most under-addressed risk in HNW portfolios. Why holders and their CPAs, attorneys, and trustees keep missing it, and how to close the gap. --- **Alec Bakouche** · June 23, 2026 Bitcoin has become a problem the wealth management industry doesn't know how to handle. The asset itself is simple, and regulation has made it easier for traditional finance to work with than ever. The problem is structural: serious Bitcoin holders now exist in numbers large enough that every CPA, estate attorney, and family office serving high-net-worth clients encounters Bitcoin regularly, and almost none of them have a confident answer when the question comes up. The result is a widening gap between the Bitcoin sitting inside portfolios and the professional infrastructure responsible for protecting it. This article maps that gap from both sides and describes the work that closes it. ### When the Plan Fails: A Continuity Failure in Slow Motion Consider a business owner, a surgeon approaching retirement, family office controller managing a position, or really anyone who spent the past decade accumulating Bitcoin. They may have a trust, a CPA, an estate attorney, life insurance, and a financial advisor. On paper, their affairs are in order. Then they unexpectedly passed. Six months later, their spouse discovers that nobody involved in the estate knows how to access, secure, value, or transfer the Bitcoin that represents a significant portion of the family's wealth. The attorney has legal authority but no recovery process, and the CPA needs records that don't exist. The trustee doesn't understand the custody structure. The family doesn't know where to begin. Nothing was stolen. Nothing was hacked. The Bitcoin is still there, exactly where they left it. But the continuity plan failed, and the family is left to reconstruct in grief what should have been documented in calm. The questions they should have been asking themselves are: How should this be structured in my estate plan? What does the right custody architecture look like at $5 million? How does my spouse access this if something happens to me? What does my CPA actually need from me to file correctly? ### Why Bitcoin Breaks Traditional Estate Planning The wealth management industry wasn't built for bearer assets. Traditional assets come with institutional infrastructure: when someone passes away owning brokerage accounts, bank accounts, or real estate, there are custodians, title registries, and established procedures for identifying assets and transferring ownership. Bitcoin in self-custody is different. The Bitcoin network doesn't care who died. It doesn't know who the beneficiary is, and it doesn't transfer because a trust document says it should. The network continues operating exactly as designed, and the entire weight of the transition falls on the people responsible for managing it. The scale of this exposure is no longer niche. According to[ CoinDesk](https://www.coindesk.com/markets/2026/06/05/bitcoin-and-ether-etfs-end-record-multi-billion-outflow-streak), U.S. spot Bitcoin ETFs hold roughly 1.28 million BTC even after a record outflow streak this spring, and[ Strategy](https://bitcointreasuries.net/) holds more than 800,000 BTC on its corporate balance sheet. Behind those institutional numbers stand millions of individual holders, and the marginal one is no longer a technically fluent early adopter as the previous example pointed to. Self-custodied Bitcoin has no custodian who answers to a beneficiary form, and no executor can locate it by opening a drawer. ### The Four Gaps in Most HNW Bitcoin Positions For holders, the gap rarely announces itself. It accumulates quietly, in four places. **The estate plan doesn't reach their Bitcoin.** Standard drafting language such as "all personal property" or "all financial accounts" covers nearly everything a wealthy person owns. Self-custodied Bitcoin is the exception. It has no custodian who answers to a beneficiary form, and no executor can locate it by opening a drawer. Without explicit language and a documented access path, the executor inherits legal authority over an asset they cannot find, identify, or move. **The tax records can't support the best outcome.** A position built over seven or eight years across multiple exchanges produces messy records, so the CPA defaults to first-in-first-out when the holder finally sells. The IRS treats Bitcoin as property under[ Notice 2014-21](https://www.irs.gov/pub/irs-drop/n-14-21.pdf), which makes specific identification and highest-in-first-out lot selection available. On large positions, the difference between the default method and the right one routinely reaches six figures. **The custody never grew up with the position.** A single hardware wallet was a reasonable structure at $20,000. At $200,000+ it is a single point of failure: one device, one seed phrase, one convincing phone call from a scammer impersonating exchange support. Custody at HNW scale is an architecture question, and most holders have never had anyone whose job it was to ask it. **The family is in the dark.** This is the gap that costs the most. The most common catastrophic loss in HNW Bitcoin is a holder dying without the family knowing what exists, where it lives, or who to call. The Bitcoin remains on the network, intact and unreachable. Families have lost millions this way, and every documented case was preventable with a plain-language briefing the spouse had actually read. ### The Questions Professionals Were Never Trained to Answer Every CPA, estate attorney, family office, and trustee serving wealthy families are now encountering Bitcoin. Most were trained in a financial system where assets are held by custodians and recovered through paperwork. Bitcoin introduces operational questions that never appeared in their training: - How does an executor recover a self-custodied position? - How should a multisig structure be documented in an estate plan? - Where should access instructions live, given that a will & testament becomes public in probate? - How does a spouse safely take control without creating new security risks? - How should years of purchases across multiple platforms be documented for tax purposes? These are not technical questions. They are continuity questions, and they are falling into a gap between professions. The exchange doesn't do estate planning, and the estate attorney doesn't do key management. The CPA doesn't build custody structures. The family office assumes someone else is handling it. As a result, many wealthy Bitcoin holders are unknowingly acting as the sole point of coordination between every moving piece of their Bitcoin wealth. That works until it doesn't. ### What Complete Bitcoin Continuity Work Looks Like Bitcoin continuity planning must exist to solve this problem. It is the discipline of ensuring that custody, taxes, estate documents, family preparedness, and professional coordination all work together before they are needed. It helps to be precise about what that means, because the term invites a few wrong assumptions: **Continuity planning is:** - Operational readiness for the people who inherit your Bitcoin and other assets - Custody and recovery processes designed before they’re needed - Coordination between your advisor, CPA, estate attorney, trustee, and family - An ongoing part of how a Bitcoin position is managed - A framework that ensures wealth can be successfully accessed, transferred, and preserved across generations **Continuity planning is not:** - A replacement for your will or trust - A document that stores private keys, seed phrases, or sensitive recovery information - Legal, tax, or investment advice - A one-time checklist that gets completed and forgotten - Something that only matters after a death or emergency occurs In practice, the work has five components. **Custody architecture matched to position size.** At scale, the standard is collaborative multisig: a 2-of-3 structure in which the holder controls two keys, a qualified partner holds the third, and no single key can move the Bitcoin. No single theft, loss, or social-engineering attack works against it.[ Swan Vault](https://www.swanbitcoin.com/vault/) is built on exactly this structure. Most large positions today are still secured by a single key, and closing that gap is usually the first priority an audit surfaces. **Lot-level tax documentation.** The IRS treats Bitcoin as property under [Notice 2014-21](https://www.irs.gov/pub/irs-drop/n-14-21.pdf), which makes specific identification and highest-in-first-out lot selection available, and makes tax-loss harvesting efficient since the wash-sale rule does not currently apply to Bitcoin. With Bitcoin currently trading near $62,000 after its October 2025 record above $126,000, holders who bought near the high are carrying substantial harvestable losses right now. Whether to act is a decision for the holder, their advisor, and their CPA together. Most CPAs were never handed the records to even raise it. **An estate plan that works operationally.** The documents name Bitcoin explicitly. The executor has a written recovery path. Access materials live in a secure location referenced by the plan, never inside the will itself, which becomes a public record in probate. **A family that has been briefed.** A plain-language document for the spouse or executor: what exists, where it lives, who to call, what the first thirty days look like. In practice this is the highest-leverage document in the entire stack, and the one holders most reliably postpone. Wealthy families share documents like this with each other. The founder in the opening story needed exactly this, and a few unremarkable hours of preparation would have replaced six months of confusion. **Beneficiary designations.** More and more companies are adding beneficiary forms for accounts where they custody their clients Bitcoin, but not all. For any account where you hold Bitcoin held by a custodian (including Bitcoin IRAs), check to see if they offer a beneficiary form and get one on file. The goal of all five isn't simply protecting Bitcoin. The goal is ensuring that the people you care about can successfully inherit, manage, and benefit from it if you're no longer around to explain how everything works. ### Closing the Gap from Both Sides Swan is Bitcoin-only by design. No token, no yield product, no altcoin tab. The platform exists to help serious holders do Bitcoin like adults: custody, taxes, estate, accumulation, and the spouse problem nobody else will bring up. More of the continuity stack already exists at Swan than most holders realize: **- For self-custody** [Swan Vault](https://www.swanbitcoin.com/vault/) provides the collaborative multi-sig architecture described above, with guided onboarding from a Bitcoin expert. Or simply withdraw to the wallet of your choice. - **For Bitcoin held on the platform**, Swan uses[ segregated custody](https://www.swanbitcoin.com/custody/): the account is in your name under a direct agreement with a regulated institution, and personal accounts support beneficiary designations. So does the[ Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/), held with Equity Trust, an IRA custodian since 1984. **- For families gifting Bitcoin** to children and heirs,[ Swan Generations](https://www.swanbitcoin.com/generations/) enables irrevocable gifts of real Bitcoin with family stewardship until an ascension age you choose, carrying the original cost basis for generational planning. **- What ties the pieces together is**[ **Swan Private**](https://www.swanbitcoin.com/private/)**:** one-on-one guidance from a dedicated Bitcoin expert who knows your situation. A Swan Private rep will walk through your custody architecture, your beneficiary designations, the records your CPA needs, and the questions your estate attorney should be asking. As Bitcoin shows up in more professional client work, Swan Private is also where CPAs, estate attorneys, and family offices can find a Bitcoin-fluent counterpart for the operational side they were never trained to handle. - **The newest addition to the Swan family deserves mention here too**.[ Vigil Protocol](https://vigilprotocol.ai/), founded by Swan CEO Cory Klippsten and Chief Business Officer Jeremy Showalter, maps a household's complete financial life, Bitcoin included, keeps it current through regular check-ins, and culminates in a verified run-book the family has already walked through together. Its promise, in Vigil's own words: *"nothing breaks if you're gone tomorrow."* That is the productized answer to the founder's story that opened this article. None of this work is glamorous, and little of it is technically difficult. It goes undone because it sits in the seams between professions, and because the cost of leaving it undone lands later, on a spouse or an executor, rather than on anyone's desk today. Bitcoin will survive. The plans built around it need to do the same. If your position or your practice is ready for that conversation,[ Swan Private](https://www.swanbitcoin.com/private/) is where it starts. *This article is educational and is not tax, legal, or investment advice. Coordinate decisions with your CPA and estate attorney.* ### Alec Bakouche Alec is an Account Executive with Swan Private and an expert in Bitcoin IRA's. Learn more about Alec [here](https://www.swanbitcoin.com/private/team/alec-bakouche/). # Bitcoin vs. Gold as a Store of Value: Which Asset Better Protects Your Wealth? URL: https://www.swanbitcoin.com/analysis/bitcoin-vs-gold-store-of-value/ Bitcoin vs. gold as a store of value in 2026: how they compare on scarcity, portability, and ownership & which better protects your wealth long term. --- **Conor Chepenik** · June 11, 2026 · Updated June 18, 2026 For thousands of years, gold has been humanity's preferred store of value. Empires have risen and fallen. Currencies have come and gone. Political systems have been built and overthrown. Through all of it, gold remained. Bitcoin is the first asset in history with a credible claim to that throne. Bitcoin was the[ fastest asset in history to hit a $1 trillion market cap](https://www.visualcapitalist.com/bitcoin-is-the-fastest-asset-to-reach-a-1-trillion-market-cap/), achieving the milestone just 12 years after its 2009 launch, making it one of the best-performing assets ever recorded. It is increasingly compared to gold by individual investors, institutions, and even nation-states. Both assets are scarce. Both exist outside the traditional monetary system. Both are held as protection against inflation, currency debasement, and financial instability. But digital gold and physical gold are not the same thing. They solve the same problem (preserving wealth in a world where governments can theoretically print infinite amounts of fiat money) in fundamentally different ways. Understanding those differences is essential for anyone thinking seriously about long-term wealth preservation. ### Quick Answer Gold has the longer track record. Bitcoin has the stronger monetary properties. Gold has protected purchasing power for millennia. Bitcoin is easier to verify, easier to move, easier to divide, and carries a supply cap that cannot be raised by anyone, ever. Investors who prioritize stability and historical precedent often prefer gold. Investors who prioritize absolute scarcity, portability, and direct ownership often prefer Bitcoin. Many sophisticated investors own both. ### The 2026 Backdrop: A Tale of Two Hard Assets Any honest comparison has to start with what actually happened recently because lately, gold has been winning. Gold[ returned more than 60% in 2025 and printed over fifty all-time highs](https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2025) along the way,[ peaking above $5,500 per ounce in late January 2026](https://www.cbsnews.com/news/highest-gold-price-in-history-how-its-changed-from-2025-to-2026/) before giving back a large share of those gains, trading in the low-to-mid $4,000s by early June. Bitcoin, after setting a[ record near $126,000 in October 2025](https://www.coingecko.com/en/coins/bitcoin), has spent 2026 in a deep drawdown, trading in the low $60,000s as of this writing, roughly 50% below its peak. A Bitcoin advocate who ignores that is not worth reading. So let's sit with it: over the past several months, the shiny metal rock has comfortably outperformed the seventeen-year-old protocol. But look at why gold ran, and the picture becomes far more interesting. Central banks[ bought 863 tonnes of gold in 2025](https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2025/central-banks), according to the World Gold Council. That pace is slower than the 1,000-plus tonnes they added in each of the three prior years, yet it still ranks as the fourth-largest annual expansion of official gold reserves on record, and nearly double the 2010 to 2021 average of roughly 473 tonnes. The catalyst seems to have been set off from a single event in 2022: when Western governments[ froze approximately $300 billion of Russia's foreign-exchange reserves](https://www.ebc.com/forex/brics-gold-reserves-hit-17-4-as-the-dollars-share-keeps-falling), and every non-aligned central bank learned the same lesson. Reserves held in another country's currency can be switched off overnight. Gold sitting in your own vault cannot. The result has been a quiet, accelerating de-dollarization. The U.S. dollar's share of global reserves has been[ declining for two decades](https://data.imf.org/en/dashboards/cofer%20dashboard), and the slide sped up after 2022; it now sits near 57%, its lowest level since 1994.[ BRICS+ nations now hold an estimated 17.4% of global gold reserves, up from about 11.2% in 2019](https://www.mining.com/brics-nations-hold-over-17-of-worlds-gold-reserves-report/), according to an analysis of World Gold Council data. By late 2025, gold had[ overtaken U.S. Treasuries to become the world's largest reserve asset by value](https://www.equiti.com/sc-en/news/market-insights/central-bank-gold-buying-cooled-in-2025-but-stayed-far-above-historical-norms/). With U.S. federal [debt past $39 trillion](https://www.usdebtclock.org/), reserve managers are voting with their balance sheets. Here is the ironic part. Central banks print money for a living, so they understand better than anyone what an expanding supply does to a currency's value. Yet the bulk of their reserves sits in someone else's paper, currency that another government can print at will and freeze at will. So the institutions closest to the printing press are following the oldest rule in the trade: never get high on your own supply. They issue fiat to the world while storing their wealth in an asset nobody can issue. And every reason behind that choice is also the entire bull case for Bitcoin: growing distrust of fiat, fear of debasement, and a hunger for an asset that no government can freeze, sanction, or inflate. So why did capital pour into one and out of the other? Because the two assets currently have different marginal buyers. Gold's bid is coming from central banks and institutions with multi-decade horizons. Bitcoin's bid this cycle came largely from ETF investors and leveraged traders, the latter being the kind of money that sells fast when liquidity tightens and rate expectations climb. Heavy ETF outflows and forced deleveraging hit Bitcoin in 2026 the way they hit every high-beta asset. None of that weakens the monetary thesis. It means the buyer base that already moved gold has yet to arrive in Bitcoin at scale, and that gap is precisely where the opportunity sits. Gold's 2026 run confirms the macro environment Bitcoin was built for. And the world's largest economy has already noticed: the United States now holds[ over 328,000 BTC](https://info.arkm.com/research/who-owns-the-most-bitcoin-top-btc-holders-2026), mostly from criminal forfeitures, and an[ executive order signed in March 2025](https://en.wikipedia.org/wiki/U.S._Strategic_Bitcoin_Reserve) that established a Strategic Bitcoin Reserve to consolidate and hold it. Congress is now working to make that reserve permanent. The[ American Reserve Modernization Act of 2026 (H.R. 8957)](https://www.congress.gov/bill/119th-congress/house-bill/8957), introduced in May with bipartisan sponsorship, would codify the reserve into law, require a minimum 20-year hold on its Bitcoin, mandate quarterly proof-of-reserve audits, and direct the Treasury to study budget-neutral ways to acquire more. The bill stops short of mandating purchases. Even so, it would convert a revocable executive order into durable national policy, and it positions the United States to become the first **major** sovereign to accumulate Bitcoin as a matter of deliberate policy. Two hard assets. Both being stockpiled by states. One with a four-thousand-year head start, one with a four-thousand-year runway. ### What Makes a Good Store of Value? A store of value is simply an asset that preserves purchasing power over time. Historically, the strongest ones share five characteristics: - **Scarcity:** it can't be created easily. - **Durability:** it survives over time. - **Portability:** it can be moved. - **Divisibility:** it can be split for transactions of any size. - **Verifiability:** its authenticity can be confirmed. When an asset is weak in any of these areas, preserving wealth becomes difficult. Food spoils. Real estate can't be carried across a border. Fiat currencies can be inflated at will. Collectibles depend on fickle, subjective demand. Gold became money because it scored well across all five. Bitcoin was engineered, deliberately, to improve on every one of them. ### Scarcity: Bitcoin's Defining Advantage Scarcity is the foundation of every monetary asset. If something can be produced cheaply, it cannot hold value for long. Gold is scarce because extracting it is genuinely hard. Mining demands enormous capital, labor, and energy, and new supply trickles into the market slowly relative to the existing above-ground stock. That difficulty is exactly why gold became money in the first place. But gold's supply is not fixed. When the price rises far enough, previously uneconomical deposits become worth mining, exploration budgets expand, and more metal eventually reaches the market. High prices are, in effect, an open invitation to dilute the supply. Bitcoin works on a different principle entirely. Its maximum supply is permanently capped at 21 million coins. No central bank can print more. No mining company can "discover" a new vein. No government can vote to successfully lift the 21 million hard cap. The issuance schedule is enforced by the protocol itself and independently verified by every participant running a node.[ Over 20 million coins, roughly 95% of the total that will ever exist, have already been mined](https://www.blockchain.com/explorer/charts/total-bitcoins), and the rest will be released on a known, decreasing schedule stretching out to the year 2140. For the first time in human history, we have an asset with absolute scarcity: a supply that is mathematically fixed, instead of merely difficult to expand. That single property is why Bitcoin is a genuine monetary breakthrough. ### Durability: Both Assets Score Highly Gold has survived for thousands of years because it doesn't corrode. A coin buried for a millennium can be unearthed virtually unchanged once you clean the dirt off of it. Gold's physical durability is extraordinary. Bitcoin achieves durability differently. The network exists simultaneously across tens of thousands of computers around the world. As long as a single copy of the blockchain survives, the entire record of ownership survives with it. Critics sometimes argue that Bitcoin is fragile because it's digital. The opposite is closer to the truth. Gold requires physical protection: vaults, guards, insurance. Bitcoin requires information preservation, and information is far easier to replicate than physical matter. A gold bar can be stolen once and it's gone. A Bitcoin wallet can be backed up, encrypted, and stored on multiple continents at essentially no cost. Both assets are durable. They simply get there by different routes. ### Portability: Where Bitcoin Changes the Game Picture moving ten million dollars of gold across an international border. You're now dealing with armored transport, security details, customs paperwork, insurance, and substantial cost. Not to mention it takes a good bit of time to transport it all. Now picture moving ten million dollars of Bitcoin. It settles globally in minutes. No trucks. No customs declarations. No vault logistics. No physical transport of any kind. This is one of Bitcoin's most genuinely revolutionary properties. Gold remains valuable, but it was designed for a physical world. A world of ships, armed guards, and vaults. Bitcoin was designed for a digital one. As commerce, communication, and wealth itself continue to migrate online, the ability to transfer final settlement anywhere on earth, at any hour, without permission, becomes an enormous structural advantage. It's simply something no previous monetary asset could offer without requiring a trusted intermediary. ### Divisibility: Bitcoin's Clear Edge Gold is divisible in theory, but dividing physical gold creates real friction. Small transactions become inefficient, verification gets harder, and storage grows more complicated with every additional piece. Bitcoin is divisible down to one hundred-millionth of a coin. These smallest units are called satoshis, or "sats." That means the same monetary network can handle a payment worth a fraction of a cent and a settlement worth billions of dollars, with no change in the underlying asset besides the UTXOs that get moved on-chain. As economic activity becomes increasingly digital and granular, that flexibility only grows more useful. ### Verifiability: Trust Versus Math One of the least appreciated differences between the two assets is how you confirm they're real. Verifying gold often requires expertise, equipment, or a trusted intermediary. Counterfeit gold exists, and the entire practice of assaying exists precisely because authenticity cannot be taken for granted. Bitcoin can be verified mathematically on one's node. Every transaction, every coin, every unit of the total supply, every transfer of ownership, all of it can be independently checked by anyone, without relying on a third party. As trust in institutions is steadily eroding, the ability to verify rather than trust is a profound competitive advantage. ### Gold's Greatest Strength: History Bitcoin advocates sometimes wave away gold's single strongest argument, and they shouldn't. That argument is time. Gold has survived essentially every challenge the human story has thrown at it from wars, collapsed empires, hyperinflations, deflations, political revolutions, and technological upheavals. Its track record spans thousands of years. Bitcoin's spans less than 18 at the time of this writing. That gap is enormous, and no intellectually honest comparison can ignore it. Gold earned its trust through millennia of survival; Bitcoin is still earning that trust in real time. For investors who prize certainty and precedent above all else, history is a perfectly rational reason to favor gold and it deserves genuine respect, not a hand-wave. But the good news is that history is still being written, and[ Hal Finney put it best back in 2011](https://x.com/BitcoinMagazine/status/1992339121772335572): *"Every day that goes by and Bitcoin hasn't collapsed due to legal or technical problems, that brings new information to the market. It increases the chance of Bitcoin's eventual success and justifies a higher price."* ### Bitcoin's Greatest Strength: The Future If gold's strength comes from its past, Bitcoin's comes from where the world is heading. The modern economy is overwhelmingly digital. Communication is digital. Commerce is digital. Work is increasingly digital. Information moves at the speed of light across the globe. And yet the dominant non-sovereign store of value remains a physical metal pulled out of the ground thousands of years ago. Bitcoin is the first successful attempt to build a native monetary asset for the internet age. Its properties are optimized for a connected world: it moves at the speed of information, it can be held in true self-custody, it can be verified by anyone, and it cannot be diluted by anyone. As society becomes more digital, and as a generation that grew up online inherits and accumulates wealth, those advantages are likely to compound rather than fade. It's worth asking if that future-facing design outweighs Bitcoin's shorter history and higher volatility. ### Ownership: The Innovation Most Investors Miss Here is a distinction that matters more than almost anyone realizes. Most people who believe they own gold actually own a claim on gold. Gold ETFs, gold futures, gold certificates, allocated and unallocated vault accounts, each introduces a layer of counterparty risk. You're trusting a custodian, a clearinghouse, or an issuer to make good. The same trap exists with Bitcoin. A spot Bitcoin ETF gives you price exposure, but exposure is not ownership. If you don't hold the keys, you're holding an IOU. Physical gold bars and coins can certainly be owned directly, just as cash can be held directly. But Bitcoin extends that concept into the digital realm in a way no previous monetary asset could. A person holding their own Bitcoin private keys can store, verify, and transfer wealth globally without requiring a bank, broker, vault operator, payment processor, or government intermediary. That is Bitcoin’s most underrated innovation. It combines the direct ownership of physical bearer assets with the portability and speed of the internet. For anyone concerned with sovereignty, portability, and counterparty risk, the distinction between mere exposure and true self-custody is worth understanding. The old Bitcoin maxim captures it bluntly: not your keys, not your coins. ### Volatility: Gold Wins Today There's no honest way around it: gold is far less volatile than Bitcoin. Bitcoin's price can swing dramatically in a matter of days, while gold's moves tend to be comparatively gentle. For an investor with a short time horizon, Bitcoin's volatility can be genuinely uncomfortable, and 2026's drawdown is a fresh reminder of that. So should volatility be read as a permanent flaw or as a temporary feature of an asset still in the middle of being monetized? Bitcoin is in the process of going from zero to a globally held monetary asset, and that journey gets priced violently and in public. Notably,[ Bitcoin's volatility has trended lower across successive market cycles](https://www.fidelitydigitalassets.com/research-and-insights/closer-look-bitcoins-volatility) as the asset has grown larger and more widely held, exactly what you'd expect from something maturing into a store of value. For investors focused on decades rather than weeks, volatility along the way may matter far less than monetary properties and long-term appreciation. Reasonable people can disagree on this. But precision matters here: volatility is the price of admission to an asset the world is still in the process of discovering, and it has historically faded as that discovery progresses. ### The Size of the Opportunity There's a reason "digital gold" implies room to grow. At the time of this writing, gold's total market value sits somewhere around[ $28 to $30 trillion](https://companiesmarketcap.com/gold/marketcap/). Bitcoin's is[ roughly $1.2 trillion](https://www.coingecko.com/en/coins/bitcoin). In other words, gold is currently more than twenty times the size of Bitcoin. That gap shows just how early Bitcoin still is. Consider the simple math. Market capitalization equals price multiplied by supply. Bitcoin's supply is fixed, so if demand pushes its market value up to match gold's, the entire increase has to come out of the price. Run those numbers at gold's current valuation and a single Bitcoin would trade somewhere around $1.4 million. Run them at gold's January 2026 peak valuation and the figure climbs above $1.9 million. Those numbers sound outlandish, and nobody should treat them as a short term forecast. The point is the asymmetry: gold is a mature, fully discovered asset with limited room to re-rate, while Bitcoin is a far smaller asset that, if the monetary thesis continues playing out, has a great deal of room to absorb value from traditional stores of wealth. Keep in mind that Kodak cameras still exist, but the vast majority of people now take and view their photos on a smartphone. Wealth storage may follow a similar migration to digital rails over the next 10 to 20 years, and even a partial migration would move the price dramatically. Gold offers stability. Bitcoin offers stability's more volatile, higher-upside younger sibling. ### What Sophisticated Investors Actually Do The debate is usually framed as Bitcoin versus gold. Reality is more nuanced. Plenty of high-net-worth investors and institutions hold both. Gold provides historical credibility and a smoother ride; Bitcoin provides asymmetric upside and, arguably, stronger monetary properties. Within a thoughtful wealth-preservation strategy, both can play a role. The most sophisticated investors tend to spend less energy on tribal "gold vs. Bitcoin" arguments and more on risk management. They ask better questions: - What specific risks am I trying to hedge? - What threats actually concern me: inflation, confiscation, counterparty failure, currency collapse? - What role should each asset play, and over what time horizon? Those questions produce far better outcomes than arguing about which asset is "perfect." That said, an investor who works through them honestly, and who weighs the next forty years as carefully as the last four thousand, often finds the balance tilting toward the harder, more portable, more verifiable of the two. ### Could Bitcoin Replace Gold? This is the question lurking behind every comparison, and the honest answer is: it depends on what people come to value most. If history and stability remain paramount, gold may hold its dominant role for a long time to come. If absolute scarcity, portability, verifiability, and true digital ownership become what investors prize, Bitcoin will likely keep absorbing monetary value from older stores of wealth. Crucially, this doesn't have to happen all at once. It may already be happening gradually, beneath the headlines. Every investor who allocates a dollar to Bitcoin instead of gold is participating in that shift. Every nation that adds Bitcoin to its reserves accelerates it. Whether the process continues for decades is one of the defining financial questions of the twenty-first century. ### Final Thoughts Gold earned its position over thousands of years. Bitcoin is attempting to earn that same position in a single human lifetime, in full public view, with all the volatility that implies. Both assets were born from the same problem: how to preserve wealth in a world where those in power can always create more currency. Gold solved that problem for the industrial age. Bitcoin was built to solve it for the digital one. The right choice between them depends on your time horizon, your risk tolerance, and your read on where the world is going. But one thing is increasingly hard to ignore: for the first time in recorded history, gold has a serious competitor. And unlike every challenger before it, Bitcoin may genuinely possess stronger monetary properties than the asset it seeks to replace. At Swan, our view is straightforward. If you're persuaded by the long-term case, skip trying to time the market or chase Bitcoin's next move. Adopt a low time-preference mindset: buy steadily through a simple dollar-cost-averaging plan, ignore the short-term noise, and hold your Bitcoin in self-custody where it answers to no one but you. Gold protected wealth for the world that was. The question now worth sitting with is which asset will protect it for the world that's coming? ### Frequently Asked Questions **Is Bitcoin better than gold?** Neither is strictly "better"; they have different strengths. Gold has a far longer track record and lower volatility, while Bitcoin has stronger monetary properties: absolute scarcity, superior portability, near-perfect divisibility, mathematical verifiability, and the ability to be self-custodied. Investors prioritizing precedent and stability often favor gold; those prioritizing scarcity, portability, and digital ownership often favor Bitcoin. **Is Bitcoin really "digital gold"?** The label fits in the sense that both are scarce, non-sovereign stores of value held as a hedge against inflation and currency debasement. But Bitcoin improves on gold in several measurable ways, most notably a permanently fixed supply of 21 million coins (gold's supply keeps growing as miners produce more) and the ability to move and verify value digitally without intermediaries. **Can Bitcoin replace gold?** It's possible, but it wouldn't happen overnight. The shift would occur gradually as monetary value migrates from gold toward Bitcoin. With gold's market value more than twenty times larger than Bitcoin's today, Bitcoin would have to absorb an enormous amount of demand to match it, which is exactly why proponents see significant long-term upside. **Is gold or Bitcoin a better inflation hedge?** Both have historically been used to protect against inflation and currency debasement. Gold has the longer, more proven track record. Bitcoin's fixed supply makes it theoretically a purer hedge against monetary inflation, but its shorter history and higher volatility mean it can behave unpredictably over short periods. Over multi-year horizons, Bitcoin has dramatically outperformed gold; since late 2025, gold has outperformed Bitcoin. **How much of my portfolio should be in Bitcoin versus gold?** There's no universal answer; it depends on your time horizon, risk tolerance, and financial goals. Many investors treat both as a small-to-moderate allocation within a broader strategy. This article is educational and not personalized financial advice; consider speaking with a qualified professional about your own situation. **Why is Bitcoin so much more volatile than gold?** Bitcoin is a young asset still in the process of being monetized, going from essentially nothing to a globally held store of value, with all the price discovery happening in public. Gold completed that journey thousands of years ago. Notably, Bitcoin's volatility has trended lower across successive market cycles as it has grown larger and more widely owned. **Is Bitcoin's 21 million supply cap really fixed?** Yes. The cap is enforced by Bitcoin's protocol and independently verified by every node on the network. Changing it would require near-universal agreement among participants, who have a strong economic incentive to preserve scarcity. No central authority, company, or government can unilaterally raise it, a key difference from gold, whose supply rises whenever higher prices make new mining profitable. *This article is for educational purposes only and does not constitute financial, investment, or tax advice. Bitcoin and gold are volatile assets; do your own research and consider consulting a qualified professional before making investment decisions.* ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # Swan Real Bitcoin Exchange (RBX): A Structured Path from Bitcoin ETFs to Real Bitcoin URL: https://www.swanbitcoin.com/product-updates/swan-real-bitcoin-exchange-rbx-a-structured-path-from-bitcoin-etfs-to-real-bitcoi/ RBX is designed for investors with significant Bitcoin ETF positions who want to own Bitcoin directly and seek a tax-efficient outcome. --- **Brady Swenson** · June 11, 2026 ### An ETF is exposure, not ownership U.S. spot Bitcoin ETFs hold more than $94 billion in assets as of May 2026. They give retirement accounts, RIAs, and brokerage clients a way to hold Bitcoin price exposure inside the accounts they already use. But exposure is not ownership. An ETF share is a claim on Bitcoin, not Bitcoin you control. It carries a management fee that compounds against your position every year, it cannot be withdrawn to a wallet or self-custodied, and it depends on issuers, brokers, and sub-custodians. The problem is most challenging for holders with a large, low-cost-basis position. They bought in years ago, watched it appreciate, and now sit on a significant unrealized gain. Selling means a capital gains bill. Staying means continued fee drag and exposure without the benefits of ownership. Across Swan's client base, long-term holders tell us the same thing: they want real Bitcoin, but the tax cost of selling has kept them from making the move. RBX is built for that investor. "Bitcoin ETFs have helped many investors take their first step," said Cory Klippsten, Founder and CEO of Swan Bitcoin. "But exposure is not the same as ownership. Swan RBX gives investors a path to move from ETF exposure to real, on-chain Bitcoin, structured to support a tax-efficient outcome." ### Convert your ETF without selling Tax treatment depends on your individual circumstances. RBX is designed to support a tax-efficient outcome where applicable, so consult your tax advisor before proceeding. RBX is a structured, in-kind exchange service. It converts a client's spot Bitcoin ETF shares into real, on-chain Bitcoin delivered to a Swan account, without requiring the client to sell those shares on an exchange. The structure is designed to support in-kind exchange treatment, subject to individual tax circumstances. This is not an ETF redemption, which is available only to authorized participants working directly with the fund sponsor. RBX is a purpose-built conversion process for individual holders, delivered in collaboration with Swan's partner registered investment advisor, with Bitcoin trading and custody handled through Swan's institutional partners. It aligns with best practices for asset exchanges and is guided by the Swan Private Wealth team. ### Built for large, low-basis ETF positions RBX for investors with sizable, low-cost-basis positions in spot Bitcoin ETFs. Typical RBX candidates include: - High-net-worth individuals holding large Bitcoin ETF positions with significant embedded gains - Family offices and trusts holding Bitcoin ETF positions across multiple entities - Long-term holders who plan to pass Bitcoin to the next generation and want it on their own terms RBX is available to Swan Private clients. If RBX fits your position, a Swan Private representative can walk you through the specifics. ### What real Bitcoin makes possible Real, on-chain Bitcoin in a Swan account opens up options an ETF share cannot. Hold it in Swan's institutional-grade custody, move it into Swan Vault collaborative self-custody, or take full self-custody, plan around it, and borrow against it. **Swan Vault.** Move Bitcoin into[ Swan Vault](https://www.swan.com/vault/), a 2-of-3 collaborative wallet where you hold two keys and manage the third through your Swan account. ETF shares cannot be self-custodied. Real Bitcoin can: keys you control, on hardware you control, with Swan for support rather than a counterparty. **Swan Generations.** Pass Bitcoin to the next generation with[ Swan Generations](https://www.swan.com/generations/). ETF shares move through an estate as paper claims that keep charging fees to heirs. Real Bitcoin transfers cleanly and is held by the next generation on their own terms. **Swan IRA.** Real Bitcoin can sit in a retirement account, too.[ Swan IRA](https://www.swan.com/bitcoin-ira/) holds Bitcoin directly, not an ETF wrapper, as a Traditional or Roth IRA. Investors holding a Bitcoin ETF inside a 401(k) or IRA face the same exposure-versus-ownership tradeoff in retirement that RBX addresses for taxable accounts. ### From exposure to ownership Real Bitcoin ownership is the foundation of everything Swan does: accumulation, collaborative self-custody, retirement, inheritance, and borrowing against real Bitcoin without selling it. None of those work on top of an ETF share. They require the asset itself. Bitcoin ETFs gave many investors an easy way to hold Bitcoin exposure inside familiar accounts. For those who plan to own Bitcoin for the long term, owning it directly comes down to when and on what terms. RBX is that path. If you hold a sizable Bitcoin ETF position, a Swan Private representative can review whether the structure fits your position and walk you through the steps. Talk to a Swan Private representative at[ swan.com/rbx](http://swan.com/rbx) or email rbx@swan.com. *Swan Bitcoin is not a broker-dealer, funding portal, or financial adviser and does not provide investment, financial, tax, legal, or other professional advice. Tax treatment depends on individual circumstances. Consult your tax advisor before proceeding.* ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Bitcoin Custody: How to Store Bitcoin Safely Without Overcomplicating It URL: https://www.swanbitcoin.com/education/bitcoin-custody-easy-and-safe/ Bitcoin custody is not one-size-fits-all. Learn the tradeoffs between hot wallets, cold storage, single sig, multisig, collaborative custody, ETFs, inheritance planning, and long-term Bitcoin security. --- **Conor Chepenik** · June 8, 2026 If you spend enough time in Bitcoin, eventually someone will tell you there is only one correct way to custody your coins. “Not your keys, not your coins.” “Use multisig.” “Never trust a third party.” “Memorize your seed phrase.” “Keep everything in cold storage.” The advice is rooted in sound Bitcoin principles, but it leaves out the tradeoffs. Bitcoin custody is simple at the protocol level: whoever can sign a valid transaction can move the bitcoin. But in real life, custody is not just a technical question. It is a balance between security, convenience, sovereignty, recoverability, inheritance planning, and operational complexity. There is no perfect setup for every person. A 22-year-old engineer holding a small amount of bitcoin has a different threat model than a retiree, a business treasury, a public Bitcoiner, a high-net-worth family, or a parent trying to make sure their children can recover funds decades from now. That does not mean one person is “doing Bitcoin wrong.” It means custody should fit the individual. This guide explains the major Bitcoin custody options, the tradeoffs behind each one, and how to think clearly before choosing a setup. ### What Is Bitcoin Custody? Bitcoin custody means controlling access to bitcoin. More specifically, it means controlling the private keys or signing process required to move bitcoin on the Bitcoin network. Bitcoin is different from traditional finance because it can be held as bearer money. If you control the private keys, you control the bitcoin. There is no bank manager who can reverse a mistaken transaction. There is no customer support line that can restore funds after a seed phrase is lost. There is no central authority that can freeze or unfreeze coins at will. That freedom is powerful, but it also creates responsibility. Simply buying bitcoin is the easy part. You can make a [Swan account](https://www.swanbitcoin.com/signup/) in under two minutes, hook up your bank account, and you're off to the races. The hard part is holding the bitcoin securely for years or decades. A person can be directionally right about Bitcoin and still make a poor custody decision. They can leave too much bitcoin on an exchange. They can build a self-custody setup they do not understand. They can use multisig before they are ready. They can optimize for theft resistance while accidentally making recovery impossible for their spouse, children, or executor. Good Bitcoin custody starts with a basic question: what risks are you trying to reduce? ### Bitcoin ETF vs Real Bitcoin Ownership One of the most important distinctions for new Bitcoin investors is the difference between buying a Bitcoin ETF and buying actual bitcoin. A spot Bitcoin ETF can provide price exposure to bitcoin through a traditional brokerage account. That may be useful for retirement accounts, institutional mandates, traditional brokerage environments, or investors who want exposure without learning wallet security. But exposure and ownership are not the same thing. When you buy actual bitcoin and withdraw it to a wallet you control, you can hold it outside the traditional brokerage system. You can self-custody it. You can use Bitcoin natively. You can design your own security model. You can move it on the Bitcoin network. That does not automatically mean self-custody is the right choice for everyone. It means the tradeoff should be understood. A Bitcoin ETF may be simple and familiar, but it does not give the same direct control as holding bitcoin in a wallet where you control the keys. Ask yourself, “What exactly do I own, and who has the power to move it?” Understanding that distinction is one of the most important parts of learning Bitcoin. ### Do Not Let Perfect Become the Enemy of Good A common mistake in Bitcoin is searching for the perfect custody setup. Perfect security does not exist. Every model protects against some risks while increasing exposure to others. Self-custody reduces counterparty risk, but it increases personal responsibility. Multisig reduces single points of failure, but it adds complexity. Collaborative custody can reduce user error, but it introduces some trust assumptions. Geographic redundancy improves resilience, but it can make recovery harder. Advanced setups may improve technical security while making inheritance nearly impossible. That is the central custody tradeoff. If you only optimize for theft resistance, you may ignore recoverability. If you only optimize for convenience, you may accept more custodial exposure than you intended. A good Bitcoin custody plan is not always the most technically impressive one, but the one you understand, can maintain, and can realistically recover from under stress. For many people, that means using more than one wallet. A small spending wallet can serve one purpose. A long-term cold storage wallet can serve another. A collaborative custody vault or inheritance-focused setup can serve another. Treating every satoshi the same can create unnecessary risk. ### Hot Wallets vs Cold Storage A hot wallet is connected to the internet. A cold wallet keeps private keys offline. Hot wallets are usually used for small balances, spending, Lightning payments, and day-to-day Bitcoin activity. They are convenient because they make bitcoin easy to access.  The tradeoff is that internet-connected devices are more exposed to malware, phishing, device compromise, and user mistakes. Cold storage is usually used for long-term savings. Hardware wallets, air-gapped signing devices, and offline multisig setups are common cold storage options. Keeping keys offline can reduce online attack exposure, but cold storage also requires better backup discipline and recovery planning. That point is easy to underestimate. Bitcoin security is not only about preventing theft. It is also about avoiding self-inflicted loss. For most people, the practical answer is not “hot wallet or cold storage.” It is both. Most people do not carry their entire net worth in physical cash. Bitcoin can be treated the same way. Keep a smaller amount accessible for use, and store long-term savings with a stronger security model. ### Single-Signature Wallets A single-signature wallet, often called single sig, means one key controls the bitcoin. A basic hardware wallet with a properly backed-up seed phrase is a common example. Single sig is the simplest form of Bitcoin self-custody. That simplicity is its greatest advantage. It is easier to understand, easier to recover, easier to explain to a spouse or executor, and less operationally demanding than more complex setups. The tradeoff is that single sig wallets can create a single point of failure. If the seed phrase is stolen, exposed, destroyed, forgotten, or poorly backed up, the funds may be lost or compromised. Bitcoin culture sometimes glorifies complexity, but single sig should not be dismissed. A well-executed single-sig setup may be safer for many people than a multisig setup they barely understand. Simple systems tend to fail less often.  If someone has a modest bitcoin position, low technical confidence, and no clear inheritance process, a clean single-sig setup may be a rational starting point. Over time, as the amount grows and the user becomes more comfortable, they can reassess if a multi-sig makes more sense. ### Multisig Wallets Multisig, short for multisignature, requires more than one key to authorize a Bitcoin transaction. Common setups include 2-of-3 or 3-of-5 wallets, where multiple keys exist but only a threshold number are required to move funds. The appeal is obvious. If one key is lost, damaged, or compromised, the bitcoin is not automatically gone. Multisig can reduce single points of failure, improve theft resistance, create geographic redundancy, and support more institutional-grade custody policies. But multisig also adds complexity. Users must understand quorum rules, wallet software, hardware devices, backups, key storage locations, recovery instructions, and inheritance implications. A poorly executed multisig setup can become fragile. It may look secure on paper while becoming difficult to recover in the real world. This is especially important for families. If only one person understands the setup, the system may fail when that person is unavailable, incapacitated, or dead. Multisig is powerful, but easy to over-romanticize. The best custody design is not the one that impresses other Bitcoiners. It is the one that survives, no matter what real life throws at you. ### Collaborative Custody and Swan Vault Collaborative custody attempts to balance direct Bitcoin ownership with guided support. Instead of choosing between fully custodial storage and fully independent self-custody, collaborative custody distributes responsibility. The user keeps meaningful control, while a provider helps with setup, recovery, education, and operational support. [Swan Vault](https://www.swanbitcoin.com/vault/) is an example of this model. Swan Vault uses a 2-of-3 multisignature setup. The client controls two keys, while Swan holds one key that can assist in recovery and coordination scenarios. Two keys are required to move funds. That distinction is the key (pun intended) to make sure clients have full control of their bitcoin. Swan cannot unilaterally move a client’s bitcoin because Swan only controls one key. At the same time, the client is not forced to navigate every aspect of multisig custody completely alone. The structure is designed to reduce single points of failure while still preserving meaningful user ownership and control. Collaborative custody does not remove every trust assumption. Users still rely on a provider for part of the experience. Regulatory environments matter. Product design matters. Recovery procedures matter. The details should be reviewed carefully before using any custody service. But the model deserves a serious place in the custody conversation. For families, older users, high-net-worth individuals, and people who want direct Bitcoin ownership without going fully alone, collaborative custody may reduce overall risk compared with poorly managed DIY self-custody. ### Do Not Forget Bitcoin Inheritance One uncomfortable truth in Bitcoin is that many people have excellent theft resistance and terrible inheritance planning. A person may have geographically distributed keys, encrypted backups, hidden seed phrases, passphrases, decoy wallets, and elaborate operational security. But if they die unexpectedly and nobody can recover the funds, the bitcoin is effectively gone forever. If nobody besides you can realistically recover the funds, the setup may not be as secure as it looks. Bitcoin inheritance planning should answer practical questions. Would your spouse know where to start? Could your children recover the bitcoin when they are older? Is there written documentation? Does someone know whom to contact? Is the recovery process legally and operationally clear? Have you created a system only you understand? A lot of Bitcoiners spend so much time thinking about theft that they barely think about recovery. They build setups that make perfect sense to them and almost nobody else. This does not mean you should casually hand out seed phrases or weaken your security. It just means Bitcoiners should have a realistic path for the people they trust to recover the bitcoin if something happens to them. That is one of the biggest reasons custody should be designed around real life, not just internet slogans. ### Why Multiple Bitcoin Wallets Can Be Rational Not every satoshi needs to live in the same place. A mobile wallet used for small payments does not require the same security model as a multi-generational cold storage plan. A business treasury does not have the same needs as a personal spending wallet. A public Bitcoiner may have a different threat model than someone quietly dollar-cost averaging in private. Separating funds by purpose can reduce risk. A person might use one wallet for spending, another for medium-term savings, another for deep cold storage, and another for inheritance planning. The exact structure depends on the person, but the principle is simple: different tools solve different problems. Trying to force one custody model onto every use case often creates unnecessary risk.  ### How to Choose a Bitcoin Custody Setup It all goes back to the same question “What risks am I trying to reduce?” Some people are most worried about exchange failure. Some worry about government seizure. Some worry about hacks, phishing, physical theft, or SIM swaps. Others worry more about forgetting passwords, losing seed phrases, dying without a recovery plan, or making a technical mistake. Different custody models reduce different risks. There is no universal answer because there is no universal user. A custody setup should match the amount of bitcoin being secured, the technical ability of the person using it, and the reality that humans make mistakes. The best setup is usually the one you can actually maintain, understand, and recover from years later. ### A Simple Bitcoin Custody Framework For a small amount of bitcoin, simplicity usually matters most. A [reputable wallet](https://help.swanbitcoin.com/hc/en-us/articles/360050711513-What-Bitcoin-wallet-should-I-use), basic security hygiene, and a clear backup process may be enough while the user learns. For meaningful long-term savings, cold storage becomes more important. A hardware wallet with a well-protected seed phrase may be a reasonable next step. For larger balances, family wealth, business treasuries, or long-term inheritance planning, multisig or collaborative custody may deserve serious consideration. For retirement accounts, institutional accounts, or brokerage-based exposure, a Bitcoin ETF or [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) structure may have a role, but investors should understand the difference between price exposure and direct bitcoin ownership. This framework is not meant to serve as financial advice, but rather a way to think more clearly about custody. The right setup depends on the person, the amount, the jurisdiction, the account type, the recovery needs, and the risks being managed. ### Final Thought: Bitcoin Custody Is Ultimately Personal  Bitcoin gives people something rare: the ability to directly own a digital monetary asset without relying on a bank, government, or financial intermediary. That is the breakthrough Satoshi Nakamoto introduced to the world. But the moment you remove the intermediary, the responsibility lands back on you. If you hold the keys yourself, you are now responsible for backups, recovery, inheritance planning, and operational security. If someone else holds the keys, you gain convenience but take on counterparty risk.  The point is to treat custody with the seriousness it deserves because Bitcoin custody is ultimately personal. Ownership and responsibility rise together. That is not a flaw in Bitcoin. That is the tradeoff we as Bitcoiners must face to use this magical internet money. ### Frequently Asked Questions ### What is Bitcoin custody? Bitcoin custody is the method used to control and secure bitcoin. It usually refers to who controls the private keys or signing process required to move bitcoin on the Bitcoin network. ### What is the safest way to store Bitcoin? There is no single safest method for everyone. Cold storage, hardware wallets, multisig, and collaborative custody can all improve security, but each comes with tradeoffs. The safest setup is one the owner understands, can maintain, and can recover. ### What is the difference between a Bitcoin ETF and owning Bitcoin? A Bitcoin ETF can provide price exposure to bitcoin through a brokerage account. Owning actual bitcoin means controlling bitcoin directly on the Bitcoin network, usually through a wallet. ETF exposure is simpler, but it is not the same as direct Bitcoin ownership. ### What is a hot wallet? A hot wallet is a Bitcoin wallet connected to the internet. Hot wallets are convenient for spending and small balances, but they have more online attack exposure than cold storage. ### What is cold storage? Cold storage means keeping Bitcoin private keys offline. Hardware wallets and air-gapped signing devices are common examples. Cold storage is often used for long-term Bitcoin savings. ### What is multisig? Multisig is a Bitcoin wallet setup that requires more than one key to authorize a transaction. For example, a 2-of-3 multisig wallet has three keys, but only two are needed to move funds. ### Is multisig better than single sig? Multisig can reduce single points of failure, but it also adds complexity. Single sig can be safer for users who need simplicity and understand how to protect one backup. The better choice depends on the user’s threat model and ability to manage the setup. ### What is collaborative custody? Collaborative custody is a Bitcoin custody model where the user controls (all or most of) the keys while a service provider helps with setup, support, and recovery. It is designed to balance self-custody with operational guidance. ### Why does Bitcoin inheritance planning matter? If bitcoin is secured in a way that nobody else can recover, it may be lost when the owner dies. A strong custody plan should include a responsible inheritance and recovery process. ### Should I keep all my bitcoin in one wallet? Not always. Many users separate bitcoin by purpose, such as spending, savings, deep cold storage, and inheritance planning. Different wallets can solve different problems. ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # Best Place to Buy Bitcoin: A Decision Framework, Not a Ranking URL: https://www.swanbitcoin.com/product-updates/best-place-to-buy-bitcoin-a-decision-framework-not-a-ranking/ Coinbase, Kraken, River, or Swan? The best place to buy Bitcoin depends on what you’re building — a trading position, or long-term wealth with real custody. --- **Brady Swenson** · May 13, 2026 The best place to buy Bitcoin is the one that matches your actual goal. If you want to trade in and out of positions, a spot exchange like Coinbase or Kraken makes sense. If you want to accumulate Bitcoin steadily over time, hold it securely, and build a long-term position, that's a different category of service entirely. Swan Bitcoin was built for the second goal. It's not an exchange. It's a wealth platform, Bitcoin-only, designed for people who want to own real Bitcoin and hold it for the long-term. ### What most people mean when they ask this question When someone searches for the best place to buy Bitcoin, they're usually asking one of three different questions: 1. **Where can I buy Bitcoin right now?** Any major exchange answers this. The question is almost too easy. 2. **Where should I buy Bitcoin on a regular basis?** This is a different product category. Recurring purchases, low friction, discipline over time. 3. **Where can I buy Bitcoin and actually keep it safe long-term?** This adds custody into the equation, which most exchange comparisons ignore entirely. Most comparison guides collapse all three into one answer and rank exchanges by fees and app ratings. That works if you're making a one-time purchase. It misses the point if you're thinking about Bitcoin as a long-term wealth position. ### Exchanges vs. wealth platforms: a real distinction Exchanges are built for transactions. They make money when you trade — on spreads, on volume, sometimes on the data your activity generates. Their interfaces are optimized for buying and selling. Features like recurring purchases are available but secondary to the core product. A wealth platform is built for a different behavior: regular, disciplined buying, with the expectation that you're holding, not trading. The experience, the fee structure, the security architecture, and the custody options are all calibrated for that use case. Swan is a wealth platform. The product defaults toward building a Bitcoin position over time, with full custody options from institutional-grade storage to collaborative self-custody. This isn't a marketing distinction. It shapes every part of how the product works. ### How the main options compare #### Coinbase Coinbase is the largest U.S. Bitcoin and cryptocurrency exchange by most measures. It offers one-time purchases, recurring buys, a custody product (Coinbase Custody), and a broad range of non-Bitcoin assets. For a first-time buyer making a single purchase, it's a reasonable starting point. For serious, sustained Bitcoin accumulation, the tradeoffs are real: - Coinbase is a multi-asset platform. Bitcoin is one product among hundreds. The incentive structure does not align with Bitcoin-only discipline. - Fee structures on retail purchases can be significant, particularly for smaller recurring amounts. Spreads on coinbase.com are materially higher than on Coinbase Advanced. - Custody on a custodial exchange means Coinbase holds your Bitcoin on your behalf. That is counterparty risk, regardless of how large the institution is. Coinbase is fine for what it is. It is not designed to be a long-term Bitcoin accumulation tool. #### River River is Bitcoin-only, which puts it in a different category from Coinbase and Kraken. It offers recurring purchases, a clean interface, and a more focused product experience. River competes more directly with Swan than with Coinbase. Key differences between River and Swan: - Swan offers a broader custody stack, including institutional-grade custody (Swan Safe), video-verified custody (Swan Safe Plus), and collaborative self-custody via multisig (Swan Vault). - Swan Private provides a white-glove service for larger buyers who want a dedicated Bitcoin expert and bespoke purchasing. - Swan IRA enables Bitcoin accumulation inside a tax-advantaged retirement account. River is a solid service. The comparison is closer here, and buyers should evaluate both. #### Kraken Kraken is built for trading across many assets. It offers recurring buys, staking for non-Bitcoin assets, and a professional trading interface. For Bitcoin-only accumulation, the same structural critique applies as with Coinbase: the platform's incentives and design are not oriented around disciplined long-term Bitcoin ownership. It is a trading venue that also supports recurring buys. #### Swan Bitcoin Swan is Bitcoin-only. It was built specifically for people who want to regularly accumulate Bitcoin and hold it properly. What that means in practice: - **Recurring buys** are front and center, not a feature bolted onto a trading interface. Daily, weekly, or monthly. Set it, and it runs. - **Custody options** are tiered and explicit. Institutional-grade custody (Swan Safe), collaborative self-custody with a 2-of-3 multisignature vault (Swan Vault), custody with live video verification on every withdrawal (Swan Safe Plus and Swan Vault Plus), or auto-withdrawal to your own wallet. You choose how much control you want. - **Swan Private** serves buyers accumulating larger positions who want a dedicated Bitcoin expert, bespoke purchasing, and hands-on service. - **Swan IRA** holds real Bitcoin inside a Traditional or Roth IRA, administered by Equity Trust Company, not ETF exposure, actual Bitcoin. - **Swan Guard** provides multi-layered account security, including dedicated US-based security personnel, on-chain monitoring, and client-initiated lockdown. Swan is not the right answer for everyone. If you want to trade Bitcoin against other assets, or you want to hold altcoins alongside Bitcoin, Swan will not serve you. Swan is for people who have decided Bitcoin is what they want and are building a position over time. ### The custody question most comparison guides skip Most "best place to buy Bitcoin" guides stop at fees and user experience. They don't ask where your Bitcoin actually lives after you buy it. This is a significant omission. When you buy Bitcoin on any exchange and leave it there, the exchange holds it on your behalf. You have a claim on Bitcoin; you don't hold Bitcoin. That exposes you to custodial risk — exchange insolvency, hacks, regulatory freezes, or account lockouts. The events of 2022 made this concrete for a large number of people. The most important decision after buying Bitcoin is where it lives. The options, roughly: 1. **Leave it on the exchange** — convenient, but you hold a claim, not Bitcoin. Acceptable for small amounts you intend to sell. Not appropriate for a long-term wealth position. 2. **Move to institutional custody** — a regulated custodian holds your Bitcoin in your name, not pooled with others. Swan Safe uses Bakkt and BitGo; holdings are in the client's name. 3. **Move to collaborative self-custody** — you hold the primary keys; a trusted third party holds one recovery key. Swan Vault is a 2-of-3 multisig where you hold two keys and Swan holds one. You can recover independently without Swan. 4. **Full self-custody** — you hold all keys. Maximum sovereignty, maximum responsibility. Swan supports withdrawal to your own wallet at any time. The best place to buy Bitcoin should make custody explicit, not an afterthought. ### How to choose This is not a ranking. It's a decision framework. **If your goal is a one-time purchase for short-term holding:** Any major exchange works. Fees and app experience are reasonable criteria. **If your goal is building a Bitcoin position over time:** Look for a platform whose default behavior matches that goal. Recurring buys, Bitcoin-only focus, and real custody options should all be present. **If you're accumulating $50,000 or more:** Custodial options and dedicated support become material. That's the threshold where Swan Private becomes relevant. **If you want Bitcoin in a retirement account:** Swan IRA holds real Bitcoin inside a tax-advantaged account with Equity Trust Company as custodian. ETF exposure in a brokerage IRA is not the same thing. **If custody and sovereignty matter to you:** Evaluate the custody architecture, not just the buying experience. Swan Vault's 2-of-3 multisig gives you full recovery capability without relying entirely on Swan. ### What Swan does not do Swan is not the right answer for everyone, and it's worth being direct about that. - Swan does not offer altcoins. Bitcoin only. - Swan is not a trading platform. There are no advanced order types, leveraged products, or short-selling tools. - Swan is not a casual first-purchase app for someone who wants to buy $20 of Bitcoin on a whim, though it handles smaller recurring amounts. If those are your requirements, Coinbase or Kraken will serve you. ### The short answer For disciplined, long-term Bitcoin accumulation with real custody options: Swan Bitcoin. For one-time purchases or multi-asset trading: a major exchange. The question isn't just where to buy Bitcoin. It's what you're building and whether the platform you choose was designed for that. ### Frequently asked questions **Is Swan Bitcoin safe?** Swan uses institutional-grade custody through Bakkt and BitGo (Swan Safe), with client holdings held in the client's name. Swan Guard provides multi-layered account security with dedicated US-based security personnel, on-chain monitoring, and SOC2 Type II auditing. Swan Safe Plus adds live video verification on every withdrawal. Custody safety depends on which option you choose; Swan makes those tradeoffs explicit. **What fees does Swan charge?** Swan's fee structure varies by product tier and custody option. Swan Safe charges 0.03% AUC per month, waived with auto-withdrawal enabled. Swan Vault charges 0.02% AUC per month, with a $30 minimum and $500 maximum. Transaction fees apply to purchases; current rates should be confirmed on Swan's pricing page. *(Editor note: verify current transaction fee figures before publication and link to Swan's official pricing page.)* **Can I move my Bitcoin off Swan?** Yes. Swan supports withdrawal to your own wallet at any time. Swan Vault is a 2-of-3 multisig that requires two of the three keys to unlock the vault. You hold two of the three keys on hardware wallets you store in separate locations and the third is managed through your Swan account.. You can recover your Bitcoin independently without Swan using the Swan Vault Recovery Assistant. **Is Swan good for beginners?** Swan is designed for people who have decided they want to accumulate Bitcoin over time. The recurring buy setup is straightforward. The custody options require some understanding of how Bitcoin custody works. Swan provides educational resources. **How is Swan different from a Bitcoin ETF?** A Bitcoin ETF gives you price exposure to Bitcoin through a traditional financial instrument. You own shares in a fund that holds Bitcoin; you do not own Bitcoin. Swan clients own actual Bitcoin, with custody options ranging from institutional storage to self-custody via multisig. The distinction matters for long-term wealth positions, inheritance planning, and counterparty risk. **Can I hold Bitcoin in a retirement account through Swan?** Yes. Swan IRA holds real Bitcoin inside a Traditional or Roth IRA, administered by Equity Trust Company. Contribution limits and withdrawal rules follow standard IRA regulations. Consult your tax advisor regarding your specific situation. **What is Swan Private?** Swan Private is a white-glove Bitcoin wealth service for individuals, family offices, and businesses building larger positions. Clients work with a dedicated Swan Bitcoin expert, have access to bespoke purchasing, tax-loss harvesting coordination, and private research and events. It is typically relevant for buyers accumulating $50,000 or more. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Quantum Fear-Mongering and The Infinite Perils Trap URL: https://www.swanbitcoin.com/analysis/quantum-bitcoin-fear-mongering-and-the-infinite-perils-trap/ Quantum is a real research problem, not a license to break Bitcoin’s deepest norms. Prepare seriously. Move slowly. Leave Satoshi’s coins alone. --- **Cory Klippsten** · May 7, 2026 **Quantum Fear-Mongering and The Infinite Perils Trap** Alex Thorn[ @intangiblecoins](https://x.com/intangiblecoins) had a strong post on quantum and Bitcoin coming out of the Vegas discussions this week. I agree with most of it, and I think **there’s a broader risk framework that explains why the emerging middle ground is the right one**. The quantum debate keeps skipping the most important question. Not “is quantum a risk?” Of course it is. The question is what kind of risk it is. That distinction matters because of a fallacy that shows up in almost every tail-risk debate: **The Infinite Perils Trap.** If a risk sounds catastrophic enough, people start treating any non-zero probability as justification for emergency intervention. That sounds serious. It is often just sloppy. There are infinite potential perils. Quantum. AI. Asteroids. Engineered pandemics. State attacks. Supply chain attacks. Unknown unknowns. You cannot spend 50% of the attention budget on each one. At some point “prudence” becomes resource exhaustion. This is where Nassim Taleb’s systemic-risk filter is useful. The irony is that Taleb is often invoked to justify maximal precaution, but his framework also tells you when NOT to go all-in. **The risks that justify extreme precaution are not merely the ones that sound scary. They are the ones that are connected and scalable.** **Connected means the threat spreads through the system.** **Scalable means a small failure can cascade into ruin for everyone.** Pandemics qualify. Banking contagion qualifies. Highly levered financial systems qualify. A car crash does not. A restaurant failure does not. An airline bankruptcy usually does not. Different risk category, different response. Now apply that to quantum and Bitcoin. **Quantum is not systemic. It is idiosyncratic.** **It fails on scalability.** The attack surface is address-by-address. There is no magic “break Bitcoin” button. Cracking one exposed public key does not mechanically crack the next one. It does not trigger a cascade across the UTXO set. The attacker has to do the work for every address he wants to attack. Satoshi’s coins are the cleanest example. People talk about them as if they are one giant honeypot. They are not. They are spread across roughly 22,000 separate P2PK addresses, usually 50 BTC each. A long-range attack would have to go address by address. That is a very different risk profile from “one person can take Satoshi’s million coins.” **Quantum also fails on connectivity.** A successful crack of an old, long-cold address does not infect other addresses. It does not corrupt consensus. It does not rewrite the ledger. It does not change the 21 million cap. It does not cause other private keys to fall like dominos. The attacker gets access to specific vulnerable coins. That may be painful. It may be ugly. It may cause a violent repricing. But painful is not the same as systemic. This is also why the “giant honeypot” framing needs precision. The real concentrated targets are exchanges, ETFs, custodians, and other active entities. ETF holders themselves cannot rotate addresses, but the custodians controlling the actual coins can. Same with exchanges. Same with large active treasury holders. If the threat becomes real enough, those entities can move to post-quantum addresses. Satoshi’s coins are different because they are dormant. But even there, the risk is far more distributed than the panic narrative suggests. Roughly 22,000 addresses, not one vault. And this is where the fallacy matters. **Once you misclassify an idiosyncratic risk as systemic, you start justifying interventions that create real systemic risk.** Freeze Satoshi’s coins. Invalidate old addresses. Rush immature cryptography into consensus. Force a panic fork. Create gridlock around every other upgrade. Turn every theoretical threat into a political emergency. That is where the systemic risk actually lives. The intervention scales. The intervention connects. The intervention changes the property-rights model. **Bitcoin can survive old coins moving. It cannot survive the normalization of “these coins make us nervous, therefore we can touch them.”** That precedent would propagate everywhere. Lost coins. Dormant coins. Sanctioned coins. Coins from old hacks. Coins held by unpopular people. Coins held by political enemies. Coins that some future coalition decides are dangerous. That is connectivity. That is scalability. That is systemic. The cure becomes the contagion. **This is why “don’t touch Satoshi’s coins” is not sentimental. It is the rigorous answer.** **Property rights are not downstream of convenience. They are the product.** Bitcoin does not promise that every old cryptographic choice will remain optimal forever. It promises that valid coins remain valid coins, and that nobody gets to rewrite the rules because a future committee got scared. The market absorption point is secondary, but still important. Even in a nightmare scenario where very old coins moved, that is a market event, not a protocol death. Data from[ @Checkmatey](https://x.com/Checkmatey) and others shows Bitcoin absorbing 1M+ BTC of movement since October 2025 alone. A massive supply shock would hurt. It would not require us to violate property rights to survive. That is the point. None of this means “ignore quantum.” It means classify the threat properly. Working on post-quantum cryptography, testing schemes, compressing signatures, debating implementation paths, funding serious work, and having credible options on the shelf are all good things. The middle ground seems basically right: Do the work. Prepare contingencies to have on the shelf if needed. Do not rush the protocol. Do not touch Satoshi’s coins. Quantum is worth working on even if it remains a low-probability tail risk. But a low-probability tail risk is not a license to break Bitcoin’s deepest norms. That is the Infinite Perils Trap. **If every scary non-zero risk becomes a protocol emergency, Bitcoin stops being conservative money and becomes a committee-managed anxiety machine.** The right response is not complacency, it is proportionality. Quantum is a real research problem, but it is not a reason to freeze coins. Prepare seriously. Move slowly. Preserve the rules. Leave Satoshi’s coins alone. ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Buy Real Bitcoin, Not a Bitcoin ETF: Why Ownership Still Matters URL: https://www.swanbitcoin.com/analysis/buy-real-bitcoin-not-a-bitcoin-etf-why-ownership-still-matters/ A spot Bitcoin ETF tracks the price of Bitcoin. Owning shares is not the same as owning Bitcoin. --- **Brady Swenson** · April 20, 2026 A spot Bitcoin ETF tracks the price of Bitcoin. Owning shares is not the same as owning Bitcoin. That difference sounds academic until you sit with what it means. Buying a share of IBIT or FBTC makes you a shareholder in a fund. The fund owns Bitcoin through a custodian, and the whole stack is governed by rules you did not write. Buying real Bitcoin and holding the keys makes you the owner of a bearer asset that settles on the most secure monetary network currently operating. For most long-term holders, that is not a close call. Here is why. **IN THIS ARTICLE** - What a Bitcoin ETF actually is - Why ownership is the whole point - Access and hours - Fees compound over decades - What Swan is built to do - When an ETF still makes sense - The bottom line ### What a Bitcoin ETF actually is A spot Bitcoin ETF is a security that holds Bitcoin on behalf of shareholders. When you buy a share of IBIT, FBTC, ARKB, or any other spot product, a regulated fund sponsor issues you a claim against Bitcoin held by a qualified custodian (almost always Coinbase Custody). You do not hold Bitcoin. You hold a legal interest in a fund that holds Bitcoin on your behalf. That structure has real benefits. ETF shares trade in brokerage accounts. They fit inside 401(k) wrappers for plans that allow it. They settle in dollars and they are tax-reported like any other security. For an investor who wants price exposure inside the portfolio they already have, an ETF is a reasonable tool. An ETF share is still a claim, not an asset. The claim sits on top of several layers of intermediaries: the fund sponsor, the authorized participants, the custodian, and the brokerage that holds the share in street name on your behalf. Every one of those intermediaries is a point of failure that Bitcoin was designed to remove. ### Why ownership is the whole point Bitcoin exists because the trust-based model has inherent weaknesses. That is not a slogan. It is the opening argument of the [white paper Satoshi Nakamoto published in 2008](https://bitcoin.org/bitcoin.pdf), which called out commerce's reliance on financial institutions as trusted third parties as the core problem Bitcoin was built to solve. A decade earlier, Nick Szabo had put it more bluntly: [trusted third parties are security holes](https://nakamotoinstitute.org/library/trusted-third-parties/). Every part of the protocol is built to eliminate the need to trust custodians, clearinghouses, and issuers. A Bitcoin you control with your own keys cannot be frozen, reversed, confiscated, diluted, or lent out behind your back. It settles on the base layer of the network every ten minutes, whether or not any particular company is still in business. A Bitcoin ETF share gives up most of that. If the custodian fails, the fund sponsor is in a bankruptcy proceeding rather than your wallet. If the brokerage gets hacked, the SIPC insurance that covers securities does not cover the Bitcoin itself. If regulators change the rules on how the fund operates, you are along for the ride. None of that is a prediction. It is the nature of securities held in street name through a layered intermediary stack. The question is not whether you trust BlackRock today. The question is whether you want to need to trust anyone ten or twenty years from now, during a crisis you cannot currently imagine. ### Access and hours Bitcoin settles every ten minutes, including weekends and holidays. ETF shares do not. When US markets close at 4 PM Eastern on Friday, your ability to buy or sell a Bitcoin ETF ends until Monday morning. The underlying asset keeps trading the whole weekend. Major moves in the Bitcoin market, the kind that tend to happen during geopolitical shocks or weekend news, regularly occur when the ETF wrapper is closed. Owning real Bitcoin means the asset is yours at 2 AM on a Saturday the same as at noon on a Tuesday. It means you can send it across a border without asking permission. The ETF wrapper reintroduces the business hours and geographic limits that Bitcoin was built to escape. ### Fees compound over decades Spot Bitcoin ETFs charge an ongoing expense ratio. Most cluster between 0.20% and 0.25% per year after introductory waivers expire. That is small on a one-year horizon and significant on a twenty-year horizon. On a $100,000 position held for twenty years at a 0.25% expense ratio, you pay roughly $5,000 to $15,000 in fees depending on how Bitcoin's price performs over the period. Real Bitcoin held in self-custody has no expense ratio. Once it is yours, there is no annual tax levied by an issuer for the privilege of holding it. For long-term holders, that difference compounds directly into how much Bitcoin you end up with. ### What Swan is built to do Swan is a Bitcoin-only company. We do not sell crypto or memecoins. We do not sell paper Bitcoin. Every product we ship is built for the same outcome: you end up actually owning your Bitcoin, on your own keys. Here is what that looks like in practice. You can buy Bitcoin on [Swan](https://www.swanbitcoin.com/) and have it automatically withdrawn to your own wallet on every purchase. No sitting on an exchange waiting for you to remember. No default to custodial storage. Real Bitcoin, moved to your addresses, on the schedule you choose. The default is ownership, not custody by us. [Swan Vault](https://www.swanbitcoin.com/vault/) handles the next problem: where the Bitcoin lives once it is yours. Vault is a collaborative custody setup that keeps you in control of your keys while removing the risk of losing everything to a single lost seed phrase or a compromised device. Two of three keys are held by you and your chosen recovery partner. One key is held by Swan. No single party can move the Bitcoin on its own. If Swan disappears tomorrow, you can still recover your Bitcoin. If you lose one of your keys, so can you. [Swan IRA](https://www.swanbitcoin.com/ira/) and [Swan Business](https://www.swanbitcoin.com/business/) extend the same principle to the places long-term capital actually lives: retirement accounts and corporate treasuries. The Bitcoin inside both products is held by a qualified custodian on your behalf rather than wrapped inside an ETF, and it can be transferred out to self-custody when the account rules allow it. That is not an option inside IBIT or FBTC. Every Swan Private client also gets a [Bitcoin Plan](https://www.swanbitcoin.com/private/) advisor. Not a salesperson. Someone whose job is to help you think through custody, taxes, inheritance, and how you build a long-term Bitcoin position over decades. ### When an ETF still makes sense To be fair, there are situations where an ETF is the right choice. If your only meaningful pool of capital is inside a 401(k) that does not permit outside investments, an ETF is the only way to get Bitcoin exposure in that wrapper. If you need a tax-reported security for a trust, estate, or corporate account governed by rules that prohibit direct commodity holdings, the ETF solves a legal problem. If you are allocating inside a managed portfolio where the advisor only has access to listed securities, the ETF is the path of least resistance. For almost every other investor, ETF exposure should be a starting point. The logical end state is owning real Bitcoin, on your own keys, in an account structure you control. ### The bottom line A Bitcoin ETF share is a financial product built to fit Bitcoin inside the existing system. Real Bitcoin is a financial asset built to replace parts of that system over time. Those two goods serve different goals and carry different trade-offs. Don't confuse them. Investors who come looking for "real Bitcoin, not an ETF" already know what they want. They want the asset itself. Swan is built to help them get it and to help them keep it for as long as they want to hold. If that is the decision you are making, [open a Swan account](https://www.swanbitcoin.com/sign-up) and start building a real Bitcoin position. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Swan Vault Plus: Human-Verified Withdrawal Protection URL: https://www.swanbitcoin.com/product-updates/swan-vault-plus-human-verified-withdrawal-protection/ Live video verification, Jade Plus signing devices, and a purpose-built recovery assistant give families and businesses greater control over their Bitcoin. --- **Brady Swenson** · January 21, 2026 At Swan, we think about Bitcoin ownership on a long-term horizon. Self-custody isn’t a moment or a setup step. It’s an arrangement you live with over years, through market cycles, changing technology, and real-world complexity. That perspective shapes how we build Swan Vault and why we’ve made several meaningful upgrades. These changes aren’t about adding features for their own sake. They’re about making self-custody more durable, more understandable, and more resilient when it matters most. #### Human verification when it matters most Withdrawals are where layered security matters most. Swan Vault Plus adds a layer of live video verification, human review, and automatic relocking, providing a final safeguard before assets leave your account. **Swan Vault Plus is now available to all Swan Vault clients. Visit your Swan dashboard to activate Vault Plus.** How it works: - A baseline video verification establishes identity upfront - Live video confirmation is required for Bitcoin withdrawals via the Vault dashboard - After verification, withdrawals are unlocked for a fixed window, then automatically relocked - Designed to protect against account takeovers, scams, coercion, and irreversible errors Vault Plus adds a deliberate human checkpoint before Bitcoin leaves a client's control, giving clients an additional layer of verification for maximum peace of mind. #### Improved signing hardware, without forcing upgrades Going forward, all new Swan Vault welcome packages will include Blockstream Jade Plus signing devices. Jade Plus builds on the same proven security foundations as the original Jade Classic, with improvements focused on usability: - A larger, higher-resolution display - Updated physical controls - Easier review of transaction details and navigation Just as important, nothing breaks for existing clients. There is no requirement to upgrade, and Swan Vault will continue to fully support Jade Classic devices. Long-term custody systems should evolve carefully, without forcing unnecessary changes or invalidating setups that already work. #### A clear and supported recovery path Serious self-custody means planning for edge cases. Devices fail. Keys get misplaced. People move, pass away, or need help years later. Recovery should never depend on improvisation. The Swan Vault Recovery Assistant is a Swan-built application designed specifically to help Vault clients recover funds if recovery is ever required. The Recovery Assistant allows clients to: - Independently sweep funds from their Swan Vault - View balances and transaction history - Recover across Mac, Windows, and Linux This becomes the primary Swan-supported recovery path for Vault clients. The open-source Specter project remains supported, but the goal is clarity: there should always be a documented, tested, and supported way forward. #### Built for real Bitcoin ownership Swan Vault is designed for people who want to own Bitcoin directly, without being forced to go it alone. Clients control their keys. Swan does not stand between clients and their Bitcoin. What we provide instead is human support, secure recovery options, and ongoing guidance informed by years of helping families and businesses think in decades, not quarters. Vault Plus, improved signing hardware, and a dedicated recovery assistant all reflect the same idea: Bitcoin ownership should be built to last. That’s the standard we’re building toward. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Introducing Swan Generations, Empowering Families to Allocate Real Bitcoin to the Next Generation URL: https://www.swanbitcoin.com/product-updates/introducing-swan-generations-empowering-families-to-allocate-real-bitcoin/ Swan Generations provides a unique service for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin. --- **Jeremy Showalter** · December 16, 2025 · Updated December 22, 2025 At Swan we build for leaders of families and businesses as a foundation for future generations to thrive in a Bitcoin world. We believe Bitcoin is for everyone, and that includes securing a meaningful amount of savings across generations.  Today we are introducing Swan Generations, the first real Bitcoin service built for families and their children. Swan Generations provides a unique service for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin. We believe that real Bitcoin is the best store of wealth ever created and the most pristine asset for preserving the value of work over time. Swan Generations is the new Bitcoin standard for long-term family wealth planning: - **Administrator Controlled** **–** As the administrator, you maintain sole control over the wallet, acting exclusively for the benefit of the wallet owner. This is a position of significant trust and responsibility, ensuring the assets are safeguarded until ascension. You represent that you are the parent, legal guardian or authorized adult, taking on the core duty of safeguarding these assets. - **Flexible Ascension Age –** Unlike traditional accounts, Generations enables the administrator to designate a flexible ascension age for when the child should take control, between 18 years and 25 years. This puts you in charge of when your child is ready to take responsibility. - **Irrevocable & Permanent Gifting –** Every gift made to the Swan Generations wallet is an irrevocable and permanent gift. Once sent, the Bitcoin becomes the legal property of the owner and cannot be reversed or reclaimed by the gifter or administrator. This ensures a foundational, long-term commitment to the owner’s Bitcoin future. - **Cost Basis Transfer –** Like other property, Bitcoin gifts to others carries the original cost basis, leading to potential tax-optimized strategies in multi-generational financial planning. See [Publication 551](https://www.irs.gov/publications/p551) for more details. - **Education Throughout** **–** Families receive access to Swan’s Bitcoin education through the years, including books, articles, videos, online courses, and exclusive webinars to encourage ongoing learning. - **Expert Service** - All Swan Generations clients receive our elevated service tiers of Premium or Swan Private, from a dedicated team of Bitcoin professionals including US-based phone support. [![](https://www.datocms-assets.com/56652/1765903499-swan-generations-ui-blog-post.jpg?auto=format)](https://swan.com/generations) Swan Generations is currently in limited preview and will be first available for Swan Private clients via their representatives, with broader availability for all Swan clients in early Q1 2026. Sign up for priority access at [swan.com/generations](http://swan.com/generations).  At Swan, we continue to design and build products where humans meet Bitcoin. Swan Generations is another step in our mission to help families build wealth together.  *While we believe in the power of gifting for long-term financial planning, Swan Bitcoin does not provide any investment, financial, tax, legal or other professional advice. We recommend that you consult with financial and tax advisors to understand the risks and consequences of buying, selling and holding Bitcoin.* ### Jeremy Showalter Jeremy is the Chief Business Officer at Swan. He founded Weave Savings and co-founded Pique (AI/ML personalization), acquired in 2021 by MoMo. Before startups, he spent 13 years at Microsoft in Ireland, Vietnam, and at HQ. # Cryptographic Proof Over Passwords: Passkeys are Live for All Swan Clients URL: https://www.swanbitcoin.com/product-updates/cryptographic-proof-over-passwords-passkeys-are-live-for-all-swan-clients/ Passkeys enable faster, more secure device-based logins (face/fingerprint) that reduce password risks and strengthen our Swan Guard security protections. --- **Yan Pritzker** · December 22, 2025 As Co-founder and CTO of Swan Bitcoin, I focus relentlessly on security, ensuring that we deploy extensive attention, budget, and engineering resources to protect our systems and client assets. This commitment is the foundation of the industry-leading protection provided by our suite of security enhancements, known as Swan Guard. The core technology behind real Bitcoin relies on cryptographic proof instead of trust. This philosophy dictates that money should be secured in a way that is physically impossible for others to access. Yet, when accessing digital financial services, many clients must still rely on traditional login methods that are prone to compromise. We previously identified passkeys as an important new security feature to implement.. Today, we are proud to announce that Passkeys are now available for all Swan clients, delivering significantly faster and more secure logins with device-based authentication. This technology uses device hardware features, cryptography, and device verification using your face or fingerprint to verify your identity. Passkeys eliminate the vulnerabilities inherent in standard passwords and drastically minimizes the attack surface for social engineering. Just as Bitcoin decouples financial transactions from real-world identities and centralized repositories of consumer data, passkeys move away from reliance on centralized password storage. Passkeys are a crucial new layer of security, making access to your funds both easier and more secure, aligning with our commitment to utilizing industry-leading technology in our operations. Swan is constantly building new security features to enhance Swan Guard. We strongly encourage all clients to adopt Passkeys. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Rolling Over a 401(k) and Other Workplace Retirement Plans to a Swan Bitcoin IRA: The Complete Guide URL: https://www.swanbitcoin.com/education/rolling-over-a-401-k-and-other-workplace-retirement-plans-to-a-swan-bitcoin-ira-t/ Rolling your old 401(k) into a Swan Bitcoin IRA lets you move legacy retirement savings into real Bitcoin while preserving tax advantages and compliance protections. --- **Alec Bakouche** · December 8, 2025 · Updated December 9, 2025 Maybe you’ve left an employer and now you’re staring at a 401(k) sitting in limbo. Or you’re building your retirement future and wondering: *can I include real Bitcoin in my IRA?* The answer is yes — with care, compliance, and a regulated custodian. Rolling your 401(k) into a Swan Bitcoin IRA lets you migrate legacy retirement capital into Bitcoin — while preserving tax advantages. The goal of this guide is to show *how* it works (and how Swan does it), flag what to watch out for, and help you confidently invest in Bitcoin with your IRA.. #### What is a Bitcoin IRA (or Self-Directed IRA)? Before we get into the mechanics, let’s clarify what kind of account can hold Bitcoin in a tax-advantaged way. - A **Swan Bitcoin IRA** is a self-directed IRA (SDIRA) that allows you to hold Bitcoin under qualified custody. - You can use either a **Traditional IRA** structure (pre-tax contributions, taxed on withdrawal) or a **Roth IRA** structure (post-tax contributions, tax-free withdrawal) as the base for your Bitcoin IRA. - There is *no annual cap* on how much you can roll over from other retirement plans (401(k), 403(b), TSP, etc.) into an IRA — rollovers are distinct from contributions. #### Why roll a 401(k) into a Bitcoin IRA? Let’s compare the legacy system vs. Bitcoin’s promise: - **Diversification & optionality**: Many 401(k) plans don’t offer Bitcoin (only indirect exposure to the price, like an ETF). Rolling into a Swan Bitcoin IRA means you hold actual Bitcoin in your IRA. - **Long-term orientation**: In designs like Swan’s, the goal is buy-and-hold, not trading. That suits Bitcoin’s role as a long-duration, non-yielding asset. - **Bitcoin investment within tax shelter**: If you believe Bitcoin’s trend is upward, you may want to capture that value *within* a tax-advantaged wrapper. - **Execution simplicity**: For many, your biggest obstacle is custodial friction. Swan’s IRA infrastructure is designed to reduce that friction (more on that later). Structure, compliance, and a trusted custodian are all important for investing Bitcoin into an IRA. #### Step-by-Step: How a 401(k) → Bitcoin IRA Rollover Works Here’s the general flow. (Swan’s internal process may optimize some steps.) **1. Check eligibility** Confirm your 401(k) allows rollover or distribution (often after leaving an employer, or via in-service rules) Some plans disallow distributions in certain years. Also, Roth vs Traditional classification matters. **2. Open the Swan Bitcoin IRA** You’ll open an IRA account with Swan (or partner custodian) that supports Bitcoin investments You decide whether it will be Traditional or Roth IRA structure **3. Initiate a direct rollover** Request your 401(k) plan to transfer funds directly *to the IRA custodian* Avoid the check going to you — that could trigger withholding or mess with the 60-day rule. **4. Wait for funds to arrive** The custodian processes the funds (could take days or weeks) Swan will keep you updated during this process. **5. Allocate to Bitcoin** Once the cash is in your IRA, you purchase the Bitcoin You’ll see the Bitcoin deposited into your Swan IRA account in your dashboard **6. Secure custody and reporting** The Bitcoin is held under qualified custody and all IRS / tax reporting is handled You’ll receive IRS forms like Form 1099-R (distribution) / 5498 (IRA contribution) as needed #### Why a direct rollover matters If you receive the funds personally (an **indirect rollover**), you have 60 days to redeposit them, or the distribution is taxed and possibly penalized. You can only do *one* indirect IRA rollover per 12-month period across all your IRAs. That constraint doesn’t apply to direct trustee-to-trustee transfers or rollovers from qualified plans.  #### Tax and Regulatory Considerations Understanding the tax limits is critical. Let’s break them down: **Traditional → Traditional** If your 401(k) is pre-tax (traditional), rolling into a Traditional Bitcoin IRA is **not a taxable event**. When you withdraw in retirement, you pay ordinary income tax.  **Traditional → Roth** You may optionally *convert* to a Roth IRA structure. That **does** trigger taxation in the conversion year (you pay income tax on the full amount). But thereafter, qualified withdrawals (including growth) are tax-free. Generally it’s best to Rollover to a Traditional IRA first, then perform the Roth conversion within the Swan IRA.  **Roth → Roth** Rollover from a Roth 401(k) into a Roth Bitcoin IRA (if available) is generally non-taxable.  **SIMPLE IRAs** If your funds are in a SIMPLE IRA, special rules may apply. You typically must wait two years after establishing the SIMPLE before rolling into a self-directed IRA. **Reporting & Forms** Once the rollover completes, you’ll get IRS forms: - **Form 1099-R** for the distribution (from the 401(k) side) - **Form 5498** for IRA contributions / rollovers - Ensure your tax return properly shows “rollover” (i.e. non-taxable) — mistakes can lead to unnecessary taxation Always work with a tax advisor, because state-level treatment may differ, and individual situations (e.g. multi-state, large balances, phased rollouts) vary. #### What Makes Swan’s Approach Better - **Swan Private:** Every Swan IRA client becomes part of our Swan Private tier of service. Private includes concierge services from a dedicated Swan Private representative, asset management options, curated HNW products and services, exclusive research, private events, and access to a network of Bitcoin professionals in estate planning, tax, legal, and investment advisory. - **Integrated custody & execution**: Swan leverages Equity Trust, A 50-year-old company providing trusted infrastructure, custody, and purchase, reducing friction and counterparty complexity. - **Designed for hold, not trading**: The Swan IRA is oriented toward long-term accumulation — consistent with Bitcoin’s sound money role — not frequent trading or speculation. - **Transparent fee structure and alignment**: We aim to minimize hidden costs and align incentives with client outcomes. - **Simplified onboarding**: We help with the paperwork and coordination across the rollover chain (401(k) provider, custodian, etc.), so you don’t have to navigate each step alone. - **Compliance-first mindset**: Every part of the IRA is built to comply with IRS rules, reducing the risk of disqualification or misstep. #### Example Scenario Here’s a simplified example to ground it: 1. You have a $100,000 traditional 401(k) from a prior employer. 2. You open a Swan Traditional Bitcoin IRA. 3. You request a direct rollover: your 401(k) custodian sends $100,000 via check to the Swan IRA custodian (Equity Trust). 4. The funds clear after 5 business days. 5. The Bitcoin is held in qualified cold storage under secure custody protocols. 6. At tax time, you report the rollover as non-taxable; upon eventual withdrawal in retirement, taxes may apply to the distributions. This way, your full $100K becomes Bitcoin inside the tax shelter, rather than you first cashing it out and then buying Bitcoin with after-tax dollars. #### Final Thoughts Rolling your 401(k) into a Swan Bitcoin IRA is not just a move — it’s a shift in the regime of how your capital is stored and grown. It’s the bridge between legacy retirement systems and a monetary future rooted in Bitcoin. Yes, it comes with complexity and risk, but those are manageable with proper structure. The reward: aligning more of your long-term savings with principles of sound money, monetary sovereignty, and optionality. If you’re curiosity-driven and want help evaluating whether such a rollover fits your retirement plan, Swan's team can walk you through it — we believe responsibility isn’t hype, it’s clarity. #### Ready to explore a Swan Bitcoin IRA? [Click here to learn more, start your Swan Bitcoin IRA, and reach out to the Swan team.](https://www.swanbitcoin.com/bitcoin-ira/) We look forward to working with you. ### Alec Bakouche Alec is an Account Executive with Swan Private and an expert in Bitcoin IRA's. Learn more about Alec [here](https://www.swanbitcoin.com/private/team/alec-bakouche/). # Building Swan Guard: Raising the Standard Across the Bitcoin Custody Spectrum URL: https://www.swanbitcoin.com/product-updates/building-swan-guard-raising-the-standard-across-the-bitcoin-custody-spectrum/ Swan Guard brings world-class Bitcoin security with advanced risk controls, scam defense, and expert support — vigilantly protecting your Swan account and safeguarding your Bitcoin. --- **Yan Pritzker** · May 22, 2025 · Updated November 25, 2025 I've spent years immersed in the world of technology and startups, but my deep dive into Bitcoin wasn't just about the tech; it was personal. [Growing up in the former USSR](https://www.swanbitcoin.com/politics/bitcoin-liberation/), I saw firsthand the devastating impact of autocratic regimes that controlled capital and suppressed basic freedoms. Bitcoin, to me, is fundamentally about reclaiming that financial freedom. It’s about building your stash of freedom cash and ensuring that your wealth is something you control, not something dependent on trusting a government or a central bank. A cornerstone of this freedom is controlling your private keys. As I often say, and as we emphasize at Swan, **"Not your keys, not your coins."** This is the absolute north star for every Bitcoiner: achieving self-custody, where you alone hold the keys that control your Bitcoin. However, the reality is that most people acquire Bitcoin through a third party, at least initially. Even transferring Bitcoin requires trusting the recipient with the expectation they won't steal it or that laws will enforce its return, neither of which is guaranteed by the Bitcoin blockchain itself. Furthermore, various use cases, like IRA accounts or accounts for clients of registered investment advisors, necessitate the use of a custodian due to regulations. We understand that there's a spectrum of how people choose to secure their Bitcoin, ranging from full self-custody to various forms of collaborative or third-party custody. [Each point on this spectrum has its own risks](https://www.swanbitcoin.com/education/assessing-risk-in-bitcoin-custody/). Full self-custody means you bear the risk of losing your keys to theft, damage, or simple loss, and you need a plan for inheritance. Using a third party introduces custody risk (mismanagement, theft), bankruptcy risk (will you get your coins back if they fail?), and regulatory risk (will the government shut them down or freeze your assets?). At Swan, our mission is to help you navigate this landscape and partner with you to take control of your financial future with Bitcoin. We strongly believe that **self-custody is the ultimate goal**, and we actively support clients in achieving this with automatic complimentary weekly withdrawals with a threshold you set, and extensive education on how to secure your own keys. We make it as easy as possible to move your Bitcoin off our platform. But for the moments when your Bitcoin is not in your custody – whether briefly during acquisition, while you're learning self-custody, or if you choose one of our collaborative custody options – we are dedicated to providing the highest possible level of security and service. This is where **Swan Guard** comes in. It's a new standard, a suite of security enhancements and elevated service features designed to provide industry-leading protection for our clients and their Bitcoin assets while they are in our care or utilizing our supported custody solutions. Built on years of experience with 150,000+ clients and billions of dollars of Bitcoin transactions, we have dedicated significant time and effort to securing our systems and helping clients avoid account takeovers and scams. Swan Guard provides a robust set of protections, including: - **Dynamic risk controls** through machine intelligence and white glove human oversight by senior-level analysts. Many of our controls work quietly in the background, keeping you safe, without creating friction for daily activity. - **Dedicated escalated support** with US-based security personnel for urgent issues. - **On-chain monitoring for withdrawals to known scam addresses** and other high-risk activity. - A **client-initiated lockdown** feature allowing you to protect your account in two taps. - **Passkeys** provide a more secure alternative to traditional authentication methods like passwords and two-factor authentication. - **Education on Bitcoin security** and personal operational security. - **Enhanced personal screenings** to protect clients against scams, performed by Bitcoiners who understand you and your needs. - **Opt in to full lockdown mode** for accounts that rarely move their coins. - **Proactive monitoring** of ongoing social scams, with warnings specific to recent campaigns embedded in our apps. - **Our recently completed SOC2 Type II audit** proves your data is protected by rigorous, independently verified security practices—continuously, not just once. - **Coins held with a regulated financial institution in your name, not Swan’s name** - you have a direct, *first-party* contractual relationship with a reputable and highly regulated financial institution holding your coins. We are also continuously developing new features under the Swan Guard umbrella, such as client security reviews, device/location/wallet whitelisting, secure in-product messaging, and proactive detection for compromised emails, for enhanced login security. For those clients who are not yet in full self-custody, Swan offers different options, each enhanced by the Swan Guard security layer: - **Swan Safe:** Provides segregated custody through partnerships with regulated financial institutions, to which you get first-party access. When choosing a custodian, it's paramount to partner with regulated financial institutions operating under robust regulatory frameworks in jurisdictions with strong property rights. Swan Safe offers this, bolstered by Swan Guard's additional security layers.  - **Swan Vault:** A collaborative multisignature setup where you retain total control with keys stored offline, but benefit from expert guidance and assistance during setup with a complimentary onboarding call. Swan co-signs your transactions after risk and security checks by Swan Guard, or acts as a backup key, should you ever lose one of yours. This offers a path towards greater personal control without having to "go it alone".  Historically, our goal has always been to get as many Bitcoiners into self-custody as possible. For this reason, our custody options continue to encourage clients to move coins off of custodians. Custody fees are entirely waived for clients who set up automatic withdrawals to self-custody. Swan Vault clients get world-class security and client experience with peace of mind from Swan monitoring and co-signing their transactions at only 0.02% per month. Clients who use Swan Safe, with coins stored at a regulated financial institution in their own name, secured by Swan Guard, will pay 0.03% per month. Ultimately, the goal remains the same: to help you achieve financial freedom through Bitcoin. While self-custody is the pinnacle of this freedom, we recognize the journey and the need for secure options along the way. Swan Guard is our commitment to providing that security and support, no matter where you are on your path to owning your future. ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Swan Safe Plus: Human-Verified Bitcoin Protection URL: https://www.swanbitcoin.com/product-updates/swan-safe-plus-next-level-security-for-your-bitcoin/ Live human verification for every Bitcoin and USD withdrawal, creating a final checkpoint that blocks SIM swaps, device theft, and social engineering. --- **Brady Swenson** · November 18, 2025 At Swan, we design our protection and security services with real human interactions at the heart of securing your Bitcoin. When your Bitcoin is held with Swan, Swan Safe and Swan Guard work together to protect it — combining segregated and regulated custody with intelligent security oversight. Today, we’re introducing **Swan Safe Plus** — direct, human-verified protection for your Bitcoin and USD withdrawals, powered by Swan’s team of experts. #### How Swan Safe Plus Works Swan Safe Plus **establishes a secure video baseline with you, then uses it for live identity verification** before any assets can be withdrawn from your personal account. The setup process takes just a few minutes: - Withdrawals are locked as soon as Safe Plus is enabled - An initial video baseline is created to verify against when withdrawals are initiated - To approve any withdrawal, you complete a brief video verification call with Swan’s team - Two members of Swan’s team independently confirm your identity against the baseline video - After approval, your withdrawal window stays open for 24 hours, then automatically re-locks - Safe Plus cannot be turned off without completing a video verification call to confirm - Safe Plus is internally secured by a full stack of SOC2-compliant controls and secure processes This creates a final, human-verified checkpoint against a baseline that blocks common attack paths, such as SIM swaps, email compromise, social engineering, and device theft, even if a bad actor obtains access to your device or email. This is especially powerful when combined with other Swan Guard protections, such as dynamic risk monitoring, enhanced fraud screening, and on-chain scam defense. Together, they form layered defenses that protect real people with real balances. #### Pricing and availability - Available to U.S.-based Swan Private clients for Personal and Business accounts - 0.06% of assets under custody, billed monthly, in lieu of the standard Swan Safe fee Your Swan Private representative can answer any questions and assist you in getting started. #### How to enable Swan Safe Plus - Go to your Dashboard in your Swan account using the web interface or mobile app - Select Swan Safe Plus and review the feature overview - Agree to the fee schedule and complete a quick setup - Schedule your initial video baseline call with the Swan team - Your account is now enabled, with live verification required for any withdrawal Your Bitcoin represents more than value. Swan Safe Plus adds the human touch that technology alone can’t provide, ensuring that your wealth is secured for generations. **Real Bitcoin, real security, verified by real people.** ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Swan Bitcoin is Live in New York, Bringing End-to-End Bitcoin Wealth Services to the World’s Financial Capital URL: https://www.swanbitcoin.com/product-updates/swan-bitcoin-is-live-in-new-york-bringing-end-to-end-bitcoin-wealth-services-to-t/ Swan Bitcoin is now live in New York, offering its full suite of services including purchases, secure custody, and retirement accounts. New Yorkers now have access to a Bitcoin-only company focused on real ownership. --- **Brady Swenson** · November 3, 2025 · Updated November 4, 2025 New Yorkers can now access the full suite of Swan’s Bitcoin services — from instant Bitcoin purchases and secure custody to white-glove private client service and retirement solutions. For the first time, residents of New York State can buy, withdraw, and custody Bitcoin with a Bitcoin-only company built on real ownership, not financial exposure. **A Major Milestone for Bitcoin in New York** Swan Bitcoin is now fully operational in the Empire State for individuals, marking a breakthrough moment for Bitcoin access in one of the world’s most tightly regulated financial markets. “New York deserves a company that stands for real Bitcoin, not paper promises,” said Cory Klippsten, CEO of Swan Bitcoin. “As investors embrace Bitcoin’s potential, they want a trusted partner who lives and breathes Bitcoin — that’s exactly what Swan delivers.” **What’s Now Available to New Yorkers** Swan clients in New York can now access the same end-to-end services trusted by Bitcoin investors across the country: - **Swan Private** – Concierge service for New York Bitcoin investors - **Swan Vault** – Collaborative self-custody with multisignature security - **Swan Safe** – Regulated, segregated Bitcoin custody through leading partners - **Swan IRA** – Tax-advantaged Bitcoin retirement accounts with real Bitcoin - **Swan Guard** – Always-on human and technical protection against unauthorized activity As a principle, Swan includes unlimited complimentary Bitcoin withdrawals to self-custody, ensuring clients can always take full ownership of their Bitcoin. **Human Security Meets Regulated Infrastructure** Behind every Swan account is Swan Guard, Swan’s modern security architecture combining intelligent monitoring with institutional-grade SOC 2 Type 2 compliance. Swan partners with Bakkt, a NYDFS-regulated crypto trading solutions provider, for its secure and scalable infrastructure. “Our partnership ensures that New York investors benefit from compliant infrastructure and seamless service as they engage with Bitcoin,” said Akshay Naheta, CEO of Bakkt. **The Real Bitcoin Platform** At Swan, every service is designed around one principle — real Bitcoin ownership. Real Bitcoin.  From simple self-custody to concierge wealth services, Swan’s mission is to help Bitcoin investors build enduring, generational wealth with Bitcoin. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. # Why Bitcoin is the Ultimate Asset for Your IRA URL: https://www.swanbitcoin.com/investing/ultimate-asset-for-your-ira/ Adding Bitcoin to your IRA can provide asset diversification, as well as the potential for higher returns and a measure of protection against monetary debasement. --- **Brandon Quittem** · April 23, 2024 · Updated September 19, 2025 ### The Goal is to Enjoy Life Without Worrying About Finances Let’s get straight to the point.  You want to maximize the value of your retirement portfolio so you can enjoy life to the fullest without worrying about your finances, right?  Great. We're on the same page. The next question is: Should you hold Bitcoin in a retirement savings vehicle such as an Individual Retirement Account (IRA)?  We believe the answer is YES simply because holding Bitcoin may increase the expected returns of your retirement portfolio. In this article we’re going to cover: - [What is an IRA?](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#What-is-an-IRA) - [The benefits of an IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Benefits-of-an-IRA-Less-Taxes-More-Savings) - [Traditional IRA vs Roth IRA vs 401(k)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Traditional-IRA-vs-Roth-IRA-vs-401k) - [Why Bitcoin is the ultimate asset to include in an IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Why-Bitcoin-is-the-Ultimate-Asset-to-Include) - [How adding Bitcoin to your IRA affects your returns (Three scenarios)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#How-Adding-Bitcoin-to-Your-IRA-May-Affect-Your) - [What percentage of your retirement portfolio should be in BTC?](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#What-Percentage-of-Your-Retirement-Portfolio) - [Introducing our Bitcoin Retirement Calculator (open-source)](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/#Swan-Research) - Is Swan’s [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) right for you? ### What is an IRA? When planning for retirement, exploring ways to reduce your tax burden is important. After all, the more you pay in taxes, the less you have left over to enjoy your life.  An [Individual Retirement Arrangement (IRA)](https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras) is a tax-advantaged savings vehicle held by individuals in the U.S. While this article is focused on American retirement accounts, similar options exist in other countries.  Most Americans are familiar with 401(k) plans, similar to an IRA, except they are issued through your employer. When you leave that employer, you can “rollover” your 401(k) balance into an IRA you control.  This article will briefly explain the benefits of leveraging tax-advantaged retirement vehicles. However, the primary focus will be on two things… 1. Why Bitcoin deserves a place in every retirement portfolio 2. What percentage should you allocate to Bitcoin  ### Benefits of an IRA: Less Taxes, More Savings *The primary benefit of an IRA (Traditional, Roth, etc) is the potential for tax savings. The less of your money that goes to taxes, the more you have to enjoy your retirement.* *Depending on your IRA type, the potential tax benefits will look slightly different. We’ll explain the differences in the next section.* *Another key benefit of long-term savings vehicles such as an IRA is compounding returns.* ***"Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."*** - Albert Einstein The longer your money has to grow, the more powerful the compounding effects will be. So, start investing as soon as possible, and let time and compounding work their magic. ### Traditional IRA vs Roth IRA vs 401k With a Traditional IRA, you contribute pre-tax income. Below certain income thresholds, you can deduct your contributions from your taxable income in the tax year you make them, which can reduce your tax bill for that tax year. Since you didn't pay taxes on the way into your Traditional IRA, you will owe taxes on the money when you withdraw it in retirement. If you withdraw money from a Traditional IRA before age 59 1/2, you may owe a penalty in addition to any taxes owed. With a Roth IRA, you contribute post-tax dollars. This means you don't get an immediate tax deduction. However, any earnings within the account grow tax-free, and you won't owe taxes on qualified withdrawals in retirement. In addition, you can withdraw your contributions (but not the earnings) at any time without owing taxes or penalties. Anyone with earned income (such as a salary or wages) can contribute to an IRA. This includes both Traditional and Roth IRAs, although there are some income limitations for Roth IRAs. In addition, if you are married, you can contribute to an IRA even if you don't work, as long as your spouse has earned income. For 2023, traditional and Roth IRAs' maximum annual contribution limit is $6,500, or $7,500 if you are 50 or older. This amount can be split between different types of IRAs or other accounts as long as the total contribution doesn't exceed the annual limit. A 401(k) is an employer-sponsored retirement plan. Like Traditional IRAs, you contribute with pre-tax income. Many employers will match employee contributions, which is an excellent incentive. When you leave the company that sponsored your 401k, you can convert it into a Traditional IRA you manage. Many 401k plans restrict what assets you can hold. Employers give you a short list to choose from, and everything else is off-limits. However, if you convert your 401k into a Traditional IRA, you will have full control over what assets you want to invest in. You know, in case you wanted more Bitcoin ;) Additionally, there are no tax implications for converting your 401k to a Traditional IRA, so long as the funds are rolled over within 60 days from one account to another.  ### Why Bitcoin is the Ultimate Asset to Include in an IRA If you have a retirement portfolio, consider adding Bitcoin. While Bitcoin is often associated with volatility and risk, there are [several reasons why](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) it makes sense as a long-term investment. 1. Bitcoin gains can grow tax-deferred (IRA) or tax-free (Roth IRA) 2. Bitcoin increases your asset diversification (reduces correlation to other assets) 3. Bitcoin may increase your risk-adjusted returns 4. Bitcoin may help protect you from the effects of inflation ([monetary debasement](https://www.swanbitcoin.com/monetary-debasement-vs-supply-shocks/)) ### Gains Grow Tax-deferred (IRA) or Tax-free (Roth IRA) Assets with high expected returns (as we believe with Bitcoin) work well in an IRA because any price appreciation will grow tax-deferred (or tax-free in the case of a Roth IRA). Peter Thiel famously bought seed stage equity in Facebook inside his Roth IRA. Thiel started his Roth IRA in 1999 with less than $2,000; by 2021, it was worth over $5 billion. The best part? Because he owned Facebook stock inside this Roth IRA, the earnings are tax-free, which would save him about $1 billion by avoiding capital gains tax if he retired today. ### Diversification Most people have a standard 60/40 allocation in their retirement accounts. This means 60% stocks and 40% bonds. Typically, stocks and bonds are “inversely correlated,” which means when stocks are going down, bonds are going up, and vice versa. This is a diversification strategy designed to minimize risk while maximizing returns. Historically, this has made sense. Do you know what increases your diversification even more? Yep, you guessed it, Bitcoin. This is because Bitcoin has a low correlation to traditional assets like stocks and bonds. The end result is your overall portfolio may have better risk-adjusted returns with Bitcoin in the picture. ### Increase Your Expected Returns Remember that standard 60/40 portfolio? If you invest in the standard retirement portfolio, your expected annual returns would be around 7%.  Not bad. Now let's compare that to Bitcoin… Although past performance does not guarantee future results, it is worth noting that since its inception in 2009, Bitcoin's price has [increased by an average of over 100% per year](https://www.swanbitcoin.com/bitcoin-price-prediction/). While there have been periods of volatility and sharp price declines, the long-term trend has climbed higher and higher.  This doesn't necessarily mean you should all-in on Bitcoin in your IRA. Even adding a small allocation to your retirement account can make a big difference. In the next section, we'll [*run the numbers*](https://www.swanbitcoin.com/bitcoin-price-prediction/) to show the returns we may potentially see after adding Bitcoin to our portfolio.  ### Protect from Inflation In addition to its potential for high returns, Bitcoin can help preserve your purchasing power in the face of inflation.  [Inflation](https://www.swanbitcoin.com/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/) can have a massive impact on the purchasing power of your money over time. For example, the purchasing power of $1 in 1913 is now worth less than 3 cents due to inflation.  This is caused by central bankers continually printing more money. When the growth of the money supply outpaces the growth of real goods and services, we see price inflation.  By contrast, Bitcoin has a fixed maximum supply (21 million) that [cannot be inflated away](https://www.swanbitcoin.com/bitcoin-and-the-true-meaning-of-inflation/). This means it can help protect against the debasement of fiat currencies like the U.S. Dollar. However, it's important to note that while Bitcoin can protect against inflation over the long term, there is no correlation between Bitcoin and short-term inflation. In fact, Bitcoin's price can be volatile in the short term due to various factors such as market sentiment, regulatory changes, and technological developments. Adding Bitcoin to your IRA can potentially provide diversification, higher returns, and protection against the effects of inflation over the long term.  However, as with any investment, it's essential to do our research, understand the risks involved, and consult with a financial advisor to determine if Bitcoin is a suitable addition to your portfolio. Ok, now that you’re convinced Bitcoin deserves a place in every retirement plan/portfolio, let’s talk about what % allocation makes sense… ##### Scenario #1: Hal (25) is a Bitcoin Bull and is setting up his first IRA. He plans to allocate 100% to BTC and, based on his projections, would have $3.2M by retirement. ### How Adding Bitcoin to Your IRA May Affect Your Returns Alright, let’s see what may happen to your returns after adding BTC to your retirement portfolio.  We will use our [open-source Bitcoin Retirement Calculator ](https://nakamotoportfolio.com/apps/ira/ira_client_basic)to help us *run the numbers*. Feel free to enter your own assumptions. This is part of a new initiative called Swan Research (more on that below).  We’re going to analyze 3 common scenarios we’re hearing from our clients (names are anonymized)  - Hal: 25-year-old Bitcoin mega Bull setting up his first IRA - Alice: 35 years old, 2 kids, moderate savings, and bullish on Bitcoin but needs to stay diversified  - Bob: 55-year-old, successful career, healthy savings, wants some Bitcoin exposure but cannot justify excessive risk this close to retirement age Hal is 25 years old, single, and just got his first *“real job.”* He has no savings but decided to set up his first IRA. He has about 40 years to invest before retirement and has a high-risk tolerance.  Hal expects an annual return of 10% from Bitcoin and 7% from a 60/40 portfolio, respectively. He anticipates that the price of Bitcoin at the time of his retirement in 2063 will be $1.3 million. Hal expects his 60/40 portfolio to have an annual return of 7% over the next 40 years. He expects Bitcoin to hit $1.3M by retirement (2063) which reflects a projected average annual return of 10%.  After running the numbers based on his projected Bitcoin price at retirement, Hal discovered that if he allocates 0% of his portfolio to Bitcoin, he can expect to have $824k by the time of his retirement. On the other hand, if he invests 100% of his IRA in Bitcoin, he can expect to have $3.2 million by retirement (3.8x more money) should Bitcoin reach or exceed his projection. Hal is optimistic about Bitcoin's future growth potential and has decided to allocate 100% of his IRA to Bitcoin. He understands the risks associated with investing in a volatile asset and is willing to accept them in pursuit of achieving his financial goals. By doing so, he hopes to accumulate a larger retirement fund, which he can use to enjoy his golden years. ![](https://www.datocms-assets.com/56652/1682358877-bitcoin-ira-scenario-1.png?auto=format) **Assumptions for Hal:** - 25 year old, single - Planning to retire at 65 (40-year time horizon) - IRA starting balance of $0 - $6,500 annual contribution - Projected annual returns (BTC) = 10% - Projected annual returns (60/40 portfolio) = 7% - Projected BTC price by time of retirement (2063) = $1.3M **Running the Numbers:** - With a 0% allocation to Bitcoin, Hal expects to have $824k by retirement - With a 100% allocation to BTC, Hal expects to have $3.2M by retirement  - $2.3M more in his retirement account (3.8x more money) should these projections become true ##### Scenario #2: Alice (35), mother of 2 kids, expects to increase her retirement balance by $1.8 million by adding a 20% allocation to Bitcoin. Alice is a 35-year-old married woman with two kids who is interested in investing in Bitcoin. She already has a moderate amount of savings and is bullish on the future prospects of Bitcoin. However, she wants to maintain a well-diversified investment portfolio. Alice currently has her retirement account invested in a standard 60/40 portfolio. She expects it to return 7% annually on average. Alice makes some assumptions to evaluate the potential benefits of adding Bitcoin to her investment portfolio. She plans to retire at the age of 65, which gives her a 30-year investment horizon. She estimates that Bitcoin will reach $1.9M by her retirement in 2053, reflecting a projected annual return of 15%. After running the numbers based on her projected Bitcoin price at retirement, Alice discovers that if she maintains a 0% allocation to Bitcoin, she can expect to have $1.4M in her retirement account by the time she retires. However, if she adds a 20% allocation to Bitcoin, she can expect to have $3.3M (2.3x more money) in her retirement account, should Bitcoin reach or exceed her projection, while still maintaining a diversified portfolio. ![](https://www.datocms-assets.com/56652/1682358922-bitcoin-ira-scenario-2.png?auto=format) **Assumptions:** - 35 years old, married with 2 kids - Retiring at 65 (30-year time horizon) - IRA starting balance of $100k  - $6,500 annual contribution - Projected annual returns (BTC)  = 15% - Projected annual returns (60/40)  = 7% - Projected BTC price by time of retirement (2053) = $1.9M - Alice currently has her retirement account in a standard 60/40 portfolio however she wants to add a 20% allocation to Bitcoin **Running the Numbers****:** - With a 0% allocation to Bitcoin, Alice expects to have $1.4M by retirement - With a 20% allocation to Bitcoin, Alice expects to have $3.3M by retirement - $1.8M more in her retirement account (2.3x more money) should these projections become true ##### Scenario #3: Bob (55) adds a 5% allocation to Bitcoin to increase his projected returns by 30%. Bob is a 55-year-old individual who is married and has seen his children graduate from college. Bob has been diligently saving for retirement and has a starting IRA balance of $1 million. He plans to retire by age 65, which is only 10 years away. He is looking for investment options that can help him maximize his returns to secure a comfortable retirement. Bob's current portfolio comprises a standard 60/40 mix of stocks and bonds. However, he is considering adding a 5% allocation to Bitcoin. Bob believes that Bitcoin can provide him with the potential to earn higher returns than traditional investments. Bob expects his 60/40 portfolio to have an annual return of 7% over the next 10 years. He projects Bitcoin to hit $400k by 2033, which reflects an average yearly return of 30%. Since Bitcoin has averaged over 100% annual returns over the last decade, and while understanding that past performance does not guarantee future results, he also thinks 30% is a conservative assumption. By managing his initial position size (5%), Bob hopes to boost his overall portfolio returns while offsetting the volatility associated with Bitcoin. ![](https://www.datocms-assets.com/56652/1682358942-bitcoin-ira-scenario-3.png?auto=format) **Assumptions for Bob:** - 55 year old, married filing jointly, kids already graduated from college - Retiring at 65 (10-year time horizon) - IRA starting balance of $1M - $6,500 annual contribution - Projected annual returns (BTC)  = 30% - Projected annual returns (60/40)  = 7% - Bitcoin price by time of retirement (2033) = $402k - Bob currently has his retirement account in a standard 60/40 portfolio however he wants to add a 5% allocation to Bitcoin **Running the Numbers****:** - With a 0% allocation to Bitcoin, Bob expects to have $2.1M by retirement - With a 5% allocation to Bitcoin, Bob expects to have $2.7M by retirement - $611k more in his retirement account (30% more money) should these projections become true ### What Percentage of Your Retirement Portfolio Should be in Bitcoin? We cannot provide financial advice. Even if we could, choosing your Bitcoin allocation depends on your time horizon, personal goals, conviction, and risk tolerance. Hopefully, the three scenarios above have helped you envision how Bitcoin might make sense for your retirement planning. If you want to play around with different scenarios, we encourage you to run the numbers yourself using parameters that would make sense based on your anticipated retirement age, desired allocation and projected Bitcoin price. ### Run the Numbers Want to run the numbers for yourself?  As part of Swan Research, our [Bitcoin retirement calculator](https://nakamotoportfolio.com/apps/ira/ira_client_basic) is open-source. Feel free to play around with the model.  If you [have questions](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) about the model or adding Bitcoin to your IRA, email me at Rapha@swan.com. ### Is Swan IRA Right for You? Here at Swan, our mission was simple: let’s create the [best Bitcoin IRA product](https://www.swanbitcoin.com/crypto-iras/) on the market.  This means easy to use, [enterprise-grade custody](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/), simple and transparent fees, and best-in-class service.  [Learn more about Swan IRA here](https://www.swanbitcoin.com/bitcoin-ira/).  **Setting up a Swan Bitcoin IRA is quick and easy** 1. [Create a Swan Account](https://www.swanbitcoin.com/bitcoin-ira/) (if you don’t have one already) 2. Open a Swan IRA (2 clicks) 3. Fund your account with a Transfer, Rollover, or contribute directly via ACH, wire transfer, or direct deposit ### Swan Research [Swan Research](https://nakamotoportfolio.com/) builds on Swan's mission of driving adoption and education by providing tools, research, and open-source code that explore Bitcoin's groundbreaking effects on the financial world.  This project acts as a lab for experimenting with new and sophisticated ideas to make them available to everyone. The team at Swan Research is dedicated to pushing the boundaries of what is possible with this revolutionary technology. Through Swan Research, users can explore cutting-edge ideas related to Bitcoin, including new investment strategies, alternative financial models, and innovative ways of understanding Bitcoin. Based on the Open Source ethos, the project is available to anyone interested in Bitcoin and wanting to learn more about this fascinating technology. Whether you are a seasoned Bitcoin investor or just getting started, Swan Research is an exciting new resource providing valuable insights and opportunities. ### Let’s Wrap Up An IRA can be a valuable tool for saving for retirement and building wealth over time. Whether you choose a traditional or Roth IRA, the tax advantages and potential for compounding can help you achieve your financial goals.  Adding Bitcoin to your IRA can be a smart long-term investment strategy, as it can provide: - Diversification. - The potential for higher returns. - Protection against the effects of inflation over the long term. However, it's essential to understand and manage the risks involved, including volatility and custody.  By researching, seeking professional advice, and staying informed about market developments, you can decide whether adding Bitcoin to your IRA is right for you.  Ultimately, the key to building a successful retirement plan is to start early, stay disciplined, and be patient. With the right strategy and mindset, you can create a secure and prosperous future for yourself and your loved ones. ### Disclaimer *This article is provided for educational purposes only, and cannot be relied upon as tax, accounting, legal, investment, or other advice. Past performance is not indicative of future performance. Bitcoin is a young, volatile, risky asset, and sudden large and sustained drops in price may occur from time to time. Swan makes no representations regarding the performance, tax consequences, or investment suitability of any structure described herein, and all such questions should be directed to a relevant advisor of your choice. The Bitcoin Retirement Calculator is only intended to show the projected investment performance based on parameters set by you, and in using this tool, you acknowledge that the results generated by placing various parameters through this tool are only projections of hypothetical performance that may be useful in assisting you in deciding how best to potentially incorporate a Bitcoin allocation in your IRA.* ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). # How to Set Up Swan Vault: Unlocking Safer Bitcoin Self-Custody URL: https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/ Discover how Swan Vault puts you in full control of your Bitcoin with a simple, secure setup. See just how easy it is to safeguard your wealth and unlock your monetary autonomy. --- **Matt Carvalho** · September 11, 2024 · Updated August 5, 2025 Swan Vault gives you full control of your Bitcoin, fulfilling the core promise of true monetary independence. Your money is solely yours, eliminating the need for banks or third-party institutions. Swan Vault is seamlessly available within the familiar Swan interface you already use. Our guided on-screen setup provides the simplest onboarding process in the industry, eliminating technical barriers so you can confidently take control of your Bitcoin. Ready to see just how simple the setup is? Let’s walk through it. ![](https://www.datocms-assets.com/56652/1724963689-blog_post-how_to_set_up_swan_vault-asset_01.png?auto=format) ### How Swan Vault Works Swan Vault uses a 2-of-3 multi-signature setup to enhance the security of your Bitcoin. Three keys protect your Bitcoin, and two are required to authorize any transaction. You control two keys with two signing devices, and you manage the third key through your Swan account for added security. You can co-authorize transactions through your Swan account using just one of your Jades, while the second stays securely stored in a separate location to maximize security. To safeguard your Vault, you will need to protect the following items: #### Signing Devices A signing device, also called a hardware wallet, is a physical device that remains unconnected to the internet, designed to store the keys required to transfer Bitcoin from your Vault. Swan Vault is designed for use with Jade devices, which are manufactured by Blockstream, a global leader in Bitcoin technology. ![](https://www.datocms-assets.com/56652/1724964050-blog_post-how_to_set_up_swan_vault-asset_02.png?auto=format) ![](https://www.datocms-assets.com/56652/1724964173-blog_post-how_to_set_up_swan_vault-asset_03.png?auto=format) You’ll connect to your Jade via USB. Here’s how to interact with your Jade: - Power button: Hold to power on or off - Select button: Press to confirm your selection on screen - Jog-wheel: Push towards the left or right to navigate through the menus #### Recovery Phrases Your recovery phrase, also known as a seed, is a unique set of 12 or 24 words that can restore a key on a signing device. Saving 12 words on your camera roll or in a password manager might seem convenient, but it's not secure. Backups on internet-connected devices can be hacked. The main point of using a signing device is to keep your recovery phrase off the internet and inaccessible to hackers.  **Write your recovery phrase on paper and keep it offline.** ![](https://www.datocms-assets.com/56652/1724964546-blog_post-how_to_set_up_swan_vault-asset_04.png?auto=format) To ensure that no one can copy your recovery phrase without your knowledge, place it inside a tamper-proof bag. To safeguard against fire, water, and wear and tear, you can even stamp the words on a metal plate like [Cryptotag](https://cryptotag.io/experience/zeus/), [Seedplate](https://bitcoinseedbackup.com/), or [Tinyseed](https://tinyseed.io/product/tinyseed-starter-pack/). ### Recovery Kit The recovery kit contains the information you need to recover your Vault. Think of it as a treasure map: the keys aren’t sufficient if you can’t locate the chest. We recommend printing physical copies to store alongside your recovery phrase backups. ![](https://www.datocms-assets.com/56652/1724964642-blog_post-how_to_set_up_swan_vault-asset_05.png?auto=format) Unlike recovery phrases, it’s generally safe to keep digital copies of your recovery kit. Besides USB flash drives, SD cards, or local folders, you can also save it on password managers or cloud storage services such as Apple iCloud, Google Drive, and Microsoft OneDrive. The recovery kit doesn’t contain your keys, so it can’t be used to steal your Bitcoin. If someone gets access to a digital copy of your recovery kit, they will just be able to view your balances and transaction history, but they will not be able to steal your bitcoin. ### Subscribing to Swan Vault When signing up for Vault, you can choose from two optional upgrades: ### Concierge Onboarding Setting up Swan Vault is a breeze and this guide covers everything you need to know. Our support team is always available to help, but if you'd like extra assistance, you can book a one-on-one session to set up your Vault on a call with one of our team members. They'll guide you through each step, answer your questions, and offer tailored advice. ### Welcome Package If you don’t have Blockstream Jades, we can ship them to you anywhere in the US. After delivery, your shipping address will be deleted from our database. ![](https://www.datocms-assets.com/56652/1724968241-blog_post-how_to_set_up_swan_vault-asset_07.png?auto=format) You can also order Jades from the [Blockstream Store](http://store.blockstream.com/products/blockstream-jade-hardware-wallet) or their [official Amazon Store](https://www.amazon.com/Blockstream-Jade-Bitcoin-Hardware-Bluetooth/dp/B0BBBBB7SP/). Always buy from trusted sources to ensure the authenticity of your device. ### Payment Details The Swan Vault fee is 0.02% of your average balance per month, with a $30 minimum and a $500 maximum. For example: - If you hold an average of $90,000 worth of Bitcoin in your Vault during a month, you pay $30. - If your Bitcoin balance is valued at $850,000, your fee is $170. - If your Bitcoin balance reaches $2,500,000 or more, you pay the maximum monthly fee of $500. Your average monthly balance is calculated from the daily end-of-day balances throughout the month. Billing is automatically processed through ACH debits from the bank account linked to your Swan account. ### Opening your Swan Vault To set up your Swan Vault, log in to Swan on a web browser that supports USB communication, such as the latest versions of Chrome, Edge, Opera, or Brave. For the best experience, we recommend Chrome. [Firefox, and Safari are not compatible due to their limited USB capabilities](https://caniuse.com/web-serial). After logging in and [enabling two factor authentication](https://help.swanbitcoin.com/hc/en-us/articles/360049979194-How-do-I-set-up-two-factor-authentication), you are ready to proceed. ### Jade Setup To set up a Jade, connect it to your computer via USB. ![](https://www.datocms-assets.com/56652/1724968453-blog_post-how_to_set_up_swan_vault-asset_10.png?auto=format) With Swan Vault, you’ll always unlock your Jade through your Swan account and follow on-screen instructions. You’ll never need to use your Jade unplugged or navigate menus on your own. ![](https://www.datocms-assets.com/56652/1724968488-blog_post-how_to_set_up_swan_vault-asset_11.png?auto=format) By clicking ‘Begin Setup’, your Jade will generate a 12-word recovery phrase. Once you’ve written down and confirmed your recovery phrase, the Jade will never display it again. Be sure to write down the correct words in the right order. ![](https://www.datocms-assets.com/56652/1724968516-blog_post-how_to_set_up_swan_vault-asset_12.png?auto=format) If you prefer a 24-word recovery phrase, select ‘Advanced Setup’. However, **12 words are recommended as it simplifies restoration and reduces the risk of mistakes during backup**. While 24 words might give the illusion of greater security, the difference is negligible — especially for multisig wallets like Swan Vault. Even with all the world’s supercomputers, guessing a 12-word phrase would take billions of years. In practice, doubling the number of words doesn’t increase your safety — guessing either would take longer than the age of the universe. ![](https://www.datocms-assets.com/56652/1724968549-blog_post-how_to_set_up_swan_vault-asset_13.png?auto=format) During setup, you’ll be prompted to create a PIN. This PIN encrypts your recovery phrase and protects your Jade from unauthorized access. If your Jade is lost or stolen, it will remain locked if the correct PIN isn’t entered. Be sure to write down your PIN. ![](https://www.datocms-assets.com/56652/1726076485-image.png?auto=format) Now, register your first key, unplug it (no need to click anywhere or turn it off), and repeat the process with the second. ### Health Check Swan Vault is designed for long-term savings, so you probably won’t transfer Bitcoin out of it frequently. However, it’s essential to ensure that your Jades are functioning properly and that you still have the keys needed to approve transactions. **We recommend performing a health check every six months.** ![](https://www.datocms-assets.com/56652/1724975833-blog_post-how_to_set_up_swan_vault-asset_16.png?auto=format) During the first health check on each Jade, Swan Vault will register your recovery kit’s wallet information into the device. This enables your Jades to validate addresses associated with your Vault. ![](https://www.datocms-assets.com/56652/1724975873-blog_post-how_to_set_up_swan_vault-asset_17.png?auto=format) ### Funding your Swan Vault Now that you've finished the setup, receiving and sending Bitcoin is easy. ### Receiving from your Swan Account Swan offers automatic withdrawals, eliminating the need to manually copy and paste addresses. Configure this feature once, and your Bitcoin will be sent to a new address each time, [avoiding address reuse](https://help.swanbitcoin.com/hc/en-us/articles/360055920494-What-is-address-reuse-Why-is-it-discouraged). ![](https://www.datocms-assets.com/56652/1724976015-blog_post-how_to_set_up_swan_vault-asset_18.png?auto=format) Swan will automatically transfer funds to your Vault once your balance reaches the selected threshold. We recommend a minimum of 0.01 BTC to [minimize future transaction fees](https://www.swanbitcoin.com/education/utxo/). The higher the threshold, the greater the savings over time. ![](https://www.datocms-assets.com/56652/1724976112-blog_post-how_to_set_up_swan_vault-asset_19.png?auto=format) **Swan covers all on-chain transaction fees for your Swan account withdrawals**, so the amount you set to withdraw is exactly what you'll receive in your Vault. ![](https://www.datocms-assets.com/56652/1724976152-blog_post-how_to_set_up_swan_vault-asset_19-part_2.png?auto=format) ### Receiving from External Sources Before copying or scanning the displayed address, always verify it on your Jade’s screen. ![](https://www.datocms-assets.com/56652/1724976193-blog_post-how_to_set_up_swan_vault-asset_20.png?auto=format) You can maximize the display to compare the characters. ![](https://www.datocms-assets.com/56652/1724976249-blog_post-how_to_set_up_swan_vault-asset_20-part_2.png?auto=format) This ensures you own the keys that can spend Bitcoin sent to that address. ![](https://www.datocms-assets.com/56652/1724976284-blog_post-how_to_set_up_swan_vault-asset_21.png?auto=format) ### Sending from your Swan Vault Transactions out of your Vault incur fees paid to miners, not to Swan. Once your Bitcoin is back in your Swan account, you can withdraw it to any address, free of charge. ![](https://www.datocms-assets.com/56652/1724976324-blog_post-how_to_set_up_swan_vault-asset_22.png?auto=format) You can approve transactions with either one or both of your Jades. If you use the cloud key, there’s a 72-hour security hold before the transaction is broadcast to the Bitcoin network, giving you time to cancel if needed. Unless it’s urgent, **we recommend using the cloud key so your second Jade can remain safely stored elsewhere.** ![](https://www.datocms-assets.com/56652/1724976366-blog_post-how_to_set_up_swan_vault-asset_23.png?auto=format) Before approving transfers, always verify the addresses and amounts on the Jade’s screen. ![](https://www.datocms-assets.com/56652/1724976414-blog_post-how_to_set_up_swan_vault-asset_24.png?auto=format) ### Securing your Swan Vault With your Vault set up and funded, you can rest assured that your Bitcoin is safe as long as your keys and recovery phrases are secure. ### Updating Firmware If needed, you’ll be prompted to update your Jade’s firmware through the Swan Vault interface. No need to access external websites. ![](https://www.datocms-assets.com/56652/1724976949-swan-vault-setup.gif?auto=format) ### Replacing a Key If one of your Jades is malfunctioning and you are confident no one has access to it, you can keep using the same key once you buy a replacement. You just need to restore your recovery phrase on your new Jade and perform a new health check. ![](https://www.datocms-assets.com/56652/1724976450-blog_post-how_to_set_up_swan_vault-asset_25.png?auto=format) If your Jade is tampered with, stolen, or lost, you’ll need a new Vault. First, transfer your funds back to your Swan account and contact us to deactivate your current Vault. Once your new Vault is ready, you can once again deposit from your Swan account. If both your signing devices and recovery phrases are lost, Swan cannot recover your Bitcoin — your funds will be permanently lost. **To access your Bitcoin, you need at least one recovery phrase or one signing device unlocked with its PIN.** ### Unlocking your Vault Without Swan You can [access your Vault without Swan](https://help.swanbitcoin.com/hc/en-us/articles/21863127251607-How-do-I-operate-my-Vault-independent-of-Swan-Bitcoin) at any time. All you need is your recovery kit and either both Jades or their respective recovery phrases. [Video](https://www.youtube.com/watch?v=s-ZHMljZBzQ) ### Open your Swan Vault Advanced self-custody setups that protect against losses and hacks were once reserved for enterprises or tech-savvy individuals. But now, Swan Vault makes this level of security accessible to everyone. Ready to take the next step? [Open your Swan Vault now](https://app.swanbitcoin.com/vault/subscribe)! Want to talk to our team? Book a[ free consultation](https://calendly.com/d/ckbv-xbc-m4h). ![](https://www.datocms-assets.com/56652/1724977105-blog_post-how_to_set_up_swan_vault-asset_27.png?auto=format) ### Matt Carvalho Matt is a Product Marketing Manager at Swan Bitcoin. He’s firmly convinced that Bitcoin is the superior store of value and believes it will soon become the ultimate medium of exchange. His mission is to help people adopt and thrive on the Bitcoin standard. # New Personal Account, Swan Vault on Mobile App, and Withdrawals to Self-Custody URL: https://www.swanbitcoin.com/product-updates/new-personal-account-swan-vault-on-mobile-app-and-withdrawals-to-self-custody/ We are excited to share the latest improvements to the Swan Bitcoin mobile app, streamlining your Bitcoin buying and storage experience. --- **Matt Carvalho** · September 30, 2024 · Updated July 1, 2025 We are excited to share the latest improvements to the Swan Bitcoin mobile app, streamlining your Bitcoin buying and storage experience. Let's take a look at a few recent updates. ### Check Your New Personal Account We've increased the maximum daily limit for ACH purchases, and we're excited to roll out more improvements and new features soon. New to Swan? Your account is already benefiting from these improvements. Long-time client? [Check your app](https://swan.us.go.link/7etoa). You now have new Personal accounts with these benefits. ![](https://www.datocms-assets.com/56652/1727730456-product_updates-2024_09_30-image_1.png?auto=format) ### Open Your Swan Vault You can now get started with Swan Vault from the mobile app. You can include concierge onboarding and welcome packages, or bring your own Jades to set it up yourself. [Setting up your Swan Vault on a computer takes only a few minutes](https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/), and you can enjoy higher Bitcoin security for a lifetime. ### Withdraw to Your Swan Vault and View Your Balance Moving Bitcoin to your Swan Vault is now effortless. You can withdraw to your Vault after unlock times or set up automatic withdrawals in the app. Automatic withdrawals to Vault are the most seamless self-custody process, with a new address being used without any manual steps. Reminder that we recommend [setting automatic withdrawals at appropriate amounts](https://www.swanbitcoin.com/education/utxo/). Following setup, your Swan Vault is visible within the Swan app along with ongoing education in the Learn tab. ![](https://www.datocms-assets.com/56652/1727451864-product_updates-2024_09_27-image_3.png?auto=format) ### Protect Yourself from Scams When you add a new withdrawal address, we'll remind you that Swan never asks you to send Bitcoin to a specific address. We also include a list of recent phishing attempts. Once a Bitcoin transaction is on the blockchain, it's irreversible. Be wary of emails, texts, or calls asking for sensitive info or urgent action. ![](https://www.datocms-assets.com/56652/1727451846-product_updates-2024_09_27-image_4.png?auto=format) ### Join the International Waitlist Not in the U.S.? You can now join the waitlist for your country through the app and we will be onboarding new clients from new countries over time. ![](https://www.datocms-assets.com/56652/1727451854-product_updates-2024_09_27-image_5.png?auto=format) ### What's Next? We continue to build for resiliency and new features are coming to your new Personal account. [Swan Vault is now open to all clients](https://www.swanbitcoin.com/industry/swan-vault-safe-and-sound-self-custody/) after months of early access. And [thanks to a new partnership with Equity Trust, we're preparing to launch new IRA account types](https://www.swanbitcoin.com/industry/swan-bitcoin-and-equity-trust-collaboration-unlocks-new-retirement-account-featur/). Want to be first in line for new features? [Download our mobile app](https://swan.us.go.link/7etoa) and give us feedback and suggestions from the Profile tab. Thank you for choosing Swan. Keep stacking. ### Matt Carvalho Matt is a Product Marketing Manager at Swan Bitcoin. He’s firmly convinced that Bitcoin is the superior store of value and believes it will soon become the ultimate medium of exchange. His mission is to help people adopt and thrive on the Bitcoin standard. # Swan Announces New Chief Investment Officer, Publishes Guide to Leveraged Bitcoin Equities URL: https://www.swanbitcoin.com/industry/swan-announces-new-chief-investment-officer-publishes-guide-to-leveraged-bitcoin/ Ben Werkman joins Swan as CIO. New LBE primer explains key concepts, implementation steps, risk management, and valuation approaches. --- **Swan Bitcoin** · April 23, 2025 · Updated May 19, 2025 Swan is committed to building a financial future rooted in Bitcoin, and that starts with hiring Bitcoiners who live the mission. As part of this directive, Swan is proud to announce the appointment of a new Chief Investment Officer to help guide us into our next phase of growth. This strategic hire reflects Swan’s dedication to assembling a leadership team that deeply understands Bitcoin and the Bitcoin Investor, and is focused on enabling clients to build their financial lives on the foundation of Bitcoin. ### Welcoming Ben Werkman as Chief Investment Officer [Ben Werkman](http://www.x.com/benwerkman) has been an instrumental voice in the retail investing community, known for simplifying complex strategies around **Leveraged Bitcoin Equities** (aka Bitcoin Treasury Companies) and making them accessible through his open-source approach to research and education. "I’m thrilled to join the passionate team of Bitcoiners at Swan during this pivotal moment in Swan’s journey," said Werkman. "Swan has been at the forefront of enabling clients and businesses to integrate Bitcoin into their financial strategies in ways that have made a significant difference, and I look forward to continuing to accelerate that mission." Werkman is a long-time Bitcoin advocate and entrepreneur with deep expertise in distressed credit, treasury strategy, strategic finance, and both equity and derivatives trading. He has advised corporations on Bitcoin adoption and treasury implementation, helping executives articulate the long-term strategic value of incorporating Bitcoin into their capital structures and driving value for their shareholders. As a strong believer in community and education, Werkman has built a dedicated following through his work with MSTR True North, his social media presence, and frequent appearances on podcasts and at various events, where he breaks down the evolving landscape of Bitcoin Treasury strategies. His thought leadership is laying the groundwork for a more informed investor base, and will now support Swan’s efforts to continue their leadership position in building the future of Bitcoin-based wealth management. ### Swan is the USA's # 1 Bitcoin-based Wealth Platform Swan is building the platform of choice for Bitcoin investors, a place where individuals and institutions alike can anchor their wealth management journey with the team they trust and the services they need. “We’re excited to bring a new layer of expertise to our offerings, allowing us to advance the understanding and adoption of Bitcoin Treasuries as a powerful tool for corporations and a foundational pillar in our clients’ investment strategies,” said Cory Klippsten, Swan CEO. “Every product Swan releases is designed with the Bitcoin investor in mind, empowering them to build, preserve, and grow their financial future on a Bitcoin standard. The expansion of our management team continues to strengthen our commitment to building for our clients to ensure we are a partner for them at every step of their Bitcoin journey.” ### Introducing Swan’s Guide for Leveraged Bitcoin Equities To help our clients and investors everywhere to better understand the strategy behind Leveraged Bitcoin Equities (aka Bitcoin Treasury Companies), Werkman and the Swan team have prepared a comprehensive primer that covers key concepts, risk management, KPIs, and implementation frameworks. [![](https://www.datocms-assets.com/56652/1745431751-research.png?auto=format)](https://swan.com/leveraged-bitcoin-equity-lbe-strategy) [Download our Leveraged Bitcoin Equity primer](https://swan.com/leveraged-bitcoin-equity-lbe-strategy) written by Ben and the Swan team. We look forward to sharing more insights in the coming months and invite you to join us on our journey. To stay up to date, subscribe to [our newsletter](https://www.swanbitcoin.com/newsletter/) and follow us on [Twitter/X](http://x.com/swan), [YouTube](http://youtube.com/@swan_bitcoin), and [LinkedIn](https://www.linkedin.com/company/swanbitcoin/). ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Why Every Gold Investor Should Seriously Consider Bitcoin URL: https://www.swanbitcoin.com/opinion/why-every-gold-investor-should-seriously-consider-bitcoin/ After managing a Swiss gold fund for 8 years, I realized Bitcoin surpasses gold as the ultimate store of value. Here’s why every gold investor should study Bitcoin closely. --- **Alex Stanczyk** · April 24, 2025 ### The Gold Market Gold is the[ largest asset in the world](https://companiesmarketcap.com/assets-by-market-cap/) with a market cap of over $21 trillion.  Gold has been used as a store of value and as money for tens of thousands of years. Gold is literally indestructible. It is eternal. It’s a physics thing. You can diffuse it in acid, but the gold is still there when the acid evaporates. To destroy gold, you literally must take it apart at a subatomic level. Firing it into the sun might do it. Whatever happens to humans, gold will persist in the universe forever. Data from the World Gold Council shows that gold ownership among professional investors in the US [has risen steadily since 2018](https://www.gold.org/goldhub/gold-focus/2024/06/gold-ownership-rise-among-north-american-professional-investors). I co-managed a physical gold fund based in Switzerland for 8 years, so I think I  understand why this is. Sooner or later, many gold investors will make the same journey as I did, from gold to Bitcoin. Let me explain how I got here. ### Climbing Mount Stupid There is a saying among the Bitcoin Maximalists: everyone climbs Mount Stupid before finally figuring out what Bitcoin is. When hearing about Bitcoin, *everyone* stays ignorant for a period of time, whether that’s minutes, months, or years. Some people will stay ignorant for the rest of their lives, while others might take the time to study Bitcoin to finally understand what they do not know. I had first heard of Bitcoin in 2011. I don’t remember a specific conversation, but the topic kept bubbling up because being in the gold industry—the hard money industry—bitcoin was based on the same concept. I never took Bitcoin seriously at the time for a couple of reasons. One, I always thought that the government would shut it down. A few years earlier, Doug Jackson who created e-gold—basically tokenized gold—got raided and indicted by the United States government for money laundering and operating an unlicensed money transmitter business. It seemed obvious that the government was going to do the same thing with Bitcoin, shutting it down. At the time, I didn’t know enough about Bitcoin to understand that it was also a decentralized protocol, which made it very difficult—if not impossible—for the government to stop it. Two, I also thought Bitcoin would fail because I thought there would be a better Bitcoin that would replace it. This is how things happened in the dot-com age. MySpace made way for Facebook. Hotmail made way for Gmail. AOL for Google, etc. I was sure it was going to be replaced by something better. When I heard Bitcoiners saying, “It's better than gold,” I just thought that was ridiculous. In early 2017, Bitcoin passed a thousand dollars per coin, which piqued my interest again because it meant one Bitcoin cost more than one ounce of gold. So, I bought a little Bitcoin. By the end of 2017, it was exploding in value, and the hype was off the charts. I was absolutely convinced that Bitcoin was a huge bubble, that it would burst, and that we’d never hear from this thing again like pet rocks and Beanie Babies. I sold it at the end of that year for nearly $18k. I’d almost 18x’d my money. I got out at the top. I thought I had called this thing perfectly and I thought I was a genius. I even wrote a paper about it. In hindsight, I was an idiot. But I didn't know that yet. #### Going Down the Rabbit Hole The year was 2019, and I was looking at Bitcoin charts. I could see that Bitcoin was consolidating again. It was going to run again. This bothered me tremendously. Why was Bitcoin still here? Surely, the government would have shut it down by now. So I started doing research. I probably spent close to a hundred hours trying to answer those questions. It finally dawned on me. They hadn't shut it down because they couldn’t. Bitcoin has been downloaded hundreds of thousands of times, sitting on computers all over the world and even on satellites. I realized I was wrong about that. Maybe I was wrong about the other things as well? I started studying Bitcoin for an hour a day, then two, then four, and then six. At this point, I was talking to my fund clients about gold and studying Bitcoin in every moment of my spare time. But I still was not *quite* over the line yet. #### The Catalyst March 2020. COVID was doing its thing, and the whole world was terrified that we might be in some kind of humanity-ending pandemic. The authorities in Switzerland decided to ground all air traffic. Nothing lands, nothing takes off. I wasn’t in Switzerland, but the gold held by our fund was. I woke up one night realizing that if one of my clients contacted me and said, “Alex, I want to do a redemption and I want you to deliver $20 million of gold bars to this country over here, this bank, or this vault,” I could not do that. In the gold industry, that's what you call a failure to deliver, and you're now out of business because reputation is everything. I called my co-managers and said that we're in big trouble if we get a big redemption. Several weeks went by, we didn't get a big redemption, and everything was fine. But that moment was my wake-up call. Gold's weakness is that in order to have final settlement, you must physically deliver the gold to your counterparty, aka physical delivery. This relies upon human beings. If I want to deliver gold, I need the cooperation of the guys working at the vault, the security truck teams, customs, flight crews, and ground crews on both sides. Anybody in that chain could mess the whole thing up. Of course, precautions are taken. But to do final settlement with gold, you require the cooperation of other human beings. Then I thought about Bitcoin. With this Bitcoin thing, I can move any amount of value from one side of the world to the other at the speed of light? At almost no cost, and no one can stop me, and I need no one's help or permission? Mind blowing. At that moment, I knew with absolute clarity that Bitcoin was better than gold in every measurable way. “But Alex, if the internet goes down, then gold is better than Bitcoin.” My friend, if the internet goes down, you have a lot bigger problems than whether gold is better than Bitcoin. When basic infrastructure starts failing, you need to start thinking about how you will get water tomorrow. How do you feed yourself? Do you have firearms and ammunition? Because it's going to get very weird, very quickly. For me, in any situation that calls for the total collapse of human society, owning gold in a Swiss vault will be useless! Bitcoin has massively outperformed gold in US dollar terms. Even though gold is at record highs today, measured against Bitcoin, it is absolutely imploding. It's faster. You can move more value. You don't need people's help. It can't be confiscated from you. The government can't shut it down or take it from you. You need no one's permission to transact. It's verifiable, it's unduplicable. You can't counterfeit it. Perhaps most importantly, Bitcoin is absolutely finite. The implications of an absolute finite supply is one of the hardest things for people to wrap their mind around, intellectually. The human race has never seen absolute scarcity before. We don’t know what to compare it to. We've been here for hundreds of thousands of years, and we've never seen a strictly finite asset before. Every other asset responds to human demand for more of it. That’s Bitcoin's key advantage over every asset, not just gold. Throughout this thought process, I arrived at the conclusion that it was time for a change, because I was in the wrong industry. ### Why Bitcoin Wins: The Future of Wealth Preservation At Swan Bitcoin, we’re often asked: *How will Bitcoin shape the future of finance?* My take is this: Bitcoin won’t replace every financial product or derivative out there, but it will become the foundational asset upon which a new wave of financial innovation is built. Fiat currencies will persist—governments aren’t giving up that control anytime soon—but Bitcoin will trigger a seismic repricing of global capital. This shift won’t happen overnight; it could take decades. The exact timeline? Anyone’s guess. But the wheels are already in motion. #### The Inflation Ripple Effect To understand why, let’s rewind to 1971. That’s when the U.S. dollar severed its tie to gold, unleashing an era of unrestricted money printing. For over 60 years, the U.S. government has churned out dollars, eroding their purchasing power and fueling inflation. Because the dollar is the world’s reserve currency, this inflation doesn’t just hit Americans—it ripples across the globe. The result? Everyone, everywhere, is scrambling to outpace inflation. People buy assets—real estate, stocks, art, gold—not always because they want them, but because they’re desperate to preserve wealth. This isn’t organic demand; it’s manipulated by a devaluing currency. I’d argue that this has mispriced the entire global capital system, from a $30 million Montana ranch (about 300 BTC today) to a Picasso on a gallery wall. #### Bitcoin: The New Benchmark Here’s where Bitcoin changes the game. I believe the monetary premiums baked into assets—diamonds, property, even gold—will eventually be recalibrated against Bitcoin. That Montana ranch? One day, it might cost just 1 BTC, or even 0.1 BTC. Why? Because Bitcoin is emerging as the new *hurdle rate*—the standard by which all investments are judged. This isn’t just a catchy phrase. At Swan Bitcoin, where we help individuals and businesses build wealth through Bitcoin, I speak daily with successful entrepreneurs, family offices, and high-net-worth individuals. Their stories back this up. One client recently told me, “I sold 22 rental properties and bought Bitcoin. Why would I keep dealing with tenants, taxes, and broken boilers when Bitcoin outperforms it all? It’s a no-brainer.” Business owners are reaching similar conclusions. Unless their companies can outpace Bitcoin’s returns, they’re considering cashing out and holding BTC instead. It’s a rational choice: Bitcoin offers superior performance without the headaches of traditional assets. #### A $900 Trillion Reset Globally, there’s an estimated $900 trillion in assets—many held by people who don’t fully understand them, bought solely to hedge against inflation. This mispricing can’t last forever. Over the next 20 to 30 years, I predict a massive rebalancing, with Bitcoin as the anchor. We’re still in the early days—very few grasp the scale of what’s coming. Consider this: There are 60 million millionaires worldwide, but only 21 million Bitcoin will ever exist. Simple math tells us not every millionaire can own a whole coin. As this reality sinks in, a tipping point will hit. Smart investors will recognize Bitcoin as the ultimate asset. Others, even those indifferent to crypto or gold, will follow suit—not out of conviction, but because it becomes the default way to save. ### Your Bitcoin Journey Starts Here Bitcoin’s rise isn’t just a trend; it’s a fundamental shift in how we store and grow wealth. Wherever you are on your Bitcoin journey, you’ll get there eventually. Want to accelerate the process? At Swan Bitcoin, we’re here to guide you. Whether you’re a seasoned investor or just starting out, we’ll help you harness Bitcoin’s potential—securely, simply, and with a team that’s all-in on its future. Ready to take the next step? Let’s talk. ### Alex Stanczyk Alex Stanczyk is a Managing Director on Swan Bitcoin’s Private Wealth team, where he advises high-net-worth individuals and family offices on safely purchasing, securing, and preserving Bitcoin for generational wealth. Before joining Swan, Alex spent eight years managing a physical gold fund with core operations in Switzerland. # This Time is Different - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/this-time-is-different/ No longer a niche commodity, Bitcoin now finds itself a prime fixation of the US Executive Branch. --- **Jason Bassett** · April 14, 2025 “This time’s different,” said every Bitcoin maximalist during every bull market cycle, a phrase so overused through the years the memes began writing themselves. Bitcoiners are known (and sometimes infamous) for their unrelenting optimism, insanely bullish predictions, and unwavering confidence in the world’s only absolutely scarce asset. And I stand before you today ready to follow in the steps of many before me and make the exact same assertion: This time is different. For real. Through the years, the world has seen Bitcoin spontaneously emerge at the hands of an anonymous creator, steadily gaining traction as a niche collectible among a small group of cypherpunks and computer nerds, earn real-world monetary status as both a currency and tradable asset, surpass a one-trillion dollar market cap, surpass a two-trillion dollar market cap, and become one of the top 10 most valuable assets in the world. Bitcoin’s journey as an emergent monetary network has been fraught with widespread skepticism and attack. Between CEOs of the world’s largest banks, economists, politicians and policymakers, gargantuan media outlets, and national governments, there has been no shortage of detractors and no punches pulled. Despite a historically adversarial environment, Bitcoin has continued to thrive – all without a marketing team, CEO, or central group leading the charge. In 2025, we find ourselves amidst a rebalancing of power that is rapidly and dramatically resetting the environment in Bitcoin’s favor—this time at the upper echelons of US politics. This would have been completely unfathomable just a year or two back. Throughout this writing, we’ll examine the significance of events that have unfolded over the past few months alone, all of which I believe point towards Bitcoin undertaking its role as the next global reserve currency. In the coming years, Bitcoin will flourish well beyond the realm of retail trading, which has largely confined it so far. It will go on to root itself into nation-state debt management, global trade, the banking system, corporate earnings, and every nook and cranny of the financial system. The recent developments highlighted here are the first of many catalysts with major political firepower behind them. So yeah, maybe “unrelenting optimism” holds up. ### Bitcoin Escapes the Lab Before we get into recent events, let’s set the stage with a quick look back to 2024, a year that saw significant leaps forward in Bitcoin’s development as a serious asset class, along with fresh all-time-high prices, thanks to the launch of the spot Bitcoin ETFs.  Arriving in early January, these products *very* quickly became the best-performing ETFs in history, cementing the fact that Bitcoin could no longer be dismissed as an unserious retail-level plaything. Wall Street’s arrival brought institutional titans such as BlackRock recommending portfolio allocations (a response, no doubt, to the wild success of their own spot ETF, IBIT), financial advisors dipping their toes in, and Bitcoin creeping its way into retirement accounts. Come summertime, during the run-up to the 2024 election, two of the three major presidential candidates were attending Bitcoin conferences and throwing around promises of a US Strategic Bitcoin Reserve and/or “stockpile”, which they claimed could be used to help offset the national debt and bring prosperity to the US.  After years of attack and gross overregulation in the US, these ideas almost seemed hard to take seriously. There’s no way *the US Government* would start stacking Bitcoin, and there’s no way *the President of the United States* is going to make this a priority.  They are, and he did. ### New Players On Board Following his election victory, Trump began making key cabinet picks who were integral to his pro-Bitcoin narrative and future policy creation.  Paul Atkins, a previous SEC Commissioner and staunch supporter of Bitcoin, was tapped to replace Gary Gensler, a notoriously harsh critic of digital assets, as SEC Chair. Just like that, the SEC’s previously hostile and constraining stance on crypto was out the window, and a shift into promoting the industry’s growth was underway.  Next up, Scott Bessent and Howard Lutnick, both supporters of Bitcoin, were appointed to become the new respective Secretaries of the US Treasury and Commerce. A few months from now, they may be the masterminds behind the first purchases of Bitcoin made by the United States of America. Former PayPal executive and longtime crypto-proponent David Sacks was given the role of “AI and Crypto Czar”, and tasked with developing the fair regulatory/legal framework that the industry had been starved of throughout its history. The mere fact that this role was created at all speaks volumes of the new administration’s intentions. Sacks would also go on to lead the President‘s Working Group on Digital Asset Markets, an cryptocurrency-focused executive committee that would include Atkins, Bessent, Lutnick, and many others. It’s noteworthy that most of these cabinet picks are not only Bitcoin supporters, but actually own the asset themselves. Lutnick, in particular, has been vocal about holding hundreds of millions of dollars worth of Bitcoin, which he has famously said will be “worth billions soon.” As a general rule of thumb, if you’re counting on policymakers to deliver a specific outcome, it helps when they themselves benefit from that same outcome. These guys have skin in the game. While not Trump’s *only* pro-Bitcoin cabinet picks (there is now a long list of names), these four represent the beginning of an enormous shift in the Government’s approach to Bitcoin. Gone are the days of hostility, demonization, and overregulation. ### A Sea Change Begins Following Trump’s inauguration, things quickly began to materialize. On the second day of the new administration, Ross Ulbricht, founder of the Silk Road marketplace, was granted a full pardon and freed from prison, where he was serving consecutive life sentences. This was the first of many promises Trump had made to the Bitcoin community during the campaign trail, and while it may have been relatively easy for him to execute, its signal was meaningful to many.  Just a few days later, Executive Order 14178 was signed, establishing the US as a leader in the digital assets and financial space. The new EO revoked Biden-era Executive Order 14067, which had focused on the risk assessment of digital assets. This action traded the previous administration's “regulation by enforcement” approach for one aimed at fostering growth and innovation. A few of the key takeaways from the Order include: the formation of an executive-level “Working Group on Digital Assets Markets”, a vow against the creation of a CBDC (central bank digital currency), support for integrating USD-backed stablecoins into the traditional financial system, fair and predictable regulation, and the assessment of a digital assets reserve/stockpile to be carried out by the Working Group. Despite being met with initial skepticism, with critics underwhelmed by the lack of specifics and immediate action, nearly all of these things have since materialized. Stop and reflect on this for a moment.  Never before had Bitcoiners seen such open levels of support (or any support) coming from the Executive Branch. And now, seemingly overnight, some of the world’s most powerful people were throwing their full weight behind this. The message rang loud and clear: The US was ready to fully embrace Bitcoin – before anyone else beat them to it. And things were just heating up. ### SAB 121 Rescinded Alongside the fresh Executive Order came the rescinding of SAB 121, which had forced institutions and banks holding custody of Bitcoin to list the asset as a liability on their balance sheets. This intentional complexity deterred banks from offering any kind of Bitcoin custodial services to their customers due to the burdensome financial accounting that it brought.  With SAB 121 being scrapped, banks are now able to offer clients such services without cumbersome accounting constraints. This is a huge leap forward for Bitcoin adoption for two reasons:  1) Many new and future entrants to Bitcoin will feel far more comfortable having the same bank they’ve used for a decade plus hold/insure their coins.  I know, I know… “not your keys, not your coins.” While the age-old mantra among Bitcoin maxis is not without its merits, it is also a healthy assumption that the need to learn self-custody, private key management, wallet types, etc., is intimidating to the broader population and a high bar to entry for most. If Bitcoin custody is going to scale en masse, banks will need to provide easy/trusted custodial solutions. The repeal of SAB 121 opens that door, along with the possibility of Bitcoin lending services which asset holders have long desired. 2) The number of entities that can provide reliable custodial services is currently very, very limited, posing a significant centralization risk. Enabling more players to enter the game leads to healthy competition and natural decentralization. These changes alone are certain to allow thousands, if not millions, of new people onboard to and use Bitcoin in various ways. ### FASB Rules Change Another key development was the FASB accounting rule change regarding Bitcoin held on corporate balance sheets. Though this change technically happened mid-December last year, its effects will begin in 2025.  Under the “impairment model” of accounting (the old way), a company holding Bitcoin on its balance sheet could only record the asset’s *loss* in value – not its gains. Not only did this heavily discourage businesses from developing Bitcoin treasury strategies, it also offered a completely inaccurate picture of the financial health of companies that *did* choose to hold Bitcoin on their balance sheets. Following the changes, businesses are not only able but required to report the fair market value of their Bitcoin holdings—meaning gains and losses are taken into account. This offers a much clearer picture of the asset’s value in real time and allows companies to benefit directly from the asset’s price appreciation. Through this accounting change, corporations become far more incentivized to add Bitcoin to their balance sheets – either through purchasing spot BTC itself or the spot BTC ETF products discussed earlier. With Michael Saylor and Strategy (formerly MicroStrategy) as the poster child for the Bitcoin treasury playbook, many other companies have already started taking note and implementing their blueprint. In fact, recent 13-F filings show that nearly 1,600 US companies have some kind of long position in Bitcoin. This move, in tandem with SAB 121’s repeal, was a major double-whammy for large, non-retail Bitcoin buyers. Now, financial institutions and corporations are entering the fray. The winning didn’t stop there, and this next one is big… ### Red, White, and Bitcoin March 6, 2025, made history, both for Bitcoin and for the United States, as President Trump signed an Executive Order titled *“Establishment Of The Strategic Bitcoin Reserve And United States Digital Asset Stockpile”*. The text can be broken down into three main parts: Before any policy specifics are laid out, the EO provides a brief and educational explanation of Bitcoin’s value –  citing its fixed supply of 21 million coins, pristine security protocol (“never been hacked”), unique store of value properties (calling it “digital gold”), and the strategic advantage of being one of the first nations to hold a reserve.  The significance of this really can’t be overstated. The White House had taken the orange pill. They *got it.* Even more importantly, they communicated it to the world.  Bitcoin’s unique value proposition – the same value proposition that Bitcoin evangelists had preached to annoyed family members at every Thanksgiving dinner, the same value proposition that mainstream economists had dismissed as nothing more than a “Ponzi scheme,” the same value proposition that had been relentlessly boiled down to “Bitcoin is a solution in search of a problem” by the legacy media – had successfully rooted itself within the highest levels of the Executive Branch.  The policy itself even further demonstrates this level of understanding, as it created two “buckets” of digital assets: the Strategic Bitcoin Reserve and the US Digital Asset Stockpile, which are to be treated notably differently from one another.  First, we have the Strategic Bitcoin Reserve, which will contain Bitcoin and *only* Bitcoin. This will comprise the US Government’s existing holdings (currently ~200,000 BTC), and these holdings are *not* to be sold, as they have been during prior administrations. As if this itself wasn’t some amazing signal, the Order goes on to state that the Secretaries of the Treasury and Commerce (Bessent and Lutnick) *shall* find “budget neutral” ways to acquire more Bitcoin in a way that bears no cost to taxpayers. The word “shall” bears significance – this is something that *is going to happen*. It’s a matter of when not if. By contrast, the Digital Asset Stockpile would contain all non-Bitcoin digital assets, such as alt-coins, currently in the US Government’s possession. The big kicker here is that the Treasury will explicitly not acquire more of these assets and is also authorized to strategically *sell* them.  Let’s take a moment to step back and truly appreciate this for what it is: The White House has just stated, clear as day, that they want the US to stack as much Bitcoin as possible before other nations beat us to it. No more selling what we’ve already got, plus concerted efforts to get more. The fact that future purchases are to be carried out in a “budget neutral” way that won’t cost taxpayers a dime guts the easiest argument of those opposing the reserve strategy. Additionally, all *non-Bitcoin* cryptocurrency has been deemed unworthy of future acquisition.. and possibly unworthy of even being held long-term at all. In fact, as many have pointed out, one of many available “budget neutral” methods of acquiring more Bitcoin would be to simply sell the other crypto to fund the purchases, and I’d have to say, I don’t hate the idea! Boom. Just like that, the White House went full tilt into Bitcoin maximalism. For those who had been rooting for the Strategic Bitcoin Reserve to materialize since it was first brought up at the Bitcoin 2024 conference in July, this was a near-perfect outcome. One must consider the many different ways this could have gone. The decision could have been to hold the top 10 cryptos in the reserve, weighted by market cap. They could have planned to purchase not only Bitcoin but also Ethereum, XRP, and Solana. They could have, but they very explicitly didn’t.  Just two days later, the White House’s official X account posted a post depicting the Executive Order alongside the caption, “America will be the Bitcoin superpower of the world,” a truly surreal thing to see. I’ll reiterate—for those who have been around for a few years, this type of thing was previously so unimaginable that it honestly still feels like an alternate reality. That is truly the gravity of change we’re undertaking here. ### So… What Now? Let’s review and piece together the recent events and developments we’ve visited throughout this writing, which can be best understood as great leaps of progress individually, but synergistically lay the groundwork for a global monetary revolution. We’ve learned that we have transitioned to a completely different regulatory environment, one that was previously very hostile towards Bitcoin. We’ve seen some of the most powerful political adversaries swapped out for strong proponents who want to see Bitcoin flourish, and who stand to directly benefit from such an outcome.  We’ve observed legislative changes that will now encourage corporations and institutions to buy and custody Bitcoin, helping the asset transcend the relatively small retail investor ecosystem it has been bound to.  We’ve seen the US Executive Branch treat the formation of a Strategic Bitcoin Reserve as a top priority—one that embodies a long-term buy-and-hold strategy. We’ve watched the White House communicate the vast benefits of Bitcoin’s fundamentals to the world, drawing a bold line between it and all other digital assets. This writing is not a political endorsement of any kind - not for any politician, political party, or administration. The purpose of this writing is to document and, in a way, timestamp a historic moment in time – the beginning of a global monetary shift. If you’ve been in Bitcoin for a while, one of the oldest and most familiar objections you’ve heard or otherwise run into is the idea that the government(s) will shut it down, ban it, criminalize it, and do anything possible to stifle its success. This has been the narrative throughout the better part of Bitcoin’s life. Today, as I write this, that narrative dies.  Even more deeply satiating is the realization that the US Government's adoption of Bitcoin is not an extension of its greed but rather a full-on capitulation. The most powerful and wealthy country on the planet has openly admitted and embraced a need for Bitcoin to maximize its prosperity. Read that twice: Bitcoin *does not need the US Government. The US Government needs Bitcoin.*  The thing is, the US buying Bitcoin is really just the spark that will ignite a slew of sovereign purchasing activity. If/when we buy $20 billion worth, we can expect our geopolitical rivals and allies alike to take note and, before long, take similar action. Keep in mind that Bitcoin has an inelastic and finite supply. There are only 21 million coins in play, and they can only be mined so fast. When you hear the words “game theory” tossed around in Bitcoin-centered discussions (Bitcoiners *love* using these words), they are referencing the reality that, once large buyers begin accumulating, it will be a race akin to a gold rush, but without the ability to produce more “gold” faster.  Supply will become very scarce quickly, prices will soar to astronomical levels, and the name of the game will be who can get the most Bitcoin at the lowest cost. All it takes is a world superpower to kick off the process, and we are going to be that superpower. Alongside this, Bitcoin-related services will become ubiquitous. You’ll see them around every corner. They’ll be advertised in airport terminals and flashed on interstate billboards. Big banks, whose CEOs spent years going on air to predict Bitcoin’s impending doom, will be pushing custodial and lending services at a dizzying pace. They, too, will have gloriously capitulated.  Corporate earnings reports and stock performance will benefit directly from Bitcoin’s price appreciation for forward-thinking companies that adopt a treasury strategy. This strategy will bring wealth and prosperity to millions of investors—even those who do not own Bitcoin directly. These companies will be agents of Bitcoin’s integration into the rails of the traditional financial system. Bitcoin’s evolution has been and will continue to be a long and winding journey, along which there will be many, many types of participants. Right now, at this moment in time, the participants helping to advance our beloved magic internet money happen to include the leader(s) of the free world, large financial institutions, and corporations. We are observing the transition from “gradually” to “suddenly” in real-time. So, what now?  If you’re a longtime Bitcoiner, revel in what can only be understood as a monumental victory – a once-in-a-century technological and monetary breakthrough blossoming into maturity. If you’re newer to Bitcoin, welcome, and keep learning! Bitcoin is soon to play a very significant role in all levels of society, and we have the gift of knowing this just before it happens. We all have the opportunity to participate in this great technological revolution – and the wealth and prosperity it will bring. This time *is* different, and it is my sincere hope you’ll enjoy the ride as much as I am.  ### Jason Bassett Jason is a sound money advocate and fitness enthusiast with a background in tech and sales management. As a member of the Swan Private Wealth team, he helps individuals and families preserve and grow their wealth in Bitcoin through various retirement and custodial strategies. Jason is dedicated to spreading financial freedom through educating clients, friends, and family about Bitcoin. # Biden’s SAB121 Veto Stands: What This Means for Banks and Bitcoin Custody URL: https://www.swanbitcoin.com/politics/biden-s-sab121-veto-stands-what-this-means-for-banks-and-bitcoin-custody/ The House failed to overturn Biden’s veto on a bill allowing banks to custody Bitcoin and crypto assets, addressing SEC’s SAB 121, which imposes stringent accounting requirements on banks holding these assets. --- **Swan Bitcoin** · July 12, 2024 · Updated April 9, 2025 The U.S. House of Representatives recently failed to overturn President Joe Biden's veto on a bill that would have allowed banks to custody Bitcoin and crypto assets. This legislative action revolves around the [SEC Staff Accounting Bulletin 121](https://www.sec.gov/oca/staff-accounting-bulletin-121) (SAB 121), imposing stringent accounting requirements on banks holding Bitcoin and crypto assets. SAB 121 requires banks to hold Bitcoin and crypto assets on their balance sheets, which differs significantly from the treatment of traditional custodial assets that are typically considered off-balance sheets. [![](https://www.datocms-assets.com/56652/1720800441-on-balance-sheet.png?auto=format)](https://www.sec.gov/oca/staff-accounting-bulletin-121) SEC.gov This policy, introduced by the SEC in March 2022, aims to ensure that banks maintain high accountability and transparency when handling digital assets. However, critics argue that this guidance discourages banks from offering Bitcoin and crypto custody services, limiting consumer options and potentially stifling innovation in the financial sector. The House passed a resolution, [H.J. Res 109](https://www.congress.gov/bill/118th-congress/house-joint-resolution/109), to nullify SAB 121, arguing that the SEC's guidance unfairly burdens banks and discourages them from providing secure Bitcoin and crypto custody services. The bill garnered bipartisan support, with 21 Democrats joining 207 Republicans in favor of the resolution. [![](https://www.datocms-assets.com/56652/1720800693-hj-res.png?auto=format)](https://www.congress.gov/bill/118th-congress/house-joint-resolution/109) Congress.gov Despite this support in Congress, President Biden vetoed the resolution, [emphasizing](https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/31/a-message-to-the-house-of-representatives-on-the-presidents-veto-of-h-j-res-109/) the need for stringent regulatory oversight to protect investors and ensure financial stability. [![](https://www.datocms-assets.com/56652/1720800946-message.png?auto=format)](https://business.cch.com/srd/20240604-AMessagetotheHouseofRepresentativesonthePresident'sVetoofHJRes109_TheWhiteHouse.pdf) Business.cch To [overturn](https://www.archives.gov/files/legislative/resources/education/veto/background.pdf) a presidential veto, Congress must achieve a two-thirds majority vote in the House of Representatives and the Senate. Historically, fewer than 10% of presidential vetoes have been successfully overridden, highlighting the difficulty of achieving such broad bipartisan support. [![](https://www.datocms-assets.com/56652/1720801047-veto-provision.png?auto=format)](https://www.archives.gov/files/legislative/resources/education/veto/background.pdf) Archives.gov Supporters of the resolution, including several lawmakers and industry advocates, contend that overturning SAB 121 would enable banks to offer safer and more reliable custody services for Bitcoin and crypto assets, thus protecting consumers from less regulated and potentially risky alternatives. House Financial Services Committee Chair Patrick McHenry stated, *"SAB 121 effectively makes custodying customer crypto cost-prohibitive for financial firms."* The American Bankers Association echoed this sentiment, arguing that the guidance *"Threatens the industry's ability to provide its customers with safe and sound custody of digital assets."* ([ABA Banking Journal](https://bankingjournal.aba.com/2024/05/aba-associations-urge-biden-to-overturn-sec-treatment-of-crypto-custody-assets/))​​ ([Yahoo News - Latest News & Headlines](https://news.yahoo.com/news/president-biden-vetoes-crypto-custody-191311740.html))​. On the other hand, the Biden administration and proponents of SAB 121 maintain that the guidance is crucial for maintaining a robust regulatory framework. They argue that relaxing these rules could introduce financial instability and market uncertainty, undermining investor confidence in the burgeoning Bitcoin and crypto market. President Biden emphasized that limiting the SEC's regulatory capabilities could present risks to the financial system. ([Yahoo News - Latest News & Headlines](https://news.yahoo.com/news/president-biden-vetoes-crypto-custody-191311740.html))​​ ([ABA Banking Journal](https://bankingjournal.aba.com/2024/05/aba-associations-urge-biden-to-overturn-sec-treatment-of-crypto-custody-assets/))​. The failure to overturn the veto demonstrates the ongoing tension between innovation and regulation in the financial sector. While there is a clear desire among many lawmakers and industry participants to integrate digital assets into the traditional banking system, concerns about financial stability and investor protection continue to drive stringent regulatory measures. This outcome may slow the pace of Bitcoin and crypto adoption by traditional financial institutions but underscores the need for a balanced approach to regulation that fosters innovation while safeguarding the financial system. ([ABA Banking Journal](https://bankingjournal.aba.com/2024/05/aba-associations-urge-biden-to-overturn-sec-treatment-of-crypto-custody-assets/))​​ ([Yahoo News - Latest News & Headlines](https://news.yahoo.com/news/president-biden-vetoes-crypto-custody-191311740.html))​. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Craig Wright Referred for Perjury Prosecution, Receives Injunctions in COPA Case URL: https://www.swanbitcoin.com/industry/craig-wright-referred-for-perjury-prosecution-receives-injunctions-in-copa-case/ Final arguments in the the Crypto Open Patent Alliance (COPA) vs. Craig Wright’s assertion that he is Bitcoin’s creator, Satoshi Nakamoto, and to prevent him from continuing to make such claims. --- **Swan Bitcoin** · July 16, 2024 · Updated April 9, 2025 Craig Wright has been referred for prosecution for perjury following a ruling today by Judge James Mellor in the COPA vs. Craig Wright trial. This case has been closely watched by the Bitcoin community, as it revolves around Wright's contentious claims of being Satoshi Nakamoto, the pseudonymous creator of Bitcoin. Judge Mellor's written judgment categorically dismisses Wright's assertions of being Nakamoto and accuses him of engaging in extensive forgery and perjury. Mellor described Wright's evidence as *"fabricated and/or based on documents that have been forged on a grand scale"* and concluded that Wright lied to the court repeatedly and extensively​ ([COPA](https://www.opencrypto.org/2024-05-20-update-written/))​​([CoinTelegraph](https://cointelegraph.com/news/final-arguments-begin-copa-case-against-craig-wright-over-btc-claims))​. The Crypto Open Patent Alliance (COPA), which initiated the lawsuit to prevent Wright from claiming he is Nakamoto, stated in its closing arguments that it would seek to have the documents submitted by Wright referred to the Director of Public Prosecutions for consideration of perjury charges. COPA's spokesperson hailed the ruling as a victory for the open-source community, emphasizing that developers can now continue their work on the Bitcoin network without the threat of costly and time-consuming litigation from Wright​ ([CoinTelegraph](https://cointelegraph.com/news/final-arguments-begin-copa-case-against-craig-wright-over-btc-claims))​. In addition to the referral for perjury prosecution, Judge Mellor issued several injunctions against Wright. [Post on X](https://twitter.com/Arthur_van_Pelt/status/1767592669981585718) These include a permanent [injunction](https://twitter.com/Arthur_van_Pelt/status/1767592669981585718) preventing Wright from claiming to be Satoshi Nakamoto and from asserting any intellectual property rights over the Bitcoin white paper and related technologies. The court's decision aims to protect the open-source community from further false claims and legal actions by Wright, ensuring that the development and innovation within the Bitcoin ecosystem can proceed unimpeded​ ([COPA](https://www.opencrypto.org/2024-05-20-update-written/))​​ ([CoinTelegraph](https://cointelegraph.com/news/final-arguments-begin-copa-case-against-craig-wright-over-btc-claims))​. If Craig Wright is prosecuted and found guilty of perjury, he could face severe penalties. In the United Kingdom, perjury is a serious offense under the [Perjury Act 1911](https://www.legislation.gov.uk/ukpga/Geo5/1-2/6/contents). The maximum penalty for perjury is up to seven years in prison. Additionally, individuals convicted of perjury may face significant fines and a criminal record. The severity of the sentence typically depends on the nature of the lies, the context in which they were made​ ([COPA](https://www.opencrypto.org/2024-05-20-update-written/))​​ ([CoinTelegraph](https://cointelegraph.com/news/final-arguments-begin-copa-case-against-craig-wright-over-btc-claims))​. [![](https://www.datocms-assets.com/56652/1721143604-perjury-act-19.png?auto=format)](https://www.legislation.gov.uk/ukpga/Geo5/1-2/6/contents) Gov.UK The full judgment can be accessed through the UK Judiciary's official website for those interested in a detailed account of the case and Judge Mellor's comprehensive findings​ ([COPA](https://www.opencrypto.org/2024-05-20-update-written/))​. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Bitcoin on the Ballot - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/bitcoin-on-the-ballot/ Millions of Bitcoiners are single-issue voters. Jason evaluates how much influence will they have in November 2024! --- **Jason Bassett** · July 16, 2024 · Updated April 9, 2025 ##### Bitcoin's long-anticipated foothold in American politics has arrived... Does it really matter? > *"I will ensure that the future of crypto and the future of Bitcoin will be made in the USA, not driven overseas. I will support the right to self-custody to the nation's 50 million crypto holders."* The words of Donald Trump, the 45th and potential 47th president of the United States, echoed for weeks throughout the Bitcoin community, wherein many had been calling for Bitcoin's rise to the mainstream political stage in recent years. Trump, aiming to juxtapose his stance on the matter with that of his Democratic rival Joe Biden and other prominent anti-crypto Democrats such as Senator Elizabeth Warren, offered voters a direct message: **A vote for Trump is a vote for Bitcoin/crypto.** [![](https://www.datocms-assets.com/56652/1721057329-spi_bb_1.png?auto=format)](https://www.coindesk.com/business/2024/06/12/trump-we-want-all-remaining-bitcoin-to-be-made-in-usa/) Coindesk Although Independent presidential candidate Robert F. Kennedy Jr. has similarly embraced Bitcoin and self-custody in public view, Trump's proclamation marked a notable shift in the mainstream political arena, as his reach and voter base is indisputably much larger. Within days, the SEC approved eight spot Ethereum ETFs—a move that surprised many in the space. The level of discourse between the agency and the ETF issuers was notably less than that which took place in the weeks leading up to the spot Bitcoin ETF approvals. The decision looked downright rushed. A couple of weeks later, reports that the Biden campaign would begin accepting cryptocurrency donations began to surface - a move that appeared to be a knee-jerk reaction to the popularity of Trump's pro-crypto stance. Trump, a previous critic and skeptic of Bitcoin, suddenly embraced digital assets and self-custodial rights, which gave many in the Bitcoin community a potent dopamine hit. Biden's response, appearing somewhat begrudging, received mixed reactions of excitement and skepticism. For a voter base of roughly 50 million Americans, this is an important issue - for some, the only issue. Between 2024 kicking off with spot Bitcoin ETF approvals and the more recent events in the political arena, euphoria is high. It feels like even those in the highest positions of power are finally coming to terms with the notion that Bitcoin is here to stay. It feels like the train is going full steam ahead - it's either get aboard or get left behind. It feels like winning. While these are indeed exciting times for Bitcoin, perhaps even historical turning points in its adoption, it's imperative for Bitcoiners to take it all in stride and keep the big picture in view. In this writing, I blend self-reflection on my political views with general observations of American politics to argue that Bitcoin is not only apolitical but is, in fact, antithetical to the political system we know and recognize today. ### Bitcoin's Basic Principles Let's first take a quick step back and review a few of Bitcoin's key characteristics: - *% Bitcoin operates on a completely decentralized, distributed global network of computers (nodes) - there's zero top-down leadership. It is equally accurate to say that nobody is in charge of Bitcoin, and everybody is in charge of Bitcoin.* - *The Bitcoin network is entirely permissionless - anyone can come and go as they please, and there is no trusted intermediary monitoring/approving Bitcoin transactions or network entrants).* - *Bitcoin's monetary policy is immutable. It has a fixed total supply (21 million coins) and a predictable issuance schedule (a predetermined inflation rate that diminishes exponentially over time).* There's a lot more to it than that, which is beyond the scope of this writing, but needless to say, these core elements alone are highly disruptive to the monetary policy enforced by central banks - and that's the point. Downstream of centrally planned monetary policy, obviously, comes an economy affected by it, which is sold to Americans as *"free market capitalism."* This couldn't be further from the truth - in a free market, fractional reserve banks that make risky bets would be allowed to fail, the stock market would cease to be propped up by trillions of dollars of liquidity injections during moments of crises (see: 2020), and interest rates would be a natural response to consumer saving, spending, and borrowing trends - not a tool (unsuccessfully) used to fight runaway inflation. We don't really have a free market. We have a shitshow. It's no coincidence that Bitcoin was born in the wake of the Great Financial Crisis. Underpinning Bitcoin's decentralized and immutable monetary policy is the ideology that money doesn't need to - and shouldn't - be controlled via top-down leadership. ### Red Team vs. Blue Team I grew up in a Democratic household with two born-and-raised New Yorker parents. As is hardly rare for children, I adopted their ideologies over time and voted blue during election cycles. To be honest, I had little interest in politics until things became very theatrical in 2016. Ironically, it was the first presidential election I opted out of. At the time, I was in a relationship with a conservative woman whose parents were staunch supporters of Donald Trump. Between gatherings with her family and time spent with my own, there was no shortage of extreme opinions being thrown around on various voter issues. It was during this time, I first became intensely fascinated with the psychology involved in two-party politics and their voter bases, particularly the underlying tribalism. Here I was, regularly exposed to these two highly contrasting groups, reconciling their views with my own belief system and thinking to myself, *'How can each of these people be so deeply convinced that their answer is right?'* And that, in itself, is an entire thought exercise deserving of its own writing. The vast majority of the time, an individual's guiding principles and systems of beliefs are genuinely well-intentioned. Of course, there are edge cases where certain groups act in malice, but this is more rare. Even actions that seem so obviously morally or ethically wrong to those on one end of the spectrum are driven by beliefs of fighting for what's right and just by those on the other end. The dilemma of the human condition is that we're often unable to access the empathy to see this, instead adopting the idea that those opposing us are ill-intentioned. [![](https://www.datocms-assets.com/56652/1721057487-spi_bb_2.png?auto=format)](https://www.economist.com/graphic-detail/2022/08/17/how-democrats-and-republicans-see-each-other) Economist Here's the thing—that's a feature of the two-party political system. It's by design. Our leaders actively guide us toward an *"us versus them"* culture, and we revel in it. We take pride in our *"team"*—our tribe. Right or left. Red or blue. Both sides are equally guilty of this, and the trench deepens with each election cycle. Today, it almost feels like the endgame is no longer about making genuine progress as a nation but rather about halting the progress of the opposing party, which has become conflated with progress. For voters, it gets harder and harder to see the difference. For an easy example of this, let's expand a bit on Trump's quote, which I opened this writing with: > *"I will also stop Joe Biden's crusade to crush crypto. We're going to stop it. I will ensure that the future of crypto and Bitcoin will be made in the USA, not driven overseas." * > *"I will support the right to self-custody for the nation's 50 million crypto holders. I say this with your vote. I will keep Elizabeth Warren and her goons away from your Bitcoin, and I will never allow the creation of a central bank digital currency."* Could Trump have displayed the same level of support for Bitcoin and self-custody without framing it as a fight against the opposing party? Is it possible that the open support of Bitcoin itself would be implicit enough for listeners to understand which side of the fight he was on? One may wonder if Trump is genuinely in support of Bitcoin or if he is simply mastering the age-old political art of creating a dichotomy on an issue that affects 50 million Americans. Is it about real progress forward or unraveling the opposing agenda? The two aren't mutually exclusive - a pro-Bitcoin agenda would bring progress for Bitcoin while wounding the anti-Bitcoin agenda. Still, it's important to note the divisive nature in which ideas of *"progress"* are presented to us. This isn't a dig at Trump, who's hardly the only one guilty of presenting ideas in a divisive manner. It's fair to say that a significant—possibly the most potent—portion of the left's rhetoric can be paraphrased as *"We're here to stop Donald Trump."* Again, the focus is on halting the opposition rather than moving the nation forward. I'm optimistic, but this kind of thing is sad to see. ### The Illusion of Choice I used to dismiss folks who said, *"It doesn't matter who gets elected—they're just puppets of the system."* The notion that high-profile political decisions are predetermined by the state, central banks, special interest groups, lobbyists, and corporations looked like a lazy excuse to avoid voting. However, the more I delved into the Bitcoin "rabbit hole," the more I found that there was some truth to it. Of course, the president affects policy in many ways, but ultimately, politics always comes down to games of money and power. The worse the money, the dirtier the games. Powerful special interest groups throw brain-scrambling amounts of money at candidates to get their agendas over the line. The candidates, in turn, help push a policy that aligns with such agendas. This happens with Republicans and Democrats alike; the onlyvariances are the agendas. While campaigning, politicians spin agendas to appeal to the population. Everything is made out to be for the greater good. Let's take a surface-level look at some familiar leftist rhetoric, for example: *"Billionaires are bad, power-hungry people who are worsening the national debt by not paying enough taxes."* For years, I was fully bought into this. Like many other millennial blue voters, I came to resent the wealthy simply for being wealthy, as if opposing them meant taking some kind of moral high ground. In studying Bitcoin and becoming increasingly familiar with Austrian economics, which promotes sound money, I began to see how deeply flawed this idea was. Wealth accumulation should be a measure of economic output - the value a person creates within society through expending time and labor. If an individual becomes wealthy in a free market, that should signal to others that they did a great deal of important work by providing goods and services. Through this lens, it makes sense that those who introduce revolutionary technologies or products that reshape society for the better deserve a high degree of wealth. The idea here is simple - the only way to accumulate wealth is to add economic value. In a monetary system based on sound money this idea of wealth accumulation totally makes sense. This, however, is not the monetary system we have today. America's dollar system is unsound, centralized, and inflationary. This allows top-down leadership, economic planners, and the ultra-wealthy to become exponentially wealthier without adding societal or monetary value. The monetary system itself, not any particular players, is the problem. Regardless of who we put into the Oval Office, this problem remains. ### Fractured Fractional Reserve Banking It wasn't until learning Bitcoin that I inadvertently began to learn about the fractional reserve banking system, which is genuinely terrible. Let's revisit the billionaires we love to hate. As I mentioned earlier, these folks have often (though not always) legitimately earned their wealth by creating life-altering products or services. Let's now go a layer deeper and examine what a billionaire might do with their wealth. As established earlier, the dollar loses purchasing power over time due to inflation. Cash is a melting ice cube, so billionaires will not simply let their dollars sit in a checking account or massive home safe. Instead, they turn to ways to make their billions even more billions—and the banking system is happy to help them do that. Let's say, for example, one of these ultra-high-net-worth individuals deposits $1 billion into a high-yield savings account, which is privately offered to this specific type of client. Average folks cannot access these accounts, which pay higher interest rates than your typical high-yield savings account. If this account were to pay out 5% APY, our billionaire friend would net an additional $50 million over the year. *'So what, Jason? People get interested in savings all the time.' Yep. Let's keep digging - where exactly does the interest come from?'* [![](https://www.datocms-assets.com/56652/1721057724-spi_bb_3.png?auto=format)](https://write.as/ipinky7/fractional-reserve-banking) Write.as Banks operate on a fractional reserve system, meaning they do not actually need to keep all of their depositors' money on hand. Historically, the Federal Reserve required a 10% reserve ratio, meaning the bank only needed to hold 10% of the funds deposited and could lend out the rest. That means, of the $1 billion deposited in the above example, the bank would only retain $100 million in reserves and lend out the remaining $900 million. They could lend this money to another bank, making even higher interest payments to the first bank. Bank 2 would follow suit, keeping only the required $90 million (10% of the deposit) on hand and lending the remaining $810 million to another bank or corporation, also earning interest. Banks will also invest their depositors' funds in securities and bonds, inflating the asset prices and netting more profit. And that, folks, is where the interest comes from. At every level in the above example, the interest payments expand the money supply - millions, billions, and trillions at a time. Oh, and each layer of lending counts towards America's measure of GDP - a metric heavily scrutinized and discussed during election cycles. Even worse, as of 2020, the 10% required reserve ratio was scrapped entirely and lowered to 0%. Banks quite literally do not need to keep any of their depositors' money on hand. None. They're able to lend freely and continue the money supply expansion, profiting heavily throughout the process without creating any economic value whatsoever. Should a bank run occur, with too many depositors seeking to withdraw their money at once, a bank failure becomes a real threat. Not to worry, though. The Federal Reserve will usually step in and *"provide liquidity"* (create and transfer money) to the troubled bank, and all is well. This comes at your expense. Downstream of monetary expansion comes rising prices, which we recognize as inflation. The problem is that while prices rise in tandem with the money supply, your bank account and salary don't. You now own an even tinier and less significant fraction of the total dollars in circulation - your savings have been diluted and devalued. Inflation is referred to as a "hidden tax" - its insidious nature allows time to pass before the pain is felt. Wealth is transferred away from you when the central banking system expands the money supply. Inflation is theft, full stop. As for the billionaire who made their $1 billion deposit? Well, they did what any reasonable person would do to avoid devaluing their stash. Hate the game, not the player. ### The Business of War War is a highly complex topic that can quickly go beyond the scope of this writing, but I'll make a few simple points here. Under a gold (sound money) standard centuries ago, when civilizations went to war, they had to fund it by taxing their citizens. This meant rallying the society behind the cause and selling everyone on the idea that this cause was so prudent it was worth everyone sacrificing their wealth (and lives) for. War came at a high cost—not only monetary but also social. Raising taxes is incredibly unpopular, so leaders avoided doing it whenever possible. The natural incentive was to avoid going to war, especially on the offensive—it's a lot easier to sell the idea of national defense than foreign invasion when citizens have to foot the bill. Over time, rulers realized they could debase their gold coins through melting them down and reissuing new coins in higher quantities with less purity. They'd use the newly debased currency to fund wars and spend into the economy, which got them around needing to tax their citizens directly. The delayed effects of the currency debasement (inflation) wouldn't be realized until later. Of course, this always ended in disaster, as the debased currencies continued devaluing and eventually collapsed. Today, our government spends trillions of dollars financing wars and providing foreign aid to other countries involved in complex conflicts, which the media sensationalizes to give us a sense of purpose. We now have a national debt of $34 trillion, a truly mind-numbing number. Since the dollar is no longer anchored to anything bound by natural scarcity following its decoupling from gold in 1971, this can, does, and will go on endlessly – until it collapses. Our politicians barely tout ideas to reduce the debt. Simply raising taxes won't bridge the gap and again poses a severe popularity problem during election cycles. So, instead, the U.S. Treasury opts to monetize the debt, selling it to investors in the form of bonds, which they'll, of course, need to pay investors interest on. *'But Jason, if we're already trillions in debt, where is the money to pay interest on the trillions coming from?'* **Exactly. More money supply expansion.** Investors aren't stupid, though, and are growing increasingly wary of the debt problem. The popularity of bonds has started to tank, even in today's high interest-rate environment. **No problem!** The U.S. Treasury just announced its *"buyback program,"* an initiative allowing them to simply buy back their bonds and pay themselves the interest. And when the interest payments on the old debt become due, they'll issue more bonds to cover the new debt. Getting a headache yet? Me too. ### America Needs Bitcoin At a basic level, we've now exemplified the dysfunction of our current monetary system. We've established that the system itself is the cancer, not any particular players within it. We can extend this logic to politicians. Whether we get a Trump presidency or a Biden presidency, either of those men will simply be participants within a monetary system that is careening downhill and that governs our entire political landscape. I don't know about you, but I don't hear any talks about abolishing fractional reserve banking (which should be renamed *"reserve-free banking"* under the updated 0% reserve ratio requirement). [![](https://www.datocms-assets.com/56652/1721057887-spi_bb_4.jpg?auto=format)](https://www.wired.com/story/internet-week-146/) Wired Trillions of dollars have been added to the national debt under both Trump and Biden's administrations and those before them. Both men have overseen rampant inflation. Neither will fix these things throughout 4 years - they simply can't. **The problem cannot be contained without a complete systemic overhaul.** Here's the thing—as doom-and-gloom as some of this may sound, I'm incredibly optimistic about America's future. Should Bitcoin succeed and America adopt a Bitcoin standard, predatory banking practices, which siphon wealth away from the majority and transfer it to the few, would cease to exist. Bitcoin's supply cannot simply be expanded due to its hard supply cap and fixed issuance schedule. There's no reality where fractional reserve banking works under a Bitcoin standard. Banks attempting this would inevitably fail, and there'd be no means to reinject them with liquidity as the Federal Reserve does today. Honest, full reserve banking would be the only system that could flourish in this reality. Under a Bitcoin standard, war would become unaffordable, as there would be no money printer to create trillions of new currency units to finance conflicts. The only way to afford war would be to tax citizens directly, which would kill the incentive to engage in disputes that weren't absolutely necessary. Under a Bitcoin standard, an individual or corporation could only accumulate wealth by producing genuine economic value through tangible goods and services. Anyone holding large amounts of Bitcoin would have attained it by expending time, resources, energy, and labor. Under a Bitcoin standard, money would not lose value over time but would increase purchasing power, incentivizing long-term savings. As technology enables more efficient and cost-effective means of production, goods and services will become cheaper, not more expensive, in Bitcoin terms. People will no longer need to become investment experts just to prevent their savings from deteriorating. Under a Bitcoin standard, the political landscape will no longer be a battle of who can best manage the economy or leverage government spending to suit their party's agenda. The economy will self-regulate as a genuinely free market, and our elected officials will have no choice but to actually serve the public they promise to represent. Under a Bitcoin standard, we transform our divided nation into one of actual progress, innovation, and prosperity. This is in no way me saying, *"None of it matters; don't bother to vote."* Absolutely vote for the candidate you feel best represents your values and beliefs. I also acknowledge that near-term decisions on Bitcoin/cryptocurrency regulation are not without significance. A Bitcoin standard in America won't happen overnight—we've got to start somewhere. So yes, politicians discussing Bitcoin does signify something. Many of the most potent daily issues will be resolved under a Bitcoin standard, not due to presidential action. Politics will be reshaped profoundly. I urge anyone reading this to look at things from a 10,000-foot view - you're bound to recognize that no president or political party is here to save Bitcoin. Rather, Bitcoin is here to save our political system. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Jason Bassett Sales professional and avid Bitcoiner with 7+ years experience in D2C and B2B environments at both the leadership and individual contributor levels. Currently immersed in the Bitcoin space, and passionate about leveraging my experience to help drive growth through a consultative approach. # CFTC Coming For Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/cftc-coming-for-bitcoin/ Competition exists between US government agencies like the SEC and CFTC to regulate Bitcoin. Senate Democrats propose giving the CFTC unprecedented control over BTC, beyond its traditional role. --- **Matthew Kratter** · July 12, 2024 · Updated April 9, 2025 ### CFTC Coming For Bitcoin? Today, we will [discuss](https://www.youtube.com/watch?v=d413L3RcwAQ) the CFTC's upcoming action on Bitcoin, but first, we need some background.  The U.S. has the Securities and Exchange Commission (SEC), which has jurisdiction over securities, including stocks and bonds. The SEC has also defined securities to include a larger category called investment contracts, as measured by the [Howey Test](https://www.sec.gov/files/dlt-framework.pdf).  However, the SEC mainly regulates familiar things like stocks and bonds. It does **NOT** have and has **NEVER** had jurisdiction over currencies or commodities; those, at least commodities, come under the CFTC, the [Commodity Futures Trading Commission](https://www.cftc.gov/). By its name, you can understand its focus. [![](https://www.datocms-assets.com/56652/1720821836-cftc-wiki.png?auto=format)](https://en.wikipedia.org/wiki/Commodity_Futures_Trading_Commission) Wikipedia The CFTC has jurisdiction over futures, swaps, and some options.  Swaps are just another kind of derivative that comes into various categories. These futures include physical commodity futures like wheat futures, corn futures, and crude oil futures.  You also have currency futures, such as the Australian dollar futures, interest rate futures, like the 10-year note treasury futures, and stock index futures, like the S&P e-mini futures. Note the keyword here is futures.  What they do **NOT** have jurisdiction over and have **NEVER** had jurisdiction over is the buying and selling of the underlying spot commodities.  They can regulate wheat futures but can't regulate wheat, corn, or crude oil—the underlying spot commodities that underpin futures contracts.  The CFTC's jurisdiction over spot commodity markets like wheat, corn, and crude oil is limited to rare fraud and market manipulation cases that would affect the fair settlement of futures contracts. There's no historical precedent for the CFTC to regulate spot Bitcoin and its trading on U.S. spot exchanges. The SEC clearly cannot regulate spot Bitcoin, though it can and does regulate spot Bitcoin ETFs, which are securities.  The SEC cannot regulate Bitcoin because it's a globally recognized digital commodity.  Now, some Senate Democrats want that to change and are trying to bring the regulation of the trading of spot Bitcoin under the jurisdiction of the CFTC, which is what today's video is about. Government agencies constantly compete to increase their power and annual budgets by regulating more stuff. Today's attempted power grab is being brought to you by yet another career politician and member of the unproductive class.  In this case, the Senior Senator from Michigan, [Debbie Stabenow](https://www.stabenow.senate.gov/about/biography).  [![](https://www.datocms-assets.com/56652/1720821963-debbie.png?auto=format)](https://www.stabenow.senate.gov/about/biography) Stabenow.senate.gov She does have a name that makes you wonder if she's the kind of politician who stabs you in the back—Senator Stabenow. Lawmakers look to forge ahead on legislation that will give the CFTC authority over crypto, citing urgency.  [![](https://www.datocms-assets.com/56652/1720822065-boozman.png?auto=format)](https://www.boozman.senate.gov/public/index.cfm/2022/8/boozman-stabenow-booker-and-thune-introduce-legislation-to-regulate-digital-commodities) Boozman.senate.gov I don't know what kind of urgency that is, apart from the upcoming November elections.  From this article [from](https://www.theblock.co/post/304565/sen-stabenow-lawmakers-look-to-forge-ahead-on-legislation-that-will-give-the-cftc-authority-over-crypto-citing-urgency) The Block:  - *"Stabenow is looking to advance legislation regulating crypto and giving the CFTC regulatory authority over digital commodities, not just the futures but also the underlying commodities."*  She met with committee Democrats on Monday night to discuss getting the bill to a markup to make that happen this summer. Senate Democrats are trying to get something passed by both houses and signed by President Biden before the November elections and before a more Bitcoin-friendly administration, like Trump's, can take office. This is not the first time that Senator Stabenow has tried this. She tried this in August 2022 with the [Digital Commodities Consumer Protection Act of 2022](https://www.congress.gov/bill/117th-congress/senate-bill/4760/text#:~:text=Introduced%20in%20Senate%20(08%2F03%2F2022)&text=To%20amend%20the%20Commodity%20Exchange,market%2C%20and%20for%20other%20purposes.). [![](https://www.datocms-assets.com/56652/1720822383-2022-act.png?auto=format)](https://www.congress.gov/bill/117th-congress/senate-bill/4760/text#:~:text=Introduced%20in%20Senate%20(08%2F03%2F2022)&text=To%20amend%20the%20Commodity%20Exchange,market%2C%20and%20for%20other%20purposes.) Congress.gov Whenever the government passes something that's supposed to protect you, you can be sure that you're being fleeced, robbed, and controlled.  According to the website OpenSecrets, the biggest backer of the Digital Commodities Consumer Protection Act of 2022 [was](https://www.cnbc.com/2022/12/13/digital-commodities-consumer-protection-act-sam-bankman-fried-ftx-fail.html) Sam Bankman-Fried, the fraudster from FTX, who lobbied for it more than any other legislation in 2022.  [![](https://www.datocms-assets.com/56652/1720822243-cnbc.png?auto=format)](https://www.cnbc.com/2022/12/13/digital-commodities-consumer-protection-act-sam-bankman-fried-ftx-fail.html) CNBC **If this current version of the bill passes in 2024:**  - *Any company that touches Bitcoin in the U.S. will be subject to increased and cumbersome compliance and surveillance, endless paperwork, and increased KYC requirements—not just exchanges, but any company that touches Bitcoin.* **It gets even worse:**  - *If the CFTC were to gain jurisdiction over the trading of spot Bitcoin on exchanges, it would have the power to pause the trading of spot Bitcoin on exchanges in the U.S. whenever it wanted to or at the request of Congress or the President.*  This is classic [circuit breaker power](https://www.investopedia.com/terms/c/circuitbreaker.asp), and who would want to have it?  The problem is, in the coming financial crisis, as the U.S. dollar continues to sink, the CFTC could be mobilized to *"pause trading"*, stop trading for months, weeks, or years on end, in an attempt to stem the outflows from fiat to Bitcoin, at least on the centralized exchanges in the U.S.  **This won't work because Bitcoin trades globally.**  It also trades peer-to-peer. You and I can trade it without needing an exchange. We can exchange goods and services for Bitcoin or fiat for Bitcoin, and no one can stop us. No one can stop me from sending Bitcoin to anyone I want.  No one can stop you or me from storing our Bitcoin without needing help from a bank or a brokerage account. No one can stop the adoption of Bitcoin, but they can certainly attempt to slow it down. This is an especially nasty move by the Senate Democrats before the November elections, trying to get this passed before we have further regulatory clarity.  Let's stop the CFTC before it starts. Contact your [Representatives](https://www.house.gov/representatives/find-your-representative) and [Senators](https://www.senate.gov/senators/senators-contact.htm) and tell them to vote against Stabenow's and other similar bills. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bitcoin ETFs Inflows Showing Robust Turnaround in July URL: https://www.swanbitcoin.com/markets/bitcoin-etfs-inflows-showing-robust-turnaround-in-july/ The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. --- **Swan Bitcoin** · July 17, 2024 · Updated April 9, 2025 Bitcoin ETFs have seen positive net inflows every day in July, except for a single instance on July 3rd, when there were minor outflows of 200 BTC. This trend signifies a renewed momentum in the market following a subdued performance in June. Most recently, July 16th recorded a substantial inflow of 6,500 BTC up from a strong performance the prior day which saw an inflow of 4,700 BTC. The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. The data, sourced from [Hey Apollo's Bitcoin Tracker](https://heyapollo.com/bitcoin-tracker/flows), shows a consistent pattern of investments flowing into these funds, indicating strong buying momentum. [![](https://www.datocms-assets.com/56652/1721250744-net-pic.png?auto=format)](https://heyapollo.com/bitcoin-tracker/flows) HeyApollo Steady inflows throughout July indicate sustained investor confidence despite significant [selling of Bitcoin by the German government](https://www.swanbitcoin.com/industry/germany-s-sale-of-50-000-confiscated-bitcoins-demonstrates-bitcoin-s-robust-liqui/). This consistency is a positive indicator of market sentiment and suggests that the market is recovering from June’s lackluster performance.  The continuous inflows into Bitcoin ETFs imply several possible causes: June’s lackluster performance appears to be an anomaly, with July’s strong inflows reflecting a recovery and renewed buying interest. Significant inflows are often indicative of institutional participation, suggesting that larger, more strategic investors are increasing their exposure to Bitcoin through ETFs. The inflows contribute to greater liquidity and market stability, which can attract more investors and support further growth in the Bitcoin market. On Monday, July 15th, Blackrock’s CEO, Larry Fink, [appeared on CNBC](https://x.com/Swan/status/1812859050368868422) to say that he now has a favorable view of Bitcoin, changing his previous view that it was not a suitable investment instrument. Blackrock’s IBIT, Bitcoin ETF, has seen the greatest inflows of all the ETFs and holds over 320,000 BTC at the time of writing. [Post on X](https://twitter.com/Swan/status/1812859050368868422) *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Trump, Bitcoin, and the Swamp - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/trump-bitcoin-and-the-swamp/ What does the Trump assassination attempt mean for the 2024 election and Bitcoin policy? Also, the U.S. secret service shows itself to be as incompetent as the mainstream media is when it covers anything Trump. --- **Matthew Kratter** · July 16, 2024 · Updated April 9, 2025 Today, we will [talk](https://www.youtube.com/watch?v=ESDSj88fJtA) Trump, Bitcoin and the swamp... Let's begin with this aerial picture that gives you a good perspective of where the rooftop shooter was standing relative to Trump on stage—just 130 yards away with a straight line of sight, which is quite incompetent of the Secret Service. [Post on X](https://twitter.com/jmart/status/1812594585866313986) I agree with Gerer Capital here... [Post on X](https://twitter.com/Geiger_Capital/status/1812302454140063949) Comparisons with the attempted shooting of President Ronald Reagan in the 1980s are also relevant. [Video](https://www.youtube.com/watch?v=EYI79ziwh0w) We can see how competent the Secret Service was back then and how they immediately jumped into place. [Post on X](https://twitter.com/bennyjohnson/status/1812487522267652129) Let's compare that with many of the videos from Saturday. We can see that the current Secret Service can holster weapons, gear falling to the ground, erratic fearful movements, and no show of force or composure. [Post on X](https://twitter.com/bodhifinn/status/1812387378222252381) I agree with this post that today's Secret Service does make presidents less safe. Whoever put a female 5'5" Secret Service agent on a 6'3" President should lose their job immediately. **This is just basic common sense.** We should also remember in our prayers and thoughts the Trump rally attendee who was murdered by one of the bullets. This is Corey Comparator, who, unfortunately, was killed on Saturday. [Post on X](https://twitter.com/TaylerUSA/status/1812507778335887390) If we look at the [prediction markets](https://polymarket.com/markets/all), we can see that Trump has surged ahead even further since the assassination attempt. [![](https://www.datocms-assets.com/56652/1721146800-poly.png?auto=format)](https://polymarket.com/event/presidential-election-winner-2024?tid=1721146760423) Polymarket Now, there's a 71% chance he will win the election and a 56% chance he'll win the popular vote, which is rare for Republicans. I trust these kinds of polls because there's $258 million riding on this one and $47 million riding on another. This differs from MSNBC, which calls someone up in their living room. These are real people betting millions of dollars on the outcome. It seems clear that if the election were held today, Trump would win by a landslide, akin to what Reagan did to Carter in 1980. [![](https://www.datocms-assets.com/56652/1721147493-save-map.webp?auto=format)](https://www.270towin.com/1984_Election/) Wikipedia We can also see Bitcoin moving up sharply since the assassination attempt. It's hard to know how much of this to attribute to that and the prospects of a Trump victory, but that is what Bitcoin is doing now. How well did our professionally trained journalists do in the heat of the moment? Were they able to protect us from all those terrible online conspiracy theories and misleading citizen journalism that plague X and Twitter? Supposedly, the talking point in all the newsrooms was not to talk about an assassination attempt or gunshots but just about loud noises. So, Trump leaves the rally after loud noises erupt—this is the [Washington Post](https://www.washingtonpost.com/video/national/trump-leaves-rally-after-loud-noises-erupt/2024/07/13/ec703498-2001-4555-802c-93bdaaa2bd72_video.html). [![](https://www.datocms-assets.com/56652/1721145539-wapo-trump.png?auto=format)](https://www.washingtonpost.com/video/national/trump-leaves-rally-after-loud-noises-erupt/2024/07/13/ec703498-2001-4555-802c-93bdaaa2bd72_video.html) Washington Post **Yahoo News and the Associated Press**: Trump [whisked](https://www.yahoo.com/news/donald-trump-whisked-off-stage-225054905.html) off stage in Pennsylvania after loud noises rang through the crowd. [![](https://www.datocms-assets.com/56652/1721145718-yahoo-turmp.png?auto=format)](https://www.yahoo.com/news/donald-trump-whisked-off-stage-225054905.html) Yahoo News, AP **As did, Cleveland 19 News**: Trump whisked off stage in Pennsylvania after loud noises rang through the crowd. [Post on X](https://twitter.com/cleveland19news/status/1812258522807120099) **Another favorite**: Trump pumps his fist after the Secret Service rushes him offstage after the incident. This is the quality of our journalism these days. [Post on X](https://twitter.com/babybeginner/status/1812351785069334577) **ABC News:** Trump was [escorted](https://abcnews.go.com/US/wireStory/donald-trump-escorted-off-stage-secret-service-rally-111913440) off stage by the Secret Service during a rally after loud noises rang out in the crowd. **And, of course, my favorite of all**: Secret Service [rushes](https://x.com/babybeginner/status/1812351785069334577) Trump off stage after he falls at a rally, trying to equate it to Biden falling. [Post on X](https://twitter.com/babybeginner/status/1812351785069334577) Trump getting shot in the head versus Biden walking upstairs—I think this was a pretty good meme. My favorite from my own [beloved](https://x.com/twobitidiot/status/1812492672403194302) Sunday Denver Post, which is a complete piece of garbage: gunman dies in attack. [Post on X](https://twitter.com/twobitidiot/status/1812492672403194302) This is why you should not trust the main media. **Articles like** [**this**](https://edition.cnn.com/2021/12/01/economy/inflation-good-bad-winners-losers/index.html)**:** Why can inflation actually be good for everyday Americans and bad for rich people? [![](https://www.datocms-assets.com/56652/1721146149-inflatgion.png?auto=format)](https://edition.cnn.com/2021/12/01/economy/inflation-good-bad-winners-losers/index.html) CNN It's actually the exact opposite, as you would expect. I agree with inverse Kramer [here](https://x.com/CramerTracker/status/1812283896572039282)... [Post on X](https://twitter.com/CramerTracker/status/1812283896572039282) The [downside](https://www.nobsbitcoin.com/elon-musk-building-worlds-most-advanced-spy-satellite-swarm-network-for-us-gov/) is that Elon's the same guy who wants to put a chip in your brain and is building the world's most advanced spy satellite swarm for the U.S. government. [![](https://www.datocms-assets.com/56652/1721146307-elon-build.png?auto=format)](https://www.nobsbitcoin.com/elon-musk-building-worlds-most-advanced-spy-satellite-swarm-network-for-us-gov/) NobsBitcoin So, I don't always know what to make of Elon, but I was certainly grateful for Twitter X over the weekend. Trump showed incredible courage after his narrow brush with death. You've probably never been shot at if you think you'd show similar courage in that situation. Seeing Trump's courage and bloody face gave me serious William Wallace vibes. Maybe this is just masculine, but it made me want to grab my sword and head out on the streets.  Here's William Wallace—a great movie if you haven't seen it. And here's the iconic photo of Trump, which will go down in history for his courage and composure. ![](https://www.datocms-assets.com/56652/1721146611-herny-meme.jpeg?auto=format) ![](https://www.datocms-assets.com/56652/1721146598-trump-fist.png?auto=format) More thoughts on Trump: he's a fiat billionaire to the core. He's often an ill-mannered boor and probably hasn't read a book in 40 years. Still, something is refreshing about a moderate Democrat from the 1990s who never changed his views even as the Overton window shifted so far to the left. I'm also always amused by how frustrated white paternalistic leftists get when black, Hispanic, and Latino Americans, primarily male, express their admiration for Trump. Despite his lack of book learning, Trump's intuitions have often been spot on. **He has a real gift.** When he spoke about Germany's fatal reliance on Russian gas and oil, the German politicians laughed at him, but Trump was correct. Also, the absurdity of being dependent on Chinese factories for U.S. national defense products—this is crazy, and Trump was one of the first to highlight it. The stupidity of having an open border paired with a welfare state and poor election voter controls is another. Trump is also a brilliant campaigner and one of the modern masters of political rhetoric. He can inspire and lead in an era of boring bureaucrats and petty technocrats. For a fat old man who overeats Kentucky Fried Chicken, he has tremendous energy and drive. He's definitely the Teflon Don—you can prosecute him, say bad things about him, jail him, even shoot at him. Still, you only end up making him more popular. My favorite is the notion that the only way to preserve democracy is by eliminating the most popular politician in America. People who say this reveal their motivations—they don't care about the people.  Trump is one of the very few U.S. politicians who, I believe, isn't suffering from extremely low testosterone levels, and it shows. He really is from a different generation, with all the good and bad that brings. Unfortunately, Trump is not much of an operator regarding the tedious work needed to build political consensus and get Congress to turn the President's agendas into law. To be fair, the permanent government employees who reside in the swamp did a pretty good job of hamstringing everything he tried to do during his first administration. But it was also **Trump's fault.** In his first term, Trump didn't drain the swamp; instead, he hired the swamp, mainly in the form of swamp creatures from Goldman Sachs, like Steve Mnuchin as head of the Treasury, and people like [Gary Cohn](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbFZadFhuV3Fqam83cVVvWjZnNy1UVVFDNkluUXxBQ3Jtc0tuZmNCYnZqN1JDdVozaTh3cGhBajE5anFpdk1kVkNTMWFKaFd1a0lqZXdsYk0wSWo0SkVMb1VZUGs3SEFBcjlZWEsyRVJpMHBrNGlEUC1VWGd1cUZBMHgzeWFiWjAtY3JqajRwVlBxOEVYeWdCLUk4Zw&q=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FGary_Cohn&v=ESDSj88fJtA) from Goldman Sachs. **What about the 2024 election?** It's wise to vote for politicians who promise to do good things for Bitcoiners. It's brighter than voting for politicians like Elizabeth Warren who hate you, want to confiscate your Bitcoin stash, and jail you. I could see Trump taking office and doing some good things for Bitcoiners in the first few months. Unfortunately, I could also see him doing a complete about-face a few months later when his advisers tell him there's a serious currency crisis. Bitcoin is destroying the dollar, and he needs to do something to stop Bitcoin. Trump's first term doesn't give me much hope that he'll accomplish much, but even benign neglect of Bitcoin and Bitcoiners would be refreshing after the endless hostility of the Biden administration. There's a further bonus to Trump winning: we'll get to watch *"journalists,"* *"educators," "economists," "experts,"* and other unproductive and dishonest people gnash their teeth endlessly. They really hate and fear Trump. The Deep State seems to fear him as well, so that's a big plus for voting for him. I'm also looking forward to continuing to laugh at all the brainwashed people who think Trump is literally the second coming of Adolf Hitler. If Hitler had a daughter, he probably wouldn't have let her marry [Jared Kushner](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqa2tBNGpmV2ZaOWMxOWFrNG9nZUVfYmpBRkVsQXxBQ3Jtc0tsTktsdVpLMkF5N1RtWjExWGEwV2tPSkdhQjNkQlA1Z3VIZHlGQTA5YXpHd2JuWDZwNldobS1qdEtHZjh1bHYyWjJuSTlLQ3pfVUp0XzhKc0M2VmU5TFM0VWM5cDZnMEJ3NkhSVGJ5SjV4WlBwNmlZVQ&q=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FJared_Kushner&v=ESDSj88fJtA), and he wouldn't have pardoned [Kushner's father](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbUdoemx6ZkVGalZMNkZHa0Q1cldaWWdSelVmUXxBQ3Jtc0tsUWo1d04tdUxIRnhkaWhBblJua2UzQVNpbW9vSG8tNGRXS1Y5M2ZBOS16clVuQjliZ3M3SFdqUEhRUF85VE5tYTl6TTMzbTJ6cHR3Rk84dE05X09Gd0pMZ1BveXRLVWZxTnptWC02YUVwbzlCbGJUYw&q=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FCharles_Kushner&v=ESDSj88fJtA). Advice for Trump's second term: please wreak as much havoc as possible. Try to actually drain the swamp this time, and good luck with that. Start by firing 95% of federal government employees, like Milei is doing in Argentina. - *Shut down the FDA, DEA, and Department of Education.* - *Shutter the IRS, CIA, FBI, ATF, and all these other three-letter agencies.* - *Start by vetoing all bills that fund foreign proxy wars.* - *End the Fed and replace it with a strategic Bitcoin reserve akin to Fort Knox for gold.* - *End all capital gains taxes on Bitcoin so we can use it freely as the money it clearly is. Make America great again by fighting hard for sound money, states' rights, and U.S. constitutional protections.* **Do everything you can to shrink the federal government.** I'm not holding my breath; my expectations are extremely low. You can't eliminate the swamp through voting anymore; it's just gotten too big and powerful. But I would be happy to be pleasantly surprised for once. As I've said many times on this channel, the most important step is voting with your money first by moving all of your U.S. dollars into Bitcoin, thereby undermining the federal government's money printers. **Vote with your feet and your money first...** and then you can vote in elections and hope and pray that the voting machines and ballot-counting mechanisms are honest—though they probably are not. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Germany’s Sale of 50,000 Confiscated Bitcoins Demonstrates Bitcoin’s Robust Liquidity URL: https://www.swanbitcoin.com/industry/germany-s-sale-of-50-000-confiscated-bitcoins-demonstrates-bitcoin-s-robust-liqui/ Germany sold 50,000 Bitcoin seized from an illegal music-sharing service. How the German government is valuing the BTC has sparked global interest and debate in the Bitcoin community. --- **Swan Bitcoin** · July 12, 2024 · Updated April 9, 2025 In a significant move underscoring the evolving landscape of digital assets, Germany has commenced the sale of 50,000 Bitcoins confiscated during the shutdown of an illegal music-sharing service. This decision marks one of the most significant disposals of seized digital currency, sparking intrigue and debate within the global Bitcoin community.  ### The Seizure and Its Implications The Bitcoin’s were confiscated from an illegal file-sharing operation known as [movie2k. to](https://en.wikipedia.org/wiki/Movie4k) facilitate access to pirated films and TV shows. The German authorities' successful crackdown on this operation [was hailed as a victory](https://www.cnbc.com/2024/07/08/germany-owns-2-billion-in-bitcoin-btc-its-freaking-out-investors.html) against digital piracy and money laundering.  The seizure, involving multiple law enforcement agencies, including the Federal Criminal Police Office and the FBI, is notable for its scale and the collaborative effort ([source](https://www.tomshardware.com/tech-industry/cryptocurrency/german-police-claim-largest-bitcoin-seizure-ever-more-than-dollar2-billion-recovered-in-ongoing-video-piracy-investigation), [source](https://www.tomshardware.com/tech-industry/cryptocurrency/german-police-claim-largest-bitcoin-seizure-ever-more-than-dollar2-billion-recovered-in-ongoing-video-piracy-investigation)).  ### Bitcoin's Role in Modern Finance The sale of these confiscated Bitcoins is not merely a bureaucratic move; it is a statement about Bitcoin's role in the modern financial landscape. By opting to sell rather than hold the Bitcoins, German authorities acknowledge Bitcoin as a valuable asset, akin to gold or foreign currency reserves ([source](https://platform.arkhamintelligence.com/explorer/entity/germany), [source](https://x.com/BitcoinMagazine/status/1809179428489961970)).  This move could set a precedent for other governments handling seized digital assets, potentially influencing how nations approach cryptocurrency in legal and economic contexts.  This decision highlights the contrast between traditional financial systems and the emerging world of digital currencies. With its fixed supply of 21 million coins, Bitcoin offers a stark contrast to fiat currencies, which central banks can print at will. This fixed supply is a core feature that appeals to investors seeking a hedge against inflation and currency devaluation, particularly in the current economic climate, where fiat currencies face unprecedented pressures.  ### The Market Impact  The introduction of 50,000 Bitcoin into the market is not without its consequences. Such a substantial sale could potentially impact Bitcoin's price, at least in the short term. Market watchers are keenly observing how the market will absorb this influx.  Will it lead to a temporary price dip, or will the market's depth and liquidity handle this influx without significant disruption?  Historical precedents suggest the market can absorb large sales without long-term adverse effects ([source](https://protos.com/german-police-seize-50000-bitcoin-in-piracy-website-bust/)).  ### Broader Implications for Digital Asset Management Germany's move also raises important questions about digital asset management and the future role of cryptocurrencies in state economics. As more assets transition to digital formats, the methods and policies for managing these assets must evolve.  This includes considerations around security, valuation, and the legal frameworks governing digital assets. For Bitcoin enthusiasts and advocates of digital currencies, Germany's decision validates Bitcoin's place in the global financial system.  It suggests that Bitcoin is not merely a speculative asset but a legitimate store of value and medium of exchange that governments must reckon with.  ### Conculsion Germany's sale of 50,000 confiscated Bitcoins is more than a [routine asset liquidation](https://blog.bitfinex.com/wp-content/uploads/2024/06/Bitfinex-Alpha-109.pdf). It is a milestone in recognizing digital currencies' legitimacy and value. The successful absorption of such a large volume of Bitcoin into the market also demonstrates Bitcoin's robust liquidity, showcasing its ability to handle significant transactions without long-term adverse effects.  As the world watches this sale unfold, it becomes increasingly clear that Bitcoin's role in the global financial landscape is evolving, with governments now participating in its market dynamics. This development marks a significant step in integrating digital assets into traditional economic frameworks, heralding a new era of financial innovation and digital asset management. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Germany’s Bitcoin “Brown Bottom” - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/germany-s-bitcoin-brown-botom/ Germany’s 50,000 BTC dump at the bull run start is baffling, especially since they can print fiat. This, along with poor energy policies and free speech disregard, shows why Bitcoin offers hope for a better world. --- **Matthew Kratter** · July 18, 2024 · Updated April 9, 2025 ### Germany's Bitcoin "Brown Bottom" [Today](https://www.youtube.com/watch?v=m_seSECUTSU&t=167s), Germany's modern day "Brown Bottom" 2.0. For those of you who don't know what the Brown Bottom is, this was a period from 1999 to 2002 [when](https://en.wikipedia.org/wiki/1999%E2%80%932002_sale_of_United_Kingdom_gold_reserves) Gordon Brown, the Chancellor of the Exchequer for the U.K. at the time, sold off half of the U.K.'s gold reserves in one of the greatest blunders of all time. [![](https://www.datocms-assets.com/56652/1721309759-wiki-brown.png?auto=format)](https://en.wikipedia.org/wiki/1999%E2%80%932002_sale_of_United_Kingdom_gold_reserves) Wikipedia The selling occurred from 1999 to 2002, marking the bottom of a multi-decade bear market in gold. This chart is priced in U.S. dollars, but we'd see a similar trend if we looked at British pounds. ![](https://www.datocms-assets.com/56652/1721310180-gold.png?auto=format) TradingView This was a colossal blunder, and Germany made a similar mistake by selling off its 50,000 Bitcoin. Checkmate has a great post that I want to highlight to remind people how markets work and how they front-run news. It's a *"sell the rumor, buy the news"* type of market price dynamic. [Post on X](https://twitter.com/_Checkmatey_/status/1812880729359167742) The German government sold a total of $3 billion worth of Bitcoin over one month, most of it sold over the last eight days, ending approximately last Friday. The market front-ran the news, selling off to $54k, but actually rallied through multiple $400 million to $682 million market sell-off days, absorbing like a champion. This chart shows this well. ![](https://www.datocms-assets.com/56652/1721309975-german-sell-off.png?auto=format) Glassnode The blue line represents the German government's balance of Bitcoin at a certain address. It began to move in mid-June, presumably being sent to exchanges to be sold for euros. The market noted this and sold off in anticipation. Then, when the actual large sales started happening, Bitcoin rallied back up. This is why it's important not to sell the actual news when it happens; you have to sell the rumor and buy the news. HODLing your Bitcoin is easier than trying to trade through these events. **Why the quick dump of Bitcoin?** They did a poor job and had a lot of slippage. Was it because some government official had to get it done before heading off to vacation last weekend? Why are governments like Germany so incompetent that they don't understand basic trading facts like slippage? Many people have said this is a bad way of pushing down Bitcoin prices because it didn't last long, and the market absorbed it. This raises the question: where did Germany get 50,000 Bitcoin? According to the [news](https://cybernews.com/news/germany-dumping-billions-worth-of-bitcoin-movie2k/), these 50,000 Bitcoin were [seized](https://cybernews.com/news/suspect-in-movie2k-case-transfers-2-billion-police/) from the pirated content streaming platform movie2k.to in mid-January. Two main operators were accused in August 2020 of distributing illegal film copies between 2008 and May 2013. They operated an illegal streaming service on Romanian servers and started buying Bitcoin with the proceeds by mid-2012. The news says that in early 2020, the site's programmer handed over €25 million worth of Bitcoin to authorities as compensation for damages after being in custody since 2019. The value of 50,000 Bitcoin in May 2013, when Movie2k shut down, was about $6.45 million, using the price of Bitcoin at approximately $129 per Bitcoin. Did these guys really [HODL](https://platform.arkhamintelligence.com/explorer/entity/germany) from $6.45 million to $2 or $3 billion? If true, they're absolute legends. However, there's a chance we're not seeing the whole story, and this might also involve laundered government intelligence money somehow ending up in German government hands and being converted to Euros. We can see here that there's still some Bitcoin sitting at that address because people have been sending Bitcoin there and trying to get it. [![](https://www.datocms-assets.com/56652/1721311304-german-governemtn.png?auto=format)](https://platform.arkhamintelligence.com/explorer/entity/germany) ArkhamIntelligence This address once had 420 Bitcoin, likely for 420 memes. The Bitcoin balance went from $3 billion to zero now. **If you own 700,000 sats or more Bitcoin, you own more than Germany.** It's hard to imagine exchanging precious Bitcoin for fiat money like euros, especially when you can print up fiat for free. This makes about as much sense as turning off your nuclear energy during an energy crisis. [Post on X](https://twitter.com/disclosetv/status/1647325445379989506) In April 2023, Germany began shutting down its last three remaining nuclear power plants after a rough winter and the Nord Stream pipeline issues. [![](https://www.datocms-assets.com/56652/1721311708-nords.png?auto=format)](https://en.wikipedia.org/wiki/Nord_Stream#/media/File:Nordstream.png) Wikipedia Germany has been trying to transition from wind and solar power to virtue signal, which is not a wise idea, especially since Germany is not particularly sunny or windy compared to places like Scotland. If you're an American, you might forget how high Germany's latitude is. It's right here on the map, and if you've ever spent fall and winter in places like Wyoming, Montana, or Canada, you know what this weather can be like. Moving from hydrocarbons and nuclear to solar and wind is probably not the best idea. ![](https://www.datocms-assets.com/56652/1721314758-long-lad.png?auto=format) The result is that Germans, especially in the winter of 2022, [returned](https://www.aa.com.tr/en/europe/germans-turning-to-wood-to-heat-their-homes/2725118) to burning wood in their fireplaces and reopening shut-down fireplaces to heat their homes due to a lack of natural gas and the closure of nuclear power plants. [![](https://www.datocms-assets.com/56652/1721311603-aa-germanty.png?auto=format)](https://www.aa.com.tr/en/europe/germans-turning-to-wood-to-heat-their-homes/2725118) AA If you care about the carbon impact of moving from nuclear and natural gas to burning wood in fireplaces, it's not good. The irony is that Germany, of all modern developed nations, should understand the importance of sound money, thanks to its history. It's been only 100 years since the hyperinflation in the Weimar Republic, which led to people carrying wheelbarrows of money to buy a loaf of bread. This was a central bank and government mismanagement at its best, just like Germany selling off 50,000 Bitcoins going into the Bitcoin revolution. [![](https://www.datocms-assets.com/56652/1721315068-hyinflation-weimer.png?auto=format)](https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic) Wikipedia As an American who values free speech, it's hard to take a country seriously that invades houses [over](https://www.theverge.com/2017/6/21/15847262/german-facebook-raid-hate-incitement) hateful social media posts rather than protecting people in real life. [![](https://www.datocms-assets.com/56652/1721315502-germany-raid-homes-of-36.png?auto=format)](https://www.nytimes.com/2017/06/20/world/europe/germany-36-accused-of-hateful-postings-over-social-media.html) New York Times Why have Western nations like the EU, Canada, Australia, New Zealand, and even the U.S., to a lesser extent, given up hope? Why so much self-hatred and bad policy? Why are these countries de-industrializing like Germany, moving from hydrocarbons and nuclear to burning wood in fireplaces? The answer for many of these countries is a return to hope; Bitcoin is one path to that hope. Bitcoin is hope for a world without hope and faith in itself. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # The Ghosts of Glass-Steagall: SAB 122 and History’s Warning for Bitcoin’s Future URL: https://www.swanbitcoin.com/opinion/the-ghosts-of-glass-steagall-sab-122-and-history-s-warning-for-bitcoin-s-future/ The SAB 121 repeal mirrors the end of Glass-Steagall in 1999, which played a major role in the 2008 financial crisis. Bitcoiners should listen to history and be more cautionary about SAB 122. --- **Brett D. Guiley** · April 9, 2025 As a Bitcoiner and CEO of Orange Horizon Wealth, my first reaction to the repeal of SAB 121 on January 23rd was likely the same as other Bitcoiners: "This is bullish for Bitcoin."   But as a risk manager with 25 years of experience, another thought crept into my mind, “The financial industry was also enthusiastic about the repeal of Glass-Steagall in 1999. And that set the stage for the 2008 financial crisis.” While SAB 121’s repeal paves the way for institutional Bitcoin adoption, it also removes a layer of transparency—one that was meant to prevent reckless banking behavior. Other than this [phenomenal article](https://egodeath.capital/blog/too-big-to-fail-banks-amp-bitcoin-custody) from Preston Pysh, I don’t believe the risks of the SAB 121 repeal are being discussed enough. My goal in examining the similarities between the repeal of Glass-Steagall in 1999 and SAB 121 in 2025 is to help create dialogue in the Bitcoin industry so we can avoid the mistakes from the Great Financial Crisis. ### What is the Glass-Steagall Act? The [Glass-Steagall Act of 1933](https://www.federalreservehistory.org/essays/glass-steagall-act) was a legislative order that separated commercial banking (holding consumer deposits) from investment banking (speculative trading). This firewall prevented banks from gambling with customer deposits protected by federal insurance. It remained in place for over 60 years—until Congress dismantled it in 1999. In 1999, Congress passed the [Gramm-Leach-Bliley Act](https://www.ftc.gov/business-guidance/privacy-security/gramm-leach-bliley-act), repealing Glass-Steagall’s core provisions. Banks could now combine traditional deposit-taking with riskier market-making and trading activities.  Almost immediately after the legal barrier between deposit-taking banks and risk-taking investment banks was removed, the big banks started buying up the small ones, setting the stage for the great financial crisis. ### What Happened After Glass-Steagall Repeal?  After Glass-Steagall’s repeal, [bank mergers skyrocketed](https://www.federalreserve.gov/pubs/feds/2012/201251/201251pap.pdf). By 2010, the top 10 firms controlled nearly 50% of U.S. banking assets, up from 36% in 2000. These larger banks dove into high-risk securities businesses like mortgage-backed securities (MBS), turning them into a massive profit engine. Between 1996 and 2007, the MBS market nearly tripled to [$7.3 trillion](https://www.frbsf.org/wp-content/uploads/Demyanyk-VanHemert.pdf), while subprime mortgages—high-risk loans—grew from 54% to 75% of new issuances. Bigger markets meant bigger risks. When housing prices crashed in 2008, defaults surged, and "too big to fail" banks imploded. The mechanics of this happening are probably best captured in the Jenga scene from [The Big Short.](https://www.youtube.com/watch?v=3hG4X5iTK8M) Unrelated note: Larry Fink, the pioneer in bringing Bitcoin to institutions through ETFs like IBIT, also pioneered mortgage-backed securities at [First Boston in 1978](https://www.euromoney.com/article/b1322hr4fx8gh0/larry-fink-the-pioneer-who-fought-his-way-to-the-top). Something to consider. ### What if Bitcoin Crashed Like Houses In 2008? In 2008, the [collapse of Lehman Brothers](https://www.cnbc.com/fall-of-lehman-brothers/) triggered a chain reaction of bank failures and [massive bailouts](https://www.cnbc.com/2011/03/16/citigroup-tops-list-of-banks-who-received-federal-aid.html)—$476 billion for Citibank, $336 billion for Bank of America, and $135 billion for Morgan Stanley. ***What if Bitcoin became the next high-risk asset banks gamble with?*** The opportunity is similar to what mortgage-backed securities offered in the early 2000s—huge profits if things go well, and large losses, resulting from not fully understanding the product they are packaging and selling, potentially having second and third-order effects.  Let’s look at the upside. Bitcoin has been the best-performing asset in 11 of the last 14 years.  The ability to collateralize and productize a high-return asset like Bitcoin can lead to new growth. Just look at BlackRock with IBIT. It is widely considered the [fastest-growing and best-performing ETF](https://www.nasdaq.com/articles/blackrocks-blk-bitcoin-etf-shatters-records-after-becoming-fastest-growing-fund) launch in Wall Street history. With the repeal of SAB 121, you can believe that other Wall Street firms beyond the ETF issuers are looking to cash in on Bitcoin. Now, let’s look at the downside. If the system were to enter a crisis as in 2008, and Bitcoin was deeply intertwined, consumers who have their Bitcoin managed inside that system, are likely not getting it back. You cannot print more Bitcoin. There will only ever be 21 million. Bitcoin has no central bank, government issuer, or lender of last resort, so no one can magically create more of it to bail out a failed institution.  They may be able to create dollars to attempt a bailout, but at that point, in the midst of another dollar-denominated collapse, what will the price of Bitcoin be? How much Bitcoin will you be able to buy with those dollars? The scarcity that makes Bitcoin valuable also makes it unforgiving of fractional reserve games. If a bank loses or mismanages customer Bitcoin (say, lends it out and can’t get it back), they can’t rely on the Federal Reserve to print a bit more Bitcoin to fill the hole.  Pysh’s nightmare scenario is scary: “If banks mismanage Bitcoin through fractional reserves, a crypto market crash or a loss of confidence could trigger a liquidity crisis that dwarfs anything we saw with the fall of FTX.” In a crisis, would the government feel pressured to backstop those losses to protect depositors or the financial system? In 2008, the answer was yes for traditional assets. But will it be the same for Bitcoin? Would they use it as an excuse to blame Bitcoin and set our industry back? ### The Similarities Of SAB 121 & Glass-Steagall SAB 121 required banks to account for Bitcoin as both an asset and a liability, effectively ensuring full-reserve banking - a foreign concept in today’s banking environment. This provided transparency in custody and prevented risky practices like rehypothecation—where banks lend out Bitcoin they don’t actually have.  If a bank held $100 million of Bitcoin in custody (a liability for the bank as it has to provide that Bitcoin to the client upon demand), it would have to show a corresponding $100 million in cash or equivalent as an asset on its balance sheet in order to meet that demand.  This requirement reflected a misunderstanding of Bitcoin - that it is money, and as long as they didn’t rehypothecate, Bitcoin fully reserves itself (in Bitcoin terms, 1 BTC = 1 BTC, after all). SAB 121 actually implemented a 2x full-reserve requirement (in USD terms).  Earlier this year, under new leadership, the SEC issued SAB No. 122, which rescinded SAB 121, removing the requirement of banks to hold assets on the balance sheet corresponding to the amount of Bitcoin held.  This reversal came right after the U.S. administration and SEC leadership changed, signaling a new regulatory philosophy toward crypto.  With SAB 121 repealed, banks can custody digital assets more like they do custody of traditional securities or cash without having to fully reserve those liabilities.  Some Bitcoiners like Eric Weiss have said, “The imminent repeal of SAB 121 is the single biggest catalyst for price appreciation in crypto and Bitcoin.”  https://x.com/Eric_BIGfund/status/1882054476174966970  I don’t disagree that it’s a major catalyst for price appreciation.  This allows big banks to handle Bitcoin and other crypto at scale by integrating them into their traditional banking services.  The flip side is this: a protective barrier—however imperfect—has been removed.  This invites banks to engage in the kinds of behavior we’ve seen for 100 years with a fractional reserve system. *As the saying goes, “Those who cannot remember the past are condemned to repeat it.”* ### Navigating the Road Ahead Using Caution and History as Our Guide As a Bitcoiner, I’m excited to see the Overton window shift. In theory, the track record of large institutions offering Bitcoin-based services will improve the perception of credibility of this young industry.  If managed prudently and correctly, banks could help provide stability and security to Bitcoin holders who don’t want to self-custody their coins. But, history has shown that when regulatory guardrails come off, **risk tends to rush in**. Here are a few thoughtful suggestions to help us steer clear of the pitfalls we encountered in 2008 regarding Bitcoin:  **For Bitcoiners**  Just because a big bank is holding your Bitcoin does not mean there aren’t risks. We need to ask the hard questions of our congressmen and our banks: - Will my Bitcoin be lent out or reused in other transactions?  - Is the bank genuinely holding one-for-one reserves?  - What could happen if the price drops significantly or if everyone wants to withdraw their coins simultaneously?   **For Banks**  Transparency wins. The saying “Don’t Trust. Verify.” resonates strongly with the Bitcoin community.  Because Bitcoin is readily verifiable, banks might consider sharing the addresses where client funds are held, like [Bitwise](https://bitbetf.com/) or [El Salvador](https://mempool.space/address/32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo) have done, proving they are holding the Bitcoin they claim to have. Doing this may create the trust and transparency Bitcoiners expect and could be a major driver in attracting assets to your firm. **For Regulators**  The U.S. government should consider setting global standards and establishing clear guidelines regarding Bitcoin custody. Clear frameworks will help the industry avoid mismanaging consumer funds through rehypothecation and fractional reserve banking.  The story of 2008 isn’t ancient history—it is still fresh in the minds of someone like me who managed other people’s money at the time. Without proper controls, asset managers will be reluctant to recommend these institutions as viable partners for their clients to store their assets. ### Bitcoin Can Transform Our Financial System ***Bitcoin’s role in the modern financial system has the potential to be transformative—but*** ***only if we avoid repeating past mistakes.*** The repeal of SAB 121 removes a layer of transparency and restraint, inviting banks to engage in risky practices that have historically led to financial crises. In 2008, reckless leverage and opaque lending practices turned a housing boom into a systemic collapse. If banks apply the same fractional reserve games to Bitcoin, the fallout could be even worse—because, unlike fiat, Bitcoin cannot be printed to bail them out. The ghosts of Glass-Steagall are watching. Will we learn from history? Will banks change their behavior? Or will they begin lending out Bitcoin that they don’t have for the sake of profit?  Bitcoiners, banks, and regulators each have a role to play.  Hopefully, this time, we will get it right.  ### Brett D. Guiley Brett D. Guiley, is a Managing Partner and a Portfolio Manager with Vista Investment Partners II, LLC, and CEO of Orange Horizon Wealth, LLC in Richmond, Indiana. Brett has been advising clients for 25 years. You can reach out to Brett at brett.guiley@orangehorizonwealth.com. *Certified Financial Planner Board of Standards Inc. owns the certification marks CFP(R) CERTIFIED FINANCIAL PLANNER (tm), and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. # The Scambling Age - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/the-age-of-scambling/ Trump Coin and the wild west of non-Bitcoin crypto --- **Cory Klippsten** · January 20, 2025 · Updated February 26, 2025 Bitcoin continues to mature into a stable and resilient network—a digital fortress of sound money immune to the whims of the powerful. Meanwhile, its lesser imitators, generally known as “crypto,” have taken a different turn, one characterized by a mix of scamming and gambling. This can be termed “SCAMBLING,” where dubious non-Bitcoin cryptocurrencies and digital assets blend hype, speculation, and outright fraud. Aided by lax oversight and a newly cozy relationship with legislators and regulators, scambling is set to flourish on a massive scale. **TRUMP Coin vs. Altcoins** Non-Bitcoin crypto assets, from Ethereum’s so-called “world computer” to the newest memecoins, are products of a hyper-speculative market, where the lines between innovation and exploitation blur more every day. Nothing embodies this trend more brazenly than the launch of the TRUMP and MELANIA tokens, originated by Donald Trump and his family. [Post on X](https://twitter.com/coryklippsten/status/1881038456924877248) Without the baggage of false innovation promises that saddle traditional altcoins, these memecoins draw gamblers in through a cult of celebrity, combining political allegiance with the thrill of high-stakes digital betting. There’s no value other than the thrill of hoping a greater fool buys in at a price higher than what you paid. And meanwhile the coin’s creators and insiders got their coins for free or cheap, and dump their coins on the gamblers. It’s scambling at its finest. The celebrity-backed token is the natural outcome of a landscape where scambling is allowed to thrive. Crypto has managed to normalize an environment where hype takes precedence over substance, and the potential for a quick buck outweighs saving and investing. **Sports Gambling and Crypto Gambling** The overarching trend here is the continued bifurcation of society, with the wealthy focused on saving and investing, and the middle and lower classes increasingly drawn to sports betting and crypto gambling. We’ve seen this play out over the past decade in Turkey. When the economy was working for the poor and middle classes, Bitcoin dominated the exchanges. As the economy suffered and the local currency weakened, the crypto market was overrun by memecoins and other pump-and-dump schemes. With little savings to put into buy-and-hold investments, most people now play markets like the lottery or a 7-step parlay, hoping for a short-term windfall. In the United States, sports gambling and crypto gambling have increasingly merged. Their apps look the same. Their advertisements look the same. They sponsor the same types of shows, sporting events, and stadiums, and cross-advertise on each other’s media outlets. This is to be expected. They are both negative-sum games for the participant, but with anecdotes of some people winning big flooding advertising and social media channels, the urge to gamble is strong. **The Crypto Wild West** Cryptocurrencies other than Bitcoin exist in a murky regulatory space, one where the rules are unclear, and enforcement is often weak or nonexistent. Recently, a wave of lobbying has enabled crypto groups and companies to exercise unprecedented influence in Washington. Donations from the crypto industry now flood campaign coffers, ensuring that the powers-that-be take a softer approach. This new, light-touch regulatory framework for non-Bitcoin crypto projects is the direct result of millions of dollars spent on political donations, lobbying efforts, and influence campaigns by companies like Coinbase, Andreessen Horowitz, Circle, and the Ethereum Foundation, all of whom have managed to buy themselves more leeway. The crypto companies and VCs have taken a page from the playbook of big tech and traditional finance, knowing that political contributions are the surest way to tilt the system in their favor. As these projects receive a pass, it is retail investors who pay the price when these house-of-cards schemes eventually crumble. This newfound freedom for crypto has ushered in a modern-day “Wild West.” With lax oversight, non-Bitcoin crypto projects are free to grift without the constraints of consumer protections. Rigged token sales, celebrity endorsements, and thinly-veiled ponzi schemes are all allowed to proliferate under the guise of “innovation.” At first glance this might seem bullish for crypto, but let’s be clear: it’s a bonanza for scambling, not for actual innovation. [Post on X](https://twitter.com/coryklippsten/status/1881132820510413299) **Bitcoin Stands Alone** Bitcoin, however, remains in a different category. It’s the only cryptocurrency that doesn’t need a lobbyist or a politician’s favor to survive and thrive. While scambling tokens maneuver to win the approval of regulators, Bitcoin operates on its own terms, outside the reach of centralized control. Bitcoin’s ethos is that it’s decentralized and permissionless; nobody controls it and it doesn’t need government regulation because its rules are both clear and inviolable. As regulators and politicians extend preferential treatment to the shiny new tokens paying their way into favor, they are inadvertently amplifying Bitcoin’s core value proposition: financial sovereignty and true decentralization. Bitcoin doesn’t need lobbyists because Bitcoin doesn’t need government to look the other way. Despite the scandals and hype cycles that have come and gone in the broader crypto industry, Bitcoin stands apart. Unlike the TRUMP coins, Bitcoin has no marketing team, no PR machine, and no centralized authority hyping its value. It is held up by the community that runs its protocol and the decentralized network that emerges. This is why Bitcoin will nonetheless thrive in this era of scambling, despite Bitcoin being the only honest player at the table. As the market for scambling inevitably collapses under the weight of its own false promises, Bitcoin will remain, unshaken and resilient. Fortunately, as the Age of Scambling proceeds, more people will see the value of Bitcoin’s slow-and-steady, deliberate design. Bitcoin was never intended to be a get-rich-quick scheme, and its value comes not from empty promises but from the integrity of its protocol and the community that upholds it. Every crypto token that crashes and every rug-pull scandal that unfolds serves as a reminder of Bitcoin’s resilience. In the end, Bitcoin doesn’t need celebrity endorsements, marketing gimmicks, or political handshakes to survive. It is inherently different from crypto. It has withstood every market cycle, every regulatory threat, and every wave of speculative mania. While regulators continue to court crypto lobbyists and embrace this age of scambling, Bitcoin’s role becomes even more apparent: a reliable, unyielding store of value for those who recognize the difference between substance and spectacle. The Age of Scambling may have arrived, but it will be Bitcoin that endures. [Video](https://www.youtube.com/watch?v=FHjAemwTRv0) ### Cory Klippsten Cory Klippsten is the Founder and CEO of Swan, which builds technology to secure your financial future. He is an investor or advisor for more than 50 technology startups, and was named to the Top 500 Most Influential list by LA Business Journal in 2024 and 2025. Klippsten is known for his b.s. detection skills, giving early warning on the biggest scams and risks in the crypto industry, and for his efforts to spread Bitcoin adoption through education. Before startups, Klippsten worked for Google, McKinsey, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in Los Angeles with his wife and daughters. His hobbies include basketball, history, and travel. # Swan Vault — Safe and Sound Self-Custody URL: https://www.swanbitcoin.com/industry/swan-vault-safe-and-sound-self-custody/ Swan Vault is advanced Bitcoin security made simple. You don’t need a bank, but you don’t have to go it alone. --- **Brady Swenson and Brandon Black** · August 21, 2024 · Updated August 29, 2024 Swan Vault is a Bitcoin storage solution engineered to provide advanced self-custody, enabling everyone to secure their Bitcoin confidently. We're excited to announce that Swan Vault is now available to all current and future Swan Bitcoin clients in the United States (we will enable access for International and New York clients as soon as possible). ![](https://www.datocms-assets.com/56652/1724961291-blog_post-safe_and_sound_self_custody_for_all-asset_01.png?auto=format) ### Total Control with Peace of Mind Swan Vault empowers you with complete control over your Bitcoin. This autonomy is fundamental to Bitcoin's promise—ensuring that your funds remain yours without restrictions or oversight. You can enjoy the independence of controlling your own Bitcoin without relying on banks or other institutions. If you lose a key, you can recover your funds. All Swan Vaults can be recovered using widely available open-source Bitcoin wallet software, such as Specter Desktop or Bitcoin Core. When you set up your Vault, you'll download an easy-to-follow recovery kit with clear instructions. We adopted industry standards to maximize the portability and recoverability of your Vault. ![](https://www.datocms-assets.com/56652/1724961321-blog_post-safe_and_sound_self_custody_for_all-asset_02.png?auto=format) ### Designed for everyone: Ease of Use Meets Advanced Security We carefully designed Swan Vault to remove the technical barriers and complexity that often deter people from embracing self-custody. Swan Vault empowers anyone to confidently take custody of their Bitcoin with guided on-screen setup to streamlined deposits and withdrawals. Blockstream Jade signing devices are straightforward and secure, making them the perfect companion to Swan Vault's human-centered design. This ease of use does not come at the expense of security; instead, it is a harmonious blend of both, ensuring users enjoy peace of mind without navigating a complex technological maze. ![](https://www.datocms-assets.com/56652/1724961345-blog_post-safe_and_sound_self_custody_for_all-asset_03.png?auto=format) ### Total Control with Peace of Mind Swan Vault empowers you with complete control over your Bitcoin. This autonomy is fundamental to Bitcoin's promise—ensuring that your funds remain yours without restrictions or oversight. You can enjoy the independence of controlling your own Bitcoin without relying on banks or other institutions. If you lose a key, you can recover your funds. All Swan Vaults can be recovered using widely available open-source Bitcoin wallet software, such as Specter Desktop or Bitcoin Core. When you set up your Vault, you'll download an easy-to-follow recovery kit with clear instructions. We adopted industry standards to maximize the portability and recoverability of your Vault. ![](https://www.datocms-assets.com/56652/1724263439-blog_post-safe_and_sound_self_custody_for_all-asset_04.png?auto=format) ### Expert Assistance: You're Not Alone Although you have total control, you don't have to manage everything alone. Whether you have questions about setting up your Vault, performing transactions, or recovering your funds, Swan’s team of experts stands ready to provide personalized assistance. By combining independent control with a robust safety net and expert guidance if needed, Swan Vault delivers peace of mind to Bitcoiners at all levels. ![](https://www.datocms-assets.com/56652/1724961380-blog_post-safe_and_sound_self_custody_for_all-asset_05.png?auto=format) Ready to take control? Log into your Swan account and [open your Swan Vault](https://app.swanbitcoin.com/vault/subscribe) today.  Discover more at[ swan.com/vault](https://swan.com/vault) and embark on your journey towards true financial autonomy with peace of mind. ### Brady Swenson Brady is a Swan cofounder focused on Product Marketing and Education. He launched [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](https://www.swanbitcoin.com/media/brady-swenson/youtube.com/swansignal), two popular Bitcoin podcasts. ### Brandon Black Brandon is a long time Bitcoiner and software engineer, currently leading the Custody engineering team at Swan Bitcoin. # The Bitcoiner who Ran for French National Assembly URL: https://www.swanbitcoin.com/analysis/the-bitcoiner-who-ran-for-french-national-assembly/ Running on a Bitcoin-only platform is a significant milestone. --- **Joe Nakamoto** · August 26, 2024 *Strapline: Europe lags well behind the United States in terms of Bitcoin in politics, but France now boasts its first-ever political candidate to put Bitcoin on the ballot sheet.* For the first time in French history, a Bitcoiner appeared on the ballot papers of France’s recent elections. Aurore Galves Orjol, co-founder of the Bitcoin brokerage Bitcoin Lyon, seized the opportunity to participate in the legislative elections in France on a pro-Bitcoin, and crucially, a Bitcoin-only platform in June. ![](https://www.datocms-assets.com/56652/1724683091-aurore-galves-orjol.jpg?auto=format) In an interview with Joe Nakamoto, Orjol explained why she launched her political career independently of any political party affiliation, and why it matters so much to do so now. In a surprising decision, the President of France, Emmanuel Macron, dissolved the National Assembly on June 9. The staunchly anti-Bitcoin and anti-crypto leader of the EU’s second-largest economy called for an election in July 2024. The speed and spontaneity of the decision led to what Aurore describes as political chaos, as well as a potential juncture for Bitcoin: “In this chaos, there's an opportunity; there's a card to play, and we're going to try to infiltrate the debate by proposing a Bitcoin candidacy.” In the United States, Donald Trump has crooned crypto fans, winning over many Big Name Bitcoiners who have promised him their vote. Furthermore, several Senators and lawmakers are beginning to grasp Bitcoin and even advocate for the technology. Across the pond, however, there are very few politicians in the UK and Europe who have shown genuine, sustained interest in the subject. Nigel Farage, the leader of the new challenger party in the United Kingdom, Reform, has spoken at Bitcoin Conferences where he expressed his aversion to cryptocurrencies. In an interview with Farage in 2022, he boasted that “Bitcoin would become a trusted means of exchange in Europe.” Nonetheless, Farage is a seasoned politician. The Brit has a history of pandering to specific focus groups—be it farmers, Brexiteers, or the de-banked. He has ignored Bitcoin since championing the Reform Party. ![](https://www.datocms-assets.com/56652/1724683447-la-profession-de-foi-d-aurore-galves-orjol-pour-les-elections-legislatives-2024-1888847.jpg?auto=format) Nonetheless, this is the first time that a seasoned Bitcoiner—as opposed to a seasoned politician—puts forward Bitcoin to the electorate. In the Isère Region of France, near Lyon, Aurore called upon the electorate to “Stop voting white [i.e., stop spoiling your vote], and start voting orange,” where orange is the color of Bitcoin. Although her hopes of winning the seat were small, the intention was to use the platform to shine a light on Bitcoin in France and to elevate Bitcoin to national discourse. And it’s working. Aurore explained: “I'm already being positively received, encouraged, and discussed. [...] And it's perhaps the first building block of something bigger. My intention is also to encourage other people to do so, so that we can infiltrate the government in a way, and propose these ideas at many levels of democracy, to enrich and refresh the democratic debate with the solutions that Bitcoin could bring.” Indeed, despite no political party affiliation, her actions gained national media attention—and it’s not all negative. Les Echos, one of France’s most prestigious national newspapers, featured Orjol, where she was able to express her views on Bitcoin mining and its role in incentivizing green energy sources. ![](https://www.datocms-assets.com/56652/1724683508-screenshot-2024-07-25-at-11-05-17.png?auto=format) As Aurore’s first foray into French politics, the move also serves as a wake-up call to other European Bitcoiners in terms of political inclusion and lobbying: “Democracies are open [...] This is a call to other Bitcoiners to come forward and get involved in politics to fill the void for pro-Bitcoin voices—because right now it’s damaging to us that laws are made against us. Since we don't participate in the laws, the laws are no longer adapted to us. They are made to our detriment.” It’s important to stress just how far behind Europe is in terms of Bitcoin acceptance in politics, and how Aurore’s move may move the needle. For example, in the United Kingdom, British Bitcoiners are desperate to understand where the new Prime Minister, Sir Keir Starmer, stands on Bitcoin. He has yet to comment on this pressing issue. President Biden, however, has made clear his approach of cautious regulation to the broader cryptocurrency space. Trump, as mentioned, is making overtures to both the Bitcoin and Cryptocurrency crowds. Aurore highlights that we should be careful to reserve judgment of politicians warming to Bitcoin: “It’s true that we’re currently seeing politicians all over the world starting to broach the subject in a bid to win over certain electoral niches with a view to winning over new voters.” She explained that ultimately, Bitcoin should be the backbone of a political proposal to change monetary policy, which is inflationary and expansionist, and to have a real impact on decision-making. Instead of opportunists cowing to Bitcoin appeal, more Bitcoiners should aim to make laws. Nonetheless, Aurore faces an uphill battle. Despite standing on a Bitcoin-only platform, BFM, another large media outlet, called Aurore “La Reine Des Cryptos,” or The Crypto Queen. Orjol lectures students at the Burgundy School of Business about Blockchain technologies, in which she says, “It ends up being lectures about Bitcoin because that’s the only blockchain that works.” The framing of the Crypto Queen is a nod to the famous Bulgarian Crypto Queen fraudster, who scammed investors out of millions in the One Coin Scandal. Orjol co-founded Bitcoin Lyon in 2019. It is the only physical space in France where customers can buy or sell Bitcoin for cash, albeit only up to a maximum of 500 EUR ($540) per person per month due to strict EU regulations. Ownership of crypto sits at around 12% of the French populace, according to a report conducted by Adan in partnership with KPMG, but Orjol comments that while this is small, it’s growing rapidly, especially among the younger demographics. Orjol’s campaign runs on two foundational promises: protect the environment by cultivating a Bitcoin mining scene in France that would promote the buildout of renewable technologies. The Bitcoin mining hash rate emanating from France is a fraction of Texas. The European Union spits out just 6% according to Coin Wars, whereas Texas churns out almost one-third of the global hash rate. Furthermore, the French government and companies funnel billions of euros into renewable energy each year. There is tremendous potential for Bitcoin mining in France with stranded or wasted renewable energy but sadly, little impetus to do so. Secondly, Orjol seeks to protect an individual’s right to self-custody. A key tenet of Bitcoin philosophy, the importance of holding one’s keys, is paramount to Bitcoin’s growing success. This belief confronts, head-on, the MICA (Markets in Crypto Assets) regulation in Europe, proposed by the European Union. In a draconian move, the MICA laws seek to outlaw what they refer to as “unhosted wallets,” or self-custody.  Aurore explains that it’s a case of Hanlon’s Razor: “They don't understand this technology because if they did, they would never have endangered individuals in this way. She continued, “A politician would never create a law to force individuals, citizens, to publicly display the amounts in their bank accounts. No politician would think it reasonable to do that.” Perhaps not all politicians think that way, but her point underscores that there is a sincere lack of Bitcoin education among politicians. Finally, unlike Trump, Orjol is not yet able to accept Bitcoin donations. Running on a Bitcoin-only platform was already a significant milestone and a novelty for the French political climate, but she commented that it is a matter of priority in the coming months. When asked what Orjol would do if she were to one day become President, she replied in a flash: “I would make Bitcoin legal tender.” The decision would reduce the capital gains taxes on Bitcoin from 30% to zero, similar to the actions of Nayib Bukele, President of El Salvador, on June 9, 2021. *Addenda: Since recording the interview, editing, and writing the follow-up article, the French election concluded. Aurore scored 100 votes, or less than 1% of her local electoral votes, sharing: “These first Orange votes in 28 of the 30 villages with ballots are historic and confirm our initial convictions.”*  ### Joe Nakamoto Bitcoin Journalist: http://youtube.com/@joenakamoto 🧡 Advisor: @heatbit_com @relai_app, @orangepillapp # What Is BTC Hashrate? Why You Should Care (July 2024 Update) URL: https://www.swanbitcoin.com/education/what-is-bitcoin-hashrate/ Bitcoin hashrate? Sounds confusing, but its not. Learn the role Bitcoin’s hashrate plays, why its important and what the current BTC hashrate is today: July 26th, 2024. --- **Mickey Koss and Drew** · July 15, 2024 · Updated July 26, 2024 ### Understanding Bitcoin Hashrate Bitcoin Hashrate is defined as the Bitcoin mining difficulty of the blockchain. It measures how difficult it is to mine a Bitcoin. - **Hashing Process**: A hash, an alphanumeric code, is randomly generated by the hash function. Bitcoin mining, also known as 'hashing,' involves attempting to guess this code using a computer that submits these guesses to the blockchain. - **Hashrate Measurement**: Bitcoin hashrate measures how many guesses are submitted per second to the entire blockchain. A higher hashrate indicates the need for more computing power, increased energy costs, and longer verification and transaction times. This results in slower and more expensive Bitcoin mining. ### Current Bitcoin Hashrate **Hashrate:** 733.41 EH/s **Block Height:** 854,030 with a difficulty of 82,047,728,459,932.75 **Date:** [July 26, 2024 12:24 PM UTC](https://www.coinwarz.com/mining/bitcoin/hashrate-chart) ##### Units of Bitcoin Hashrate Bitcoin Hashrate is measured in: - Billions - Trillions (a thousand billion) - Quadrillions (10^15) - Quintillions (10^18) For example, according to [Coinwarz](https://www.coinwarz.com/mining/bitcoin/hashrate-chart), the current Bitcoin Hashrate as of July 26th, 2024, is 733.41 EH/s exahashes per second. - **1 exahash is 1 quintillion** (10^18) hashes per second. This means 688 quintillion guesses are being submitted to the blockchain every second. - **Historical Comparison**: On July 26th, 2023, the hashrate was 379.55 exahashes per second, indicating that it was 48.24% cheaper to mine Bitcoin just a year ago. ##### Interactive Hashrate Graphs You can check out an interactive graph of Bitcoin hashrate in exahashes on [Coinwarz](https://www.coinwarz.com/mining/bitcoin/hashrate-chart). - **1 exahash per second** = **1 quintillion hashes** submitted per second. For viewing in terahashes, visit [Blockchain.com](https://www.blockchain.com/explorer/charts/hash-rate). - **1 terahash** = **1 trillion hashes** submitted per second. Understanding these metrics helps to comprehend the complexity and cost associated with Bitcoin mining. ### Understanding Bitcoin Hashrate Hashrate is commonly defined as the speed at which a Bitcoin mining machine operates. In the context of Bitcoin, hashrate refers to the number of computations that hardware can perform per second as it works to solve the cryptographic puzzle.  As more miners join the network, the network hashrate rises. The higher the Bitcoin [hashrate](https://www.blockchain.com/explorer/charts/hash-rate), the more difficult it is to attempt to attack Bitcoin.   ### How Hashrate Works Bitcoin miners and hashrate are inexorably linked. Miners provide the hashrate to the network in exchange for the newly issued Bitcoin and transaction fees. On a Bitcoin only exchange such as Swan, or crypto exchange with higher fees such as [Kraken](https://www.swanbitcoin.com/kraken-review/) or [Coinbase](https://www.swanbitcoin.com/is-coinbase-in-trouble). [![](https://www.datocms-assets.com/56652/1713080111-thr-april-14.png?auto=format)](https://www.blockchain.com/explorer/charts/hash-rate) Blockchain.com **1) What is Bitcoin Mining?** Bitcoin mining involves adding new transactions to the blockchain and securing the network. Miners use powerful computers to solve complex mathematical puzzles, validating transactions. Miners are rewarded with newly minted Bitcoin for their efforts. Learn more about the [Byzantine Generals Problem](https://www.swanbitcoin.com/byzantine-generals-problem/) and [mining costs](https://www.swanbitcoin.com/how-much-does-it-cost-to-mine-a-bitcoin/). **2) What is SHA-256?** SHA-256 (Secure Hash Algorithm 256-bit) is the cryptographic algorithm used in Bitcoin mining. It transforms transaction data (block header) into a fixed-size hash value using [proof-of-work](https://www.swanbitcoin.com/proof-of-work-vs-proof-of-stake/). **3) What is a Nonce?** A nonce is a specific value miners must find to produce a hash with certain characteristics. It is a number used only once in the cryptographic process. **4) How Do Miners Find the Nonce?** Miners use trial and error to find the nonce. They continuously change the nonce value and run it through the SHA-256 algorithm until they find a hash that meets the required criteria. **5) What is a Block Time?** Bitcoin's protocol adjusts mining difficulty every 2016 blocks (approximately every two weeks) to maintain an average block time of about 10 minutes. This ensures a steady and reliable rate of new block additions. ### The Role of Miners Miners are computers that perform the computations for the Bitcoin network. Hashrate represents the number of computations per second. As more miners join the network, the hashrate increases, making it harder for a single entity to affect the network. ##### Key Points - **Computational Guesses**: Solo miners could spend years without solving a block and getting paid, due to the random nature of the computations. - **Mining Pools**: To mitigate this risk, many miners join mining pools. Pools combine computing power, raising the probability of solving a block and resulting in more frequent, smaller payouts. ##### Mining Pools Explained - **Increased Probability**: By pooling hashing power, miners improve their chances of solving a block. - **Frequent Payouts**: Participants in mining pools receive more regular, smaller payouts. ##### Comparison - **Lottery vs. Bond**: Mining pools are like playing the [lottery](https://twitter.com/skwp/status/1106380867071549440?s=20&t=Iz6nSBUpBouQdbrWdxsSkQ) versus buying a bond, with the bond paying interest in Bitcoin instead of fiat currency. Swan's [Yan Pritzker](https://twitter.com/skwp) explains Bitcoin mining as a lottery system in this [Twitter thread](https://twitter.com/skwp/status/1106380867071549440?s=20&t=Iz6nSBUpBouQdbrWdxsSkQ). [![](https://www.datocms-assets.com/56652/1709323735-yan-lottery.png?auto=format)](https://twitter.com/skwp/status/1106380867071549440?s=20&t=Iz6nSBUpBouQdbrWdxsSkQ) Twitter ### The Impact of Hashrate on Bitcoin ##### Security Implications A high [hashrate](https://www.swanbitcoin.com/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/) in the Bitcoin network: - Acts as a shield against potential attacks. - Safeguards the integrity of transactions. - Enhances the trust and reliability of the decentralized system. As more miners join the network, the difficulty of mining adjusts to maintain a consistent block time. This mechanism: - Ensures smooth network operation. - Reinforces security by keeping mining competitive and resource-intensive. A high hashrate implies substantial computational power dedicated to mining and processing transactions. This makes the network robust and secure against potential threats by making attacks cost-prohibitive. ##### Hashrate and Bitcoin's Value When comparing Bitcoin's price movement with its hashing power: - Bitcoin's price fluctuates significantly. - Hashrate follows a relatively steady upward trajectory. Some argue that: - Hashrate leads to price increases. - Miners position themselves for profits during price run-ups. Understanding the correlation between hashrate and Bitcoin's value provides insights into market dynamics and network security. Some would argue that hashrate leads price, or even causes price to increase. Others may say miners are positioning themselves to make windfall profits when the price runs up inevitably.  [![](https://www.datocms-assets.com/56652/1710287462-look-into-bitcoin-hash-rate.png?auto=format)](https://www.lookintobitcoin.com/charts/bitcoin-hashrate-chart/) LookintoBitcoin ##### Challenges and Risks Regarding Bitcoin's hashrate, it's essential to be aware of potential risks that may threaten the network's stability and security. Here's a breakdown of some key risks to keep in mind: **1) 51% Attacks: Quelling the Majority Menace** **Risk**: A 51% attack occurs when an individual or group controls more than half of the network's hashrate, granting them significant power to manipulate transactions or double-spend coins. Such attacks can undermine the trust and integrity of the Bitcoin network, potentially leading to financial losses and a loss of confidence in the cryptocurrency. [![](https://www.datocms-assets.com/56652/1709323865-pool-distribution.png?auto=format)](https://hashrateindex.com/hashrate/pools) Hashrate Index **Mitigation** - 51% attacks are only possible if one entity, likely a mining pool, controls over half the hashrate. - Pool operators would need malicious intent, which would likely destroy the value they have created. - Switching mining pools is easy, so many miners would leave a pool if it approached 51% of the network power. **2) Contentious Hard Forks: Splitting the Blockchain** **Risk** - A [hard fork](https://www.swanbitcoin.com/what-is-a-bitcoin-fork/) happens when a protocol upgrade creates rules incompatible with the existing blockchain. Contentious hard forks occur when there is disagreement within the community about the changes, leading to a split and the creation of a new cryptocurrency. - These forks can cause confusion, disrupt transactions, and impact network security and stability. - They occur when there is a disagreement among the community about the proposed changes, leading to a split in the blockchain and the creation of a new cryptocurrency. These forks can cause confusion, disrupt transactions, and potentially impact the security and stability of the network.  ![](https://www.datocms-assets.com/56652/1708658566-spi_changing_bitcoin_2.svg) - The [blocksize war](https://www.swanbitcoin.com/the-blocksize-war/), involving Bitcoin and Bitcoin Cash, revolved around the debate on the optimal block size limit for processing transactions. - [Bitcoin Cash](https://www.swanbitcoin.com/changing-bitcoin-the-past-the-present-and-the-future-part-one/), which split from Bitcoin in 2017, increased the block size limit to improve scalability but has since become less relevant. **Mitigation** - Bitcoin's strength lies in its decentralized nature and consensus mechanism. - During the blocksize war, influential entities like [Coinbase](https://www.swanbitcoin.com/is-coinbase-in-trouble/) and significant portions of the hashrate sided with big blockers. However, their efforts were thwarted by node runners and network users who stood firm in their refusal to accept the proposed changes. - Hashrate does not grant the power to control the network; users running nodes that maintain Bitcoin's ruleset still hold significant power. By understanding these challenges, Bitcoin users and stakeholders can better navigate and mitigate risks, ensuring the continued stability and security of the network. ### Measuring and Analyzing Hashrate **How Bitcoin Hashrate is Measured** The BTC hashrate is typically calculated as hashes per second (h/s). The hash unit can be expressed by size: [![](https://www.datocms-assets.com/56652/1710287359-hashunits.png?auto=format)](https://www.lookintobitcoin.com/charts/bitcoin-hashrate-chart/) LookintoBitcoin By analyzing the time it takes to mine a block and the difficulty level of the network, one can estimate the total hashrate of the Bitcoin network.  Here are a few tools you can use to keep an eye on or analyze hashrate:  - If you really want to dig in deep, Luxor’s [Hashrate Index](https://data.hashrateindex.com/network-data/btc) is probably your best bet.  - At a glance, tools like [TimechainStats](https://data.hashrateindex.com/network-data/btc) can’t be beat, but with a good amount of functionality for those who want a little more.  - For those who love summary visualizations, [Time Chain Calendar](https://data.hashrateindex.com/network-data/btc) is a good option for quick hashrate updates. ### Bitcoin Hashrate History The higher Bitcoin’s price goes, the more miners will want to join the network, further adding to the security and reliability.  ##### Bitcoin Hashrate All Time High **835.86 EH/s** **May 24, 2024 at block 844,894** ### Swan Bitcoin HashRateUp Series **Newest Episode**: [July 14th, 2024](https://www.youtube.com/watch?v=-LVrvPoSEzY) - Energy & Bitcoin ASIC Development with Haris Basit *In this episode of HashrateUp, we dive deep into the world of Bitdeer with Haris Basit the Chief Strategy Officer. Join us as we explore Bitdeer's journey, their approach to vertical integration, and their groundbreaking advancements in ASIC development. This episode provided a deep dive into Bitdeer's strategic approach, technological innovations, and the challenges and opportunities in the Bitcoin mining industry.* [Video](https://www.youtube.com/watch?v=r5tkrsfVUD0) [HashrateUp](https://podcasters.spotify.com/pod/show/hashrateup) is a podcast that delves into Bitcoin mining and exciting projects, utilizing hashrate production to unlock new potentials in the broader energy industry. ### FAQ Section **What factors can affect Bitcoin's hashrate?** - Factors affecting hashrate and mining profitability include Bitcoin price, block reward, difficulty, the cost of power, and geopolitical conditions. For example, after the [halving](https://www.swanbitcoin.com/bitcoin-halving-dates/), the block reward is cut in half, so many older miners may fall out of profitability and shut off, decreasing the hashrate. However, if Bitcoin's price increases fast enough, those old machines may be profitable to turn back on, resulting in a subsequent increase in the hash rate.  **What happens if Bitcoin’s hash rate decreases significantly?**  - If Bitcoin's hash rate decreases significantly, it may take longer for blocks to come in than the 10-minute targeted average. Eventually, the network would reach the 2016 block limit and adjust the difficulty level accordingly. Depending on the degree of hash rate loss, this may have to happen several times to reach the 10-minute target - though slow block times would likely increase the demand for block space, resulting in [higher fees and incentivizing](https://www.swanbitcoin.com/bitcoin-fee-based-security-modeling-lyn-alden/) more miners to join the network. The network is a self-licking ice cream cone of incentives that keeps things moving.  **Can Bitcoin’s hashrate ever reach zero?**  - A zero hashrate would imply the world has ended. In this case, your diversification into guns, ammunition, and general doomsday prepper goods and services may eventually be helpful. In all seriousness, the answer to this question is probably not. Similar to questions about "*what if the internet doesn't work*." Well, then basically nothing else does either, so good luck accessing your bank account.  **What if mining is banned in my country?**  - China [banned](https://www.reuters.com/world/china/china-central-bank-vows-crackdown-cryptocurrency-trading-2021-09-24/) Bitcoin mining in 2021, which is widely believed to have chopped the head off the 2020 bull run, so to speak. Since then, hashrate has nearly tripled, with foreign countries like [Ethiopia](https://bitcoinmagazine.com/markets/chinese-partnership-to-bring-large-scale-bitcoin-mining-to-ethiopia) experiencing the benefits rather than China. **You can't ban Bitcoin; you can only ban your country from benefiting.**  **Isn’t Bitcoin mining bad for the environment?**  - Bitcoin mining does not waste energy; rather, it puts economic value on wasted energy. Though hotly debated, those in the know understand that Bitcoin and Bitcoin mining have the potential to radically transform the world's energy infrastructure into a cleaner, more reliable, and abundant energy system for everybody. ### Let's Wrap Up Simply put, Bitcoin’s hash rate is a representation of the network’s power and security.  Hashrate represents the backbone of Bitcoin - it powers the network and allows transactions to be securely processed, validated and added to the blockchain.  While the concept is technical, it provides valuable insight into the health and growth of Bitcoin. Monitoring hashrate provides critical data that analysts can use to assess the overall security and state of the Bitcoin ecosystem. As Bitcoin continues to develop, its ever-growing hashrate is cementing its position as the most powerful and secure computational network in the history of the world.  On January 25th, Swan [announced](https://www.youtube.com/watch?v=1iWONScJJQw) [Swan Mining](https://www.swanbitcoin.com/swan-bitcoin-unveils-mining-unit/), a division of [Swan Institutional](https://www.swanbitcoin.com/institutional/). Whether you’re new to Bitcoin or a seasoned enthusiast looking to expand your portfolio with a [Bitcoin IRA.](https://www.swanbitcoin.com/bitcoin-ira/) [Join](https://www.swanbitcoin.com/drewswanbitcoin/) Swan Bitcoin today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # FBTC vs. GBTC: Which Bitcoin ETF Should You Buy In 2024? URL: https://www.swanbitcoin.com/investing/gbtc-vs-fbtc/ Since the start, FBTC (Fidelity Wise Origin Bitcoin Fund) and GBTC (Grayscale Bitcoin Trust) have held the #2 and #3 AUMs for spot Bitcoin ETFs since the jump. FBTC or GBTC? Which should you buy? --- **Drew** · July 17, 2024 · Updated July 26, 2024 This article delves into a comprehensive comparison of FBTC and GBTC, aiming to provide clear insights for both seasoned and novice investors. We'll explore their distinct characteristics, benefits, performance, fees, and drawbacks, focusing on how spot Bitcoin ETFs fit into the broader context of Bitcoin investment strategies. ***TL;DR:*** *FBTC, the Fidelity Wise Origin Bitcoin Fund, offers exposure to Bitcoin through direct holdings of Bitcoin. GBTC, the Grayscale suits investors seeking exposure to Bitcoin's price movements despite potentially higher costs and the risk of trading at premiums or discounts.* ### Quick Comparison: FBTC vs. GBTC #### FBTC - **Name**: Fidelity Bitcoin Trust (FBTC) - **Issuer**: [Fidelity Investments](https://www.fidelity.com/crypto/overview) - **Type**: Bitcoin Trust - **Custody**: Self-custody - **Launch Date**: 2021 - **Objective**: To track the price of Bitcoin by investing in Bitcoin directly. - **Management**: Actively managed by Fidelity's experienced team. - **Investment Strategy**: Purchase and hold Bitcoin to provide exposure to its price movements. #### GBTC - **Name**: Grayscale Bitcoin Trust (GBTC) - **Issuer**: [Grayscale Investments](https://etfs.grayscale.com/gbtc) - **Type**: Bitcoin Trust - **Custody**: [Coinbase Custody](https://www.coinbase.com/en-gb/prime/custody) - **Launch Date**: 2013 - **Objective**: To provide investors with a cost-effective and convenient way to gain exposure to Bitcoin. - **Management**: Passively managed - **Investment Strategy**: Purchase and hold Bitcoin to mirror Bitcoin's price performance. #### Key Comparisons: Fees and Performance ##### Fees - **FBTC**: Management fee of 0.40% per annum - **GBTC**: Management fee of 2.00% per annum ### Fidelity Wise Origin Bitcoin Fund (FBTC) The Fidelity Wise Origin Bitcoin Fund primarily allocates its investments to holding actual Bitcoin instead of investing in Bitcoin futures contracts. FBTC offers a direct exposure method to Bitcoin and is designed to provide investors with an opportunity to gain exposure to the price of Bitcoin through a familiar investment vehicle. ##### FBTC Overview #### Pros - **Ease of Access:** Provides a straightforward way for traditional investors to gain exposure to Bitcoin without needing to manage digital wallets or navigate cryptocurrency exchanges. - **Regulated Product:** Managed by Fidelity, FBTC is subject to regulatory oversight, providing transparency and investor protection. - **Diversification:** Allows investors to include Bitcoin in their diversified investment portfolios through a familiar financial instrument. - **Secure Custody:** The fund's Bitcoin is stored with secure custodians, reducing the risk associated with individual cryptocurrency storage. - **Liquidity:** Shares of FBTC are traded on traditional stock exchanges, providing liquidity and ease of buying and selling. #### Cons - **Management Fees:** FBTC charges management fees, which can reduce overall returns compared to holding Bitcoin directly. - **Tracking Errors:** FBTC's performance may not perfectly match Bitcoin's due to fees and market conditions. - **Limited Control:** Investors do not have direct control over the Bitcoin held by the fund, which can be a drawback for those who prefer to manage their cryptocurrency holdings. - **Regulatory Risks:** Regulation changes could impact the fund's operations or ability to hold Bitcoin. - **Market Risk:** As with any investment in Bitcoin, FBTC is subject to the volatility and market risks associated with the cryptocurrency. - **Potential Premiums:** The share price of FBTC may trade at a premium or discount to the net asset value (NAV) of the Bitcoin held by the fund, potentially affecting investment returns. **NAV as of July 18th, 2024** - [$56.38](https://ycharts.com/companies/GBTC/discount_or_premium_to_nav) **Sponsor Fee** - 0.25% (starting August 1, 2024)​ ([Fidelity](https://www.fidelity.com/etfs/fbtc))​​ ([ETF.com](https://www.etf.com/FBTC))​ ### GBTC (Grayscale Bitcoin Trust): An Overview GBTC was one of the first spot Bitcoin ETFs in the U.S. It is solely and passively invested in Bitcoin. Its shares are designed to reflect the value of BTC held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities.  GBTC allows investors to gain exposure to Bitcoin through a familiar investment vehicle without setting up an account or wallet on a cryptocurrency trading platform.  Similar to how investors use ETFs to hold other commodities, like gold or silver, they can now invest in Bitcoin through GBTC. - GBTC owns and passively holds actual Bitcoins through their Custodian, Coinbase Custody. - GBTC does not trade, buy, sell, or hold Bitcoin derivatives, including Bitcoin futures contracts. Despite all of GBTC's competitors lowering their spot Bitcoin ETF fees just before the SEC approved 11 spot Bitcoin ETFs, GBTC notably did not. We have a complete overview of all spot Bitcoin ETF fee products. [Best Bitcoin ETF Fees: Lowest to Highest (July 2024)](https://www.swanbitcoin.com/education/bitcoin-etf-fees/) ##### GBTC Overview #### Pros - **Direct Exposure to Bitcoin:** GBTC holds actual Bitcoin, directly exposing its price movements. - **Simplicity:** It's a straightforward way for investors to gain exposure to Bitcoin without the complexities of managing Bitcoin wallets and keys. - **Traditional Investment Vehicle:** As a trust, it can be held in certain tax-advantaged accounts, like IRAs. #### Cons - **Higher Fees:** GBTC typically has a higher fee structure due to the costs of securely holding physical Bitcoin. Grayscale has by far the highest Bitcoin ETF fee (1.50%) of any approved Bitcoin ETF. - **Premiums or Discounts:** GBTC can trade at significant premiums or discounts to the underlying Bitcoin price, affecting investment value. - **Less Liquidity:** Being an OTC product, it lacks the same level of liquidity as a standard ETF. - **ETF Conversion Risk:** May be forced to "sell & rebuy" Bitcoin as part of the ETF conversion process and may involve capital gains taxes. ##### How to Invest in GBTC Grayscale Bitcoin Trust ETF (Ticker: GBTC) trades on NYSE Arca and is available through your brokerage account. ### FBTC vs. GBTC Comparison: Fees and Performance ##### Performance Metrics - FBTC's performance is tied directly to the spot price of Bitcoin, providing a more direct correlation with Bitcoin's worth. - GBTC's performance is also correlated with Bitcoin's price but is subject to premiums or discounts based on market demand for the shares. ##### Fees Impact - FBTC has a competitive fee structure that is attractive for cost-conscious investors. - GBTC's higher fees cater to the Trust's direct exposure to Bitcoin and additional security measures. ### Spot Bitcoin ETF Fees and Holdings (As of July 26th, 2024) ##### Fidelity Wise Origin Bitcoin Trust (FBTC) - **Fee**: 0.25% (0% fee waived until Aug. 1, 2024) - **BTC Holdings**: 181,087 BTC in self-custody - [More Information](https://institutional.fidelity.com/advisors/investment-solutions/asset-classes/alternatives/fidelity-wise-origin-bitcoin-fund) ##### Grayscale Bitcoin Trust (GBTC) - **Fee**: 1.5% - **BTC Holdings**: 270,770 BTC with Coinbase - Held 619K Bitcoin on launch - [More Information](https://etfs.grayscale.com/gbtc) ##### Grayscale Bitcoin Mini Trust - **Fee:** [0.15%](https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm) - **GBTC:** 10% of Grayscale Bitcoin Trust (GBTC) - assets invested in the Bitcoin Mini Trust (BTC) - [More Information](https://www.grayscale.com/blog/general-updates/what-is-grayscale-bitcoin-mini-trust) ### Net Bitcoin ETF Inflows **Total Volume**: $1.67B **Total Marketcap**: $61.25B **Total AUM**: $52.14B **Last Update**: [July 26, 2024 - 1:56 PM UTC](https://www.coinglass.com/bitcoin-etf) Bitcoin ETF fee information is updated daily. For the latest updates, click [here](https://heyapollo.com/bitcoin-tracker/overview). ##### Q1 Spot Bitcoin ETF Key Takeaways - The initial three months of trading for spot Bitcoin ETFs have ended, with the eleven offerings approved by the SEC collectively attracting about $12.1 billion in inflows. - Blackrock's IBIT has emerged as the leading beneficiary, securing $13.9 billion in flows since it started trading in January. - **IBIT is the fastest growing ETF in the history of ETFs.** - On March 27th, BlackRock CEO Larry Fink appeared on Fox Business to discuss the wild success of its spot Bitcoin ETF product, IBIT. **Fink's spot Bitcoin ETF comments begin at the 10 minute, 15 second mark.** - More than 30 Bitcoin ETFs collectively [owned](https://www.coinglass.com/bitcoin-etf) 1,002,343 BTC as of May 24. - BlackRock (IBIT) became the [fastest](https://malaysia.news.yahoo.com/bitcoin-etfs-resume-inflow-winning-180801483.html) ETF to reach $20B - added Bitcoin to its Strategic Income and Strategic Global Bond Funds. - BlackRock's iShares Bitcoin Trust has [become](https://www.reuters.com/technology/blackrocks-etf-becomes-largest-bitcoin-fund-world-bloomberg-news-reports-2024-05-29/#:~:text=May%2029%20(Reuters)%20%2D%20BlackRock's,Bloomberg%20News%20reported%20on%20Wednesday.) the world's largest Bitcoin fund, amassing nearly $20 billion in assets since its U.S. listing in January. [Video](https://www.youtube.com/watch?v=6zEJrQJKJCg) ### Bitcoin ETF Disclosure's - **Millennium Management** - [Total](https://www.sec.gov/Archives/edgar/data/1273087/000127308724000071/0001273087-24-000071.txt) investment: $1.9 billion - $844.2 million in BlackRock's iShares Bitcoin Trust (IBIT) - $806.7 million in Fidelity's Wise Origin Bitcoin Fund (FBTC) - $202 million in Grayscale Bitcoin Trust (GBTC) - $45.0 million in ARK 21Shares Bitcoin ETF (ARKB) - $44.7 million in Bitwise Bitcoin ETF (BITB) - **Schonfeld Strategic Advisors** - Manages $13 billion in assets - $248 million in BlackRock's ETF - $231.8 million in Fidelity's fund - [Total](https://www.sec.gov/Archives/edgar/data/895421/000089542124000355/0000895421-24-000355-index.html) investment: $479 million - **Susquehanna International Group** - [Total](https://www.sec.gov/Archives/edgar/data/1446194/000144619424000004/0001446194-24-000004.txt) investment: +$1.8 billion - **Morgan Stanley** - $269.9 million in [GBTC](https://www.sec.gov/Archives/edgar/data/895421/000089542124000355/0000895421-24-000355-index.html) - **Aristeia Capital** - $163.4 million in IBIT - [**Wisconsin Investment Board** ](https://www.wpr.org/news/wisconsin-pension-fund-bitcoin) - $162 million in [IBIT, GBTC](https://www.sec.gov/Archives/edgar/data/854157/000106299324010116/xslForm13F_X02/form13fInfoTable.xml) - **Other major investors** - [JPMorgan](https://x.com/JSeyff/status/1789026505013506157) - [Wells Fargo](https://www.sec.gov/Archives/edgar/data/72971/000007297124000139/0000072971-24-000139.txt) - UBS - [BNP Paribas](https://www.sec.gov/Archives/edgar/data/1166588/000116658824000009/0001166588-24-000009-index.htm) - Royal Bank of Canada ### Additional Investment Considerations When deciding between FBTC and GBTC, several factors must be considered to determine which investment vehicle best suits your needs and investment strategy. **Management Fees** - **FBTC:** Understand the management fee FBTC charges and how it impacts your overall returns. - **GBTC:** Compare the fees associated with GBTC, which are often higher. Higher fees can erode your returns, especially if you plan a long-term investment. **Tracking Performance** - **FBTC:** Evaluate how closely FBTC tracks the price of Bitcoin. Consider any potential tracking errors and how they might affect your investment. - **GBTC:** Assess GBTC's historical performance about Bitcoin's price. GBTC has sometimes traded at significant premiums or discounts to its net asset value (NAV). **Liquidity and Trading** - **FBTC:** Check the liquidity of FBTC shares and how easily they can be bought or sold on traditional stock exchanges. Higher liquidity generally means easier trading. - **GBTC:** Consider the liquidity of GBTC shares, which can vary. Understanding market demand and trading volumes can help you plan your entry and exit strategies. **Custody and Security** - **FBTC:** Review the security measures and custodial arrangements for the Bitcoin held by FBTC. Secure custody is crucial to protect your investment. - **GBTC:** Investigate GBTC's custodial practices to ensure your assets are safely stored and protected against potential security threats. **Regulatory Environment** - **FBTC:** Consider the regulatory framework governing FBTC, including any recent changes or anticipated regulations that could impact the fund. - **GBTC:** Examine the regulatory landscape for GBTC and how it complies with existing regulations. Regulatory clarity can provide investors with peace of mind. **Market Sentiment and Premiums** - **FBTC:** Be aware of how FBTC's share price may be traded about its NAV. Market sentiment can influence whether FBTC trades at a premium or discount. - **GBTC:** Historically, GBTC has experienced significant premiums and discounts. Understanding these market dynamics can help you make informed decisions about timing your investments. *By carefully evaluating these factors, you can decide whether FBTC or GBTC is the right choice for your Bitcoin investment needs.* ### Conclusion: FBTC vs. GBTC This guide was designed to help investors navigate the complex landscape of Bitcoin ETFs, providing insights into the unique characteristics, benefits, and drawbacks of FBTC and GBTC. **FBTC and GBTC cater to different investor needs and risk appetites...**  - *FBTC is preferable for those seeking an ETF structure with competitive fees and direct exposure to Bitcoin.*  - *GBTC suits investors seeking exposure to Bitcoin's price movements despite potentially higher costs and the risk of trading at premiums or discounts.* With all the complexities and downsides, is there **a great alternative to FBTC and GBTC?**  ***YES!*** Don't settle for mere exposure through a financial product like FBTC or GBTC!  Whether you invest through [Swan's IRA](https://www.swanbitcoin.com/bitcoin-ira/) product, or just recurring buys - Swan ensures you are in control of your Bitcoin journey and own actual Bitcoin. If you are looking to own real Bitcoin and self custody or invest in a tax-free BTC IRA, Swan is your best choice! ##### The Swan Advantage - [No recurring fee for personal, business, or trust Swan accounts](https://www.swanbitcoin.com/fees/) - [No fees first, or next $10k BTC purchases](https://www.swanbitcoin.com/fees/) - [Customer service](https://www.swanbitcoin.com/swan-customer-support/) - [Expert access](https://www.swanbitcoin.com/advisor/) - [Education resources](https://welcome.swanbitcoin.com/) - [Swan Media](https://www.youtube.com/@Swan_Bitcoin) - [Community - AMA live streams and in-person events](https://www.swanbitcoin.com/private/) - Self-custody or multi-sig [Swan Vault](https://www.swanbitcoin.com/vault/) has a low recurring fee ![](https://www.datocms-assets.com/56652/1703369143-swan-featured.png?auto=format) Secure your financial future with real Bitcoin from [Swan Bitcoin](https://www.swanbitcoin.com/). For more information, contact [Terrence Yang, Swan Managing Director](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details. [Join](https://www.swanbitcoin.com/drewswanbitcoin/) Swan Bitcoin today! For more information on FBTC and GBTC, you can visit their respective pages on Fidelity and Grayscale​ ([Fidelity](https://www.fidelity.com/etfs/fbtc))​​ ([Stock Analysis](https://stockanalysis.com/etf/fbtc/))​​ ([ETF.com](https://www.etf.com/FBTC))​. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Top 5 Benefits of Bitcoin Dollar-Cost Averaging URL: https://www.swanbitcoin.com/investing/dollar-cost-average/ Bitcoin offers a strategic approach to investing. Here are the top 5 benefits: it reduces volatility risk, simplifies investing, lowers emotional stress, fosters discipline, and enables long-term growth. --- **Mickey Koss and Drew** · July 7, 2024 · Updated July 26, 2024 Timing Bitcoin trades can be an extremely stressful endeavor; why not take the pressure off with dollar-cost averaging?  ***TL;DR****: Bitcoin dollar-cost averaging (DCA) is a strategic investment approach that involves regularly investing a fixed amount in Bitcoin regardless of its price. This method reduces the risk associated with market volatility, simplifies the investment process by eliminating the need to time the market, lowers emotional stress by promoting a steady investment mindset, fosters disciplined saving and investing habits, and supports long-term growth by leveraging Bitcoin's potential for appreciation over time.* ### Quick Basics of Bitcoin Dollar-Cost Averaging - **Dollar Cost Averaging (DCA)** is an investment strategy where you invest a fixed amount of money into an asset, such as Bitcoin, at regular intervals, regardless of its price. - **Recurring Buys**: A dollar-cost average (DCA) strategy is also commonly referred to as '*recurring buys or puchase.'* - **Consistent Investment**: DCA involves investing a fixed amount of money into Bitcoin at regular intervals, regardless of the price. This approach helps mitigate the impact of market volatility. - **Reduced Risk**: By spreading out investments over time, DCA reduces the risk of investing a large amount in Bitcoin at a market peak, thereby lowering the potential for significant losses. - **Simplicity and Discipline**: DCA simplifies investment, removing the need to time the market. Investors set a schedule (daily, weekly, monthly) and stick to it, promoting disciplined investment habits. - **Cost Averaging**: Over time, DCA can help achieve a lower average cost per Bitcoin unit compared to making a one-time purchase, as it takes advantage of market fluctuations. - **Emotional Management**: This strategy helps manage emotions by avoiding impulsive decisions based on short-term market movements, allowing investors to focus on long-term goals. ##### *Bottomline: Bitcoin dollar-cost averaging offers a balanced and systematic approach to investing in Bitcoin.* ### Recurring Buys with Swan Bitcoin: A Step-by-Step Guide 1. **Sign up with Swan** - Visit the Swan Bitcoin website. - Click on the *"Get Started"* or *"Sign Up"* button. - Enter your email address to create an account. 2. **Log in with your link** - After signing up, you will receive a *"link"* in your email. - Open your email and click the link to log in to your Swan account. 3. **Verify your identity** - Follow the on-screen prompts to verify your identity. - You will need to provide personal information and documentation (such as a photo ID) to comply with KYC (Know Your Customer) regulations. 4. **Link your bank account** - Once your identity is verified, proceed to link your bank account. - Provide your bank account details and authorize Swan to make transactions. 5. **Start your savings plan** - Set up your recurring buy plan by choosing the amount you want to invest and the frequency (daily, weekly, or monthly). - Confirm the details and start your automated Bitcoin savings plan. - Swan will automatically withdraw funds from your bank account and purchase Bitcoin according to your specified schedule. ***NOTE****: DCA'ing Bitcoin is a similar strategy to investors who automatically reinvest dividends from stocks into buying more shares in several ways:* **Consistency** - **Dividend Reinvestment**: Automatically reinvesting dividends ensures that you consistently put any earned dividends back into the stock, buying more shares regularly whenever dividends are paid. - **DCA in Bitcoin**: With DCA, you invest a fixed amount of money into Bitcoin at regular intervals (e.g., weekly, monthly), regardless of the price. **Cost Averaging** - **Dividend Reinvestment**: By reinvesting dividends automatically, you buy shares at different price points, which can average out your cost basis over time. - **DCA in Bitcoin**: Similarly, by purchasing Bitcoin regularly, you buy at various prices, averaging your cost basis and potentially mitigating the impact of market volatility. **Compounding Growth** - **Dividend Reinvestment**: Reinvesting dividends helps compound growth since the dividends buy more shares, which can earn more dividends. - **DCA in Bitcoin**: Regular investments in Bitcoin can lead to compounding growth if the value of Bitcoin increases over time. **Passive Strategy** - **Dividend Reinvestment**: This is a passive investment strategy where the reinvestment happens automatically, requiring no active management. - **DCA in Bitcoin**: DCA is also a passive strategy. You set a schedule and amount to invest, automating the process to avoid market timing. **Long-term Focus** - **Dividend Reinvestment**: This strategy is typically part of a long-term investment plan aimed at growing the value of your portfolio over time. - **DCA in Bitcoin**: DCA is often employed by those looking to build their Bitcoin holdings over the long term without worrying about short-term price fluctuations. Both strategies leverage regular and automatic investments to reduce the impact of market volatility and focus on gradual growth over time. ### Brief History of Bitcoin Volatility Bitcoin is well known for its volatility. Typically initiated after a supply issuance halving, Bitcoin bull markets have exceeded 100x returns, contrasted against bear market corrections that can dip as low as 70-80%.  How does one choose an entry point without losing one's mind (or one's pants)?  There are two main ways of investing - lump sum and dollar cost averaging.  - **Lump Sum Investing**: involves taking your desired allocation of a particular asset and throwing it all in at once.  - **Dollar Cost Averaging:** spreads the investment, allowing individuals to build their positions over time.  Swan has extensively analyzed the difference between lump sum and dollar cost averaging. Generally speaking, a lump sum is[ mathematically superior,](https://nakamotoportfolio.com/static/docs/DCA_Lumpsum.pdf) but that doesn’t account for the toll volatility can take on the human psyche. ***NOTE****: Most of the time, Bitcoin goes sideways or down. It's only a select few days that Bitcoin goes up, but when it does, it really goes up. It's best to avoid trying to time those things.* We'll discuss this in more detail below.  Dollar-cost averaging shines during the manic price run-ups that Bitcoin has experienced every few years. Often characterized as bubbles, these run-ups are unpredictable, and nobody really knows if, when, or how far the price will fall following an exponential trend.  This following chart demonstrates, however, that when you buy the top with a lump sum purchase, it takes as long as 1,227 days to return to your break-even point. [![](https://www.datocms-assets.com/56652/1720386003-1678913475-04-dca-strategies-outperformance-compared-lump-sum.svg)](https://www.swanbitcoin.com/investing/dollar-cost-averaging-vs-lump-sum-investing/#:~:text=Which%20Recurring%20Buying%20Strategy%20Outperformed%3F) Swan Bitcoin Talk about some severe pain.  On the flip side -  if you resist the urge to FOMO all-in to Bitcoin in a bull market, your dollar cost average has the potential to buy dip after dip… all the way down the other side of that price peak. The result is a potentially significant reduction in the days it takes to break even after a bear market correction.   Swan [analysis](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/#:~:text=Which%20Recurring%20Buying%20Strategy%20Outperformed%3F) illuminates just how risky trying to time the market can be. The chart above shows the 15 highest 3-day return periods for Bitcoin from 2018-2023. [![](https://www.datocms-assets.com/56652/1719956544-15-day.png?auto=format)](https://www.swanbitcoin.com/dollar-cost-averaging-vs-lump-sum-investing/#:~:text=Which%20Recurring%20Buying%20Strategy%20Outperformed%3F) Swan Bitcoin That’s 45 days out of 1,826 - or only 2.5% of the time! - *“If an investor had missed these 15 largest 3-day periods during this time period, their total return was -84.6%. This was during a period when the total return of Bitcoin increased by +127%!.”* By dollar-cost averaging, you avoid the age-old decision pitfall of trying to time the market and missing out on the gains. Trading is ultimately a loser game, with very few participants making money. Time in the market is much more important than timing the market. ##### Benefit 3: Disciplined Investing Remember that gym you signed up for after your New Year's resolution 2017?  It took you about 3 and a half years to realize you were still paying for the membership even though you only went for the first two months. That's basically dollar cost averaging—with the caveat that it's actually a productive expense to forget about.  Dollar-cost averaging promotes disciplined investing by taking the discipline out of it entirely. Set it and forget it, then let your money work for you. DCA also removes emotional baggage from the equation - provided you have the discipline to stick to your plan.  Generally speaking - the purpose of a plan is to make decisions ahead of time so you don’t have to think as hard. **Imagine this scenario:** - Bitcoin hit $69k for the second time this year. Every analyst is calling for an imminent run to $100k by the end of the year.  - Bitcoin dips to the $50k mark from there. Influencers are adamant it’s a temporary and healthy price correction before continuing on the moon trajectory.  What’s a guy to do?  1. Stick to the DCA plan and do nothing?  2. FOMO buy the dip with the rest of your liquid savings? If you said 2, unfortunately, you were in for a lot of pain. Bitcoin continued to grind lower for 12 straight months, eventually hitting as low as $16k. DCA for the win in this scenario. Emotional FOMO buyers be forewarned. **Encouraging long-term investment strategies** Schwab studies also validate these claims - [timing the market](https://smartasset.com/investing/schwab-research-timing-the-market) is proven repeatedly to be a fool’s errand. Of course, timing the market ideally would increase your returns - that’s an obvious conclusion, but how hard is it actually to do that.  As mentioned above, it only took 45 days out of 5 years to flip your returns from 127% to -84.6%. **That’s** [**the magic of DCA'ing Bitcoin**](https://www.swanbitcoin.com/bitcoin-university-series/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/)**.** You can get outsized returns from effectively doing nothing. Set it and quite literally forget it. [Video](https://www.youtube.com/watch?v=CucPRlAkBfg) ##### Benefit 4: Potential for Higher Returns - Explanation of how dollar-cost averaging can potentially result in higher returns - Taking advantage of market dips and fluctuations - Examples of successful dollar-cost averaging strategies Dollar-cost averaging does not necessarily have higher returns than lump sum investing; it's more of a tool to manage price risk and emotions and help build your position in a way that won't keep you up at night. That being said, DCA's performance speaks for itself through cost-weighted autoregulation for those of us without six-plus figures of cash to throw around at a time.  Check out this [Swan research piece](https://nakamotoportfolio.com/static/docs/DCA_Lumpsum.pdf) on Lump Sum vs. DCA investing for an in-depth analysis of optimal strategies. For those seeking the cliff notes version- here are the key points:  - In general, lump-sum strategies outperform DCA strategies, except when individuals invest all their available funds right before an extended period of downward price action.  - The longer an investor took to deploy capital, the more they underperformed compared to a lump-sum investment. ##### Benefit 5: Flexibility Dollar-cost averaging adds flexibility to your portfolio by preventing you from getting in too deep, too fast. Let's illustrate this using the classic Davey vs. Ben example:  **Davey** - Davey decides to get in on that Bitcoin price action before it shoots off to the moon and never returns again. - He invests 10% of his net worth in Bitcoin in a single transaction. - Later that week, Bitcoin dropped 15% in a day over unfounded regulatory concerns. Davey has a panic attack and sells his entire position at a loss. **Ben** - Ben decides to allocate strategically to Bitcoin to preserve his family’s wealth and purchasing power for generations. - Ben starts a dollar-cost averaging plan amidst the early 2021 bull market hype. - Ben feels the pull of FOMO as Bitcoin takes off towards all-time highs but resists the urge to break from his plan. - Ben buys the 2021 top. - Ben buys the 2023 bottom. Ben buys every price in between the two and beyond. It is now 2024, and Bitcoin is hovering below all-time highs, but Ben’s investment is significantly in the green. He’s inadvertently over-allocated to Bitcoin based on his original goals. Still, he understands what he owns now and continues to accumulate regardless.  ![](https://www.datocms-assets.com/56652/1720386328-weekly-dca.png?auto=format) ![](https://www.datocms-assets.com/56652/1720386363-lump-sum.png?auto=format) ### Closing Tips 1. Earn Free Bitcoin as part of your DCA strategy. [Learn more](https://www.swanbitcoin.com/education/earn-free-bitcoin/). 2. Start your children out young and set up a recurring buy plan and start [stacking sats](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/) with Swan. By the time they reach 18, the [price](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/) could be in $100,000's. 3. Don't use [Coinbase](https://www.swanbitcoin.com/education/bitcoin-exchanges/) for DCA. You don't own the BTC in the account and Coinbase is consistently in [trouble](https://www.swanbitcoin.com/industry/is-coinbase-in-trouble/) with the U.S. government. Learn how to delete it in 3 simple steps [here](https://www.swanbitcoin.com/education/delete-coinbase-in-3-easy-steps/). #### Swan Bitcoin Customer Reviews **Fees**: [0.99%* ](https://www.swanbitcoin.com/fees/)**Custody Provider**: [BitGo Trust Company ](https://www.bitgo.com/swan/)**Trustpilot Rating**: [4.6 / 5 out of 1,136 reviews ](https://trustpilot.com/review/swanbitcoin.com)**Apple App Store**: [4.8 / 5 out of 1.5k reviews ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)**Google Play Store**: [4.4 / 5 out of 619 reviews, 50,000+ downloads](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1) #### Coinbase Customer Reviews **Account Minimum:** $2 **Investment Options:** [+150 alternative cryptocurrencies](https://www.coinbase.com/explore) **Fees:** [0.5% to 4.5%](https://help.coinbase.com/en/coinbase/trading-and-funding/pricing-and-fees/fees) **Custody Provider:** [Coinbase Custody Trust](https://www.coinbase.com/prime/custody) **Trustpilot Rating:** [1.8 / 5 from 9,351 reviews ](https://www.trustpilot.com/review/coinbase.com)**Apple Store App**: [4.7 / 5 from +1.7M reviews (#13 in Finance) ](https://apps.apple.com/us/app/coinbase-buy-bitcoin-ether/id886427730) **Google Play Store**: [4.5 / 5 from +839k reviews, +10M downloads](https://play.google.com/store/apps/details?id=com.coinbase.android&hl=en_US&gl=US) Keep those hands diamond - be a Bitcoin Ben and just say no to FOMO. **Adjusting investment amounts based on personal financial situation** Dollar-cost averaging also allows flexibility based on personal financial circumstances. Though Bitcoin is a great long-term store of value, I wouldn’t necessarily classify it as a savings account just yet. If you allocate too much and need some cash, you could sustain some losses in the short term. If you build your position with patience through dollar-cost averaging, you can always put it on pause to address emergencies without having to panic sell.  [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today! ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # 5 Top Safe Ways to Earn Free Bitcoin in 2024 - Swan Bitcoin URL: https://www.swanbitcoin.com/education/earn-free-bitcoin/ What if I told you there are ways to earn extra Bitcoin or get off zero if you don’t own any? Whether you are just starting to stack sats or a Bitcoin veteran, here are 5 ways to add more BTC to your freedom stash. --- **Mickey Koss and Drew** · July 1, 2024 · Updated July 26, 2024 In the summer of 2021, we published our original [5 Top Ways to Earn Free Bitcoin](https://www.swanbitcoin.com/5-ways-to-earn-bitcoin/). Three years later, we are back with an updated Top 5 list for June of 2024. Let's get into it... ### Benefits of earning free Bitcoin in 2024  Benefits of earning free Bitcoin in 2024 are twofold: 1. **Riskless initial exposure:** Bitcoin can be a big leap for some—its legendary volatility can scare the pants off even the most seasoned investors. Starting with small allocations earned for free, you can begin your Bitcoin journey without fear of losing your pants to emotional decision-making.  2. **Skin in the game**: It's hard to learn about Bitcoin without having skin in the game. Once you start earning and accumulating Bitcoin, you will be much more incentivized to actually dive in and see what it's all about. As many big name Bitcoiners like to say: Bitcoin allocations scale with knowledge and understanding.  ### 1. Bitcoin Faucets  **Earning Poten­tial:** Low **Category:** Miscellaneous **Location:** Global **Company:** None **Cost:** Free ![](https://www.datocms-assets.com/56652/1719336959-bitcoin-faucets.webp?auto=format) **How do Bitcoin faucets work?**  Bitcoin faucets are websites or applications that dispense small amounts of Bitcoin, known as Satoshis, to users in exchange for completing simple tasks. These tasks include completing: - surveys - viewing ads - playing games - watching videos **Fun Fact**: The first Bitcoin faucet was in 2011. The original Bitcoin faucet [used](https://www.reddit.com/r/Bitcoin/comments/6vsmyu/the_original_bitcoin_faucet_used_to_give_away_5/) to give away 5 whole Bitcoin - worth about 40 cents USD each at the time. **5 BTC is Worth**: $336,209.50 today **Pros and cons of using Bitcoin faucets**  **Pros**: - Bitcoin faucets allow you to earn small amounts of Bitcoin without putting your hard-earned money to work. - A great place to learn about Bitcoin and market behavior without fearing volatility and loss. **Cons**: - Bitcoin earnings are relatively meager compared to the time spent completing these tasks. - Risk of encountering scams, with some faucets designed to siphon personal information. - If faucets do not use the Lightning Network, there is also a risk that your small stack of Bitcoin could be stuck on the platform indefinitely due to network fees.  **Tips for maximizing earnings from Bitcoin faucets**  1. To maximize earnings, users may want to try many different applications to determine which are most worth their time expenditures. 2. Consistency is key to stacking enough to withdraw on Bitcoin’s base network, so if you see one advertising using the Lightning Network, you can reduce your risk of getting stuck. Here’s a list of legitimate Bitcoin faucets we’ve compiled: - [Cointiply](https://cointiply.com): This is one of the most popular Bitcoin faucets, offering multiple ways to earn Bitcoin. It also has a loyalty bonus and a high payout system​. - [FreeBitco.in](https://freebitco.in): This site offers a chance to earn free Bitcoin every hour, up to $200 worth of BTC. - [Faucet Crypto](https://faucetcrypto.com): It has a loyalty program and supports over 25 coins for payouts​. - [Bitcoinker](https://bitcoinker.com): This faucet rewards users for solving captcha puzzles and allows frequent claims, collectively offering around 100,000 Satoshis every five minutes​. - [Fire Faucet](https://firefaucet.win): Users can earn auto rewards by viewing video ads and completing daily surveys. It supports multiple cryptocurrencies and has been operational for over six years​.  - [sMiles:](https://www.smilesbitcoin.com/) This application offers Bitcoin rewards for walking, shopping, playing games, and taking surveys.  ### 2. Writing, Blogging, Microtasks, Freelancing  **Earning Poten­tial:** Low - High **Category:**  Full-time, Part-time, Contrac­tors **Location:** USA/Global **Company:** [BitcoinerJobs](https://bitcoinerjobs.co/) **Cost:** Free ![](https://www.datocms-assets.com/56652/1719336851-bitcoiner_jobs_cover.jpeg?auto=format) **What are microtasks and freelancing?**  - Small and simple tasks that can be completed quickly, typically through online platforms. - Freelancing refers to independent work in which individuals offer specialized skills and services on a per-task or project basis.  **How to find micro tasks and freelance opportunities that pay in Bitcoin**  We Are ₿itcoiners, We Are Satoshi. Bitcoiner Jobs helps connect Bitcoiners with Bitcoin-only compa­nies. Many of these jobs will pay you in Bitcoin when hired.  [Apply Here.](http://bitcoinerjobs.co/) **There are a couple ways to achieve this**: Freelance contracts through a Bitcoin company and/or getting hired by a Bitcoin company. Whether you’re a hairstylist, social media manager, or handyman, you can now earn Bitcoin for your services. Some recom­mended job sites to check out are: - [Bitcoiner Jobs](https://bitcoinerjobs.co/) - [Angel­List](https://angel.co/bitcoin) If you’re a freelancer, create an account on platforms like [Cash App](https://cash.app/) and have customers send you Bitcoin through the app. Either have them scan your QR code or use the tag associ­ated with your profile (this will begin with $). Trans­ac­tions are instan­ta­neous since every­thing happens within Cash App’s internal system.  All jobs listed stem from bona fide Bitcoin-only companies. Most, if not all, are willing to pay in Bitcoin, with many freelance and full-time gigs to choose from.  **Pros and cons of earning Bitcoin through micro tasks and freelancing** **Pros**: - Provide a low barrier to starting your stack with a lot of flexibility compared to traditional full-time roles. - Many different jobs and tasks to choose from, and it may be an excellent way to start dipping your toes into the space and build a Bitcoin resume.  **Cons**:  - Do not provide the same protections and benefits as traditional employment avenues - you’re not going to be seeing health insurance and paid time off in this sector. - Payments are taxable, and with Bitcoin’s volatility, earners need to plan ahead, or they may see themselves selling at a loss in order to cover unexpected tax burdens. - Typically remote in nature, individuals must compete on a global scale, which, in turn, can drive down earnings potential.  ### 3. Affiliate Marketing  **Earning Poten­tial:** Medium **Category:** Cash-back, Sats-back **Location:** USA **Company:** [Lolli](https://www.lolli.com/) / [Fold](https://foldapp.com/) **Cost:** Free ![](https://www.datocms-assets.com/56652/1719336697-lolli-fold.png?auto=format) **What is affiliate marketing, and how does it work?**  Affiliate marketing apps like Lolli and Fold are great ways to earn free Bitcoin. Lolli earns you Bitcoin cash back by linking your credit card and activating cash-back boosts when you spend money with certain companies. They also allow you to earn Bitcoin cash back by shopping with their partner companies through the app. [Download Chrome Exten­sion.](http://lolli.com/) In addition to the free daily stack on the Lolli-app, earn Bitcoin back on purchases by [adding their exten­sion to your browser](https://www.lolli.com/). When you’re on a Lolli partner site, the exten­sion will turn green to signal it’s active (stay logged in to see this). The best part of the exten­sion is free.  Here are some of the retailers that partner with them: - Expedia - Chewy - Sephora - Nike - Adidas - Bloomingdale’s Fold users earn cash back by purchasing gift cards or using Fold’s prepaid debit card. Both applications also have a daily reward function, which allows you to earn small amounts of Bitcoin by simply pressing a button.  **How to find and join affiliate programs that pay in Bitcoin**  [Lolli ](https://www.lolli.com/)and [Fold ](https://foldapp.com/)are easy and free to join. Simply visit their websites or download their applications and sign up - then you’re off to the races with stacking.  **Pros and cons of earning Bitcoin through affiliate marketing**  **Pros**: - Lolli and Fold allow you to earn Bitcoin cash back on purchases you were already going to make, making it perhaps the easiest way to earn free Bitcoin we’ve discussed yet.  **Cons**: - The library of partner companies changes frequently and may be difficult to track. - Boosts can only be activated prior to spending, so if you forget to go through the apps, you can lose out on earnings even if your cards are linked. ### 4. Referral Programs  **Earning Poten­tial:** Low - High **Category:** Cash-back, Sats-back **Location:** Global **Company:** [Swan Bitcoin](https://www.swanbitcoin.com/drewswanbitcoin/) **Cost:** Free ![](https://www.datocms-assets.com/56652/1713888505-swanbitcoin-swanforce.png?auto=format) **How do referral programs work?**  Referral programs generally involve companies creating a unique code or link for their customers to use to refer others to their product or service. [Swan Force](https://help.swanbitcoin.com/hc/en-us/articles/17382395564823-What-is-Swan-Force), for example, requires registration but allows Swans to earn Bitcoin every time they successfully refer someone to the site.  *"If anyone signs up with Swan Bitcoin through your promotional link, they'll get $10 of free BTC (an offer available only to U.S. residents), and you will earn 25% of their Bitcoin fees for their first year of Bitcoin purchases."* **Tips for finding and participating in referral programs for Bitcoin**  **Pro Tip**: In addition to Swan Force, Lolli and Fold have their own referral programs, allowing you and your friends to earn more Bitcoin when they join the team.  ### 5. Online Games  **Earning Poten­tial:** Low **Category:** Miscellaneous **Location:** Global **Company:** [Zebedee](https://zbd.gg/) **Cost:** Free ![](https://www.datocms-assets.com/56652/1719336242-zee.jpg?auto=format) **How to earn free Bitcoin through online games** Earning Bitcoin through online gaming has become increasingly popular, offering gamers a way to receive Bitcoin rewards for their playtime and achievements. One of the standout companies in this space is [Zebedee](https://zbd.gg/), which has significantly innovated how gamers can earn Bitcoin. Zebedee's app stands out with its innovative feature that rewards users with Bitcoin for playing over 100 eligible mobile games. This integration not only allows gamers to earn Bitcoin by simply engaging with their favorite games but also marks a substantial step towards the fusion of gaming and digital currencies. **Risks and benefits of using online games to earn Bitcoin**  **Benefits**: - If you're into gaming to relieve some stress occasionally, why not try to earn some Bitcoin while you're at it? - Adding hard money may just give you the excitement boost you need after a hard day's work in the Matrix. And who knows? You may learn something about Bitcoin while you're at it.   **Risks**: - Gaming addiction is one of the most serious conditions preventing large muscles and suntans in modern Western society. - Be sure you're paying attention to your health trying to stack those free sats. - Also, never download games from an unknown source - they may prove to be privacy and security concerns on your devices down the road.  **Tips for responsible and profitable use of online games for Bitcoin**  If you're going to use games to earn Bitcoin, treat it as an exploration rather than a job. Remember, there's an entire world of grass and sunlight out there just waiting to be touched. Buy. Hodl. Withdraw to self custody. Repeat ad-infinitum. This is your final warning.  [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) and HODL with Swan today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Top-Rated Bitcoin IRA (Trusted by 120K+ Investors) URL: https://www.swanbitcoin.com/industry/bitcoin-iras/ Bitcoin halving is done, it’s time to invest in Bitcoin IRAs. We share the top 3 Bitcoin-only IRAs TrustPilot ratings, customer reviews and fine print to consider as of July 26th, 2024. --- **Matt Ruby** · July 10, 2024 · Updated July 26, 2024 Bitcoin IRAs allow you to invest in Bitcoin using retirement savings without purchasing or holding Bitcoin assets. You get the benefits of a Roth/traditional IRA account but with the upside of Bitcoin.  Crypto IRAs typically allow you to invest in different altcoins (non-Bitcoin) as part of your retirement savings strategy. This is risky since these digital assets are often funded through presale token agreements, which can have hazy legal definitions. There are plenty of cryptocurrency IRAs, but only a handful of *“Bitcoin-only”* IRAs (i.e., accounts in which you can invest exclusively in BTC). Bitcoin-only IRAs provide Bitcoin stability and growth potential without the added risks associated with cryptocurrency altcoins. In this article, we share the top 3 Bitcoin-only IRAs for investors along with their Trustpilot ratings, customer reviews, and all the fine print details you need to know. Ready? Let’s roll… ### Top 3 Bitcoin IRAs for 2024 Finding a Bitcoin-only IRA that purely invests in Bitcoin is actually pretty hard. Most IRAs try to market other risky altcoins to you and allow you to invest in many different cryptocurrencies.  Below are our top picks for Bitcoin-only IRAs to consider this summer. Feel free to use the jump links below to jump to the specific Bitcoin-only IRA: 1. [Swan Bitcoin  - TrustPilot Rating: 4.6 / 5](https://www.trustpilot.com/review/swanbitcoin.com) 2. [Unchained Capital](https://www.swanbitcoin.com/top-3-bitcoin-only-iras/#Unchained-Capital--3-2-5-Trustpilot-Rating) - [TrustPilot Rating: 3.2 / 5](https://www.swanbitcoin.com/top-3-bitcoin-only-iras/#Swan-Bitcoin--4-5-5-Trustpilot-Rating) 3. [River Financial - No Ratings on Trustpilot yet](https://www.swanbitcoin.com/top-3-bitcoin-only-iras/#River-Financial-No-Trustpilot-Rating) Investing in Bitcoin-only IRAs provides Bitcoin stability and growth potential without the added risks associated with altcoins. By focusing on Bitcoin, investors can enjoy the benefits of a traditional IRA while leveraging the unique advantages of the leading cryptocurrency. In this article, we review the top 3 Bitcoin IRAs for investors in 2024 after [the Bitcoin Halving](https://www.investopedia.com/bitcoin-halving-4843769) (i.e., when the number of new Bitcoins issued (rewarded) is cut in half). ### What is a Bitcoin IRA? A Bitcoin IRA is a type of self-directed IRA designed to hold cryptocurrency. [Forbes](https://www.forbes.com/advisor/investing/cryptocurrency/bitcoin-ira/): *"Self-directed IRAs let you invest in alternative assets like cryptocurrency, real estate, precious metals, and collectibles, all of which are excluded from conventional IRAs. The Retirement Industry Trust Association (RITA), a self-directed IRA industry group, estimates that 3% to 5% of all IRAs are invested in alternative assets."* Like their *"regular"* counterparts, Bitcoin IRAs come in both traditional and Roth flavors. You can defer taxes on your contributions until you withdraw or contribute after-tax dollars to a Roth account and enjoy tax-free growth. ##### Reasons to Invest in a Bitcoin IRA **ROI**: Bitcoin's robust performance is key. Yes, it can be volatile, but it has also been the best-performing asset class for eight out of the past eleven years. Bitcoin's historical returns for various holding periods (as of the start of 2024): - **1 year: 156.62% return** - **3 years: 50.00% return** - **5 years: 999.77% return** - **7 years: 5,147.10% return** - **10 years: 6,172.12% return** **Diversification**: Investing in Bitcoin for retirement can yield greater investment returns and provide diversification.  **Tax benefits**: Plus, you can take advantage of the tax benefits that make conventional IRAs and 401(k)s popular vehicles. ##### Reasons *Not* to Invest in a Bitcoin IRA **Volatility**: These IRAs can also introduce risk to your retirement portfolio due to Bitcoin's volatility. However, Bitcoin's volatility could also be seen as a solid reason to keep these assets within an IRA. Since early withdrawals from IRAs are subject to a penalty, investors are likelier to HODL for the long haul, regardless of price volatility. **Fees**: Setting up an account costs money. Be aware of the fees (e.g., setup, transaction, custodial, etc.) you're being charged. Platforms aren't always transparent, so do your research.  **Market shifts**: You should pay attention to the market as a whole, future Bitcoin regulatory developments, and any other news that might affect your IRA moving forward.  Alright, let's get into the top 3 Bitcoin-only IRAs... ### Swan Bitcoin ([4.6/5 Trustpilot Rating](https://www.trustpilot.com/review/swanbitcoin.com)) Swan Bitcoin is a leading Bitcoin-only IRA provider, founded in 2019 and based in Los Angeles, California. The platform is designed to simplify investing in Bitcoin for long-term retirement savings, making it accessible even to those new to cryptocurrency. ##### Swan Bitcoin Pros - **Bitcoin Focus**: Exclusively supports Bitcoin, reducing complexity and focusing on what many consider the most reliable cryptocurrency. - **Easy Setup**: Streamlined onboarding process that can be completed in just one business day. - **No Minimum Balance**: Allows investors to start with any amount, making it accessible to a wide range of investors. - **Tax Advantages**: Bitcoin IRAs held in regulated trust accounts offer tax advantages, potentially increasing the long-term benefits. - **High Ratings**: Strong ratings across Trustpilot and mobile app platforms indicate high customer satisfaction. ##### Swan Bitcoin Cons - **Limited Investment Options:** Only offers Bitcoin, which might not appeal to those looking to diversify with other cryptocurrencies. - **Geographical Availability**: While available in all 50 U.S. states, international customers must contact Swan directly, which may complicate access for some. ##### Fees - [Trading Fees](https://www.swanbitcoin.com/fees/): 0.99% for buy and sell transactions, charged directly from IRA funds. - [Zero Fees Next $10k](https://www.swanbitcoin.com/fees/): Enjoy zero fees on your first $10,000 of Bitcoin buys (or your next $10,000 for existing clients). No time limit applies to single buys, recurring buys, and IRA buys. - [Other Fees](https://www.swanbitcoin.com/fees/): No hidden fees; all management fees are transparently calculated and disclosed. ##### Custody Provider - Provider: BitGo Trust Company, a well-regarded U.S.-chartered trust that enhances security and compliance. ##### Customer Ratings ***Account Minimum:*** *No minimum balance requirements* ***Investment Options:*** *Bitcoin-only* [Fees: ](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1)[0.99%* ](https://www.swanbitcoin.com/fees/)[Custody Provider: ](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1)[BitGo Trust Company ](https://www.bitgo.com/swan/)[Trustpilot Rating: ](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1)[4.6 / 5 out of 1,138 reviews ](https://trustpilot.com/review/swanbitcoin.com)[Apple App Store: ](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1)[4.8 / 5 out of 1.5k reviews ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)[Google Play Store: ](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1)[4.5 / 5 out of 619 reviews, 50,000+ downloads](https://play.google.com/store/apps/details?id=com.swanbitcoin.android&hl=en&gl=US&pli=1) ##### Recent Developments - **Swan Vault**: This newly launched [service](https://www.swanbitcoin.com/vault/) offers self-custody solutions with features like secure key backup and inheritance planning, tailored for high-net-worth individuals. - **Swan Mining April Report**: *The Current State of Bitcoin Mining*. [Free Download](https://www.swanbitcoin.com/the-current-state-of-bitcoin-mining-april-2024/). ##### Customer Comments - [Customer](https://www.trustpilot.com/reviews/663f24c2bce5dfbbf1d6ac4f): *“The best company for buying Bitcoin. Support is great.”* - [Customer](https://apps.apple.com/us/app/swan-bitcoin-buy-save/id1576287352?see-all=reviews): *“Hard to say what I love most about Swan, is it the easy to set up dca? The automatic withdrawal to my hardware wallet? Or the easiest way to give the gift of bitcoin to a family member? All of this and a support team that has your back should you have a question.”* - [Customer](https://www.trustpilot.com/reviews/6629358c4ad64b8e94b9f3c5): *“These guys are top-notch. Passionate. Caring. Smart, Effective. I trust them wholeheartedly with my investments.”* - [Customer](https://apps.apple.com/us/app/swan-bitcoin-buy-save/id1576287352?see-all=reviews): *“Swan has been the most reliable way to buy bitcoin over the years, and their bitcoin-only mission puts them in a category of their own. They always exceed my expectations, and the app experience is no different! Swan is the only exchange I feel comfortable recommending to friends and family.”* - [Customer](https://www.trustpilot.com/reviews/66180e89285e27d1462a8ec8): *“Everyone at Swan is so helpful! Whenever I have a question, I can be sure that they will respond to my emails promptly and personably. They are always working to educate everyone more about bitcoin and make it easier to purchase it and take self-custody.”* ### Unchained Capital ([3.2/5 Trustpilot Rating](https://www.trustpilot.com/review/unchained-capital.com)) Unchained is a Bitcoin-native financial services company offering collaborative custody multi-signature vaults and loans for Bitcoin holders. ##### Pros of Unchained Capital - **Secure Investments**: Offers a Bitcoin-only IRA with investments secured through a multi-signature cold storage vault. - **Expert Custody**: Employs a collaborative custody model, enhancing security by distributing control over Bitcoin holdings. - **Specialized Service**: Focuses exclusively on Bitcoin, avoiding complications from other cryptocurrencies. - **Educational Resources**: Provides educational materials on Bitcoin and its technological foundations. ##### Cons of Unchained Capital - **Limited Options**: Only supports Bitcoin, which is not suitable for those looking to invest in other cryptocurrencies. - **Higher Fees**: Charges a 0.5% fee plus a $995 setup fee, which might be higher than some competitors. [Pricing and Fees](https://help.unchained.com/how-do-the-fees-for-the-unchained-ira-work) - **Setup Time**: Account setup may take up to five business days, which is slower than other services. ##### Fees - Unchained IRA accounts have setup and yearly fees. These fees cover the maintenance and servicing required for these accounts and are charged when you initially set up the account. - **IRA setup fee**: $745 - **Annual IRA account fee**: $250/year - [Bitcoin conversion fee](https://unchained.com/pricing) ##### Customer Insights from Trustpilot **Account Minimum:** [$6,000](https://www.unchainedcap.com/dev/product-pricing-copy) **Investment Options:** Bitcoin-only **Fees:** [0.5%, plus a $995 setup fee](https://help.unchained.com/how-do-the-fees-for-the-unchained-ira-work) **Custody Provider:** [Solera National Bank](https://help.unchained.com/who-is-solera-national-bank) **Trustpilot Rating:** [3.2 / 5 from 2 reviews ](https://www.trustpilot.com/review/unchained-capital.com)**Apple App Store**: None [ ](https://apps.apple.com/us/app/swan-bitcoin/id1576287352?see-all=reviews)**Google Play Store**: None - Feedback: Customers appreciate the security features but may find the service limited to Bitcoin restrictive. ##### Unique Solutions Offered by Unchained Capital - Provides a highly secure, Bitcoin-only IRA, using advanced security measures like collaborative custody and multi-signature cold storage. It caters to clients who prioritize Bitcoin security in their retirement planning. ##### Service Expansion - Recently raised $60 million to expand financial self-custody services [Unchained Capital Blog](https://unchained.com/blog/unchained-series-b/) ##### Customer Comments - [Customer](https://apps.apple.com/us/app/unchained-bitcoin-only/id6457364167?see-all=reviews): *"Great company, I've been a customer since 2021. Though they offer a free service, I opted for concierge onboarding and also opted for their inheritance option. I also plan to move my tradition and Roth IRAs to Unchained in the near future."* - [Customer](https://www.trustpilot.com/reviews/624c3cd0c7628b203ba327e7): *"Included photo identification as requested (California DL) only to be told they couldn't use state ID."*  - [Customer](https://www.trustpilot.com/reviews/5eecaa337dd75306b8c82e15): *"I got approved for a loan very fast."* - [Customer](https://apps.apple.com/us/app/unchained-bitcoin-only/id6457364167?see-all=reviews): *"Unchained has been the best bitcoin company in the industry. Now they have the best app! If you're looking for the world-class products and support, Unchained is for you."* - [Customer](https://apps.apple.com/us/app/unchained-bitcoin-only/id6457364167): *"Very clean app - meticulously designed for the cleanest UX to track your portfolio, view products, deposit, and trade on the go. Buying directly to cold storage from a mobile app is surreal."* ### River Financial (No Trustpilot Rating) River Financial is a Bitcoin-only financial institution catering to the needs of long-term investors. ##### Pros of River Capital - **100% full reserve custody:** All assets on River are held 1:1. River doesn't use or lend your Bitcoin. - **Multisig cold storage**: Clients' Bitcoin is kept offline in cold storage and requires multiple signatures (multisig) to identify and authorize a transaction. - **Licensed and regulated in the U.S**: River complies with all state and federal regulations.  - **Customer service**: An experienced Client Services team is available. ##### Cons of River Capital - Some customers report having their accounts suddenly canceled. - Reports of delays in withdrawing funds. - Service is only available to clients residing in the United States - Doesn't promote active trading - Minimal online reviews available (and none on Trustpilot) ##### Fees Fee considerations [mentioned by River](https://river.com/learn/investing-bitcoin-retirement-accounts/#Fee%20Considerations): - *"Adding Bitcoin to your retirement account carries fee obligations that are different from fees associated with brokerages or exchanges. Depending on the IRA provider, initial set-up fees can cost thousands of dollars. There are also recurring custody and management fees, as well as fees charged by the custodian's trading partner any time you buy or sell Bitcoin in your IRA. Custodians often justify higher fees when including Bitcoin in a retirement portfolio because they are taking on added risk and have additional reporting requirements."* ##### Customer Insights **Fees:** [0.8 - 1.2%](https://support.river.com/kb/guide/en/what-fees-does-river-charge-for-buy-and-sell-orders-09FWWqEaW5/Steps/2122041) **Custody Provider:** [100% full reserve custody, all assets on River are held 1:1](https://river.com/security#:~:text=100%25%20full%20reserve%20custody,or%20lend%20your%20Bitcoin%2C%20ever.) **Trustpilot Rating:** No Rating **Apple Store App**: [4.8 / 5 from +2.2k review](https://apps.apple.com/us/app/river-buy-bitcoin/id1536176542) **Google Play Store**: [3.6 / 5 from 112 reviews, +10,000 downloads](https://play.google.com/store/apps/details?id=com.river.riverapp&hl=en&gl=US) ##### Unique Solutions Offered by River Capital - Offers traditional banking products like joint accounts, IRAs, tax-advantaged accounts, etc. - River accounts use mandatory multi-factor authentication (TOTP or SMS), and passwords are bcrypt hashed with a work factor of 14. - No third parties: River's custody systems were built from the ground up to maximize security and minimize dependence on third parties. - Bitcoin keys are stored in multi-sig cold storage in geographically dispersed locations. ##### Customer comments - [Customer](https://www.bbb.org/us/ca/san-francisco/profile/financial-services/river-financial-1116-928036/complaints#1116_928036_21601338): *"They charged me astronomical fees, and I tell them I want to pull my money and then they decide to freeze my funds for 60 days with no explanation! Deceptive and wrong."* - [Customer](https://apps.apple.com/us/app/river-buy-bitcoin/id1536176542?see-all=reviews): *"The focus on Bitcoin is fantastic. I really couldn't recommend this highly enough to any and all Bitcoin investors looking for a reliable, secure, and easy to use place to buy and store their coins."* - [Customer](https://www.bbb.org/us/ca/san-francisco/profile/financial-services/river-financial-1116-928036/complaints#1116_928036_18889048): *"A week later i was told they were canceling my account & blocked me getting into my account with NO EXPLANATION."* - [Customer](https://apps.apple.com/us/app/river-buy-bitcoin/id1536176542): *"They've done a great job at making DCA'ing into bitcoin very easy. There is no fee after 1 week of a reccurring order, which is nice. However, you're limited to 3 reccurring orders at a time, which is kinda annoying."* - [Customer](https://www.bbb.org/us/ca/san-francisco/profile/financial-services/river-financial-1116-928036/complaints#1116_928036_16932592): *"I was assured by customer support agent Christian that I would know in two days when I would receive the money. It is now two days later and I have heard nothing."* - [Customer](https://play.google.com/store/apps/details?id=com.river.riverapp&hl=en&gl=US): *"Simple interface and setup. Latest update now includes send & receive! Support is quick to respond, even if the issue is minor."* ### The Potential of Bitcoin in 2024 The 2024 halving is likely to have a positive impact on Bitcoin for the rest of the year. Halvings reduce the number of new Bitcoins introduced – as a result, demand for new Bitcoins generally increases. **That's why Bitcoin's price has generally** [**risen**](https://www.investopedia.com/bitcoin-halving-4843769#toc-bitcoin-halving-effects) **after each previous halving event.**  Interest in Bitcoin among institutional investors is also [on the rise](https://www.vaneck.com/us/en/blogs/digital-assets/3-reasons-advisors-should-consider-bitcoin/) in 2024. Hedge funds, asset management firms, and endowments are finding it to be an effective portfolio diversifier and hedge against inflation.  The launch of spot Bitcoin ETFs has also been a huge boon to Bitcoin. [You can learn more about Bitcoin ETF fees here.](https://www.swanbitcoin.com/bitcoin-etf-fees/) Also, more merchants and businesses are accepting Bitcoin as a form of payment. Meanwhile, more infrastructure is being built to make Bitcoin convenient for the average person to use (e.g., user-friendly wallets, exchanges, etc.). **All this bodes well for Bitcoin in 2024.** ##### U.S. Pension Fund Exposure **Wisconsin Investment Board** - $162 million in [IBIT, GBTC](https://www.sec.gov/Archives/edgar/data/854157/000106299324010116/xslForm13F_X02/form13fInfoTable.xml) - [More information](https://www.sec.gov/Archives/edgar/data/854157/000106299324010116/xslForm13F_X02/form13fInfoTable.xml) ### Factors to Consider Before Investing in a Bitcoin IRA Investors should evaluate several factors when considering Bitcoin IRAs… **Risk tolerance** Bitcoin is highly volatile, and prices can change rapidly. A Bitcoin IRA may not be ideal if you have a low-risk tolerance or are close to retirement age. **Your investment goals** A Bitcoin IRA can serve as one component of a diversified retirement portfolio. Decide how much you want to balance one with more traditional assets that can offer more stability. **Your knowledge of Bitcoin** Bitcoin can be confusing and even intimidating to those new to the cryptocurrency and [crypto IRAs](https://www.swanbitcoin.com/crypto-iras/). Still, it’s worth studying this new arena to know what you’re getting into (and where you’re putting your money).  **Current market trends** Bitcoin IRAs provide a potential hedge against inflation and other economic shifts. This is especially true since Bitcoin is decentralized and not subject to government control. **The credibility of the IRA provider** Select a reputable Bitcoin IRA provider to ensure your savings are safe and secure. Research and compare providers based on reputation, fees, and customer reviews. (Reading this piece is a great start!) ### What to Look For in a Bitcoin IRA Provider Consider the following features when deciding on a Bitcoin IRA… **Robust security** Given the vulnerability of digital assets to hacking and theft, you should choose a Bitcoin IRA provider that prioritizes strict security measures. **Transparent and reasonable fees** Carefully review and compare the [IRA fees](https://www.swanbitcoin.com/crypto-iras/) charged by different custodians and providers. Watch out for hidden or excessive fees that can eat away your returns over time. **Custodian reputation** Research the [custodian’s reputation](https://www.swanbitcoin.com/the-bullish-case-for-bitcoin-custodians/) when entrusting your IRA assets to a custodian. Ensure they have a trustworthy track record and are well-regarded within the industry. **Tax implications** Familiarize yourself with the tax implications before making investment decisions. For example, gains from Bitcoin investments held within an IRA may be subject to tax when you withdraw the funds. **Regulations** Stay informed of new regulations or legal developments affecting your IRA investment. Learn more about how a [Backdoor Roth IRA](https://www.swanbitcoin.com/mega-backdoor-roth-2024/) can benefit high earners. ##### Key Points - Risks of Altcoins - Altcoins are highly speculative and carry numerous [unique risks](https://www.swanbitcoin.com/crypto-iras/). - These digital assets are often funded through presale token agreements with hazy legal definitions. - Developers of [crypto IRA](https://www.swanbitcoin.com/crypto-iras/) products usually retain a guaranteed token stake at launch, similar to an IPO in the traditional stock market. - Benefits of Bitcoin-Only IRAs. - Better returns on average. - Aligned incentives. - Better user experience. - Regulatory clarity. - Altcoins depend on a leader or foundation to build, maintain, and promote the coins, leading to the demise of thousands of altcoins while Bitcoin remains strong ([source](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/)). And before we go, here are a few best practices to keep in mind when it comes to investing in IRAs: - Stay informed about market trends. - Diversify your investments. - Regularly review and adjust your portfolio. - Keep track of your tax obligations. - Consider consulting with a financial advisor. ### Our Pick While we’re biased, we think [Swan](https://swan.com/) is the best possible way to remove the complexity and confusion surrounding Bitcoin IRA investing. The great support and low fees make going with Swan a smart move. For more IRA information, contact [Terrence Yang, Swan Managing Director.](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today! ### Disclaimer *This article is provided for educational purposes only, and cannot be relied upon as tax, accounting, legal, investment, or other advice. Past performance is not indicative of future performance. Bitcoin is a young, volatile, risky asset, and sudden large and sustained drops in price may occur from time to time.* *Swan makes no representations regarding the performance, tax consequences, or investment suitability of any structure described herein, and all such questions should be directed to a relevant advisor of your choice.* *The Bitcoin Retirement Calculator is only intended to show the projected investment performance based on parameters set by you, and in using this tool, you acknowledge that the results generated by placing various parameters through this tool are only projections of hypothetical performance that may be useful in assisting you in deciding how best to potentially incorporate a Bitcoin allocation in your IRA.* ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # BITO vs. GBTC Compared: Which is Best in July 2024? URL: https://www.swanbitcoin.com/investing/bito-vs-gbtc-compared/ BITO vs. GBTC… Which is best in July of 2024? Neither. Learn why! --- **Drew** · July 3, 2024 · Updated July 26, 2024 Two major players have consistently captured the attention of institutional and other Bitcoin investors: ***BITO (ProShares Bitcoin Strategy ETF) and GBTC (Grayscale Bitcoin Trust).***  This article delves into a comprehensive comparison of BITO and GBTC, aiming to provide clear insights for both seasoned and novice investors navigating the Bitcoin landscape.  We'll explore their distinct characteristics, benefits, performance, fees and drawbacks, focusing on how spot [Bitcoin ETFs](https://www.swanbitcoin.com/what-bitcoin-etfs-mean-for-you/) fit into the broader context of Bitcoin investment strategies.  ### ProShares Bitcoin Strategy ETF (BITO) The ProShares Bitcoin Strategy ETF primarily allocates its investments to Bitcoin futures contracts instead of directly investing in Bitcoin. It stands as the largest and most frequently traded Bitcoin ETF globally, boasting an AUM of $2.1 billion. With an annual fee of 95 basis points, it sees an average daily trading volume of 20 million shares, highlighting its leading role in the rally as Bitcoin surpasses the $52,000 mark. Since the introduction of spot rivals, BITO has experienced a net outflow of $254 million, according to data gathered by [Bloomberg](https://www.bnnbloomberg.ca/bitcoin-spot-etf-flows-eclipse-once-dominant-futures-linked-fund-1.2035186). Until December, BITO had accounted for 92% of the trading volume among U.S. Bitcoin-linked ETFs. ### Grayscale Bitcoin Trust (GBTC) The Grayscale Bitcoin Trust, the world's largest Bitcoin ETF, offers investors the opportunity to invest in Bitcoin as a security, circumventing the difficulties associated with the direct purchase, storage, and safekeeping of Bitcoin. Through [Coinbase Custody](https://www.coinbase.com/en-de/prime/custody), the Trust passively possesses real Bitcoins. With AUM totaling $22.7 billion, it levies a 1.50% annual fee on investors. On average, it experiences a substantial daily trading volume, exceeding 26 million shares. Despite ALL of GBTC's competitors lowering their spot Bitcoin ETF fees just before [10 spot Bitcoin ETFs](https://www.swanbitcoin.com/the-race-is-on-eleven-bitcoin-etfs-launch/) were approved by the SEC - GBTC notably did not. **GBTC remains at** [**1.5%**](https://etfs.grayscale.com/gbtc) **- the highest of any provider.** But here's the twist – what if I told you that neither BITO nor GBTC is your best bet? ### BITO (ProShares Bitcoin Strategy ETF): An Overview [BITO](https://www.proshares.com/our-etfs/strategic/bito) was one of the U.S.'s [first](https://www.bis.org/publ/qtrpdf/r_qt2112t.htm) ETF's to offer exposure to Bitcoin futures. Key aspects: - **Structure****:** BITO operates as an ETF, trading on stock exchanges and offering intraday liquidity. - **Investment Focus****:** It primarily invests in Bitcoin futures contracts, not directly in Bitcoin. - **Fees****:** BITO charges a management fee, usually lower than GBTC's fee structure. - **Performance****:** As BITO tracks Bitcoin futures, its performance may not precisely mirror the spot price of Bitcoin. It's influenced by the futures market dynamics. ![](https://www.datocms-assets.com/56652/1703366468-proshares.png?auto=format) ##### Pros 1. **ETF Structure****:** BITO, being an ETF, offers greater liquidity and is traded on major stock exchanges. This makes it easier to buy and sell during market hours. 2. **Lower Fees****:** Generally, BITO has a lower fee structure than GBTC, which is more cost-effective for investors. 3. **Regulated Framework****:** BITO operates within a regulated framework, providing a sense of security for investors wary of the unregulated nature of cryptocurrencies. 4. **Futures-Based Exposure****:** Offers exposure to Bitcoin futures, which might be more appealing for investors looking to avoid the direct volatility of Bitcoin. ##### Cons 1. **Indirect Exposure to Bitcoin****:** As it invests in futures contracts, BITO does not provide direct exposure to the actual price movements of Bitcoin. 2. **Futures Market Risks****:** Futures contracts can introduce contango and backwardation risks, potentially affecting returns. 3. **Active Management Risk****:** The Fund is actively managed and its performance reflects the investment decisions that ProShare Advisors makes for the Fund. ProShare Advisors’ judgments about the Fund’s investments may prove to be incorrect. ### GBTC (Grayscale Bitcoin Trust): An Overview [GBTC](https://www.grayscale.com/crypto-products/grayscale-bitcoin-trust) offers investors a traditional investment vehicle to gain exposure to Bitcoin's price movements without the challenges of buying, storing, and safekeeping Bitcoin directly. GBTC holds actual Bitcoin as a trust and its shares trade over the counter.  - **Structure****:** GBTC is a trust, not an ETF. It trades over the counter (OTC) and doesn't offer the same liquidity as ETFs like BITO. - **Investment Focus****:** GBTC holds actual Bitcoin, offering more direct exposure to Bitcoin's price. - **Fees****:** The annual fee for GBTC tends to be higher, accounting for security, storage, and insurance of the held Bitcoins. - **Performance****:** GBTC's price can deviate significantly from the underlying Bitcoin price, often trading at a premium or discount. [![](https://www.datocms-assets.com/56652/1713433604-gbtc-outflow-apr-17.jpeg?auto=format)](https://twitter.com/VetleLunde/status/1780494604468666447?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1780494604468666447%7Ctwgr%5Ee3a2c4eef5fdc751e1738541c7b172c32b65d4ad%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.cryptotimes.io%2F2024%2F04%2F17%2Fgrayscale-bitcoin-etf-gbtc-plummets-50-pre-bitcoin-halving%2F) GBTC has experienced net outflows of 310,611 BTC in the 66 trading days since its conversion. That's a 50.16% reduction in Bitcoin in its fund since January 10. ##### Pros 1. **Direct Exposure to Bitcoin****:** GBTC holds actual Bitcoin, directly exposing its price movements. 2. **Simplicity****:** It's a straightforward way for investors to gain exposure to Bitcoin without the complexities of managing Bitcoin wallets and keys. 3. **Traditional Investment Vehicle****:** As a trust, it can be held in certain tax-advantaged accounts, like IRAs. ##### Cons 1. **Higher Fees****:** GBTC typically has a higher fee structure due to the costs of securely holding physical Bitcoin. **Grayscale has BY FAR the highest** [**Bitcoin ETF fee (1.50%)**](https://etfs.grayscale.com/gbtc?gclid=CjwKCAjwq7aGBhADEiwA6uGZp5Bc4HHPGO_Kqsc-pBott-3aQ5ncgM7opx05k40QoT9gB8SpLQPYGxoCdjgQAvD_BwE) **of any Bitcoin ETF that was approved.** 2. **Premiums or Discounts****:** GBTC can trade at significant premiums or discounts to the underlying Bitcoin price, affecting investment value. 3. **Less Liquidity****:** Being an OTC product, it lacks the same level of liquidity as a standard ETF. 4. **ETF Conversion Risk**: May be forced to “*sell & rebuy*” Bitcoin as part of the ETF conversion process and may involve capital gains taxes. ##### Key Comparisons: Fees and Performance - **Performance Metrics****:** BITO performance is tied to the futures market, which can differ from the spot price of Bitcoin. GBTC's performance is more directly correlated with Bitcoin's worth but also subject to premiums or discounts based on market demand for the shares. - **Fees Impact****:** BITO has a lower fee structure that is attractive for cost-conscious investors. GBTC's higher fees cater to the trust's direct exposure to Bitcoin and additional security measures. ### Spot Bitcoin ETF Fees and Holdings (As of July 26th, 2024) ##### BlackRock iShares Bitcoin Trust (IBIT) - **Fee**: 0.25% for the first 6 months or $5 billion - **BTC Holdings**: 338,127 BTC with Coinbase - 0.12% fees for first 6 months or $5 billion - [More Information](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust) ##### Grayscale Bitcoin Trust (GBTC) - **Fee**: 1.5% - **BTC Holdings**: 270,770 BTC with Coinbase - Held 619K Bitcoin on launch - [More Information](https://etfs.grayscale.com/gbtc) ##### Grayscale Bitcoin Mini Trust - **Fee:** [0.15%](https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm) - **GBTC:** 10% of Grayscale Bitcoin Trust (GBTC) - assets invested in the Bitcoin Mini Trust (BTC) - [More Information](https://www.grayscale.com/blog/general-updates/what-is-grayscale-bitcoin-mini-trust) ### Net Bitcoin ETF Inflows **Total Volume**: $1.67B **Total Marketcap**: $61.25B **Total AUM**: $52.14B **Last Update**: [July 26, 2024 - 1:56 PM UTC](https://www.coinglass.com/bitcoin-etf) Bitcoin ETF fee information is updated daily. For the latest updates, click [here](https://heyapollo.com/bitcoin-tracker/overview). ##### Important Fee Considerations **Discounted Fees** - Some ETFs may offer discounted fees for a limited period, so investors should know the terms. **Trustworthy Companies** - To ensure security and reliability, choose an ETF backed by a trusted company with substantial assets under management (AUM). Want to known more about spot [Bitcoin ETF fees](https://www.swanbitcoin.com/bitcoin-etf-fees/)? Check out our [complete overview](https://www.swanbitcoin.com/bitcoin-etf-fees/). ### BITO vs GBTC Trade-offs  **Performance and Concerns** BITO is intricately linked to its futures contracts, which can lead to what is known as '*roll decay*.'  ***WTH*** is roll decay?  Roll decay is a phenomenon typically associated with futures-based ETFs like BITO.  - BITO doesn't invest directly in Bitcoin - it holds futures contracts. - Futures contracts are agreements to buy or sell the asset at a predetermined future date and price. - They have expiration dates, and to maintain exposure to Bitcoin. - BITO must periodically '*roll*' its futures contracts to later-dated ones. The issue of roll decay arises particularly in a market situation known as '*contango*.' GBTC provides a more direct way to gain exposure to Bitcoin - it holds real Bitcoin. However, its structure as a trust, not an ETF, has led to significant variances in its trading price compared to the actual value of the Bitcoin it holds.  GBTC initially traded at a premium, but has more recently seen a shift to trading at a discount, raising concerns about its effectiveness as an investment vehicle for Bitcoin exposure. ##### Widening GBTC Discount and BITO's Growing Appeal **The GBTC Discount** - The discount on the Grayscale Bitcoin Trust ([GBTC](https://etfs.grayscale.com/gbtc)) has been a significant factor in its performance evaluation. - This discount means that GBTC shares trade at a lower price than the actual Bitcoin value they represent. - Over time, the discount has not only persisted but widened, raising concerns about its attractiveness to investors. - Many investors prefer more accurately priced exposure to Bitcoin, which GBTC currently struggles to provide. **BITO's Growing Appeal** - In contrast, the [ProShares Bitcoin Strategy ETF (BITO)]() has been gaining appeal. - BITO attracts those seeking an investment product that aligns more closely with traditional ETF structures. - Despite concerns regarding roll decay, BITO offers a unique type of exposure to Bitcoin that might be more familiar and appealing to traditional investors. **Why BITO is Gaining Popularity** - BITO's structure as a futures-based ETF avoids some of the regulatory and structural challenges faced by GBTC. - This structure provides a different type of exposure to Bitcoin, which might be more appealing to those used to traditional ETFs. For more detailed information on GBTC and BITO, you can visit their respective pages: [GBTC](https://etfs.grayscale.com/gbtc) and [BITO](). ### BITO's Performance and Concerns [![](https://www.datocms-assets.com/56652/1708023500-bito-fund-flow.jpeg?auto=format)](https://www.bnnbloomberg.ca/bitcoin-spot-etf-flows-eclipse-once-dominant-futures-linked-fund-1.2035186) Bloomberg ##### What is Roll Decay? - Roll decay is a critical concern for [BITO investors](https://www.investopedia.com/investing-in-cryptocurrency-etfs-bitcoin-futures-vs-ether-futures-8362456). - This phenomenon affects futures-based ETFs like BITO, which invest in futures contracts rather than holding the underlying asset directly. - Futures contracts have set expiration dates, requiring a process called 'rolling over,' where expiring contracts are replaced with new ones. ##### What is Contango? - In a market condition known as [contango](https://www.investopedia.com/terms/c/contango.asp), future contracts are priced higher than the current spot price of the asset. - This can lead to losses for BITO, as the ETF might sell futures contracts at a lower price and buy new contracts at a higher price, resulting in roll decay. ##### BITO vs. GBTC: Volatility Comparison - Unlike [GBTC](https://etfs.grayscale.com/gbtc), BITO’s volatility is influenced by factors inherent in the futures market. - GBTC's volatility is tied directly to the price of Bitcoin, whereas BITO's is affected by the futures contracts it holds and the associated roll decay. [![](https://www.datocms-assets.com/56652/1714216422-vc-bito.png?auto=format)](https://portfolioslab.com/tools/stock-comparison/GBTC/BITO) Portfolio Lab ### GBTC Unpredictable Discount: A Risk Factor ##### Unpredictability of the GBTC Discount - The [Grayscale Bitcoin Trust (GBTC)](https://www.swanbitcoin.com/gbtc-was-the-genesis-of-the-crypto-credit-contagion/) is structured as a trust that holds Bitcoin, allowing investors to gain exposure to Bitcoin's price movements without directly owning Bitcoin. - One significant risk factor is the GBTC discount or premium to its [net asset value (NAV)](https://www.investopedia.com/terms/n/nav.asp). ##### Understanding the Discount and Premium - The discount or premium to NAV measures the percentage difference between the trading price of an ETF or closed-end fund (CEF) and its NAV. - This figure is crucial for assessing how much a security's market price deviates from its actual value. - It is particularly significant for closed-end funds, as they do not create new shares after their initial public offering, leading to potential significant divergence between market price and asset value. ##### GBTC's Unique Trading Characteristics - Unlike traditional ETFs, GBTC shares often do not trade in perfect alignment with the NAV of the Bitcoin they hold. - This discrepancy has led to GBTC trading at either a premium or a discount to its NAV. [![](https://www.datocms-assets.com/56652/1714215380-grayscale-nav.png?auto=format)](https://ycharts.com/companies/GBTC/discount_or_premium_to_nav) YCharts ##### Predominantly Trading at a Discount - GBTC has predominantly traded at a discount, meaning its market price is lower than the value of the Bitcoin per share it represents. - This discount has been notably unpredictable, fluctuating based on various factors such as market sentiment, investor demand, and regulatory developments. For more detailed information on GBTC and its pricing dynamics, visit [Swan Bitcoin's analysis](https://www.swanbitcoin.com/gbtc-was-the-genesis-of-the-crypto-credit-contagion/). ### Top 4 Implications of GBTC’s Unpredictable Discount ##### Investment Risk - **Increased Exposure**: Investors in [GBTC](https://etfs.grayscale.com/gbtc) face the dual risk of Bitcoin's price fluctuations and the variability of the discount. - **Potential Underperformance**: Even if Bitcoin's price rises, a widening discount can lead to underperformance relative to direct Bitcoin investments. ##### Valuation Challenges - **Complex Valuation**: The fluctuating discount complicates the valuation of GBTC as an investment. - **Timing Difficulties**: Determining the right entry and exit points becomes more challenging when the discount level is volatile and seemingly detached from Bitcoin's market performance. ##### Market Sentiment Indicator - **Sentiment Barometer**: The discount level can act as a barometer for broader market sentiment towards Bitcoin. - **Confidence Indicator**: A widening discount might reflect decreasing confidence or increasing regulatory concerns, while a narrowing discount could signal growing investor optimism. ##### Strategic Considerations - **Buying Opportunities**: A deep discount might present a strategic buying opportunity, assuming it will eventually narrow. - **Selling Signals**: Conversely, a small discount or a premium might indicate a good time to sell. For more insights into GBTC's pricing dynamics and investment risks, visit [Grayscale Bitcoin Trust](https://etfs.grayscale.com/gbtc). ### BITO Structure and Its Impact on Performance ##### Unique Structure of BITO - Unlike a direct Bitcoin investment or a spot Bitcoin ETF, [BITO]() invests in futures contracts traded on the [Chicago Mercantile Exchange (CME)](https://www.cmegroup.com/). - This approach provides exposure to Bitcoin's price movements without the challenges of holding the actual cryptocurrency, such as storage and security concerns. ##### Performance Implications - **Roll Decay**: The primary concern with BITO's futures-based structure is 'roll decay.' - **Roll Over Process**: Roll decay occurs when the fund rolls over expiring futures contracts to later-dated ones, often at a higher price in a contango market condition. - **Performance Lag**: This can cause the ETF's performance to lag behind the actual spot price of Bitcoin, especially in prolonged contango market conditions. ##### Factors Influencing BITO's Tracking Efficiency - **Futures Market Liquidity**: Liquidity in the futures market can impact BITO's ability to closely track Bitcoin's price. - **Rollover Costs**: Varying costs associated with rolling over contracts can affect performance. - **Market Divergence**: Occasional divergence between futures and spot prices can lead to disparities in performance. Understanding these factors can help investors make informed decisions about investing in BITO and anticipate how its structure might impact performance. For more information, visit [CME Group](https://www.cmegroup.com/). ### The Decision: BITO or GBTC? BITO and GBTC cater to different investor needs and risk appetites... BITO is preferable for those seeking an ETF structure with lower fees and indirect exposure to Bitcoin via futures, while GBTC suits investors seeking direct exposure to Bitcoin's price movements despite potentially higher fees and the risk of trading at premiums or discounts.  ##### Making the Decision: What to Consider! - **Investment Goals****:** Consider whether you want direct exposure to Bitcoin's price (GBTC) or prefer the derivatives market (BITO). - **Risk Tolerance****:** GBTC's direct exposure to Bitcoin's price can be more volatile. BITO's exposure to futures may involve different types of market risks. - **Cost Sensitivity****:** BITO's lower fees might be more appealing if fees are a significant consideration. - **Liquidity Needs****:** BITO's ETF structure provides easier entry and exit points if you prioritize liquidity. - **Account Type****:** If you're investing through a particular account type (like a [Swan Bitcoin IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) account), [check which product](https://www.swanbitcoin.com/crypto-iras/) is compatible. ##### Swan Bitcoin Daily Series Every Monday - Friday, Dante Cook releases a Bitcoin Daily Show for the latest Bitcoin ETF news. Check out his most recent episode below... [Video](https://www.youtube.com/watch?v=fu5RK5G8ziA) With all the complexities and downsides, is there a great alternative to BITO and GBTC?  ***YES!*** Don't settle for mere exposure through a financial product like BITO or GBTC!  Whether you invest through [Swan's IRA](https://www.swanbitcoin.com/bitcoin-ira/) product, or just recurring buys - Swan ensures you are in control of your Bitcoin journey and own actual Bitcoin. If you are looking to own real Bitcoin and self custody or invest in a tax-free BTC IRA, Swan is your best choice! ##### The Swan Advantage - [No recurring fee for personal, business, or trust Swan accounts](https://www.swanbitcoin.com/fees/) - [No fees first, or next $10k BTC purchases](https://www.swanbitcoin.com/fees/) - [Customer service](https://www.swanbitcoin.com/swan-customer-support/) - [Expert access](https://www.swanbitcoin.com/advisor/) - [Education resources](https://welcome.swanbitcoin.com/) - [Swan Media](https://www.youtube.com/@Swan_Bitcoin) - [Community - AMA live streams and in-person events](https://www.swanbitcoin.com/private/) - Self-custody or multi-sig [Swan Vault](https://www.swanbitcoin.com/vault/) has a low recurring fee ![](https://www.datocms-assets.com/56652/1703369143-swan-featured.png?auto=format) Secure your financial future with real Bitcoin from [Swan Bitcoin](https://www.swanbitcoin.com/). For more information, contact [Terrence Yang, Swan Managing Director](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details. [Join](https://www.swanbitcoin.com/drewswanbitcoin/) Swan Bitcoin today! ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # IBIT vs. GBTC: Which is Best in July 2024? - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/ibit-vs-gbtc/ IBIT vs. GBTC. A review aiming to provide clear insights for both seasoned and novice investors. Which is better in July 2024! --- **Drew** · June 30, 2024 · Updated July 26, 2024 Since the start, iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust (GBTC) have held the #1 and #2 AUMs for spot Bitcoin ETFs, respectively.   This article delves into a comprehensive comparison of IBIT and GBTC, aiming to provide clear insights for both seasoned and novice investors. We'll explore their distinct characteristics, benefits, performance, fees, and drawbacks, focusing on how spot Bitcoin ETFs fit into the broader context of Bitcoin investment strategies. ***TL;DR****: IBIT and GBTC cater to different investor needs and risk appetites. IBIT is preferable for those seeking an ETF structure with competitive fees and direct exposure to Bitcoin, while GBTC suits investors seeking exposure to Bitcoin's price movements despite potentially higher fees and the risk of trading at premiums or discounts.* ### iShares Bitcoin Trust (IBIT) The [iShares Bitcoin Trust](https://www.blackrock.com/us/financial-professionals/products/333011/) (IBIT) is an exchange-traded fund (ETF) designed to provide investors with exposure to Bitcoin. Managed by BlackRock, IBIT aims to mirror Bitcoin's performance by holding the actual cryptocurrency or Bitcoin futures contracts. It offers a way for investors to gain exposure to Bitcoin without the need to directly buy, store, or manage the cryptocurrency themselves. [![](https://www.datocms-assets.com/56652/1718741490-ibit-spoonse-r.png?auto=format)](https://www.blackrock.com/us/financial-professionals/products/333011/) iShares ##### Why IBIT? 1. **Access:** IBIT enables investors to access Bitcoin within a traditional brokerage account. 2. **Convenience:** IBIT can help remove operational burdens associated with holding bitcoin directly, as well as potentially high trading costs and tax reporting complexities.  3. **Quality:** IBIT is built by BlackRock, the world’s largest asset manager and ETF provider, with a history of innovation.* ** BlackRock is the world’s largest ETF manager by AUM, managing $3.5T in global ETF investment vehicles as of December 31, 2023.* [![](https://www.datocms-assets.com/56652/1719613068-ibit-key.png?auto=format)](https://www.blackrock.com/us/financial-professionals/products/333011/) Blackrock.com **Pros** 1. **Regulated Product**: As a product managed by BlackRock, IBIT is subject to regulatory oversight, which can provide additional transparency and investor protection. 2. **Diversification**: Allows investors to include Bitcoin in their diversified investment portfolios through a familiar financial instrument. 3. **Secure Custody**: Bitcoin held by the Trust is stored with secure custodians, reducing the risk associated with individual cryptocurrency storage. 4. **Liquidity**: Shares of IBIT are traded on traditional stock exchanges, providing liquidity and ease of buying and selling. **Cons** 1. **Management Fees**: The Trust charges management fees, which can reduce overall returns compared to holding Bitcoin directly. 2. **Tracking Errors**: Due to factors such as fees and market conditions, IBIT's performance may not perfectly match Bitcoin's. 3. **Limited Control**: Investors do not have direct control over the Bitcoin held by the Trust, which can be a drawback for those who prefer to manage their own cryptocurrency holdings. 4. **Regulatory Risks**: Regulation changes could impact the Trust's operations or ability to hold Bitcoin. 5. **Market Risk**: As with any investment in Bitcoin, IBIT is subject to the volatility and market risks associated with the cryptocurrency. 6. **Potential Premiums**: The share price of IBIT may trade at a premium or discount to the net asset value (NAV) of the Bitcoin held by the Trust, potentially affecting investment returns. ### Grayscale Bitcoin Trust (GBTC) The [Grayscale Bitcoin Trust](https://etfs.grayscale.com/gbtc), the world's 2nd largest Bitcoin ETF, offers investors the opportunity to invest in Bitcoin as a security, circumventing the difficulties associated with the direct purchase, storage, and safekeeping of Bitcoin. Through [Coinbase Custody](https://www.sec.gov/Archives/edgar/data/1588489/000119312519295206/d735049dex101.htm), the Trust passively possesses real Bitcoin. With [AUM totaling $16.93 billion](https://ycharts.com/companies/GBTC/total_assets_under_management), it levies investors a 1.50% annual fee. On average, it experiences a substantial daily trading volume, exceeding 26 million shares. [![](https://www.datocms-assets.com/56652/1719613973-aum-16.png?auto=format)](https://ycharts.com/companies/GBTC/total_assets_under_management) ycharts Despite all of GBTC's competitors lowering their spot Bitcoin ETF fees just before the SEC approved 10 spot Bitcoin ETFs, GBTC notably did not. **GBTC remains at 1.5%** — the highest of any provider. ### GBTC Overview GBTC offers investors a traditional investment vehicle to gain exposure to Bitcoin's price movements without the challenges of buying, storing, and safekeeping Bitcoin directly. GBTC holds actual Bitcoin as a trust, and its shares are traded over the counter. ##### Key Facts **Structure:** GBTC is a trust, not an ETF. It trades over the counter (OTC) and doesn't offer the same liquidity as ETFs like IBIT. **Investment Focus:** GBTC holds actual Bitcoin, offering more direct exposure to Bitcoin's price. **Fees:** The annual fee for GBTC tends to be higher, accounting for security, storage, and insurance of the held Bitcoins. **Performance:** GBTC's price can deviate significantly from the underlying Bitcoin price, often trading at a premium or discount. [![](https://www.datocms-assets.com/56652/1719613371-gray-fund.png?auto=format)](https://etfs.grayscale.com/gbtc) Grayscale.com **Pros** - **Direct Exposure to Bitcoin:** GBTC holds actual Bitcoin, directly exposing its price movements. - **Simplicity:** It's a straightforward way for investors to gain exposure to Bitcoin without the complexities of managing Bitcoin wallets and keys. - **Traditional Investment Vehicle:** As a trust, it can be held in certain tax-advantaged accounts, like IRAs. **Cons** - **Higher Fees:** GBTC typically has a higher fee structure due to the costs of securely holding physical Bitcoin. Grayscale has by far the highest Bitcoin ETF fee (1.50%) of any approved Bitcoin ETF. - **Premiums or Discounts:** GBTC can trade at significant premiums or discounts to the underlying Bitcoin price, affecting investment value. - **Less Liquidity:** Being an OTC product, it lacks the same level of liquidity as a standard ETF. - **ETF Conversion Risk:** May be forced to "sell & rebuy" Bitcoin as part of the ETF conversion process and may involve capital gains taxes. ### Key Comparisons: Fees and Performance **Performance Metrics** - IBIT's performance is tied directly to the spot price of Bitcoin, providing a more direct correlation with Bitcoin's worth. - GBTC's performance is also correlated with Bitcoin's price but is subject to premiums or discounts based on market demand for the shares. **Fees Impact** - IBIT has a competitive fee structure that is attractive for cost-conscious investors. - GBTC's higher fees cater to the Trust's direct exposure to Bitcoin and additional security measures. ### Spot Bitcoin ETF Fees and Holdings (As of July 26th, 2024) ##### BlackRock iShares Bitcoin Trust (IBIT) - **Fee**: 0.25% for the first 6 months or $5 billion - **BTC Holdings**: 338,127 BTC with Coinbase - 0.12% fees for first 6 months or $5 billion - [More Information](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust) ##### Grayscale Bitcoin Trust (GBTC) - **Fee**: 1.5% - **BTC Holdings**: 270,770 BTC with Coinbase - Held 619K Bitcoin on launch - [More Information](https://etfs.grayscale.com/gbtc) ##### Grayscale Bitcoin Mini Trust - **Fee:** [0.15%](https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm) - **GBTC:** 10% of Grayscale Bitcoin Trust (GBTC) - assets invested in the Bitcoin Mini Trust (BTC) - [More Information](https://www.grayscale.com/blog/general-updates/what-is-grayscale-bitcoin-mini-trust) ### Net Bitcoin ETF Inflows **Total Volume**: $1.67B **Total Marketcap**: $61.25B **Total AUM**: $52.14B **Last Update**: [July 26, 2024 - 1:56 PM UTC](https://www.coinglass.com/bitcoin-etf) ### Making the Decision: What to Consider When deciding between IBIT and GBTC, several factors must be considered to determine which investment vehicle best suits your needs and investment strategy.  **Discounted Fees:** Some ETFs may offer discounted fees for a limited period, so investors should know the terms. **Trustworthy Companies:** To ensure security and reliability, choose an ETF backed by a trusted company with substantial assets under management (AUM). Here are key aspects to evaluate: **Management Fees** 1. **IBIT**: Understand the specific management fee charged by IBIT and how it impacts your overall returns. IBIT may have lower fees than some other Bitcoin trusts. 2. **GBTC**: Compare the fees associated with GBTC, which are often higher. Higher fees can erode your returns, especially if you plan a long-term investment. **Tracking Performance** 1. **IBIT**: Evaluate how closely IBIT tracks the price of Bitcoin. Consider any potential tracking errors and how they might affect your investment. 2. **GBTC**: Assess GBTC's historical performance about Bitcoin's price. GBTC has sometimes traded at significant premiums or discounts to its net asset value (NAV). **Liquidity and Trading** 1. **IBIT**: Check the liquidity of IBIT shares and how easily they can be bought or sold on traditional stock exchanges. Higher liquidity generally means easier trading. 2. **GBTC**: Consider the liquidity of GBTC shares, which can vary. Understanding market demand and trading volumes can help you plan your entry and exit strategies. **Custody and Security** 1. **IBIT**: Review the security measures and custodial arrangements for the Bitcoin held by IBIT. Secure custody is crucial to protect your investment. 2. **GBTC**: Investigate GBTC's custodial practices to ensure that your assets are safely stored and protected against potential security threats. **Regulatory Environment** 1. **IBIT**: Consider the regulatory framework governing IBIT, including any recent changes or anticipated regulations that could impact the Trust. 2. **GBTC**: Examine the regulatory landscape for GBTC and how it complies with existing regulations. Regulatory clarity can provide investors with peace of mind. **Market Sentiment and Premiums** 1. **IBIT**: Be aware of how IBIT's share price may trade in relation to its NAV. Market sentiment can influence whether IBIT trades at a premium or discount. 2. **GBTC**: Historically, GBTC has experienced significant premiums and discounts. Understanding these market dynamics can help you make informed decisions about timing your investments. **Investment Goals** 1. **IBIT**: Align your choice with your overall investment goals and risk tolerance. Consider whether IBIT fits into your portfolio strategy and long-term financial objectives. 2. **GBTC**: Reflect on how GBTC aligns with your investment goals, especially if you seek exposure to Bitcoin through a more established trust with a longer track record. By carefully evaluating these factors, you can decide whether IBIT or GBTC is the right choice for your Bitcoin investment needs. For more detailed information on IBIT and GBTC, you can visit their respective pages: IBIT and GBTC. IBIT and GBTC cater to different investor needs and risk appetites. IBIT is preferable for those seeking an ETF structure with competitive fees and direct exposure to Bitcoin, while GBTC suits investors seeking exposure to Bitcoin's price movements despite potentially higher fees and the risk of trading at premiums or discounts. Secure your financial future with Bitcoin investments tailored to your needs. For more information, contact Terrence Yang, Swan's Managing Director, at terrence@swan.com or 312.448.8012 (text or call) for details. Sign up [today](https://www.swanbitcoin.com/drewswanbitcoin)! ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # From Fiat Family Home to Bitcoin Mining Trailer: Off-Grid Steve URL: https://www.swanbitcoin.com/opinion/from-fiat-family-home-to-bitcoin-mining-trailer-off-grid-steve/ The British Bitcoiner on a mission to understand whether Off-Grid, Bitcoin miner heat living is a viable and crucially, profitable venture. --- **Joe Nakamoto** · July 22, 2024 Would you sell your home to buy more Bitcoin? Perhaps some readers would. Would you sell your house and downsize while driving down your living costs, to acquire more Bitcoin? I’m certain that some of you reading this have already done just that. How about the extreme and borderline insane? Would you sell your family home and move into an off-grid trailer-come-Bitcoin-mining-science-project, where you inject all of your time and intellectual capital into stacking as much Bitcoin as possible? I scour the world looking for interesting Bitcoin stories and scoops, and I’ve met one individual who has done just that. And we’re calling him Off Grid Steve. Hopefully, Steve’s actions will inspire you to tinker a little more with Bitcoin, and at the very least, it will stretch your imagination of what Bitcoin can and will achieve. ![](https://www.datocms-assets.com/56652/1721656493-image2.png?auto=format) Steve is a warm, rough and ready, middle-aged bloke who runs a small business in the UK as a systems engineer. I was fortunate enough to meet Steve at a Bitcoin Conference in Edinburgh in 2022, when he first told me about his plan. ***“I’m going to work out how feasible it is to heat my home with heat from Bitcoin miners which consume electricity from solar panels and batteries,”*** he shouted at me over the din of bagpipes in downtown Edinburgh. The off-grid trailer, or caravan, is all part of a larger mission, he explained – one we will delve into in this article. I reunited with Steve this Spring, in a sleepy suburban English town that shall remain nameless. Steve picked me up in Slough, outer London, and drove me to his caravan in his brand-new Tesla. Not a very low-time preference purchase, I teased him. However, an electric car means no reliance on petrol stations. All the power that Steve consumes at home or on the road has to be made at home. ### Mining for Profit and Heat In Steve’s toasty home, I quickly learned how he kept it so warm. Solar panels cover every inch of roof, as well as the shipping container which also doubles as his workshop. Even in the bleak British winter, the panels generate enough electricity to power up the following: two ASIC miners, household appliances such as his kettle, a few TVs and Steve’s home office, batteries, and the rack of servers in the shipping container. On a summer’s day, Steve makes about $15 a day by simply mining Bitcoin with the sun’s rays. But the genius innovation, and a space we will see tremendous growth this decade is what Steve does with the excess heat from the miner. ![](https://www.datocms-assets.com/56652/1721656568-image4.png?auto=format) When the sun calls in sick for days on end—a common occurrence in the UK—there are two large batteries that Steve keeps charged. However, he has overbuilt the solar capacity by a factor, as shown by the drone shot. One ASIC runs 24/7 in the shipping container, and the heat from that miner pumps under the floor of the caravan. In said cold and wet winters, Steve says one ASIC will keep the entire house at 14 Celsius or 57 Fahrenheit. That’s uncomfortably nippy, so he moves the second miner, which has tentacles. Steve’s mother knits the woolen, insulated miner tentacles which direct heat into other parts of the house, as shown here: ![](https://www.datocms-assets.com/56652/1721656592-image1.png?auto=format) Steve has christened the tentacle attachment device and casing for the ASIC, a Hush Box. Hush, because the lead lined casing almost silences the noise generated by the Bitcoin miner. If you have seen or played with a Bitcoin miner before, you’ll be aware just how much heat and noise these things generate. The noise is effectively useless, but the heat could help to solve many Northern Hemisphere countries’ energy crises in the coming years. Here’s a diagram of the heat distribution of just two miners. In the Spring and Summer, Steve channels the heat to the outside because, were the ASICs to channel the heat indoors, it would create a sauna. ![](https://www.datocms-assets.com/56652/1721656624-image3.png?auto=format) I’ve reported on Bitcoin miners implementing creative solutions for heat previously: from a Bitcoin miner heated swimming pool to Beef Jerky that’s dried and cured by miner heat, to a timber mill in Scandinavia that dries logs with Bitcoin miner heat. Steve’s solution is one of the most slick, DIY setups I’ve seen that are comfortable enough to live with. Incidentally, Steve shares the mini caravan with his partner and two daughters. Plus, it’s a pilot project. Steve is four years into his eight year plan. He wanted to see and understand if it is possible to heat a home and be paid for the privilege. So far, the numbers are looking good: he has consumed zero electricity from the grid since February—which means no electricity bills, while his heating bill is zero, too. For the next four years the plan is to expand the operation to other small caravan style homes in which Bitcoiners can live off grid in small, warm and Bitcoin powered communities. ### Buying Bitcoin in the United Kingdom vs. The States It’s important to note that while the United States is an excellent Bitcoin stacking destination, across the pond it’s borderline impossible to buy a whole coin. Steve sold his family home in 2022 to stack and purchase the goods for the Bitcoin project. He did his best to lump as much fiat as possible into the hardest money known to mankind, with some left over to buy a mobile home, solar panels and two S19 ASIC Bitcoin miners. It took Steve months to accumulate the Bitcoin that you can buy with [Swan Private](https://www.swanbitcoin.com/private/insight-reports/) right now: > *I’ve been researching this for eight years. I know exactly what I’m doing. It’s my money, I would like to invest for the future. You can walk into a casino, take £50,000 on your credit card and bosh it on black.* Steve criticizes the UK regulators for making it easy to put the equivalent of one whole coin on a credit card in a casino, but buying small digits of Bitcoin is heavily regulated. ### The future of Bitcoin and “waste” heat I gleaned two things over the course of this adventure. One: as Bitcoiners, we’re going to win. There are plenty of Steves around the world—maybe you are one of them—Bitcoiners mad enough to give up something and doggedly work on Bitcoin-based solutions while fighting, evangelizing, and building a better future. And two; we’re scratching the surface of what can be achieved with Bitcoin mining *“waste”* heat. Imagine a world in which homes and hand dryers, office towers and institutions are heated by Bitcoin, it might be closer than we think. And what if, Heaven forbid, we are all wrong about Bitcoin? Let’s parry that question to Steve, because he’s in far deeper than any of us: ***"Well, you can spend every day worrying about what might happen, or you can get on with your life. So I figure if the worst comes to the worst, and we are all wrong for some reason, I'll just get up tomorrow and carry on with a new plan. That's basically it, isn't it?"*** A stoic and bittersweet response. Fortunately, we are right about Bitcoin. Better still, there are Bitcoiners like Steve all over the world who continue to tinker, test and take Bitcoin’s technology to the limit. Swan calls these people the [Intransigent Minority](https://www.swanbitcoin.com/culture/ten-million-bitcoiners-the-intransigent-minority/). ### Joe Nakamoto If you’d like to know more about Steve’s project, check the YouTube video, ***“He sold everything to go Off-Grid.”*** Since filming the mini documentary, Steve is now selling, or at least consulting for Bitcoin miner heat projects under the BTCHushBox brand, [https://btchushbox.com/](https://btchushbox.com/). Also, to watch the full video, here is the [link](https://www.youtube.com/watch?v=V_PNiqIOjVA). **Joe Nakamoto Bio** *Joe is a research and interview journalist and polyglot who left mainstream reporting at Oxford Business Group and Bloomberg Professional Services in 2021 to pursue real, first-hand Bitcoin reporting. In 2024, he left Cointelegraph to pursue Bitcoin video journalism worldwide under the moniker Joe Nakamoto. He moonlights as an MC at Bitcoin and crypto conferences but spends most of his time creating mini-documentaries for his YouTube channel.* ### Joe Nakamoto Bitcoin Journalist: http://youtube.com/@joenakamoto 🧡 Advisor: @heatbit_com @relai_app, @orangepillapp # Why Bitcoin Needs To Change - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/why-bitcoin-needs-to-change/ When we save our life’s work in bitcoin, we want to be certain that the wealth generated by such work will still be around decades or even centuries from now. --- **Chris Guida** · July 18, 2024 · Updated July 20, 2024 At first glance, it might appear that a decentralized protocol for money should eventually “ossify”, or stop changing. This is an appealing view as bitcoin needs to be predictable and secure in order to be the best money. When we save our life’s work in bitcoin, we want to be certain that the wealth generated by such work will still be around decades or even centuries from now. Altering the consensus rules can feel risky because our trust in bitcoin grows as time goes on and as bitcoin successfully fends off constant attacks from all sides. When we make changes to the protocol, this can feel a bit like replacing bitcoin’s armor with something new and untested, leading us to worry about the introduction of unknown vulnerabilities. However, we should resist the temptation to think too narrowly in this manner, as the risks of changing bitcoin turn out to be far outweighed by the risks of *not* changing bitcoin, especially in the long term.  Bitcoin is not just a dead set of consensus rules. It is a living super-organism made up of millions of people and their collective wisdom, energy, and spirit, inhabiting an ever-changing environment. Humanity has gotten as far as it has because of its incredible adaptability to new environments. In fact, all of the most successful species are those that overcame new challenges and adapted to their environments better than others. Species that were unable to adapt to changes quickly went extinct. This requirement that life be adaptable to novel environments constitutes the driving force behind evolution. In addition to this general law of nature that ossifying a living system is a bad idea, ossifying bitcoin with its current consensus rules is especially risky. This is because bitcoin does not have the ability to scale to a global userbase without experiencing centralization so extreme that it would block bitcoin’s mission of replacing the fiat standard with something significantly better. Bitcoin *must* remain decentralized if it is to achieve this mission; otherwise it will become corrupt, rendering it unable to fix any of the problems fiat money and central banking have caused. That is to say, bitcoin already has some gaps in its armor, and patching them is less risky than indefinitely leaving them as they are. Currently, bitcoin users are feeling huge pressure toward relying on trusted third parties, both to process payments and even to take custody of their bitcoin. As bitcoin’s userbase grows, transaction fees will soar, and the percentage of bitcoiners trusting such centralized institutions will only increase because transacting on-chain and running a functional lightning node will become more difficult. Covenant proposals (such as LNHANCE) should drastically reduce reliance on trusted third parties as they allow the creation of a simpler Lightning protocol, along with new protocols and features to scale custody and payments to a global userbase, such as vaults, timeout trees, payment pools, and Ark. [![](https://www.datocms-assets.com/56652/1721342113-lnh.png?auto=format)](https://delvingbitcoin.org/t/lnhance-bips-and-implementation/376) DelvingBitcoin If we fail to activate covenants, users (especially new ones) will increasingly be forced into trusting third parties to process payments and to store their bitcoin. If a large enough percentage of payments and coin supply are handled by trusted third parties, these organizations become single points of failure that allow bitcoin to become captured by the legacy financial system (or its replacement), damaging bitcoin’s ability to remain incorruptible, and changing it into something that I would shudder to call “bitcoin”. As a result, there will come a point in the near future where any fork of bitcoin that introduces covenants in an elegant way will have a market value that is greater than that of the current bitcoin chain, because bitcoin’s market value is dependent on the degree to which it provides uncapturable, incorruptible, sovereign money for everyone. To recap: since bitcoin is a living system, it would be unwise to stop updating it at any point in the future, as the very laws of nature dictate that an organism that ossifies and stops adapting to its environment is doomed to extinction. Given this, bitcoiners should always remain open to the possibility of making changes that progress and protect bitcoin's primary mission of being money that offers everyone the same protections, far into the future. Since covenants can help bitcoin fix two big vulnerabilities (centralization of custody and payments), activating them in an elegant way is an important step in bitcoin's slow, yet necessary evolution. ### Chris Guida Chris Guida is a Bitcoin ecosystem developer, educator, and writer with a deep passion for helping onboard new devs and merchants to the Lightning Network. He has contributed to many Bitcoin software projects, including Core Lightning and its plugin ecosystem, Start9 services, and tutorials to help newbies onboard to Bitcoin development and node operation. He believes that it must be Bitcoin’s mission to become the new global monetary standard, and the mission of every bitcoiner to help it get there. # If They Can Print Money, Why Do We Pay Taxes? - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/if-they-can-print-money-why-do-we-pay-taxes/ Bitcoin is a real solution to the issues surrounding the question of “If they can print money, why do we pay taxes?” --- **Stephan Livera** · July 19, 2024 Nowadays, I often hear the line, *“If they can print money, why do we pay taxes?”*. Lots of people have their answers. For some, it is about the control system that taxation represents. In this view, taxation is a way to discourage certain behaviors and encourage others (i.e., create desired incentives). This is true, but it’s not the ultimate reason. What is the ultimate reason? Taxation is just part of an overall con game. The state needs enough people to believe in the system. If not enough people believe in the fiat money system, it collapses. ### The ‘control system’ view In this view, taxes can be seen as a way to discourage undesired behaviors and encourage desired ones. Sometimes, they want to discourage drinking, so they impose alcohol taxes. In other cases, they discourage everyone’s productivity with an income tax. Now, do governments want to discourage productivity? Generally, no they don’t. But what happens in practice is that they need the taxation revenue to pay down government debts that result from government overspending. In many cases, the politicians have such a desire to over-promise on government projects and spending, that the government ends up taxing so highly that it discourages private sector productivity. This control system view also helps explain why many governments have very complicated tax codes because politicians and bureaucrats have tried to encourage or discourage different things at very fine levels of detail over time. The end result of continual meddling is this disjointed hodgepodge tax code that is not cohesive. It’s not that this control system view is incorrect. But it’s not ultimately as important as the next reason we’ll discuss. ### So what is the ultimate answer? The state requires resources. To get those resources, it needs a way to command them. In the modern era, states generally issue debt, and states use those funds to pay for government projects. Politicians love to make big campaign promises, right? Those generally translate into government projects. For an example of government debt issued, consider treasury bills (also known as government bonds). When you buy these, you are effectively loaning the government money under the promise that they will repay you a coupon rate and the full face value when the bond fully matures (which could range from months to years to decades). Government generally requires bag holders. It needs enough people who are willing to hold government bonds. Oh and by the way, did I mention that these government bonds typically yield negative returns in real terms? What does this mean? It means if you buy government bonds, and hold them to maturity, your actual purchasing power decreases over time. How can this be? Over time, authorities print a lot more fiat currency units, and the actual amount of goods and services you can buy with some amount of fiat currency goes down over time. Governments don’t always succeed in getting people or companies to fund all the debt they issue. In these cases, they face a temptation to directly print more fiat currency. In historical cases of hyperinflation such as in Zimbabwe, governments transition from “borrow and spend” mode into *“print and spend”* mode. In simple terms, they print the difference. In times like these, it is highly inadvisable to remain holding a fiat cash balance. But it’s not just the basket-case economies where debasement occurs! It even occurs with the world reserve currency. As an example of base money expansion, consider the work of [Matthew Mezinskis of Porkopolis Economics, who has shown that, on average, since 1969, USD base money has inflated about 9.1%/year.](https://www.porkopolis.io/2024q1/) ![](https://www.datocms-assets.com/56652/1721397656-spi_tax_1.png?auto=format) If you have an investment portfolio, has your return after fees and taxes exceeded 9.1%? If not, you’re losing purchasing power over time. You are being robbed! Now given government bond yields are generally far lower than 9%, you’re obviously losing money in purchasing power terms by holding them. ### Back to the con game Let’s consider it this way. Imagine a world or country where the government followed through on what the title question implies of printing money instead of collecting taxes. Imagine they had zero taxation revenue and simply printed money to fund government projects or repay lenders. Who would lend them money in this scenario? Or would they even need to borrow at all? What would happen if they simply printed and didn’t tax or borrow? Ah, but then the jig would be up! Runaway inflation would be upon us and the people would realize the con game. And sure, when it comes to printing fiat, the state might be able to ‘get away with it’ for a short time. But eventually, the cost of living spirals out of control. It would become clear to the masses that inflation is a hidden tax on top of all the explicit taxes that they already pay. ### Con game dynamics Try to put yourself in the shoes of a lender, looking for yield. **Would you loan your money to a counterparty who has zero income, and simply ends up printing more of the underlying money to repay you?** To ask this question is to answer it. ### Conclusion So to put it simply, if the state had no other means of revenue, the only way it could repay these loans is by printing more fiat. This would tremendously discourage the use of its national currency and the holding of government bonds. While the ‘control system’ answer also helps explain taxation, the even more existential question for governments is that they need enough people to believe that they’re not just printing money. They need you to believe in their system. You have a choice. There is the government fiat con game, and there is a monetary system without any reliance on a state being fiscally responsible, Bitcoin. Bitcoin is a real solution to the issues surrounding the question of *“If they can print money, why do we pay taxes?”.* *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Mega Backdoor Roth 2024: Is it the Best Option? URL: https://www.swanbitcoin.com/education/mega-backdoor-roth-2024/ Here’s how high earners can benefit from a Roth IRA via “the backdoor” despite IRS income limits. Plus, a forecast on the future of these retirement plans. --- **Matt Ruby** · June 11, 2024 · Updated July 18, 2024 Coming in through the backdoor may *sound* like a sneaky move, but it’s actually a great fiscal solution for high earners looking to get the tax benefits of a Roth IRA. This article provides a deep dive into Backdoor Roth IRAs: what they are, why they matter, the pros and cons, how to get one, and their future. ### Explanation of a Backdoor Roth IRA The good news: You’re a high earner. The bad news: That means you aren’t allowed to open or fund a Roth IRA. How come? When your [Modified Adjusted Gross Income](https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/#:~:text=MAGI%20is%20adjusted%20gross%20income,Supplemental%20Security%20Income%20(SSI).) (MAGI) exceeds regulatory ceilings, the IRS starts phasing out these options. For 2024, the maximum income is $161,000 for single filers and $240,000 for married couples filing jointly.  This is where the Backdoor Roth IRA enters the picture. This option allows high earners to sidestep these income limits by converting nondeductible traditional IRA contributions to a Roth IRA. ### Is Backdoor Roth IRA Going Away in 2025? There are potential complications in the world of backdoor Roth IRAs since there is a possibility they’ll be eliminated (or constrained) in the future.  While they seem safe for the rest of 2024, they remain a target of proposed legislation that could impact them in the future.  Legislators have already tried to limit Roth IRAs and/or change tax brackets and [Required Minimum Distributions](https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/) (RMDs) in the future.  Still, if these IRAs provide advantages, it’s probably better to act now than adopt a wait-and-see attitude. After all, each dConsidering the available benefits (e.g., the lack of required RMDs and relatively low tax rates), it’s still an appealing time to consider a Roth IRA conversion. ### What is a Backdoor Roth IRA? ##### Definition and explanation of a Backdoor Roth IRA A Backdoor Roth IRA is a strategy that allows high earners (i.e., folks who earn too much to contribute directly to a Roth IRA) to fund a Roth IRA by converting nondeductible contributions from a traditional IRA into a Roth IRA.  How does it work? By opening a traditional IRA, making after-tax (or nondeductible) contributions, and then converting those funds to a Roth IRA at a later date.ay you miss means sacrificing potential tax-free growth on earnings.  However, note that the conversion process can trigger income tax on the appreciation of after-tax contributions. And, the pro-rata rule is also applicable if the traditional IRA contains both pre-tax and after-tax contributions. (The pro-rata rule is an IRS rule that determines the taxable portion of a distribution from a qualified retirement account that includes both pre-tax and after-tax dollars.) ##### How it differs from a traditional Roth IRA Roth IRAs and traditional IRAs are similar in terms of their self-directed nature and contribution limits. However, they differ when it comes to their tax advantages. With a Roth IRA, you contribute after-tax dollars and your money grows tax-free. After the age of 59 ½, you can generally make tax and penalty-free withdrawals.  Traditional IRAs, on the other hand, offer an immediate tax advantage by lowering your Adjusted Gross Income (AGI). With a traditional IRA, you contribute pre-tax dollars, which can provide a sense of reassurance about your current financial situation. Then, withdrawals are taxed as current income after age 59 ½, ensuring that you are prepared for any tax implications in the future.   ##### Transforming the Traditional IRA: The Roth Conversion  About a decade after the creation of the Roth, changes introduced a [backdoor method for investors](https://www.cnbc.com/2021/12/20/backdoor-roth-401k-and-ira-rules-for-the-wealthy-survive-for-now.html) to convert a traditional retirement account into a Roth IRA by paying a one-time tax. This conversion option was introduced through the [Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA)](https://www.congress.gov/bill/109th-congress/house-bill/4297) and became effective in 2010.  [![](https://www.datocms-assets.com/56652/1719272142-1693605814-congress.avif?auto=format)](https://www.congress.gov/bill/109th-congress/house-bill/4297) Congress.gov The newfound flexibility significantly impacted retirement planning by allowing individuals to shift their retirement savings from a tax-deferred environment to a tax-free one. It allowed any American to take money in less favorable traditional retirement accounts and, after paying a one-time tax, to shift them to a Roth where their money could grow untaxed, similar to having your own Bermuda-style tax haven right here in the U.S. This process was a significant departure from previous restrictions that limited Roth conversions to individuals with lower income levels. Before the change: - Individuals were limited in converting their traditional IRAs to Roth IRAs. - It expanded retirement planning options and gave individuals more flexibility in managing their retirement savings. - It also changed the tax code and allowed individuals to convert their traditional IRAs into Roth IRAs.  - Removed the income limitation previously preventing high-income earners from converting their traditional IRAs into Roth IRAs. - Only individuals with a modified adjusted gross income (MAGI) of $100,000 or less were eligible to convert. Now, regardless of income, [anyone](https://help.swanbitcoin.com/hc/en-us/articles/13481965807511-Can-I-convert-my-Swan-Traditional-IRA-into-a-Swan-Roth-IRA-) could convert their traditional IRAs into a Roth. ##### Eligibility requirements Technically, high-income earners can’t open Roth-style accounts because of regulatory income caps. (In 2024, those caps are $161,000 for individuals and $240,000 for married couples.)  The Backdoor Roth IRA offers a workaround. Those over the cap can contribute to traditional IRAs and then perform Roth IRA conversions. That means you can continue to take advantage of tax-free growth. Keep in mind that this is a totally legal loophole that lets you circumvent income limits. It can result in higher upfront tax payments, but you’ll then gain the future tax savings of a Roth account. ### Limits of a Backdoor Roth IRA ##### Annual contribution limits So, what are the annual contribution limits for a backdoor Roth IRA? They’re the same as those for a traditional IRA and a Roth IRA. These are set by the IRS and subject to change annually.  For 2024, these are the limits: - Individuals under 50: $7,000 - Individuals 50 and older: $8,000  ### Income limits for eligibility There are also income requirements to contribute to a Roth IRA. For the 2024 tax year, married individuals filing jointly with a modified adjusted gross income (MAGI) of less than $240,000 can contribute to a Roth IRA (an uptick from the 2023 limit of $228,000). For single individuals, the max is $161,000. A Backdoor Roth IRA strategy can provide an alternative if your income is above these limits. The limits don't apply to backdoor Roth IRA conversions. You'll need to contribute to a traditional IRA and then convert it to a Roth IRA.  Essentially, the Backdoor Roth technique is a solution for investors who wish to contribute to a Roth IRA but earn too much in a given tax year. The process is straightforward – you contribute to a traditional IRA and then convert it to a Roth IRA. However, it's important to note that this conversion may trigger additional taxes, so it's crucial to have cash on hand to cover these potential taxes. ### Contribution limits for high-income earners Your modified adjusted gross income (MAGI) must be below certain income limits to contribute to a Roth IRA.  **As mentioned earlier**: For the 2024 tax year, married individuals filing jointly with a modified adjusted gross income (MAGI) of less than $240,000 can contribute to a Roth IRA (an uptick from the 2023 limit of $228,000). For single individuals, the max is $161,000. A Backdoor Roth IRA conversion allows those with higher incomes who can't contribute in the typical manner to still take advantage of a Roth IRA.  And again, these are the 2024 contribution limits as determined by the IRS:  - Individuals under 50: $7,000 - Individuals 50 and older: $8,000  ***NOTE******:*** *When an individual converts a traditional IRA to a Roth IRA, they are required to pay income tax on the converted amount in the year of conversion. This is because the funds in the traditional IRA were contributed pre-tax, and the government wants to collect the tax revenue it would have received upon withdrawal.* The decision to convert to a Roth IRA depends on several factors:  - **Future tax rates** - **The individual’s financial situation** - **Retirement goals**  ### 5 common mistakes to avoid with Backdoor Roth IRAs Backdoor Roth IRA conversions can be complicated. Be careful to avoid the following mistakes. Also: Getting guidance from a financial advisor is recommended too. **Mistake 1:** ***“I forgot about the pro-rata rule.”*** If you have a large chunk of money in a traditional IRA which has never been taxed, the taxes owed on a backdoor conversion will be higher. This is because of the pro rata rule, which applies to retirement accounts that contain both pretax and after-tax contributions. This rule determines the ratio of pre-tax to after-tax dollars in an account and applies to distributions and conversions. Failing to note the implications of the pro-rata rule can lead to unexpected tax consequences. **Mistake 2:** ***“I forgot about the five-year rule.”*** The five-year rule: You have to wait five years after making an initial contribution to avoid taxes and/or penalties. Withdrawing funds before the five years are up (if you are under 59 ½) means you’ll face taxes and a 10% penalty on the withdrawal.  **Mistake 3:** ***“I overlooked the escape hatch.”*** The escape hatch is a workaround to the pro-rata rule for people who can access effective company retirement plans that allow for roll-ins. This means you can transfer untaxed IRA dollars into your plan, bypassing the pro-rata rule. You should investigate the details of your 401k or company retirement plan options before proceeding with a Backdoor Roth IRA.  **Mistake 4:** ***“I only did it once.”*** To get the most out of a Backdoor Roth IRA requires a serial conversion approach (i.e. contributing year after year). You’ll want to contribute the maximum allowed amount each year. Develop the habit of executing your Backdoor Roth IRA conversion annually (preferably early in the year). **Mistake 5:** ***“I didn’t submit Form 8606.”*** Don’t overlook Form 8606 on your tax returns. Otherwise, you’ll violate tax regulations and may wind up overpaying taxes. (Form 8606 is how you report non-deductible contributions to a traditional IRA to the IRS.) ### News and Updates on Backdoor Roth IRAs ##### Recent changes or updates to Backdoor Roth IRA rules The IRA sets contribution limits, which can change from year to year. For 2024, the IRA contribution limits are $7,000. It's worth noting that individuals aged 50 or over can make an additional' catch-up contribution' of $ 1,000, a beneficial provision to boost retirement savings. The income limitations for contributing to a Roth IRA account (the top reason people go for a Backdoor Roth IRA) are also important. [Here are the 2024 income limits for contributing directly to a Roth IRA.](https://time.com/personal-finance/article/backdoor-roth-ira/#backdoor-roth-ira-contribution-limits-for-2024) ##### Potential future changes or updates The future of Backdoor Roth IRAs is uncertain. Legislation has been proposed that could significantly impact retirement savings strategies. These changes could limit Roth IRAs, alter tax brackets, or modify RMDs in the future. Congress and the IRS may choose to target tax-free accumulations, particularly in the challenging fiscal environment of America. It's crucial to stay informed and prepared for these potential changes.  President Joe Biden[ introduced his budget proposal for fiscal 2025](https://www.planadviser.com/biden-budget-eliminate-backdoor-roth-conversions-consider-tax-change-bolster-social-security/), which included significant changes to retirement incentives. The proposal aims to ensure that the ultra-wealthy cannot use these incentives to amass tax-free fortunes, potentially affecting 'mega backdoor Roth conversions.'  This proposal would 'prevent excessive accumulations by high-income taxpayers in tax-favored retirement accounts and make other reforms.' As a high-income individual or retirement planner, understanding and adapting to these potential changes is key to maintaining financial control. The administration wants to prevent people making more than $400,000 (or $450,000 for married couples) from making backdoor conversions into Roth IRAs. Biden's proposed budget describes these conversions as a practice that *"inappropriately sidesteps the income restrictions on contributions to Roth IRAs."* Additionally, the budget proposes requiring high-income savers with an aggregate balance of $10 million or more in tax-preferred retirement accounts to withdraw half the difference between $10 million and their account balance annually.  A president's budget is the first step, though. Congress will now develop its own budget/spending proposals for fiscal year 2025. Some legislators have argued eliminating the Backdoor Roth would be a step toward a more efficient and effective retirement tax policy. The U.S. Supreme Court may also weigh in via a case with wealth tax implications.  Also, the fact that this approach is called a "Backdoor Roth IRA" may raise eyebrows, too, since it sounds slightly furtive. Moving forward, it's a good idea to monitor these developments closely. ##### Impact of political or economic climate on Backdoor Roth IRAs So will Backdoor Roth IRAs be eliminated? [According to Fidelity](https://www.fidelity.com/learning-center/personal-finance/backdoor-roth-ira), they seem safe for now: - *“While Congress has considered placing limits on backdoor Roth conversions, current retirement legislative efforts have focused on the benefits of contributing to a Roth, rather than conversions.”* But you should also be aware of the risks moving forward. To put it bluntly, Congress and the IRS may not be able to keep their hands off these tax-free accumulations considering the challenging fiscal environment faced by the federal government. Writer Ted Godbout [explains](https://www.napa-net.org/news-info/daily-news/biden%E2%80%99s-fy-2025-budget-targets-back-door-roths-excess-retirement-accumulations), - *“To address the so-called ‘back-door’ Roth IRA strategy and a similar one for retirement plans, the proposal, among other things, would prohibit a rollover to a Roth IRA of an amount distributed from an account in an employer-sponsored eligible retirement plan that is not a designated Roth account (or of an amount distributed from an IRA other than a Roth IRA) for a high-income taxpayer. The provision would also prohibit rollovers or transfers of amounts that are not held within a designated Roth account into a designated Roth account for a high-income taxpayer.”* Bruce Willey, Founder of American Tax and Business Planning, [warns](https://www.kiplinger.com/retirement/how-a-backdoor-roth-ira-works-and-drawbacks), - *“The notion of retroactivity — which is what a wealth tax would bring — continues to feel like the wolf at the door. With deficits at record levels, taxes labeled ‘billionaire wealth taxes’ could easily and quickly expand into retroactive taxes on unrealized and untaxed Roth IRA accounts.”* That said, no one in the elected office has proposed an attack on retirement accounts yet. As for the future, no one can say for sure. ### Pros and Cons of a Backdoor Roth IRA ##### Advantages of a Backdoor Roth IRA - Tax-free growth and withdrawals - No required minimum distributions - Flexibility in contribution and withdrawal options Let’s explore further… The main benefit of a Backdoor Roth IRA (and it’s a big one): You can contribute to a Roth IRA even if your income is too high to contribute directly. Then, you can take withdrawals in retirement tax-free. Later, you can withdraw money from a Roth IRA with no taxes or penalties (if you’ve met the five-year holding requirement). Roth IRAs can also help with your retirement planning since the money converted to a Roth is not subject to required minimum distributions (RMDs) after an account holder turns 73.  Note: In contrast, traditional IRA and 401k accounts require RMDs once an account holder reaches a certain age. Also, having money in a Roth IRA provides tax diversification for account holders once they reach retirement. As long as you meet the five-year rule requirements and are at least 59 ½, there is no 10% early withdrawal penalty (thus, withdrawals will be tax-free). A Roth can also help with estate planning. For example, spouses can roll an inherited Roth IRA into a Roth IRA in their own name and treat the assets like their own. If the original account was a Roth IRA and assets were in the account for over 5 years, distributions could be tax-free. There's no time requirement on when you have to withdraw money either. ##### Disadvantages of a Backdoor Roth IRA If you do a Backdoor Roth conversion, it could cause some of the conversion to be taxable. There may be federal, state, and local taxes on converted earnings and deductible contributions. And be prepared for the possibility that rules around this could change in the future.  Also, conversions could kick you into a higher tax bracket. Keep in mind the 5-year aging rule in order to be eligible for tax-free distributions too. Be sure to take your current year tax situation into account and note how any taxes incurred on the conversion impact your overall taxes for the year.  Plus, if you’re a high-earner, there may be bigger-impact ways to minimize your tax burden that don’t require so much administration on the backend. Bruce Willey writes, *“Each year’s contribution has to be created as a separate Roth IRA account, meaning that if you make contributions for the next 20 years, you’ll be juggling 20 separate Roth IRA accounts. There’s also a thicket of IRS conversion regulations that have to be followed carefully to avoid triggering additional tax liabilities.”* Bottom line: It’s wise to get tax advice from an expert before proceeding.  ### Conversion to a Backdoor Roth IRA ##### Explanation of the conversion process The three ways to create a Backdoor Roth IRA: - Fund a traditional IRA and roll over funds to a Roth - Convert an entire traditional IRA to a Roth - Roll over your 401k to a Roth IRA ##### Tax implications and considerations Keep in mind that all or part of a backdoor Roth IRA conversion can be a taxable event. You may have to pay taxes (federal, state, and/or local) on converted earnings and deductible contributions. And Remember conversions could bump you into a higher tax bracket for the year. Tax-free distributions are available, but only after you’ve completed the 5-year aging rule. Talk it through with a financial expert to fully understand the potential costs and consequences. ### Steps to convert a traditional IRA to a Backdoor Roth IRA How to execute a Backdoor Roth IRA: 1. **Open and make a nondeductible contribution to a new traditional IRA or contribute to an existing traditional IRA.** You can open an IRA at most financial institutions. Note the maximum contributions available.   2. **Research how a Roth IRA conversion works.** It’s always smart to consult with a financial professional prior to revising retirement plans. You may need to file additional tax forms too.  3. **Convert your contributions to a Roth IRA.** The nondeductible contribution principal amount won’t be taxable, but earnings *will* be taxable. Making the conversion quickly may minimize taxable earnings. 4. **Repeat these steps annually.** Rinse, later, and repeat every year (if you want). ### Conclusion ##### Summary of key points The Backdoor Roth IRA allows high earners to fund a Roth IRA by converting nondeductible contributions from a traditional IRA into a Roth IRA.  It works like this: You open a traditional IRA, make after-tax (or nondeductible) contributions, and then convert those funds to a Roth IRA at a later date. The big advantages to a Backdoor Roth IRA: - Tax-free growth and withdrawals - No required minimum distributions - Flexibility in contribution and withdrawal options ##### Final thoughts and recommendations A Backdoor Roth IRA can be a great fit because it lets you contribute to a Roth IRA even if your income is too high to contribute directly. This can help with your retirement planning since the money converted to a Roth is not subject to required minimum distributions (RMDs) after an account holder turns 73.  Also, having money in a Roth IRA provides tax diversification for account holders after retirement.  A Roth can also help with estate planning. Talk it through with a financial expert to fully understand the potential costs and consequences. ##### Additional resources for further reading Some other articles on the topic: - [Are Roth Conversions Going Away? Ideal Timing Insights (2024)](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) - [How a Backdoor Roth IRA Works (and Its Drawbacks)](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) - [What Is a Backdoor Roth IRA? Benefits, Limits, Conversion](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) - [The Backdoor Roth: Is It Right for You?](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) - [Backdoor Roth IRA: What It Is and How to Set One Up](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) - [Backdoor Roth IRA: Is it right for you?](https://uncommoncentsinvesting.com/retirement-planning/are-roth-conversions-going-away-ideal-timing-insights/#:~:text=While%20it%20doesn%27t%20look,and%20RMDs%20in%20the%20future) **Curious about Bitcoin and Crypto IRAs?** Learn about the Top 3 Bitcoin-only IRAs [here](https://www.swanbitcoin.com/bitcoin-iras/) and the Top 5 Bitcoin & Crypto IRA options [here](https://www.swanbitcoin.com/crypto-iras/). For more Swan Bitcoin IRA information, contact [Terrence Yang, Swan Managing Director](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details. ##### Disclaimer *This article is provided for educational purposes only, and cannot be relied upon as tax, accounting, legal, investment, or other advice. Past performance is not indicative of future performance. Bitcoin is a young, volatile, risky asset, and sudden large and sustained drops in price may occur from time to time.* *Swan makes no representations regarding the performance, tax consequences, or investment suitability of any structure described herein, and all such questions should be directed to a relevant advisor of your choice.* *The Bitcoin Retirement Calculator is only intended to show the projected investment performance based on parameters set by you, and in using this tool, you acknowledge that the results generated by placing various parameters through this tool are only projections of hypothetical performance that may be useful in assisting you in deciding how best to potentially incorporate a Bitcoin allocation in your IRA.* *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # Why Gresham’s Law is Important For You (2024 Update) URL: https://www.swanbitcoin.com/economics/greshams-law/ Bitcoin’s legal status as commodity money brings to light Gresham’s Law, an economic principle stating “bad money drives out good.” We explore how to apply Gresham’s Law to the Bitcoin Standard. --- **Mickey Koss** · July 9, 2024 · Updated July 18, 2024 Money makes the world go 'round. But what happens when there are different forms of money circulate side by side?  This phenomenon is explained by Gresham's Law, a centuries-old economic principle stating that "*bad money drives out good.*" As Bitcoin continues its meteoric rise as a digital currency and store of value, the implications of Gresham's Law are more relevant than ever. Will Bitcoin be able to take hold as the new medium of exchange of the future? Or will it be relegated to a nascent store of value as the bad money’s inflationary policy continues incentivizing spending? ### Understanding Gresham's Law ##### Historical Background and Definition While often attributed to British financier Thomas Gresham, ancient Greeks and Romans knew the observation behind Gresham's Law. They noticed that when coins of varying gold and silver content circulated together, the "*bad*" coins with lower precious metal content drove the "*good*" coins out of circulation. People hoard coins with higher [gold](https://www.swanbitcoin.com/goldbugs-dont-understand-money/) or silver purity while spending money on "*bad*" coins of lesser value. ![](https://www.datocms-assets.com/56652/1710367277-money-traits.png?auto=format) Bitcoin Talk Forum **Historical Origin** - In the 1500s, Sir Thomas Gresham [articulated](https://en.wikipedia.org/wiki/Thomas_Gresham) the principle that *"bad money drives out good"* in a letter to Queen Elizabeth I. - The debased currency circulated by King Henry VIII led to a loss of high-quality coins, and silver moved overseas, where it had better value. **Application of Gresham's Law** - This principle explains how inferior currency tends to replace high-quality money in circulation when an artificially imposed exchange rate is enforced. **Digital Currency Context** - In the digital age, Gresham's Law is applicable, with [Bitcoin](https://www.swanbitcoin.com/will-bitcoin-follow-gold-s-monetary-rise-and-fall/) being the new *"good money."* - As a nascent store of value, many holders avoid spending Bitcoin during this period due to its appreciation over time, preferring to spend *"bad"* [traditional fiat](https://www.swanbitcoin.com/with-fiat-currencies-crumbling-it-s-time-to-denominate-in-bitcoin-terms/) currencies instead. Gresham's Law refers to the principle that when different forms of currency coexist, the one with lesser intrinsic value (*"bad"* money) tends to circulate widely. In comparison, the one with greater intrinsic value (*"good"* money) is hoarded or removed from circulation. **Commodity vs. Fiat Money** - **Commodity Money:** Holds intrinsic value based on the physical worth of precious metals like gold and silver. - **Fiat Money:** Has no intrinsic value but derives its worth from government backing or decrees. **Key Mechanisms of Gresham's Law** - **Hoarding:** Individuals perceive commodity currencies to have greater long-term value. Therefore, they stockpile these currencies while using fiat money for daily transactions. - **Melting Down:** Coins made of valuable metals get melted down and sold for their metallic worth. - **Account Settling:** Debtors favor settling their accounts with fiat currency because it's legal tender, even though it has less intrinsic value. **End Result** The cumulative effect is that only inferior money (fiat currency) circulates actively in the economy. As a result, currency devaluation becomes cyclical, potentially contributing to inflation. [For more insights](https://www.swanbitcoin.com/the-inflation-deflation-tug-of-war/) into inflationary and deflationary trends. ### Gresham's Law in the Age of Digital Assets **New Chapter for Gresham's Law** - Bitcoin introduces a new dimension to Gresham's Law as a decentralized digital currency. Unlike traditional physical money, Bitcoin is backed by cryptography, features a programmed supply, and gains value from its network effect, setting a distinct path from commodities-based currencies. **Application of Gresham's Law in the Digital Era** - This age-old economic principle raises questions about how it can provide insight into Bitcoin's impact on monetary systems and its future trajectory. **Inherent Value and Supply** - Bitcoin has an inherent value and a limited supply, which is in stark contrast to the theoretically unlimited supply of fiat currencies. **Coexistence with Fiat Currencies**  - For over a decade, Bitcoin and fiat currencies have coexisted, serving as payment methods. This demonstrates the practical applications and acceptance of Bitcoin alongside traditional money. ### Key Differences from Traditional Applications of Gresham's Law **Lack of Physical Form** - Unlike physical money, Bitcoin cannot be *"driven out"* of circulation since it exists purely as a digital asset on the blockchain. **Utility and Value** - Bitcoin serves multiple functions—it operates as a payment network, an uncorrelated asset, and a monetary system beyond government control. This multifaceted utility significantly influences its value and distinguishes it from traditional monetary frameworks. [Video](https://www.youtube.com/watch?v=Ufq1EfSEg8g) **Human Psychology and Gresham’s Law** - When considering Bitcoin through the lens of Gresham's Law, human psychological elements remain significant. People use Bitcoin as a savings vehicle, similar to precious metals, due to its limited supply and potential for appreciation, driving its use over fiat currencies when both are options for saving ([learn more about saving with Bitcoin](https://www.swanbitcoin.com/saving-with-bitcoin-sam-callahan/)). **Utility and Spending Incentives** - Beyond merely serving as a store of value, Bitcoin provides a unique utility that shifts incentives from hoarding. Its acceptance as a mainstream form of payment could encourage the spending of fiat currencies while retaining Bitcoin for savings, leveraging its first-mover advantage and growing network effect. Swan CIO [Rapha Zagury](https://www.swanbitcoin.com/private/team/rapha-zagury/) outlines in detail the winner-take-all battle of money, and looks at Ethereum versus Bitcoin versus all other cryptocurrencies and explains why according to Gresham's Law - he believes there can only be one that ultimately comes out on top. [Video](https://www.youtube.com/watch?v=nYZGPGm0HbQ) #### Impact on Traditional Financial Systems The relationship between Bitcoin, fiat currencies, and Gresham's Law presents a complex interplay of money, technology, and economic theory. This interaction could potentially reshape traditional banking and monetary policies in significant ways, presenting two primary routes: **Influence on Banking** - Bitcoin poses a distinct challenge to traditional banking systems by offering an alternative that operates outside of government control and conventional banking mechanisms ([explore the impact on banking](https://www.swanbitcoin.com/the-banking-system-vs-bitcoin/)). **Shifts in Monetary Policy** - As Bitcoin continues to gain acceptance and influence, it may prompt shifts in how monetary policies are formulated and implemented, challenging existing financial frameworks and necessitating new approaches to economic management. ### Route 1: Bitcoin Accepted as a Means of Payment **Picture this**: A country where Bitcoin is embraced as a legitimate form of payment alongside traditional fiat currencies. Gresham's Law could come into play in this scenario but with a twist. Instead of "*bad*" money drives out "*good*" money, we might witness a shift where Bitcoin becomes the preferred form of payment, thanks to its advantages over fiat currencies: 1. **Currency competition and innovation**: The acceptance of Bitcoin as a means of payment could create healthy competition between Bitcoin and fiat currencies. Governments and traditional banking systems may need to adapt to this new reality by introducing innovative financial products and services to stay relevant and attract users. 2. **Enhanced financial inclusivity**: Bitcoin's decentralized nature can provide financial access to those underserved by traditional banking systems. It could empower individuals in areas with limited banking infrastructure, allowing them to participate in the global economy. 3. **Altered monetary policies**: With Bitcoin entering the mix, governments may need to reassess their monetary policies. The [fixed supply](https://www.swanbitcoin.com/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/) of 21 million bitcoins could challenge central banks' ability to control money supply and ensure price stability. 4. **Vendor incentives**: Since Bitcoin does not rely on layers of intermediaries to process transactions and move value, businesses are incentivized to adopt the technology as a cost-savings mechanism. As more businesses begin to accept Bitcoin, the public may very well follow suit, especially if those businesses pass their cost savings on to their customers as well. ### Route 2: Hostility and Capital Flight Now, let's take a turn down a different path—one where governments continue their hostility towards Bitcoin, leading to the outflow of Bitcoin-denominated wealth from the country, as alluded to in the book "*Sovereign Individual*": 1. **Government crackdowns and restrictions**: In this scenario, governments perceive Bitcoin as a threat to threatening their control over monetary systems and attempt to suppress it through strict regulations or bans. This hostility might only drive the use of Bitcoin underground and limit its potential benefits. 2. **Capital flight and currency devaluation**: Faced with government resistance, individuals may opt to move their wealth out of the country by converting it into Bitcoin, a portable bearer asset that can easily cross borders. This capital flight could pressure fiat currencies, leading to currency devaluation and economic instability. 3. **Impact on traditional banking**: As individuals embrace Bitcoin to protect their [wealth](https://www.swanbitcoin.com/bitcoin-is-generational-wealth/), traditional banking systems in hostile countries could experience a decline in deposits and face challenges in managing capital flows. Banks may need to adapt their services to cater to the changing financial landscape or risk becoming obsolete. Remember, these two routes present contrasting possibilities and would have varied implications for traditional banking and monetary policies. The acceptance or hostility towards Bitcoin depends on how governments and financial institutions perceive and adapt to this technological disruption. ![](https://www.datocms-assets.com/56652/1711048781-0.jpg?auto=format) My Bigger Tricks ### The Future of Money and Digital Currencies **The Potential for Bitcoin as "*****Good*****" or "*****Bad*****" Money: A Gresham's Law Perspective** In the wild world of money, where Bitcoin roams alongside traditional fiat currencies, how does it fare in the eyes of Gresham's Law? Could it be considered "*good*" or "*bad*" money? Let's dive in and find out! **Bitcoin as "*****Good*****" Money** When we say Bitcoin could be seen as "*good*" money, we mean it's the preferred choice for transactions and store of value. Here's why [Bitcoin might earn that shiny "*good*" money](https://www.swanbitcoin.com/bitcoin-solving-the-fundamental-problem-of-money/) title: - **Transcending boundaries**: Bitcoin operates globally and is accessible to anyone with an internet connection. It's not tied to any particular country or central authority. This borderless nature allows for seamless and secure cross-border transactions, making it a convenient option. - **Security and privacy**: Bitcoin offers a high level of security, as cryptographic technology protects transactions. It also allows for anonymous transactions, giving individuals control over their financial information. - **Limited supply**: Unlike fiat currencies that can be printed to no end, there will only ever be 21 million Bitcoin. This scarcity, combined with growing demand, could lead to price appreciation. It's like owning a limited edition, except instead of Beanie Babies, it's [digital gold](https://www.swanbitcoin.com/physical-gold-vs-digital-gold/)! **Bitcoin as "*****Bad*****" Money** On the flip side, Bitcoin might get labeled as "*bad*" money if it falls short in certain areas. Here are a few aspects that could contribute to this less flattering designation: - **Volatility**: Bitcoin's price can resemble a roller coaster ride on a bumpy road. The value can fluctuate wildly, which might deter some from using it as a stable medium of exchange, at least during the monetization phase of adoption.  - **Limited acceptance**: While increasing in popularity, Bitcoin has yet to achieve widespread adoption as a payment method. You can't exactly pay for your morning coffee or groceries with it everywhere you go, unless you stumble upon a Bitcoin-savvy vendor or cafe. If businesses remain intransigent in their acceptance, then it might be difficult to gain traction as an everyday-use currency.  - **Learning curve**: Bitcoin is a different beast from traditional money. It requires a degree of technical understanding to set up wallets, manage private keys, and navigate the ecosystem. This learning curve could act as a barrier to widespread adoption. **The Interplay Continues** Many argue that Bitcoin is still in its earliest stages of adoption. As Bitcoin grows and matures, the volatility is expected to decline, making Bitcoin more suitable for everyday transactions. That being said, despite the current volatility, many are [choosing](https://www.swanbitcoin.com/choose-bitcoin/) to live on a Bitcoin standard regardless. This trend could continue to accelerate with fiat monetary debasement over time.  ### Challenges and Controversies ##### Criticisms of Applying Gresham's Law to Bitcoin **Addressing the Limitations of Applying Gresham's Law to the Bitcoin Market** When it comes to [applying](https://www.linkedin.com/pulse/good-money-bad-deciphering-greshams-law-era-cryptocurrency-2zjze#:~:text=Gresham's%20Law%20in%20the%20Cryptocurrency,cryptocurrencies%20in%20certain%20economic%20environments.) Gresham's Law to the Bitcoin market, we need to consider its limitations and potential criticisms. **Technological Differences** Bitcoin is a whole different beast compared to traditional fiat currencies. Its underlying technology and features can challenge the application of Gresham's Law in a couple of ways: 1. [**Digital vs. physical**](https://www.swanbitcoin.com/physical-gold-vs-digital-gold/): Bitcoin exists purely in the digital realm, unlike physical coins or paper bills. This digital nature can affect people's perception of its value and utility, making it harder to compare directly to physical currencies. 2. **Uniqueness and scarcity**: Bitcoin's limited supply and uniqueness set it apart from fiat currencies. Unlike traditional money, Bitcoin cannot be easily replicated or printed at will. This scarcity factor introduces a whole new dynamic that may not neatly fit into Gresham's Law's framework. **Adoption Challenges** 1. **Limited acceptance**: Bitcoin's acceptance as a means of payment is still in its early stages. While some businesses and individuals embrace it, it's not yet universally accepted. This limited adoption could hinder the smooth operation of Gresham's Law, as the battle between "*good*" and "*bad*" money requires widespread usage. **Volatility and Store of Value Concerns** Bitcoin's notorious price volatility can make it a less desirable store of value or medium of exchange for the [risk-averse](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/). Others may be hesitant to spend their Bitcoin if they expect its value to skyrocket in the future, leading to higher savings rates and less circulation. **Utility Differences** 1. **Transaction speed and scalability**: Bitcoin's underlying blockchain technology comes with speed and scalability limitations. The time it takes to process transactions and the number of transactions the network can handle per second can impact its practicality as a medium of exchange. Though second-layer protocols alleviate these concerns, some argue that later adopters may be relegated to second-class citizen status with Bitcoin service providers rather than fully owning the Bitcoin themselves. **Privacy and Anonymity** Bitcoin offers a degree of privacy but is not entirely anonymous. Transactions can be traced on the public blockchain, which might deter some individuals from fully embracing it for everyday transactions. ### Let's Summarize the Key Takeaways - **Bitcoin as "*****Good*****" money**: Bitcoin has the potential to be preferred for transactions and as a store of value due to its borderless nature, security features, and limited supply. It's like a globetrotting superhero with cryptographic armor and a limited-edition cape. Pretty impressive, right? - **Bitcoin as "*****Bad*****" money**: On the flip side, Bitcoin faces challenges that might hinder its acceptance as a stable medium of exchange. Volatility, limited adoption, and a steep learning curve can make it a little less dazzling in the eyes of Gresham's Law. But fear not, for these challenges may fade away with time and adoption like a bad hair day. - **Technological, adoption, and utility differences**: Bitcoin's digital nature, unique scarcity, limited acceptance, scalability concerns, and privacy features introduce complexities that may not neatly align with Gresham's Law. It's like trying to fit a square peg into a round hole, but the pieces might just come together with some wiggling and adjustment. Join [Swan Bitcoin](https://www.swanbitcoin.com/drewswanbitcoin) today. Happy Bitcoin-ing! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. # MSTR vs. GBTC Compared: Which is Best in July 2024? URL: https://www.swanbitcoin.com/investing/mstr-vs-gbtc/ This article compares MSTR and GBTC, offering insights for investors by examining their features, benefits, performance, fees, and drawbacks, focusing on their role in Bitcoin investment strategies in July of 2024. --- **Drew** · July 1, 2024 · Updated July 18, 2024 ### MicroStrategy (MSTR) ##### Key Features - **Bitcoin as Primary Reserve Asset** - MicroStrategy (MSTR) uses Bitcoin as its primary reserve asset, providing potential for significant appreciation. - **Diversified Operations** - With its enterprise software operations and diversified investment approach, MSTR offers a more stable investment profile than the Grayscale Bitcoin Fund (GBTC), which focuses solely on Bitcoin's price fluctuations. - **Substantial Bitcoin Holdings** - MicroStrategy is a trailblazer among publicly traded companies for adopting Bitcoin as its main treasury asset. - This substantial investment in Bitcoin positions it as a leader in the corporate crypto space. ##### Investment Proxy - **Indirect Bitcoin Exposure** - MSTR offers a proxy for investors seeking Bitcoin exposure without directly buying cryptocurrency. ### Grayscale Bitcoin Trust (GBTC) ##### Key Features - **Largest Bitcoin ETF** - GBTC, the world's largest Bitcoin ETF, allows investors to buy into Bitcoin as a security, avoiding the complexities of direct purchase, storage, and safekeeping. - **Custody through Coinbase** - The Trust holds actual Bitcoin securely via [Coinbase Custody](https://www.sec.gov/Archives/edgar/data/1588489/000119312519295206/d735049dex101.htm). - With $22.7 billion in assets under management (AUM), it charges investors a 1.50% annual fee. - **High Trading Volume** - GBTC experiences a daily trading volume of over 26 million shares, providing substantial liquidity for investors. ##### Exposure to Bitcoin - **Price Movements** - GBTC offers direct exposure to Bitcoin's price movements, making it an attractive option for investors seeking to participate in the cryptocurrency market. ##### A New Perspective - **Alternative Investment Strategies** - Despite GBTC's appeal, alternative strategies should be considered, offering better value and diversified exposure. What if I told you that **neither MSTR nor GBTC is your best bet?**  ### MicroStrategy (MSTR): An Overview ##### Company Background - **Business Transformation** - [MicroStrategy](https://www.microstrategy.com/) is a prominent company that initially focused on business intelligence, mobile software, and cloud-based services. - It has pivoted to Bitcoin-only investments by adding Bitcoin to its corporate balance sheet as the primary reserve asset. Learn more about this strategic move [here](https://www.swanbitcoin.com/my-top-3-takeaways-from-the-microstrategy-world-conference/). ##### Unique Investment Structure - **Bitcoin-Only Investment** - [MSTR](https://www.swanbitcoin.com/5-reasons-to-focus-on-bitcoin-only/) is a software company listed on NASDAQ with a direct Bitcoin-only investment strategy. As explained in this resource, Bitcoin is its primary treasury asset. ##### Investment Focus - **Bitcoin as Primary Asset** - MSTR's primary investment focus is Bitcoin, held in its corporate treasury. This reflects the company's strong belief in the long-term growth potential of digital currency. Read more about this approach [here](https://www.swanbitcoin.com/why-every-investor-should-have-bitcoin-in-their-portfolio/). ##### Fee Structure - **Public Company Model** - As a public company, MSTR doesn't charge typical investment fees like management or performance charges. - However, investors should consider the stock price, exchange trading fees, and any premium or discount on the stock compared to its Bitcoin holdings. ##### Performance - **Volatility and Link to Bitcoin** - MSTR's stock price is closely tied to Bitcoin's price movements, resulting in significant fluctuations. - Performance should be assessed considering both the software business and its Bitcoin investments. ##### In summary - MicroStrategy's strategic shift toward a Bitcoin-focused investment model provides a unique blend of a traditional software company and a cryptocurrency investment vehicle. - MSTR's stock price is closely linked to Bitcoin's volatile price movements, leading to significant fluctuations. Its performance should be assessed considering both its software business and Bitcoin investments. [![](https://www.datocms-assets.com/56652/1715171667-micro-stats.png?auto=format)](https://www.tradingview.com/symbols/NASDAQ-MSTR/) Tradingview ### Grayscale Bitcoin Trust (GBTC): An Overview ##### Investment Vehicle and Structure - **Traditional Investment Vehicle** - The Grayscale Bitcoin Trust offers a way for investors to gain exposure to Bitcoin's price movements without directly managing the challenges of buying, storing, or safekeeping Bitcoin. - **Trust Structure** - GBTC is a trust that trades over the counter (OTC), offering less liquidity compared to stocks in a publicly traded company. ##### Investment Focus - **Direct Bitcoin Holdings** - Similar to MicroStrategy, GBTC holds actual Bitcoin, providing more direct exposure to Bitcoin's price movements. Learn more about its comparative approach [here](https://www.swanbitcoin.com/bito-vs-gbtc-compared/). ##### Fee Structure - **Highest Annual Fee** - GBTC has the highest annual fee of all 11 approved spot Bitcoin ETFs. Find out more about the competition among Bitcoin ETFs [here](https://www.swanbitcoin.com/the-race-is-on-eleven-bitcoin-etfs-launch/). ##### Performance - **Premium or Discount** - GBTC's price often deviates from the underlying Bitcoin price, frequently trading at a premium or discount. - In summary, Grayscale Bitcoin Trust provides a conventional way to invest in Bitcoin, offering direct exposure through a trust structure. However, investors should consider the liquidity, fees, and price fluctuations before investing. [![](https://www.datocms-assets.com/56652/1714403389-grascale-apr-29.png?auto=format)](https://bitcointreasuries.net/entities/50) Bitcoin Treasuries ### Spot Bitcoin ETF Fees and Holdings (As of July 16th, 2024) ##### BlackRock iShares Bitcoin Trust (IBIT) - **Fee**: 0.25% for the first 6 months or $5 billion - **BTC Holdings**: 318,119 BTC with Coinbase - 0.12% fees for first 6 months or $5 billion - [More Information](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust) ##### Grayscale Bitcoin Trust (GBTC) - **Fee**: 1.5% - **BTC Holdings**: 273,076 BTC with Coinbase - Held 619K Bitcoin on launch - [More Information](https://etfs.grayscale.com/gbtc) ##### Grayscale Bitcoin Mini Trust - **Fee:** [0.15%](https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm) - **GBTC:** 10% of Grayscale Bitcoin Trust (GBTC) - assets invested in the Bitcoin Mini Trust (BTC) - [More Information](https://www.grayscale.com/blog/general-updates/what-is-grayscale-bitcoin-mini-trust) ### Net Bitcoin ETF Inflows **Total Volume**: $1.24B **Total Marketcap**: $58.92B **Total AUM**: $52.22B **Last Update**: [July 18, 2024 - 07:08 PM CST](https://www.coinglass.com/bitcoin-etf) Bitcoin ETF fee information is updated daily. For the latest updates, click [here](https://heyapollo.com/bitcoin-tracker/overview). ##### Swan Bitcoin Daily Series To stay on top of all the daily inflow and outflow changes, check out our new [Daily Bitcoin Show](https://www.youtube.com/watch?v=1voKhumF_1c&list=PLoB1eZWSVHVaCOtrrbq79F2JXVgV2Xz-J&pp=iAQB), hosted by Dante Cook. Check out his most recent episode below... [Video](https://www.youtube.com/watch?v=yo1L_cULnLQ) ### MSTR Pros and Cons ##### Pros **Direct Exposure to Bitcoin = Increase in MSTR Stock Price**  MSTR often mirrors Bitcoin's market performance due to its substantial investment in the cryptocurrency. When Bitcoin's value increases, so does the value of MicroStrategy's holdings, positively affecting MSTR's stock price. Since MSTR [first invested](https://finance.yahoo.com/news/microstrategy-becomes-first-listed-company-113746283.html#:~:text=MicroStrategy%2C%20the%20Nasdaq%2Dlisted%20business,currently%20worth%20over%20%24250%20million).) in Bitcoin on August 11th, 2020. **Investment Structure** MicroStrategy's [direct Bitcoin investment](https://www.hope.com/), part of its corporate treasury, allows investors to gain cryptocurrency market exposure through its publicly traded stock MSTR, bypassing the need for direct dealings with cryptocurrency exchanges or wallets. **Lower Fees** - Investing in MSTR, a publicly traded company, offers indirect exposure to Bitcoin, avoiding the usual fees for buying, holding, and selling Bitcoin directly.  - This approach eliminates typical transaction and management costs associated with buying real Bitcoin. **Regulated Framework** MSTR operates under U.S. regulations for publicly traded companies, offering investors security and transparency. This compliance ensures proper corporate governance and financial reporting, creating a safer and more structured investment environment. ##### Cons **Market Volatility** - MSTR's heavy reliance on Bitcoin makes its stock susceptible to the inherent volatility of the Bitcoin market.  - Bitcoin's price can be extremely volatile, influenced by regulatory news, technological developments, and market sentiment.  - This volatility can lead to significant fluctuations in MSTR's stock price. **Concentration Risk** - MSTR's significant investment in Bitcoin does represent a concentration risk.  - The company's financial health is closely tied to the performance of a single asset class.  - This lack of diversification can be risky, especially if the digital asset market faces downturns or regulatory challenges.  **Potential Liquidity Concerns and Impact on Core Business Model**  - During market downturns or significant drops in Bitcoin's price,  - MSTR could struggle to sell its extensive Bitcoin holdings without affecting it’s stock valuation.  - The strong focus on Bitcoin may divert resources from its main business in business intelligence and cloud services, possibly impacting its long-term health and stock performance. ### GBTC Pros and Cons ##### Pros 1. **Direct Exposure to Bitcoin****:** GBTC holds actual Bitcoin, directly exposing its price movements. 2. **Simplicity****:** It's a straightforward way for investors to gain exposure to Bitcoin without the complexities of managing cryptocurrency wallets and keys. 3. **Traditional Investment Vehicle****:** As a trust, it can be held in certain tax-advantaged accounts, like [IRAs](https://www.swanbitcoin.com/bitcoin-ira/). ##### Cons 1. **Higher Fees****:** GBTC typically has a higher fee structure due to the costs of securely holding physical Bitcoin. 2. **Premiums or Discounts****:** GBTC can trade at significant premiums or discounts to the underlying Bitcoin price, affecting investment value. 3. **Less Liquidity****:** Being an OTC product, it lacks the same level of liquidity as a standard ETF. 4. **ETF Conversion Risk**: May be forced to “Sell & Rebuy” Bitcoin as part of the ETF conversion process Learn how GBTC works, how it’s [associated](https://www.swanbitcoin.com/gbtc-was-the-genesis-of-the-crypto-credit-contagion/) with the [recent crypto contagion](https://www.swanbitcoin.com/gbtc-credit-contagion-part-ii/), and why buying spot Bitcoin and taking self-custody helps you avoid all of these risks today. ### MSTR vs. GBTC Performance, Trade-offs and Concerns  [![](https://www.datocms-assets.com/56652/1714215273-mstr-gbtc.png?auto=format)](https://portfolioslab.com/tools/stock-comparison/MSTR/GBTC) Portfolio Labs ##### Widening GBTC Discount vs. MSTR Stock Exposure **GBTC Discount** - **Persistent and Growing Discount** - The widening discount has become a significant factor affecting GBTC's performance, meaning its shares trade below the value of the Bitcoin they represent. - This persistent and growing discount has led investors to question the trust's attractiveness, as some seek a more accurately priced way to gain Bitcoin exposure. **Structure and Pricing Issues** - **Trust vs. ETF** - GBTC holds actual Bitcoin, providing a direct way to gain exposure to the cryptocurrency. - However, its structure as a trust rather than an ETF has resulted in significant discrepancies between its trading price and the actual value of the Bitcoin it holds. **Shifting from Premium to Discount** - **Initial Premium, Now Discount** - Initially, GBTC traded at a premium but has recently moved to trading at a discount, raising concerns about its effectiveness as a Bitcoin investment vehicle. **Comparing GBTC and MSTR** - **Risk and Stability** - [MSTR](https://www.microstrategy.com/) appeals to investors willing to take on more risk in exchange for potentially greater returns through a diversified software and Bitcoin investment approach. - [GBTC](https://www.swanbitcoin.com/bito-vs-gbtc-compared/) is more suitable for those seeking stability, although its widening discount remains a concern. ### GBTC Unpredictable Discount: A Risk Factor **Unpredictability of GBTC's Discount to Bitcoin** - **Trust Structure and Bitcoin Holdings** - GBTC is structured as a trust holding Bitcoin, providing investors exposure to Bitcoin's price movements without requiring them to directly own the cryptocurrency. - However, unlike traditional ETFs, GBTC shares often trade at a significant discount or premium relative to Bitcoin's net asset value (NAV). **Measuring the Discount/Premium** - **Discount/Premium to NAV** - The discount or premium to NAV measures the percentage difference between the market trading price of an ETF or closed-end fund (CEF) and its underlying NAV. - This measure is crucial in assessing how much a security's market price deviates from its intrinsic value. **Impact on Closed-End Funds** - **Limited Share Creation** - Closed-end funds like GBTC do not create new shares after their initial public offering, leading to market prices diverging significantly from the actual value of their assets. - As a result, GBTC can trade at a premium or discount to its NAV, posing a risk to investors who seek predictable pricing. [![](https://www.datocms-assets.com/56652/1715172094-gbtc-nav.png?auto=format)](https://www.coinglass.com/Grayscale) CoinGlass ### Primary Four Implications of GBTC’s Unpredictable Discount 1. **Investment Risk****:** Investors in GBTC are exposed to the risk of not only Bitcoin's price fluctuations but also the variability of the discount. Even if Bitcoin's price rises, the discount can widen, potentially leading to underperformance relative to direct Bitcoin investments. 2. **Valuation Challenges****:** The fluctuating discount complicates the valuation of GBTC as an investment. Determining the right entry and exit points becomes more challenging when the discount level is volatile and seemingly detached from Bitcoin's market performance. 3. **Market Sentiment Indicator****:** A widening discount might reflect decreasing confidence or increasing regulatory or market concerns, while a narrowing discount could signal growing investor optimism. 4. **Strategic Considerations****:** A deep discount could be viewed as a buying opportunity, assuming it will eventually narrow. Conversely, a small discount or a premium might signal a good time to sell. #### MSTR Structure and Impact on Performance 1. **Investment Risk**: MSTR's performance is shaped by its substantial Bitcoin investments and enterprise analytics and software business. This dual focus leads to benefits from Bitcoin's growth but also exposes it to tech industry risks like competition and tech advancements, creating a distinct investment profile. 2. **Valuation Challenges**: MSTR's valuation is complex, impacted by the volatile value of its Bitcoin assets and enterprise software business performance. Its stock price might not align with its Bitcoin value due to market factors, and its software business is valued based on earnings, growth, and competition. 3. **Market Sentiment Indicator****:** MSTR reflects Bitcoin market sentiment due to its significant holdings. Its stock benefits from positive Bitcoin investor confidence but can suffer negative sentiment or regulatory issues, regardless of its core business performance. 4. **Strategic Considerations****:** Investors should assess MSTR's strategy in balancing Bitcoin investments with its software business. ### The Decision: MSTR or GBTC? - **Exposure Considerations****:** GBTC closely tracks Bitcoin's price, while MSTR's diverse activities beyond Bitcoin can influence its stock.  - **Risk Tolerance****:** GBTC's direct exposure to Bitcoin's price can be more volatile, while MSTR's exposure, through its broader business operations, may offer more stability but with different risks associated with its diversified activities. - **Diversification Potential****:** GBTC focuses mainly on Bitcoin, offering limited diversification. MSTR, however, blends real Bitcoin ownership with tech sector exposure and its software business success. - **Long-Term Outlook**: GBTC's value depends on Bitcoin's long-term trends. MSTR's outlook is tied to Bitcoin's future, technology, and analytics business growth.  With all the complexities and downsides, is there a great alternative to MSTR and GBTC with a more straightforward approach?  ***YES!*** Secure your financial future with real Bitcoin from Swan Bitcoin! Don't settle for mere exposure through a financial product like [IBIT](https://www.swanbitcoin.com/ibit-vs-gbtc/), MSTR, GBTC or [BITO](https://www.swanbitcoin.com/bito-vs-gbtc-compared/). With Swan, you own actual Bitcoin, even through Swan's [IRA product](https://www.swanbitcoin.com/bitcoin-ira/), ensuring direct ownership of the world's leading digital asset. Join [Swan Bitcoin](https://www.swanbitcoin.com/) today and take charge of your investment destiny! ##### The Swan Advantage - [No recurring fee for Swan’s personal, business, or trust](https://www.swanbitcoin.com/fees/) - [Competitive pricing of 0.99%](https://www.swanbitcoin.com/fees/) - [Customer service](https://www.swanbitcoin.com/swan-customer-support/) - [Expert access](https://www.swanbitcoin.com/advisor/) - [Education resources](https://welcome.swanbitcoin.com/) - [Swan Media](https://www.youtube.com/@Swan_Bitcoin) - [Community — AMA live streams and in-person events](https://www.swanbitcoin.com/private/) - Self-custody or multi-sig [Swan Vault](https://www.swanbitcoin.com/vault/) has a low recurring fee For more information, contact [Terrence Yang, Swan Managing Director](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details [Join](https://www.swanbitcoin.com/drewswanbitcoin/) Swan Bitcoin today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Physical vs. Digital Gold: Which Reigns Supreme in 2024? URL: https://www.swanbitcoin.com/economics/physical-gold-vs-digital-gold/ In this guide, we delve into the key differences between Bitcoin & gold, exploring which is a better investment in terms of value, accessibility, security, liquidity. --- **Matt Ruby and Mickey Koss** · June 1, 2024 · Updated July 17, 2024 The Bitcoin supply is absolutely finite. But gold is only relatively scarce. That's because Bitcoin (aka digital gold) is capped at 21 million BTC, and nothing can ever change that. Plus, already-lost Bitcoin makes it even more scarce. The early days of the currency are full of stories about people who lost their private keys—and once that BTC is gone, it's gone forever. That means the maximum supply of Bitcoin is actually, in effect, even less than 21 million. That’s a big reason why Bitcoin is often referred to as digital gold. It uses 21st-century technology to emulate the valuable properties that physical gold provided in the past. While both kinds of gold can serve as a store of value in compelling ways, there are also significant differences between the two. In this piece, we'll compare their fundamental differences regarding supply, value, security, and more. By the end, you'll realize that, despite the similarities between Bitcoin and physical gold, Bitcoin is superior because of its truly finite supply. There will never be more than 21 million Bitcoin making it the superior asset. *(NOTE: For clarity, the rest of this piece will refer to physical gold as simply “gold” and* ***digital gold as “Bitcoin****.”)* ### Differences of Gold and Bitcoin One of the key reasons why Bitcoin is often dubbed digital gold is its ability to leverage 21st-century technology to replicate the valuable properties of physical gold. This innovative approach sets Bitcoin apart, impressing with its ability to adapt and evolve in the digital age. Gold isn't all it's cracked up to be, either. While many presume gold to be finite, in reality, gold mining activities can change the supply. For example, gold discovered in Uganda in 2022 nearly equaled the total amount of gold existing above ground at the time. ##### Quick comparison Before we dive into an in-depth comparison, here’s a chart that shows how gold and Bitcoin stack up against each other… ![](https://www.datocms-assets.com/56652/1712241632-gold-v-bitcoin.png?auto=format) While both Bitcoin and gold have their unique appeal, there are distinct reasons why Bitcoin has gained popularity as a store of value. To delve deeper into these differences, let’s compare and contrast their unique features. If you prefer a video overview, check out [Hard Money | Bitcoin vs. Gold](https://www.youtube.com/watch?v=F3H5XA-zKLU) below with Natalie Brunell. [Video](https://www.youtube.com/watch?v=F3H5XA-zKLU) ##### Value While Bitcoin has certainly seen its share of volatility (especially in its early years), its value has generally trended upward over time as adoption increases. On average, it has returned 671% annually (as of February 2024) since its inception.  **The reason for that growth:** Proponents believe digital gold provides an even better store of value and inflation hedge than physical gold. Gold has proven a fairly reliable investment over time and is often considered a safe haven during market volatility. Peter Burns [writes in Money](https://money.com/has-gold-been-a-good-investment-over-the-long-term/), - *“Gold is not an asset that generates income, but it can function as a store of value when its price appreciates over time. The worldwide average annual return of gold between 1971 (the year the U.S. stopped linking the price of gold to the dollar) and 2022 was 7.78%.*  *Still, there can be considerable fluctuations from year to year. For example, the annual return of gold in 2022 was only 0.4%.”* Meanwhile, the value of Bitcoin shot up during this period. ### Factors that impact the value of Bitcoin **1. Supply and Demand Dynamics** Like any other asset, Bitcoin’s value is influenced by the age-old forces of supply and demand. By design, there’s always a limited supply, so its value goes up when demand increases. Worth noting: Price and demand do not impact Bitcoin’s programmatic supply schedule; that remains constant regardless of market dynamics.  **2. Market Sentiment and Investor Confidence** The value of digital gold goes up in response to positive news, adoption by major companies, and regulatory endorsements that boost investor confidence. Conversely, negative news, security breaches, or regulatory crackdowns can dampen Bitcoin’s price. **3. Economic and Geopolitical Factors** Inflation rates, economic stability, political uncertainty, or currency fluctuations can all influence the perceived value of Bitcoin as a store of value or hedge against traditional financial systems. **4. Scarcity and Halving Events** Bitcoin has a finite supply with a total cap of 21 million coins. Periodic events called *“halvings”* occur approximately every four years, reducing the rate at which new Bitcoin is created. Historically, this has preceded Bitcoin bull markets. **5. Global Adoption and Mainstream Acceptance** As Bitcoin gains broader adoption, its value has the potential to increase. Factors such as merchant acceptance, institutional investment, and regulatory frameworks can all contribute to the perception of digital gold as trustworthy and valuable. ### Factors that impact the value of gold **1. Global Supply and Demand** Like Bitcoin, the price of gold is influenced by supply and demand in the global market. When demand exceeds supply, the price tends to rise. One key difference here is that this can result in increased mining/production of gold. Bitcoin has a fixed limit, though. **2. Investor Sentiment and Safe-Haven Demand** Gold is often considered a safe-haven investment during economic uncertainty or market volatility. This rise (or fall) in desire can impact its value. **3. Interest Rates and Inflation** When interest rates are low (or inflation is high), investors may turn to gold as an alternative investment, potentially driving its value. **4. Currency Exchange Rates** Changes in currency exchange rates can affect the price of gold. As the value of a currency declines compared to other global currencies, the cost of gold in that currency may rise. **5. Central Bank Actions** Central banks often hold large quantities of gold in reserve. Central banks buying or selling gold reserves can impact the supply and demand dynamics in the market. **6. Jewelry and Industrial Demand** The demand for gold in jewelry and other industries also can impact its value. ##### Supply Having a predictable supply prevents inflation and ensures an asset retains its value.  - Bitcoin has a hard-capped, limited supply—only 21 million units will ever exist since this supply cap is hard-coded into its core protocol rules. The limited supply is key to Bitcoin’s long-term value.   - Gold also [scarce](https://www.forbes.com/sites/nathanlewis/2016/09/29/gold-is-money-because-it-is-plentiful-not-because-it-is-scarce/?sh=635ec6924138) because it is hard to find and is usually available only in low concentrations since one must process a large amount of rock to obtain it. The rarity of gold, the fact that it’s non-renewable, and the challenges in obtaining it are largely [why gold is valuable](https://www.bankofengland.co.uk/museum/online-collections/blog/as-good-as-gold). Nonetheless, there are fluctuations in the amount of gold available at any given time. Investment researcher Nathan Lewis [writes](https://www.forbes.com/sites/nathanlewis/2016/09/29/gold-is-money-because-it-is-plentiful-not-because-it-is-scarce/?sh=55990f5a4138), *“* - *In terms of availability, [gold] is very plentiful. We actually have twice as much above-ground gold today as when the world left the gold standard in 1971. We have seven times more than in 1910.”* Some bad news for gold’s ability to serve as a store of value: In June 2022, [authorities in Uganda revealed a significant](https://www.ntu.edu.sg/cas/news-events/news/details/major-gold-deposits-discovered-in-uganda#:~:text=In%20June%2C%20Ugandan%20officials%20announced,an%20estimated%20US%2412%20trillion.) find of around 31 million metric tons of gold ore within the nation (320,158 metric tons of purified gold). That amount’s approximate valuation was $12 trillion. This single discovery represented more than the entire amount of above-ground gold accounted for in total supply. As this gold continues to be recovered, it will significantly dilute the scarcity properties of physical gold.  ##### Divisibility High divisibility allows an asset to be split into smaller units, making it easy to transact regardless of the amount.  Bitcoin is much more divisible than most currencies. One Bitcoin can be divided into up to eight decimal places, with constituent units called satoshis. That helps keep costs in check. Divide gold into smaller increments, and you will pay a premium. One-hundredth of an ounce of gold will cost around $35 online, which is, in effect, a $3,500 per ounce price of gold—that’s a 75% markup compared to the actual price of gold at that time! **Current 1 ounce of gold to BTC ratio: 0.0339748 BTC** ##### Security Is Bitcoin secure?  [Answer](https://bitcoin.org/en/secure-your-wallet):  - *“Bitcoin makes it possible to transfer value anywhere in a very easy way, and it allows you to be in control of your money. Such great features also come with great security concerns. At the same time, Bitcoin can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money.”* Of course, the same issues exist with gold. You have to make sure you’re storing it somewhere safe and trustworthy. Also, verifying the authenticity and purity of gold is tricky. Counterfeiting is a lurking danger. Determining if your gold is the real deal can be challenging unless you have special equipment and expertise. ##### Programmable Bitcoin implements programmable transactions and smart contract functionality via things like its built-in scripting language (Script), the Lightning Network, Discreet Log Contracts, and sidechains.  Gold offers nothing of the sort. ##### Portability  With Bitcoin, your money is always available. You don’t have to ship gold bars somewhere. That means it is ready to be used wherever/whenever.  Gold is heavy and a pain to lug around…just ask pirates. #### /h4Liquidity  Bitcoin can be converted into cash quickly through cryptocurrency exchanges and Bitcoin ATMs, typically 24/7 and within minutes (though some exchanges may take longer). ATMs offer instant cash but broader spreads. Peer-to-peer transactions benefit from Bitcoin’s easy verifiability, too. As for fees, converting Bitcoin to cash may incur transaction fees from exchanges or platforms and potential capital gains taxes based on timing. Converting gold to cash can be quite time-consuming. The process involves finding a reputable dealer or pawnshop and verifying the gold’s authenticity and purity, which can take anywhere from days to weeks. Then, you need to negotiate a fair price based on market demand and local conditions. Selling physical gold may also involve dealer margins and fees to confirm authenticity. ##### Accessibility Purchasing Bitcoin has become increasingly easy thanks to Bitcoin exchanges and user-friendly platforms. Registering an account on reputable exchanges (like [Swan](https://swan.com/)) is a straightforward process. You can fund your account through ACH or wire transfers. With a few clicks, you can transact. Some exchanges even offer mobile apps so you can purchase and manage Bitcoin on the go. Compare that to gold, which you can acquire at brick-and-mortar coin shops and purchase gold bars or coins in person. There are also reputable online dealers where you can browse the inventory, select your gold product, and deliver it to your doorstep. Online auctions or marketplaces also provide opportunities to buy physical gold. There, prices can vary depending on demand and bidding competition. However, purchasing gold means considering a few extra factors… **Authenticity** - Verifying the authenticity of physical gold can be crucial since counterfeit gold exists in the market. Stick to reputable sellers or dealers with a solid track record. **Storage and Security** - Physical gold requires storage arrangements to ensure its safety. Buyers should consider a secure home safe, a safety deposit box, or third-party storage facilities (each with its own associated costs). **Additional Expenses** - When buying physical gold, you may need to consider additional expenses, such as shipping or insurance fees. These can also add up and impact the overall cost. **Liquidation** - If you decide to sell your gold in the future, the process might involve finding a buyer, either directly or through a dealer, and arranging for the transfer of ownership. This can be much more time-consuming than the instant liquidity of Bitcoin. ### Environmental Impact of Gold vs. Bitcoin [Video](https://www.youtube.com/watch?v=CSjS17aDRKk) ##### Similarities Between Gold and Bitcoin Of course, we should mention the many things Bitcoin and gold have in common. - They are both highly fungible (i.e., any unit of the asset can be exchanged with another of the same type without losing value). - Also, they are non-consumable, meaning they are assets that do not degrade through use. Both preserve their value and utility over time, and neither loses anything from repeated use. - Both are very durable. Durability signifies an asset’s ability to resist deterioration over time, ensuring it retains value and utility. That’s a key attribute for any store of value. - Sovereign issuance and government backing can impact an asset’s credibility, stability, and acceptance. While fiat currency excels in this regard, Bitcoin and gold lag.  - Decentralization (i.e., removing third parties and centralized institutions from financial transactions) is a core principle of Bitcoin. However, it’s also inherent in gold. Neither is controlled by any central authority. [![](https://www.datocms-assets.com/56652/1710367277-money-traits.png?auto=format)](https://bitcointalk.org/index.php?topic=1251184.0) Bitcoin Talk Forum **Can Bitcoin flip gold's market cap this cycle?** Bitcoin OG Adam Back thinks so. In the video below, we pit the two hardest monies against one another and explore how gold's historic price moves following its ETF approval could foreshadow what will come in the next few years for Bitcoin. [Video](https://www.youtube.com/watch?v=EUzKbrKZ23g) ### Making the Choice Consider your personal preferences and risk tolerance when pondering the choice between Bitcoin and gold. If you love technology and are comfortable with the digital realm, Bitcoin may be an ideal fit. Gold may be a better choice if you desire a physical currency and prefer tangibility.  Diversification is always an option, too. Consider allocating a portion of your wealth to digital gold, which offers liquidity, ease of transfer, and potential growth. Then, balance that with physical gold to add an extra layer of stability and hedge against economic uncertainties and Bitcoin's volatility. **Here are some recommendations from experts** Michael Saylor, MicroStrategy founder, [says](https://erickimphotography.com/blog/2024/01/19/michael-saylor/):  - *"Bitcoin is more efficient than gold. It's more efficient than fiat money. It's more efficient than storing your money in an Airbnb rental apartment. It's just the most efficient energy system, and rational people everywhere in the world are looking at it and saying, 'Why wouldn't I want to store my money in a property that is the apex property of the human race?"* In this clip from the [*"Saylor Series"*](https://www.youtube.com/playlist?list=PL2jAZ0x9H0bQFY6wIbQfnrnIlqMcSHd6X) by Robert Breedlove on the [*"What Is Money?"*](https://podcasts.apple.com/us/podcast/the-what-is-money-show/id1541404400) podcast, Michael Saylor talks about why Bitcoin is better than gold! [Video](https://www.youtube.com/watch?v=ZrU9QUg02qA) Jurrien Timmer, the Director of Global Macro at Fidelity, [found](https://twitter.com/TimmerFidelity/status/1720451086882877606?s=20) that allocating just 1% of a traditional portfolio to Bitcoin produced similar effects to a 4% gold allocation. In other words, by including Bitcoin, investors could potentially achieve more with less in their "store of value" portfolio allocations.  The folks at Cathie Wood's [Ark Invest](https://ark-invest.com/big-ideas-2024) have found the optimal allocation to Bitcoin to be a whopping 19.4%. Now, that might be a bit much for most investors. Still, when considering the risk-adjusted returns, increasing one's allocation is worth considering. According to these experts, Bitcoin is gaining traction as a long-term investment option that could outshine gold. Still, do your own research, examine your risk tolerance, and invest accordingly. Once you have, buy real Bitcoin with [Swan](https://www.swanbitcoin.com/) today! *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. # What Is Byzantine Generals Problem (2024 Solution) URL: https://www.swanbitcoin.com/education/byzantine-generals-problem/ In this definitive guide we analyze the question: 'How does Bitcoin solve the Byzantine Generals Problem? ' --- **Matt Ruby** · July 1, 2024 · Updated July 17, 2024 Let's be real. You don't live in Byzantine (*FYI, that's what they used to call Istanbul*), and you're not a general commanding an army. So, why on Earth should you care about something called the Byzantine Generals' Problem? To answer that, we need to zoom out: In truth, the Byzantine Generals' Problem is an analogy that demonstrates the challenge of reaching consensus in distributed systems – in most cases, that means a computing network spread across many computers (aka [nodes](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/)). **But let's zoom out even further...** The real problem here is with money – specifically, [what happens when centralized authorities control it](https://www.voltequity.com/post/why-bitcoin-three-problems-with-centralized-financial-systems).  - *Think of the 2008 financial crisis, which cost the global economy trillions of dollars, and how the public paid the price while large banks received bailouts.*  - *Or consider how often central banks print money to stimulate a weak economy. The result:* ***Money eventually winds up*** [***debased and devalued***](https://www.swanbitcoin.com/monetary-debasement-vs-supply-shocks/)***.***  - *Also, a centralized financial system means governments can confiscate your money as they see fit. Unfortunately for asset holders, impoverished governments often turn to desperate measures.* - *Decentralized money (i.e., a* [*peer-to-peer payment system*](https://bitcoin.org/bitcoin.pdf) *that does not require a trusted third party) is a solution to all these issues. But to create decentralized money, the Byzantine Generals' Problem must be solved.* ### Explaining the Byzantine Generals' Problem The problem represents a game theory query about what constitutes rational decision-making behavior. So, even though you may not care about ancient military strategy, the solution to this computing problem can have a huge impact on our monetary lives.  **The riddle to solve**: If there's a decentralized network that prevents people from verifying the identity (or reputation) of other participants, how can anyone know who is actually telling the truth? Without a central authority, how can everyone reach agreement? *Before we go further:* ***Who is this piece for?*** *The target audience is Bitcoin investors (and potential future investors) – typically, though not exclusively, younger folks (18-25 years old) – who have heard about the Byzantine Generals’ Problem, but aren’t 100% sure what it is or why it matters. They want it explained clearly and in a way that’s not sleep-inducing. Plus, they want to know if Bitcoin really solves it and how. This piece will be especially resonant for people new to Bitcoin, beginner investors, and/or anyone else skeptical about crypto in general and Bitcoin specifically. OK, let’s get back to it…* The Byzantine Generals' Problem uses game theory to clarify the riddle that Bitcoin must solve. ![](https://www.datocms-assets.com/56652/1705362293-bg-graphic-3-1.jpg?auto=format) Swan Bitcoin Here's the scenario:  - Multiple divisions of the Byzantine army are stationed at various locations outside a city they want to invade. Each division is led by a different general. They communicate with each other via messengers. - If the generals attack at the same time, they'll win. But if the attacks come at different times, they will be defeated. So, the generals need to agree on a joint invasion plan.  - **But beware**! There are traitors in their midst. The generals know these traitors will try to sabotage any attack plan by intercepting messages and inserting false plans. The generals have no way of telling if these messages have been changed. - The generals need to reach an agreement on their invasion without the traitors screwing up their battle plan. So, how can the generals organize a simultaneous attack? ### What's money got to do with it? - **Historical Use of Currency:** Various items like metals, shells, and beads have been used as currency, but each had limitations. Gold, in particular, has been the most trusted but comes with weight, purity, and portability challenges. For example, while plentiful, shells highlight the impracticality of using natural items as modern currency ([read more about the limitations of using gold](https://www.swanbitcoin.com/will-bitcoin-follow-gold-s-monetary-rise-and-fall/)). - **Centralization of Money:** To overcome these challenges, nation-states have typically taken control of monetary systems. Although this was intended to inspire trust in the currency's value and purity, history shows that central authorities often [violate this trust](https://www.swanbitcoin.com/goldbugs-dont-understand-money/). - **The Search for Decentralized Money:** The ideal solution would be a decentralized, verifiable, counterfeit-resistant, and trustless monetary system. Many have tried to establish a system that operates [independently from the government](https://www.swanbitcoin.com/bitcoin-reuniting-a-deeply-divided-world/). Still, success was elusive until the emergence of a groundbreaking technology. - **Introduction of Bitcoin:** In 2008, Bitcoin was introduced as the first successful implementation of decentralized digital currency that solved the Byzantine Generals' Problem. This cryptocurrency ensures the integrity and value of money through a cryptographic, trustless system, making it resistant to counterfeiting and free from central monetary control ([discover the mysteries of Bitcoin](https://www.swanbitcoin.com/bitcoin-an-endless-chain-of-mysteries/)). Bitcoin represents a pivotal moment in the evolution of money, offering a solution that addresses fundamental problems with traditional monetary systems ([Learn how Bitcoin solves these problems](https://www.swanbitcoin.com/bitcoin-solving-the-fundamental-problem-of-money/)). *"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."* *-Satoshi Nakamoto, the creator of Bitcoin* ### Bitcoin, Proof-of-Work and Blockchain to the Rescue So, how did Bitcoin solve this riddle? With a blockchain and a consensus mechanism called "*Proof-of-work."* [*blockchain*](https://www.google.com/search?sca_esv=597319875&sxsrf=ACQVn0-gEoeMxxNlipWa7TlWqa9F-K7mHg:1704929874954&q=Blockchain&si=AKbGX_pt4UlL1m2gNC94R_NJDj6SQ5Vmh9zWZzs34EZsX5XkkDJpkZOyrAkoHtQ1x-FnckVNdavVhjehZH82Nqit27Pp1hQrd9PLJl5f_O3VGGC_4tkcd5o%3D&expnd=1&sa=X&ved=2ahUKEwi54sDc_tODAxWmv4kEHaXeBa8Q2v4IegQIFBAS&biw=1456&bih=961&dpr=2) *- a system in which a record of transactions, especially those made in a cryptocurrency, is maintained across computers that are linked in a peer-to-peer network*  Bitcoin relies on a public, distributed ledger to store a history of all transactions. Remember how the Byzantine generals needed a way to agree on the same truth? With Bitcoin, that truth is the blockchain. Instead of generals, there are nodes and miners. And instead of messages, there is the ledger and transactions. With the blockchain, every node agrees on which transactions occurred (and the order of transactions). That way, everyone can verify ownership. **The result****: a decentralized, functioning, trustless money.** Wikipedia [citation #31](https://en.wikipedia.org/wiki/Byzantine_fault). [![](https://www.datocms-assets.com/56652/1706560906-seo-win-biz-gen.png?auto=format)](https://en.wikipedia.org/wiki/Byzantine_fault) Wikipedia How does it do it? Via '[*Proof-of-work*](https://www.swanbitcoin.com/proof-of-work-vs-proof-of-stake/)*.*' - *“Proof-of-work is a software algorithm used by Bitcoin and other blockchains to ensure blocks are only regarded as valid if they require a certain amount of computational power to produce,”* [says](https://www.forbes.com/advisor/investing/cryptocurrency/proof-of-work/) blockchain developer Amaury Sechet. - *“It’s a consensus mechanism that allows anonymous entities in decentralized networks to trust one another.”* [Crypto 101](https://www.bitstamp.net/learn/crypto-101/what-is-the-byzantine-generals-problem/): 1. Under the *proof-of-work* algorithm, all Bitcoin miners must agree that a transaction is valid before it is added to the blockchain. 2. Miners validate transactions using the historical information on the ledger to check that the necessary account balances are available. 3. If they encounter a transaction that appears contradictory to the existing data, they have the power to reject it. However, once a transaction has been validated, it's recorded on the ledger permanently, meaning that anyone can trust the history of transaction data. Since every miner on the network has a copy of the same data, it can always be verified as true. In order to add information (aka blocks) to the blockchain, a node must publish proof that the block they are adding required considerable work. ##### Hal Finney on Bitcoin nodes ![](https://www.datocms-assets.com/56652/1710976921-finney-on-bitcoin-nodes-jpg.webp?auto=format) - **Preference for Predetermined Consensus:** There's a notable preference for establishing a predetermined process for achieving consensus finality in digital currencies instead of relying on a competitive consensus model. This approach has led to innovations such as "user-activated soft forks" (UASF), highlighting the importance of individual nodes in the network. - **Inspiration from Finney's Concepts:** Inspired by Hal Finney's ideas, a solution to the Byzantine Generals' Problem was conceptualized through the idea of 'Byzantine soldiers.' This concept addresses the skepticism surrounding the effectiveness of competitive consensus, especially at large scales or under the premise that it might be fundamentally flawed. - **Addressing the Byzantine Generals' Problem:** The core challenge involves ensuring reliable communication and trust, even when there is a possibility of betrayal. Bitcoin tackles this issue with its proof-of-work mechanism, which introduces a competitive nature through difficulty adjustments. - **Elimination of Inherent Trust:** Bitcoin's system removes the need for inherent trust among participants by requiring them to prove their commitment through mining efforts before their version of the ledger is accepted. This proof of work ensures only the most reliable and verified information is maintained. - **Incentive to Publish Honest Information:** The energy-intensive nature of mining Bitcoin secures the network and provides a strong incentive for miners to publish honest information, as they receive Bitcoin in return for their efforts. This robust mechanism is why the [Bitcoin network remains secure and has never been successfully attacked](https://www.swanbitcoin.com/how-much-does-it-cost-to-mine-a-bitcoin/). [![](https://www.datocms-assets.com/56652/1705361729-agreement.png?auto=format)](https://www.geeksforgeeks.org/byzantine-generals-problem-in-blockchain/) Geeks For Geeks Once a block is added, it’s extremely difficult to remove – and that makes Bitcoin’s past immutable. [*immutable*](https://www.ledger.com/academy/glossary/immutable#:~:text=The%20term%20%E2%80%9Cimmutable%E2%80%9D%20in%20the,or%20changed%20after%20its%20creation.) *- in the context of a blockchain, implies that the data or ledger is permanent and tamper-proof, and its history cannot be modified or changed after its creation* The result is everyone on the Bitcoin network agrees on all transactions on the blockchain. [*Proof-of-work*](https://www.swanbitcoin.com/proof-of-work-vs-proof-of-stake/) lets each [node](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/) verify the validity of blocks using [computer hash power](https://www.swanbitcoin.com/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/). If a node inserts false information, other nodes immediately recognize it as invalid, which means it winds up being ignored. Since every node can verify all information on the network independently, Bitcoin is a [trustless](https://www.swanbitcoin.com/a-new-separation-of-powers/) system wherein all members can agree on a single [truth](https://www.swanbitcoin.com/bitcoin-bitcoiners-truth-beauty-and-love/).  [Video](https://www.youtube.com/watch?v=KeTaO-i49kw) This [Reddit thread](https://www.reddit.com/r/networking/comments/ga05uh/i_may_have_found_the_two_generals_problem_solution/) about the Byzantine Generals Problem provides a great overview. ### FAQs **What is the Byzantine Generals’ Problem in blockchain?** [Answer](https://komodoplatform.com/en/academy/byzantine-generals-problem/#:~:text=The%20Byzantine%20Generals%20Problem%20is,dishonest%20nodes%20in%20the%20mix.) The Byzantine Generals Problem is a challenge in computer science that portrays the difficulties of ensuring security in a distributed network. To address the Byzantine Generals Problem, honest nodes must achieve consensus even with dishonest nodes in the mix. This implies that a majority of nodes must set a rule framework and agree on its enforcement within the network. **How does Bitcoin tackle the Byzantine Generals' Problem?** [Answer](https://www.linkedin.com/pulse/from-ancient-strategies-modern-triumph-how-bitcoin-tackles-sealy#:~:text=Bitcoin's%20blockchain%20technology%20is%20groundbreaking,network%2Dwide%20agreement%20is%20achieved.) By solving the Byzantine Generals' Problem, Bitcoin allows a transaction to be consolidated into a block and appended to the blockchain only after network-wide agreement is achieved. **Did Satoshi achieve Byzantine Fault Tolerance?** [Answer](https://pintu.co.id/en/academy/post/what-is-byzantine-generals-problem-in-blockchain) Bitcoin, created by Satoshi Nakamoto, is the first time a decentralized currency has successfully solved the Byzantine Generals' Problem. Satoshi does this using the [*proof-of-work*](https://www.semanticscholar.org/paper/BYZANTINE-CONSENSUS-THROUGH-BITCOIN-%E2%80%99-S-Rijnbout/0d82a314dd96265ac8542a9ca80e5c7db09594d2) consensus method. In addition, [Bitcoin](https://www.sciencedirect.com/science/article/abs/pii/S0065245820300632) is the first decentralized system to achieve BFT ([Byzantine Fault Tolerance](https://web.archive.org/web/20220908000432id_/https://aip.scitation.org/doi/pdf/10.1063/5.0090799)). **Why has Satoshi Nakamoto remained anonymous?** [Answer](https://bravenewcoin.com/insights/why-has-satoshi-nakamoto-remained-anonymous#:~:text=Remaining%20anonymous%20allowed%20Nakamoto%20to,(or%20their)%20personal%20identity.) Remaining anonymous allowed Nakamoto to step back from the spotlight and encourage others to take ownership of the project's development and direction. Nakamoto emphasized the importance of the technology itself, rather than his (or their) personal identity. **How did the financial crisis help create Bitcoin?** [Answer](https://www.investopedia.com/articles/investing/050715/can-bitcoin-kill-central-banks.asp#:~:text=First%2C%20it%20eliminates%20the%20problem,is%20still%20a%20trustworthy%20system.) One of the responses to that crisis was Bitcoin. With its decentralized system and peer-to-peer technology, Bitcoin has the potential to [dismantle a banking system](https://www.swanbitcoin.com/the-banking-system-vs-bitcoin/) in which a central authority is responsible for decisions that affect the economic fortunes of entire countries. [Video](https://www.youtube.com/watch?v=Zq5XuTaLy4k) ### Conclusion No longer do we need a central authority to validate transactions. *Voila, the Byzantine Generals’ Problem is solved!* Kudos to Satoshi Nakamoto, the creator of Bitcoin, for figuring out a brilliant workaround to this dilemma. Those Byzantine Generals would have loved to have Nakamoto fighting in *their* army. **Just be glad he was fighting for you instead.** If you found this article about the Byzantine Generals' Problem helpful, check out our article about the [Cantillon Effect](https://www.swanbitcoin.com/cantillon-effect/). *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # What is Cantillon Effect? (Top Ways it Impacts You in 2024) URL: https://www.swanbitcoin.com/economics/cantillon-effect/ In this guide, we examine the Cantillon Effect, answering the question: 'How does Bitcoin act as a counter to uneven inflationary impacts? ' --- **Mickey Koss, Drew and Matt Ruby** · June 1, 2024 · Updated July 17, 2024 The Cantillon Effect describes how inflation impacts people unequally and helps insiders get a leg up on ordinary folks. Here is a quick summary of how it works: - New money is injected into the economy by the government. - Certain groups (e.g., banks, Wall Street, etc.) get access to this money first. - These groups gain an arbitrage opportunity – they’re able to spend money before prices increase across society. **How the Cantillon Effect Happens** - The Fed prints money to boost the economy. - That money goes from central banks to private banks to Wall Street to regular folks. - Insiders early in that chain get to spend the money first, before inflation takes hold, and thus get to acquire goods and services at a discounted rate.  **How Bitcoin Helps** - Bitcoin has a hard cap fixed supply. - This returns scarcity to the monetary system since the government can’t print more of it. - As a result, savings in Bitcoin are able to outpace the rate of monetary inflation. **Bitcoin’s Reverse Cantillon Effect** - As the government keeps printing money, Bitcoin becomes a refuge. - Bitcoin lets you opt-out of unfair fiat currency systems. - Bitcoin’s limited supply creates, in effect, the opposite of the Cantillon Effect. ### Understanding the Cantillon Effect The Cantillon Effect explains the unequal impact of inflation. When new fiat money is created, it moves from central banks to private banks, then to Wall Street, and finally to regular citizens. This lag time between money printing and inflation affects the economy differently. - **Lag Time Advantage**: Banks and Wall Street insiders can purchase goods and assets before prices rise, acquiring them at a discounted rate. - **Impact on Citizens**: Ordinary people end up paying higher prices, making inflation a regressive tax on regular citizens. Those who are less “connected” suffer financially, while banks and asset owners gain an advantage. ### The Cantillon Effect and Bitcoin So, what’s this got to do with Bitcoin? Unlike conventional fiat currencies, Bitcoin’s value isn’t tied to government printing. Instead, it arises organically from increased purchasing power, similar to the wealth effect. - **Wealth Effect**: This behavioral economic theory suggests that people spend more as the value of their assets rises. In fact, Bitcoin offers a **Reverse Cantillon Effect**. As capital enters the market, its market cap surges more than 1:1. For instance, in 2021, Bank of America estimated a [107x increase in Bitcoin value](https://archive.ph/sejEZ) during bullish market periods. Watch this [YouTube video](https://www.youtube.com/watch?v=Ftj9zw9p9Qg) to learn more. By understanding these dynamics, you can see how Bitcoin might serve as a hedge against the traditional Cantillon Effect, offering a more equitable financial landscape. ### How the Cantillon Effect Happens ##### Step 1: Government's Quantitative Easing Policy What happens when governments increase spending? Newly printed money emerges from central banks and enters the economic system through one of these mechanisms: - Government deficit spending - Quantitative easing (QE) ##### Understanding Government Deficit Spending Governments run into fiscal deficits when they spend more than they take in from taxes and other revenues. This can have both positive and negative impacts: - **Positive Impact**: Temporarily boosts a sluggish economy by giving individuals more money to buy goods/services and invest in the market. - **Negative Impact**: May create long-term deficits that are detrimental to economic growth and stability. ##### Understanding Quantitative Easing [Quantitative easing](https://fee.org/articles/the-cantillon-effect-because-of-inflation-we-re-financing-the-financiers/) is a monetary policy strategy central banks use to: - Reduce interest rates. - Increase the supply of money, which can lead to [monetary debasement](https://www.swanbitcoin.com/bitcoin-a-digital-benchmark-for-tracking-fiat-debasement/). - Drive more lending to consumers and businesses. The biggest problem with quantitative easing is the risk of inflation. When a central bank prints new currency, the total supply of dollars increases, causing inflation. [From Wikipedia](https://en.wikipedia.org/wiki/Richard_Cantillon): [![](https://www.datocms-assets.com/56652/1707868192-wiki.png?auto=format)](https://en.wikipedia.org/wiki/Richard_Cantillon#cite_note-65) Wikipedia ##### Step 2: Debt-Fueled Spending When the [government spends](https://www.swanbitcoin.com/the-government-is-spending/), it does so by borrowing and running a higher deficit instead of raising taxes. As of June 27th, 2024, the U.S. government is currently running a debt of [$34.84 trillion](https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/), which [continues to grow](https://www.swanbitcoin.com/the-government-is-spending/). Why should we care if the government has high debt? The following steps explain... ##### Step 3: Fed Keeps Printing Money To lower interest rates or bail out financial crises, the Fed performs a kind of financial alchemy (or [financialization](https://mises.org/wire/misesian-insight-cantillon-effects-and-financialization)) by printing money and acquiring more bonds. As bond prices grow, interest rates and yields come down, enabling more businesses and people to borrow money. ##### Step 4: Low-Interest Rates Boost Activity This quantitative easing policy fills the pockets of [Wall Street](https://www.swanbitcoin.com/are-institutions-feeling-the-fomo/) banks with fresh cash, eagerly awaiting investment. With interest rates at an all-time low, the wealthy elite and businesses seize the opportunity to expand operations or acquire appreciating assets. ##### Step 5: Prices Start to Increase for Ordinary People As these new dollars circulate through the economy, they silently increase the prices of life's essentials. Average folks find themselves priced out of asset ownership (e.g., buying a home or car), while [inflation's relentless surge](https://www.swanbitcoin.com/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/) makes investing more challenging. Ordinary people struggle to afford [increasing prices](https://www.swanbitcoin.com/accounting-for-bitcoin-in-a-world-of-rising-oil-prices/), finding themselves paying $8 for a dozen eggs. Ugh! ##### Result: A Society in Turmoil The result?  [Wealth inequality](https://www.lynalden.com/qe-and-inequality/)! Understanding these steps helps to see the broader impact of the Cantillon Effect on our society. [Video](https://www.youtube.com/watch?v=C1AWl-40KXY) Some argue for increased government intervention as a solution to that. But remember, the government has two central policies, and both involve spending. This relentless money printing continues to fan the flames of instability is [how](https://api.news.bitcoin.com/cantillon-effect-can-be-countered-by-having-bitcoin-only-companies-present-at-the-negotiating-table-swan-bitcoin-md/) the Cantillon Effect works. **How the Cantillion Effect Looks** ![](https://www.datocms-assets.com/56652/1701706846-cantillion-4.jpg?auto=format) ### Escape the Cycle By Saving in Bitcoin  It’s a doom loop we keep witnessing in the American economic system… We are addicted to new money: The system is currently leveraged to the eyeballs. Without this money printing, the system would collapse spectacularly. **Debt Spirals**: Debt begets [more](https://www.swanbitcoin.com/tracking-bitcoin-rally-after-the-cash-injection-of-2020/) debt. And with debt levels this high, the Federal Reserve is only one small emergency away from another round of quantitative easing, starting the entire Cantillon process over again.  Luckily, Bitcoin is here to rescue us… **Opt-out with Bitcoin**: [Bitcoin](https://www.swanbitcoin.com/yours-truly-bitcoin/) is an escape from the vicious money printing cycle that leaves people scrambling to catch up. In a world devoid of scarcity in the monetary system, scarce assets like Bitcoin [allow](https://www.swanbitcoin.com/cash-flow-into-bitcoin-next/) your savings to outpace the monetary inflation rate. **NGU (Number Go Up)**: As the money supply increases exponentially, asset prices will too. Bitcoin may be [the younger generations](https://www.swanbitcoin.com/why-bitcoin-is-what-millennials-are-looking-for/)’ only hope to achieve a secure financial future. [**More on NGU**](https://thebitcoinmanual.com/btc-culture/glossary/ngu/) ### Final Thoughts The impact of the Cantillon Effect needs to stay top-of-mind as we experience additional increases in the money supply. A potential Federal Reserve [pivot moment](https://www.youtube.com/watch?v=l3NkDzl5amg) is near, which means the [money printer](https://www.youtube.com/watch?v=Lg12Fvq4Vo8) will likely start up again. And when that happens, remember that inflationary effects will not be distributed evenly. - *“The only way to get bitcoin is to acquire it from someone else, you pretty much cannot steal bitcoin, you have to provide something of value and someone else has to willingly part with their bitcoin. I think the profundity of that cannot be overstated. There is no other way to extract value from the global markets than to be productive and I think this is an enormous change for society”* **Gigi, Engineer at Swan Bitcoin** [**(Bitcoin’s Nature, “Bitcoin Magazine Podcast”)**](https://btcmagwpstage.wpengine.com/articles/video-bitcoins-nature-with-gigi) ![](https://www.datocms-assets.com/56652/1707364682-fed-pivot.jpeg?auto=format) Elliot Waves International #### Follow the Money: Quantitative Easing and Bitcoin It's crucial to keep an eye on where new money enters the system. During [quantitative easing (QE)](https://www.forbes.com/advisor/investing/quantitative-easing-qe/#:~:text=Quantitative%20easing%E2%80%94QE%20for%20short,lending%20to%20consumers%20and%20businesses), new money flows into the system through [Wall Street](https://www.swanbitcoin.com/are-institutions-feeling-the-fomo/). Now, with Spot Bitcoin ETFs available to Wall Street traders, [Bitcoin](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) is increasingly becoming a sponge for this excess liquidity. - **Record-Breaking Launch**: Spot Bitcoin ETFs shattered records on their [first day of trading](https://www.reuters.com/technology/spot-bitcoin-etfs-start-trading-big-boost-crypto-industry-2024-01-11/), with over $4.6 billion in trading volume, the highest ever for an ETF launch. - **Major Inflows**: Spot Bitcoin ETFs from BlackRock and Fidelity Investments saw more than [$2 billion of net inflows](https://www.pionline.com/exchange-traded-funds/blackrock-fidelity-spot-bitcoin-etfs-winning-inflow-race-gbtc-outflows#:~:text=Spot%20bitcoin%20ETFs%20from%20BlackRock,outflows%2C%20Bloomberg%20Intelligence%20data%20showed) during their first 12 trading days. Meanwhile, the Grayscale Bitcoin Trust experienced more than $5 billion in net outflows. #### Bitcoin as an Investment Tool This excess liquidity might shift from bonds into Bitcoin investment tools, like [Bitcoin IRAs](https://www.swanbitcoin.com/bitcoin-ira/) and [spot-Bitcoin ETFs](https://www.swanbitcoin.com/bitcoin-etf/). Stay updated on all things Bitcoin ETF with our [Bitcoin Daily Show](https://www.youtube.com/watch?v=1voKhumF_1c&list=PLoB1eZWSVHVaCOtrrbq79F2JXVgV2Xz-J&pp=iAQB), hosted by Dante Cook. [Video](https://www.youtube.com/watch?v=HGeqbS62LcQ) #### The Cantillon Effect and Bitcoin Understanding the Cantillon Effect reveals the power of Bitcoin’s reverse Cantillon Effect. As the government continues printing money, Bitcoin becomes a refuge, effectively becoming *"true money"* that allows us to opt out of unfair fiat currency systems. In a world devoid of monetary scarcity, Bitcoin’s limited supply leverages the Cantillon Effect, enabling us to benefit from it. If you enjoyed reading this, check out our article about the [Byzantine Generals Problem](https://www.swanbitcoin.com/byzantine-generals-problem/). *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # What Are Bitcoin Smart Contracts: A Beginner’s Guide URL: https://www.swanbitcoin.com/education/bitcoin-smart-contracts/ Smart contracts are self-executing agreements powered by code… Learn how to make them work for you with Swan! --- **Mickey Koss and Drew** · June 1, 2024 · Updated July 17, 2024 Bitcoin. You've heard of it as *"digital gold"* or *"magic internet money,"* enabling payments without banks. But did you know Bitcoin can do even more than simple peer-to-peer transactions?  In this beginner's guide, we'll decode the buzz around Bitcoin smart contracts and show you how they work. By the end, you'll see Bitcoin as more than just a store of value but a platform for the next generation of digital financial products. Strap in! ### Understanding Bitcoin Smart Contracts Simply put, a smart contract is an *"if/then"* agreement written in computer code rather than legal jargon. For example, if X event happens, then execute Y action. The key difference between traditional and smart contracts is enforcement - smart contracts auto-execute once conditions are met, and no middlemen are required! ![](https://www.datocms-assets.com/56652/1713538611-smart.png?auto=format) Blockgeeks We can understand smart contracts through the vending machine analogy. A vending machine takes your cash, connects it to a desired snack choice, and dispenses it once you select an item. The entire agreement—cash for chips—is handled automatically based on written code rather than a human. Now, translate that to the digital world, and you've got smart contract basics down! The core benefit of smart contracts is that there is no longer a need for costly intermediaries or blind trust between counterparties. Code execution also brings speed, efficiency, and transparency to agreements. As Bitcoin matures, smart contracts open doors for programmable money applications that were impossible before. Exciting times ahead! ### The Evolution of Bitcoin Smart Contracts **Introduction to the concept of smart contracts on the Bitcoin network** The beauty? These digital agreements run on the Bitcoin blockchain, making them as trusty as a Swiss watch – they automatically execute transactions when certain conditions are met, no middlemen needed! Since its launch in 2009, Bitcoin development has focused on peer-to-peer electronic cash—sending value from A to B without banks or middlemen. Yet even in its early days, enthusiasts saw more possibilities—like enabling complex contracts through code!  Now, before your eyes glaze over at the mention of *"contracts"* (because let's face it, that word conjures up images of stuffy lawyers and endless stacks of paperwork), let me assure you: We're not talking about your average legal document here.  Bitcoin smart contracts are like your tech-savvy friend who always knows how to handle money matters without getting emotionally involved. They're self-executing contracts with the terms of the agreement directly written into lines of code.  The beauty of Bitcoin smart contracts lies in their simplicity and efficiency. These digital agreements run on the Bitcoin blockchain, functioning like a Swiss watch – they automatically execute transactions when certain conditions are met, eliminating the need for intermediaries. Several Bitcoin Improvement Proposals (BIPs) have since brought smart contract capability to the protocol. ***OP_RETURN (2014) - Allow short messages in transactions   OP_CHECKLOCKTIMEVERIFY (2015) - Timelock funds until X date   OP_CHECKSEQUENCEVERIFY (2015) - Timelock funds until X block*** These upgrades allow basic smart contract functions in Bitcoin, like escrows, time-bound payments, multi-party agreements, and more. While Bitcoin's scripting language intentionally limits complexity, developers continue finding creative solutions to build next-gen digital agreements on a secure foundation. ### How Bitcoin Smart Contracts Differ from Ethereum While Bitcoin's approach to smart contracts emphasizes simplicity, security, and reliability, enabling robust yet relatively basic functions, Ethereum embraces complexity to offer a broad spectrum of functionalities at the expense of potentially increased attack surfaces and scalability issues.  The choice between the two largely depends on the requirements of the use case at hand. Bitcoin's limitations are designed to prioritize security and stability over versatility. Smart contracts in Bitcoin are essentially pre-defined conditions encoded into transactions. Executing such conditions results in the transactions being completed. On the other hand, Ethereum was conceived as a distributed computing platform with a broader ambition. It allows developers to write more complex and conditional contracts, often called decentralized applications (dApps).  However, this enhanced capability comes with its own set of challenges, notably in the areas of security and scalability. Complex contracts can be more challenging to audit, leading to vulnerabilities. In contrast, the computational demands of running these contracts have led to congestion and high transaction fees during peak times. The massive amount of data involved also prevents the average user from [running their own node](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/), leading to centralization concerns. **Security benefits of Bitcoin's limited scripting language** Bitcoin's scripting language is like the cool, minimalist friend who shows up at a potluck with a dish with only three ingredients but somehow steals the show. The Bitcoin scripting language, known simply as ***Script***, is a stack-based, executed-from-left-to-right set of instructions that makes smart contracts possible. But here's the kicker—it's intentionally limited. Why, you ask? Well, because with simplicity comes great security. - **High Security**: Imagine a fortress with fewer doors. Fewer doors mean fewer ways for invaders to sneak in.  - **Easy to Learn**: You don't need to be a coding Jedi to get the hang of Bitcoin Script. It's designed to be easy for anyone to pick up.  - **Stability**: Bitcoin's Script is as stable as your grandmother's 100-year-old sourdough starter. This reliability ensures that contracts executed today will run the same way years later, providing a solid foundation for financial agreements. **(Actual) Decentralization** In the Bitcoin ecosystem, running a full node is akin to having VIP backstage passes at a rock concert—you get complete autonomy and control, plus a front-row seat to the action. The beauty of Bitcoin's streamlined approach means that almost anyone with a standard computer and an internet connection can join the party. ### Ongoing Developments and Future Potential for Bitcoin Smart Contracts **Lightning Network** The [Lightning Network](https://www.swanbitcoin.com/what-s-new-and-coming-in-lightning/) is like Bitcoin's express lane, and when it comes to smart contracts, it's ready to take them from a trot to a gallop. The [Lightning Network](https://www.swanbitcoin.com/running-the-numbers/) comprises multiple bidirectional payment channels that handle transactions parallel to the main blockchain. Using a series of smart contracts that *"lock"* Bitcoin within the [Lightning Network](https://www.swanbitcoin.com/a-look-at-the-lightning-network/) avoids issues like double-spending. This means lightning-fast transactions with a side order of reduced fees. It's like upgrading from a dial-up connection to fiber-optic internet—game-changing. **Taproot and CTV Change Everything** Though not adopted into Bitcoin's code, CTV brings a dash of predictability to the table by allowing Bitcoiners to define conditions for how coins can be spent in the future. Paired with additional privacy gained by Taproot, the dynamic duo has the potential to give smart contracts on Bitcoin flexibility and strength. Advocates also think that CTV may be able to keep transactions leaner, reducing future demand for that precious block space.  **Satoshi Utility** Combine all these advancements, and what do you get? A future where your Bitcoin works smarter, not harder, potentially increases your stash's value and [utility](https://www.swanbitcoin.com/bitcoin-and-the-most-valuable-brand-of-the-21st-century/). More secure, efficient, and versatile smart contracts mean a more robust Bitcoin ecosystem. And who doesn't like the sound of that? ### Real-World Applications of Bitcoin Smart Contracts Bitcoin's smart contract capabilities are actively employed in numerous areas today and have promising potential use cases. Here are a few notable examples: - **Escrow Services**: Bitcoin smart contracts can be programmed to allow for escrow services. For instance, a Bitcoin smart contract can be designed to return the initial escrow deposit to a tenant's account via a separate transaction only after the lease has expired and all the payments have been made. Such smart contracts can increase trust and security during transactions. - **Automated Payments**: Smart contracts can automate conditional Bitcoin payments without counterparty risk. For example, one could construct a conceptual Bitcoin vending machine dispensing digital assets upon payment.  - **Decentralized Applications (dApps)**: Within the Bitcoin network, smart contracts are used to power a host of decentralized applications (dApps) capable of executing intricate financial transactions without intermediaries. We will discuss these below. Smart contracts are the new *"it"* thing as we watch bright minds and pioneering startups chart unknown territories in the Bitcoin blockchain. Let's meet two of the top players ***(other than the Lightning Network)*** *-* Rootstock (RSK) and the Liquid Network - each revolutionizing this space in unique and novel ways. ### The Wizards of Rootstock (RSK) Now, RSK isn't your average neighborhood sidechain. It's the Hogwarts of Bitcoin smart contracts—merging the gap between Ethereum's smart contract versatility and Bitcoin's robust security! Rootstock is the pioneering open-source smart contract platform driven by the Bitcoin network. Its mission is to enhance the Bitcoin ecosystem by introducing smart contracts, enabling nearly instantaneous payments, and expanding scalability. [Rootstock's full technology stack](https://dev.rootstock.io/the-stack), is built on Bitcoin, from its smart contracts to the Rootstock Infrastructure Framework. This stack aims to foster a more equitable and inclusive financial system. Mining is the first point of contact. Bitcoin miners engage in what is known as merged mining, which simultaneously secures both the Bitcoin and Rootstock networks using the same infrastructure and energy consumption. Every 10 minutes, these miners generate blocks on the Bitcoin network, processing Bitcoin transactions between addresses and minting new Bitcoin. On Rootstock, however, blocks are produced every 30 seconds specifically to support the execution of smart contracts. [![](https://www.datocms-assets.com/56652/1713536978-2-way-peg-example.webp?auto=format)](https://www.a24.com/crypto/que-es-rootstock-rsk-y-que-manera-puede-potenciar-bitcoin-btc-n1055668) A24 While this process does not generate new coins, miners still receive rewards through merged mining. For more information on mining, visit [mine BTC with Rootstock](https://rootstock.io/mine-btc-with-rootstock/). With its sidechain sorcery, RSK enables your Bitcoin to be locked up cozily on the mainchain. At the same time, they virtually play on the RSK sidechain. This permits users to execute complex contracts without ever disturbing the mighty dragon hoard of Bitcoin. ***NOTE****: Smart contracts for RSK are written using Solidity (a Javascript like programming language) and are fully compatible with Ethereum Smart Contracts, so you can migrate your existing Ethereum Smart Contract to RSK without changing the smart contract.* ### Liquid Network: Your Assets on Ice Skates Brought to you by the folks at [Blockstream](https://blockstream.com/), [Liquid Network](https://liquid.net/) has a name that makes you think of refreshing beverages, but it's even cooler. Picture your Bitcoin assets wearing ice skates—they glide faster and smoother on Liquid's sidechain. It is designed to quicken Bitcoin transactions, and, as a bonus, it adds a layer of privacy that would make even a secret agent blush. This platform is shaking things up, providing the ability to issue digital assets and, yes, deploy smart contracts with a sporty twist of Bitcoin security. A veritable cocktail for the digital age. These projects are much like knights setting forth to expand the kingdom of Bitcoin, with visions of smart contracts galore—fostering a land where transactions are as smart as they are secure. It's about creating a treasure horde that works for you, all the while shrouded in the impregnable armor of Bitcoin. ### Getting Started with Bitcoin Smart Contracts Some resources beginners might find helpful when exploring Bitcoin smart contract development. - **Online Tutorials**: Websites such as [FreeCodeCamp](https://www.freecodecamp.org/news/introduction-to-blockchain/) offer tutorials that aid in understanding the basics of blockchain and how to code smart contracts]. - **Comprehensive Guides**: Comprehensive guides available on [Medium](https://medium.com/cryptocurrency-scripts/bitcoin-smart-contracts-and-apps-a-comprehensive-guide-a06e75bf792e) cover Bitcoin smart contract development and applications. These also stress the need for a solid understanding of Bitcoin’s scripting language. - **Step-by-Step Guides**: Resources like [CoinGeek ](https://coingeek.com/a-step-by-step-guide-to-developing-bitcoin-smart-contracts/)provide a step-by-step guide for developing Bitcoin smart contracts, including segments on design, development, testing, deployment, and invocation. - **Blogs**: Like those on [Tectum ](https://tectum.io/blog/bitcoin-smart-contracts/) provide overviews and insights into Bitcoin smart contracts. Though you may not be excited about Bitcoin smart contracts as a Toxic Maxi, the one benefit they may provide is a brain drain from the broader crypto ecosystem to the one true kingdom of Bitcoin. With Bitcoin's simplicity, it's easy to start testing and building your skills by attempting to write simple, smart contracts yourself. You can even do it on Bitcoin's test net to avoid losing your precious sats. ### Bitcoin Smart Contracts FAQ  ##### What Are Smart Contracts? **A:** Smart contracts are self-executing contracts where the terms of the agreement between buyer and seller are directly written into lines of code. They automatically enforce and execute the terms of a contract based on predefined rules. ##### Can Bitcoin Really Execute Smart Contracts? **A:** Yes, Bitcoin can execute smart contracts, although in a more limited capacity compared to platforms like Ethereum. Bitcoin's scripting language, Script, allows for the creation of certain types of smart contracts, emphasizing security and simplicity. ##### How Do Bitcoin Smart Contracts Work? **A:** Bitcoin smart contracts work by using Bitcoin's scripting language to encode conditions into Bitcoin transactions. These conditions must be met for the transaction to be completed. This can include simple operations like multi-signature requirements or more complex conditions defined by the contract creator. ##### Are Bitcoin Smart Contracts Secure? **A:** Bitcoin's approach to smart contracts prioritizes security. The simplicity of Bitcoin's scripting language reduces the surface area for potential attacks, making well-designed Bitcoin smart contracts highly secure. However, like all code, the security depends on the quality of the contract's implementation. ##### What Makes Bitcoin Smart Contracts Different from Those on Ethereum? **A:** The main difference lies in the complexity and capabilities. Ethereum's smart contracts are more complex and flexible, allowing for a wider range of applications. Bitcoin smart contracts are simpler, which can lead to increased security but limits their functionality compared to Ethereum. ##### Can I Create a Bitcoin Smart Contract? **A:** Yes, if you have some programming knowledge and understand Bitcoin's scripting language, you can create Bitcoin smart contracts. Resources and communities are also available to help beginners learn how to develop smart contracts on Bitcoin. ##### What Are Some Use Cases for Bitcoin Smart Contracts? **A:** Use cases include, but are not limited to, automated payments, escrow services, time-locked contracts, and certain types of decentralized finance (DeFi) applications. These applications leverage the security and reliability of the Bitcoin network. ##### Where Can I Learn More About Developing Bitcoin Smart Contracts? **A:** Several online resources, tutorials, and community forums are dedicated to Bitcoin development, including smart contracts. Websites like Bitcoin.org, developer forums, and platforms such as GitHub can provide guidance and resources for those interested in learning more. ### Wrapping Up the Bitcoin Smart Contract Story Alright, friends, it's time to Ctrl+S on our Bitcoin smart contract saga and save all the nuggets of wisdom we've uncovered.  - We built our knowledge on what smart contracts are, their history in the Bitcoin space, and why Bitcoin provides a better foundation for smart contracts than centralized crypto casino chains. - We dished out the starter pack for Bitcoin smart contract development, complete with online courses, dev kits, and a pinch of forum banter. Because even the best of us need a map to navigate the high seas of code. - We discussed the importance of community – your coding crew, debuggers-in-arms, and shoulder to cry on when the semicolon you missed was *right there* the whole time. Education in Bitcoin is a marathon, not a sprint—unless you're racing to snag that last Bitcoin pizza slice. And with the potential of smart contracts in your toolbox, who knows the digital domains you'll conquer? So, as we lay our smart contracts down to rest, here's a little brain teaser to stir the pot:  If a smart contract executes in the blockchain, and there's no one around to transact, does it make a block? Share your philosophically cryptic or hilariously technical answers below, and let's keep the learning and laughs rolling! Until next time, remember to HODL onto your private keys and never stop exploring the Bitcoin cosmos! [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) for Swan today with [no fees](https://www.swanbitcoin.com/fees/) for your first $10k in purchases. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Multi-Sig Custody and Inheritance - Swan Bitcoin URL: https://www.swanbitcoin.com/education/multi-sig-custody-and-inheritance/ This essay is my attempt to answer all your questions about multi-sig custody and inheritance so you walk away with a better understanding of the options and can figure out what is best for your family. --- **Matthew Gillette** · June 27, 2024 · Updated July 17, 2024 A question that I often get asked is, *“Matt, what’s the best way to secure my Bitcoin holdings so that my spouse and children will be able to access and enjoy the wealth that I’ve helped build for them?”* My short answer almost immediately is: *“Cold Stored within a Collaborative Multi-Sig.”* Their response is usually something like, *“Wow, ok, great. Now, what the hell is a Collaborative Multi-Sig?.”* This essay is my attempt to answer these questions so you walk away with a better understanding of the options and can figure out what is best for your family.  The topic of inheritance is already a very complicated one. What works for one family, won’t work exactly the same way for another. A family of hardcore Bitcoiners, who run their own nodes and set up their own multi-sigs, may not require the same as a family with one brave Bitcoiner who lovingly leads a family of no-coiners (or worse, heirs with no interest in learning about Bitcoin!).  To get started, we’ll need to cover some basic topics surrounding how you can hold the keys to your Bitcoin. I’ll do my best to outline what I think are some of the benefits and some of the risks of each setup.  I’ll start with 3rd party custody, then single-signature cold storage self-custody, then multi-signature self-custody, and lastly, multi-signature collaborative custody.   If you want to skip this essay altogether, I’ll make it easy:   ***I believe multi-signature collaborative custody is by far the best way to ensure continuity across generations and heirs, due to the increased security & built-in redundancy, and most importantly, having a Bitcoin expert who can be brought in to teach and guide your surviving loved ones.***   The last thing you want is for your heir(s), who know little about the true potential of Bitcoin in 2024, to sell your 3 Bitcoins for a Lambo and call it a day.   We bitcoiners have listened, read, and watched a thousand hours of Bitcoin education. We have painstakingly held onto our “corn” during seemingly endless bear markets filled with fear, uncertainty, and doubt. We’ve gotten scoffed at by unaware and ignorant eggplant-level IQ non-player characters. We’ve watched tutorial videos and how-tos to learn to take possession of our keys and waited patiently for those first sats to arrive in our wallets with sweat dripping down our brows.   We did not invest this much of our time and energy and resources so that our bitcoin would someday be lost or squandered.  NO! Our bitcoin will survive the journey, arriving safely to our children and grandchildren!!  Let’s get into it. ### 3rd Party Custody  Now you likely know the old Bitcoin phrase, “Not your keys, not your coin”. This speaks to the counterparty risk when your Bitcoin keys are held by someone else, be it a custodian, institution, or your great uncle. As long as you are not the one holding your keys, there is a risk that whoever is, could mismanage, steal, or lose your Bitcoin.  Keep in mind that a core feature of Bitcoin is that it has final settlement. There are no “take-backs”, “charge-backs”, or “just-kiddings”. When Bitcoin travels on the network, there is no one to rescue it from a mistake or take it back by force from a bad actor. Having a 3rd party custodial partner does come with a pretty huge benefit: they manage holding your Bitcoin keys so you don’t have to!  You can log in to their site, send the bitcoin at will, and don’t have to worry about messing up the storage element of your keys.  I know many people who choose to go this route, at least for some of their bitcoin. Some view self-custody as too risky from a physical safety perspective ($5 dollar wrench attack) or are concerned that a family member could lose thousands or millions of dollars of value. With Qualified Custodians, many offer insurance against theft or mismanagement, and that also is appealing to those who don’t want the responsibility of being their own bank. Again, the BIG risk here is trusting that your counterparty will not rug you by accident or bad acting.  ### Single-Signature Cold Storage Single-Sig is a great first step to feeling like a true Bitcoiner. This usually involves a key manager hardware device, like a Blockstream Jade, Cold Card, SeedSigner, etc. While they are called “wallets”, it is more precise to think of these like a “keyring”, since they hold multiple Bitcoin keys that are used to sign transactions on the Bitcoin network.  With Single-Sig, you are no longer relying on any counterparty and you “can be your own bank”.  And Bitcoiners love to talk about “being their own bank”.  What people don’t talk about is the other side of the coin:  being your own bank can be stressful and risky too!  However, if you keep your hardware device and/or your 12-word seed phrase in the gun safe, if there is a break-in and someone gets that 12-word seed phrase, they can easily take your hard-earned bitcoin into a different wallet that they control.  This is more secure than a hot wallet where your keys are kept on an internet-connected device (since online hacking is a lot more common than home intrusions), but I do have one friend who put his written seed phrase and hardware device in a box when he moved and he sadly still can’t find it. There are ways to make a single-sig more robust: most devices have an option for adding a “passphrase”, which is a secret 13th or 25th word or phrase. So if an attacker did find the 12-word seed phrase, they would still not have everything they need to steal your Bitcoin.  But this is not great for inheritance though. If Grandpa never told you what the passphrase was, you’re out of luck, even with the hardware device and the 12-word seed.  ### Multi-Signature Cold Storage Multi-Sig, as the name suggests, is a wallet configuration that instead of requiring one key signature to transact with your Bitcoin, multiple signatures are now required. The most popular is a 2-of-3 setup, where at minimum two key signatures are required to move your Bitcoin. (with only one signature, you can’t move your Bitcoin). You can also configure a 3-of-5, 5-of-7, etc, or any combination of your choosing. But with each expansion of key signatures required, you introduce additional complexity, which is also a form of risk.  Businesses may require more complexity (for example, each Director or Board Member has a key, and all but two are required in order to transact). However, for most families, the 2-of-3 configuration has plenty of protection and minimal complexity and makes the most sense. The pros here are many. With a 2 of 3 setup, you eliminate the single point of failure inherent to a single-sig setup. That is, if a thief comes across only one of the three hardware devices, with only that one device or seed phrase, they will be unable to do anything with your Bitcoin, since at least (2) key signatures are always required.  With 3 hardware devices, you would obviously want to store each of those in 3 different geographical locations. Doing this helps to prevent theft, fire, flood, etc. For our topic of inheritance, the risk of setting up a multi-sig is that if you lose or accidentally destroy two or more of the required keys, you are out of luck and that bitcoin is gone forever. A single key by itself is never enough to access your generational wealth. This model also requires that your heirs understand Bitcoin fairly well and that they don’t lose the seed phrases, devices, or forget the pin codes to the devices.  It is also an important criteria to store the wallet descriptor that will be generated by the 3 key combination when setting it up because with only two of them in possession, you will not be able to generate the addresses that correspond to the 2 of 3 setup. Multi-signature for beginners does have this gotcha that users need to be aware of if they are making multiple deposits to multiple addresses governed by this setup. ### Multi-Signature Collaborative Custody Cold Storage  Multi-Sig Collaborative Custody is a multi-sig wallet configuration with a superpower: The added element of a trusted collaborative partner or custodian who will manage some number of your keys for you. Swan recently released the [Swan Vault](http://swan.com/vault). This is our version of a collaborative custody 2-of-3 multi-sig, and it is awesome for inheritance planning. The setup is simple: the family or individual has (2) Blockstream Jade hardware devices and Swan manages a third cloud-based key signature. Again, we chose to go with the 2-of-3 model, as this eliminates the single point of failure (because of the built-in redundancy of having (2) key signing devices) while not adding in more complexity than what is necessary.  How does this work in practice? I usually give the following example: You can keep one Jade in your home, and the other Jade with a trusted relative, in a private vault, at the lake house, or at some other location you or your relatives can get to if needed. Most people can come up with a safe location for their second Jade outside of their home.  Now, using your Jade at home, when paired with Swan’s cloud key, you can access your Bitcoin with full control, without ever needing to retrieve your 2nd Jade from its safe haven.  Whenever the cloud key is used within your 2-factor-authenticated Swan account, there is a mandatory 72-hour hold on broadcasting any transactions to further protect against coercion, theft, duress, etc.  So why is Collaborative Custody Multi-Sig the best option for Inheritance? Consider this example: Bitcoiner Dad has done his best to teach his wife and adult children about Bitcoin, but they are just not interested yet. What will he do to ensure his stack of sats is not lost when he dies?   Bitcoiner Dad can update his Trust, so there is an amendment that clearly communicates that he owns Bitcoin and his beneficiaries inherit it, with additional instructions that include something like*: - He has a Swan account with an IRA full of Bitcoin, and a Swan Vault associated with his email address, [BitcoinerDad@swanmail.com](mailto:BitcoinerDad@swanmail.com) - He has a Blockstream Jade held at Bitcoiner Credit Union’s safety deposit box number 21 - Instructions for his wife to retrieve the Jade and contact Swan, or to get connected with their Swan Private Advisor As you can see, there’s nothing complex or super “Bitcoiny” about the above. If anyone got a hold of this information in the Trust, they can still not do anything with the Bitcoin without his 2nd signing device. However, his surviving wife can reach out to Swan and we can help her access her Bitcoin, the way Bitcoiner Dad intended, with the use of Swan’s cloud key and the (1) Jade in her possession.   You’ll notice there were a few different transfers taking place. The first is the legal transfer (clearly documented in a Will or Trust who gets what). Just because someone has a key to the house, doesn’t mean that they own the house.  The second transfer is the retrieving and handling of the hardware devices, seed phrases, etc. The wife may want to set up a new multi-sig Vault or may need to sell some bitcoin to pay for certain expenses. Swan can help her do what she needs to do.  The third and most important transfer is *knowledge* transfer. As I  mentioned earlier, we wouldn’t want to see the bitcoin squandered or lost – or even underappreciated. At Swan Private, we can come alongside the surviving family and educate them so they really understand what they have been given. We help people who are new to Bitcoin every day, answering questions, sharing content, and helping with their first time sending or receiving Bitcoin. We love doing this. And that piece right there is why collaborative custody multi-sig is so valuable. You are not leaving your inheritance to a mourning family who wouldn’t know the first thing about Bitcoin, by themselves. You are providing a safety net of trusted Bitcoiners who can help guide your heirs and be there for them as they learn and progress.  I hope this has cleared a few things up about custody options and how each has their own unique pros and cons. While I believe Collaborative Custody Multi-Sig is the best for inheritance planning AND minimizing attack vectors, it might make sense to diversify across a few different types of custody. You may have 80% of your Bitcoin in cold storage in a Swan Vault in order to ensure your heir has a trusted Advisor after you’ve departed. You might have some held in 3rd party custody with a Swan IRA for tax efficiency. You might even have a secret, single-sig hardware wallet that you keep in El Salvador as your bug-out coin. You can exercise lots of options.  You can always reach out to your Swan Private Advisor to learn more about Swan Vault and/or to get assistance with finding a good estate planning attorney to create your Will or Trust. We know several Attorneys who are also Bitcoiners that we’d love to put you in contact with. ****I am not a legal professional. This is not legal advice. Please consult an attorney to*** ***create/update your will or trust.*** ### Matthew Gillette Account Executive, Swan Private Client # Cherry Pickers - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/cherry-pickers/ While quick ‘drive-by’ analyses can be inflammatory and make it look like Bitcoin is failing, proper analysis requires ‘zooming out’ and understanding the reasoning at a deeper level… --- **Stephan Livera** · May 20, 2024 · Updated July 16, 2024 #### It’s all just a bit too convenient, isn’t it? When you make an argument for or against something, some people like to take liberties with the timelines, or the timing of their statements. Take pig-headed gold bug, Peter Schiff: Obviously, if you take a perspective on three days of price action instead of zooming out and seeing a broader perspective, you’ll get things wrong! ![](https://www.datocms-assets.com/56652/1716226596-image4.png?auto=format) If you zoom out and take the full ~15-year perspective of Bitcoin’s existence, this is what you get instead. ![](https://www.datocms-assets.com/56652/1716226614-table.svg) See, Peter Schiff had chosen to opine on this drop over a few days from around $71,000/BTC to around $66,000/BTC: Which is why long-time HODLers tell you to simply zoom out. If you zoom out on a one-year timeline, Bitcoin has gone from about $28,000/BTC to $66,000/BTC (from 1st April 2023 to 1st April 2024).  ![](https://www.datocms-assets.com/56652/1716226487-image3.png?auto=format) ![](https://www.datocms-assets.com/56652/1716226302-image8.png?auto=format) But why let longer term numbers get in the way of a deceptive post! #### Another example  Now, let’s turn to another example that is more related to Bitcoin’s useability. Most Bitcoiners today understand it as a final settlement layer for value, where the price to get your transaction confirmed into a Bitcoin block is based on a market for blockspace. If there are lots of other people competing to get their transaction into a block, you will naturally have to pay more to get your transaction in that block. We have recently seen a lot more transactions of the spammy kind (inscriptions, BRC-20, Stamps) etc, and as of the recent halving, a new protocol, Runes. Runes is essentially a new *‘altcoin-on-Bitcoin’* meta-protocol that operates on top of Bitcoin and is intended as a replacement for BRC-20. One silver lining here is that Runes is a more UTXO-efficient protocol than BRC-20, which creates a lot of extra UTXOs. But the downside here is that as the halving occurred, there was a big spike in on-chain transactions as the Rune degens were playing their games in Bitcoin’s mempool. Many of them wanted to be first or at least early to mint new Runes, which they could then hope to dump on other people as is a tradition in the non-Bitcoin *‘Crypto’* world. This caused a temporary spike up in the prices to get a Bitcoin on-chain transaction confirmed. Of course, big blockers who are still salty about the events of the block size war in 2017 chose this precise moment to run *‘victory laps*’ on social media. They would post things like, *“Oh, look at how much it costs, Bitcoin has failed as a Medium of Exchange and it’s all over!”.* As an example, see Aaron Day’s post straight after the halving on April 20th:  ![](https://www.datocms-assets.com/56652/1716226187-image7.png?auto=format) Or, of course, if he’d waited a few days until April 25th, and he’d see that it had already dropped down to much more reasonable levels: ![](https://www.datocms-assets.com/56652/1716226149-image2.png?auto=format) And as I write this now, on April 30th, it’s even lower: ![](https://www.datocms-assets.com/56652/1716226116-image1.png?auto=format) So what’s the lesson? We should learn that we shouldn’t just take cherry-picked statistics or numbers; we should zoom out and look at longer-term averages. As an example, Bull Bitcoin has a [fee multiple tool](https://feemultiple.bullbitcoin.com/chart/index) that show the price against the 1-year average. It’s also important to understand the context of how the tool is designed to be used. For example, Bitcoin was never going to support on-chain scaling of everybody’s coffee payments globally. We were always going to need other layers and off-chain techniques. ![](https://www.datocms-assets.com/56652/1716225642-image6.png?auto=format) This is why the intelligent way to do smaller transactions is to make use of Bull Bitcoin Fee Multiple Bitcoin’s Lightning Network. You can use it either custodially (for beginners or people who’d rather not use the chain as often) or self-custodial (for those who want increased sovereignty and manual control and are prepared to incur the associated cost of running an always-on node). For those users who use Lightning self-custodially, they are able to use tools such as [Mutiny Wallet](https://mutinywallet.com/) or [Zeus Wallet](https://zeusln.com/) in the USA, or [Phoenix](https://phoenix.acinq.co/) from outside the USA to easily ‘compress’ the number of times they have to use on-chain transactions. It’s also quite feasible to open Lightning channels when Bitcoin main chain fees are lower and then subsequently do most of your commerce off-chain. So, as an example, I could do one or two on-chain transactions per month but do dozens or even hundreds of off-chain transactions per month. This minimizes the chain fees required while still enabling me to do coffee or other smaller-value transactions instantly. #### Conclusion While quick *‘drive-by’* analyses can be inflammatory and make it look like Bitcoin is failing, proper analysis requires ‘zooming out’ and understanding the reasoning at a deeper level. Goldbugs who are salty about how Bitcoin does what they hoped gold would do often resort to cherry-picking timelines to make gold look good. Likewise, big blockers who do not understand the reason for Bitcoin’s current status resort to cherry-picking specific fees to paint a narrative that Bitcoin has failed from a fee perspective. Zooming out and understanding why Bitcoin is the way it is is crucial to seeing the bigger picture.   *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # The Eras of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/the-eras-of-bitcoin/ SWAN SIGNAL MONTHLY NEWSLETTER VOL. 42 --- **Swan Bitcoin and Drew** · March 29, 2024 · Updated July 15, 2024 The history of Bitcoin can be viewed through the lens of its four-year cycles, commonly referred to as “*Halving epochs.*” Halving epochs last for about four years and end when the reward for mining Bitcoin is cut in half and a new epoch begins. The end of this epoch is just a few weeks away, and the mining reward will fall from 6.25 BTC to 3.125 BTC per block. By 2034, during the 7th epoch, over 99% of all Bitcoin to ever exist will have been mined. Bitcoin’s fixed monetary policy and issuance rate stand in stark contrast to central banks, who print money in unpredictable quantities, ultimately robbing you of your purchasing power. Below is a brief history lesson on what transpired during the first four epochs (over 15 years!) and what we can expect in the years to come. ![](https://www.datocms-assets.com/56652/1711734659-unnamed.png?auto=format) ChartsBTC, CoinMetrics ### Genesis Epoch (2009-2012) **Max:** $29.02 **Min:** $0.00 **Average:** $9.53 **Milestones:** Bitcoin was born amidst the Great Financial Crisis. Satoshi mined the Genesis block. Bitcoin is officially priced in USD and other currencies. The "*Genesis Epoch*" (2009-2012) began with the creation of the Genesis block on January 3, 2009, mined by Satoshi Nakamoto. It would not be until May 22, 2010, that the first commercial transaction took place. That day, Laszlo Hanyecz made history by purchasing two large pizzas for 10,000 BTC. That transaction valued each Bitcoin at roughly $.002 at the time. Today, that same 10,000 BTC would be valued at over $690M. This transaction established Bitcoin's first known price and moved the nascent technology from a novelty to an actual currency. During this epoch, Mt. Gox, an early Bitcoin exchange, emerged, providing users with a platform to trade between fiat currency and Bitcoin. The earliest investors in Bitcoin included libertarians, cypherpunks, and tech enthusiasts looking for an alternative to traditional banking. The Genesis epoch also established the Silk Road, a digital darknet marketplace that accepted Bitcoin for payment. While controversial, it provided Bitcoin a testing ground to demonstrate its ability to facilitate transactions effectively. The primary communication platform for Bitcoin then was [bitcointalk.org](http://bitcointalk.org/), where most of Satoshi's writings still reside. Satoshi disappeared during this era; his [last post](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGSKebdWBO319GvgDALKGOk4IZYBkYGwxNRLhpwhK1IsHIviCo-4qA9qZTT0DFUq_5aLpFtTww=) was dated December 10, 2010. ### The Expansion Epoch (2012-2016) **Max:** $1,163 **Min:** $13 **Average:** $588 **Milestones:** Mt. Gox collapsed. The first ASICs hit the market. The "*Expansion Epoch*" (2012-2016) was significant due to how security and trust in the network were tested. This period was marked by the collapse of Mt. Gox in 2014 due to poor accounting and security practices, resulting in the loss of 850,000 BTC. People with coins on Mt. Gox at the time are still awaiting (partial) settlement of their claims ten years later. As we say in Bitcoin, "[*Not your keys, not your coins.*](https://www.swanbitcoin.com/bitcoin-cold-storage/)" This period also marked the infamous "*bear whale,*" who attempted to market sell a significant amount of Bitcoin in one day (30,000 BTC), exerting significant sell pressure on the price at that time. This epoch also saw the first mining ASICs hit the market, initially mere USB sticks that delivered one Gigahash of hash power. Thanks to ASICs, by February 2016, the Bitcoin network's computing power surpassed [one exahash per second](https://www.swanbitcoin.com/what-is-bitcoin-hashrate/) (EH/s) for the first time. For comparison, [Swan Mining](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGSKebdWP2-OOPaCYQA07Dx0iTdwzDyz7KJUEOjHR2EEDs9QCE4NQOyxd_XTZhmFCUEmosJJqE=) recently stood up over 7 EH/s in less than one year. In comparison, the entire network stands at well over 500 EH/s today. We've come a long way… ![](https://www.datocms-assets.com/56652/1711735548-unnamed-2.png?auto=format) Blockchain.com ### The Blocksize Wars Epoch (2016-2020) **Max:** $19,666 **Min:** $352 **Average:** $6,123 **Milestones:** The scaling dilemma was resolved. The “[*Blocksize Wars*](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGSKebdV0K5QN8Ns3NymjiqYbZf4bKiYEESuTBAe5kgz85e3bNNBoZJTqH4kqnhEgAfVQiO5Aw=) *Epoch*” (2016-2020) challenged Bitcoin’s resiliency and independence. The community debated how to scale the network to support more transactions and over who, if anyone, could control Bitcoin. The technological debate centered on scaling Bitcoin by either developing a second layer like the [Lightning Network](https://www.swanbitcoin.com/what-s-new-and-coming-in-lightning/) or by only increasing block size. However, of equal importance, the battle lines were drawn between users of Bitcoin and the largest companies and miners in the space. Ultimately, the users were victorious, and several corporate opponents forked away from Bitcoin, creating a different coin called Bitcoin Cash — a move that cost them billions of dollars. This epoch also saw the emergence of the ICO craze. As Bitcoin gained popularity, various affinity scams were created in the form of pre-mined tokens that ultimately became a very bad investment. The lure of a quick buck incentivized the creation of many companies that came under regulatory scrutiny and criminal charges, for example, [FTX](https://www.swanbitcoin.com/the-ftx-fiasco-and-the-fallout-to-come/), [Luna](https://www.swanbitcoin.com/dark-moon-the-inevitable-collapse-of-luna/), and [Hex](https://www.swanbitcoin.com/when-investing-in-crypto-beware-of-ponzi-tokens/)... ***** The end of this epoch witnessed the birth of Bitcoin-only Swan Bitcoin. Bitcoin, not crypto!*** [Post on X](https://twitter.com/SwanBitcoin/status/1244712348386054145) ### The Institutional Epoch (2020-2024) **Max:** $73,835 (so far) **Min:** $3,850 **Average:** $38,842 **Milestones:** Public companies began acquiring Bitcoin. Nation-state adoption began. The approval of spot Bitcoin ETFs. The fourth epoch (2020-2024) has been defined by the early stages of corporate and nation-state adoption. In the early 2020s, corporations like [MicroStrategy](https://www.swanbitcoin.com/mstr-vs-gbtc/) and Tesla announced treasury strategies to acquire and hold Bitcoin on their balance sheets. “*I realized I’m on a melting ice cube of $500 million worth of money, the purchasing power is dwindling at 10% to 20% a year, I have to do something.*” - Michael Saylor, Founder and Chairman of MicroStrategy During this epoch, El Salvador transformed their country by adopting Bitcoin as legal tender and setting Bitcoin-friendly policies to drive growth. Finally, the end of this 4th Bitcoin epoch brought the likes of BlackRock, Fidelity, and the biggest asset managers on the planet into the Bitcoin network through the approval of the [first](https://www.swanbitcoin.com/what-bitcoin-etfs-mean-for-you/) [spot Bitcoin](https://www.swanbitcoin.com/wall-street-bitcoin-what-it-means-for-bitcoin-and-you/) [ETFs](https://www.swanbitcoin.com/bitcoin-etf-fees/). It’s likely only the [beginning of this wave](https://www.swanbitcoin.com/the-race-is-on-eleven-bitcoin-etfs-launch/) of institutional interest in the Bitcoin network. However, the 4th epoch will be remembered as the start of this paradigm shift. ![](https://www.datocms-assets.com/56652/1711735507-unnamed-1.png?auto=format) Finoa.io ### The Adoption Epoch (2024-2028) **Possible Milestones (Forecast):** Could [Bitcoin replace](https://www.swanbitcoin.com/physical-gold-vs-digital-gold/) [gold](https://www.swanbitcoin.com/will-bitcoin-follow-gold-s-monetary-rise-and-fall/) as the world's most valuable asset? How will institutional adoption expand? Will more G20 countries follow El Salvador's lead? Will more corporations adopt Bitcoin? In early 2024, Bitcoin looked to put silver in its rearview mirror and established itself as a top ten global asset by market capitalization. It will next set its sights on gold, which has served as the best base money for millennia. Will it happen in just four years? Meanwhile, we enter this new epoch with Wall Street accelerating to full momentum. BlackRock has already accumulated 1% of the total supply on behalf of investors. Fidelity is not far behind. Institutions and nation-states are just getting started. [![](https://www.datocms-assets.com/56652/1711735444-saylor-1st.png?auto=format)](https://twitter.com/saylor/status/1321221111699415044) Twitter ### A New Era Bitcoin is on an S-curve adoption cycle very similar to the early internet - only faster. During an era of runaway [inflation](https://www.swanbitcoin.com/cantillon-effect/), Bitcoin stands alone in its ability to protect your wealth. "*Bitcoin is the best monetary fuel cell human beings have ever invented.*" - Rapha Zagury, CIO at Swan Everything else deteriorates with time, except for Bitcoin. How will you position yourself for the upcoming 5th epoch? [Subscribe to our newsletter](https://www.swanbitcoin.com/newsletter/) for more insightful essays and stay informed about all things Swan and Bitcoin. Become a Swan [today](https://www.swanbitcoin.com/)! ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Bitcoin Wealth Distribution - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bitcoin-wealth-distribution/ Bitcoin curbs government overreach through money printing and devaluation. It promotes saving and long-term investment over fiat’s consumerism, empowering global citizens and potentially sparking a cultural renaissance. --- **Matthew Kratter** · July 13, 2024 ### Bitcoin Wealth Distribution This [video](https://www.youtube.com/watch?v=JcXk7MX3Y7M) is part of a series I've been doing on Bitcoin's HODL culture. What is Bitcoin's HODL culture, and why is it so important? As we've been saying, Holding Bitcoin for the long term helps create diamond-handed, low-time-preference wealthy individuals and strong families. It also helps create the necessary preconditions for developing Bitcoin's circular economy. If your money is *"hot potato money"* like Monero…  After transacting in it, merchants and individuals will constantly dump it for a stronger currency (BTC). This precludes the formation of a circular economy for that cryptocurrency. We know that people dump their Monero for Bitcoin because we can look at the multi-year chart of Monero versus Bitcoin and see that this is not where people want to store their savings. They may transact using Monero but move their profits back into Bitcoin, as we said. ![](https://www.datocms-assets.com/56652/1720883130-monero-btc.png?auto=format) So that's the background... Response to a comment from @gratefulmjp1: ![](https://www.datocms-assets.com/56652/1720888339-grate.png?auto=format) This idea that HODL culture is a symptom of the fiat system betrays a deep misunderstanding of Bitcoin, its basic economic history, and how economies and capital formation function. - *Savings are essential for civilizational flourishing.* - *Savings are essential for capital formation.* - *Modern civilization began in the Middle East when people accumulated an economic surplus.*  **For Example**: Storing more grain than they consume. If people don't save more than they spend, there will never be a surplus that can be invested in projects, enterprises, farms, corporations, and other human endeavors. At a very basic level, you can think about it like this:  - *If you eat all of the wheat from this year's harvest, there won't be any seeds to plant for next year's harvest*  - *You cannot have capital formation if people choose not to save*  - *Savings require people to have long-term time horizons, self-control and hope for the future* Learning how to save can help develop these same virtues. It's a virtuous circle. It's modern fiat culture that is the complete opposite.  **Fiat culture, not HODL'ing culture**: - *Teaches people to have short-term time horizons* - *High-time preferences* - *Mindless consumerism*  Fiat money is a melting ice cube; trying to spend it as quickly as possible makes sense. If you wait too long, you won't buy as many goods and services. Fiat money is really at the root of modern mindless consumerism. Both fiat money and modern mindless consumerism are 20th-century inventions. Fiat money inevitably leads to empty, materialistic lives and superficial culture, as seen everywhere in shopping culture. This is also a huge problem in crypto, where people are extremely fiat with their ideologies and behavior. - *Short-term thinking* - *Short-term trading* - *Crass materialism* … As we always see with crypto and lambos.  ![](https://www.datocms-assets.com/56652/1720888857-lambo-png.png?auto=format) This silly idea we see with Richard Hart, the scammer who got a lot of possessions by dumping his token on a bunch of idiots, and people like Charles Hoskinson, who also lead very crass, worldly lives. Bitcoin is about more than just having better money. Bitcoin also marks the return of a healthier, more spiritual, and less materialistic culture. As no-coiners go down the rabbit hole, **Bitcoin leads men and women to want to become better versions of themselves.** - *Taking better care of your body through real food and exercise* - *Focusing more on relationships than possessions* - *Family formation, getting married, having children* - *Creating a legacy for the world* - *Helping to upgrade the culture.*  This is what hope and positive thinking look like. Similar to how sound money, particularly the Florentine gold florin, was the economic foundation for much of the Italian Renaissance, what's extraordinary is that the florin did not change its gold content between 1252 and 1533.  [![](https://www.datocms-assets.com/56652/1720888952-florin-issued.png?auto=format)](https://en.wikipedia.org/wiki/Florin) Wikipedia It's responsible for the civilizational flourishing we see in Florence: the Duomo, the Baptistery, Botticelli's *"Primavera,"* and Dante's work. These amazing achievements all took place during this very short period.  The return to sound money on a Bitcoin standard will usher in a similar *"Bitcoin Renaissance,"* where we can see things we now dream of in modern civilization and beautiful architecture. - *"Bitcoin is not about your wealth, my wealth, or generational wealth; it's about redistributing all wealth to everyone, full stop. I think that sounds great as long as it's a voluntary redistribution."* As long as it's voluntary redistribution… If it's not voluntary, it's just more plain theft, like Russian or Chinese communism or American, European, Canadian, Australian, or New Zealand socialism that we see these days.  Fortunately, it's difficult to steal someone's Bitcoin. In fact, you can kill them and still not get their Bitcoin. By contrast, the modern fiat system is all about not private property but theft and the redistribution of wealth.   Governments on a fiat standard fund their deficits by picking the pockets of everyone through money printing and inflation, which is a stealth tax that ironically predominantly hurts the working and middle classes. Wealthy people are usually financially sophisticated enough to hedge against it. The fiat money system is like soft socialism, which makes sense when you remember that extreme centralization of power and giving control to a central bank were key pillars of the garbage economics and politics espoused by Marx and Engels. **Consider the** [**Ten Points**](https://heidelblog.net/2014/02/the-ten-points-of-marxism/) **from the Communist Manifesto**, particularly the fifth point which advocates for the centralization of credit in the hands of the state. This system, using a national bank with state capital and an exclusive monopoly, raises significant concerns about the concentration of power. [![](https://www.datocms-assets.com/56652/1720889251-ten-points.png?auto=format)](https://heidelblog.net/2014/02/the-ten-points-of-marxism/) Heidelblog.net Unfortunately, he's talking about the modern central bank, which is a very communist thing in this sense. By contrast, Bitcoin gives people everywhere access to the same sound, decentralized money, and a level playing field. Anyone can have their own Swiss bank account with a Bitcoin hardware wallet or a mobile phone app, not just the very rich. By protecting private property and defunding government corruption, Bitcoin levels the economic playing field for 8 billion people. Bitcoin doesn't necessarily ensure equal economic outcomes because people are not equally good at the same things, and specific jobs pay more money than others. But Bitcoin does give people a chance for economic advancement wherever they live. Before Bitcoin, it was virtually impossible to accumulate capital if you didn't live in a country with a relatively less bad major currency like the USD, EUR, JPY, AUD, CAD, CHF… In other words, to save money, because if you tried to save in the local fiat, it was just a melting ice cube, and you never got ahead since any economic value stored in a weak local fiat currency was constantly being destroyed by monetary devaluation.  **This is what we mean by the melting ice cube!** Bitcoin levels the playing field by giving every person, family, village, city, and country access to their own Swiss bank account. They can then use this account to accumulate and preserve capital to fund corporate ventures, scientific research, arts and music, cultural flourishing, etc. And, in taking care of the young, the old, the sick, the disabled, and all those who cannot take care of themselves, and doing so in a highly effective, decentralized, free-market-driven manner rather than by corrupt bureaucratic government agencies that care more about growing their annual budgets and power than doing anything productive that actually helps real people. We've seen this in California, where from 2018 to 2022, the California government [spent](https://edition.cnn.com/2023/07/11/us/california-homeless-spending/index.html) $17.5 billion trying to combat homelessness, whatever that means. Of course, homelessness got worse, but a lot of bureaucrats and government leeches got rich in the process. [![](https://www.datocms-assets.com/56652/1720889413-cnn-homeless.png?auto=format)](https://edition.cnn.com/2023/07/11/us/california-homeless-spending/index.html) CNN I want to return to the second half of @gratefulmjp1 comment: ![](https://www.datocms-assets.com/56652/1720889454-grateful-2.png?auto=format) This is a ridiculous idea because the people who've been HODL'ing since 2011 deserve Bitcoin and all the trials and tribulations they've gone through to hold it to the present.  **Very few people have done that.**  It marks a very strong type of human being who can do that. I only came into Bitcoin in 2019, so I don't know why this person is against people with extreme self-control, who are really smart, and who have held this currency for a very long period. I'm curious to know how this idea that you could somehow shield people from Bitcoin's volatility would work. We could have a government agency that would protect people against Bitcoin's volatility or something like that. He also says, which is not true, that certain countries and people in third-world or developing countries will not get Bitcoin. In many cases, what we're seeing is actually the exact opposite. We have the current *"elite"* people [like](https://www.cnbc.com/2018/05/05/warren-buffett-says-bitcoin-is-probably-rat-poison-squared.html) Warren Buffett and his banker friends—they're the ones who don't like Bitcoin. Buffett here is saying that he [wouldn't](https://finance.yahoo.com/news/warren-buffett-says-wouldnt-pay-175917403.html) pay $25 for all the Bitcoin in the world. [![](https://www.datocms-assets.com/56652/1720889600-buffet.png?auto=format)](https://www.cnbc.com/2018/05/05/warren-buffett-says-bitcoin-is-probably-rat-poison-squared.html) CNBC Instead, we see a lot more adoption of Bitcoin among people with low incomes in developing countries.  [Post on X](https://twitter.com/bullishguate/status/1808255552608203094) Here's Pedro, who lives at Bitcoin Lake in Guatemala, talking about opening his third restaurant and accepting Bitcoin. The Naira crisis in Nigeria is [fueling](https://www.nobsbitcoin.com/the-naira-crisis-is-fueling-bitcoin-adoption/) Bitcoin adoption.  [![](https://www.datocms-assets.com/56652/1720889690-naria-crisis.png?auto=format)](https://www.nobsbitcoin.com/the-naira-crisis-is-fueling-bitcoin-adoption/) NobsBitcoin And then, of course, we have very small countries that don't matter on the geopolitical grand stage—they're always the ones who come to Bitcoin [first](https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency). [![](https://www.datocms-assets.com/56652/1720889795-bill-el-sal.png?auto=format)](https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency) NPR So his other point here is not true. He responded to his comment: ![](https://www.datocms-assets.com/56652/1720889807-grateful-3.png?auto=format) I think it's incredible how the Bitcoin ethos drives away this kind of soft communist type who pretends to care for humanity but secretly wants the forced redistribution of private property by governments. Bitcoin, with its unique principles, can guide individuals with different economic ideologies on how to manage their finances and remove themselves from the economic game. They won't buy Bitcoin anytime soon, and I will take advantage of them on a Bitcoin Standard. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Is Kaspa The Next Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/is-kaspa-the-next-bitcoin/ Kaspa’s strengths (no premine, proof of work, capped supply) are undermined by its concentrated founding team and devs with outspoken political views, raising concerns about its neutrality and future forks. --- **Matthew Kratter** · July 1, 2024 · Updated July 13, 2024 ### Is Kaspa the Next Bitcoin? Today, we will [examine](https://www.youtube.com/watch?v=GodfG2hMMXs) the methodology for analyzing any new cryptocurrency, including Kaspa. I encourage you to watch this video even if you're not especially interested in Kaspa. Kaspa is currently ranked number 24 among cryptocurrencies by market cap, positioned between ICP (Internet Computer) and PEPE. ![](https://www.datocms-assets.com/56652/1719865962-24.png?auto=format) Coinmarketcap However, I believe Kaspa is a much more serious project than either. What is Kaspa? According to their website, it's a cryptocurrency that implements a protocol called GhostDAG, a generalization of the Nakamoto consensus.  ![](https://www.datocms-assets.com/56652/1719868283-what-is-kaspa.png?auto=format) Kaspa.org Unlike blockchains, a BLOCKDAG orders all blocks in parallel within consensus, allowing for extremely high block rates, virtually instant transactions, and scalability at no cost to security. This is based on a [paper](https://eprint.iacr.org/2018/104.pdf) by Yonatan Sompolinsky, the founder of Kaspa, and others. GhostDAG appears to be a real innovation in this space. [![](https://www.datocms-assets.com/56652/1719868373-pg.png?auto=format)](https://eprint.iacr.org/2018/104.pdf) BLOCKDAG Whitepaper One of Kaspa's talking points is that it solves the trilemma faced by traditional cryptocurrencies, known as the *'blockchain trilemma.'*  ![](https://www.datocms-assets.com/56652/1719868452-solves.png?auto=format) Vitalik Buterin was likely the first to write about this. It suggests you can't have all three simultaneously if you want security, scalability, or decentralization. Has Kaspa solved this trilemma? From my cursory reading of their literature, if globally successful, Kaspa's end state would involve a few people running massive archival nodes, thus threatening decentralization.  But I want to be fair. I'll assume Kaspa's GhostDAG is as amazing as they claim and has indeed solved the blockchain trilemma, which would be very exciting if true. **Good things about Kaspa:** 1. *Distinguishes itself from common altcoins and VC-issued coins with pre-mines* 2. *No pre-mine or initial token allocation to anyone, unlike Ethereum and Cardano* 3. *Runs on proof-of-work* 4. *Has a fixed maximum supply* However, one might question whether its forward monetary policy and future max supply are as credible as Bitcoin's. Does the Kaspa community take the hard cap seriously, or could developers persuade them to increase the supply in the future?  Bitcoiners have been fanatical about not increasing the maximum supply for 15 years.  Kaspa has only been around for three years, so it might be too early to tell. Incentives suggest Kaspa holders wouldn't want to dilute their holdings by increasing the supply. Kaspa's [max supply](https://kaspa.org/tokenomics/) is 28.7 billion coins, making it look cheaper than Bitcoin's 21 million.  [![](https://www.datocms-assets.com/56652/1719868502-kaspa-emission.png?auto=format)](https://kaspa.org/tokenomics/) Kaspa.org **Bad aspects of Kaspa:** 1. Living founder, Yonatan Sompolinsky, who tweets. His [tweet](https://x.com/hashdag/status/1710754786692268191) on October 7, 2023, quoting [V for Vendetta](https://en.wikipedia.org/wiki/V_for_Vendetta_(film)), coincided with Israel's [invasion](https://en.wikipedia.org/wiki/Israeli_invasion_of_the_Gaza_Strip_(2023%E2%80%93present)) of Gaza.  [![](https://www.datocms-assets.com/56652/1719868564-yon-tweet-v.png?auto=format)](https://x.com/hashdag/status/1710754786692268191) Twitter This could be controversial, especially for Palestinians or Muslims. This is Ayn Rand [on](https://www.youtube.com/watch?v=2uHSv1asFvU) Israel and the Middle East.  Kaspa's core development team happens to be primarily Israeli. Is this really what I want to see tweeted out by the founder of the world's supposed next global reserve currency?  [![](https://www.datocms-assets.com/56652/1719868650-kaspa-core.png?auto=format)](https://kaspa.org/contributors/) Kaspa.org I cannot definitely say that it is not.  While GhostDAG's math and cryptography are neutral, the founder and developers' public stance on the Israel-Palestine conflict can be problematic.  … especially when they are constantly tweeting about Gaza.  Decentralization is crucial for cryptocurrencies, and having a politically vocal, living founder who can influence the community and development and who is primarily Israeli is not what you want to see when it comes to decentralization.   These people seem to still have an [outsized](https://x.com/orchidimperial/status/1805721748995707164) influence on the community, which puts a lot of its trust in them.  Leave aside your own political or religious views on the Israel/Palestine tragedy for a moment.  [![](https://www.datocms-assets.com/56652/1719868806-kaspa-tweet-two.png?auto=format)](https://x.com/orchidimperial/status/1805721748995707164) Twitter Even assuming that Yonatan and his development team have zero influence over future Kaspa forks (which it would be naive to assume since Yonatan has a bully pulpit that he could choose to start using at any time.  This is one of the primary problems with having a living founder. It would probably be a similar disaster if Satoshi were active on social media today. Satoshi had the foresight and humility to leave the project and never be heard from again.  Yonatan [didn't](https://x.com/hashdag/status/1615507601587838976).  This is one key difference between Bitcoin's immaculate conception vs. Kaspa making a baby in front of everyone in public. The sad thing is that Yonatan [himself](https://x.com/hashdag/status/1615507601587838976) understands this principle but has been unable to follow Satoshi's superhuman path:  [![](https://www.datocms-assets.com/56652/1719868793-tweet-3.png?auto=format)](https://x.com/hashdag/status/1615507601587838976) Twitter **In the case of Bitcoin:** *"The doctor"* (Satoshi) definitely vanished.  **In the case of Kaspa**: *"The doctor"* is still around and tweeting pro-Israel videos.  In the interest of being extremely clear and transparent about the point here (because I know my enemies will try to use this against me and possibly de-platformed for being *"anti-Semitic."*   *This is not about being for or against Israelis or Palestinians, Jews or Muslims, or even Christians (3% of Palestinians). It's about the necessary pre-conditions for creating neutral money that can be embraced and used by 8 billion human beings from every country, state, and terrority in the world.*  *This includes Christians, Jews, Muslims, Buddhists, Hindus, Deists, Atheists, Agnostics, etc. It's not a problem if your development team is all Israeli… it's just the job of writing software. But, it's not so great if you're trying to create a new neutral money for the world.*  *And it's even worse if your founder is actively tweeting and linking to pro-Israel videos. All I can say here is: Thank God Satoshi disappeared when he did and never came back.*  **In the case of Bitcoin**: *"The doctor"* (Satoshi) definitely vanished. But it's much more than that. In its early years, Bitcoin was nothing more than a curiosity and a collectible for nerds with zero monetary value.  Then, something amazing happened:  Bitcoin grew slowly and organically under the radar, experiencing a long and steady growth and distribution of coins that resulted in a spontaneous monetization event (Bitcoin Pizza Day).  Bitcoin didn't have a Harvard or Hebrew University PhD in writing Medium [posts](https://hashdag.medium.com/in-which-mayday-mayday-we-are-syncing-about-bf05ad58957a) and telling everyone he made it to get rich.  [![](https://www.datocms-assets.com/56652/1719868940-why-meidum.png?auto=format)](https://hashdag.medium.com/in-which-mayday-mayday-we-are-syncing-about-bf05ad58957a) Medium Many people fail to understand that creating new money involves multiple factors beyond cool new tech or cryptography.   GHOSTDAG certainly appears (to me) to be a genuine innovation. Some aspects of it could work well within the Bitcoin ecosystem (maybe as part of Layer 2, but you wouldn't need the Kaspa token for that Layer 2 function).  **Creating a new money requires a:**  - Fair community launch without a pre-mine (table stakes)  - *Kaspa does that well, unlike almost every other crypto in the world besides Bitcoin.*  - Slow organic process of growth in which the coins are globally distributed and spontaneously monetized.  - *Kaspa rushes this because its founder and development team are high-time preference investors.*  Kaspa [launched](https://kaspa.org/tokenomics-emission-and-mining/) in November 2021, with 95% of its coins to be mined by July 2026, a much faster issuance schedule than Bitcoin.  [![](https://www.datocms-assets.com/56652/1719869009-k-tokens.png?auto=format)](https://kaspa.org/tokenomics-emission-and-mining/) Kaspa.org True digital scarcity can only be created once, and Satoshi achieved that with Bitcoin. Subsequent attempts, like Kaspa, will always be copies, near-copies, copycats, derivatives, variations on Bitcoin, and claims they are *"better"* than Bitcoin—the Standard against which all other cryptocurrencies are measured.  Had Satoshi known about BLOCKDAG at the time, perhaps he would have used it as the basis for Bitcoin. But he didn't and didn't include it in Bitcoin's design.  By the time Kaspa came onto the scene in late-2021, Bitcoin was already a globally distributed asset with powerful network effects and a market cap above $1 trillion. Bitcoin embodies a powerful first-mover advantage that no crypto, including Kaspa, can overcome.  Bitcoin already has a global brand. Kaspa does not.  Bitcoin is already plugged into the financial system everywhere, from savings, retirement accounts, corporate treasuries, ETFs, futures, options, etc.  By contrast, Kaspa is a new, niche product. It's also not battle-tested like Bitcoin. Kaspa has yet to grow large enough to warrant attention from nation-state attackers, like Bitcoin.  Will Kaspa be able to survive when it is attacked?  Maybe. **Do you feel lucky?**  The Kaspa community is always quick to offer olive branches to Bitcoiners (a gesture I appreciate) and assure us that they are not trying to usurp Bitcoin's place with Kaspa.  Common phrases from the Kaspa community:  - *"I don't see it as a competitor to Bitcoin."* - *"Kaspa is silver to Bitcoin's gold."*  That phrase is particularly unfortunate.  Kaspa = *"Silver"* in Arabic.  *"So, Kaspa is silver to Bitcoin's gold."* That's the same silly marketing slogan Litecoin has been trying to use for years. This is what silver to Bitcoin's gold has looked like for Litecoin:  ![](https://www.datocms-assets.com/56652/1719869048-ltc-btc.png?auto=format) It's unclear why Kaspa would use this *'silver to gold'* comparison since it hasn't worked out well for Litecoin, and physical gold, historically, ended up demonetizing silver. This marketing metaphor demonstrates the Kaspa team's ignorance of economic history.  The only reason people used physical silver on a bimetallic standard was because gold is very dense, expensive, and challenging to subdivide. Silver functioned as a *"small change"* to gold's larger denominations.  This is obviously not a problem for software money like BTC, where you can subdivide BTC into sats and sats into smaller denominations if necessary.  A 1USD: 1SAT parity system is the same as saying 1 BTC = $100 million.  One person in the comment section asked: *"Why the hate on Kaspa?"* ![](https://www.datocms-assets.com/56652/1719867555-why-the-hate.png?auto=format) YouTube As for peaceful coexistence between different types of money, *"I don't see it as a competitor to Bitcoin"* is absurd. All money competes with all other money. Money is war. Strong money vanquishes weak money. This has been happening lately, with the USD wiping out the Turkish Lira, the Lebanon Pound, and even the Japanese Yen.  Do you carry USD, EUR, and JPY in your wallet and bank account?  Of course not. It's very inconvenient. Money is a winner-take-all game. Money always tries to converge to one.  Today, the world is still mostly on a USD Standard:  - *Almost all central banks hold USD-denominated U.S. treasuries as a reserve asset.*  - *Most of the money in the world today is pegged directly or indirectly to the USD.*  - *Subject to Federal Reserve monetary policy and its knock-on cross-currency effects.*  We'd already have one global money if it weren't for nation-states putting up gates and sanctions (which is admittedly a logical response to other governments issuing their own competing monies).  Bitcoin is much more difficult for nation-states to stop with gates and sanctions, and there is also a nation-state accumulation game theory behind it since no country can turn off or freeze the Bitcoin network. Bitcoin possesses all of the properties needed to become the world's next global reserve currency and asset.  If you are on the *"Kaspa is not a competitor to Bitcoin; we just want to peacefully co-exist with you guys…"*  Then, it becomes obvious you don't understand anything about economic history or how monetary competition works. Issuers of fiat put a gun (itself funded by the fiat money printers) to our heads and force us to use their money.  That's why there are still different forms of money in the world, and more than one. Unless Kaspa puts a gun to our heads, it will have to compete in the free market against Bitcoin, just like fiat and other cryptocurrencies.  **I have no doubt Kaspa will lose.** Bitcoin's first-mover advantage, global brand, and integration into the financial system make it difficult for Kaspa to compete. Bitcoin is already a top 10 global asset. Kaspa is still playing in the shallow end with a market cap under $5 billion.  Bitcoin is scarce, sound money. Fiat money is garbage.  It's easy for scarce, sound money to defeat garbage. Kaspa has a much bigger fight on its hands than fiat. It will have to defeat a battle-hardened warrior with a 12-year lead over Kaspa and the best money the world has ever seen.  **Good luck with that.**  The Kaspa army is small and niche. **The Bitcoin army is large and global.**  - *Bitcoin is front and center in the U.S. Presidential race.*  - *Bitcoin is front and center on Wall Street today.*  - *Bitcoin is front and center in geopolitics today.*  - *Bitcoin is a trillion-dollar asset waging war on the global stage.*  Meanwhile, Kaspa is still just a boy sitting at home, playing with his toy soldiers, and pretending that one day he will grow up to be Napoleon.  **It won't.**  The Bitcoin army is a crazy, obsessed, smart bunch of fanatics who've been training for years and whose numbers far exceed the tiny Kaspa community.  If you store your savings in Kaspa, you will likely get poorer over time than if you were holding Bitcoin. Bitcoin has a large, dedicated community and is a battle-hardened protocol. You will likely be disappointed if you try to trade your way to more Bitcoin using Kaspa. Every single money that has tried to dethrone King Bitcoin has failed. Kaspa might temporarily outperform Bitcoin, but it will likely trend to zero against Bitcoin over time. Choose your money wisely. Money is a winner-take-all game, and the winner has been and will continue to be Bitcoin. Get on the winning team before it's too late. It's best to stay humble, stack sats, HODL Bitcoin, and ignore new cryptos claiming to complement or replace it. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # The Magic of Dollar-Cost-Averaging (DCA’ing) Bitcoin URL: https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/ Dollar cost averaging (DCA) imposes the discipline of buying fewer sats when the fiat price is higher and more sats when the fiat price is lower, thus giving you a lower fiat cost basis. --- **Matthew Kratter** · June 26, 2024 · Updated July 12, 2024 ### The Magic of Bitcoin DCA DCA [stands](https://www.youtube.com/watch?v=CucPRlAkBfg) for dollar cost averaging, when you buy a fixed fiat amount of Bitcoin at regular intervals regardless of the price.  **For Example**: You buy $100 every Monday.  When Bitcoin's price is low, that $100 buys you more sats than it normally would - when Bitcoin's price is high, that $100 buys you fewer sats than it usually would.  Both properties help you get Bitcoin at a better average fiat price.  Dollar-cost averaging, as we'll see, is a superpower. You'll often hear people say that Bitcoin has failed to keep up with inflation since its intraday peak on November 10, 2021, at roughly $69,000 per coin. So, hasn't everyone been underwater in recurring Bitcoin purchases since then? If we look at the chart, we're currently trading just north of $61,000 per coin, and that peak was right here on November 10 when it hit approximately $69,000. So, we're definitely underwater from there. ![](https://www.datocms-assets.com/56652/1719442586-price-trading-view.png?auto=format) A website called [dollarcostaveragebitcoin.com](https://www.bitcoindollarcostaverage.com/) is a great tool to see how this works.  This allows you to enter a starting and ending date and decide how much you want to dollar cost average, providing a historical backtest of what would have happened. If you had $100 and invested it all at the peak on November 10, 2021, you'd be down 82% on your investment. But look what happens if you decide to dollar-cost average. [![](https://www.datocms-assets.com/56652/1719441548-dca-1.png?auto=format)](https://www.bitcoindollarcostaverage.com/) In this example, we will look at dollar cost averaging weekly, bi-weekly (meaning every two weeks), semi-monthly, and monthly. Obviously, a one-time purchase here was not a good idea, but let's see what would happen if we had dollar costs averaged weekly. With $100 worth of Bitcoin each week, our return on investment would be over 102%. We would have spent $13,800 over this period, and the current market value of our Bitcoin would be almost $28,000, a 102.61% return.  [![](https://www.datocms-assets.com/56652/1719441834-dca-2.png?auto=format)](https://www.bitcoindollarcostaverage.com/) If we had done the same thing on a bi-weekly basis, our returns would be similar, though we would have less Bitcoin because we invested less money.  Buying $100 worth of Bitcoin every two weeks instead of weekly. If we did it semi-monthly or even monthly, our returns would be approximately the same. Now, let's compare that to inflation. Looking at the Consumer Price Index ([CPI)](https://fred.stlouisfed.org/series/CPIAUCSL) for all urban consumers, when Bitcoin peaked in November 2021, the CPI was approximately 279.  ![](https://www.datocms-assets.com/56652/1719441061-ss5.png?auto=format) St. Louis Fed The latest CPI reading from May 2024 is 313, an approximately 12.35% increase. This index obviously understates the real inflation taking place. This is just the government lying at its best. But even if the real inflation rate for your household was 20% per year, over a couple of years and a few months, that's about 60% total inflation compounded.  Bitcoin has still handily preserved your purchasing power, up over 100%, no matter how you slice it. This is why it's so important to dollar cost average. It's also essential to HODL instead of trading in and out of Bitcoin.  As Jack Bogle used to say, *"Time in the market beats timing the market."* Saylor has a great summary of this from March 2024.  [Post on X](https://twitter.com/Vivek4real_/status/1771726414686888386) This is a 30-year chart of returns on the S&P index. This chart shows that if you missed one day, there's one day every year when 85-90% of all gains occur and 36 hours a year when all investment returns occur. So, in 365 days, nothing happens 99.5% of the time. This is why we have laser eyes and say HODL and trading Bitcoin is a sign of lesser intellect. This is something I always remind people of on the channel.  **Trading Bitcoin is a sign of lesser intellect**. If you try to jump in and out of it, you'll definitely underperform just HODLing, especially when you account for capital gains taxes. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Is Bitcoin Controlled By Tether? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/is-bitcoin-controlled-by-tether/ Questions about Bitcoin market and transactional value, and Tether’s influence. Bitcoin isn’t controlled by Tether, which is likely not a Ponzi scheme but a profitable business. --- **Matthew Kratter** · July 12, 2024 ### Is Bitcoin Controlled by Tether  Someone sent me a paragraph of questions [about](https://www.youtube.com/watch?v=oxwZa3B3VRE) Tether's *"Ponzi-scheme-like"* control over Bitcoin. Let's go over each in detail. **Question #1**: *"Bitcoin is a speculative asset that, with limited supply, will never become a transactional currency."*  **Answer**: Sorry to say this, but Bitcoin has already become a transactional currency. People in every country on Earth already use it daily to pay for goods and services.  We previously discussed Pedro at Lake Bitcoin in Guatemala yesterday, where he accepted Bitcoin for his businesses. [Post on X](https://twitter.com/bullishguate/status/1808255552608203094) Here's Francis in Bitcoin Jungle making fun of people who say you cannot buy food with Bitcoin, showing all the stuff that he bought with Bitcoin.  [Post on X](https://twitter.com/francispouliot_/status/1763663907032342997) The [BTCmap.org](https://btcmap.org/) is a great tool for easily finding places to spend Bitcoin online and worldwide. [![](https://www.datocms-assets.com/56652/1720784886-btcmap.png?auto=format)](https://btcmap.org/) BTCmap.org Even on my website, you can pay using Bitcoin for my paid material. So, Bitcoin is already being used globally as a transactional currency. It's not being used everywhere, obviously. We're still very early, but it works very well as money. **Question #2**: *"The abundance of sats only means that each sat has a value proportional to a Bitcoin, the same way a penny is always 1/100th of a dollar."*  **Answer**: There's no such thing as a whole Bitcoin. The Bitcoin software refers only to sats. **100 million sats in = 1 BTC** This also isn't an argument against Bitcoin.  Still, at least he didn't say that dividing a pizza into a million pieces enables you to feed the whole planet with one pizza, which people often say when they claim that Bitcoin's not scarce because it can be subdivided - a very silly statement. Now, we come to the main critique of this comment: - *"The problem for Bitcoin is that its limited supply created its sole use as a speculative asset. Stablecoins evolved to back its speculative use, and Tether became the dominant stablecoin. Tether is an unaudited Ponzi scheme that will eventually collapse, as all Ponzi's do. Because of the Tether Ponzi, which became the underlying foundation for the entire crypto space, there's no true market value for Bitcoin. Its price is completely manipulated by creating unbacked Tethers and controlling Bitcoin's limited supply."* [![](https://www.datocms-assets.com/56652/1720785123-tether-wiki.png?auto=format)](https://en.wikipedia.org/wiki/Tether_(cryptocurrency)) Wikipedia **So, is Tether a scam?** This is something we've talked about a few times before… Tether is probably one of the **world's best businesses today**. The way it works:  1. *Investors have given Tether about $112 billion.*  2. *Tether buys U.S. Treasuries with that money and gives the people USDT tokens.* 3. *Then Tether gets to sit on those Treasuries and collect its interest income.* Currently earning 4 to 5% a year. This is really like shooting fish in a barrel. In the first quarter of 2024, they reported a $4.5 billion profit. If you do the math - *4%: $4.48B* - *5%: $5.6B* There is talk that they're not fully backed. This is unlikely. They're fully backed. They have such a good business—there is no reason why they wouldn't be fully backed. Their problem is that the big four auditing firms have avoided auditing Tether. [![](https://www.datocms-assets.com/56652/1720785206-trans-tether.png?auto=format)](https://tether.to/en/transparency/?tab=usdt) Tether.to However, Tether has onboarded the U.S. FBI and the Secret Service and is just rolling in cash. They've been investing billions of dollars in startups and buying huge amounts of Bitcoin using their cash. ![](https://www.datocms-assets.com/56652/1720785315-bloomberg.png?auto=format) ![](https://www.datocms-assets.com/56652/1720785433-tether-acquired.png?auto=format) But for the sake of argument, let's assume that all this is smoke and mirrors, that Tether has only been pretending to invest billions of dollars into Bitcoin and startups. This would be very difficult to fake, especially when they refer to a company that they've invested in, and everyone knows what company this is, and they can audit it, etc.  It's hard to pretend to invest billions of dollars in Bitcoin and startups. But let's pretend it's all smoke and mirrors. Does it really matter? If Tether were to blow up, would it matter, given Tether's tiny size relative to the real money printers? **People often forget about this.** Tether has a tiny money printer, if it's a money printer at all. It's not the same kind of money printer the Fed and central banks have. Like the Fed, the real money printer that pumps Bitcoin is the fiat money printer.  As we said, Tether has a market cap of about $112 billion.  [![](https://www.datocms-assets.com/56652/1720785529-tether-mc.png?auto=format)](https://coinmarketcap.com/currencies/tether/) CoinMarketCap By contrast, the Fed's balance sheet is approximately $7.2 trillion, and the U.S. money supply is about $21 trillion.  ![](https://www.datocms-assets.com/56652/1720785627-total-assets-fred.png?auto=format) ![](https://www.datocms-assets.com/56652/1720785683-m2-fred.png?auto=format) $112 billion pales in comparison to these much larger numbers, and this is where the real money printers are. These so-called Tether truthers on Twitter have been around for years. They refuse to accept reality. They're like that person you see jogging outside, entirely alone in 2024, and wearing a blue surgical mask for some strange reason.  Entirely out of touch with reality. **Final critique**:  - *"Bitcoin has use and value as a means to transfer and hold wealth."* This was strange because, at the beginning of his paragraph, he already said that it can never be used for transactions, so he contradicted himself. Bitcoin has been used and valued to transfer and hold wealth, but there needs to be a true market to determine that value. This is some of the biggest nonsense I've ever heard.  - *Bitcoin is the most accessible market in the world.*  - *It's global. Unlike any other market.* - *It trades 24/7, 365 days of the year.*  - *It's highly, highly liquid.* Bitcoin has a market cap of over a trillion dollars and trades on centralized and decentralized exchanges worldwide. So, when someone says, *"There's no true market to determine its value."* I suggest that they check the price of Bitcoin on one of these exchanges. ![](https://www.datocms-assets.com/56652/1720786655-crypto-echanges.png?auto=format) Google There are dozens of exchanges, decentralized exchanges worldwide, and peer-to-peer exchanges that trade Bitcoin. So, it's pretty silly to say that there's no true market to determine the value of Bitcoin. This is one of the most ridiculous things I've ever heard. **I get it.**  Some people really, really don't want to have to deal with the cognitive dissonance that comes with finally facing how fraudulent the current fiat financial system is and how dumb they've personally been to have avoided buying Bitcoin for so many years.  The people who supposedly study Bitcoin and then spend a lot of time online being bearish about it or emailing their friends like this person did are obsessed with Bitcoin, but they're obsessed in a terrible way. They don't understand it deeply and are more obsessed with it because they feel like they've missed out—and in many ways, they have. These people prefer to devise a million poor excuses for never buying Bitcoin.  So, what do they end up doing?  What do they end up using instead of Bitcoin? **This is the problem.** They usually just end up using fiat money instead, just U.S. dollars. So it sounds like this:  ##### *"I hate Bitcoin, so I use the U.S. dollar network instead, with its single node controlled by ex-lawyers and investment bankers. I don't believe in using money with a fixed maximum supply because I prefer currencies that bankers can print for free in unlimited quantities. In contrast, I have to go to work and earn those dollars, thus constantly eroding the purchasing power of my hard-earned savings."* The person should focus on the real Ponzi, the U.S. dollar, which they're probably HODLing and using daily. [![](https://www.datocms-assets.com/56652/1720471827-purchasing-power-of-the-u-s-dollar-over-time.jpg?auto=format)](https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/) Visual Capitalist *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bootstrapping Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bootstrapping-bitcoin/ Launching a new cryptocurrency is challenging, needing miner compensation through new issuance (diluting holders) or transaction fees (requiring long-term demand). Bitcoin successfully navigated this quagmire. --- **Matthew Kratter** · July 2, 2024 · Updated July 12, 2024 ### Bootstrapping Bitcoin Let's talk about [Bootstrapping Bitcoin](https://www.youtube.com/watch?v=6DIxr8fmP2s). This video is a follow-up to yesterday's video about Kaspa, which proved to be very controversial. You can watch that if you want to understand some of the background, but it's unnecessary. [Video](https://www.youtube.com/watch?v=GodfG2hMMXs) Today, we will discuss Proof-of-Work (PoW) and how to bootstrap a network like Bitcoin. [Video](https://www.youtube.com/watch?v=6DIxr8fmP2s) PoW is definitely the best consensus mechanism for reasons we've discussed in previous videos. Under PoW, miners can be paid in two ways: the issuance of new coins, which dilutes existing holders through monetary inflation, or transaction fees, paid by network users. Satoshi's compromise was to bootstrap the network by initially paying miners with newly issued coins, as there was minimal transaction demand. The reward halves every four years, or every 210,000 blocks, hoping that transaction fees will eventually compensate for the declining revenue from new coins. **Failure Mode #1**: Occurs when not enough people use the new money, and miners starve from a lack of transaction fee revenue.  **Failure Mode #2**: Occurs when the block size is increased to keep transaction fees low, which prevents a robust transaction fee market from developing. Giant blocks require more node storage, verification work, and internet bandwidth, causing latency issues. [![](https://www.datocms-assets.com/56652/1719940418-moody-1.png?auto=format)](https://bitcoin.clarkmoody.com/dashboard/) Clark Moody Dashboard Miners must transition from block subsidy to transaction fee revenue, hoping enough people worldwide use the money and run nodes. Bitcoin was fortunate; 93.9% of its 21 million coins have been mined, with 19,400 reachable nodes.  [![](https://www.datocms-assets.com/56652/1719940456-bitnodes.png?auto=format)](https://bitnodes.io/) Bitnodes.io Although Kaspa does many things right, it may not be so lucky. ![](https://www.datocms-assets.com/56652/1719940609-kas-fyi.png?auto=format) Kas.fyi As of today, 83.9% of Kaspa has been mined, but only 280 nodes exist. By July 10, 2026, 95% of Kaspa will have been mined. If demand for Kaspa doesn't grow, its miners may face trouble. [![](https://www.datocms-assets.com/56652/1719940504-active-public-nodes.png?auto=format)](https://bitnodes.io/) Bitnodes.io PoW miners have real-world costs, like hardware and electricity, and need compensation either through new issuance or transaction fees. Kaspa's fast issuance schedule helps initially but may harm long-term mining sustainability. MaximalMining on Twitter noted that he sold over 10 million Kaspa and believes it's just another altcoin. [Post on X](https://twitter.com/MaximalMining/status/1807880771836752373) [Post on X](https://twitter.com/MaximalMining/status/1807882103381504317) Bitcoin has survived the transition from block subsidy to transaction fee revenue due to its rising fiat price and a fanatical group of HODLers who run nodes, demand to be paid in Bitcoin, and encourage merchants to accept it. **These actions create transaction fee revenue for miners.**  Hodlers become stronger through their journey, moving from high to low-time preference living, prioritizing exercise and nutrition, and creating new Bitcoiners with good values. Bitcoin culture is organic and strong, making it impossible for new coins to compete. New coins often become flashes in the pan or pump-and-dumps, unable to achieve long-term organic demand and growth. In conclusion, when it comes to cryptocurrencies, there's really **only Bitcoin.**  *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Mt. Gox Dump Coming? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/mt-gox-dump-coming/ The market may overreact to the upcoming Mt. Gox BTC distribution — presenting a buying opportunity. Long-term HODLers should use lower prices to accumulate BTC. --- **Matthew Kratter** · June 24, 2024 · Updated July 12, 2024 ### Mt. Gox Dump Coming? Today, we are [covering](https://www.youtube.com/watch?v=IJVLCyzQ43s) how finally, after 10 years, Mt. Gox, the earliest large Bitcoin exchange, which launched in 2010 and closed in 2014, handling over 70% of all Bitcoin buys and sells worldwide, is set to distribute the coins it had at the time of its bankruptcy.  [![](https://www.datocms-assets.com/56652/1719253755-mt-gox-info.png?auto=format)](https://en.wikipedia.org/wiki/Mt._Gox) Wikipedia This was the original lesson in *"Not your keys, not your coins"* and why it's important not to leave your Bitcoin on an exchange where they can be hacked or stolen. It's also a good time to revisit the scammer, the Bitcoin Cash scammer Roger Ver, and what he said to reassure people that their Bitcoin was still safe.  - *"I'm Roger Ver, a longtime Bitcoin advocate and investor. Today, I'm at the Mt. Gox world headquarters in Tokyo, Japan. I had a nice chat with Mt. Gox CEO Mark Karpeles about their current situation. He showed me multiple bank statements as well as letters from banks and lawyers. I'm sure that all the current withdrawal problems at Mt. Gox are being caused by the traditional banking system.”* [Video](https://www.youtube.com/watch?v=UP1YsMlrfF0 ) His claim is, of course, absurd because you don't need any help from the traditional banking system to send someone their Bitcoin. It turns out, Mt. Gox did not have enough Bitcoin to ensure order flow. This is one in a series of many lies by Roger Ver.  That aside, it does look like people are going to begin to get some of their Bitcoin back, up to $9 billion worth of Bitcoin and Bitcoin Cash, because of the fork that happened while these coins were still being held by the Mt. Gox trustee.  This letter on the Mt. Gox [website](https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf) looks legitimate and indicates that these repayments are going to start. It looks like these coins will be starting to be returned to people at the beginning of July. ![](https://www.datocms-assets.com/56652/1719253844-mt-gox-letter.png?auto=format) The market is panicking about this. But there were signs that this distribution was coming in April of this year. Mt. Gox creditors reported that they had an update in their payment system on the website.  Someone put in a [snapshot](https://cointelegraph.com/news/mt-gox-trustee-table-bitcoin-cash-repayment) showing the date April 18, 2024, and the fact that they were beginning to make plans to redistribute the Bitcoin.  ![](https://www.datocms-assets.com/56652/1719255391-address-mt.png?auto=format) The Mt. Gox funds represent 141,142 out of a total of 21 million Bitcoin. That's just 0.675%, so just a bit more than half a percentage of the coins may be sold.  The actual amount will probably be much lower. Why?  Creditors, in other words, old customers of Mt. Gox have had more than 10 years to sell their claims. When selling your claim, you give up your claim for Bitcoin that Mt. Gox owes you in exchange for a fiat payment today.  These claims were made at various levels, 40%, 50% or 60% on the dollar – who knows. You might be asking, *“Won't the hedge funds that bought up those claims dump the Bitcoin once they receive it this summer from Mt. Gox?”*  Perhaps they will, but they've also had years to hedge their positions.  They might go short on Bitcoin futures or Bitcoin ETFs to lock in their profit potential. If they sell their Bitcoin after receiving it from the Mt. Gox trustee, they will also buy back their short futures positions or short ETF positions. The net effect for these hedged institutional traders will be zero, and the net effect on Bitcoin's price will be zero. So why is the market panicking today?  Probably because people are shortsighted and use short-term news as a catalyst to trade.  Even Elon Musk has traded in and out of Bitcoin like a fool over the past couple of years. He talked about Bitcoin's long-term potential when he bought in 2021, then dumped 75% of it near the lows in 2022. [![](https://www.datocms-assets.com/56652/1719255475-tesla-dumps.png?auto=format)](https://www.cnbc.com/2022/07/20/tesla-converted-75percent-of-bitcoin-purchases-to-fiat-currency-in-q2-2022.html) CNBC We have these endless rumors about people buying and selling Bitcoin. I'd encourage you to disregard all of these. For example, this was true of a [rumor](https://markets.businessinsider.com/news/currencies/bitcoin-price-plunge-elon-musks-spacex-sold-373-million-stake-2023-8) from August 18, 2023, that looks like it was wrong because [reports](https://decrypt.co/220597/tesla-spacex-bitcoin-wallets-elon-musk-firms-1-3-billion) are that SpaceX still [owns](https://platform.arkhamintelligence.com/explorer/entity/spacex) this Bitcoin.  Supposedly, they were dumping it on August 18, 2023, when Bitcoin was at $27,000. If you follow short-term news and trade based on it, you'll hamper your Bitcoin returns.  This Mt. Gox FUD has been happening for years. Back on August 23, 2022, some short-term holders dumped their Bitcoin around $19,000 or $20,000 on rumors that the Mt. Gox payments were about to start.  ![](https://www.datocms-assets.com/56652/1719255595-btc-usd-augst-23.png?auto=format) This is long-term FUD, and the best thing you can do is ignore it. One of the funny things about it is that it's causing a sell-off across all cryptocurrencies.  It's actually Bitcoin that may be dumped, but Ethereum is selling off even harder on the news, down 5%. This shows how all other cryptocurrencies are derivatives of Bitcoin's price and don't have a mind of their own.  Ethereum dumping because Mt. Gox is distributing Bitcoin doesn't make any sense. Ignore the rumors, flows, and online movements of Bitcoin from an exchange.  These things don't matter if you're a long-term hodler. You should be happy if Mt. Gox sellers dump and depress the price. This provides the opportunity for more people to get on the Bitcoin lifeboat before the next round of money printing and the next leg down in fiat.  If your Bitcoin is sitting safe in cold storage, you have nothing to worry about. However, do not leave your Bitcoin on an exchange that might turn out to be the next Mt. Gox.  Every exchange has the potential to either be hacked or criminally drained of its Bitcoin. Not your keys, not your coins. People first learned this with Mt. Gox and should understand the lesson today.  Do not leave your Bitcoin on an exchange. Instead, withdraw it and hold your private keys on a hardware wallet like a Coldcard. If you want to be a truly self-sovereign holder of Bitcoin, learn to hold your own Bitcoin private keys. Learn to use these tools, and I guarantee you the feeling is incredible once you're less reliant on banks and large exchanges to give you permission to move your Bitcoin. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bitcoin HODL’ing vs. Spending - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bitcoin-hodl-ing-vs-spending/ In this video, Matt discusses Bitcoin HODL’ing vs. Bitcoin spending. Most people should probably have at least 2 Bitcoin buckets: 1) Deep cold storage Bitcoin, 2) Spending wallet. --- **Matthew Kratter** · July 7, 2024 · Updated July 12, 2024 ### Bitcoin HODL'ing vs. Bitcoin spending This is a [follow-up](https://www.youtube.com/watch?v=bT-ZCURA340) to the [previous video](https://www.youtube.com/watch?v=78t9s2LrRWE), which I called *"Bitcoin's HODL Culture”* discussing Bitcoin's culture of HODL'ing, holding for the long term, and how important it is for building strong individuals and families and for creating the necessary preconditions for a Bitcoin circular economy to develop.  **Bitcoin's HODL culture is unique.**  By contrast, crypto is all about gambling, musical chairs, and the hopeless quest to find the next fastest horse. **So these were some takeaways**: - *Don't trade in and out of Bitcoin because most returns come from a small 36-hour window every year that you don't want to miss.* - *If you're trading in and out, it's quite likely you will miss this alpha period where all the returns come. Also, don't take profits on your Bitcoin.* Taking profits is a funny phrase in itself. It's not as tax-efficient as HODL'ing.  Obviously, it's also really dumb when you think about it because taking profits really means converting your savings from a very strong, scarce, censorship-resistant currency, which is Bitcoin, to a very weak currency, fiat money, which is a melting ice cube. **People say:** - *"Hey, look, I just made $10,000 in profits by selling my Bitcoin. Now I'm going to take that cash and put it in a bank that may or may not let me withdraw it when I really need it and where its purchasing power will be totally eaten up by inflation."*  This just doesn't make any sense. You're much better off just HODL'ing Bitcoin for the long term. Also, don't take your fiat and store this cash under a mattress, either. You'll have full access to it, but its purchasing power will also be destroyed by inflation, and that's not a smart thing. So in general, you shouldn't be moving your money from *"Bank of Satoshi"* to *"Bank of America."* Instead, you should be moving your money from *"Bank of America"* to *"Bank of Satoshi"* if you understand what's coming. As they say, only leave as much in fiat as you're willing to lose. **There are a couple of follow-up questions**: - *"I completely agree with you, but I remember in one of your videos you said that if you bought super early, in other words, if you invested in Bitcoin super early on, then it's definitely normal to take some profits. I find this contradicting."* And then this question from d.batta8952: - *"What do you think about the motto 'spend and replace'?"* I think these are great questions, and I think you should have at least two separate Bitcoin buckets. You should have your deep cold storage Bitcoin, where you hold your private keys on a hardware wallet like a Coldcard or a Blockstream Jade, either using single-sig or multi-sig, which I talk about in my more advanced classes. This is the bucket that I'm referring to when I say that I'm never selling my Bitcoin, and it's where I have most of my net worth. This cold storage Bitcoin is your long-term savings account that you should try to HODL as long as possible to create intergenerational wealth.  Bitcoiners are interested in intergenerational wealth because they have very low time preference thinking, which Bitcoin teaches you. When I say that you should never sell your Bitcoin, you have to understand the context of why I'm saying that. I'm saying that here on YouTube, and I'm speaking against a culture of trading, flipping, short-term time horizons, degenerate trading, and high-time preference thinking.  I'm certainly not saying that you shouldn't spend some of your Bitcoin on a sick child or a sick parent, or some other medical emergency, or on something that will really make your life better. After all, Bitcoin is freedom money, and your Bitcoin is your Bitcoin and your money to do with as you see fit. But all I'm arguing on this channel is that I just think it's dumb to sell it for something superficial like a Lambo when Bitcoin is only at $55,000 per coin on its way to multi-millions of dollars per coin. But if you love Lambos, have at it. Again, Bitcoin is your money, after all, and you can do with it as you wish. But if you have the patience, Bitcoin will probably be worth more than 10x in a few years, so keep that in mind. That buys a lot more Lambos if that's what you're into. There's this huge opportunity cost; obviously, that comes with spending Bitcoin today rather than waiting a few more years or even a few more decades if you can.  So, you should have these two separate Bitcoin buckets. 1. *The deep cold storage bucket.* 2. *The second bucket should be a spending wallet, like a hot wallet on your phone, a hot wallet like Strike, Aqua, or Mutiny.*  Then, you try to spend Bitcoin from your spending wallets as often as possible to help increase Bitcoin adoption. You spend because you're spending already. You have bills, you need to buy goods and services, and you need to pay people and corporations. So going forward, whenever you need to pay someone, maybe a handyman or a babysitter or a friend, you need to pay back for dinner, offer to pay them 110% of the amount that you owe them if they accept it in Bitcoin. Then, show them how to download the Aqua wallet, the Mutiny wallet, or the Strike wallet on their phone. This hot wallet should be treated as a spend-and-replace wallet. So, I do like the phrase *"spend and replace."*  You can buy $10, $50, and $100 worth of Bitcoin for this wallet. Spend it, try to find Bitcoin merchants who accept it, or create your own Bitcoin merchants by orange-pilling people. Then buy another $100 worth of Bitcoin for this wallet when it's almost run out of sats. I want to thank Matt Odell and Marty Bent.  The phrase *"spend and replace,"* and I think it's the perfect complement to Odell's most famous maxim, which is *"stay humble and stack sats."* ![](https://www.datocms-assets.com/56652/1720371413-odell-btc.png?auto=format) So, spend and replace describes your hot wallet, your one bucket of Bitcoin, and then stay humble, and stack sats really describe your deep cold storage. If you're looking for places to spend your Bitcoin, you can do it at [BTCmap.org](https://btcmap.org/), which I will link to in the description notes below. [![](https://www.datocms-assets.com/56652/1720378406-btcmap.png?auto=format)](https://btcmap.org/) BTC Map.org A final note for those less experienced Bitcoin users who are not familiar with the intricacies of chain analysis and the footprint that you leave when you do transactions on-chain with Bitcoin… If you do it in a naive manner, if you're not familiar with [CoinJoin](https://en.bitcoin.it/wiki/CoinJoin) and the differences between non-KYC Bitcoin and how traceable they are versus KYC Bitcoin, you should probably never send Bitcoin directly from cold storage to your spending hot wallet. Likewise, vice versa, you should probably never send Bitcoin directly from your spending hot wallets to cold storage. It's much better to keep these two buckets separate, your cold storage sats and your hot wallet sats.  When you run out of sats in your hot wallet, just use some fiat, U.S. dollars, pounds, or euros to buy Bitcoin whenever you need to top up that hot wallet. I would say the Strike app is especially great for fiat on-chain Bitcoin and Lightning Bitcoin, learning to use all three of them in a mobile wallet. The [Strike app](https://strike.me/) is custodial, thus not private or self-sovereign, but I think it's still a good tool to use when you're just getting started learning how to spend and replace your Bitcoin. It's available both for iOS and Android. ![](https://www.datocms-assets.com/56652/1720378895-strike-app.webp?auto=format) So, if you haven't yet, keep your sats in cold storage, but also try to create a hot wallet and start spending your Bitcoin. **This will help spread Bitcoin adoption in a circular economy.** *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # How To Deprogram Yourself - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/how-to-deprogram-yourself/ Learn how to deprogram yourself, and get on the path to recovery from years of abuse and gaslighting by governments, schools, corporations, lobbying groups, and the media. --- **Matthew Kratter** · June 27, 2024 · Updated July 12, 2024 ### How to Deprogram Yourself The context for this [post](https://www.youtube.com/watch?v=ijt7ch35buI) is advice tailored to people living under late-stage Fiat rot. If you're not currently living under late-stage Fiat rot, for example, you're Venusian or Martian, you can safely ignore this video. But the bad news, at least for the current inhabitants of Earth, is: - *You're the product of a really fake, unhealthy, and stupid culture.* - *Your mind is the victim of years of government education and endless coordinated government-corporate media psyop's.* - *Your body is probably the victim of Fiat food and medical malpractice.* - *Your identity is the victim of Fiat culture, and you've grown up trusting institutions that you may now realize should no longer be trusted.* Now, you can pretend it's otherwise, but at some point, it's probably a good idea to begin to face reality like an adult. So, the question is, how can you escape from this Fiat Matrix? Here's a non-exhaustive list, but first, be forewarned that this video will trigger some of you, maybe many of you. ##### Possible signs that you may be experiencing cognitive dissonance - *You call me "buddy" and leave a condescending comment.* - *Extreme anger followed by a quick unsubscribe.* - *Accusing me of being a shill for either Biden or Trump or someone else.* - *Telling me I should stick to economics and Bitcoin since those are my areas of expertise.* ***... However, I’m not really qualified to talk about Bitcoin and economics either.***  I'm an English major, so if you are a devout credentialist who needs to see University degrees before someone's allowed to talk about something. I'm really only qualified to talk about Anglo-American literary modernism and poststructuralism, which we could talk about at some point. So, let’s go through a series of lessons here that may or may not help you deprogram yourself. **Lesson #1:** Understand that incentives drive everything. Not truth, not science, not compassion for the people. I think it was Munger who said, *"Show me the incentives, and I'll show you the outcome."* **Here's an example:** An incentive program where if you get 75% of Anthem members to do something, you get a $125 bonus per vaccinated member.  Many of you are probably not aware that this is behind a lot of what we have seen over the past few years. It may also explain certain surgeries which are extremely expensive, $100,000 to $150,000. I've heard estimates of up to a million. ![](https://www.datocms-assets.com/56652/1719518606-provider-19.jpeg?auto=format) Anthem This may explain some why people in the medical establishment may be behind movements like this. It's also quite enlightening to consider the incentives when you realize all these corporate sponsors behind the American Diabetes Association, the American Cancer Society, the American Heart Association, etc.  [Post on X](https://twitter.com/wthfilm/status/877251309245681664) These don't look like the kind of sponsors you would want if you're trying to help people's health. **Lesson #2:** Don't be mesmerized by white lab coats, suits, or other trappings of authority. This is very easy to see when we look at past times, but it's a little bit more difficult to see when it's present. If we look at the past, we can see how ridiculous this medical advice was. - *"As your dentist, I would recommend a certain kind of cigarette. Not one single case of throat irritation due to smoking Camels."* ![](https://www.datocms-assets.com/56652/1719518755-viceroy.jpg?auto=format) The guy in the white lab coat, another guy in the white lab coat, said, *"More doctors smoke Camels than any other cigarette."* ![](https://www.datocms-assets.com/56652/1719518820-camels.jpg?auto=format) ![](https://www.datocms-assets.com/56652/1719518872-doctos-cmales.jpg?auto=format) These were clearly people who understood how the human body worked. "*Just sort of appeared that six feet is going to be the distance."* ![](https://www.datocms-assets.com/56652/1719519164-how-it-started.png?auto=format) Sometimes it's a little more difficult to see it when it occurs contemporaneously.  **Lesson #3:** Nine out of ten dentists agree that Crest or Colgate or whatever it was is the best toothpaste. 97% of publishing climate scientists agree that humans are causing global warming and climate change. ![](https://www.datocms-assets.com/56652/1719519336-97.png?auto=format) And 97% of priests agree that child sacrifice is necessary for a good harvest. [Post on X](https://twitter.com/saifedean/status/1500851593570394115?lang=en) - *"What makes you think you know better? What should we do with your child? You're not even a priest, so you should stop being selfish and hand over your kid. Nobody enjoys child sacrifice, but it's important to be pragmatic. Until we can transition to fully renewable child technology, we have to sacrifice your child. So you should stop being an extremist and hand over your child."* Eye roll. *"So you're saying all the priests are wrong, or they're all part of some evil grand conspiracy?"* Smirk. *"And you, just another peasant, are the only one who knows what should be done with your child?"* **Lesson #4:** Most government officials are clueless muppets.  We have Bernanke saying that the subprime contagion is contained. We have Janet Yellen saying in 2017 that we would never see a new financial crisis in our lifetimes. We saw one just three years later. ![](https://www.datocms-assets.com/56652/1719519613-clown-world.jpg?auto=format) And then we have this muppet, Jared Bernstein, who is the chair of the Council of Economic Advisors under the Biden Administration and can't seem to figure out basic economics about how they do money printing.  [Post on X](https://twitter.com/enur72/status/1786361504738025519) Just to clarify, this is definitely not a deep fake. This is a real clip, and this is someone who's advising your president on economic policy today. **Lesson #5:** There are very few awake adult Homo sapiens in the world. Very, very few. Most people are this new species that's been created by modern governments called the sheeple, the ultimate government creation. ![](https://www.datocms-assets.com/56652/1719520411-sheep.jpg?auto=format) **Lesson #6:** The stated official reason is never the real reason. We have Colin Powell talking about WMDs in Iraq, which were never found. ![](https://www.datocms-assets.com/56652/1719520468-powell-iraq-lies-980.jpg?auto=format) Though these WMDs were indeed found by the U.S. Army. ![](https://www.datocms-assets.com/56652/1719520580-main-qimg-4c6505afd3885961f0e4e4d2d2cd338d.jpeg?auto=format) **Lesson #7:** When the government tells you that something will last two weeks, it will actually last for many years instead. We had the Iraq War, *"Mission Accomplished,"* about 15 years before it was actually accomplished.  ![](https://www.datocms-assets.com/56652/1719520626-thumbs-up.webp?auto=format) And with lockdowns, *"Two weeks to flatten the curve,"* three months later, 2023, etc. ![](https://www.datocms-assets.com/56652/1719520730-day-15.jpg?auto=format) **Lesson #8:** The global economy is completely rotten from the foundation up. Fiat money is a gigantic scam. It's printed up by central banksters for free and used to fund the government while you have to sit trapped in a cubicle to earn it. Instead, they can just print it up for free. ![](https://www.datocms-assets.com/56652/1719521201-btc-nwo.jpg?auto=format) To add insult to injury, you are taxed when you earn, spend, and breathe. And when you stop breathing and die, you are taxed one final time.  ##### How to deprogram yourself **In summary:** - Always pay attention to the incentives. - Never take financial advice from poor people. - Never take medical or nutritional advice from unhealthy people. - Stop listening to the *"experts."* - Most of them have no idea what they're talking about and just represent a very narrow sliver of consensus that exists at the present moment, that may not have ever existed before or after. - Stop listening to the experts. - Stop following *"the news."* - Learn to actually think for yourself instead of just repeating something that you read online this morning. It's a really good idea to stop scrolling. Read more things that were written 50, 100, 150 years ago, or even a thousand years ago. You can learn a lot from that. Also, hang out with more Bitcoiners and other insane conspiracy theorists who somehow manage to be right about almost everything. This is the most important thing: If you're an American, be sure to eat six to eleven servings of grains every day. ![](https://www.datocms-assets.com/56652/1719520976-nixon-fool.jpg?auto=format) The government knows what's best for you! The one exception would be if you're from the UK. You're going to have to use this pyramid with the beans and toast and the figgy puddings. ![](https://www.datocms-assets.com/56652/1719521038-uk-food.webp?auto=format) *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Will Bitcoin Kill All Stocks? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/will-bitcoin-kill-all-stocks/ Sound money, free markets, and corporations can coordinate human activity and productivity effectively, but stocks, unlike Bitcoin, are paper assets subject to management, regulatory, and operational risks. --- **Matthew Kratter** · June 20, 2024 · Updated July 12, 2024 ### Will Bitcoin Kill All Stocks?  It really depends on what *"killing all stocks"* [means](https://www.youtube.com/watch?v=Vhb38T5NePU)... If it means will Bitcoin's fiat price outperform all stocks over all possible time horizons, I would say definitely not, and this has already been proven true over the last 18 months. Bitcoin has already massively underperformed Nvidia, for example. As we can see here, Bitcoin is up about 300%, and Nvidia is up about 800%. [![](https://www.datocms-assets.com/56652/1718909159-bu-1-pic-1.png?auto=format)](https://www.youtube.com/watch?v=Vhb38T5NePU) Bitcoin University Now, the other question is, will you be able to trade in and out of stocks and outperform Bitcoin on a post-tax basis over the next decade?  Will you be able to find the new Nvidia every 18 months and get into it and get out of it in time?  Definitely not, I would say, and so that's why I encourage people just to keep it simple and HODL Bitcoin. At least, that's what I do. Now, is it bad or sad that Nvidia has outperformed Bitcoin lately?  I'd say it's neither. I'm glad that Nvidia makes great GPUs for the world and that its shareholders are being rewarded for this. I'm also glad that I've been holding just Bitcoin instead, and I can go hiking every day instead of being glued to my computer trying to pick which new investment I can roll my money into. Bitcoin and Nvidia really are like comparing apples and oranges. Stocks are not a neutral, censorship-resistant, peer-to-peer money that you can send to anyone or move anywhere in a brain wallet. Rather, stocks are paper assets that are at the mercy of company management, the board, and myriad operational, regulatory, and jurisdictional risks. You also hold stocks in a brokerage account that can easily be closed, frozen, or censored. Now, sometimes individual [stocks](https://www.swanbitcoin.com/bitcoin-is-not-your-typical-investment/) will outperform, and sometimes Bitcoin will. I'm quite certain, however, that holding Bitcoin will massively outperform over the next decade, let's say, holding a diversified basket of stocks like the S&P 500 in the form of the SPY or the NASDAQ 100 in the form of the QQQs. I think Bitcoin will also massively outperform holding cash, bonds, and real estate as well. Now, there's another interpretation of today's title, *"Will Bitcoin kill all stocks?"*  That interpretation is, will stocks still exist on a Bitcoin Standard?  I think it's a great question and one that I've alluded to a few times in recent videos and that people have been asking me to cover. People have been wondering about this free market rabbit hole, this sort of libertarian and 'an-cap' rabbit hole that we've been going down recently.  I want to say now that I made these videos in part to provide the necessary intellectual framework for answering today's question. This is really what we've been building up to, so if you haven't watched those videos first, I'd encourage you to watch them: [Bitcoin and Free Markets](https://www.youtube.com/watch?v=pXE0zlMTu-g), and then, of course, [Who Will Build the Roads?](https://www.youtube.com/watch?v=Jnshim6pwvg) In these videos, I try to answer the basic question of how to coordinate and scale human activity. How do you enable large groups of people to work together to accomplish amazing things?  Do you just enslave a lot of people and force them to build a pyramid for you?  I'd say that's not just ethically reprehensible but also probably doesn't bring out the best in your workers. Religion and/or nationalism have been other effective ways to coordinate human action: *“Build this pyramid because Amon-Ra or your beloved Pharaoh desires it or because it will make Egypt great again (MEGA).”* Not to imply that I support these kinds of highly reductionist explanations for either religion or nationalism, both of which are extremely complicated and nuanced phenomena, but I would say here that religion and nationalism have certainly been used to coordinate human action and activity. Another way to motivate people and coordinate their activity is through free markets and money.  For example, as we spoke about over the past two days, there's no such thing as a global *“Pencil Czar”*. Yet somehow, lots of people globally manage to coordinate to work together to collect the necessary raw commodities (wood, rubber, graphite, etc.) and to produce a finished product that is amazing and affordable—just 4 cents for a pencil, which is assembled globally and makes its way to your house. Milton Friedman's [pencil parable](https://www.youtube.com/watch?v=DNp_qGZ7c68) is a wonderful example of how free markets help to coordinate and scale complex human activity. [Video](https://www.youtube.com/watch?v=DNp_qGZ7c68) So now I think we're ready to answer the question: Will stocks exist on a Bitcoin Standard?  And I think yes, I think they will, for the following reason: Corporations are another excellent way of coordinating and scaling human activity in the context of money and free markets. How do you get, for example, 200,000 people to work together to design and build a new airplane?  A great way of doing this is to form a corporation and allow the management team, the workers and outside investors to participate in the upside in exchange for investing either their time or their money?  Stocks are just shares of ownership; they're equity in a company, and having shares of ownership in many different companies being publicly traded, I think, is a great idea. It creates deep, liquid markets. It's definitely a much better use of capital than funneling everything into government bonds like U.S. treasuries, which help to fund an institution that's stupid, violent, and a terrible allocator of capital. Good, neutral, sound, scarce, hard commodity money like Bitcoin is the best foundation for a prosperous economy. So that would be sort of layer one. You don't want to use soft money that can be endlessly printed by central bankers or other insiders, in the case of the U.S. dollar, and crypto, which is really just another form of fiat.  Now, the next level up from this sound foundation of sound money is the free and voluntary exchange of goods and services for that money, what we call free markets. Markets that are free of government restrictions, capital controls, tariffs, price controls, wage controls, and other forms of interference. And then I'd say the next level up from free markets is the alignment of interests that comes from ownership in a common enterprise like a corporation. Corporations have given us jet-powered aircraft, modern automobiles, dishwashers, laundry machines, and, of course, the iPhone.  Now, it's impossible to design and manufacture a new jet aircraft with your friends in your garage. Rather, it requires the coordination of thousands and thousands of people working on wing design, wing safety, avionics, flight controls, hydraulic and pneumatic systems, etc.  And for this reason, the modern corporation really is still the best mechanism to enable the creation and manufacture of complex modern items like computers or aircraft. Now, of course, many industries, many corporations, and many stocks in the modern fiat era are highly captured and corrupt, like, for example, the banks big pharma and food manufacturing companies, just to name a few. But I think they'll be much less captured on a Bitcoin Standard where the federal government is much smaller, less powerful, and unable to bail out industries or play favorites using its access to the money printers.  This is really how the game works.  But, I do think corporations will still exist on a Bitcoin Standard, and their shares will still be publicly traded because corporations remain one of the best tools ever developed to help coordinate and scale human activity in useful and productive ways. Now, will people still want to invest in these stocks?  I think absolutely. I think Bitcoiners themselves will use their Bitcoin to fund, for example, life extension companies, space exploration companies, and who knows what other cool ideas. And when the world is mostly on a Bitcoin Standard, Bitcoin will gain purchasing power not through new adoption like today, with new people coming in and adopting Bitcoin and holding it as their reserve asset, but rather at a much slower rate that captures civilizational progress and productivity gains.  At that point, you'll be able to outperform the base money, which will be Bitcoin, by building companies that create goods and services that people really want to buy. So Bitcoin will not kill stocks; rather, I think Bitcoin will make stocks great again. --- *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Highly Regarded Bitcoin Miner - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/highly-regarded-bitcoin-miner/ Matt discusses Marathon Digital Holdings (MARA), a US Bitcoin miner criticized for OFAC censorship, spamming the network and mining altcoins. With stock price and revenue down — survival is uncertain. --- **Matthew Kratter** · June 28, 2024 · Updated July 12, 2024 Today, we are taking a [closer look](https://www.youtube.com/watch?v=QdPUwW4hsjU) at, which in my opinion, is one of the worst Bitcoin mining companies in America.  ***Necessary Disclosures****: I've never owned any MARA shares and never will, and you're going to see the reasons in this video.* This is Marathon Digital Holdings, an American Bitcoin mining company.  [![](https://www.datocms-assets.com/56652/1719608542-mara-wiki.png?auto=format)](https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqazlWekJpN1l3aG5JMXNKWmRqUm1KMGxNUVEyZ3xBQ3Jtc0tsNE5mYUNhdDgxaFpMcTFUY2lxUHlnMmdVRG9na1ByYmVSRDFtVFV3WlhjSk13bVBjcXc1SXBZbkhUcjFIbWVhbWU0M09ab1hDTVdLdktkRW52UkdPemtfcHBDY2FJNjNvWnlxQXJfaXQ3ZWdZY1VONA&q=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FMarathon_Digital&v=QdPUwW4hsjU) Wikipedia The CEO and Chairman of the Board, which presents some governance issues, is Fred Thiel.  [![](https://www.datocms-assets.com/56652/1719608879-fred.png?auto=format)](https://ir.mara.com/corporate-governance/board-of-directors) Mata Digital Holdings Website Marathon used to be a patent troll holding company, and then in 2020 and 2021, they transitioned to becoming a Bitcoin mining company.  [![](https://www.datocms-assets.com/56652/1719608983-marathon-patent.png?auto=format)](https://crypto.marketswiki.com/index.php?title=Marathon_Patent_Group) crypto.marketswiki They own ASICs and, in addition, they run a Bitcoin mining pool called the MARA Pool, which currently controls approximately 4% of the total hash rate of the network. [![](https://www.datocms-assets.com/56652/1719609393-mara-pool.png?auto=format)](https://mempool.space/mining) MemePool Marathon has a long history of being a generally pretty crappy actor in the Bitcoin space.  For example, they were the first Bitcoin mining company in America to earn their OFAC knee pads. OFAC, of course, is an office under the Department of the Treasury; it's the Office of Foreign Assets Control.  [![](https://www.datocms-assets.com/56652/1719609613-ofac.png?auto=format)](https://ofac.treasury.gov/) OFAC.gov In May of 2021, Marathon became the first North American enterprise miner to produce fully AML and OFAC-compliant blocks.  [![](https://www.datocms-assets.com/56652/1719609601-mara-first-pfac.png?auto=format)](https://ir.mara.com/news-events/press-releases/detail/1239/marathon-digital-holdings-becomes-the-first-north-american) mara.com/news What does this mean?  It means that one of Fred Thiel's first moves after becoming CEO was to direct Marathon to censor real Bitcoin transactions that Janet Yellen didn't like. Imagine getting into the Bitcoin space in order to immediately audition for the role of Judas Iscariot. Fortunately, the Bitcoin community was watching and shamed MARA, and then MARA did the right thing and stopped censoring Bitcoin transactions in June of 2021, done playing the OFAC game.  ![](https://www.datocms-assets.com/56652/1719609664-mara-no-more.png?auto=format) Coindesk What were they going to do next?  They decided to start spamming the chain instead. They were responsible for the fourth-largest Bitcoin transaction ever being included in a block, at least at the time.  [![](https://www.datocms-assets.com/56652/1719609782-screenshot-2024-06-20-at-2-57-08-pm-e1718866927433.png?auto=format)](https://theminermag.com/news/2024-06-20/marathon-bitcoin-slipstream-video-inscription/) theminermag.com They earned 0.85 BTC for inscribing this monstrosity into a block. It's a [56-second video](https://www.ord.io/71769029) that was said to be paying homage to the builders, artists, and collectors in the Ordinals ecosystem.  [![](https://www.datocms-assets.com/56652/1719609832-odri-video.png?auto=format)](https://www.ord.io/71769029) ord.io Due to the video's large size, this block included only three transactions compared to the usual several thousand. So, what they're doing here too is misusing the blockchain by spamming the chain. Not enough?  Why not do something that will piss people off even more?  MARA began to mine shipcoins and, in effect, helped to prop up ecosystems that are trying to compete with Bitcoin. MARA diversifies revenue streams with Kaspa mining and expanded leadership in digital asset compute.  ![](https://www.datocms-assets.com/56652/1719609895-kaspa.png?auto=format) mara.com/news Typical corporate speak. Now, I get it, Bitcoin mining is a really, really tough business, which suggests that if you're in that business, you should actually be 150% focused on Bitcoin mining itself, especially if your financials and stock performance have been abysmal.  If we take a look at their total revenues over the past few years, they've been completely flat. When you subtract out the cost of those revenues, you end up with actually negative gross profit.  [![](https://www.datocms-assets.com/56652/1719609976-mara-yahoo.png?auto=format)](https://finance.yahoo.com/quote/MARA/financials/) finance.yahoo So, this is a company that's been hemorrhaging money and would actually make more money if they didn't do anything.  MARA’s stock price has actually gone down since Fred Thiel became CEO on April 26th, 2021. On that date, the stock closed at $36.78 and is currently trading just under $20. So, this has been a disaster. ![](https://www.datocms-assets.com/56652/1719610046-mara-stock.png?auto=format) Tradingview The one chart that has gone up, though, has been Fred's compensation. It's gone from $18 million in 2021 to $7 million in 2022 to $36 million in 2023, in spite of the abysmal stock performance.  [![](https://www.datocms-assets.com/56652/1719610078-theil-earnings.png?auto=format)](https://www.morningstar.com/stocks/xnas/mara/executive) MorningStar This is the problem, though.  This is the problem when you have very, very poor corporate governance. You should never have the CEO also be Chairman of the Board of Directors. This provides huge conflicts of interest and basically allows CEOs to vote themselves raises when they clearly don't deserve it.  It looks like holders are dumb enough to have recently approved, as of yesterday, a proxy statement in which shareholders voted to increase the compensation of people who work at MARA by 15 million shares.  [![](https://www.datocms-assets.com/56652/1719610179-shareholders.png?auto=format)](https://ir.mara.com/sec-filings/all-sec-filings/content/0001493152-24-024436/0001493152-24-024436.pdf) ir.mara.com Put this into the cookie jar so management can help themselves some more. This involves diluting shareholders even more.  [![](https://www.datocms-assets.com/56652/1719610218-outstanding-shares.png?auto=format)](https://ycharts.com/companies/MARA/shares_outstanding) ycharts.com We can see that since Fred took over and really since this became a Bitcoin mining company, the share count has gone up even as the stock price has gone down. This is a leech, it is a blood-sucking parasite. Don't be like a leech.  ![](https://www.datocms-assets.com/56652/1719610285-leech.png?auto=format) You shouldn't be paying yourself so much out of the cookie jar when you're providing such poor returns to shareholders. Is any of this bad news for Bitcoin?  Fortunately, it's not. Highly regarded actors like MARA always do a good job of shooting themselves in the foot, and if I had to bet, MARA is going to be one of those companies that's simply not going to make it. It would seem that short sellers agree with me.  If we take a look at the short interest, 26% of the float is currently sold short, which is quite a large short position and is a sign that many people are betting against this company as they continue to pay their management and dilute shareholders and provide quite poor performance.  [![](https://www.datocms-assets.com/56652/1719610307-share-stats.png?auto=format)](https://finance.yahoo.com/quote/MARA/key-statistics/) finance.yahoo In a last act of desperation, they started mining shipcoins. *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bitcoin’s HODL Culture - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bitcoin-s-hodl-culture/ Bitcoin’s culture of hodling, and how important it is both for building strong individuals and families, as well as creating the precondition for a Bitcoin circular economy to develop. --- **Matthew Kratter** · July 4, 2024 · Updated July 12, 2024 ### Bitcoin's HODL Culture Bitcoin HODL culture is extremely important. This [discussion](https://www.youtube.com/watch?v=78t9s2LrRWE) arises from our discussion about Kaspa and whether Kaspa will be the next Bitcoin. ##### Spoiler Alert: It definitely is not. In a follow-up video, I [discussed](https://www.youtube.com/watch?v=6DIxr8fmP2s) how the Bitcoin network was bootstrapped. Derridaaa commented about Kaspa Maxi channels discussing when to take profits. ![](https://www.datocms-assets.com/56652/1720064103-1-comment.png?auto=format) The idea of taking profits is really a crypto thing. **For Example:** *"My Kaspa Exit Strategy"* and *"When to Take Profits"* are common topics. They're all tied to Bitcoin because it's the only real digital asset that matters. Bitcoin culture is very different. The first rule of Bitcoin is: **You never sell your Bitcoin.** ![](https://www.datocms-assets.com/56652/1720045860-1st-btc.png?auto=format) This is perfectly captured in the Batman and Robin meme: ![](https://www.datocms-assets.com/56652/1720045738-hodl.png?auto=format) Altcoiners, or *"shipcoiners,"* are often puzzled by Bitcoin's HODL culture. Shipcoiners are used to taking profits frequently, subconsciously understanding that they are the exit liquidity for venture capitalists and others who dump their coins on retail investors. The entire concept of HODL'ing is lost on shipcoiners. They either take profits to buy depreciating assets like Lamborghinis or jump from one crypto horse to the next. This lifestyle is exhausting! ##### Bitcoin is different. The Bitcoin culture is different. Bitcoin is the goal, the exit, the destination. It's not just another stop on a gambler's journey. Bitcoin is the Inn at the end of your journey where you can relax, knowing your money is safe and secure and will continue to gain purchasing power. **The smartest crypto scammers understand this.** The *'crypto industry'* is a game where more intelligent and more evil people than you try to take your BTC in various ways. **For Example**: the EOS scammers at Block.one issued EOS, dumped it on retail investors, and bought Bitcoin. Block.one now owns 164,000 Bitcoin, while EOS retail bag holders lost purchasing power. [![](https://www.datocms-assets.com/56652/1720046108-block-one.png?auto=format)](https://bitcointreasuries.com/) Bitcoin Treasuries Many in crypto misunderstand Bitcoin's HODL culture. **Kainoslyfe commented:** ![](https://www.datocms-assets.com/56652/1720064291-yes-3.png?auto=format) **Tien1millkion reponsed:** ![](https://www.datocms-assets.com/56652/1720064416-yes-2.png?auto=format) Bitcoin is like your savings. You only use it to buy what you need. Cryptos are like casino chips; you bet black and hope you'll win or cash out to cut your loss. Bitcoin HODLing culture fosters virtues of self-control, less materialism, and a focus on relationships and experiences. **It's important for both individuals and the Bitcoin ecosystem.** ![](https://www.datocms-assets.com/56652/1720053737-matrix-btc.png?auto=format) HODLing culture is important for the individual and for the family because it breeds the virtues of: - *self-control* - *being less materialistic* - *low-time preference thinking* HODLing is also important for the Bitcoin ecosystem and its network effects. A circular economy for Bitcoin can only develop if people are willing to HODL. Even Monero, a cool crypto, fails here because dark web drug dealers dump it for Bitcoin when building their long-term savings. Bitcoin HODLers are stronger than Monero HODLers. ##### BTC HODLers > XMR HODLers ... as you can see by the chart below, which shows Monero's continuous loss of value against Bitcoin. ![](https://www.datocms-assets.com/56652/1720046303-xmr-vs-btc.png?auto=format) I wish all of you a happy 4th of July. Bitcoin is the spiritual successor to the decentralized governance model the U.S. Founding Fathers laid out. **The American Revolution showed one way out of tyranny.** The Bitcoin Revolution we're fighting today is against petty tyrants, bureaucrats, politicians, and their central bank puppet masters - not kings. Bitcoin is freedom money for everyone worldwide, not just Americans. ##### #Bitcoinisforeveryone *Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.*  **Learn more at**: [https://www.bitcoinuniversity.com/](https://www.bitcoinuniversity.com/)   **Follow him on Twitter**: [@mattkratter ](https://twitter.com/mattkratter)**Join Bitcoin University**: [https://www.bitcoinuniversity.com/join](https://www.bitcoinuniversity.com/join) ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Bitcoin Miners Depilating Dogs? - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/bitcoin-miners-depilating-dogs/ Is Bitcoin mining is behind canine hair loss, old oak trees dying, and old people getting sick? No. But, the smear campaigns remain relentless. --- **Matthew Kratter** · July 12, 2024 ### Bitcoin Miners Depilating Dogs Today, let's [discuss](https://www.youtube.com/watch?v=AUzQugmyZ_8) whether Bitcoin mining is behind canine hair loss, old oak trees dying, and old people getting sick. This is an electric vehicle - a Tesla. ![](https://www.datocms-assets.com/56652/1720809757-test.jpeg?auto=format) If you plug it in, you're a good person. And you're saving the planet because E.V.s do not emit carbon dioxide. By contrast, this is a Bitcoin mining rig. ![](https://www.datocms-assets.com/56652/1720809798-bitcooin-mining-rig.jpg?auto=format) If you plug one of these in... You're actually a bad person. You're destroying the planet. Even though Bitcoin mining rigs, like electric vehicles, do not emit carbon dioxide. Who knew it's so hard to be good these days? As you know, if you've ever watched The Goode Family from many years ago. ![](https://www.datocms-assets.com/56652/1720810065-goode-fam.jpg?auto=format) If you're a Bitcoin miner... It's especially difficult to be good these days. For example, since Bitcoin miners came to this small town in Granbury, Texas, many things have been going wrong. [![](https://www.datocms-assets.com/56652/1720810024-time.png?auto=format)](https://time.com/6982015/bitcoin-mining-texas-health/) Time.com A centuries-old oak tree died. It's hard to believe. How did this happen? What's the world coming to when really old things suddenly die? Also, an 81-year-old woman got sick, and a 64-year-old man got a blood clot. And don't you dare blame something else for that blood clot? [![](https://www.datocms-assets.com/56652/1720809930-clots.png?auto=format)](https://www.lakegranburymedicalcenter.com/news-room/take-steps-to-stop-the-clot-17255) Lake Granbury Medical Center It was definitely caused by these Bitcoin mining machines. Bitcoin miners showed no mercy to Granbury, Texas. They didn't even stop depilating dogs. This dog lost fur, thanks to the Bitcoin miners. To be fair to the Bitcoin miners, the author of The Times article admits that it's possible that none of these problems were actually caused by Bitcoin mining itself. This disclaimer is very deep in the Times article: - *"It's nearly impossible to prove that Bitcoin mining directly caused the afflictions of these specific animals and plants. But as the strange anecdotes accumulate, they add to the stress of a town that feels under siege from all directions."* This *"under siege from all directions"* is always interesting. The only time that New York journalists like Andrew Chow, who wrote this article, take a break from looking down their noses at *"redneck towns"* in *"flyover country"* is when they want to use their rural brethren as a political battering ram. Here's an anthropologist presenting his findings in New York City: [![](https://www.datocms-assets.com/56652/1720810123-flyover.jpg?auto=format)](https://www.cartoonstock.com/directory/f/flyover_state.asp) CartoonStock - *"The drone footage is our best evidence yet that humans actually inhabit this area in the middle of the country called flyover country."* These same journalists didn't write articles about all the manufacturing jobs in Granbury being outsourced to China to help create a bid for U.S. government debt and endless U.S. government deficits. These journalists didn't write articles about Scott Jamar of Granbury, Texas, who died early in 2003 in Iraq fighting a war for the U.S. dollar elites to stop Saddam Hussein from selling oil for euros. [![](https://www.datocms-assets.com/56652/1720810245-scott-jamar.png?auto=format)](https://obits.al.com/us/obituaries/mobile/name/scott-jamar-obituary?pid=3097110) obits.al When it comes to a new type of money like Bitcoin that gives people freedom from bankers... Harvard-trained journalist Andrew Chow's moral sensibilities awakened. He's suddenly ***"SO CONCERNED"*** **about rural Texas folk.** It would seem that a Texas jury would disagree with his article. Just [yesterday](https://decrypt.co/239380/texas-jury-sides-with-bitcoin-miner-marathon-in-nightmare-noise-dispute), a Texas jury sided with a Bitcoin miner, Marathon, who runs a Bitcoin mining plant in Granbury, Texas, and acquitted them of all charges. [![](https://www.datocms-assets.com/56652/1720810364-texas-jury.png?auto=format)](https://decrypt.co/239380/texas-jury-sides-with-bitcoin-miner-marathon-in-nightmare-noise-dispute) Decrypt In response, - *"In Granbury, Marathon has pledged to conduct a sound study and take steps to reduce noise, like moving some computers to immersion cooling. I believe the cooling fans in Granbury are causing the noise. Extending sound barriers and planting trees will also help."* **To be clear:** I'm fully in favor of small towns being able to decide what businesses they want in their local communities and what rules, including noise ordinances, those businesses must abide by. Presumably, Marathon applied for permits; they needed permission from the town council to set up a mining facility in Granbury. What I am against are ignorant journalists like Andrew Chow, who write clickbait articles, run smear campaigns against Bitcoiners, and lead people to believe that even a dog losing its fur can be attributed to Bitcoin mining. *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Matthew Kratter Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers. Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective. In late 2019, after finally recognizing Bitcoin's importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin. Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site. In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs. # Will A.I. Go the Way of Bitcoin Mining - Swan Bitcoin URL: https://www.swanbitcoin.com/mining/will-a-i-go-the-way-of-bitcoin-mining/ Abstract: ASICs are coming to Artificial Intelligence. They may well become part of the AI mix. However, ASICs are unlikely to come to dominate AI as they have in Bitcoin Mining. --- **Adrian Morris** · July 11, 2024 #### Introduction There was a robust conversation in a Spaces on Twitter recently where participants went through the many facets of AI and the pros, cons, and unknowns of Bitcoin Mining Companies making the *"pivot"* into High Performance Computing / Artificial Intelligence (A.I.). The discussion brought attention to which companies were pursuing legitimate advancements vs. which were making grandiose claims. With that in mind, a grandiose claim circles on Twitter today in the form of a post from *"*[*Etched*](https://x.com/Etched/status/1805625693113663834)*"*. [Full Article](https://www.etched.com/announcing-etched) The post claimed the Etched Soho Chip was "***the fastest AI chip of all time..”;*** (a fairly bold statement to say the least) and given the nature of the claim, looking at it with some context can be beneficial. Firstly, any claims made about a newly spec'd chip with no benchmarks other than the manufacturer’s should be treated with a healthy level of skepticism. Secondly, any claims of a new, unproven technology leading to the obsolescence of an *"old"* proven technology are typically premature for several reasons:  1. Evolving Ecosystem: The AI Ecosystem is rapidly changing, with new model architectures and hardware solutions constantly emerging, making long-term hardware predictions challenging. 2. Flexibility vs. Efficiency: GPUs offer flexibility for a wide range of AI tasks, while specialized hardware like LPUs and TPUs / ASICs provide higher efficiency for specific tasks.  3. Continued Relevance of GPUs: GPUs will remain relevant due to their versatility. Unless a fundamental shift in LLM design or a related step function of AI development takes place, this versatility will allow them to be used for emerging AI architectures and tasks that specialized hardware may not support. #### This Doesn't Sound Like Chat GPT The [press release](https://www.etched.com/announcing-etched) from Etched stated *“We’ve spent the past two years building Sohu, the world’s first specialized chip (ASIC) for transformers (the “T” in ChatGPT).”* *This is a very important claim as it touches on the very foundation of how A.I. (in its current form) “works”.* GPT stands for *“Generative Pretrained Transformer”* which is an architecture based on[ ](https://x.com/hashtag/NeuralNetworks?src=hashtag_click)Neural Networks. This neural network structure is used for text generation, machine translation, and text classification, all known as *“Natural Language Processing Tasks.”* OpenAI built GPT from the ground up into one of the largest language models, with over 200 Billion [Parameters](https://levelup.gitconnected.com/gpt-4-parameters-explained-everything-you-need-to-know-e210c20576ca). Parameters are the numerical values acquired from data during the training phase that dictate how a neural network handles input data and generates output data. As the number of parameters increases a model becomes more intricate and capable, allowing it to process larger and more complex datasets. The neural network of GPT is a *“transformer”* model that adopts self-attention mechanisms to process input text and generate output text. A simpler way of thinking about it is that these attention mechanisms are meant to reproduce human cognition where we can pay more attention to certain inputs while ignoring or diminishing the importance of other inputs based on the information we receive. Simply put, Etched claims the Sohu chip is designed to address one of the fundamental building blocks of A.I. more effectively, than any device or system to date.  #### What Does All That Mean? That can be a lot to digest, and assuming that readers of this post are unfamiliar with Artificial Intelligence, or distinctions between different technologies, and the hardware that drives them, a brief overview of the popular technologies and why they are important would be beneficial. In very general terms: 1. GPUs (Graphics Processing Units): GPUs are extremely versatile across a wide range of applications due to their specialized architecture that is well-suited for parallel matrix processing of mathematical operations across many cores.They are excellent for general-purpose AI workloads, including training and inference. The most well known examples of GPUs are made by [Nvidia](https://www.nvidia.com/en-us/data-center/h100/).  2. LPUs (Language Processing Units): LPUs like those developed by [Groq](https://wow.groq.com/lpu-inference-engine/) are fundamentally different from GPUs  in their architecture and optimization for specific tasks. LPUs are purpose-built for sequential processing, which is crucial for natural language processing (NLP) tasks. The Groq LPU uses a Tensor Streaming Processor (TSP) architecture, which processes data tasks in a sequential, organized manner, [similar to an assembly line](https://www.techradar.com/pro/feels-like-magic-groqs-ultrafast-lpu-could-well-be-the-first-llm-native-processor-and-its-latest-demo-may-well-convince-nvidia-and-amd-to-get-out-their-checkbooks). LPUs can offer higher performance and energy efficiency for specific language tasks but are less flexible than GPUs for other types of A.I. workloads. 3. TPUs (Tensor Processing Units): TPUs are a specialized form of application-specific integrated circuit (ASIC) [created by Google](https://cloud.google.com/blog/products/ai-machine-learning/google-supercharges-machine-learning-tasks-with-custom-chip) to enhance the performance of machine learning tasks. While Graphics Processing Units (GPUs) were initially engineered for rendering graphics and subsequently repurposed for artificial intelligence applications, TPUs were designed explicitly to meet the unique requirements of machine learning from the outset. This targeted design strategy has produced a hardware platform that is particularly proficient at performing tensor operations, which are essential components of numerous A.I. algorithms. The most well known example of a TPU is [Google’s Cloud TPU v4](https://cloud.google.com/blog/topics/systems/tpu-v4-enables-performance-energy-and-co2e-efficiency-gains). TPUs have a more specialized architecture with systolic arrays optimized for matrix operations, which are fundamental to many machine learning algorithms. #### What Makes Sohu By Etched Different Sohu is an Application-Specific Integrated Circuit (ASIC) designed exclusively for transformer models. Unlike GPUs, TPUs, or LPUs, which are more general-purpose A.I. *“accelerators”*, Sohu cannot run other types of A.I. models and this extreme specialization allows for much higher performance on transformer based models. Without digging into the technicals of the chip in a manner that is far beyond the scope of this article, Sohu's specialization for transformer models allows for higher compute density and simplified software optimization compared to more general-purpose AI accelerators like GPUs, TPUs, or LPUs. However, this specialization comes at the cost of flexibility. #### BItcoin’s Specialized Model Inspired A.I. Innovation Detailing the differences between GPUs, LPUs, and TPUs/ASIC Transformers, and exploring their roles in shaping the future of AI processing highlights intriguing parallels between Large Language Models (LLMs) and Bitcoin. For comparison purposes, one can think of LLMs as the *“Layer 1”* of the AGI Cognitive *“Chain”* (CogChain). The GPUs, LPUs, TPUs, and specialized Transformer ASICs can be likened to Bitcoin Mining Rigs. Future machine learning models, whether they are LLMs or otherwise, will serve as *“Layer 2”*, providing increased functionality, speed, and applications on top of *“Layer 1”*. This analogy may seem confusing at first, but breaking it down can help with understanding: 1. **Foundational vs. Specialized**: LLMs can serve as a foundational layer for many AI applications, much like Bitcoin's blockchain serves as the base layer for the Bitcoin network. This foundational layer underpins the overall structure and functionality, providing a solid base upon which additional layers can build. 2. **Hardware Specialization**: Just as specialized hardware (ASICs) has emerged for Bitcoin mining to optimize efficiency and performance, specialized hardware for AI tasks is also beginning to appear. GPUs (Graphics Processing Units), LPUs (Learning Processing Units), and TPUs (Tensor Processing Units) are examples of this trend. These specialized units are designed to handle specific tasks more efficiently than general-purpose hardware. 3. **Evolving Ecosystem**: The AI ecosystem is rapidly evolving, with new model architectures and hardware solutions constantly emerging. This rapid change makes long-term hardware predictions challenging, similar to the ever-growing and changing Bitcoin ecosystem. The pace of innovation in AI mirrors the dynamic nature of the cryptocurrency space. #### GPUs and Bitcoin Aren't Going Anywhere In conclusion, while specialized AI hardware might offer significant performance improvements for specific tasks, GPUs will remain important due to their flexibility and ability to adapt to new AI models and architectures. As these models continue to evolve and develop, the AI hardware landscape will likely diversify further. Different hardware solutions will coexist to meet various needs, much like the emergence of different layer 2 solutions alongside Bitcoin. This diversified approach ensures that a range of tasks and applications can be effectively supported, reflecting the multifaceted nature of both AI and Bitcoin.  *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Adrian Morris Adrian Morris has been lurking in the shadows of the Bitcoin space for over a decade. Writing has always been a passion of his, as he writes engaging and thought-provoking pieces. Adrian was raised in the streets of Brooklyn, New York and now resides in Arizona. His life mission is to raise awareness of Bitcoin and how it can bring about a bright-orange future. # Bitcoin, Ethereum, and the Fall of the Roman Republic URL: https://www.swanbitcoin.com/finance/bitcoin-ethereum-and-the-fall-of-the-roman-republic/ Bitcoin is unchanging, and in a complex world where everything changes all the time, this is what makes it a system the likes of which the world has never seen… --- **Sam Callahan** · June 17, 2024 · Updated July 8, 2024 *"A great civilization is not conquered from without until it has destroyed itself from within.“* – Will Durant ### The Mos Maiorum of Rome – Duty, Loyalty, Discipline, Courage and Trustworthiness Did you know the Roman Republic was not governed by a written constitution? Instead, it was governed by a set of unwritten values, rules, and traditions known as mos maiorum, meaning *"the way of the elders."* Mos maiorum encompassed a set of values that served as the foundation for the Republic's political and social stability. Values like duty, loyalty, discipline, courage, and trustworthiness were cherished, and unspoken societal rules arose from them. These rules were always respected during the Republic's most prosperous years. They included things like always honoring the Senate's authority, always serving Rome above one's personal ambitions, never publicly criticizing one's superiors, and never bearing arms in the Pomerium, Rome's sacred inner boundary. However, as Rome expanded and faced internal and external pressures, the strict adherence to mos maiorum began to erode. Politicians and military leaders increasingly prioritized personal power and ambition over traditional norms, and the values that guided Rome's ascension were slowly abandoned. The foundation began to crumble. As author Mike Duncan wrote in his book, *"**The Storm Before the Storm: The Beginning of the End of the Roman Republic.**"* *"When the Republic began to collapse in the late second century, it wasn’t the written laws that fell apart but the respect for the mutually accepted bonds of mos maiorum."* Some examples of this abandonment were when Roman leaders like Julius Caesar and Sulla took unprecedented actions to consolidate power, bypassing laws and traditional norms. Caesar famously crossed the Rubicon with his army, disregarding the authority of the Senate, and Sulla marched on Rome, taking up arms and spilling blood in the sacred Pomerium. Actions like these compounded over time, eventually destabilizing the Republic. As the customs eroded, Rome experienced rapid social changes and an increase in the creation of new laws to address emerging issues. This led to a more complex and unstable governance structure, making the Republic more prone to chaos. Ultimately, this led to the tearing of Rome's very social and political fabric, which contributed to the Republic's eventual downfall. ### The mos maiorum of Ethereum – Decentralization, Immutability, Community Governance, and Innovation When looking at the current state of Ethereum today, it's not hard to see some similarities with how the Roman Republic fell all those years ago. The '*mos maiorum'* of Ethereum can be considered the early values that guided Ethereum's initial development and ethos. Some of the fundamental principles that Ethereum's founders emphasized were decentralization, immutability, community governance, and innovation. These fundamental values guided Ethereum's early development and ethos, but like in Rome, Ethereum's values have been gradually cast aside as it has grown. This piece will explore how Ethereum has broken with its mos maiorum. We will look back on its history and identify how change after change has led to the project's deviation from its original core values. We will also explain why Ethereum's increased complexity as a result of these changes could lead to more instability, increasing the likelihood of its future downfall. ### Principles Get Lost in a Sea of Change One reason the Roman Republic lost its way and strayed from its core values was due to swift changes in its governance. The Republic's early values of shared power and civic duty were gradually undermined by a series of reforms and crises that centralized authority. As Rome expanded, the complexity of managing vast territories led to the rapid creation of new laws and institutions that increased executive powers, often at the expense of traditional republican norms. This shift contributed to political instability and the transition to a more centralized form of rule. If there's one lesson to be learned from the fall of the Roman Republic, it's that, in the face of relentless change, holding onto one's principles can become challenging. Like the Romans thousands of years ago, as Ethereum has expanded, the community has made significant changes to the system, which have arguably caused it to become more centralized over time. Ethereum's governance model has allowed for relatively frequent protocol changes (a hard fork every 6-12 months). To be clear, the ability to make frequent changes to the protocol does not necessarily make Ethereum inherently centralized, but it does raise questions. Why is Ethereum changing so much? Who is spearheading these changes, and why? Since the infamous DAO hack, Ethereum has undergone 17 hard forks. Many of these hard forks have resulted in fundamental changes to Ethereum's monetary policy and protocol. The following table shows five major hard forks since the DAO hack that either directly or indirectly altered Ethereum's annual issuance rate. ![](https://www.datocms-assets.com/56652/1718649737-rtn-01.svg) Furthermore, the graph below highlights how Ethereum's annual issuance rate has changed after each hard fork. ![](https://www.datocms-assets.com/56652/1718649775-rtn-02.svg) Source: ethhub.io The question becomes, *"Is there a select group of individuals or entities pushing for these protocol changes?"* It's widely believed that the decline of the Roman Republic was partly due to powerful leaders and politicians altering laws to serve their own interests and those of their contemporaries. Key figures such as Julius Caesar, Pompey the Great, and Marcus Licinius Crassus formed alliances and enacted policies that centralized power, undermining the Republic's traditional values. Ethereum's governance process occurs off-chain and involves informal processes, such as public discussions, chat forums, social media, and Zoom calls. Said differently, Ethereum's governance is achieved through social consensus rather than on-chain voting. This can make it challenging to ascertain the true level of decentralization, as the decision-making process and the direction of the network can be influenced by prominent community members or a select group of developers instead of reflecting a fully democratic and decentralized approach. Vitalik Buterin noted this risk himself when he wrote a [post](https://hackernoon.com/notes-on-blockchain-governance-ob65o3pod) on blockchain governance stating, *"The leading alternative [to on-chain governance] seems to be core developer consensus. However, the failure mode of a system being controlled by “ivory tower intellectuals” who care more about abstract philosophies and solutions that sound technically impressive over and above real day-to-day concerns like user experience and transaction fees is, in my view, also a real threat to be taken seriously."* Although Ethereum proponents will argue that the Ethereum community today is too large and diverse for any single entity to make changes to the protocol, it's hard to deny that certain organizations within the community have played crucial roles in nearly every major hard fork in Ethereum's history. One such entity is the Ethereum Foundation. The Ethereum Foundation is a non-profit organization established to promote and develop the Ethereum platform. It was founded by Vitalik Buterin and several other Ethereum co-founders. The foundation was initially funded through Ethereum's Initial Coin Offering, where it received around 20% of the initial distribution of tokens in 2014. It has since used these funds to develop the protocol and support the ecosystem. To this day, the Ethereum Foundation conducts research, funds developers, develops technology, and leads community discussions. But what's important to note is that the foundation's governance structure is opaque. No one knows exactly who's in charge or how decisions are made within the organization. At this point, it's indisputable that the Ethereum Foundation has played a hand in every major change to Ethereum, whether that be by directly proposing the hard forks, facilitating discussions and advocating for them in the community, or technically implementing them. Another prominent entity in the Ethereum ecosystem is ConsenSys, founded by one of Ethereum's co-founders, Joe Lubin. ConsenSys has become an important company in the ecosystem because it controls and operates key infrastructure such as MetaMask and Infura. MetaMask is a leading self-custodial wallet, and Infura is a critical node infrastructure provider, both of which provide users access to the Ethereum network. This has raised centralization concerns because one company can effectively act as a gatekeeper to the network. In the past, ConsenSys has blocked users from accessing its products due to compliance with sanctions. ![](https://www.datocms-assets.com/56652/1718649816-rtn-03.png?auto=format) Like the Ethereum Foundation, ConsenSys’s control over key infrastructure provides it with a large amount of influence in the Ethereum community. ConsenSys has played a pivotal role in many major upgrades to the protocol through its development and funding efforts, including with the Merge (which we will discuss later). If these entities are, in fact, guiding the Ethereum protocol and pushing through changes to the system to benefit their own interests, then it’s not difficult to hear the echoes of Rome. If a select group of individuals are, in fact, manipulating the protocol, then Ethereum could be doomed to suffer the same fate as the Roman Republic. But have past changes to the protocol benefitted these entities and early founders? Some would argue yes, but others disagree. Often, it is best to follow the incentives to find answers to questions like this. ### The Immutability Principle is Abandoned A common theme observed whenever Rome abandoned its core values is that it often happened during times of crisis. Similarly, this behavior can be seen when analyzing Ethereum’s history. During past periods of crisis, Ethereum’s leaders prioritized immediate solutions over the project’s long-standing principles. A prime example of this occurred when the principle of immutability was abandoned during [the DAO hack](https://www.coindesk.com/learn/understanding-the-dao-attack/). In 2016, a hacker stole millions of dollars worth of ether. In response, Ethereum’s leaders implemented a hard fork to reverse the hack and return the stolen funds to the victims, rewriting Ethereum’s transactional history. Part of the reason the hard fork may have been implemented is that many prominent community members were likely victims of the hack themselves. It’s unknown who exactly invested in the DAO or how much, but the DAO had significant backing from leading entities and individuals in the Ethereum community. It was touted as an innovative approach to decentralized governance. Even the founder of the company behind the DAO, Stephan Tual, was an employee of the Ethereum Foundation. After the DAO was hacked, it posed a significant threat to the credibility of the Ethereum network due to the sheer amount of ETH the hackers controlled —about 15% of all ETH in circulation. In the aftermath, the community had an intense debate on how to move forward. Some community members wanted to honor Ethereum’s original principle of immutability and advocated for not changing the code. Other community members, including several prominent figureheads, pushed for a hard fork to reverse the transactions and return the hacked funds to the victims. One community member who supported the hard fork was Ethereum co-founder Vitalik Buterin. ![](https://www.datocms-assets.com/56652/1718649865-rtn-04.png?auto=format) After weeks of discussion, the community could not reach a social consensus, so the Ethereum Foundation leveraged its influence to push through the hard fork. First, Stephan Tual from the Ethereum Foundation proposed the hard fork, but no social consensus could be reached on it. In another break with tradition, the Ethereum Foundation then chose to organize an on-chain vote instead. Less than 5% of all ETH participated in the vote, but a majority of those who did agreed to make the hard fork the default for node operators. In other words, if an ETH holder disagreed with abandoning Ethereum’s core principle of immutability, they had to choose not to update their software. After the vote, the hard fork was scheduled. For a hard fork to take effect, the new protocol rules must be implemented in the clients used by the nodes across the network. Clients are critical for coordinating network-wide updates. At the time of the DAO hack, more than 95% of nodes on Ethereum used the same client, Geth. ![](https://www.datocms-assets.com/56652/1718651269-rtn-05.png?auto=format) Source: Plotly, @shekhirin It just so happens that the Ethereum Foundation funded and supported Geth. With Geth being such a dominant client then, it was much easier for the Ethereum Foundation to coordinate and implement the hard fork despite the lack of broad consensus in the community. Galaxy Digital's Christine Kim wrote an excellent [report](https://www.galaxy.com/insights/research/ethereum-governance/) on Ethereum's Governance, where she highlighted this, saying: *"During the DAO hard fork, the main software development team was Geth, and the consensus among Geth developers, which was influenced by the figureheads leading the Ethereum Foundation at the time such as Vitalik Buterin, was to execute the hard fork returning funds from the DAO hack to the DAO creators. This consensus among Geth developers and the Ethereum Foundation more broadly held a large influence over what the Ethereum community and the larger crypto industry viewed as the appropriate course of action for Ethereum."* Influential entities and individuals in Ethereum reversed the DAO hack, changing the project forever. It set a precedent that Ethereum would favor the wishes of prominent organizations and leaders over the protocol's immutability during times of crisis. It’s pretty clear who benefitted the most from the hard fork—the individuals who invested in the DAO. These people got to rewrite history and recoup the ETH they lost. Is it a coincidence that that same group just happened to consist of many early prominent figureheads in Ethereum who advocated for and helped implement the hard fork? The principle of immutability is crucial as it ensures trust, security, and the integrity of financial transactions on the blockchain. Any deviation from this principle negatively affects ETH’s long-term value proposition because an investor can no longer have certainty that the transactions on Ethereum will not be tampered with if another crisis emerges. In many ways, the DAO hack represents the first major deviation in the mos maiorum of Ethereum. ### The Decentralization Principle is Abandoned Decentralization was another core value that formed the mos maiorum of Ethereum. It refers to the distribution of authority and control across multiple nodes or participants in a network, ensuring that no single entity has complete control. This makes the network more resistant to censorship and single points of failure. Initially, Ethereum aimed to design a decentralized platform using a Proof-of-Work (PoW) consensus mechanism. PoW utilizes the laws of physics to maintain the security and ensure the decentralization of blockchain. To validate transactions and mine a block, miners must expend computational power, creating a physical cost to participating in the network. This cost acts as a form of physical governance because it ensures that any attempt to alter the blockchain requires substantial resources (energy and hardware), making it economically unfeasible for actors to gain control of the network. This also creates a fair playing field because anyone with the necessary computational resources can participate. Using energy prevents centralization since control over the network is not based on ownership of the currency but on the ability to contribute computational work. In addition, PoW is inherently transparent because the energy expenditure done by each miner is publicly verifiable. Every node on the network can validate miners' work, ensuring the blockchain's integrity and security. This public verification process makes the system trustworthy. There is also an important caveat here: In PoW, a separation of powers exists between validators (miners), nodes, and token holders. Only miners can validate transactions and add them to a block. This structure creates a system of checks and balances. Miners need to produce valid blocks according to the rules enforced by nodes. Nodes enforce the protocol rules and can detect and reject any attempt by miners to cheat or deviate from them. Token holders have no governance power, which prevents large holders from exerting disproportionate control over the network. By dividing responsibilities among miners, nodes, and token holders, PoW reduces the risk of centralization. In summary, PoW uses the laws of physics and energy consumption to create a fair, transparent, and secure consensus mechanism. This ensures that anyone with the required resources can participate, maintaining the protocol's decentralization and integrity. However, in 2022, after the largest upgrade in its history, the Merge, Ethereum abandoned PoW for a Proof of Stake (PoS) consensus mechanism. The new PoS Ethere*um blockchain was dubbed "Ethereum 2.0."* This can be viewed as another break with one of the core principles that Ethereum was founded on: decentralization. In PoS, validators are chosen to create new blocks based on the number of tokens they hold and are willing to *"stake"* as collateral. This mechanism reduces the reliance on physical resources and increases the reliance on social and economic factors. In a way, PoS can simply be thought of as shareholder voting. The more tokens one has, the more votes they have, and the more power one has in the system. The concern is that PoS results in the centralization of power among a few large stakeholders, as those with more tokens have a higher probability of being selected to validate transactions and earn rewards. *"In PoS, in many ways, the wealthier you are, the more powerful and influential you are. Sound familiar?"* The risk is that large token holders can theoretically collude with one another and drive changes to the protocol against the broad community consensus for their own benefit. And unlike PoW, the separation of powers between validators, nodes, and token holders doesn't exist in PoS. Token holders now become the validators through staking. As token holders can validate transactions, there is less independent oversight to detect and reject invalid transactions, potentially compromising the security and decentralization of the network. The Ethereum Foundation once again played a significant role in guiding the network towards the Merge. They proposed the transition from PoW to PoS, facilitated and led discussions within the community, and developed the Beacon Chain, the backbone of Ethereum's PoS blockchain. The Ethereum Foundation also spearheaded the technical implementation of the Merge. This is likely why regulatory authorities are now asking questions about how involved the Ethereum Foundation is in governing this supposedly decentralized system. In February 2024, the Ethereum Foundation revealed in a GitHub [commit](https://x.com/BTCGandalf/status/1770783642719055887) that they had received inquiries from an unnamed state authority. Previously, their website stated they had never been contacted by any state agency requiring non-disclosure and would publicly disclose inquiries outside regular business. This statement and the website's warrant canary, a visual indicator of no secret subpoenas, has since been removed. ConsenSys, too, played a pivotal role in the Merge. It used its unique position to influence key stakeholders and validators to approve and implement the Merge. In addition, ConsenSys was deeply involved in building and testing the Beacon Chain, particularly through its Teku client. They also contributed to important upgrades, including the Altair upgrade, which was essential for Ethereum's eventual transition to PoS. These actions help highlight the substantial influence ConsenSys has had in guiding Ethereum towards PoS. Similar to the Ethereum Foundation, this is likely why regulators had been asking questions about the company's role in Ethereum's move to Ethereum 2.0. In a [lawsuit](https://assets.ctfassets.net/gjyjx7gst9lo/2kfQoAKoQyQD1cw0HbVF3I/9c52c1e8754583c8f9b090e4b610de65/Consensys_v._Gensler_et_al.__Complaint_for_Declaratory_and_Injunctive_Relief__as-filed_.pdf) ConsenSys filed against the SEC, it was revealed that the SEC had issued multiple subpoenas related to ConsenSys's involvement with the Merge. ![](https://www.datocms-assets.com/56652/1718651429-rtn-06.png?auto=format) The lawsuit states that ConsenSys received several subpoenas from the SEC seeking more information on its role in the Merge: *"The subpoenas do not just seek information on Consensys's acquisitions, holdings, and sales of ETH. They also seek detailed information concerning the role of Consensys, including its software developers, in a host of Ethereum Improvement Proposals related to the Ethereum Merge, the transition from a proof-of-work to a proof-of-stake validation mechanism. These subpoena categories include information on Consensys meetings with third parties, communications with all Consensys customers, a list of the names of any Consensys developers who contributed to any coding related to the proposals, and the identity of all public and private repositories that Consensys developers contributed to in connection with their coding."* The lawsuit continues by saying: *"The SEC's "Ethereum 2.0" investigation has only escalated in the year since... Just last month, the SEC served yet another document subpoena on Consensys. The subpoena categories include all documents and communications between Consensys and any secondary trading platforms as well as other third parties concerning the Merge, the ongoing development of the Ethereum blockchain, and Consensys's role as a validator for Ethereum."* The SEC has since announced that it has dropped its investigation into Ethereum 2.0 after the spot Ethereum ETFs were approved. In an [email](https://assets.ctfassets.net/gjyjx7gst9lo/6BtUdxsw1vlatBjIspkJN9/792adab194b9ac71c1eeeded42b01615/Termination_Notice_K._Schwartz_6.18.24.pdf) titled "On the Matter of Ethereum 2.0," the SEC wrote, "*While we do not with this notice, or otherwise, agree with the factual statements or legal conclusions set forth in the June 4 Letter, based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against your client, Consensys Software Inc. with respect to this investigation*." This was a response to a letter that Consensys sent to the SEC on June 7, asking the regulator to confirm that the spot Ethereum ETF approvals meant that the SEC would close its Ethereum 2.0 investigation, given that it effectively labels ETH as a commodity. The SEC did not give a reason for dropping the investigation, but it is noteworthy that the letter made it clear that the commission does not agree with ConsenSys's statements. However, this doesn't mean that ConsenSys is totally out of the woods. On June 28th, the SEC filed a [complaint ](https://t.co/cFy5hfp18a)arguing that "*Since January 2023, Consensys has engaged in the unregistered offer and sale of securities in the form of crypto asset staking programs, and acted as an unregistered broker, through its MetaMask Staking service.*" It seems the SEC has abandoned its efforts to label Ethereum itself as a security and has instead shifted its attention to the argument that any staking-as-a-service product is an unregistered security. This development means that we may never know the full extent of ConsenSys's involvement in Ethereum's transition to PoS, but it does appear significant when looking at the role it played. Ethereum's abandonment of PoW can be viewed as breaking with the mos maiorum of Ethereum. Initially, PoW was integral to Ethereum's goal of embodying the principles of decentralization and security. The shift to PoS represents a significant evolution in the network's governance, prioritizing efficiency and scalability while sacrificing decentralization and security. It is irrefutable that large entities like the Ethereum Foundation and ConsenSys guided the system toward PoS, but why? Ethereum proponents will argue that PoS provides better decentralization and security guarantees and that it has always been on Ethereum's roadmap. On the first point, I respectfully disagree and have already addressed why earlier. On the second point, this is actually true. Vitalik Buterin always planned on Ethereum moving to PoS. In the [White Paper](https://ethereum.org/en/whitepaper/), he wrote, *"Note that in the future, it is likely that Ethereum will switch to a proof-of-stake model for security."* Another possible reason why prominent individuals and entities in Ethereum advocated for the transition to PoS is that it further centralized Ethereum and gave existing token holders more control and power in the system. When one compares Ethereum before and after the Merge, one can objectively conclude that it has become more centralized and censored. One explanation for this centralization is that running a validator node requires high costs and technical hurdles. An individual needs 32 ETH to run a validator node, which equates to more than $100,000 today. Most individuals don’t have the money or technical expertise to run one, leading to the rise of staking-as-a-service providers. ![](https://www.datocms-assets.com/56652/1718651532-rtn-07.svg) Source: Glassnode Staking-as-a-service providers are third parties that allow users to participate in staking without needing to manage the technical aspects themselves. These providers take custody of users’ tokens and pool funds from various users to meet the minimum staking requirements. They then handle the setup and maintenance of validator nodes on behalf of their clients. These services have become wildly popular because users can stake their ETH and receive yield without dealing with the headache of maintaining the node. Today, more than half of all staked ETH use service providers, and 73% of this staked ETH resides with just four service providers. Lido, the leading staking platform, currently controls 25% of all staked ETH, which brings it alarmingly close to the 33% consensus threshold, where it could unilaterally jeopardize the network's finality. Furthermore, if any entity, even a multi-operator setup like Lido, gains control of more than 50% of the staked ETH, it could theoretically censor transactions and reorganize the chain. Although it could be argued that Lido is more decentralized than other centralized staking providers like Coinbase, it still maintains control over the curation of third-party node operators, centralizing decision-making power. Users of Lido deposit their ETH with the company and then receive profits from the staking that comes from Lido's efforts. For this reason, Lido was deemed a security in the SEC's latest [complaint](https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-79.pdf) against ConsenSys. Although some people argue Lido is sufficiently decentralized, the SEC seems to consider it more as a centralized entity. This centralization is a threat because it can lead to situations where coordinated actions by Lido's node operators might compromise the network's security and functionality. Additionally, even if Lido's operators do not collude, the very concentration of staked ETH under Lido's umbrella makes Ethereum more vulnerable to governance attacks or policy changes initiated by Lido's primary stakeholders. Ethereum Foundation researcher Danny Ryan wrote about these risks, calling Lido a *"*[*systemic threat to Ethereum.*](https://www.youtube.com/watch?v=Y0ddkSa1ZuI)*"* The fear is not just about one entity controlling the stake but about how that control can be exerted subtly and indirectly through governance and network influence. The fact that more than a third of staked ETH is held with staking-as-a-service providers should concern the entire Ethereum community. The concentration of staking in the hands of a few centralized providers can lead to governance issues, where these entities can alter the protocol and have a disproportionate influence over the network's direction, especially if they collude with one another. The power these staking entities have today has been fully displayed since Ethereum's transition to PoS. Soon after the Merge happened, it became clear that many validators began complying with OFAC sanctions and censoring transactions. Today, nearly 40% of blocks are being censored. ![](https://www.datocms-assets.com/56652/1718651654-rtn-08.svg) Source: mevwatch.info Despite these sanctioned transactions being valid, validators have stopped recognizing them, refused to include them in blocks, and prevented them from executing on the blockchain. The transition to PoS has resulted in a concentration of validators in centralized entities, leading to on-chain censorship in compliance with OFAC sanctions. This highlights the ease with which powerful entities can influence and further change the Ethereum protocol. ### More Change, More Complexity, More Risk The ease of change associated with centralization can lead to a cycle in which protocol modifications become more common, adding more complexity and potentially destabilizing the system. Once again, Ancient Rome comes to mind, where increased wealth and power among a few elites led to greater political complexity as they frequently changed the laws, eventually destabilizing the Republic. Similarly, Ethereum has grown more complex with each hard fork as the values of decentralization and immutability have been sacrificed for other values like functionality and scalability. As the network grows more complex, the likelihood of further changes increases, perpetuating a cycle of instability. This growing complexity was touched on by Ethereum lead developer Péter Szilágyi when he wrote: ![](https://www.datocms-assets.com/56652/1718652017-rtn-09.png?auto=format) Why does added complexity matter? In 1999, noted cybersecurity expert Bruce Schneier wrote, *"The worst enemy of security is complexity."* This idea suggests that as a system becomes more complex, it introduces more potential points of failure, making it harder to secure. Ethereum's gradual abandonment of its immutability and decentralization core values has led to more changes and increased complexity. Galaxy Digital's Christine Kim notes in her [report](https://www.galaxy.com/insights/research/ethereum-governance/) that the frequency of upgrades is increasing and becoming more ambitious, not less. She also described the risks that increased complexity brings: *"With hard forks occurring every six to 12 months, this is a recurring introduction of technical risk and associated smart contract risk to dependents. The argument against complexity is not that complexity is inherently bad, but that the protocol may not have enough developers and researchers looking at the first and second-order effects from these ongoing changes."* Lyn Alden wrote an excellent [analysis](https://www.lynalden.com/ethereum-analysis/) of Ethereum roughly three years ago, saying: *"Investors should understand that Ethereum is still in alpha development. Maybe in another 5 years, when Ethereum 2.0 is in place and functioning for a while, with consistent monetary policy for that whole time, it can be considered largely a finished project like Bitcoin. Until then, it's experimental."* The transition to PoS was meant to be the final hard fork before Ethereum began to ossify. Still, multiple hard forks have already occurred since the Merge. The recent Dencun upgrade reduced transaction fees, changing Ethereum's annual issuance rate (once again) and making it [inflationary](https://www.google.com/url?q=https://www.coindesk.com/tech/2024/05/09/eth-reverts-to-inflationary-asset-following-fee-reducing-dencun-upgrade/%23:~:text%3DA%2520CryptoQuant%2520report%2520reveals%2520that,the%2520fastest%2520rate%2520since%25202022.&sa=D&source=apps-viewer-frontend&ust=1718733237341150&usg=AOvVaw0Yl8s8Li7iDju8HCZaEz0l&hl=en) (once again). A common narrative after Ethereum moved to PoS was that it was *"ultrasound money"* because it had a deflationary monetary policy. Of course, a monetary policy's soundness must first be judged by how difficult it is to alter. You no longer hear much about Ethereum as ultrasound money lately. Now, its annual issuance rate is inflationary again. What's true in Ethereum today will not necessarily be true tomorrow. In fact, Ethereum proponents themselves are discussing how to best market Ethereum to Wall Street, given how many changing narratives it has experienced over the years. ![](https://www.datocms-assets.com/56652/1718652139-rtn-10.png?auto=format) This is a critical point to understand when it comes to Ethereum. The criticism of the protocol is not whether the changes are good or bad. It’s not that they are happening at all. The future roadmap of Ethereum looks as complex as ever, with many developments underway. ![](https://www.datocms-assets.com/56652/1718652231-rtn-11.png?auto=format) What Lyn wrote three years ago still rings true today—Ethereum should still be considered an experiment, given that it seemingly refuses to ossify. At this point, it’s impossible to predict what the network or monetary policy will look like two years from now, five years from now, or ten years from now. When I look at the graphic above, it’s difficult not to think about the graphic below. It comes from a paper by Zoltan Pozsar, in which he attempted to map out the plumbing of the Shadow Banking System. ![](https://www.datocms-assets.com/56652/1718652278-rtn-12.png?auto=format) Source: Zoltan Pozsar The traditional financial system is so complex that one needs a magnifying glass even to understand what they're looking at here. This is where Bitcoin's simplicity and immutability shine. Bitcoin is unchanging, and in a complex world where everything changes all the time, this is what makes it a system the likes of which the world has never seen. ### The mos maiorum of Bitcoin – Security, Immutability, and Decentralization Bitcoin is different from Ethereum and the Roman Republic. Unlike them, it has maintained a steadfast adherence to its mos maiorum. Bitcoin's core principles are security, immutability, and decentralization. These core values remain unchanged and have been respected since its inception – even in the face of crisis. Bitcoin's protocol has seen very few changes in its lifetime. Its development has been slow and conservative. Bitcoin's unwavering adherence to these core values has contributed to its stability and predictability. The continued commitment to decentralization and security ensures that no single entity can control or manipulate the network. This approach is what allowed Bitcoin to become a trusted store of value. It's why there is certainty around its 21 million hard fixed supply. Today, an investor can buy Bitcoin, send it to a hardware wallet, put it in a safe for 5 years, completely forget about it, and sleep easy at night knowing that the protocol won't undergo some significant change. Bitcoin will stay the same. Bitcoin's commitment to decentralization and immutability breaks the cycle of governance failures that befell historical systems like the Roman Republic. By maintaining a decentralized protocol where no single group can exert control, Bitcoin protects against corruption and manipulation. Its reliance on the physical laws of PoW rather than human governance ensures that it will remain a truly decentralized and incorruptible system. This is why Bitcoin is different from Ethereum. This is why Bitcoin is different from the Roman Republic. Bitcoin is governed by rules, not rulers. These rules are set in stone. The mos maiorum will be respected because the mos maiorum is coded into unchangeable, incorruptible law. And that – that – is how you build the foundation of a system that will prosper for millennia to come. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Tech Giants' AI Energy Crisis Is Their Own Fault URL: https://www.swanbitcoin.com/industry/ai-energy-crisis/ We can either continue our current trajectory, or we can adopt energy freedom policies and become a world leader in both AI and electricity. --- **Alex Epstein** · May 24, 2024 · Updated July 3, 2024 For years tech giants have been helping climate catastrophists shut down reliable fossil fuel sources of electricity. Now the grid they've helped gut cannot supply their growing AI needs. A recent Reuters headline points out that, according to Mark Zuckerberg, energy constraints are holding back the development of data centers for AI. ![](https://www.datocms-assets.com/56652/1716567703-ac8b57b3-910a-43b1-8d4d-9b350efaa188_1448x958.webp?auto=format) However, for the last decade, tech giants such as Apple, Microsoft, Meta, and Google have, through dedicated anti-fossil-fuel propaganda and political efforts, promoted the shutdown of reliable fossil fuel power plants in favor of unreliable solar and wind, as seen in the headlines below. ![](https://www.datocms-assets.com/56652/1716567719-74ec9ba7-23d6-47b2-8368-e7b141efbdc6_910x818.webp?auto=format) These tech giants have propagandized against reliable fossil fuel power plants by falsely claiming to be "100% renewable" and implying everyone could do it. In fact, they have just paid utilities to credit them for others' solar and wind use, while blaming others for their coal and gas use. ![](https://www.datocms-assets.com/56652/1716567743-5b72004c-06f1-45f1-89ad-80aaa7373c55_882x618.webp?auto=format) Meanwhile, in addition to their “100% renewable” propaganda, tech giants directly endorsed people and policies that shut down reliable fossil fuel power plants. For example, the RE100 coalition, including Google, Apple, Meta, and Microsoft, advocates for policies to “accelerate change towards zero carbon grids at scale by 2040.” ![](https://www.datocms-assets.com/56652/1716567766-95f49f1c-b1ad-446b-9e72-3a4b7ee7d29d_1674x924.webp?auto=format) Companies' propaganda that solar/wind could rapidly replace fossil fuels has proven to be false. Statewide blackouts in California (2020) and Texas (2021) were caused by the failure of solar/wind—which can go near zero at any time—to make up for the lack of reliable fossil fuel capacity. As a result of these tech giants' advocacy, we have now shut down enough reliable power plants to find ourselves in a nationwide electricity crisis. For example, most of North America is at elevated/high risk of electricity shortfalls between 2024-2028. ![](https://www.datocms-assets.com/56652/1716567791-c273a433-e29d-43f5-8c5a-d815e72045ce_1624x1064.webp?auto=format) The anti-fossil-fuel, pro-unreliable solar, and wind political climate that these tech giants have fostered is getting much worse, as the administration has pledged to further reduce reliable electricity supply via power plant shutdowns while adding artificial demand through EV mandates. (See my article Biden's EV mandate: a dictatorial attack on the American driver and the US Grid). While for years tech giants didn't seem to have any concern about the electricity supply disaster that their propaganda and policies were bringing about, they are now very interested because of the accelerating power requirements of computing – above all in the hyper-competitive AI space. To function at its potential, AI requires massive amounts of power in the form of state-of-the-art data centers that can require as much electricity as a large nuclear reactor can generate. ![](https://www.datocms-assets.com/56652/1716567807-b0d8ae64-f99b-49eb-8b57-fa8d6174f87c_1368x1332.webp?auto=format) Electricity demand from US data centers already doubled between 2014 and 2023. Now with the fast growth of energy-hungry AI, demand from data centers could triple from 2.5% to 7.5% of our electricity use by 2030, according to Boston Consulting Group. ![](https://www.datocms-assets.com/56652/1716567820-7dc82c46-8bef-481e-b423-4bef0dda7fce_878x848.webp?auto=format) In large part due to AI, nationwide electricity demand is projected to skyrocket. Official 10-year projections for the US have summer and winter peak demand rising by over 79 gigawatts and over 90 gigawatts respectively. 90 gigawatts is equivalent to adding the entire power-generating capacity of California. ![](https://www.datocms-assets.com/56652/1716567836-d8aa7b38-0630-43d2-89ae-073babaf80f1_1518x872.webp?auto=format) Given the woefully underpowered grid that AI giants have helped bring about, the dramatically rising demand from AI will not only contribute to massive electricity shortages but will also eliminate a lot of the potential for AI to occur in the United States. Limited and expensive electricity will force data centers to operate with higher cost or lower capacity within the US—or take a performance hit in the form of increased latency (which can drastically reduce the value of the product) by moving offshore. Not only is offshoring data centers destructive from an economic standpoint, but it also poses a substantial security risk. E.g., Building a data center in China—which we already depend on dangerously for critical minerals—gives the CCP physical power over more parts of our economy. Economically, data centers are a gold mine of opportunities. Globally, data centers employed 2M people full-time in 2019, many in high-skill/high-pay jobs — and this number is forecast to increase by nearly 300K by 2025. Our gutted grid will cost many Americans these opportunities. ![](https://www.datocms-assets.com/56652/1716567852-1863107a-34c9-4519-a9d9-b44c82c49d15_1396x794.webp?auto=format) In the face of woefully inadequate electricity supply for their AI goals, tech giant CEOs are finally speaking up about the lack of power. Meta CEO Mark Zuckerberg said in an interview that energy will be the #1 bottleneck to AI progress. It is not enough for tech giants to warn us about the lack of reliable power. They need to take responsibility for their anti-fossil-fuel advocacy that helped cause it. And they need to support energy freedom policies that allow all fuels to compete to provide reliable power. (Read my article “[End Preferences for Unreliable Electricity here](https://alexepstein.substack.com/p/end-preferences-for-unreliable-electricity).) A further example of a tech giant influencer not taking any responsibility for causing the electricity crisis is BlackRock CEO Larry Fink, who pushed companies and governments to adopt "net-zero" policies using mostly solar/wind, but now admits they can't power AI data centers! A better attitude toward electricity was expressed by OpenAI CEO Sam Altman: *"There will always be people who wait and sit around and say ‘we shouldn't do AI because we may burn a little more carbon’... the anti-progress streak" and this "is something that we can all fight against.”* [9](https://alexepstein.substack.com/p/tech-giants-self-made-ai-energy-crisis#footnote-9-144619267) America faces a choice. We can either continue our current trajectory, descend into a Third World grid, and become totally inhospitable for AI, or we can adopt energy freedom policies and become a world leader in both AI and electricity. Share this article with tech giant CEOs and tell them to publicly apologize for damaging our grid and to commit to energy freedom policies. Google: [@sundarpichai](https://twitter.com/sundarpichai) (sundar@google.com) Apple: @[tim_cook](https://twitter.com/tim_cook) (tcook@apple.com) Meta: [@finkd](https://twitter.com/finkd) (zuck@fb.com) Microsoft: [@satyanadella](https://twitter.com/satyanadella) (satyan@microsoft.com) *Michelle Hung contributed to this piece.* Sources: [WSJ - The Coming Electricity Crisis](https://www.wsj.com/articles/electric-grid-crisis-biden-administration-climate-policy-energy-artificial-intelligence-cfc10b68) [Washington Post - Amid explosive demand, America is running out of power](https://www.washingtonpost.com/business/2024/03/07/ai-data-centers-power/) [Apple - Environmental Progress Report 2024](https://www.apple.com/environment/pdf/Apple_Environmental_Progress_Report_2024.pdf) [Climate Group RE100 - Policy Engagement](https://www.there100.org/policy-engagement) [NERC - 2023 Long-Term Reliability Assessments](https://www.nerc.com/pa/RAPA/ra/Pages/default.aspx) [Bloomberg - Data Centers Now Need a Reactor’s Worth of Power, Dominion Says](https://www.bloomberg.com/news/articles/2024-05-02/data-centers-now-need-a-reactor-s-worth-of-power-dominion-says) [Vivian Lee - The Impact of GenAI on Electricity: How GenAI is Fueling the Data Center Boom in the U.S.](https://www.linkedin.com/pulse/impact-genai-electricity-how-fueling-data-center-boom-vivian-lee/) [Lawrence Berkeley National Laboratory - United States Data Center Energy Usage Report (2016)](https://eta.lbl.gov/publications/united-states-data-center-energy) [NERC - 2023 Long-Term Reliability Assessments](https://www.nerc.com/pa/RAPA/ra/Pages/default.aspx) [CA Energy Commission - Electric Generation Capacity and Energy](https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/electric-generation-capacity-and-energy) [Uptime Institute - The people challenge: Global data center staffing forecast 2021-2025](https://www.missioncriticalmagazine.com/ext/resources/images/2021/Staffing-a-Forecast_v5P.pdf) [John Werner - Sam Altman On Climate And Entrepreneurship](https://www.forbes.com/sites/johnwerner/2024/05/03/sam-altman-on-climate-and-entrepreneurship/) ### Alex Epstein Alex is a dedicated Bitcoin advocate and the author of [Fossil Future](https://FossilFuture.com). His writings on energy have been published in The Wall Street Journal, Forbes, and Investor’s Business Daily, among hundreds of other publications. Learn more about his research at [AlexEpstein.com](https://AlexEpstein.com). # Scaling Bitcoin: Lightning, Liquid & The Blockchain Trilemma URL: https://www.swanbitcoin.com/education/scaling-bitcoin/ These networks represent pivotal developments in the quest to enhance Bitcoin’s capabilities and overcome its limitations. --- **Adrian Morris** · May 23, 2024 · Updated July 4, 2024 The evolution of Bitcoin and its underlying blockchain technology has been a continuous journey toward achieving a balance between scalability, security, and decentralization. Among the most significant advancements in this domain are the Lightning Network and the Liquid Network, two "Layer 2" solutions designed to enhance Bitcoin's functionality and address some of its limitations. In this article, we will explore these potential scaling solutions and the challenges they aim to solve. Our goal is to provide an impartial, detailed introduction to these technologies, focusing on their origins, development, and operational mechanisms. By understanding how these networks function and interact with the Bitcoin blockchain, we can gain a comprehensive understanding of their roles in the evolving Bitcoin ecosystem. It's important to note that any mention of specific cryptocurrencies other than Bitcoin in this article is for the purpose of comparing and contrasting technologies. It should not be construed as an endorsement or praise of those particular projects. My objective is to present a balanced and informative analysis of the technological landscape surrounding Bitcoin and its scaling solutions. As we dive into the intricacies of the Lightning Network and the Liquid Network, we will uncover the innovative approaches they employ to improve Bitcoin's scalability and functionality. Whether it be in the form of off-chain transactions or sidechains, these Layer 2 solutions offer unique perspectives on how to address the challenges faced by decentralized networks. ### Blockchain Technology and the Trilemma Blockchain technology harbors the potential to fundamentally transform how we interact and transact, pivoting on three critical pillars: security, scalability, and decentralization. The optimization of these core elements, however, presents a formidable challenge often encapsulated in what many in the space known as "Blockchain Trilemma". Conceptually, the "Trilemma" illustrates that by enhancing one of these aspects, you inevitably compromise another. For example, if we focus on amplifying scalability, we can inadvertently weaken decentralization. **Scalability** is essential for Bitcoin’s ability to process an increasing number of transactions; this is crucial during peak usage. Yet, prominent blockchains like Bitcoin and Ethereum grapple with scalability; Bitcoin processes approximately 7 (base layer) transactions per second (TPS), and Ethereum about 15 (base layer) TPS, starkly lower than traditional systems like Visa. This limitation leads to transaction delays, increased fees, and network congestion, adversely affecting user experience and deterring mainstream adoption. To address these scalability issues, Bitcoin developers created the Lightning Network which uses *state channels* to create a  Layer 2 solution that facilitates off-chain transactions, significantly reducing on-chain load. This method involves participants locking funds in a multi-signature or smart contract on the blockchain and conducting numerous secured transactions among themselves without broadcasting them to the blockchain immediately. The final balances are posted only when the channel closes, dramatically cutting down on transaction costs and expediting transaction speeds to near-instantaneous levels while maintaining transaction privacy. ### Decentralization: Empowering Users Through Distributed Control Decentralization removes the need for a central authority, distributing control across all network participants. This is realized through a *"permissionless"* structure where transactions are validated by pre-set rules. This approach prevents censorship and manipulation (as evidenced by WikiLeaks' use of Bitcoin in 2010 amidst financial blockades) and also enables users under authoritarian regimes to bypass restrictions. However, achieving consensus in such a distributed system can be computationally demanding and slow, necessitating a balance between the number of validating nodes, speed, and the efficiency of the transaction process. ### Exploring Potential Solutions to the Blockchain Trilemma Across the cryptocurrency ecosystem, developers continue to explore innovative solutions to the trilemma, including methods like *Sharding* which "divides" a blockchain into smaller, manageable pieces, processing transactions independently to alleviate pressure on the main chain. Meanwhile, Layer 2 solutions provide scalability by handling transactions off the main ledger, though these can theoretically introduce security vulnerabilities and centralization risks. Cryptocurrency projects like ($ALGO) Algorand, ($DOT) Polkadot, and ([#ETH](https://x.com/search?q=%23ETH&src=hashtag_click)) Ethereum have active projects and development to address these challenges. However, these are still highly centralized solutions, and the gains you make in speed are possibly offset by the increased centralization and security vulnerabilities. Now that we have a sufficient enough understanding of the Blockchain Trilemma and its considerations, let’s move on to how these issues are being addressed in Bitcoin. ### The Genesis of the Lightning Network As the Bitcoin network grew, and the number of users on-chain swelled, scalability issues became apparent. Out of this need came a new development in the form of the Lightning Network (LN), a solution conceptualized to address Bitcoin's scalability issues. ### Early Development and Milestones In 2016, Joseph Poon and Thaddeus Dryja published the seminal Lightning Network white paper, proposing a second-layer solution that would enable off-chain transactions, thereby increasing transaction speed and reducing costs. In their white paper titled "[*The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments*](https://lightning.network/lightning-network-paper.pdf)" they suggested that there could be a second-layer solution atop the Bitcoin blockchain that would enable off-chain transactions. This meant that transactions could occur between parties independently of the main blockchain, thus decongesting the network and significantly reducing transaction fees. The development of LN was marked by significant milestones, including the first main-net transaction by Alex Bosworth of Lightning Labs, which demonstrated the network's potential for real-world applications. The network's architecture, based on micropayment channels, allows for instant transactions at a fraction of the cost of on-chain transactions, addressing Bitcoin's limitations regarding transaction throughput and speed. ### Key Features and Applications The core idea behind the Lightning Network is relatively straightforward yet ingenious. It involves the creation of a network of payment channels where transactions between participants are not broadcasted to the blockchain but are instead conducted off-chain. Once a channel is established between two parties, they can perform an unlimited number of transactions without needing to involve the blockchain for each transfer. Only two transactions would be recorded on the blockchain: one to open the payment channel and another to close it. The opening transaction "locks in" a certain amount of Bitcoin that can be transacted between the two parties, and when the channel is closed, the final state of this balance is settled on the blockchain. This method drastically reduces the strain on the blockchain by limiting the number of transactions that need to be recorded and confirmed by the entire network. Moreover, since transactions within a channel are not broadcast to the blockchain, they are confirmed instantly, allowing for rapid payments that match the speeds of conventional electronic payment systems. In 2019, *Lightning Torch* emerged as a pivotal social experiment designed to test and showcase the capabilities of the Lightning Network (LN). The experiment, also known as the *LN Trust Chain*, involved participants adding a small amount of Bitcoin to a payment, and then passing it onto someone else via the Lightning Network. This process not only demonstrated the network's technical capabilities but also helped to foster a sense of community and collaboration among its users. Lightning Torch gained significant attention due to the participation of high-profile figures within the tech and Bitcoin communities. Among the notable participants were Jack Dorsey the (at that time) CEO of Twitter, and Elizabeth Stark, CEO of Lightning Labs. Dorsey's involvement was particularly impactful; as a well-known tech leader and an outspoken proponent of Bitcoin, his participation lent considerable credibility to the Lightning Network. He not only engaged with the experiment by receiving and then *passing the torch* but also expressed strong support for the potential of Bitcoin and the Lightning Network to transform digital payments. ### The Liquid Network: Bridging Traditional and Bitcoin Markets Parallel to the development of the Lightning Network, the Liquid Network (LiqN) emerged as another Layer 2 solution, developed to address some of the inherent limitations of the Bitcoin blockchain by focusing on the issuance of digital assets and rapid, confidential transactions. ### Early Development and Milestones Launched by Blockstream in 2018, LiqN operates as a *sidechain* to the Bitcoin blockchain. The concept of sidechains was detailed in Blockstream's 2014 White Paper "[*Sidechain Elements*](https://blockstream.com/sidechains.pdf)." LiqN aims to extend Bitcoin's capabilities by enabling the issuance and transfer of various digital assets, (including stablecoins and security tokens), on a platform that offers both faster transaction settlement and confidentiality. ### Early Development and Milestones LiqN employs a *federated consensus model*, where a group of functionaries operates the network. This model, while introducing a degree of centralization, provides added speed and privacy for high-value transactions and asset issuance. LiqN's support for *confidential transactions* allows the amounts and types of assets being transferred to be hidden from public view, which represents a marked departure from the typical transparency of blockchain transactions. Confidential transactions use cryptographic techniques to obscure the transaction values while still allowing network participants to verify the validity of transactions. This privacy feature is particularly appealing to financial institutions and traders who may want to shield their market activities from competitors or maintain customer confidentiality. Another unique capability of LiqN is the ability to issue new assets. Unlike the Bitcoin blockchain, which primarily supports the transfer of Bitcoin, LiqN allows the creation and transfer of digital assets, including stablecoins, security tokens, and other tokenized assets. This is achieved through a mechanism known as *issued assets,* which can represent real-world securities, commodities, or other financial instruments in tokenized form. The ability to issue assets on the Liquid Network has broad implications, including simplifying the processes of tokenization, improving the efficiency of certain financial transactions, and opening up new possibilities for blockchain integration into traditional finance. The unique features of LiqN have the potential to make it an attractive option for traders, financial institutions, and other market participants.  ### Challenges and Future Prospects While the Lightning Network and the Liquid Network represent significant advancements in Bitcoin's scalability and functionality, they are not without their challenges. Both networks face concerns regarding centralization, security, and the complexity of operating nodes. The Lightning Network, for instance, requires users to remain online and vigilant to prevent fraudulent activity. On the other hand, Liquid's federated model relies heavily on the trustworthiness of its functionaries, which may raise questions about its centralization. Despite these challenges, the continued development and adoption of these Layer 2 solutions are crucial for Bitcoin's evolution as a scalable protocol. As Lightning and Liquid Networks mature, they hold the promise of unlocking new possibilities for Bitcoin, enabling it to fulfill its potential as a global, decentralized financial system. The innovations introduced by these networks have the potential to address the blockchain trilemma, striking a balance between scalability, security, and decentralization. By enabling faster, cheaper, and more private transactions, as well as facilitating the issuance and transfer of digital assets, these Layer 2 solutions pave the way for Bitcoin's broader adoption and use in a wide range of applications, from micropayments to digital asset markets. As Bitcoin continues to evolve, these networks will undoubtedly play a significant role in shaping its future. The lessons learned from their development and implementation will inform the creation of new scaling solutions and drive further innovation in the space. In conclusion, these networks represent pivotal developments in the quest to enhance Bitcoin's capabilities and overcome its limitations. By addressing the challenges faced by the Bitcoin blockchain, these Layer 2 solutions open up new possibilities for decentralized finance and lay the foundation for a more efficient and robust global financial system. As we look ahead, it is clear that the innovations introduced by these networks will have a lasting impact on the future of Bitcoin and the broader blockchain ecosystem for years to come. ### Adrian Morris Adrian Morris has been lurking in the shadows of the Bitcoin space for over a decade. Writing has always been a passion of his, as he writes engaging and thought-provoking pieces. Adrian was raised in the streets of Brooklyn, New York and now resides in Arizona. His life mission is to raise awareness of Bitcoin and how it can bring about a bright-orange future. # An Open Letter to Ann Barnhardt - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/an-open-letter-to-ann-barnhardt/ I decided to write a letter, then made it an open letter, to Ann Barnhardt. --- **Arman the Parman** · May 12, 2024 · Updated July 3, 2024 Hi Ann, I want to thank you, and I hope this email finds you well. A long time I ago, I watched your excellent multi-part presentation on YouTube describing the problems with the fiat money system. [Video](https://youtu.be/7dFVFJ0iRRA?si=WwWytiJMo89XdTl8) I actually first heard the word ‘fiat’ for the first time in my life from that lecture. It was my first touchpoint to the awakening that humanity has been scammed, and a bunch of privileged people create money out of nothing and plunder the assets of the planet with it, and what’s more, they infiltrate/own the governments, media, education system to make us believe it’s good for society that they should control the issuance of money. We have been fooled, captured, hook line and sinker. An Austrian Econ enthusiast was born. I know some people believe gold is the solution, but really, gold failed – it is BECAUSE of gold’s portability-weakness that we are in this fiat mess. Gold got centralized, particularly after being easily confiscated from US citizens in 1933 (exec order 6102), as I’m sure you know all about. Partially backed, devalued, and then completely unhinged from gold in 1971 (thanks Nixon), we are now on a US dollar paper standard, and it’s being used to enslave humanity. Gold can never rise as world money once again, as it can not resist the paper trading that suppresses its price – because no meaningful volume of trade can happen peer-2-peer in the international economy; and so it will always be held by institutions, and they will always contribute to the paper suppression of gold. To resist, people need to not just withdraw gold, but not deposit it back to banks when spending. Another way to say this is that no significant volume of gold will be withdrawn from institutions to resist the paper suppression, and if that ever begins to happen, the gold would need to be deposited back into the institutions in order to use it as a medium of exchange (that portability weakness I mentioned earlier ensures this trap plays out). But sure, if we descend into chaos, we can barter with gold, silver, bullets, and food; but a thriving civilization can not be built from that, and if we approach a prospering civilization, fiat will return to capture us again. Gold only resists fiat if we have fractured local economies, and that’s what we had for 5000 years. Fiat money can even be printed in an ongoing way to suppress gold with little risk (until hyperinflation of course, and then a new fiat currency is thrust upon the people). [But now we have Bitcoin](https://armantheparman.com/bitcoin-english/). Hear me out, please. I wonder if you have looked into it yet because it should certainly be right up your alley, but there’s a high risk you’ll dismiss it at first like most people, as I did too. I have you to thank for me beginning this path of enlightenment, and I want to help you by gently encouraging you to look at Bitcoin with an open mind if you haven’t, and also to help you dismiss any concerns. After 10,000+ hours of study/writing/teaching, I can logically demonstrate that any concern I have ever come across, is refutable. You may converse with me for any clarification; I’ll give you my time. Also, I have a website with 5 years of my writing – [https://armantheparman.com](https://armantheparman.com/) There are a lot of initial pushback points like - “[it’s too volatile](https://armantheparman.com/volatile/)“ - “[it has no intrinsic value](https://armantheparman.com/iv/)“ - “[governments will ban it](https://armantheparman.com/ban/)“ - “[it’s bad for the environment](https://www.lynalden.com/bitcoin-energy/)“ - “[quantum computers will kill it](https://armantheparman.com/qc/)“, and much more None of these are worthy arguments, and I have written essays to refute all of them. You see, Bitcoin has the necessary *technical* properties of money, but not the *social* properties (yet) – the network effect of money. The network of people adopting it for future use as money has been steadily growing for the last 15 years, and it’s done a damn good job of growing so rapidly. It is 1 trillion in market cap, and one should ask themselves why this “Tulip Bubble” has inflated and collapsed, and reinflated 4 TIMES. The reason is that it’s not a bubble – it’s the way price action looks when a new sound money’s value is discovered. There is no other way. You see, Bitcoin is being adopted by a network of people that is only ever increasing – once you see a solution to worldwide tyranny, one never decides to abandon their only chance at resisting: Either Bitcoin wins, or worldwide coordinated tyranny wins, and we all must choose a side. [We are separating money and state, join us.](https://armantheparman.com/joinus/) Those who are adopting it have learned (and can never unlearn) that Bitcoin is the ONLY contender as worldwide money (the world economy is actually in a state of partial-barter using USD primarily, gold, and recently some other fiat monies). Bitcoin is the only contender because it is the ONLY unstoppable digital worldwide money that has all the minimum properties of money (that you know about from Aristotle), plus more, and of those, it is by far in the lead, and insurmountable. With your finance background, you might know that money trends toward there being one, because the natural force that causes the emergence of money in society from a state of barter, is the same force that causes multiple competing monies (partial barter) to [one money](https://armantheparman.com/onemoney/). *Even the “intrinsic” value property is actually satisfied, as I can argue that some people can find its cryptographic security and scarcity as a form of art, or beauty or a satisfying collectible – to deny this argument and say “not everyone thinks that way”, is to then be forced to conclude that “art has no intrinsic value because not everyone likes a given work of art” (to remain internally logically consistent).* Regardless, I can demonstrate that money does not actually *need* an intrinsic value *impurity* to be money (yes, impurity, money has monetary value with or without non-monetary value, the impurity) – it only needs it when society is emerging from a state of barter; this property then [satisfies Mises’ regression theorem](https://armantheparman.com/iv/#:~:text=Academic%20arguments%20%E2%80%93-,Regression%20Theorem,-I%20have%20heard). Bitcoin isn’t evolving from a barter society. We already have money in our respective countries so the regression theorem applied to Bitcoin results in the regression going back to the exchange for it in dollars, or the electricity paid to mine it. The reason Bitcoin is a contender (and the only one) for the status of *world money* is that it is not unilaterally controllable by anyone (or changeable, which contributes to soundness), it’s digital yet strictly scarce in supply (21 million), open source (the code is not secret), it’s possible to settle with finality internationally peer-2-peer in 10 minutes (compare that to gold on a cargo ship, or USD in an armored truck), it is open source, decentralized so it’s unstoppable and not changeable, and works without any central authority. Yes, it can be copied, but the PEOPLE adopting that version of money can not be copied, and money (a complex idea) is both the token AND the people. Compare this to a language and see that the “value” of a language is determined by how good it is (properties of words, symbols, sounds, grammar, ease to learn etc), AND how many people USE it. The difference between language and money in this regard is that one can learn multiple languages, but one can not store value in two different things (two different tokens). One must choose, and hard money (hard to produce) always beats easy money (easy to produce) given a long enough timeframe. I’m going to stop here. If you got this far, thank you for reading. I hope to hear from you. Best wishes, Parman ### Arman the Parman Arman's mission is to bring on hyperbitcoinization as fast as possible. He believes it is inevitable, but wants it to come sooner. He does everything he can to spread the knowledge. Read more at https://armantheparman.com/ # A Bond Bloodbath is Spiking Heart Rates - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/bond-bloodbath-spiking-heart-rates/ Bond yields are rising as investors are beginning to question the sustainability of these policies as the budget deficit grows larger and inflation remains elevated. --- **Sam Callahan** · November 3, 2023 · Updated July 3, 2024 In healthcare, a medical professional learns that an elevated resting heart rate is typically not a good sign, often indicating trouble brewing under the surface. It can occur for different reasons including cardiovascular disease, increased stress/anxiety, lack of sleep, smoking, as well as an adverse side-effect of several prescription medications. If left untreated, a high resting heart rate can lead to serious health complications such as heart attack, stroke, and even death.  To put it simply, a high resting heart rate means a person’s heart is working too hard. This puts strain on the rest of the system until something eventually breaks. When I look at the state of the economy today, I see a system with a high resting heart rate. At a time when the Federal Reserve is desperately trying to crush demand in the economy, it continues to run hot. Annual GDP growth is running above its historical average, inflation remains elevated, consumer spending appears robust, and the labor market remains tight. When combined, these data points give credence to the notion that the economy is strong. Further evidence of this could be found in the bond market. A strong economy is one plausible reason why bond yields may be climbing. At least that’s what U.S. Treasury Janet Yellen likes [to think](https://www.reuters.com/markets/us/yellen-says-us-gdp-is-good-strong-number-2023-10-26/#:~:text=%22It's%20perfectly%20possible%20that%20we,reflection%20of%20the%20stronger%20economy.%22): “*I see the higher yields as certainly an important reflection of the stronger economy*." - Janet Yellen But is this spike in yields a sign of a strong economy or an unhealthy one? I would argue that this economy is acting more like a patient with a high resting heart rate who has become addicted to stimulative cheap money, and despite the worrying symptoms, the government continues to prescribe more and more medication to keep the economy upright. This week, the Treasury [announced](https://home.treasury.gov/news/press-releases/jy1851) that it expects to borrow $1.6 trillion in the next 6 months. That puts it on pace to run over a $3 trillion deficit in the next 12 months!  ![](https://www.datocms-assets.com/56652/1699041634-1.png?auto=format) This extreme fiscal spending isn’t expected to stop anytime soon. CBO projections show that deficit spending is expected to be around 5% of GDP and continue to grow for the foreseeable future. ![](https://www.datocms-assets.com/56652/1699041663-2.png?auto=format) CBO With deficits running consistently greater than 5%, it is difficult to see inflation coming down to pre-pandemic levels anytime soon.  This may help explain why long-dated bond yields have been rising. Investors might be concluding that a sustained period of elevated inflation makes bonds less attractive and, as such, they are demanding a higher yield for the risks of holding a long-dated Treasury bond. There are now increased concerns that the Treasury will need to continue to flood the bond market with new supply to finance bigger and bigger budget deficits. This tracks with how we have seen yields move in response to news related to the US’s fiscal picture. Below, you can see how the 10-year Treasury yield has increased when new developments come to light.  ![](https://www.datocms-assets.com/56652/1699041695-3.png?auto=format) TBAC Market participants are beginning to understand that the Fed is no longer in the driver’s seat here; the Treasury is. ![](https://www.datocms-assets.com/56652/1699041725-4.png?auto=format) It leads to the question that if bond rates continue to rise as investors demand a higher yield for holding long-term Treasury bonds due to fears of elevated inflation and ongoing large fiscal deficits, how will bonds provide the portfolio diversification they once did? In this period of rising interest rates and multi-decade high inflation, bonds are currently experiencing the longest and steepest bear market in the last 40 years. ![](https://www.datocms-assets.com/56652/1699041757-5.png?auto=format) Treasury bonds are on pace to have their third consecutive losing year for the first time in history.  ![](https://www.datocms-assets.com/56652/1699041777-6.png?auto=format) But what’s really scary is that bonds and stocks have fallen together over the last quarter. Over the last couple of years, we have seen the relationship between stocks and bonds change. For the last 20 years, bonds have not only acted as a *“shock absorber”* for portfolios, rising when stock prices fall, but they have also delivered positive returns as central banks manipulated interest rates lower. For younger investors, this relationship is all they have known, but there have been times throughout history when stock and bond prices move together. However, that has not always been the case. Observe in the chart below how long-term Treasury bonds and the S&P 500 were positively correlated from the late 1960s to 2000. ![](https://www.datocms-assets.com/56652/1699041807-7.png?auto=format) As we enter a new investing regime of higher rates and sticky inflation, this change in the relationship between the prices of bonds and stocks has enormous ramifications for all investors. It means that bonds no longer provide the portfolio protection for investors like they have since 2000. As Bob Dylan famously sang, *'The Times They Are A-Changin’.* But why now? One word - inflation. AQR Capital Management looked into when stocks and bonds stop enhancing risk-adjusted returns for a diversified portfolio and discovered that this was mostly observed in periods of rising inflation. The [report](https://www.aqr.com/Insights/Research/Journal-Article/A-Changing-Stock-Bond-Correlation) writes,  “*What about inflation? Positive inflation news directly reduces the value of bonds’ fixed nominal cash flows, as well as raising short-term interest rate expectations, so prices fall. Equities, in theory, give investors a claim on real cash flows, but in practice, rising inflation has usually been associated with falling stock prices. Stocks and bonds therefore have same-signed sensitivities to inflation news.*” - AQR Capital Management The figure below from the report illustrates this changing relationship by categorizing 50 years of data into *“up”* and *“down”* growth and inflation regimes and calculating the risk-adjusted return (Sharpe ratio) of stocks and bonds in each regime. The chart shows the difference in Sharpe ratio for each asset class in each regime, and finds that Sharpe ratios for bonds and stocks decline in tandem in periods of rising inflation. ![](https://www.datocms-assets.com/56652/1699041848-8.png?auto=format) AQR Capital Management The chart above should serve as a warning sign for investors today. Bonds have already been bleeding out during this period of elevated inflation and have not offset stock market declines. This is highlighted in the figure below showing how bonds have not provided positive returns on equity down days since 2021. ![](https://www.datocms-assets.com/56652/1699041877-9.png?auto=format) BlackRock So what are sophisticated investors doing to prepare for this new investing environment of high inflation brought on by reckless spending? They are increasingly allocating to alternative asset classes to enhance returns and reduce risk through diversification. ![](https://www.datocms-assets.com/56652/1699042110-10.png?auto=format) Traditionally, in times of inflation, investors have turned to fixed-supply alternative assets such as real estate, commodities, dividend-yield stocks, and gold. But this time around, investors could turn to a new type of fixed-supply alternative asset, one with a growth potential that cannot be matched – Bitcoin. We are already seeing this narrative play out. Asset management firm AllianceBernstein, with over $600 billion in AUM, recently [called](https://blockworks.co/news/alliancebernstein-gold-bitcoin-returns) Bitcoin a *“safe haven asset”* in a memo. CEO of BlackRock Larry Fink [called](https://x.com/Swan/status/1714006347803443603?s=20) it a *“flight to quality”* on national television. Billionaire investors Paul Tudor Jones and Stanley Druckenmiller both said they are constructive on Bitcoin in a recent [interview](https://x.com/stackhodler/status/1719017354963697697?s=20). Even Bitcoin critics like Mohamed El-Erian, Chief Economic Advisor at Allianz, recently [admitted](https://www.coindesk.com/markets/2023/11/01/bitcoins-safe-haven-status-bolstered-by-treasury-underperformance-mohamed-el-erian-says/) that investors are beginning to view Bitcoin as a safe haven asset because they have lost confidence in government bonds.  And why not? Over the last 5 years, Bitcoin has shown to have a low and even negative rolling 90-day correlation with other major asset classes. ![](https://www.datocms-assets.com/56652/1699042172-11.png?auto=format) Fidelity’s Director of Global Macro, Jurrien Timmer recently called Bitcoin *“*[*exponential gold*](https://x.com/TimmerFidelity/status/1720152886863179937?s=20)*”* and highlighted below how Bitcoin’s risk-adjusted returns are simply in another stratosphere compared to other asset classes since 2020. ![](https://www.datocms-assets.com/56652/1699042199-12.png?auto=format) When an asset outperforms like this and is doing so in an uncorrelated fashion, that’s going to catch the eyes of a lot of portfolio managers.  There have been some data points that suggest that this recent rally has been driven by institutional investors who may be beginning to understand how Bitcoin could enhance their portfolios. One is that Bitcoin futures open interest – the number of unsettled and active contracts – trading on the Chicago Mercantile Exchange surpassed previous record highs from 2021.  ![](https://www.datocms-assets.com/56652/1699042228-13.png?auto=format) Institutional traders prefer to trade on this highly regulated and respected trading venue and tend to use futures products more than retail investors, so this metric is a good proxy for institutional interest. Fun fact: the notional value of the open interest in the CME bitcoin futures contracts surpassed 100,000 BTC for the first time in history. Some other metrics hinting at bigger players driving this recent price rally can be observed on-chain. The number of addresses holding at least $100,000 in BTC has increased by 20% over the last month.  ![](https://www.datocms-assets.com/56652/1699042256-14.png?auto=format) In addition, the number of addresses holding at least $1 million in BTC has increased by 11% over the same time frame. ![](https://www.datocms-assets.com/56652/1699042266-15.png?auto=format) It seems that institutional and other big investors are waking up to the fact that Bitcoin has a unique value proposition. It has the characteristics of a safe haven asset like gold but with the growth potential of a promising tech stock. Today, the economy is running hot in an unhealthy manner as the government continues to spend money it doesn’t have and stimulate the economy in the short term at the expense of long-term stability. The bond market is starting to question the sustainability of these policies and that has caused historic losses for bond investors. It’s time investors begin to understand that we have entered a new inflationary regime driven by reckless spending that is only projected to grow by the CBO’s own projections. As a result, it’s never been more important for market participants to understand how this new environment changes the relationship between stocks and bonds and for them to consider other strategies to diversify their portfolios to protect their wealth in the years to come.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1699042304-16.png?auto=format) Tradingview, Prices as of 11/03/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # What’s New and Coming in Lightning - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/what-s-new-and-coming-in-lightning/ As Lightning Network Usage Grows, Splicing, BOLT12, Offline Payments, and LSPs are Poised to Deliver Big Improvements for Users. --- **Stephan Livera** · November 11, 2023 · Updated July 3, 2024 Bitcoin’s payment technology has probably advanced more than you realize. Now, an instant and cheap self-custodial lightning experience is already available. The experience is not quite at the level of fiat payments in the likes of CashApp, Venmo, or Paypal, but it’s well on the way there. If your view of Bitcoin payments is that they’re slow, expensive, and not scalable to many people, you need to update your views, as this view is likely from the 2015-2017 blocksize war era or perhaps in the early lightning network era of 2018-2021. But if you are a regular user of lightning apps, you probably already see it for yourself. Now, of course, we should acknowledge that most Bitcoiners in Western world nations are interested in HODLing rather than spending sats. This is generally due to tax reasons and mostly because they anticipate Bitcoin’s price to rise significantly in the medium to long-term future. But nevertheless, it’s nice to know that the network is rapidly improving, and should you want to easily transact, you can! After all, once there is broader Bitcoin adoption, it’s likely that tax laws will change as they did in El Salvador with Bitcoin as legal tender, taking away the capital gains tax law issue. ### Overview of Bitcoin’s Lightning Network The Lightning Network is a network of payment channels. By using one on-chain transaction to open a channel and another to close that channel - users can take many transactions *“off the chain”* by only settling out on-chain once when that channel is closed down. Not only this, but Bitcoin’s lightning network allows you to route payments through the network, even if you do not have a direct channel with your intended recipient. Payment routing occurs using multiple ‘hops’ passing through multiple nodes on the network. Using the Lightning Network doesn’t mean a user can completely avoid using Bitcoin on-chain, but rather, they are able to reduce their use of the blockchain, which saves fees and speeds up transactions for small to medium-value transactions. ### Lightning Use Today Lightning network faces criticism from some people who argue that *“nobody uses the Lightning network.”* But at the same time, if you look at some of the statistics around the ecosystem, Lightning transactions are increasing considerably.  As examples:  - Alby, a popular Lightning browser extension, reported 1M transactions for the month of [August 2023](https://twitter.com/getAlby/status/1703757553094611370).  ![](https://www.datocms-assets.com/56652/1699326195-alby.jpeg?auto=format) - Wallet of Satoshi is on track for about 820,000 LN payments in September 2023 ([per Kevin Rooke’s stat tracking](https://twitter.com/kerooke/status/1705626002284527750).) ![](https://www.datocms-assets.com/56652/1699326251-voltage-ln.jpeg?auto=format) - Bitrefill (a Bitcoin commerce site selling vouchers) is noting growth in Lightning use as a proportion of Bitcoin transactions. ![](https://www.datocms-assets.com/56652/1699326308-btc-ln.png?auto=format) More and more Bitcoin and crypto exchanges are supporting lightning over time, e.g., Coinbase, Binance, and others have recently announced support or that they are working on it. This is all occurring despite the fact that Bitcoin’s price is down from the all-time high (circa $69,000 to $26,200 in late September 2023), and overall Bitcoin search volume is down. Global Bitcoin search volume from 1/1/21 to 26/9/2023: ![](https://www.datocms-assets.com/56652/1699326482-iot.png?auto=format) ### What’s New and Coming in Bitcoin’s Lightning Network? Big improvements are here or coming soon for Bitcoin’s Lightning Network. Here’s a walkthrough of some highlights: ### Splicing: Cost Saving and User Experience Improvement Splicing relates to being able to resize a Lightning channel with one on-chain transaction rather than having to spend an on-chain transaction to close a channel and another on-chain transaction to reopen the channel. This technique will lower the cost of running a Lightning node for many Lightning node operators, and this, in turn, flows through to cost savings for end users. Notably, Phoenix Wallet by the ACINQ team has splicing enabled on the Android version of the app, with iPhone support coming soon. What does this mean in plain English for end users? This provides a unified experience of on-chain and Lightning. The user no longer has to think about managing channels, and they are able to seamlessly spend on-chain or spend using Lightning, with greatly improved simplicity. For example, with Phoenix, users previously had to pay 1% for a swap-in fee for taking in on-chain funds and putting them into a Lightning channel. Now, this fee is gone and replaced with only the miner fee to ‘splice in’ the on-chain Bitcoin into a Lightning channel that is immediately spendable by the user. The main fee Phoenix users will face is 0.4% for spending using Lightning or occasional on-chain fees when receiving on-chain. This is a dramatic simplification of the fees and experience. It makes it far easier for an average end user to use Lightning in a self-custodial way, and ACINQ’s service has very high payment reliability. It’s now becoming more feasible to actually earn your salary in Bitcoin or Lightning and actually spend using Lightning at Lightning-enabled merchants. The other great point is that users who want to use, say, Phoenix as an on-chain wallet can still do so without necessarily paying high swap in or out fees for every on-chain transaction, as the fees for on-chain transactions are simply the miner fees that would be paid anyway with any on-chain wallet. And this isn’t all. Splicing could evolve in the future to provide even more benefits such as increased privacy or increased cost savings. This could happen where lightning nodes are communicating with each other and coordinating multiple operations to be batched into one transaction. Some Bitcoin surveillance firm heuristics rely on the notion of multiple inputs being spent being controlled by the same user, and if splicing enables multiple parties to collaborate on transactions, this could undermine blockchain surveillance, resulting in a privacy improvement. Collaborating on other transactions across Lightning could also result in on-chain cost savings for users. Imagine a world where multiple channels can be resized and an on-chain payment made, all with one on-chain transaction! For more information on splicing in theory and practice, listen to relevant episodes [SLP490 with Dusty Daemon](https://stephanlivera.com/episode/490/) and [SLP513 with Bastien Teinturier](https://stephanlivera.com/episode/513/). Or, of course, try it out yourself with Phoenix Wallet. ### Bolt12 (Offers) Bolt12 relates to a new experience for Lightning. Currently, with Lightning, there are generally single-use invoices, which, as the name implies, are not designed to be reused. But with Bolt12, aka *“Offers,”* we can have static QR codes or strings that can be utilized by users to fetch new invoices from each other. This means users could create a Bolt12 code that relates to their wallet and post this up to receive donations or to receive regular ongoing payments. It also means streamers, content creators, or fund-raisers could use a single QR code to take donations cheaply and quickly. ![](https://www.datocms-assets.com/56652/1699668295-offers.png?auto=format) Historically, people used to put up a single Bitcoin address to take donations or, in some cases, even for regular commerce. Generally, re-using Bitcoin addresses is seen as a privacy no-no. And this approach was also more costly, as each donation required going on-chain for the sender. But now, in a Lightning-enabled future with Bolt12, you can put up a single QR code and actually receive donations without re-using Bitcoin addresses and without the donor/sender having to spend on-chain. Spelling this out further, when you sign up today for online services, they usually ask for your email so they can send you notifications, product information, marketing, etc. It’s become the generalized way to send messages for e-commerce. But there is no easy way to send or receive money, as this usually involves one person having to type in credit card details, banking details, or wire details. Imagine, in the future, when you sign up with services, and when they want to make a payout to you, they can simply make a payment to you using your bolt12 code. This can dramatically simplify your experience and speed the process by making it so you only have to paste in a Bolt12 code to receive payment, just like you would enter in your email address today to receive emails. This can dramatically simplify the process for users to earn sats, get reward payouts, or even receive refunds in an e-commerce context. Taking it one step further, your Bitcoin lightning wallet apps could incorporate a contact list where your contacts have their bolt12 codes registered. You could then pick a contact and instantly make a lightning payment to that person without even having to use a custodian! You could settle up with friends and family for dinner or other shared expenses or make periodic payments to vendors or merchants. At that point, lightning would have a similar experience to typical fiat fintech apps like Venmo, CashApp, or PayPal - but it could be done without custodians and done using Bitcoin. What an incredible world that would be. For more information on Bolt12, see [Bolt12.org](https://bolt12.org/) or listen to the creator, [Rusty Russell, on SLP298](https://stephanlivera.com/episode/298/). ### Async Payments, aka *“Offline Payments”* Now, to properly enable that future above, what's needed is further development in what's called asynchronous payments, also known as offline payments. In Lightning today, generally, both parties to the channel need to be online to send or receive funds. This can present an issue for mobile users if they are periodically offline or in areas with bad connectivity. To fix this, there is new work to enable LSPs (Lightning Service Providers) to assist in such cases. Casual Lightning users on mobile will typically have an LSP help them by providing Lightning liquidity to their node, and it may also assist by helping notify them to go online and check their payments and channels. In the future, with asynchronous payments, the sender's LSP could notify your LSP that you have an incoming payment. Your mobile application could then 'wake up' and signify to your LSP that you are now available to take the payment, and at that point, the payment can be forwarded from the sender's LSP over to you. In the earlier years of Bitcoin, people would commonly use an on-chain address to take payment even hours or days later. In the Lightning context, this changed because of the online requirement. I.e., Lightning invoices are set with an expiry period, and the sender must generally respond and make the payment within a set period of time. This clunkiness that previously existed for security reasons can be removed with asynchronous payments. Users can end up getting the ‘best of both worlds’! They can have the fast, low-fee payments of Lightning and take away some of the downsides, such as the always-online requirement, with this clever workaround. ### Lightning Service Provider (LSP) Specification Industry participants are coming together to work on an LSP specification to provide a unified API (Application Programming Interface). This will enable direct p2p (peer-to-peer) messages between lightning nodes and users. This will also enable greater competition and collaboration between different Lightning applications and LSPs. Currently, casual lightning users are reliant on an LSP that is built into the wallet application, and this can cause a type of ‘vendor lock-in.’ For example, if you use the XYZ app, you might have to use XYZ LSP, and if you use the ABC app, you might have otherwise had to use ABC LSP. But in the future, once an LSP specification is in place, you can more easily have lightning apps that are LSP-agnostic. So you could have XYZ app, but use ABC’s LSP. So you could have one lightning app that makes use of a different LSP channel or even use multiple different LSPs for privacy or payment reliability reasons. This can all be done without the end user giving up the custodianship of funds, as the LSP is merely assisting with liquidity and user experience. Other benefits here may include: Making it easier for wallet app developers to build - as they can now focus on building their wallet or app rather than also having to develop and build an LSP. In this way, it lowers the bar to creating and innovating apps in Lightning increased competition between LSPs, providing the user with more choice. Some LSPs may choose not to service particular jurisdictions for legal and regulatory reasons, so this may enable them to still operate for users based in other jurisdictions. For example, the Blocktank LSP won’t serve users from the USA but could serve users from other jurisdictions. ### What’s the Catch? There’s still work required, and even when complete, it will still require periodically interacting with Bitcoin on-chain. This means that if you want to remain self-sovereign, you will need to periodically *“go to chain,”* whether that is to open new channels, do splice in/out transactions, use swap/in-out functions, or to close channels. It’s also important that in order to keep Lightning secure, that you are able to do an on-chain transaction in case your counterparty goes offline or tries to cheat you. Is it likely that many people will continue to use custodial Lightning for various convenience or cost-saving reasons? Yes, But the key point is that overall Lightning use is growing over time and that the ability to use Lightning self-custodially is improving rapidly, too. ### The Bottom Line Imagine a future where more people can natively live on Lightning. They could earn their pay using Lightning, and they could also spend using Lightning. In that future, users may only need to periodically interact with Bitcoin’s base chain. Over time, of course, we should expect that fees will rise as more and more people want access to Bitcoin. Bitcoin’s *“Not your keys, not your coins”* ethos will mean that more people will want to actually own some coins on-chain rather than trusting custodians. Though some may have had false expectations about how quickly Lightning would develop in the early years of its being live on the main network (around 2018), Lightning is quickly advancing now. Applications such as Phoenix Wallet for iPhone or Android are probably leading examples of what is possible today. As it becomes more widely accepted across payment processors and integrated into more apps that we use, Lightning can become the default for lower-value commerce online and also for in-person commerce. The future of Internet commerce will change as Lightning becomes widely adopted and supported. It will become a much smoother experience, and we are already seeing this in various Bitcoin communities around the world. The future for Lightning is bright, and it’s worth trying out some modern Lightning apps to see for yourself. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Preparing for an Inflationary Soft Landing - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/preparing-for-an-inflationary-soft-landing/ Investors need to consider that we may be entering a period not seen in the developed world in decades, similar only to those experienced in emerging markets. --- **Sam Callahan** · November 17, 2023 · Updated July 3, 2024 The highlight in markets this week came on Tuesday when October’s CPI data was released, showing year-over-year inflation had fallen more than expected. Furthermore, Core CPI - CPI minus food and energy – declined to its lowest level since 2021. ![](https://www.datocms-assets.com/56652/1700254091-1.png?auto=format) Much of the decline was attributed to falling energy prices. After many months of upward price pressure, the price of crude oil has sold off over the last month to the surprise of many market participants. ![](https://www.datocms-assets.com/56652/1700254118-2.png?auto=format) In the wake of this CPI print, investors everywhere began to wonder once again if the Fed had accomplished the impossible – bringing down inflation without causing a significant recession. This is the coveted *“soft landing”* that everyone has been talking about. James Lavish highlighted below how mentions of *“soft landing”* littered his Bloomberg Terminal in the aftermath of the CPI release.  ![](https://www.datocms-assets.com/56652/1700254145-3.png?auto=format) If this truly is a “*soft landing,”* then the Fed has achieved something extraordinary. It has raised interest rates at one of the fastest paces in history in a highly leveraged economy without causing a significant recession. But is this just hopeful thinking? Below is a chart that analyzed mentions of *“soft landing”* in company documents and filings dating back to 1995. It found that the frequency of soft landing mentions has only spiked to these levels on two previous occasions, 1) Right before the Dot Com Crash, and 2) Right before the Global Financial Crisis. ![](https://www.datocms-assets.com/56652/1700254173-4.png?auto=format) Bloomberg shared a similar chart that shows how investor optimism about a *“soft landing”* tends to peak right before an economic downturn hits. ![](https://www.datocms-assets.com/56652/1700254201-5.png?auto=format) Nonetheless, investors saw this latest CPI as a sign that the Fed is likely done with rate hikes and, as a result, bonds and stocks have both rallied.  We saw yields drop across the entire yield curve as the market began to price in an increased probability that the Fed has reached the end of its hiking cycle. ![](https://www.datocms-assets.com/56652/1700254223-6.png?auto=format) The futures market shows that investors are assigning nearly a 0% probability of another rate hike, with rate cuts set for May 2024. Before this CPI print, there was a 30% chance of another hike. The market thinks the Fed is done. ![](https://www.datocms-assets.com/56652/1700254253-7.png?auto=format) If the Fed is done with hikes, then investors might find current bond yields attractive. If this is the top for rates, then investors can lock in the high yield and then benefit from any rate cuts in the future if a deflationary recession does hit. Right now, the market has high conviction that bond yields will be lower next year. ![](https://www.datocms-assets.com/56652/1700254323-8.png?auto=format) You also see this in the market’s positioning. Today, investors are the most overweight bonds than they have been since the Global Financial Crisis. ![](https://www.datocms-assets.com/56652/1700254345-9.png?auto=format) These investors are probably aware of what happens after the Fed finishes a hiking cycle. On average, it takes 8 months from the last Fed hike to the first Fed cut. That takes us to around May.  ![](https://www.datocms-assets.com/56652/1700254367-10.png?auto=format) But are bonds really where investors want to be allocated to for the long term? These investors appear to be making a short-term trade that will capitalize on a Fed pivot in response to some future deflationary downturn. They are effectively trying to pick up pennies in front of a steamroller. But the question all of these investors overweight in bonds should be asking themselves is, *“What if we are about to enter an inflationary recession, something not seen since the 1970s? What will yields do then?”* In recent memory, during a financial crisis, long-dated bonds have rallied as inflation collapsed. But what if bond yields remain elevated or even start climbing as inflation remains sticky? At that point, investors will begin to ask themselves, *“Do I really want to lend money to a highly-indebted government running multi-trillion dollar deficits with inflation still at 4% for the next 30 years at these rates?"* The answer is probably not – at least not at these yields. They will demand higher rates for the amount of risk they are taking. If long-dated bond yields rise in that scenario, then investors playing the Fed pivot will find themselves in a world of pain. Moreover, there are structural inflationary pressures that could keep inflation elevated even if the Fed begins to cut rates such as demographics, reshoring of supply chains, excessive government spending, and underinvestment in energy and infrastructure.   What investors need to consider is not that we may be having a *“soft landing”* or a *“hard landing,”* but rather if we will have an *“emerging market-style landing”* as Lyn Alden alludes to in the Tweet below. ![](https://www.datocms-assets.com/56652/1700254414-11.png?auto=format) What does she mean by this? It means that you could have a situation where the United States never sees a true *“hard landing”* because policymakers are implementing an emerging market playbook. Here’s what you could expect to see: - Excessive deficit spending - Rising bond yields - Currency debasement  - Elevated inflation  - Hot nominal growth, low real growth - Highly politicized monetary and fiscal policymaking - Weakening rule of law  Sound familiar? The Treasury is already running massive fiscal deficits, effectively running the emerging market playbook. If this continues, then inflation will remain elevated, and bonds will continue to underperform.  Another sign that we are divulging into an emerging market occurred this week when US Senator Markwayne Mullin and President of the Teamsters union Sean O’Brien almost got into a fistfight during a Senate hearing. This is the highly politicized economic decision-making that you often see in Emerging Market economies.  If the United States continues to function like an emerging market, then we should expect an emerging market-style investing environment – aka high amounts of government spending, increased uncertainty and civil unrest, and elevated levels of inflation. In that potential future, it is inflationary assets like commodities, real estate, precious metals, and Bitcoin that will likely outperform *“deflationary assets”* like bonds. It’s not too crazy to think that inflationary assets will finally get their time in the sun given the last several decades. For the last 40 years or so, deflationary assets have significantly benefited from interest rates steadily falling. This long-term trend could all be changing. ![](https://www.datocms-assets.com/56652/1700254571-12.png?auto=format) If you believe in contrarian bets, then this next chart is for you. It highlights the relative price of real assets versus financial assets since 1925. You can see how we are at historic lows when it comes to the price of real assets against financial assets, that it appears to be carving out a bottom since 2021, and that the prices of real assets tend to spike during periods of increased geopolitical and economic uncertainty. ![](https://www.datocms-assets.com/56652/1700254603-13.png?auto=format) Further evidence that investors are woefully underallocated to real assets can be seen in the percentage of advisors with exposure to gold. A recent survey from Bank of America found that 71% of financial advisors have little to no exposure to gold. ![](https://www.datocms-assets.com/56652/1700254630-14.png?auto=format) This survey shows that there could be significant opportunity in the future if macro conditions provide a tailwind for real assets and asset managers begin to shift their allocation strategies in response to a sustained, inflationary environment, causing large inflows into these underallocated assets.  And what real asset has a value proposition like Bitcoin? Bitcoin has an investment case similar to gold given its scarcity and resistance to inflation and censorship, but also has the growth potential of a young tech stock. Furthermore, just when the market expects the Fed to resort back to accommodative policies like rate cuts and Quantitative Easing, Bitcoin will be undergoing another halving. If the timing aligns, then the contrast between the two monetary systems will once again be on full display. Whereas one monetary system will continue to debase the value of the money, the other will continue to preserve the scarcity that allows it to hold its value over time. This occurred in 2020 when the Fed responded to the pandemic with massive Quantitative Easing programs and the Bitcoin halving occurred simultaneously. This stark contrast between the monetary systems wasn’t even lost on CNBC hosts like Brian Kelly. ![](https://www.datocms-assets.com/56652/1700254669-15.png?auto=format) We are currently 89% through this current halving cycle. If the market is correct, we could be experiencing Bitcoin’s fourth halving right as the Fed has to pivot in response to some economic downturn. ![](https://www.datocms-assets.com/56652/1700254704-16.png?auto=format) If the Fed does begin cutting rates and inflation remains high due to public officials implementing emerging-market style policies, then Bitcoin could shine at that time.  Historically, long-dated bonds have been a place of refuge for investors. Today, we are seeing market participants pile into bonds as they expect the Fed is done with rate hikes, and a recession could be near. However, investors need to consider that we may be entering a period not seen in the developed world in decades, similar only to those experienced in emerging markets. In that world, in the long term, it is real assets like Bitcoin that will provide safe haven for investors, not paper financial products like bonds, no matter what the Fed decides to do with interest rates.   ***Market Overview*** ![](https://www.datocms-assets.com/56652/1700254744-17.png?auto=format) Tradingview, Prices as of 11/17/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # What Bitcoiners Need to Know About Hashes (But Are Afraid to Ask) URL: https://www.swanbitcoin.com/education/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/ Bitcoin leans heavily on a process called hashing to achieve many of its unique properties… But what actually is hashing? --- **Tomer Strolight** · November 22, 2023 · Updated July 3, 2024 If you've been learning about Bitcoin, you've probably heard a lot about hashes. So you might just be thinking: *"I don't know what a hash is, and at this point, I'm afraid to ask. "* Fear no more. ### To Understand Bitcoin, You Must Understand Hashing Bitcoin leans heavily on a process called hashing to achieve many of its unique properties. Mining Bitcoin blocks with proof-of-work relies on hashing. Chaining together blocks to create the blockchain relies on hashes. And while those aren't even all the ways Bitcoin uses hashes, they are two of the most special applications. (Bitcoin also uses hashes to identify transactions, create addresses from public keys, and group all the transactions together in a single block.) Without the unique things only hashes do, it would not be possible to create Bitcoin. But what actually is hashing? This article aims to explain what hashes do that Bitcoin then uses to build a decentralized, consensus database consisting of blocks that are *“chained”* together. It aims to do it using simple terms and straightforward examples. If you’ve been struggling to understand how Bitcoin actually accomplishes some of the exceptional things it does, you’ll hopefully have a couple of *“aha!”* moments. Unfortunately, we can’t jump straight to those *“aha”* moments just yet. We’ll need to establish a couple of foundational ideas first. The first thing we need to understand is what a hash is, and in particular, what a few of the special properties of secure hashes are. Once we’ve done that, we can see how hashes can be cleverly used to do a few brilliant things that they’re used for in Bitcoin. *Disclaimer: This is neither a formal nor a complete explanation of hashing and isn’t intended to replace what you would learn by taking a formal class on cryptography. It really only focuses on the absolute minimum amount of content necessary to demonstrate what goes on in Bitcoin rather than how hashes get used in the world at large outside of Bitcoin.* ### Part 1: Getting to Know Hashes What Is a Hash? Let’s start with a really simple explanation of a hash. A hash is a reasonably short number you get when you put a digital file into something called a hashing algorithm. I hope the word algorithm doesn’t turn you off already. An algorithm is just a set of instructions for doing mathematical operations in a particular order on something you put into it. For example, *“Multiply by 2 and then add 4”* is an algorithm. So, if we’re cool with that word, I’ll get back to what a hash is. Again, a hash is a reasonably short number you get when you put a digital file into a hashing algorithm. Whenever you put the same file into the hashing algorithm, the number it puts out is the same. In other words, the same input always leads to the same output. So, if I run the algorithm on a file and you run it on an exact copy of the same file, we’ll both get the same result. This can be really useful if we each have a big file, and we want to see if the file we both have is the same or not. Instead of sending that huge file to each other and comparing each bit of it, we simply each run the hashing algorithm on the file we already have, and then we compare just the short results. If the two results are different, we know we didn’t both use the same file. However, if we do both get the same result, then it means we might have the same file. But if the size of the hash result is itself too small a number, like a number between 0 and 1000, then any two different files could have a one-in-a-thousand chance of putting out the same result. If we want to use hashes for comparing files (which we very much, in fact do want to do), we need something more reliable – something whose results are more secure. And for that, we’ll need to leap straight into what makes something a secure hashing algorithm. ### What Makes a Hashing Algorithm Secure? As we just explained, hashes can be used to compare two files to see if they are the same file or not. But while each hash of a file is a reasonably short number, to be a reliable source of comparison, the number of possible results still has to be large enough that we won’t ever mistake one file for another. #### Secure Hash Feature 1: A Very Large Range of Possible Outcomes We need the possible range of numbers a hash can result in to be very big. After all, there are so many things we digitize – every photo on every smartphone, every email and text message, every song on Spotify, every video on YouTube, every Kindle book on Amazon, every jpeg on the Internet, and so on. We create tens of billions of new files every day, trillions of them every year, maybe even quadrillions. Maybe even more. So, the first relevant feature for us of a secure hash is that it is a relatively short number that covers a tremendously large number of possibilities. In the case of Bitcoin, Satoshi chose to use Secure-Hashing-Algorithm-256 (SHA256). The *“256”* in its name indicates the output is always a 256-bit number. That means the result is a binary number (a bunch of zeroes and ones) that is 256 characters long. In decimal notation – the way we normally write down numbers – that’s a range of numbers between: ![](https://www.datocms-assets.com/56652/1700681554-spi_tomer-3.jpg?auto=format) Now, at first glance, you may think that’s not a *“reasonably short number”* at all. Let’s not mistake big for long, though. It is a big number. It’s apparently as big a number as there are atoms in the visible universe. But it’s only seventy-eight digits long. Since we’re using these results to compare files that are millions, billions, or trillions of digits in length, the length of these hashes, being under a hundred characters, is relatively quite short. And yet, in a number this short, we can have a range of possible outcomes as vast as all the atoms in the universe! The first requirement of a secure hash is that it covers a very wide range of possible outcomes while still being relatively short. And, as we’ve seen, SHA256 does that. The next two important requirements are closely related to and complement this first one. ![](https://www.datocms-assets.com/56652/1700681766-spi_tomer-4.jpg?auto=format) #### Secure Hash Feature 2: A Completely Unpredictable Outcome Another crucial feature that makes a hash secure is that the result, or even any part of it, is completely unpredictable prior to running the algorithm on a file. There are several things worth pointing out about this feature. One is that by looking at the hash of any single file, you can find out nothing at all about the original file itself. If you only have a hash of a file, all you have is a random-looking 256-bit number. You do not know how big the input file is, what kind of file it is, or anything about it or any part of it. And conversely, until you run the algorithm on a file, you have no way of knowing what any part of the output will be, even if you’ve run the algorithm on very similar files before. **The result reveals nothing about the original file, and nothing about the original file gives you any clues about what the hash result will be.** A further implication of this feature is that if you have the hashes of two different files, no matter how similar these original files are to each other, the hashes look no more similar to each other than if the two original files had nothing in common at all. The results must appear random. For example, this means that if you use even two very similar inputs, like the text of Shakespeare’s *“Romeo and Juliet”* as the first input and the same text but with just one letter changed as the second input, the two results you get will not be any more similar than if you used a picture of a frog as the second input. This feature is sometimes called *“hiding”* in that the result of the hash of an input doesn’t reveal anything about that file other than what its hash is. A hash basically just serves as a **short and unique** ***“fingerprint”*** **of the original file.** #### Secure Hash Feature 3: We Can’t Find Two Different Inputs that Give the Same Output Finally, and somewhat obviously, it is, of course, very important that we don’t end up with two different inputs producing the same result. A secure hash algorithm needs to be carefully created so that a *“collision”* of results (i.e., the same result) between two inputs is profoundly unlikely to occur. #### Other Features Briefly Worth Mentioning There are other features of secure hashing algorithms, but we won’t explore them here. It is perhaps worth mentioning that hash functions cannot be reversed. There’s no way to take the short result and construct what the original input was. It’s also worth a brief mention that hashes need to be relatively fast to compute. If it took hours to generate a hash, we might often prefer to work with the original input file itself instead of its hash. ### Part 2: Having Fun With Hashes **Another Disclaimer:** If we had more space, we would, at this stage, go through dozens of basic examples of using hashes to become more familiar with them. But given the aim of keeping this as short as possible, we’ll dive right into how they end up getting used in Bitcoin. #### Recap So, we have this tool called a Secure Hash Algorithm. It takes any file as an input and then outputs for each file a random-looking number that is unique for that input. But that output isn’t actually random. If you put the exact same input in again, you’ll get the same result again. Thus, the hash serves as a unique *“fingerprint”* of the file that was the input. ![](https://www.datocms-assets.com/56652/1700681807-spi_tomer-5.jpg?auto=format) #### Hashing Hashes We can put any digital file into a hash function. In fact, a hash result is itself a digital file. What if we tried to be clever and put into the hashing function something that itself contained the output of a hash? Let’s look at an example. Say you took the hash of the first photo on your phone’s photo library. For this example, let’s assume that photos are somewhere around 6 megabytes each, so each photo is hundreds of thousands of times bigger than the hash of the photo. (6 Megabytes is actually 48 million bits of information, and 48 million divided by 256 is 187,500 times as big). The hash is a unique and small fingerprint of photo number 1 in your photo library. Next, we take that first short output and put it in front of the data that makes up the second photo in your photo library. We’ve temporarily created a new file that is only 256 bits longer than that second photo. It consists of the fingerprint of the first photo and the whole second photo. Now, we run the hash function on this new file. What would we get this time? ![](https://www.datocms-assets.com/56652/1700681844-spi_tomer-6.jpg?auto=format) Well, we would still get a result that is only 256 bits long because that’s what the hash function always produces. But it is not the hash of the second photo. Instead, that result is now the unique fingerprint of something very special – it’s the fingerprint of the combination of, first, the fingerprint of the first photo and, secondly, the actual second photo. Why is this special (and what’s it got to do with Bitcoin)? Bear with me for just six more paragraphs, and we’ll see. Imagine we keep this process going through the whole photo library on your phone, which, for our example, we will assume is 1,000 photos, so about 6 Gigabytes in size. We continue taking the 256-bit result at each step, stick it in front of the next photo in the library, and run the hashing algorithm to get a new 256-bit number. We take a 256 result from the prior step each time, stick it in front of the next image in our library, and then run the algorithm to get a new 256-bit number. We keep all these short results in an ordered list. Let’s look at what we’ve done. We have quickly (remember, hashes are quick to compute) and compactly created a database of 1,000 short 256-bit numbers. The size of the database is 256,000 bits in total (256 bits times one thousand) - a mere 32 KBs. That’s still 187,500 times smaller than the photo library. But it’s not a hash of each photo. It’s a chain of hashes that starts with a hash of a single photo. Yet, each subsequent link in the chain is arrived at by hashing the fingerprint of the previous link with the next photo. Wherever we are in the chain, the result we have can only be arrived at if we use all the original photos in order to get there. When we arrive at the final photo, the 1000th photo, we take the 999th result and hash it together with the 1000th photo. Now, why might we do this? Well, imagine we are maintaining a backup of our photo album in the cloud because we don’t want to lose our precious photos. In creating this progressive chain of hashes with photos, we are able to use this very small amount of data to see exactly how much of the photo gallery is perfectly copied into the cloud – and we can do it with blazing speed and accuracy. Let’s see how. By running this same chaining process on the cloud backup of the photo library, we create a very easy tool for comparing not just whether the backup is complete but just how complete it is. We don’t have to compare the two libraries by starting at the beginning and going through the whole thing photo by photo. We don’t have to compare 1,000 individual photos or 1,000 individual hashes of photos. Instead, we can start at the very end of both of the chains and compare the final hashes in both to see if they are the same. If both final 256-bit entries on our phone and the cloud backup are the same, it must mean that the entire photo libraries in both places are exactly the same! In doing that, we only compare two short 256-bit numbers and can determine that the two collections of files are exactly the same! That’s 187 million times faster than looking at the photos themselves! More importantly, though, what if the final entries didn’t match? In fact, every time you take a new photo or a bunch of them, this process runs, and now the final result on the backup does not match the final result on your phone. However, with the database we’ve created, we can very quickly find out where the backup left off. All the backup service needs to do is start at the end of the list you provide from your phone and work its way back until it gets a matching result. So whenever there isn’t a match, the backup service simply goes backward one result at a time through the list of hash outputs to see if it gets a match with the cloud backup. As soon as it finds a match, it knows that’s the point it is in sync with and only needs to copy everything from that point on. The backup service doesn’t need to confirm the accuracy of anything that came earlier! For example, If the cloud backup’s final hash result matches with the 997th output in our phone’s list of hashes, the backup would know the following: It is a perfect match for all the first 997 photos in the photo library on the phone. It would know this without having to look at any one of those photos or any of the previous 996 hash results! And then it would know to copy only the final three photos, just 18 megabytes, instead of all 6 gigabytes. #### Bitcoin Chains Blocks, Not Photos In the above example, we used photos because we’re all familiar with them. We showed how we could use hashes to chain together hashes of photos with actual photos in order, one at a time. This allowed us to create and maintain a perfect backup without having to go through the whole database each time a new photo was added. The efficiency was incredible and ensured 100% complete accuracy in each photo in the library and even in the order of the library itself. We may be less familiar with what Bitcoin blocks are than what photos are. However, hashes don’t care what the input is, so what works with the photo library example also works for what Bitcoin does with blocks of transactions. Bitcoin doesn’t maintain just one single perfect backup of its database of blocks, though – it maintains as many backups as there are people who run Bitcoin nodes. Tens of thousands of people all over the world are able to copy and keep perfect, up-to-date copies of its database that is hundreds of gigabytes in size with minimal computational effort and minimal data transmission. How? By relying on chaining together these tiny hash results. As long as the hash of the last block they have matches that of the network, they can know with perfect certainty that all the data in all the blocks, from the genesis block until the latest block, is 100% precisely identical to that of everyone else’s. This is because every Bitcoin node acts similarly to the backup service in the example above. It starts with the hash of the genesis block (which was represented by photo #1 in the above example) and hashes it together with the data from the incoming block. And this keeps going on, one block at a time, every time a new block is added. Whenever a node rejoins the network, it finds the last matching hash and downloads new blocks only from that point on to get in perfect synchronization. #### But Who Gets to Add Blocks? In the case of your phone’s photo library, you are allowed to add a photo whenever you want. But in the case of Bitcoin, we have a very different and unique situation. First, we want anyone to be allowed to participate in the process of adding a block – this is the nature of a decentralized and permissionless system. But we never said this would be easy. After all, Bitcoin only wants one new block added every ten minutes on average. Otherwise, the blockchain would grow too big, and we wouldn’t be able to keep backups of it on affordable and common hardware. Also, since Bitcoin pays a reward in Bitcoins to whoever adds a block, lots of people want to get that reward. What’s a fair way of deciding who gets that reward? How do we do all these things at once? #### Secure Hashes to the Rescue – Again Satoshi wanted for anyone to be able to participate in the process of adding a new block, but that this would happen only once every ten minutes and that everyone would agree that one proposed new block in particular was going to be the next block instead of some other proposed block. He wanted this all to be done without a central authority declaring which block is next. Let’s try to imagine how challenging this is with our phone photo library example again. ![](https://www.datocms-assets.com/56652/1700681895-spi_tomer-7.jpg?auto=format) Imagine we were trying to maintain a photo library not linked to any one phone in particular but one where any phone in the world can upload a photo. There are a few catches we add-in. Lots of people are going to keep copies of the whole collection, so we need to keep it small enough for them to do so. We’re also only going to allow 10 photos in each update, and we’re also only going to add one such update of 10 photos once every ten minutes. How do we decide which photos to include? What makes one person’s proposed 10-photo-contribution valid and another’s invalid? We’re also not allowed to ask people to register and then randomly choose one of them every ten minutes because we aren’t allowed to identify individuals in the system. And even if we knew everyone’s identity so we could try to choose one at random, what if that someone was chosen but wasn’t around to propose their addition? What would we do then? And who would do the choosing - some central or single authority? This is a hopeless and unsolvable problem in the case of a photo gallery. Luckily, it’s not a useful problem to solve anyway. But in the case of Bitcoin, it is necessary we solve these challenges. We need some method of choosing a valid next addition to the database (i.e., the addition of the next block) that still complies with the desired goals of one block every ten minutes, only valid transactions (no double spending, no spending non-existent coins), being under a maximum size limit, and picking up exactly where the last block left off. We also need everyone to agree on what the valid next block is and for all of them to move on to the next block once one has been added. We also need anyone in the world to be able to participate in this process and everyone to agree on the outcome. If this sounds like an impossible task to you, don’t beat yourself up about it. It was thought to be impossible until Satoshi showed how to do it with hash functions in the Bitcoin whitepaper. ### Proof of Work – A Hash Value That’s Hard to Come By Let’s recall that a hash is a fingerprint of a digital file. Its result is a 256-bit number. That means it can be greater than some particular number, less than that number, or equal to it. And let’s recall that when you first put a file into a hash function, you have no idea what the result will be. It’s got a 50/50 chance of being greater than half that huge 78 digit-long number in the earlier section of this article and a 50/50 chance of being smaller. It’s also got a one in a trillion chance of being less than one trillionth of that number. Now, one trillionth of that number is still a very big number: ![](https://www.datocms-assets.com/56652/1700681965-spi_tomer-8.jpg?auto=format) No matter what you put into the hash function, you’ve got only a one in a trillion chance of getting a result that (when expressed in decimal value) will be less than this number. So what if we gave the following requirements for a proposed next block to be valid? First, it had to have in its input the hash of the prior block (just like we did in how we constructed our photo library hash-chain). This would ensure that it was built on a precise and flawless copy of where the database last got updated. This is easy: just use the number you have. Next, it would have to contain only valid transactions. This also is easy: don’t try including any invalid transactions. Third, let’s make it so the hash of this data has to be less than that big number above. This is not so easy – you have a one-in-a-trillion chance of getting an outcome that meets this requirement. If someone was proposing a new block, it would be easy to meet the first two requirements. But to satisfy the third requirement, they would have to create roughly one trillion different blocks before they found one whose hash was less than that target number. While running a hash is quick, it’s not instantaneous, so it requires time and it also requires some computing energy. Running it a trillion times could take a long time and use up a lot of energy. Therefore, for someone to create a block that everyone else would agree is valid, they would have to do a lot of work (and get lucky enough to find a solution before anyone else does). However, to prove they found a valid solution, they would only have to share the single valid result (a single block) with the rest of the network – not all the trillions of failed attempts they made. And all the network participants have to do to check if it is valid is to hash the single proposed block and see that its result is lower than the required target (and that it also met the first two easy conditions). This is exactly how Bitcoin allows anyone in the world to participate in finding new blocks. By requiring that the hash of a block be a value lower than a particular target (as opposed to the number above) and by adjusting that target periodically so that the expected time between blocks remains an average of ten minutes, Bitcoin succeeds at meeting all the seemingly impossible requirements from up above. ***1. It takes roughly ten minutes to produce a block everyone agrees will be valid;*** ***2. Anyone in the world can participate in the process – anonymously and without signing up (both in trying to create blocks and in verifying their accuracy);*** ***3. Nobody is in charge of deciding whose proposal is valid or not – the system itself sets the difficulty based on what is happening in the real world.*** And so, we have a completely decentralized system where everyone can maintain and agree on the same database. Everyone’s copy is exactly the same. And we did it all by leaning on these interesting properties of hash functions. ### Where To Next? I hope this article helped you better understand what hashes are and how Bitcoin uses them to create a database (its blockchain) that’s easily and perfectly replicated and kept up to date by tens of thousands of people all over the world without there ever being any discrepancy and with nobody in charge. There’s a lot here to mentally process, so if you don’t feel like you’ve got it all yet, don’t worry. Let it sit with you for a bit. There’s also a lot more to hashes and a lot more to Bitcoin, so this is only an entry into understanding how they work together. You may have lots of questions popping up in your head. One particular question I haven’t answered here is: *“What if two people find two different valid solutions to a block?* *How do we decide which one we’ll keep?”* That’s a great question, but I had to stop somewhere. (The answer to that question is in the Bitcoin whitepaper in lots of other writings about Bitcoin, and Bitcoiners are very happy to answer it on social media, too.) Knowing hashes exist, though, with their special properties and seeing how those properties are used can often spark one’s imagination and ideas around what is possible. And, from time to time, someone like Satoshi comes around and puts together these properties to create incredible inventions like Bitcoin. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Feast or Famine? Breaking Down the State of the Economy URL: https://www.swanbitcoin.com/economics/feast-or-famine-breaking-down-the-state-of-the-economy/ As Americans continue to feel misled by their government and struggle with the cost of living, Bitcoin increasingly becomes a viable alternative. --- **Sam Callahan** · December 1, 2023 · Updated July 3, 2024 Being an American today is a confusing experience. On the one hand, everything feels more expensive, and many are finding it harder to make ends meet. You see it in countless surveys, in social media posts, and hear it at the dinner table. People’s paychecks aren’t going as far as they used to, and many are struggling to afford basic necessities like food, shelter, and energy. But on the other hand, the government is telling them that the economy is strong and inflation is coming down. White House Press Secretary Karine Jean-Pierre even said with a straight face that this Thanksgiving dinner is *“the fourth-cheapest ever, as a percentage of average earnings.”* Anyone who actually stood in line at the grocery store during the holiday knows that something is not adding up here.  This messaging was echoed by U.S. Treasury Secretary Janet Yellen in a recent interview on CNBC, when she was questioned about a recent poll from the New York Times that found that 59% of people under 30 in the U.S. rate the economy as *“poor.”* In response, Yellen made it sound like this was simply a misunderstanding. It was just a matter of raising awareness about the strength of the economy and that Americans would soon realize how good they have it today.  Instead of addressing the problem and coming up with solutions, government officials continue to gaslight the public and are even worsening the problem with their large spending deficits. Despite the Federal Reserve trying to crush demand with its rate hikes, real GDP was revised higher to 5.2% annualized for the third quarter.  ![](https://www.datocms-assets.com/56652/1701462952-1.png?auto=format) So, what could be causing the economy to continue to run hot? Well, the copious amounts of money printing that occurred in the pandemic certainly is still a factor here, along with massive fiscal deficits that only continue to grow. The chart below estimates that government output has contributed nearly 1% of the overall 5.2% real GDP figure.  ![](https://www.datocms-assets.com/56652/1701462979-2.png?auto=format) The next chart helps illuminate what is transpiring here. It shows a correlation between major countries’ GDP and their nominal public debt. ![](https://www.datocms-assets.com/56652/1701463005-3.png?auto=format) The trend is clear. As the public debt has exploded in the United States since the pandemic, so has nominal GDP. Since 2019, the national debt has grown by over $10 trillion! Is it really a surprise that GDP continues to run hot? To make matters worse, the government is not just contributing to GDP through its borrowing but is also impacting it through its hiring. The chart below from Hedgeye highlights how government hiring and wage growth have helped to keep US GDP afloat compared to the private sector.  ![](https://www.datocms-assets.com/56652/1701463032-4.png?auto=format) So, the government is not helping to bring down inflation; they are stoking it. And yet, the gaslighting continued yesterday when Joe Biden passed the blame off to corporations. ![](https://www.datocms-assets.com/56652/1701463058-5.png?auto=format) This victory lap from public officials on conquering inflation isn’t reflected in some other data as well, such as inflation expectations and business plans to raise prices.  ![](https://www.datocms-assets.com/56652/1701463099-6.png?auto=format) It’s also important to note that although the White House wants the public to believe that inflation coming down equals prices falling, this is not the case. Falling inflation simply means that the *rate* at which prices are rising is slowing. The actual price increases that have occurred in goods and services in the economy over the last couple of years will likely never return to pre-pandemic levels.  Bloomberg recently published [an article](https://www.bloomberg.com/graphics/2023-inflation-economy-cost-of-living/?srnd=premium) that shared evidence of the cost of living crisis many Americans are facing today. Here are some of the price increases Bloomberg calculated since 2020: - Groceries: +25% - Home Values: +42% - Electricity Bills: +25% - Natural Gas: +29% - Rent: +20% - Used Car Values: +35% - Car Insurance: +33% - Child care: +32% This data reflects the reality that American households are experiencing on the ground, contrary to the narratives being pushed by elected officials. The next question then arises: have wages kept up with inflation? The chart below highlights how real wages have only become positive this year as inflation has declined after two years of getting decimated. ![](https://www.datocms-assets.com/56652/1701463201-7.png?auto=format) Now that wages are finally positive and inflation is declining, the Federal Reserve is also celebrating like their job is done despite the pain many Americans are still experiencing today.  ![](https://www.datocms-assets.com/56652/1701463234-8.png?auto=format) The positive messaging on the inflation battle from Fed officials has many market participants thinking that the Fed is done with its hiking cycle. As a result, assets across the board have rallied. After getting slaughtered all year, bonds had their best month in November since the 1980s.  ![](https://www.datocms-assets.com/56652/1701463259-9.png?auto=format) Market participants are piling into bonds with the expectation that 1) there will be no more further hikes, and 2) the Fed will eventually have to cut rates next year. The market currently gives a 100% probability of at least two Fed rate cuts in 2024. But of course, if inflation does stick around for longer than these bond investors expect, then their positions will lose purchasing power in real terms over the long term. This may be why we are seeing real assets like Bitcoin and gold rally. Gold recently hit a new all-time high. ![](https://www.datocms-assets.com/56652/1701463298-10.png?auto=format) Historically, gold has moved inversely to rates, so with the market expecting rate cuts soon, this could explain part of the price action. But investors may also be flocking to gold because they see the unsustainable nature of the U.S.’s fiscal position and are beginning to see the writing on the wall. Even Jerome Powell called the U.S.’s fiscal position *“unsustainable”* at a [recent event](https://www.wsj.com/livecoverage/stock-market-today-dow-jones-12-01-2023/card/powell-calls-fiscal-path-unsustainable--7Eo2ZQzkZCnPE33CunyA). Bitcoin could also be moving for the same reasons as gold, given its gold-like characteristics. Bitcoin recently hit an annual high, briefly touching $39,000 per bitcoin. ![](https://www.datocms-assets.com/56652/1701463334-11.png?auto=format) The primary catalysts currently influencing Bitcoin’s price include increased institutional adoption, the possibility of a Spot Bitcoin ETF approval, more regulatory clarity concerning the broader crypto industry, the upcoming halving event, and rising investor awareness around the unsustainable nature of the US’s fiscal position and Bitcoin’s potential as a hedge against reckless monetary and fiscal policies. In recent months, there has been a favorable shift in sentiment amongst institutions and investors towards Bitcoin. The idea of allocating resources to a digital store of value that cannot be inflated away and requires no counterparty for ownership seems to be resonating with more investors in an environment of bank failures, trillion-dollar deficits, and ballooning debt levels. With the demand for Bitcoin increasing, the available supply on the open market is decreasing. This is evident as 70% of Bitcoin’s available supply hasn’t moved in over a year, signaling that investors are holding. Additionally, this coming spring marks the quadrennial 'halving' event, where Bitcoin’s issuance rate will be cut in half. As appetite for Bitcoin grows, it is only becoming more scarce. These supply and demand dynamics will ultimately be what drive Bitcoin’s price into the New Year. As Americans continue to feel misled by their government and struggle with the cost of living, Bitcoin increasingly becomes a viable alternative. Today, awareness around this new savings technology, and how it can protect investors’ purchasing power, has not yet reached the wider population. In the coming years, if inflation remains elevated, and the government and central bank continue with their harmful policies, more and more Americans will be searching for a solution to their money problems. Lucky for them, the solution has been being built for them for nearly 15 years now.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1701463371-12.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin: A Digital Benchmark For Tracking Fiat Debasement URL: https://www.swanbitcoin.com/economics/bitcoin-a-digital-benchmark-for-tracking-fiat-debasement/ As economies around the globe grapple with the fragility of their currencies, the rising adoption of Bitcoin signals a collective move towards the hardest money man has ever known. --- **Sam Callahan** · November 14, 2023 · Updated July 3, 2024 Since 1971, the world has been forced into one big experiment – the free-floating fiat monetary system. Despite money’s role in purchasing goods and services in the real economy, in this system, we measure the value of fiat currencies against that of other fiat currencies. This is a strange concept. The value of fiat currencies has been de-coupled from the real world. With their value subject to daily manipulation by central authorities, there is no stable benchmark for individuals to gauge the true value of their money. This is extremely deceptive because it makes it difficult for market participants to recognize when their money is being debased. Without a way to measure the true value of a fiat currency, it opens the door for it to be manipulated by governments and central banks. Some argue that fiat currencies are inherently immoral because they have been forced upon the public and act as a mechanism for legalized theft through currency debasement. Unanchored to any scarce real-world asset, these currencies are subject to indiscriminate printing by those who command the proverbial money printers, fostering a climate rife with privilege, inequality, cronyism, and corruption. Consider the charts below, which depict how various major fiat currencies have diminished in value relative to the U.S. dollar since 2021. ![](https://www.datocms-assets.com/56652/1699986965-01-major-currency-performance.jpg?auto=format) However, these charts paint a false impression that the dollar itself is growing stronger when, in actuality, the dollar has lost about 12% of its purchasing power since 2021 amid high inflation. This means that, according to the CPI, today's prices are 1.1x as high as average prices since 2021. One can observe this trend by comparing the buying power of $100 dollars in 2021 versus today. A dollar today only buys 88% of what it could buy back then. ![](https://www.datocms-assets.com/56652/1699986990-02-buying-power.svg) So even though other fiat currencies are losing value against the dollar, this just means that the dollar is losing its purchasing power at a slower rate than other fiat currencies. This devaluation trend isn’t new; it’s a consistent pattern since the abandonment of the gold standard in 1971, and the pace of this decline is accelerating. The true value of fiat currencies becomes apparent only when measured against assets immune to manipulation and inflation and that are inherently scarce – like gold, a historically reliable yardstick for assessing the long-term erosion of fiat currencies. ![](https://www.datocms-assets.com/56652/1699987824-03-time-reveals-the-true-value-of-all-fiat.svg) History has proven that all fiat currencies eventually fail over long periods of time. Since we have gone on this *“Great Fiat Experiment,”* the frequency of currency crises has spiked. ![](https://www.datocms-assets.com/56652/1699987927-04-number-of-banking-and-currency-crises.svg) When fiat currencies collapse, economies naturally gravitate towards more stable forms of money, such as Bitcoin, gold, or a stronger fiat currency like the dollar. As Former Fed Chairman Alan Greenspan once said, *"Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted."* - Alan Greenspan We are seeing this dynamic play out in real-time in Argentina. Facing an anticipated inflation rate of 200% YoY by year's end, Presidential candidate Javier Milei is campaigning to dismantle Argentina's central bank and transition its economy to the dollar. This has grabbed a lot of attention, but it's worth noting that Argentina's economy has been dollarizing for decades. Over the summer, dollars became so scarce in Argentina that citizens began turning to other fiat currencies that are weaker but still stronger than their local currency, like the yuan. ![](https://www.datocms-assets.com/56652/1699987225-05-dollars-are-so-scarce-in-argentina.jpg?auto=format) Argentina’s national statistics agency estimates its citizens hold about $250 billion in foreign currencies, shielding themselves from the crashing Argentine peso. ![](https://www.datocms-assets.com/56652/1699987998-06-argentina-offshore-assets.svg) Yet, Javier Milei is not just advocating for the dollar to be adopted in his country to escape the perils of hyperinflation; he is also advocating for a digital commodity money, Bitcoin. He stated in a recent interview, *"It has an algorithm and one day it will reach a certain amount and there will be no more. It is a tool that can compete with other currencies. Bitcoin represents the return of money to its original creator, the private sector."* - Javier Milei And why shouldn’t Argentines be turning to Bitcoin? When compared against their local currency, Bitcoin represents a flight to safety, even with its inherent price volatility. And unlike the dollar, Bitcoin’s scarcity allows it to hold its value over long periods of time. One local Argentine noted in a Bloomberg article, *“People don’t trust the peso...Between the volatility of the peso and the volatility of Bitcoin, I prefer Bitcoin.”* For the last several decades, gold has been the go-to measuring stick to clearly visualize the ongoing devaluation of all fiat currencies. But now, there is a digital gold that can accomplish the same task, Bitcoin. For the people of Argentina, if they had held Bitcoin over the last 5 years, it would be evident to them that their currency was failing because the purchasing power of their Bitcoin had increased significantly. The accompanying chart illustrates the five-year average return for Bitcoin holders in various foreign currencies, highlighting the benefits realized by individuals in Turkey and Argentina amidst rampant inflation. ![](https://www.datocms-assets.com/56652/1699988058-07-5-year-average-return-of-bitcoin.svg) Bitcoin has often been described as a functioning fire alarm for fiat currencies. Given its scarcity and immutable nature, its price action can be seen as a reflection of the debasement of fiat currencies. Said differently, it’s not that the price of Bitcoin continues to rise; it’s that fiat currencies continue to crash in value against it. Just last month, Bitcoin’s price in Turkey, Nigeria, and Argentina hit record highs despite the asset trading nearly 50% below its all-time high in dollar terms. This coincided with 61%, 26%, and 138% YoY inflation rates, respectively, and economic instability within these nations. ![](https://www.datocms-assets.com/56652/1699988104-08-bitcoin-vs-nigerian-naira.svg) ![](https://www.datocms-assets.com/56652/1699988146-09-bitcoin-turkish-lira.svg) ![](https://www.datocms-assets.com/56652/1699988187-10-bitcoin-vs-argentine-peso.svg) It’s no surprise that we see that the highest cryptocurrency adoption rates are occurring in countries with high rates of inflation. Turkey, Argentina, and Nigeria all rank in the top 15 in crypto adoption globally, according to the [2023 Global Cryptocurrency Adoption Index](https://go.chainalysis.com/rs/503-FAP-074/images/The%202023%20Geography%20of%20Cryptocurrency%20Report.pdf?version=0). Some might argue that Bitcoin’s volatility makes it a difficult measuring stick to use, but this misses the point. Bitcoin’s volatility is a function of its fixed supply and ongoing adoption. The fact that there will only ever be 21 million Bitcoin is precisely what makes it valuable in the first place. It is also a result of the fact that Bitcoin can’t be manipulated by central planners. Central banks and governments have intervened with their currencies for decades to maintain some arbitrary levels of price stability. They have enacted policies to suppress volatility, but where has that gotten us? All we have seen is steady devaluation with periods of heightened volatility in the forms of manias, bubbles, and crashes. Over the long term, Bitcoin’s natural price discovery and the volatility that comes with it is preferable to the artificial stability brought on by central planners. Today, we appear to be reaching an inflection point in this free-floating fiat experiment. Around the world, fiat currencies have been manipulated and debased consistently for decades, and we are now seeing hyperinflationary events become more frequent. The unraveling of fiat currencies emphasizes the critical need for an incorruptible benchmark, one not susceptible to the whims of policy or economic tides. Emerging in response to the free-floating fiat system, Bitcoin represents a contrasting monetary experiment. At just 15 years old, it is considerably younger than the fiat system, yet in this short time, it has appreciated in value – a stark contrast to fiat’s depreciation. Bitcoin can be thought of as a compass guiding us through the monetary tumult. It's fixed supply and decentralized nature offer a consistent frame of reference for everyone to see the devaluation of fiat currencies in real-time. As economies around the globe grapple with the fragility of their currencies, the rising adoption of Bitcoin signals a collective move towards a money that stands firm in the face of inflationary pressures and is free of manipulation. It is in this digital revolution of money that we will find a return to the fundamental principles of scarcity and value, principles that fiat currencies have long forsaken, illuminating a path towards enduring monetary stability. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Argentina: How Fiat Policies Ruined a Once Prosperous Nation URL: https://www.swanbitcoin.com/economics/argentina-how-fiat-policies-ruined-a-once-prosperous-nation/ If Argentina embraces Bitcoin, perhaps it can start to resemble the prosperous nation it once was and its people can finally experience something they haven’t felt in a long time — hope. --- **Sam Callahan** · December 11, 2023 · Updated July 3, 2024 Did you know that Argentina was one of the wealthiest nations in the world entering the 20th century? Blessed with an abundance of natural resources, Argentina’s national output expanded at an average rate of 6-7% annually in the early 1900s, led by exports of wheat, flour, meat, corn, and other agricultural products. To be an Argentine during this time was synonymous with being wealthy. There was even a common expression, *“As rich as an Argentine,”* and more than 3 million immigrants flooded to Argentina in those years in search of *“The Argentine Dream.”* It might seem crazy to think today, but back then, immigrants had a serious decision to make: *“Should we move to the United States or Argentina?”* By the 1910s, GDP per capita in Argentina was greater than that of France and Germany, reaching 80% of the United States at its peak. ![](https://www.datocms-assets.com/56652/1702314134-01-gdp-per-capita-argentina.svg) Source: World Bank But as the chart above illustrates, the two economies diverged significantly in the century to follow. Whereas the United States became the premier economic superpower of the world, Argentina’s wealth gradually dissipated over the century. What caused this decline? The answer, of course, is complex, but it can be distilled down into bad policy decisions and corruption. The country underwent repeated cycles of economic and political upheavals, including multiple military coups, economic depressions caused by socialist policies, and hyperinflations that prevented it from achieving the promise that once attracted foreigners to its shores. The graph below beautifully depicts the series of political instability and economic policy errors that contributed to Argentina’s decline. ![](https://www.datocms-assets.com/56652/1702314190-02-argentina-political-instability.svg) Source: Rok Spruk Of course, money printing played a pivotal role in Argentina’s demise. This was never more evident than during the 1980s. In the early 1980s, Argentina faced a debt crisis, and the price of commodities plummeted. Due to Argentina being an export-driven economy, economic growth stagnated, and its financial markets crashed. As tax revenues plummeted, the Argentine government did what so many governments in the past had done when they were faced with an economic crisis – it succumbed to the temptation of turning to its central bank to help finance itself by money printing. The graph below shows Argentina’s government spending as a % of GDP since 1900. Whenever this ratio exceeded 30%, a new high inflation cycle began. The dotted line represents the fiscal deficit generated by the central bank. In the 1980s, you can see how this spiked. ![](https://www.datocms-assets.com/56652/1702314224-03-government-spending-gdp.svg) Source: Cavallo (2013), Ferreres (2010), IMF WEO. The dotted line is the quasi-fiscal deficit generated by the Central Bank This central bank-financed deficit spending culminated in the Argentine hyperinflation of the 1980s, where inflation soared to nearly 5,000% by 1989. Average annual inflation rates exceeded 100% in the ’70s and ’80s. ![](https://www.datocms-assets.com/56652/1702314274-04-argentine-inflation.svg) Source: INDEC Whereas only decades before, everyday Argentinians were enjoying respectable living standards, by the late 1980s, an estimated 2 to 9 million residents of Buenos Aires were being fed by soup kitchens. This ruinous hyperinflation led to drastic changes to Argentina’s policies aimed to circumvent its causes. At this time, Argentina adopted economic policy prescriptions promoted by the International Monetary Fund, dubbed the *“Washington Consensus.”* The Washington Consensus consisted of privatizing state-owned enterprises, fiscal austerity measures, removal of trade restrictions, and opening up the economy to foreign investment. However, Argentina took it a step further to prevent its government from printing money. In 1991, the Convertibility Law was passed, which created a currency board that was charged with fixing the exchange rate at one Argentine peso per U.S. dollar. This put handcuffs on the government because it required them to keep the number of pesos in circulation backed by an equal amount of dollars in their reserves, eliminating the ability of the central bank to finance the government deficit that caused inflation to spiral out of control. Only when more dollars flowed into the central bank were they allowed to expand the money supply. This did wonders to stop inflation in its tracks. In the graphic below, one can clearly see the effect that the new currency peg had on the inflation rate after it was initiated. ![](https://www.datocms-assets.com/56652/1702314307-05-inflation.svg) Source: IMF, International Financial Statistics. Year-on-year change in CPI. And so, Argentina experienced significant growth in the 1990s with inflation in the rearview mirror, and it became an emerging market darling. As Argentina recovered, it became a poster child for the IMF as an example to the rest of the world of what could happen if a country adopted its Washington Consensus reforms. Around this time, the IMF provided Argentina with multiple loans to implement medium-term structural reforms. As Argentina’s economy grew, the government improved its public image and began to take on debt from foreigners at an extraordinary pace. It’s important to note that foreign investors at the time viewed the new convertibility system as remarkably effective in keeping Argentina’s inflation down, providing stability to the economy that had been absent for decades. As a result, investors increasingly felt comfortable buying Argentine debt, and the Argentine government had no problem issuing more of it to these willing buyers. The government felt like they were winning because they could fund their deficits with foreign debt, and Wall Street didn’t mind because it was making an absolute killing underwriting the loans. It is estimated that Wall Street firms reaped nearly $1 billion in fees alone from underwriting Argentine government bonds during the 1991-2001 decade. Rogelio Frigerio, Argentina’s Secretary of Economic Policy in 1998, was quoted as saying: ![](https://www.datocms-assets.com/56652/1702314380-if-you-get.png?auto=format) All of this is to say that although the currency peg helped eliminate inflation and provide economic stability in the 1990s, it did nothing to stop the government’s fiscal profligacy from continuing, just through a different avenue. This led to a rapidly growing but fragile economy that was susceptible to crisis should an economic downturn transpire. Argentina’s fixed currency regime had other drawbacks besides enabling the government to binge on foreign debt. One important caveat with a fixed currency peg is that a pegging country must give up its monetary policy autonomy in order to stabilize its local currency and increase trade. This leads to inherent risks when the country experiences deteriorating economic conditions domestically. They are limited in their tools to both protect the peg and respond to domestic economic shocks. By adhering to a strict currency peg, Argentina gave up its monetary sovereignty. So when the Asian Currency and Russian Financial crises unfolded in 1997 and 1998 respectively, causing a contagion event across the globe, Argentina found itself in an extremely vulnerable position. Argentina was up to its ears in debt with rapidly slowing growth and couldn’t control its own currency exchange rate. It didn’t take long for foreign investors to begin withdrawing their capital in droves as they feared that Argentina would not be able to service its debts. ![](https://www.datocms-assets.com/56652/1702314405-06-capital-flows.svg) Source: IMF, International Financial Statistics. This led to a full-blown economic, banking, and political crisis culminating in the IMF refusing to disburse funds to the nation. In the end, Argentina abandoned the currency peg, froze banking deposits, and defaulted on its $141 billion in foreign debt. It was the largest sovereign default in history at the time. The IMF touched on the toxic mix of a fixed currency regime and poor fiscal discipline and the role these factors played in Argentina’s collapse: ![](https://www.datocms-assets.com/56652/1702314482-the-imf-though.png?auto=format) Furthermore, in a rare admission of culpability, the IMF touched on its own failures in ignoring the building up of economic imbalances while continuously leveraging the Argentine economy, stating: ![](https://www.datocms-assets.com/56652/1702314539-the-provision.png?auto=format) After Argentina abandoned the dollar peg, the peso went into an absolute freefall, depreciating 50% in a matter of days. ![](https://www.datocms-assets.com/56652/1702314604-07-cash-in-crisis.svg) Source: Thomson Financiel Datastream In the end, it was the Argentine people who suffered. The unemployment rate spiked, and Argentina went into a severe economic depression. Immediately after the default, many Argentines saw the writing on the wall and began dumping their pesos and withdrawing dollars from local banks. To end the bank run, the government enacted a new law that restricted Argentinians to withdrawing a maximum of 300 dollars per week. This bank deposit freeze was nicknamed Corralito, which, when translated to English, means *“child’s playpen”* because Argentines felt like the government was treating them like children by not allowing them access to their own money. At the same time that Corralito was being enforced, the government began swapping all the US dollars in Argentinian bank accounts with pesos. This was because the foreign debt the government needed to pay off was denominated in dollars, and the government was no longer finding it so easy to raise capital in the market during the crisis. This non-consensual currency swap resulted in Argentinians losing about 75% of their savings a mere two months after the peg was abandoned. In the end, pegging the peso to the dollar only led fiscal excesses to grow and contributed to more instability and a greater crisis down the road. When we fast forward to today, the country faces problems similar to those that led to the currency peg in 1991. Will they experience the same catastrophic results if they go down a path of dollarization today, as promised/espoused by the newly elected president, Javier Milei? ### Argentina in 2023 is a Mirror of 1989 Since the Argentina Economic Crisis of 2001, Argentina does not seem to have learned from its past mistakes. Coming out of the deep recession, Argentina has experienced political instability, and the fiscal mismanagement has only continued. Over the last decade, the government has consistently run massive fiscal deficits financed by its central bank. ![](https://www.datocms-assets.com/56652/1702314649-08-argentinas-budget-red.svg) Source: Government data Once again, today, government spending makes up more than 30% of Argentina’s GDP, historically a threshold that preceded hyperinflationary events. ![](https://www.datocms-assets.com/56652/1702314840-09-argentinas-public-spending.svg) Sources: OJF - Orlando J Ferreres & Asociados (public spending); Casa Rosada (presidential terms) As a result of this spending, Argentina has seen its growth increase, but so too has its inflation. Inflation in Argentina has now hit its highest levels since 1991. ![](https://www.datocms-assets.com/56652/1702314881-10-argentina-inflation.svg) Note: Numbers based on several series data, the compilation of which has adjusted over time. Some data missing for 2015-2016 Source: INDEC As a result of the inflation, the government has taken several measures. It has been draining its central bank reserves to try to prop up the peso, performed an overnight devaluation of 18% in August 2023, and maintained strict capital controls. After the devaluation, the gap between the official dollar exchange rate and the black market dollar exchange rate widened to the widest level in 30 years. ![](https://www.datocms-assets.com/56652/1702314919-11-argentinas-exchange-rate.svg) Source: Bloomberg It’s no surprise that Argentinians are increasingly pulling their dollars out of Argentina and storing them abroad. After all, many have seen how this story ends, and they don’t want to find themselves frozen out of their bank deposits again if things take an even greater turn for the worse. The amount of deposits held abroad by Argentinians dwarfs other countries’. These people do not trust their government, and it’s not hard to see why. ![](https://www.datocms-assets.com/56652/1702315103-12-deposits-abroad.svg) Source: Institute of International Finance Inflation is only part of the problem, too. Argentina finds itself in a mountain of debt due to many years of poor fiscal policy. Argentina received the largest loan in IMF history in 2018 to the tune of $57 billion, only to default on it just two years later in 2020. This was the ninth sovereign default in its history. Since then, the IMF has bailed out Argentina once again with another loan of $45 billion. Today, Argentina is currently the IMF’s top debtor by far. ![](https://www.datocms-assets.com/56652/1702315128-13-argentina-imf-top-debtor.svg) Source: Institute of International Finance So this is where Argentina now finds itself – triple-digit inflation, a debt-to-GDP ratio of about 90%, and one in four Argentines currently living in poverty. All this led to the election of President Javier Milei, whose campaign ran on promises to end the fiscal profligacy, shutter the central bank, and dollarize the economy. But as we have seen from history, this may not be a fix-all solution for Argentina. Although Milei wants to bring change to Argentina, he is inheriting a mess of an economy. This is why one of the first things Milei has done since he took office is meet with the IMF to discuss terms to roll over Argentina’s debt and avoid another default and potential hyperinflationary event. ![](https://www.datocms-assets.com/56652/1702315150-14-headline.png?auto=format) Source: Institute of International Finance Ultimately, President Milei is beholden to its lender (IMF) when it comes to his economic plans, and if the IMF is to accept his agendas, they will undoubtedly be asking for something in return. If the IMF decides to withhold the disbursement of funds, this would prove catastrophic to the highly leveraged country’s economic outlook. This was never more evident than when Argentina last was given a $45 billion bailout from the IMF. A notable provision in that bailout revolved around cryptocurrencies. As part of the bailout, Argentina agreed to an IMF-mandated policy that prevents any bank from doing business using cryptocurrencies on Argentine soil. ![](https://www.datocms-assets.com/56652/1702315162-15-headline.png?auto=format) Source: Coindesk The provision read, *“To further safeguard financial stability, we are taking important steps to discourage the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation.”* President Milei has publicly spoken positively about Bitcoin, leading many to label him a pro-Bitcoin candidate, but he will likely find it very challenging to openly support Bitcoin in his presidency due to his country’s dependence on the IMF. Typically, governments tend to enact stricter capital controls in the face of inflation. They do this to prevent their citizenry from dumping the inflating local currency, worsening the inflationary crisis. If Milei decides to clamp down on alternative forms of money like Bitcoin to protect the falling peso, he would likely be doing his people a disservice. (This would require him to break his promise to close the central bank and dollarize the economy first.) Already, Argentina has the world’s 15th highest cryptocurrency adoption rate according to a [recent report from Chainalysis](https://go.chainalysis.com/rs/503-FAP-074/images/The%202023%20Geography%20of%20Cryptocurrency%20Report.pdf?version=0). Bitcoin offers a way for the people of Argentina to protect themselves against a government that has mismanaged its economy for decades. On top of being a money that is resistant to inflation, Bitcoin also allows individuals to hold their wealth outside of the banking industry/regime. This will likely resonate for Argentines, given the fresh memory of having their bank accounts frozen. President Milei wants to push for dollarization to fix the economic crisis that his country is currently engulfed in, but history shows us that this is no silver bullet. Dollarization may help bring down inflation, but it won’t fix the debt problem or the continuation of poor policy decisions. In addition, in that dollarization process, Milei would be giving up his country’s monetary sovereignty to a foreign country. What he should consider is adopting a money that is controlled by no one, that can’t be inflated, and that can allow his people to save and build for their future. El Salvador’s Nayib Bukele has shown what can happen to a country when it embraces Bitcoin. Since making Bitcoin legal tender, El Salvador has been experiencing one of the highest growth rates in Latin America and is paying down its debts rather than accumulating more. While pro-Bitcoin legislation in Argentina is probably a pipedream at this point, a more reasonable hope is that President Milei does not actively prevent Bitcoin’s adoption within his borders as he attempts to right the ship of Argentina. He has an uphill battle ahead of him. But if he can embrace a new monetary technology, perhaps Argentina will start to resemble the prosperous nation it once was long ago, and its people can finally experience something they haven’t felt in a long time – hope. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Is it Time For Bitcoiners to Get on 'Zero Fiat'? Not Yet URL: https://www.swanbitcoin.com/investing/is-it-time-for-bitcoiners-to-get-on-zero-fiat-not-yet/ We’ll all eventually transition to holding zero fiat money, but most people cannot afford to go full Bitcoin just yet. --- **Stephan Livera** · December 23, 2021 · Updated July 3, 2024 *This article from December 23rd, 2021 by Stephan Livera was originally published on Bitcoin Magazine and later updated on July 29th, 2023.* Should we all go zero fiat? I've recently seen this idea gain prominence on Bitcoin Twitter, discussed by people like [LaserHodl](https://twitter.com/LaserHodl) and [Heavily Armed Clown](https://twitter.com/heavilyarmedc). Personally, I'm open to the idea, and I believe that we all will eventually #GetOnZero. But not *just* yet. As much as I'd love to live in the hyperbitcoinized world today, we're not there yet. Put in simple terms, I still have fiat-denominated obligations with individuals or businesses that do not directly accept Bitcoin. So, while I generally minimize my fiat exposure, there are valid criticisms and concerns about literally going to zero fiat today. And what about using the fiat system's debt for your own benefit before it collapses? So, as I wrote this in December 2021, I don't believe "*the juice is worth the squeeze*" for many Bitcoiners sitting on something around 99% to go all the way to 100% Bitcoin and zero fiats. ### STEELMANNING #GETONZERO Let's try to present the charitable version, or *"steelman,"* of the case. The main point of #GetOnZero is to maximize Bitcoin exposure and obviously minimize fiat exposure. The #GetOnZero gang has a good point in that by continuing to hold fiat, you have not *"truly left"* the fiat system, and you're, in some sense, supporting the fiat system. In economic terms, we could argue that if you still hold fiat, you're still contributing to fiat liquidity by chipping into the [reservation demand](https://mises.org/library/man-economy-and-state-power-and-market/html/p/1092) for fiat. One worthwhile insight from the #GetOnZero gang is that, while capital gains tax headaches are associated with selling your sats, at least the reporting can be *mostly* automated. For example, your exchange or Bitcoin broker service should provide you with a transaction export CSV list. Then, you could take that to a tax accountant or automated software solution to calculate taxes payable at year's end automatically. I believe this is a point that few had really considered up until recently. Still, there are many Bitcoiners sitting in a solid green position. If they had to liquidate some for an emergency fiat obligation, they would now have to pay capital gains taxes that they otherwise would not have had to. What's the retort from the #GetOnZero stance? Well, you might still come out ahead even after taxes because of the additional Bitcoin exposure. So, let's say you are a diligent saver and planner, and you've stacked a six-month emergency fund. Instead of maintaining, say, a six-month fiat emergency fund, you, the #GetOnZero adherent, would rather not bother and simply HODL Bitcoin. As Bitcoin is going up very quickly ([155% per year on a 10-year basis](http://casebitcoin.com/) as of December 18, 2021, or let's say around [60% to 70%](https://twitter.com/FriarHass/status/1406604389427466241) per year going forward for the medium term), it's clear why you want to maximize Bitcoin exposure. So, let's say you had $10,000 in fiat stashed in an account; well, you'd now be exposing *that emergency fund* to the 70% return per year. So, in the years that you didn't need to draw on this emergency fund, you might well have $7,000 extra on a $10,000 emergency fund. Pretty nice, right. ### SO, WHERE DO I PRINCIPALLY DISAGREE? When your obligations are fiat-denominated (and the person you owe does not take Bitcoin payment), you will generally need to sell some Bitcoin. In these cases, particularly, you are bringing into your life a whole new world of tax and reporting that previously did not exist relative to paying with fiat. In other cases, you might be conflicting with other objectives of using the fiat system. Let's summarize some situations where you might be: - Cushioning yourself against an extended bear market or job loss - Using the fiat system for loans to stack more sats - Interested in staying more under the radar by legally not incurring capital gains tax events - Unable to access the services that help you stay zero fiat #### LONG BEAR MARKETS COULD LEAVE YOU REKT I say this because the 2014, '15, '16 bear market was brutal. Bitcoin went from around $1,200 in late 2013 down to around $200 or so. It wasn't even clear that Bitcoin would recover in those days. At this time, if you were zero fiat and lost your job or income, you would have been spending down Bitcoin *at the worst time*. This is the time that a fiat emergency fund of, say, three to six months of living expenses is most helpful. While the scenario might be more on the bearish side, I'd generally prefer to keep more resilience in my overall life and not be so reliant on selling or spending down sats at the worst possible time. Consider also that you might have large upcoming fiat obligations. Would you be willing and able to sell Bitcoin to meet them if you lost your job? What if the scenario is that the Federal Reserve or other central banks try (even temporarily) to raise interest rates, the market tanks and there are mass layoffs? Losing your job at these times would be even worse if you didn't have a fiat emergency fund. Now, the #GetOnZero rejoinder here might be: save up enough sats such that you have enough to ride this out. But how much is actually enough? While you might think, *"Sure, I've saved up 'two-years' worth of sats to live on should things go bad,"* what happens when Bitcoin tanks 80%? If your fiat purchasing power drops to one-fifth of what it was, does that mean you now need to have '10-years' worth of salary saved in Bitcoin? How comfortable would you be trying to ride out two years without a job, spending down a significant portion of your stack? Now, in fairness, the six-month emergency fund might not tide you over for two years, but I'd view this as *part* of the overall mitigation approach: cut expenses down and spend fiat rather than spending Bitcoin while looking for a new job or income. While the 2018 and '19 bear cycle wasn't as harsh and long as the previous one, there are no guarantees about what the future holds. Be wary that your backtesting only includes recent history. #### USING THE FIAT SYSTEM AND DEBT TO STACK MORE SATS I recently did an episode of my podcast with Dylan LeClair of *Bitcoin Magazine* ([SLP326](http://stephanlivera.com/326)) to discuss using the fiat system to stack more sats. In this episode, we discussed some techniques for using fiat debt to stack more sats. As part of this strategy, you may need to keep some fiat on hand to be able to repay the fiat loan, with the net result being that you end up ahead in Bitcoin terms. Another example could be using a collateralized loan for a portion of your stack (don't borrow against your whole stack! Or even a large part of it!). In this case, you might have a life expense or large purchase to pay for, and rather than paying Bitcoin or selling Bitcoin, you'd rather retain the Bitcoin exposure. If you can get a loan with decent terms and/or you have fiat income to be able to repay the loan, you might calculate that your expected value (EV) is higher to use fiat credit than to spend/sell sats. In the successful case, you could see that borrowing fiat worked out. Once the loan term is up, you either roll over and withdraw some collateral (if a number has gone up), or you may have saved enough fiat to repay the principal and take all of your Bitcoin collateral back into your self-custody. In this case, you can make a purchase that could be tied to a life event but avoid a capital gains tax event on the sale/disposal of Bitcoin and end up ahead in Bitcoin terms. Now, of course, if you're not careful, you could end up down and REKT, as discussed in the episode of my show with Andy Edstrom ([SLP273](http://stephanlivera.com/273)). But note that one of the mitigations against getting rekt here is to deposit more fiat to lower your loan-to-valuation (LTV) ratio. You might need some fiat available on hand to quickly deposit into the loan facility to meet a margin call and avoid liquidation. This is another reasonable case for not being on zero fiat, but for a calculated reason. In other cases, you might need to maintain some fiat balance for the sake of a broader freedom and sovereignty objective. For example, if you wanted to pursue residency in some other countries, one qualification is demonstrating a minimum fiat balance (e.g., [Malaysia's MM2H program](https://mm2h.co/mm2h-requirements/)) or purchasing a government bond for a given period of time. Now, why do this? Because it might help you legally reduce your net tax payable amount to the state and give you another flag that you could stack as part of *"flag theory."* In doing so, you might be able to reduce your reliance on any one particular state. Rather than being locked inside the country like Australians were during Hysteria-19, you could potentially use an alternative citizenship or residency to leave. Speaking merely of *minimizing fiat* rather than grandstanding about literally having $0.00 in your fiat bank account is more precise here. #### STAYING UNDER THE RADAR As Bitcoiners, we're often more skeptical of the state and don't want to unnecessarily report and deal with the accounting and taxation headaches associated. While there are automated tools, as discussed earlier, this can *still* be a pain to track if you have multiple wallets and setups running. Not every Bitcoin wallet has auto-export functionality with transaction descriptions attached, and few Bitcoin wallets track cost basis. This problem is compounded if you're already sitting on a gain from some time ago. Then, even if the price hasn't recently gone up, but you have fiat obligations due, you end up paying a capital gain. The desire for complete purity from [fiat money](https://bitcoinmagazine.com/guides/fiat-money) ends up causing logistical and accounting headaches as well as increases the capital gain tax payable — where otherwise the HODLer could have maintained a small fiat balance to pay with. #### NOT EVERYONE CAN ACCESS THE SERVICES THAT HELP WITH ZERO FIAT Some of the services that specifically assist Bitcoiners going *"zero fiat"* are only available for U.S. customers and are simply not available everywhere in the world. For example, having credit cards that auto-pull from a BTC balance or allow you to spend your Bitcoin down *"but as fiat."* What's a HODLer to do? Keep a Bitcoin balance on an exchange? I hope to be able to find peer-to-peer cash deal counterparties (someone wanting to buy Bitcoin for cash) every time. It seems impractical to me. ### WHEN WOULD IT MAKE SENSE? I've mostly been spelling out some reasons why it doesn't make sense to go zero fiat. But to be fair, when *would* it make sense? Probably when all our income is in Bitcoin, and we can pay all or most of our costs directly in Bitcoin, ideally after the [DCA army](https://bitcoinmagazine.com/markets/dca-army-drives-1-million-bitcoin-price) has grown larger. Living in a world where obligations are denominated in fiat and unpayable in Bitcoin just makes it impractical for most people to go to zero fiat. It would also make more sense once fiat inflation crosses above a certain threshold. This would be because your fiat emergency fund would have to start climbing rapidly in nominal value at some point. Yes, it's subjective, but I don't perceive that time as being now. ### SUMMING UP Bitcoin is best treated as the ideal savings account — that doesn't necessarily mean you can't use the fiat system for what it offers you today. This could be conservatively using fiat debt or loans to stack more sats, or simply protecting ourselves against long-term bear market cycles and unknowns. Rather than #GetOnZero, I think something like #MinimizeFiat is a better heuristic for maximizing your Bitcoin exposure within safe and conservative limits. But going all the way to zero fiat? Not quite yet. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Bitcoin Bear Markets: We’ve Been Here Before - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/bitcoin-bear-markets-we-ve-been-here-before/ New Bitcoiners are likely upset with the Bitcoin price right now, but we’ve been here before and there are some silver linings. --- **Stephan Livera** · June 28, 2022 · Updated July 3, 2024 *This article from June 28th, 2022 by Stephan Livera was originally published on Bitcoin Magazine* Some newer Bitcoiners could be upset about what's gone on lately, especially if they were expecting very high highs for Bitcoin or no large drawdowns. It seems like in the last few weeks, it has become evident that this is, in fact, a bear/sideways market. We've seen a [75% drop from $69,000 to $17,600](https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD) from peak to trough. We've seen a *"crypto contagion"* of sorts, with the blow-up of the [Luna/UST ponzi](https://bitcoinmagazine.com/markets/luna-foundation-sold-80000-bitcoin-amid-ust-crash), the [liquidation of Three Arrows Capital (3AC)](https://bitcoinmagazine.com/markets/fears-of-further-contagion-in-the-bitcoin-market) and other *"crypto"* market participants undergoing stress, such as [Celsius stopping withdrawals](https://bitcoinmagazine.com/markets/celsius-halts-bitcoin-withdrawals-what-went-wrong) and other entities having exposure to 3AC (e.g., [Voyager](https://bitcoinmagazine.com/business/voyager-announces-large-exposure-to-three-arrows-capital), [BlockFi](https://bitcoinmagazine.com/business/blockfi-and-voyager-get-bailed-out-by-ftx)). Recognizing where we are in the cycle can take a few months. It was similar in early 2018 after the $20,000 high in December 2017. Bitcoin's price was bouncing around in the teens, and it was halfway through 2018 when it finally became clear to most people that it was a bear market. So, while Bitcoin's high of $69,000 last year was quite lofty, it was arguably the blow-up of Luna that kicked off the crypto contagion and made it more apparent that this is a bear market. After Luna blew up and the Luna 2.0 attempt fell flat, we saw Celsius block withdrawals. This became a stinging reminder to many a yield-chaser about the crucial lesson: *"Not your keys, not your coins."* There was a commonly-quoted statistic, *"If you bought Bitcoin and held for four years, you were never down,"* which is no longer valid. Now, if we cherry-pick, you could have purchased the December 2017 high of $19,600 and held through to the recent crash to $17,300. You'd be underwater over a roughly four-and-a-half-year period. In fairness, few people would *actually* be in this scenario, but nevertheless, it does change the statistics. ### SO, WHAT IS THE SILVER LINING HERE? Firstly, concerning the above *"four-year HODLer"* statistic, while it's fair to say that specific cherry-picked individuals are down over a four-year period, it's still true that all four-year regular *stackers* are up. Why is this so? Because people's memories seem to be distorted to the highs of cycles. So, for example, many people are mentally anchoring to the 2017 top around $20,000, as though that was the price *for the whole of 2017*. But the [reality is](https://www.coingecko.com/en/coins/bitcoin) that Bitcoin spent about 75% of 2017 under $5,000 and about 90% of 2017 under $10,000. So, if you were consistently long-term stacking, you are still up. You would have been accumulating all the way through. In those times when Bitcoin's price was low (e.g., December 2018 or March 2020, around $3,000 to $4,000), you were accumulating *more satoshis* for your fiat. And now we have companies like[ Swan Bitcoin](https://swanbitcoin.com/) that explicitly help customers regularly stack sats with a long-term focus. While the macro environment is challenging, investors worldwide struggle to find a place to store their wealth. So, while the 60/40 stocks and bonds portfolio has some of its[ worst times on record](https://www.barrons.com/articles/stocks-bonds-portfolio-investing-51652394644), and inflation is running high worldwide, this is *precisely* when traditional investors will be open to reconsidering their allocations. It's also fair to say that Bitcoin has already gone through its deleveraging cycle. At the same time, the pain in other asset classes may still continue. With all this pain in the bond markets, it's completely reasonable for bond investors to decide they'd rather purchase some Bitcoin. This asset can't be easily manipulated by governments and central banks worldwide. There's another silver lining: people get another chance to stack cheaply. Those who say *"early Bitcoiners had an unfair opportunity to get coins cheap or easy"* have less ground to stand on. Bitcoin *right now* is relatively cheap, and it's a great chance to take ownership of some sats and stack them in your cold storage. Then, maybe in a few year's time, people will look back and say how *"lucky"* you were to be stacking in the $20,000 range. The reality of it is that any long-term HODLer or stacker has had to go through big peak-to-trough drawdowns. Bitcoin is no stranger to 80% drawdowns, with three in its lifetime and many lesser drawdowns of *"only"* 50%. I accept this volatility as the price to be paid for Bitcoin's incredible qualities and increased purchasing power over the long term. Even with the price around $21,000 in June 2022, the 10-year compound annual growth rate (CAGR) is[ around 120%](https://casebitcoin.com/) yearly. Can you even think of an asset class or index that outperformed this? As the trope goes, bear markets are great for building. There will be a whole new crop of people who learned their lesson the hard way with Luna, Celsius, 3AC, Voyager, etc... Some fraction of them will now be ready to improve their technical knowledge of Bitcoin. They may even start building something in the Bitcoin ecosystem. Whether you want to build a company, grow your local meetup, or find a[ Bitcoin job](http://bitcoinerjobs.com/), now is a great time. You might take this opportunity to connect with local Bitcoiners in your area to get the local [Bitcoin meetup](http://bitcoinerevents.com/) going, help onboard local merchants to accept Bitcoin/Lightning Network payments, and practice your skills in event organization or Bitcoin education and presentation. Bear markets are often when you can find out who is truly committed to the cause, and this may help find the right kind of people to work with or learn from. Bear markets are also a time when experienced Bitcoiners can help new Bitcoiners going through their first bear market at the local meetup. When the cycle turns, and the bull market is back, you're now in a better position, having already built up your skills, meetup group, venture, business, or project. You might have already established a small but loyal user base for your Bitcoin project, and they may help with contributions to the project or help share the word about it with their friends. If you've done a good enough job building your product or service, Bitcoiners will recommend it to their families and friends, and you can *"catch the next wave"* in the next bull cycle. ### BUILDING ON BITCOIN IN THE BEAR MARKET The network effect of Lightning is growing steadily over time, and this is a great opportunity to slowly build circular economies and grow the peer-to-peer (P2P) aspect of Bitcoin, too. There are businesses accepting Lightning payments worldwide, and we're seeing Lightning-enabled business models and projects. For example, podcasting 2.0 allows listeners to stream sats on apps like[ Sphinx](http://sphinx.chat/),[ Breez](http://breez.technology/), and[ Fountain](https://fountain.fm/). It's getting easier and easier to set up your[ BTCPay Server](http://btcpayserver.org/) and Lightning node in just minutes with services like[ Voltage.cloud](http://voltage.cloud/) and take payment or build Bitcoin/Lightning-enabled businesses. We're seeing Lightning-enabled competitors to traditional news aggregator and discussion sites such as[ Stacker.News](http://stacker.news/), and Lightning-enabled gaming companies such as[ THNDR Games](https://www.thndr.games/) and[ Zebedee](https://zebedee.io/). The wallets are getting easier to use and more reliable, too. For newcoiners, [Muun Wallet](http://muun.com/) is a great fast setup choice because it really smooths over the difference between on-chain funds and Lightning. This makes it very easy for a new Bitcoiner to self-secure and also experience the *"magic"* of fast and cheap Lightning payments. In years gone by, making larger payments on Lightning wasn't so reliable unless you already had big channels, and new users would often get confused because they didn't have *inbound liquidity* to receive a payment. But these things are improving over time as wallets iterate, making the experience smoother and easier for new users. We have the concept of Lightning service providers (LSPs), which help users with inbound liquidity/channels to permit them to receive sats quickly. We have the concept of *"turbo channels"* (aka, zero-confirmation channels) to help them receive/spend coins without waiting for the channel to confirm on-chain first (note: there are tradeoffs here, and you can disable this if you're not comfortable with the trust assumptions. Generally, this is only done in specific scenarios to control the risk). I believe it now makes sense to onboard most Western world newcoiners with non-custodial, Lightning-enabled mobile wallets and services, e.g.,[ Muun](http://muun.com/),[ Phoenix](https://phoenix.acinq.co/), and[ Breez](http://breez.technology/). If there was ever a time to grow the peer-to-peer and/or circular economy of Bitcoin and help businesses and individuals directly sell their products and services for Bitcoin, this is it. We're seeing large services with millions of users enable Lightning, such as[ Cash App](https://cash.app/), [Bitfinex](http://bitfinex.com/), [Kraken](http://kraken.com/),[ Paxful](http://paxful.com/), [Chivo](https://chivowallet.com/), [OKcoin](https://www.okcoin.com/), and other smaller companies. [Robinhood stated](https://bitcoinmagazine.com/business/robinhood-will-enable-bitcoin-withdrawals) it is enabling Lightning at Bitcoin 2022. So, upwards of 50 million people can spend with Lightning, even if many of those people don't know it or understand it yet! Bitcoin startups such as[ Oshi](https://www.oshi.tech/) are helping Bitcoiners grow the Bitcoin merchant scene in their local area, and we see the likes of[ OpenNode](http://opennode.com/) and[ IBEX Mercado](https://www.ibexmercado.com/) making their solution available for merchants, too. ### THE GROWING PHILOSOPHIES OF BITCOIN After seeing so many companies in the *"crypto"* space going through troubling times with stoppage of withdrawals and taking losses on loans or tokens, the *"not your keys, not your coins"* message will resonate strongly. Those who thought they were geniuses in the bull market for getting yield on their coins will now be ready to hear the message of using Bitcoin with their own wallets. It will be easier to make the argument for self-custody versus the unsustainable or irresponsibly risky yield being offered on *"crypto"* platforms. This may serve as a lesson similar to how [Mt. Gox's failure in 2013](https://bitcoinmagazine.com/culture/mt-gox-bitcoin-hack-teaches-us-today) led to a resurgence in interest in self-custody. It was an easy, recent story that could be told to explain the dangers of custodial-ism and fractional reserve. The human rights aspect of Bitcoin is growing, too. One great recent example is the Human Rights Foundation's (HRF's)[ Oslo Freedom Forum](https://oslofreedomforum.com/) (OFF), which I attended recently. There, I heard stories of activists, journalists, and technologists who are putting themselves on the line to fight tyranny. And in many cases, the speakers and attendees at OFF could instantly see the value proposition of using Bitcoin, whether for fundraising or operating under adversarial conditions. This year, there was a Bitcoin academy [where Bitcoiners were teaching](https://twitter.com/hodlonaut/status/1529459785678041088) various aspects of how to use Bitcoin, privacy and quickly setting up BTCPay Server. [Post on X](https://twitter.com/hodlonaut/status/1529459785678041088?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1529459785678041088%7Ctwgr%5E9e04758fcd99fa19e2c0d006357abad9df135032%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fmarkets%2Flessons-in-the-bitcoin-price-bear-market) Interestingly, Bitcoin is derided as a plaything of the rich tech bros and high-net-worth speculators in parts of the Western world. But at HRF's OFF, there were people from so many different countries, such as Togo, Ethiopia, Afghanistan, and Ukraine, all of whom were using Bitcoin. And this could be either because they were dealing with authoritarian bank control or with inflation destroying their savings. I found that the HRF as an organization helps place Bitcoin and freedom in the proper context. While Twitter blue checks in the Western world wring their hands about Bitcoin energy use or inequality, there are[ 1.7 billion people in the world who are unbanked](https://globalfindex.worldbank.org/chapters/unbanked), with many living under high inflation. [Sergej Kotliar](https://twitter.com/ziggamon) from[ Bitrefill](https://bitrefill.com/) also had an [excellent thread](https://twitter.com/ziggamon/status/1529875207602720771) on what we're really doing on here: [Post on X](https://twitter.com/ziggamon/status/1529875199645995008?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1529875207602720771%7Ctwgr%5E9e04758fcd99fa19e2c0d006357abad9df135032%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fmarkets%2Flessons-in-the-bitcoin-price-bear-market) So, while irresponsible shit-coiners and degenerate yield farmers may have caused this recent sell-down in Bitcoin's price, another silver lining is that the industry may now advance with a deeper appreciation for full reserve banking. We may see renewed interest in proof of reserves techniques so that exchanges and service providers may prove their Bitcoin balances. We will also see more interest in non-custodial adoption. We will continue growing the Bitcoin ecosystem instead of chasing a *"6% yield on your stables"* only to be down in purchasing power anyway thanks to high inflation. Remember that Bitcoin spends much time, but *not* at all-time highs. But when Bitcoin is off the all-time high, traditional media love to remind us of this fact. And yet the funny thing is, Bitcoin is still dramatically up versus most other assets over the long term; it’s just not up by *as much as it was recently*. [Post on X](https://twitter.com/stephanlivera/status/1319588010862604289?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1319588010862604289%7Ctwgr%5E9e04758fcd99fa19e2c0d006357abad9df135032%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fmarkets%2Flessons-in-the-bitcoin-price-bear-market) So, at the end of the day, we've been here before, and I'll be here again. Take it as an opportunity to stack sats, continue building, continue educating and advocating, and in a few years, you will look back and realize that you made the right decision. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Trillion-Dollar Deficits are Keeping the Economy Afloat URL: https://www.swanbitcoin.com/economics/trillion-dollar-deficits-are-keeping-the-economy-afloat/ The reckless nature of government fiscal policies suggests a future where financial instability may hinge on the balance between innovation and traditional policy decisions. --- **Sam Callahan** · January 26, 2024 · Updated July 3, 2024 With 10 days of trading in the books, we now have a clearer picture of how much capital these new ETFs are attracting and which ETF providers are separating themselves from the pack.  According to Bloomberg Intelligence Analyst James Seyffart, to date, these new ETFs (excluding Grayscale) have brought in $5.5 billion in inflows. ![](https://www.datocms-assets.com/56652/1706301131-1.png?auto=format) At the same time, Grayscale’s GBTC has seen about $4.8 billion in outflows. This means that the net inflows into these spot Bitcoin ETFs have been $744 million. This dynamic is illustrated well in the chart below. ![](https://www.datocms-assets.com/56652/1706302838-2.png?auto=format) It appears that investors are continuing to dump GBTC, in part, because there are now cheaper alternatives with lower fees to gain exposure to Bitcoin. However, these aren’t the only people selling GBTC. The FTX Bankruptcy Estate has [reportedly](https://www.coindesk.com/business/2024/01/22/ftx-sold-about-1b-of-grayscales-bitcoin-etf-explaining-much-of-outflow-sources/) sold 22 million shares of GBTC worth around $1 billion since GBTC was converted into an ETF. This makes up roughly one-fifth of the outflows over the last 10 days. The FTX Bankruptcy Estate will now use the proceeds from the sale to distribute the funds to FTX customers who are waiting to recoup their money after the exchange’s collapse. The estate now holds zero GBTC shares and, thus, this selling pressure is behind us. FTX is likely not the only bankruptcy estate that holds GBTC that will be forced sellers in the future. But it’s important to note that these represent one-time selling events. There are a few other explanations for why GBTC is seeing significant outflows. For starters, for many years it was the only way for investors to gain exposure to Bitcoin in retirement accounts. Now these investors can transfer their funds to a cheaper ETF with no tax consequences. This dynamic will likely result in continued outflows of GBTC in the coming months Second, many traders were playing the discount arbitrage trade. GBTC was trading at a large discount and these traders were betting that it would be converted to an ETF, eliminating the discount. These traders were right, and now they appear to be taking some profit. It’s important to note that these traders were not long-term believers in Bitcoin’s value proposition or the impact of ETFs on demand for Bitcoin long-term. They were simply trying to capitalize on a market inefficiency and executed a trade. As capital has flowed out of GBTC, it has flowed into the other ETFs. The top five ETF issuers have now purchased more than 100,000 bitcoins within just two weeks of being active. This shows how much potential sustained demand these ETFs are capable of bringing to the asset class in the years to come. One of the main reasons why demand for Bitcoin could remain robust in the coming years is the precarious state of the US’s finances and elected leaders who apparently never learned the lesson that you shouldn’t spend money you don’t have on things you don’t need. US debt has been increasing at an alarming rate as the government continues to spend like there is no tomorrow. Sven Henrich notes below that the debt has increased by a whopping $2.7 trillion in the last 12 months alone. ![](https://www.datocms-assets.com/56652/1706302921-3.png?auto=format) US Treasury Secretary Janet Yellen is publicly stating that there is no reason to worry about the debt, which is interesting considering that a few years ago she was saying the national debt *“should keep people awake at night”* when the national debt was a fraction of what it is today.  ![](https://www.datocms-assets.com/56652/1706302972-4.png?auto=format) What is especially concerning is how interest on that mountain of debt recently eclipsed $1 trillion according to the Q$ GDP report. Annualized interest on the federal debt is projected to be over $3 trillion by 2030. ![](https://www.datocms-assets.com/56652/1706303002-5.png?auto=format) This is not sustainable. Despite these scary projections, US politicians continue to spend. People point to the recent above-average GDP print (3.3%) as a sign that the economy is firing on all cylinders when, in reality, the economy is being bolstered by multi-trillion dollar deficits. According to the data below, it now takes $1.55 in budget deficit to generate $1 of GDP growth and takes over $2.50 in new debt to generate $1 of GDP growth. ![](https://www.datocms-assets.com/56652/1706303227-6.png?auto=format) In other words, as the government continues to spend to prop up the economy, it will take more and more debt-driven spending to achieve the same desired effect. It bears repeating – this is not sustainable. All of this deficit spending leads to increased economic activity, which leads to increased corporate earnings, which leads to increased stock prices. Is it really a surprise that all of the major stock indices have made new all-time highs as we’re on track to run deficits as large as 2020 and 2021? ![](https://www.datocms-assets.com/56652/1706303264-7.png?auto=format) This level of spending is bound to keep the economy running hot, which is inflationary. If it continues in 2024 at the current rate, and the Federal Reserve does cut rates as the market expects, then these policy choices could act as a tailwind for all asset prices moving forward. Of course, all of this could change if we start to see these higher interest rates start to really impact the economy in a meaningful way. Some sectors appear much more vulnerable to the current rate environment than others including commercial real estate and regional banks. Prices in US commercial real estate have dropped 11% during this monetary tightening cycle, the most ever compared to previous tightening cycles. ![](https://www.datocms-assets.com/56652/1706303299-8.png?auto=format) Some economic research firms are [expecting](https://finance.yahoo.com/news/commercial-real-estate-values-suffer-123000415.html) CRE prices to fall an additional 10% in 2024. CRE loans today make up around 30% of smaller regional banks' total assets, so you can see why this could become a big problem. ![](https://www.datocms-assets.com/56652/1706303440-9.png?auto=format) Dr. EJ Antoni We are seeing what can happen to a country’s economic growth outlook when a toxic real estate market starts to break down across the ocean in China. It’s becoming more and more evident that China is going through some sort of financial/economic crisis, or at minimum, is on the verge of one. As the US stock market has soared, the Chinese and Hong Kong stock markets have plummeted. The difference between the market value of US and Chinese stocks now sits at a record level. ![](https://www.datocms-assets.com/56652/1706303478-10.png?auto=format) The Chinese and Hong Kong stock markets have suffered as foreign investors have been selling their stock holdings in droves. China’s post-pandemic growth has disappointed, the real estate crisis has spooked investors, and the government regime has become even more controlling, which increases risks for foreign investors. Foreign investors sold about 90% of the $33 billion of Chinese stocks they had purchased earlier in the year, and have continued selling this year. ![](https://www.datocms-assets.com/56652/1706303585-11.png?auto=format) Furthermore, foreign purchases of Chinese stocks dropped to an 8-year low in 2023. ![](https://www.datocms-assets.com/56652/1706303611-12.png?auto=format) This is one key factor for why the CSI 300 Index and Hang Sang are now down around -40% from their highs in 2021. ![](https://www.datocms-assets.com/56652/1706303638-13.png?auto=format) This poor performance has led to the Chinese government contemplating intervening in their stock market to help provide support. ![](https://www.datocms-assets.com/56652/1706303663-14.png?auto=format) However, historically, whenever governments attempt to flood their stock market with liquidity, it only offers a temporary reprieve to the stock selling. This would be akin to a bandaid for a bullet wound. The fact that the Chinese government is contemplating this stimulus package does provide just more evidence of the prevailing modern central bank mentality to intervene in financial markets whenever things go wrong. No longer do these central bankers believe in the principles of free market capitalism or the concept of [creative destruction](https://en.wikipedia.org/wiki/Creative_destruction). Instead, they believe their mission is to smooth out business cycles with their interventionism. Of course, this only leads to the creation of even greater asset bubbles and further misallocation of capital. It leads one to wonder if the CRE loans cause a regional bank crisis 2.0, will the regulators step in once again to *“save the day?”* I know what I would bet on. Probably the most interesting development this week out of China was data that more Chinese are turning to Bitcoin as their stock market crashes. ![](https://www.datocms-assets.com/56652/1706303724-15.png?auto=format) Despite Bitcoin trading and mining being banned in the country, Chainalysis [reports](https://www.reuters.com/technology/bruised-by-stock-market-chinese-rush-into-banned-bitcoin-2024-01-25/) that peer-to-peer trading volume in China has jumped significantly in 2023 compared to 2022. With an estimated $86.4 billion in transaction volume, China jumped from the 122nd country in the world in 2022, to the 13th in the world in 2023. A Chinese resident quoted in the article stated that he views Bitcoin as *“a safe haven.”* This article highlights two things: 1. It’s incredibly hard for governments to ban their citizenry from using Bitcoin.  2. More and more people are trusting Bitcoin with their savings over traditional asset classes and banks.  This story out of China comes in a week when Statista released the findings of a new survey of 10,000 Americans that found that, outside savings accounts, *“cryptocurrency”* was the most used or owned financial product.  ![](https://www.datocms-assets.com/56652/1706303779-16.png?auto=format) The world is changing rapidly. Never before have the citizens of the world had a digital store of value accessible to them with a smartphone and internet connection that can protect their savings from debasement and confiscation. The landscape of Bitcoin ETFs and the broader financial market is witnessing significant shifts. The precarious state of the US fiscal outlook, with its soaring national debt and unsustainable deficit spending, poses serious risks to the long-term health of the economy. The situation is only further complicated by challenges faced by countries like China, where increased Bitcoin adoption amid a stock market downturn reflects a growing global reliance on alternative assets to protect their savings. The integration of Bitcoin into Wall Street financial products, combined with the reckless nature of government fiscal policies, suggests a future where financial instability may hinge on the balance between innovation and traditional policy decisions. ***Market Overview***  ![](https://www.datocms-assets.com/56652/1706303807-17.png?auto=format) Tradingview, Prices as of 01/26/24 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # The Turkish Lira’s Freefall and the Bitcoin Parachute URL: https://www.swanbitcoin.com/economics/the-turkish-lira-s-freefall-and-the-bitcoin-parachute/ As the national currency of Turkey continues to plummet, Bitcoin represents an escape hatch for citizens looking to preserve wealth. --- **Sam Callahan** · April 1, 2022 · Updated July 3, 2024 2021 was a rough year for the people of Turkey, as the country experienced rapid devaluation of its currency, the Lira. Things haven't improved in 2022 as the Lira has suffered since Russia invaded Ukraine, as sanctions and export bans have resulted in soaring commodity prices. According to official government reports, [Turks are now suffering from 54.4% year-over-year (YoY) inflation](https://www.reuters.com/markets/currencies/turkeys-inflation-surges-5444-highest-20-years-2022-03-03/), the highest in 20 years. ![](https://www.datocms-assets.com/56652/1708230634-sam-1.webp?auto=format) Source: Trading Economics | Turkish Statistical Institute The central bank estimates that inflation will *only* be [23.2% YoY by year-end](https://www.bloomberg.com/news/articles/2022-03-03/turkey-inflation-set-to-breach-52-even-before-oil-jump-kicks-in), but that estimation was made assuming the price of crude oil would be around $80 per barrel. The outbreak of war has caused the price of oil to spike well above $100 at the time of writing. Soaring commodity prices from the war likely means the central bank is underestimating year-end inflation. To put things into perspective, Russia and Ukraine [supplied 80% of Turkey's $4 billion grain imports last year](https://www.al-monitor.com/originals/2022/03/turkeys-inflation-hits-544-ukraine-crisis-threatens-fresh-blows). If the price of that one single commodity increases drastically, that alone could cause Turkey's inflation rate to rise. The purchasing power of the Lira is tragically vanishing right before Turkish citizens' eyes. But the truth is, this currency crisis has been developing for a long time now. Over the last five years, the Lira has lost 75.57% of its value against the U.S. dollar. ![](https://www.datocms-assets.com/56652/1708230688-sam-2.webp?auto=format) Source: Tradingview How Did Turkey Get Here? To put it simply, since 2012, Turkey has suffered from taking on a [large debt](https://en.wikipedia.org/wiki/2018%E2%80%932022_Turkish_currency_and_debt_crisis) burden coming out of the Great Recession, political instability that led to a [failed coup d'état in 2016](https://en.wikipedia.org/wiki/2016_Turkish_coup_d%27%C3%A9tat_attempt), and U.S. [sanctions](https://www.cnbc.com/2019/10/17/trump-defends-sanctions-says-turkey-sells-us-a-lot-of-steel-it-doesnt.html) and tariffs on its steel and aluminum industries further damaged its economy. Here's a helpful timeline of events to get a sense of what Turkey's last decade has been like: ![](https://www.datocms-assets.com/56652/1708230759-sam-3.webp?auto=format) Source: Refinity Datastream | Karin Strohecker All of these events have culminated in what is unfolding today with the collapsing Lira. Over the last two years, we've witnessed all of the telltale signs of what happens when a currency collapses and how a government and central bank attempt to save it. The Central Bank of the Republic of Turkey (CBRT) and President Tayyip Erdoğan appear desperate in their efforts to try to combat soaring inflation and stabilize the Lira. In the past year, we saw them attempt every tactic in the government playbook to fight inflation. Here are eight ways that Turkish authorities have tried to combat inflation so far: **1. Implementing Price Controls** [El Flaco 🌋🇳🇮⚡ on Twitter: *"How Turkey fights consumer price inflation: Authorities go to supermarkets, check prices and threaten fines if prices are 'too high"* / Twitter](https://twitter.com/_pretyflaco/status/1475476780228263937) One example of this price-fixing is with bread and Turkish bakeries. The Chamber of Bakeries [fixed the price of bread](https://www.nytimes.com/2021/12/15/world/europe/turkey-bread-prices.html), but now the bakeries are warning that bankruptcy looms as they are forced to adhere to the government's price-fixing while their sales are down. **2. Pleading With Turkish Citizens To Sell Gold/Dollar Holdings To Support The Lira** "*I ask my citizens to invest their foreign currencies and gold in various financial institutions and bring those assets into the economy and production.*"  — President Tayyip Erdoğan, March 24, 2021, [in a speech at the Congress of the ruling AKP](https://ahvalnews.com/currency-crisis/turks-turn-deaf-ear-erdogans-call-sell-dollar-gold). In a last-ditch effort to stop Turkish citizens from fleeing the Lira and finding protection elsewhere, President Erdoğan has tried, on multiple occasions, to encourage them to hold on to their freefalling Liras in the name of national pride. The government recently [announced a new gold conversion deposit account](https://www.aa.com.tr/en/economy/turkiye-unveils-scheme-to-bring-gold-savings-at-home-into-banking-system/2500891) that promises "*risk-free income*" in order to encourage people to bring their *"under-the-mattress"* gold into the banking system. **3. Depleting Foreign Currency Reserves To Prop Up The Lira** In mid-January, the Turkish central bank's [foreign currency reserves dropped to their lowest level since 2002, to $7.54 billion dollars](https://www.reuters.com/markets/rates-bonds/turkish-cenbanks-net-fx-reserves-surge-1633-bln-2022-02-10/). This means that since November 2021, approximately 75% of the central bank's FX (foreign exchange) reserves have been sold off to support the Lira. Since those January lows, Turkey's FX reserves have surged back after [the central bank made some swap deals with the United Arab Emirates](https://www.reuters.com/markets/rates-bonds/turkey-pitches-its-unorthodox-policy-london-investors-2022-02-08/). Goldman Sachs estimates the nation's gross FX reserves fell around $20 billion in December 2021 alone due to central bank currency interventions. President Erdoğan has been selling his country's FX reserves rapidly to prop up the falling Lira. **4. Demanding Exporters Convert 25% Of Income To Liras** This measure is aimed at boosting Turkey's currency reserves by [forcing companies to keep some of their revenues from their sales abroad in Liras](https://www.bloomberg.com/news/articles/2022-01-03/turkey-orders-exporters-to-convert-25-of-income-to-liras). These actions are an attempt to stop companies from selling their Liras for stronger foreign currencies. **5. Increasing The Minimum Wage By 50%** To ease public discontent, President Erdoğan [increased the minimum wage by 50%, the highest raise in 50 years](https://www.bloomberg.com/news/articles/2021-12-16/erdogan-expected-to-hike-turkey-minimum-wage-thursday). Higher wages definitely help those suffering on the ground, but there's also a risk of higher wages leading to even more inflation, bankruptcies, and unemployment as businesses face increased labor costs. **6. Injecting State Banks With Capital To Boost Lending** Turkey's Sovereign Wealth Fund recently [injected $2 billion into two of the largest Turkish](https://www.bloomberg.com/news/articles/2022-02-09/turkish-sovereign-wealth-fund-gives-state-banks-2-billion-boost) banks to help improve their balance sheets and stimulate lending to corporations. It also followed that capital injection with an [additional $1.6 billion injection into its largest lender, T.C. Ziratt Bankasi](https://www.bloomberg.com/news/articles/2022-02-16/turkey-adds-to-capital-injections-with-1-6-billion-for-top-bank), to "*strengthen the capital of state banks and improve their lending power.*" The government is attempting to keep credit flowing in its banking system by injecting them with cash to make up for the eroding Lira on their balance sheets. **7. Providing State-Protected Lira Accounts** To combat investors hoarding dollars to protect themselves, the Central Bank of Turkey [announced that they would support accounts that converted foreign currencies to Liras](https://www.reuters.com/markets/currencies/turkish-central-bank-support-fx-deposit-conversion-lira-deposits-2021-12-21/). Essentially the central bank is offering protection to accounts that are converted to Liras by covering any changes in interest rates or exchange rates from when the conversion happens. This strategy has resulted in favorable results for the central bank as Turks have flocked to the protected Lira accounts. Funds have steadily flowed into these "*FX-protected accounts*," [reaching 290 billion Liras ($21.4 billion)](https://www.bloomberg.com/news/articles/2022-02-04/turks-flock-to-dollar-linked-saving-accounts-at-fastest-rate-yet). ![](https://www.datocms-assets.com/56652/1708230993-sam4.webp?auto=format) Source: State-run Anadolu Agency and Bloomberg This new strategy has successfully resulted in local investors reducing their dollar and euro deposits by nearly $11 billion since the FX-protected accounts began back in December 2021. Time will tell if this savings scheme can continue to attract local investors to hold Liras instead of other assets and foreign currencies. **8. Refusing To Raise Interest Rates Despite The High-Inflation Environment** Contrary to the traditional practice of central banks, President Erdoğan has not raised interest rates in response to inflation and instead has cut interest rates in the face of inflation. In many cases, historically, this has only led to more inflation. Additionally, he has fired multiple central bank governors whose policies started to raise interest rates. President Erdoğan [fired four central bank policymakers in a two-month span](https://www.cnbc.com/2021/05/25/turkeys-erdogan-fires-central-bank-deputy-governor-.html) back in the spring of 2021 alone. Whereas other central banks are raising interest rates to combat inflation, President Erdoğan has refused to. He has kept its benchmark rate unchanged in spite of rapid inflation for the last two months. Turkey's real yield now stands at negative 34.7%, the lowest amongst emerging markets by a large margin. ![](https://www.datocms-assets.com/56652/1708231052-sam5.webp?auto=format) Source: Central Banks, Bloomberg, Data as of 2/17/22 Turkey's key interest rate, the one-week repo rate, [remains at 14%](https://www.bloomberg.com/news/articles/2022-02-17/turkey-keeps-key-rate-unchanged-as-inflation-backlash-builds), down 3% over the last year. Despite all of these efforts by Turkish authorities, inflation continues to soar, and the Lira continues to lose its purchasing power. As of last week, Erdoğan is now blaming inflation, not on his policies, but rather on "[*foreign financial tools*](https://www.cnbc.com/2022/01/13/erdogan-blames-turkeys-currency-woes-on-foreign-financial-tools-as-central-bank-reserves-fall.html)" and bad statistics. Erdoğan recently [fired the President of the Turkish Statistical Institute](https://www.wsj.com/articles/turkeys-erdogan-fires-statistics-chief-after-record-inflation-11643456492?page=3) after his statistical analysis showed inflation was still on the rise. All in all, this Turkish inflation train doesn't appear to be stopping anytime soon. All of the central bank and government's attempts to stem the inflation have done nothing to stop the Lira's freefall. Now, a war has unfortunately broken out in their region, worsening the inflation picture even more. ### A FIAT CRISIS UNLIKE OTHERS From a Western perspective, it's easy to look at what's happening in Turkey and see just another emerging market on the other side of the world suffering a currency crisis like Argentina or Venezuela, but this is very different. Turkey dwarfs other countries in gross domestic production (GDP), population, and global trade. We haven't seen a country with an economy of this size go through a currency crisis like this in a long time, and we *definitely* haven't seen a fiat currency of this size inflate like this in Bitcoin's lifetime. Today, Turkey has a population of around 84 million people. It is the 21st largest economy in the world in terms of nominal GDP and the 11th largest economy in terms of GDP by purchasing power parity (PPP). Recently, Turkey's exports broke a record of over $225 billion dollars, and [Turkey's share in global exports surpassed 1% of total exports for the first time in history](https://www.dailysabah.com/business/economy/turkeys-share-in-global-exports-tops-1-for-first-time). Turkey is currently the sixth-largest trading partner in Europe and the 32nd-largest trading partner in the United States. Its main exports are vehicles, machinery parts, steel, iron, and textiles. ![](https://www.datocms-assets.com/56652/1708289860-sam-7.webp?auto=format) Source: Statistica The point I'm trying to make here is that Turkey is not some small, inconsequential country. It's a large, extremely important member of the global economy and a vital trade partner for all of Europe and abroad. The rapid inflation of the Lira is, therefore, one of the biggest opportunities yet for Bitcoin to prove its use case on the world stage as a censorship-resistant money that no one can debase – money that can find product-market fit specifically in countries like Turkey where the local currency is losing its purchasing power at an alarming rate. Sadly, for the people on the ground in Turkey, the red-hot inflation is starting to feel very real. ### WHAT'S IT LIKE ON THE GROUND? From speaking with some friends and colleagues on the ground, it sounds like what you'd expect to hear in the early stages of a hyperinflationary event. Everyone is telling me how they and others are trying to find ways to protect themselves against the rising inflation and that they are struggling to make ends meet. The rising cost of living has made everything more expensive for the ordinary Turkish person. Grocery prices are rising almost daily, forcing grocery store chains to [put quotas on items like flour, oil, and milk](https://ahvalnews.com/food-inflation/turkish-supermarkets-impose-quota-milk-oil-prices-soar). There are multiple reports of food shortages across the country. Recently, a two liters per family monthly limit was put in place on sunflower oil. The government denied these shortages only to [ban exports of oils and margarine](https://ahvalnews.com/turkey-economy/turkey-bans-exports-sunflower-oil-after-denying-reports-shortages) later due to "*domestic demand issues and problems with price movements*." Breadlines are becoming a more common occurrence, [as *The New York Times* reports in this article.](https://www.nytimes.com/2021/12/15/world/europe/turkey-bread-prices.html) At the start of the year, the state raised electricity and natural gas tariffs that [some estimate could raise household energy costs by up to 130%](https://www.bloomberg.com/news/articles/2022-01-01/turkey-raises-prices-of-electricity-and-natural-gas-in-new-year). Mind you, this was *before* the war between Russia and Ukraine caused oil prices to spike. The rising inflation has also resulted in soaring rent prices across the country. Rent prices increased by about [60% in some districts of Istanbul this year](https://aegeanlocations.com/de/2021/11/26/officials-checking-for-tools-to-control-excessive-rent-increase-in-turkey%E2%80%A8/). Turkish students are struggling to afford rent and have taken to the streets to protest by [sleeping in parks to highlight their struggles](https://www.reuters.com/world/middle-east/turkish-students-struggle-afford-rent-inflation-surges-2021-10-22/). Another friend explained to me how restaurants in Turkey, for the first time, started requiring a minimum dollar amount before customers were allowed to sit down and also started charging customers by the hour to use a heating lamp due to the rising energy costs. In addition to the rising cost of living, locals have to deal with opportunistic foreigners. Foreigners from neighboring countries like Bulgaria have been crossing the border to take advantage of the Lira's struggles by [using their stronger currencies to clear out grocery stores](https://www.bloomberg.com/news/articles/2021-12-27/bulgarian-shoppers-find-bargains-in-turkey-as-lira-struggles). They pack their cars full of goods they purchase cheaply and then return home with their bounty. Turkey's wealth is being pillaged by foreigners, adding pressure on ordinary Turkish people who are already struggling to afford food, housing, and other essentials. [Post on X](https://twitter.com/1e9petrichor/status/1467634582526779405) All of these developments have led to anger and desperation among the people of Turkey. As their savings continue to evaporate, they have taken to the streets to protest against their President's economic policies and their wages. [According to independent researcher Labor Studies Group, over 13,000 Turkish workers from 61 companies have gone on strike](https://www.bloomberg.com/news/articles/2022-03-01/strikes-over-turkey-s-cost-of-living-crisis-raise-pressure-on-erdogan) demanding higher wages. Some of the strikes have been successful and received up to 30% real wage increases, but even that didn't keep up with the rising cost of living. Last month, thousands marched in Istanbul to raise their voice against their economy and the country's direction. This is what happens when money dies. When people's life savings are destroyed, and they are finding it harder to afford necessities, the only thing left to do is take to the streets and demand change. [Post on X](https://twitter.com/TheInsiderPaper/status/1467171867266101248) ### HOW ARE THE PEOPLE OF TURKEY PROTECTING THEMSELVES? Much to the dismay of President Erdoğan, the people of Turkey did not heed his call to sell all of their gold and dollar holdings to protect the falling Lira. The Turkish people are instead seeking refuge from the inflating Lira in various stores of value like real estate, gold, dollars, and Bitcoin. An Istanbul-based research company, Aksoy Research, recently [took a poll](https://ahvalnews.com/currency-crisis/turks-turn-deaf-ear-erdogans-call-sell-dollar-gold?__cf_chl_f_tk=6ivJUmM0x4xuM5udedSMIkMRWnUlKjFBgwNzGTmtoas-1642191848-0-gaNycGzNC30) and asked the people of Turkey, "*If you had an extra 10,000 Liras, which one would you invest in?"* The results were only 11.4% of respondents said they would keep their savings in the Lira. The rest of the poll results were the following: - 39.6% said they would invest in gold - 18.9% said they would hold dollars - 14.3% said they would hold cryptocurrencies This poll corroborates some of the stories I've heard and data I've seen that shows a rush to dollars and gold amidst the Lira's turmoil. Foreign currency deposits in Turkey [hit a record high of $239 billion dollars](https://www.yahoo.com/now/turks-cling-dollars-red-flag-130107373.html) at the start of the year. ![](https://www.datocms-assets.com/56652/1708290547-sam9.webp?auto=format) Source: Bloomberg, data as of 01/04/22 This increasing dollarization in Turkey shouldn't surprise anyone because dollars offer short-term stability for these individuals to pay their monthly bills amidst rising inflation. Turkey also imports most of its energy needs, which are priced in dollars, and also gorged on dollar-denominated debt coming out of the Great Recession. Both of these factors have contributed to the increased dollarization of Turkey's economy over the last decade. In Turkey, gold has been the preferred "*under-the-mattress*" protection from inflation for many generations. Gold has a central place in Turkish customs, often given as gifts from birth to weddings. Over the last couple of years, we've seen a gold rush occurring as Turks saw the writing on the wall with their inflating Lira and sought refuge in gold. Since 2020, Turkish firms and retail investors have more than [tripled their gold holdings to $36 billion](https://nationalinterest.org/blog/buzz/turkey%E2%80%99s-frantic-gold-rush-points-financial-crisis-ahead-176118). This is in addition to the gold that Turkish households hold at home, which their government now estimates to be [around 5,000 tons of gold worth between 250 and 350 billion dollars](https://www.aa.com.tr/en/economy/turkiye-unveils-scheme-to-bring-gold-savings-at-home-into-banking-system/2500891). The rush to gold and dollars is to be expected, and lately, [we've seen gold prices continue to spike in the Turkish market](https://www.paturkey.com/news/gold-prices-surge-sharply-in-turkish-market-amid-russian-war-and-inflation-concerns/2022/). However, one of the most interesting developments throughout this inflationary episode is that Turks are turning more and more towards Bitcoin as a way to preserve their wealth against the debasement of their currency. A [report from the *Wall Street Journal*](https://www.wsj.com/articles/turks-pile-into-bitcoin-and-tether-to-escape-plunging-lira-11641982077?mod=e2tw) found that the dollar value of cryptocurrency trading volumes is up, and so too are online searches for "*Bitcoin*." Turks are beginning to embrace Bitcoin and stablecoins, such as Tether, as hedges against inflation in their time of need. Bitcoin is offering some people hope as they search for places to store their wealth outside the faltering Turkish banking system. ![](https://www.datocms-assets.com/56652/1708290665-sam10.webp?auto=format) Source: Chainanalysis ![](https://www.datocms-assets.com/56652/1708290707-sam11.webp?auto=format) Source: Google Trends ### THE BITCOIN PARACHUTE The fall of the Turkish Lira is a prime example of why, 13 years ago, Satoshi invented [Bitcoin](https://bitcoin.org/bitcoin.pdf). Embedded in the Bitcoin network genesis block, Satoshi sent a message that this creation was a possible solution to central banking and the easy money policies plaguing the world. Today, we are seeing Satoshi's vision be realized as Turks are starting to use Bitcoin for its intended purpose — non-governmental money that preserves wealth and cannot be controlled or corrupted. Before Bitcoin, the people of Turkey would have had to resort to only using gold and dollars to protect themselves against their central bankers and government policies. Now, a new solution exists that can be accessed by anyone with a smartphone and internet connection. Unlike gold and the dollar, a Turkish individual does not need to trust a third party to gain access to this wealth-preserving asset. They no longer need to have a bank account to protect themselves against inflation. On top of that, unlike gold and the dollar, Bitcoin cannot be easily seized by authorities as [countries have done in the past](https://cointelegraph.com/news/greece-seizes-500000-bank-accounts-worth-euro-16-bln-escape-with-bitcoin) during periods of financial crises. Bitcoin also has the added benefit of appreciating its value over time due to its inelastic supply and its network effect. Two years ago, if a Turkish citizen decided to save in Bitcoin instead of gold, Liars, or dollars, their purchasing power would have increased dramatically during a time period when the Lira lost over 50% against the dollar. For the last two years, Bitcoin has outperformed the Turkish Lira by 768.40% compared to the dollar (104.25%) and gold (132.95%): ![](https://www.datocms-assets.com/56652/1708290787-sam12.webp?auto=format) Source: Tradingview As the Lira has inflated, the good news is the people of Turkey understood how to protect themselves in part because older generations have suffered inflation like this before in the late 1990s. Turks have sought refuge from inflation in assets like real estate, equities, gold, dollars, and Bitcoin for the first time. Back in November 2021, President Erdoğan famously [declared war on Bitcoin](https://www.yahoo.com/now/erdogan-war-against-bitcoin-092146961.html). The thought of a president declaring war against a decentralized digital ledger was comical, to say the least. Fast-forward to today, and it appears the Turkish President might already be waving the white flag in his war against Bitcoin. After El Salvador President Nayib Bukelye [visited with the Turkish President back in January](https://www.wsj.com/articles/turkeys-erdogan-meets-el-salvadors-bitcoin-boosting-leader-amid-economic-crisis-11642678083?page=3), President Erdoğan advised the country's ruling Justice and Development Party to closely examine Bitcoin's potential use and to organize an upcoming forum on the subject. These recent developments give me hope for the people of Turkey. What lifts my spirits is knowing that Bitcoin exists today as a parachute for them to escape their freefalling Lira. Bitcoin is offering the people of Turkey a flicker of hope in dark times. It's stories like the ones above that remind me of why I've dedicated every day of my life to making Bitcoin more accessible to people all over the world suffering similar fates to those of the people of Turkey. Today, I'm feeling optimistic. The sticker below, seen on the streets of Istanbul, says it better than I ever could: ![](https://www.datocms-assets.com/56652/1708290862-sam13.webp?auto=format) Source: @BTCSTREETART Now that we've entered the age of Bitcoin, citizens all over the world have an alternative to turn to in order to protect their wealth against the detrimental effects of inflation. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin is Generational Wealth - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-is-generational-wealth/ “Bitcoin is Generational Wealth” is a short film exploring Bitcoin’s potential across generations. --- **Tomer Strolight** · November 2, 2021 · Updated July 3, 2024 Throughout recorded history, cycles of "*rise and fall*" repeat — both of civilizations themselves and of what they use for money. We are experiencing another fall now. However, something unprecedented has occurred — the invention of money that is incorruptible, indestructible, and infallible: "*un-fallible.*" It is money that can support on its shoulders a civilization that will also be un-fallible. Bitcoin offers an incentive for cooperation on a global scale. The enabling of digital private property rights for everyone on Earth is an incredible leap forward in creating a safer world. The world's citizens now have a reliable network upon which to coordinate their lives, as opposed to the chaos of fiat monetary manipulation. The unprecedented freedom created by Bitcoin is a revolutionary change that will be felt beyond our time. With the prospect of preserving capital forever, new possibilities can be imagined and their potential made into reality over multiple generations. That is what this film aims to impress upon viewers: r**eplacing these cycles with everlasting, productive peace.** [Video](https://www.youtube.com/watch?v=3Rnqst5qCgA ) If you enjoyed this content, our [Swan Signal blog](https://www.swanbitcoin.com/signal/) has the best Bitcoin education in the industry. [Invest](https://www.swanbitcoin.com/) with Swan today! ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # GBTC was the Genesis of the Crypto Credit Contagion (Part II) URL: https://www.swanbitcoin.com/investing/gbtc-credit-contagion-part-ii/ There are many reasons to criticize DCG and Genesis. Moreover, the drama highlights why holding Bitcoin is a superior option for investors. No fees or if your money benefits a company that doesn’t align with your values. --- **Sam Callahan** · February 13, 2024 · Updated July 3, 2024 Over a year ago, I wrote a detailed [article](https://www.swanbitcoin.com/gbtc-was-the-genesis-of-the-crypto-credit-contagion/) highlighting the role that Digital Currency Group (DCG) and its subsidiaries Genesis and Grayscale played in contributing to the contagion that we saw rip through the broader cryptocurrency industry in 2022. What lay at the heart of it all was Grayscale's Bitcoin Trust, GBTC. At the time, the structure of GBTC was a closed-end trust without a redemption mechanism. This led to significant market inefficiencies, most notably the fluctuation of GBTC shares' price relative to the Bitcoin price, which consisted of the premium or discount to the Net Asset Value (NAV). For many years, GBTC traded at a premium, which provided lucrative arbitrage opportunities for investors. ![](https://www.datocms-assets.com/56652/1707853168-01.svg) Source: Bloomberg To summarize the *“GBTC Premium Trade,”* investors would do the following: **Step 1: Buy or borrow Bitcoin Step 2: Give that Bitcoin to Grayscale in exchange for GBTC shares Step 3: Hold the GBTC shares for the 6-month lock-up period Step 4: Sell the GBTC shares at a premium when the lock-up ended Step 5: Rinse and Repeat** Investors could optionally also short Bitcoin or use futures to offset their Bitcoin exposure while they were in the trade, thereby ensuring their profit would be in dollar terms rather than Bitcoin terms. This was effectively *“free money”* for these firms, and often, they would obtain leverage from lenders like Genesis to put on this trade. This GBTC Premium Trade was extremely lucrative for both the firms putting on the trade and for DCG, at least while it lasted. Everything changed when the GBTC premium collapsed in 2021, flipping to a steep discount. This shift had far-reaching consequences. Firms like BlockFi and Three Arrows Capital (3AC), which were heavily invested in this arbitrage trade, went bankrupt. The end of the premium era led to a domino effect of bankruptcies among major crypto lenders and hedge funds, highlighting the precariousness of leveraging such market inefficiencies. The GBTC Premium Trade quickly became the “*Widowmaker Trade,*” and in many ways, the impact of GBTC is still being felt today as the market is still dealing with its hangover effects. As I mentioned in the previous article, there is plenty of blame to go around for why GBTC became such a toxic wrecking ball for the broader cryptocurrency industry. You can blame the crypto lenders for their shockingly poor risk management. You can also blame hedge funds and institutional investors for putting on extremely risky trades with obscene amounts of leverage. You can blame Genesis/DCG for providing the leverage in the first place to pump its revenues. Lastly, you can blame the SEC, which denied Grayscale from converting GBTC into a spot Bitcoin ETF for years, which would have eliminated the market inefficiency and better-protected investors. When the SEC finally approved the ETFs this January, SEC Commissioner Hester Peirce wrote a [letter](https://www.sec.gov/news/statement/peirce-statement-spot-bitcoin-011023#_ftn5) that applauded the decision and criticized the Commission for the harm it caused by denying these investment vehicles for so many years. She wrote, “*The Commission has driven retail investors to less efficient means of attaining Bitcoin exposure in the securities markets.*” Presumably, by “*less efficient means of exposure,*” Peirce likely meant Bitcoin Futures ETFs and GBTC. She then goes on to list out five harms caused by the SEC’s consistent denials for spot Bitcoin ETFs: ![](https://www.datocms-assets.com/56652/1707853233-02.jpg?auto=format) Source: SEC.gov These are all reasonable points from Commissioner Peirce, but she fails to include the biggest harm done by the SEC’s failure: the potentially hundreds of thousands of investors who have lost their life savings due to contagion caused by GBTC and the actors behind it. If the SEC had approved a spot Bitcoin ETF, firms wouldn’t have been incentivized to pump obscene amounts of leverage into the GBTC Premium Trade, only for it to explode in their faces, causing a string of bankruptcies that ultimately harmed investors. But the world looks very different today than when I first wrote the aforementioned article years ago. Multiple lawsuits have been filed against Genesis and DCG since then. Genesis has declared bankruptcy. DCG CEO Barry Silbert has resigned from Grayscale’s board of directors. Plus, the SEC has now approved the conversion of GBTC into a spot Bitcoin ETF. Due to all of these developments, I felt that an update was warranted on this ongoing fiasco. In this piece, I will dig into what happened to Genesis, how poor management led to its collapse, how DCG actually contributed to its downfall, and where things stand today. ### An ETF Unlike The Others On January 11th, the newly approved spot Bitcoin ETFs went live, but one of them is not like the others. ![](https://www.datocms-assets.com/56652/1707853305-03.jpg?auto=format) Source: James Seyffart When GBTC was converted into a spot Bitcoin ETF, it already had more than $26 billion in Bitcoin, while the other ETFs started essentially from scratch. Since then, we have seen a massive $6.1 billion in sales out of GBTC. These outflows have occurred for numerous reasons. For one, many traders were putting on another, newer trade, which I’ll call The GBTC Discount Trade. They were betting on Grayscale getting converted to an ETF and the discount going to 0%. They were right. The GBTC discount gradually disappeared leading up to the ETF approval. ![](https://www.datocms-assets.com/56652/1707853420-04.svg) Source: Bloomberg Once GBTC was converted to an ETF, these traders took profit after their successful arbitrage trade. The second reason for these outflows is that Grayscale maintained its annual fee at 1.5% while the other ETFs were all charging much lower fees. Many investors appear to be rotating from GBTC to those cheaper ETF alternatives. A third factor is that many bankruptcy estates are now selling their GBTC holdings. The first of these was the FTX Bankruptcy Estate, which sold 22 million GBTC shares worth approximately $1 billion after GBTC was converted. ![](https://www.datocms-assets.com/56652/1707853459-05.jpg?auto=format) The next one will likely be Genesis, which is currently looking to sell nearly 36 million shares of GBTC. ![](https://www.datocms-assets.com/56652/1707853498-06.jpg?auto=format) This points to the fact that the market is still absorbing the GBTC contagion from years ago. The firms that went bankrupt after the GBTC premium trade collapsed have now become forced sellers of GBTC, which has put significant sell pressure on the price of Bitcoin itself. But precisely how Genesis became the holder of so much GBTC is an interesting story in itself. ### It All Comes Down to Incentives To understand the collapse of Genesis, it’s important first to understand the company's structure. DCG is the parent company of Genesis, which was a large crypto prime brokerage firm, mainly offering lending and trading services to institutional investors and high-net-worth individuals. Note in the graphic below how DCG is also the parent company of Grayscale. ![](https://www.datocms-assets.com/56652/1707853563-07.jpg?auto=format) Genesis didn’t mind providing the leverage to put on the GBTC Premium Trade because, ultimately, it was good business for it to originate more loans. In addition, the Bitcoin it was lending out to put on the trade would end up in its sister company, Grayscale. Due to there being no redemption mechanism in GBTC, once the Bitcoin entered GBTC, it never left. Grayscale would then go on to collect a hefty 2% annual fee on that Bitcoin. The more Bitcoin in the trust, the greater Grayscale’s revenues. And all of that money eventually flowed up to the parent company, DCG. In the end, it’s all about incentives, and Genesis was incentivized to provide loans to firms to put on the GBTC trade because it was good for Genesis, it was good for Grayscale, and it was good for its parent company, DCG. Genesis would source its Bitcoin from its customers by offering interest for them to park their Bitcoin on their platform. They would then turn around and lend that Bitcoin out at higher interest rates to borrowers and pocket the difference between the rates. One of its biggest borrowers was Three Arrows Capital, which was keen on getting as much Bitcoin as possible to put on the GBTC Premium Trade. Genesis was more than happy to provide Three Arrows Capital with the leverage to put on the trade because the Bitcoin would end up in the Grayscale trust. In late 2021, Three Arrows Capital was the largest shareholder of GBTC, and they were able to acquire that much GBTC by borrowing from Genesis. ![](https://www.datocms-assets.com/56652/1707853621-08.jpg?auto=format) Source: Bloomberg Documents show that even Grayscale was aware that Genesis was providing Three Arrow Capital with the Bitcoin to purchase the GBTC. Below is a document that shows that Grayscale CEO Michael Sonnenshein signed off on the Genesis loan to Three Arrows Capital. This loan was not small either. From 3AC’s [bankruptcy filings](https://www.theblock.co/post/158167/crypto-lender-genesis-lent-2-36-billion-to-three-arrows-capital), we now know that Genesis loaned Three Arrows Capital a whopping $2.3 billion dollars. To make matters worse, the loan was undercollateralized with GBTC and other illiquid cryptocurrencies. ![](https://www.datocms-assets.com/56652/1707853661-09.jpg?auto=format) ![](https://www.datocms-assets.com/56652/1707853710-10.jpg?auto=format) Source: Grayscale SEC Filings Ultimately, when Three Arrows Capital went bankrupt in June 2022 after the GBTC premium disappeared, Genesis obtained some of these GBTC shares. However, since the loan was undercollateralized, Three Arrows Capital still blew a $1.2 billion hole in Genesis's balance sheet. Not only did Genesis have a giant hole in their balance sheet, but the collateral they received, the GBTC shares, was illiquid. On June 13th, 2022, Silbert informed the DCG board that some of the collateral Three Arrows Capital provided Genesis was illiquid because GBTC was issued by DCG-subsidiary Grayscale, which Genesis could not liquidate due to restrictions on sales of stock by its issuing company's affiliates. What Silbert was referring to is an SEC restriction called [rule 144A](https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144). It is explained on the SEC's website below, ![](https://www.datocms-assets.com/56652/1707853835-form-144.png?auto=format) Due to this rule, Genesis would legally only be allowed to sell ~7 million GBTC shares every quarter. This was a problem for Genesis because it needed liquidity immediately to service its withdrawals. At this point, Genesis was effectively insolvent. If all of its customers tried to withdraw their funds, they would not have been able to service them. But instead of publicly admitting this and declaring bankruptcy, Genesis concocted a plan to avoid doing this with its parent company, DCG. Genesis CEO Michael Moro tweeted reassurances: ![](https://www.datocms-assets.com/56652/1707853870-12.jpg?auto=format) Source: Twitter Around that time, Genesis even tweeted out that its balance sheet was “*strong*” despite a gaping billion-dollar hole in it. ![](https://www.datocms-assets.com/56652/1707853912-13.jpg?auto=format) Source: Twitter This alleged misrepresentation was highlighted in the [NYAG lawsuit](https://ag.ny.gov/sites/default/files/court-filings/nysoag-complaint-against-gemini-et-al.pdf) against Genesis, Gemini DCG, Barry Silbert, and Michael Moro, which stated, *“DCG and Genesis Capital engaged in a communications campaign designed to conceal Genesis Capital’s financial condition and mislead counterparties into believing Genesis Capital was operating “business as usual.”* The plan between Barry Silbert and Michael Moro was that DCG would give Genesis a $1.1 billion promissory note to fill the hole in the balance sheet. DCG agreed to pay Genesis a decade later at a 1% interest rate, well below market interest rates. Genesis then categorized this promissory note as a “*current asset*” on its balance sheet, or the equivalent of cash, when it was far from it. ![](https://www.datocms-assets.com/56652/1707853965-14.jpg?auto=format) After the promissory note was signed by Silbert and Moro, Moro tweeted that DCG had assumed the liabilities of its Three Arrows Capital loss with the note and ensured the public that Genesis had the capital to continue long-term. ![](https://www.datocms-assets.com/56652/1707854013-15.jpg?auto=format) Source: Twitter In reality, this promissory note did nothing to fill the hole in Genesis’s balance sheet. Some have argued that this was more of an accounting trick to reassure Genesis users and prevent a bank run from occurring. However, it all unraveled for the lender when FTX blew up in November 2022. Genesis lost $175 million when FTX collapsed. This proved to be the final nail in the coffin. On November 16th, Genesis suspended withdrawals, and on January 19th, it filed for bankruptcy. ### Genesis Uses GBTC to Back Gemini Earn Program So Genesis was sitting on a lot of illiquid GBTC shares that it couldn’t sell because it accepted them as collateral for loans given to hedge funds like Three Arrows Capital to put on the GBTC Premium trade with leverage. What did Genesis do with these illiquid shares? Well, some of them were used as collateral for the Gemini Earn program. In August 2022, Genesis pledged around 30 million GBTC shares to “*secure its obligations to the Gemini lenders.*” ![](https://www.datocms-assets.com/56652/1707854055-16.jpg?auto=format) Source: Genesis Bankruptcy Files The Gemini Earn program was a joint venture with the cryptocurrency exchange Gemini, in which Gemini customers could collect interest payments by loaning their digital assets. Genesis served as the program's only counterparty. The SEC later charged Genesis and Gemini for offering the sale of unregistered securities through this Gemini Earn program. Genesis later settled with the SEC for $21 million for its role in the Gemini Earn program. ![](https://www.datocms-assets.com/56652/1707854091-17.jpg?auto=format) Genesis is now looking to sell all of the GBTC shares that were used as collateral for the Gemini Earn program. ![](https://www.datocms-assets.com/56652/1707854118-18.jpg?auto=format) So Genesis is sitting on millions of GBTC shares partly because 1.) It obtained some from the Three Arrows Capital bankruptcy, and 2.) It used GBTC shares as collateral for the Gemini Earn program, which was later deemed illegal by the SEC. ### How DCG Contributed to Genesis’s Liquidity Crunch Here’s where things get interesting – it was later discovered that Genesis’ parent, DCG, was actually worsening this whole situation as it unfolded. When Genesis needed liquidity, the most, DCG was actually draining it from them. From January 2022 through July 2022, DCG borrowed over $800 million from Genesis through multiple loans. The first loan DCG took out was an unsecured $100 million loan from Genesis that was set to mature in late July 2022. But instead of paying it back when Genesis needed the liquidity the most, DCG informed Genesis that it “*[literally] did not have the money right now*” and “*gave guidance*” to Genesis to extend the loan to May 2023. The Genesis manager initially objected to this but relented, stating, “*It sounds like we don’t have much room to push back, so we will do what DCG needs us to do*.” On top of that, DCG dictated what the interest rate would be on the loan. The second loan DCG took out was another unsecured $100 million loan that was set to mature in late August 2022. Similarly, DCG did not pay and had Genesis extend the loan to May 2023. A third loan occurred in early June 2022, right in the middle of the Three Arrows Capital collapse, when Genesis was running around putting out fires, desperate for liquidity. Despite its predicament, Genesis still chose to lend DCG a massive 18,697 Bitcoin worth around $355 million at the time. ![](https://www.datocms-assets.com/56652/1707854158-19.jpg?auto=format) Source: Genesis Loan Term Sheet After the FTX collapse, DCG partially repaid this loan – but not in Bitcoin. On November 10th, 2022, DCG repaid the loan with nearly 26 million GBTC shares worth approximately $250 million. DCG then made Genesis extend the loan on the remaining 4,550 Bitcoin to, once again, May 2023. So this is how Genesis ended up with another large tranche of GBTC shares. I’ll remind the reader of rule 144A mentioned earlier. Genesis was restricted from selling these GBTC shares, so by consistently forcing Genesis to extend its cash loans and choosing to partially repay its Bitcoin loan in GBTC shares instead of Bitcoin, DCG actually worsened Genesis’s liquidity crunch. Things didn’t get better for Genesis after it declared bankruptcy. DCG’s loans came due in May 2023, but DCG failed to pay them again. ![](https://www.datocms-assets.com/56652/1707854192-20.jpg?auto=format) However, the loans were restructured once again to avoid an outright default. This time, the loans were extended to June 2024. ![](https://www.datocms-assets.com/56652/1707854255-21.jpg?auto=format) Source: Restructure Term Sheet So, even in bankruptcy, DCG continued to cause problems for Genesis and its creditors. Instead of paying off its loans and helping Genesis creditors recoup their funds, DCG put up collateral and promised to repay the loans over time. Finally, after Genesis was forced to sue its parent company to recoup the funds, and over seven months after the loans should have been repaid, Silbert took to X to publicly claim that DCG had fully paid off all of the money it borrowed from Genesis. ![](https://www.datocms-assets.com/56652/1707854314-22.jpg?auto=format) Source: Twitter But this claim is being disputed. DCG did not, in fact, pay back the 4,550 Bitcoin that it owed Genesis. Instead, it gave Genesis the collateral it put up when the loans were extended in May 2023. What was that collateral? Well, it wasn’t Bitcoin. It consisted of shares of Grayscale Ethereum Classic Trust and Grayscale Ethereum Trust. These are highly illiquid securities. This matters because when the Genesis bankruptcy estate goes to sell them, there will likely be significant price slippage, resulting in the face value of these assets falling below what it would have been if they were paid in Bitcoin instead. According to the partial repayment agreement, DCG was only allowed to settle its USD and BTC obligations in those currencies, not in other assets, but DCG did it anyway. Genesis now claims that DCG still owes them more Bitcoin and about $26 million in interest and late fees. And the saga continues... ### So, Where Do Things Go From Here? It’s been over a year since Genesis filed for bankruptcy, and its creditors are still awaiting full repayment from DCG. Meanwhile, DCG continues to roll in profits from its cash cow, Grayscale, after it was converted into an ETF. Despite the significant outflows in GBTC, the Grayscale ETF still holds more than $20 billion in Bitcoin. At a 1.5% annual fee, that means that Grayscale is bringing in roughly $300 million in annual fees. The only logical explanation for why DCG failed to repay its loans to its subsidiary for so long was that it was also financially in trouble. Evidence of this theory can also be found in the fact that they were selling other valuable assets last year. In November, DCG sold popular events and media company CoinDesk in an all-cash deal. ![](https://www.datocms-assets.com/56652/1707854474-23.jpg?auto=format) I’m speculating, but I think DCG has stalled in these bankruptcy proceedings because it was waiting for Bitcoin’s price to go up and/or for the GBTC discount to disappear when it would eventually be permitted to become an ETF. Perhaps no entity in the world benefited more from Bitcoin’s stellar 2023 than DCG. As the price of Bitcoin soared, DCG’s revenues increased significantly due to its large Bitcoin holdings. This likely put them in a better position to finally, at least partially, pay their loans to Genesis. I wish to note that I am working only with publicly available information in this piece. There are no doubt details about this story that are not public knowledge and the lawsuit from the NYAG is still ongoing. DCG has called NYAG’s lawsuit “*baseless*” and said, “*DCG has always conducted its business lawfully and with integrity, and DCG and Barry Silbert will be fully vindicated.*” However, the evidence paints a picture that there was a whole lot of chicanery here (as my friend Vijay Boyapati likes to say). In the end, there are many reasons to criticize how DCG and Genesis handled the predicament they found themselves in during the Great Crypto Contagion of 2022. Instead of being honest with the public and their creditors, it appears they misled them and tried to paper over their losses with accounting tricks that are alleged to be fraudulent. The NYAG lawsuit claims they defrauded more than 230,000 investors of approximately $3 billion. If you want to hear about the nightmare that some of these Genesis clients have gone through during this whole ordeal, I recommend listening to this [podcast](https://www.youtube.com/watch?v=Slp_cm-fUk4) with two Genesis creditors. It’s important to remember that there are real victims when situations like this unfold. This drama highlights why holding native Bitcoin is a superior option for investors. By holding actual Bitcoin, you don’t have to worry about any annual fees or whether your money benefits a company that doesn’t align with your values. Plus, you never have to worry about your Bitcoin getting stuck in bankruptcy proceedings. This is the real way investors can navigate this market and protect themselves. In the near future, I expect the court to grant Genesis permission to sell the $1.4 billion worth of GBTC shares. In addition, Genesis has just won another court decision, which found that it was the rightful owner of an additional 31.2 million GBTC shares related to the same Gemini Earn Program mentioned before. This additional tranche of GBTC shares is currently worth more than $1.2 billion. ![](https://www.datocms-assets.com/56652/1707854515-24.jpg?auto=format) Eventually, Genesis will likely sell these GBTC shares, too, as it liquidates assets to pay off its creditors. It's important to note that the Genesis creditors will be paid in-kind (in BTC). So even though around 67 million shares will be sold, the Genesis bankruptcy estate will be buying the spot bitcoin to give to its creditors. The question really becomes, *"What percentage of these Genesis creditors will be selling their BTC holdings?"* Regardless of what that percentage is, these developments will likely result in some non-trivial amount of sell pressure on Bitcoin itself. However, eventually, this toxic garbage will be absorbed by the market. These GBTC selling events can only occur once. Once that bullet is shot, it’s done. All in all, it’s good that the toxic remnants from the last cycle are being washed away so that Bitcoin can proceed cleansed and renewed for the next bull run. Special thanks to [Vijay Boyapati](https://twitter.com/real_vijay) for writing two excellent Twitter threads that inspired some of this writing. If you haven’t read them, you can find them [here](https://twitter.com/real_vijay/status/1721385528510251182) and [here](https://twitter.com/real_vijay/status/1744454468379484387). ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin Isn’t Ossified, It’s in Equilibrium - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/bitcoin-isn-t-ossified-it-s-in-equilibrium/ Bitcoin is the world’s first truly global grassroots revolution. --- **Rapha Zagury** · June 19, 2024 · Updated July 3, 2024 Bitcoin is a global revolution that starts at the individual level. This is a beautiful thing. Moreover, unlike other technological breakthroughs, where those with privileged access to investments adopt it first and front-run average people, Bitcoin has the most ethical and fair investment adoption cycle I've ever seen. Anyone can invest. So, those who truly understand its value proposition are the ones with the advantage. Knowledge is the barrier. If that's the case, how do we know that individuals' interests will lead to a broader good? The answer is game theory. Game theory studies strategic decision-making, where each participant's outcome depends on others' actions. It explores how individual self-interest can align with the collective good. In game theory, Nash Equilibrium (named after its discoverer, John Nash, the subject of the film A Beautiful Mind) is a situation in which no player can benefit from changing his strategy without others changing theirs to offset those benefits. Many aspects of Bitcoin are close to this state. I, therefore, prefer to describe these features as Nash balanced rather than ossified (or unable to be changed). That is, the system stays stable because it is in Nash equilibrium, not because it can't be changed. Ossification implies rigidity. Equilibrium implies balance. I would, for example, say the fixed supply of 21 million Bitcoin is in a strong Nash Equilibrium: This fixed supply is embedded in the protocol, and any attempt to change it would require consensus from the majority of the network. Since the fixed supply underpins Bitcoin's value proposition as a store of value, network participants (miners, nodes, users) have no incentive to change this rule, assuming others also adhere to it. If someone attempts to change the issuance algorithm by altering the code, they are essentially excluded by all other participants whose code ignores any data that violates the original algorithm. Proof-of-Work (PoW) is in the same category: Miners have invested heavily in hardware and energy costs. Cheating the system (e.g., double spending Bitcoin) would devalue the currency and its rewards, which are denominated in Bitcoin, leading to significant financial losses. Hence, the optimal strategy for each miner is to continue mining honestly, assuming all other miners do the same. On a protocol level, changes to PoW would make Bitcoin worse as a store of value. Not changing it is the Nash Equilibrium action. Transaction verification incentives (ensuring every transaction has a valid cryptographic signature and only spends never-before-spent coins) are also arguably in Nash Equilibrium. Honest transaction verification ensures that miners receive their rewards. Invalidating or ignoring valid transactions would undermine the network's trust and devalue the rewards, making it in both nodes' and miners' best interests to adhere to the protocol. Thus, when we talk about features ossifying in Bitcoin, it would be more accurate to refer to features reaching Nash Equilibrium. The above examples are the obvious ones, but there are others. Some may never reach Nash Equilibrium, and some may stay in it until they need to change—Dynamic Equilibrium. Another well-known game-theoretic aspect is Bitcoin's network effect. The value of Bitcoin increases as more people use it. Bitcoin's utility, security, and value increase exponentially with the number of users (according to Metcalfe's law). This makes Bitcoin more attractive to new users, creating a positive feedback loop that reinforces Bitcoin's dominance. Unlike the network effect, which everyone agrees on, some features in Bitcoin are still contentious. These can often be described by the famous game theoretic scenario known as the *"Prisoners' Dilemma."* In this scenario, while a player would personally benefit by acting alone, he knows that his benefits can be offset by the other player taking the same action. At the same time, both of them are better off if neither takes action. Miners and nodes face a similar dilemma regarding protocol changes. Maintaining a stable and secure network is in everyone's collective interest. While individual actors might be tempted to push for changes that benefit them personally, Bitcoin's decentralized governance ensures that any significant changes must be widely accepted, mitigating the dilemma. The Blocksize Wars were a classic example of the Prisoner's Dilemma, where mutual defection led to a network split. Those who initiated the action of forking, intending to benefit themselves, ended up doing themselves tremendous harm. Hey, Bitcoin Cash and Bitcoin SV, are you guys ok? Yet another game theory situation is known as the *“tragedy of the commons,”* which states that if people harm a system but can spread that cost to others, those who can do this all will. Inflation is a great example of hoisting a cost onto others. But Bitcoin’s fixed supply prevents the tragedy of the commons in terms of monetary inflation. Unlike fiat currencies, where governments and privileged insiders can print more fiat money or get easy access to it and personally benefit, Bitcoin’s scarcity ensures that its value is not eroded by inflation, aligning individual incentives with the collective good. It is the anti-Cantillon effect. There is no mechanism to benefit the few at a cost to the many. Finally, let’s discuss *“coordination games.”* Bitcoin operates as a coordination game where all users, miners, and nodes benefit from agreeing on the rules and following the same protocol. This coordination ensures the network’s security and stability. Changes to the protocol, such as the implementation of SegWit, require broad agreement, reflecting the cooperative nature of Bitcoin’s governance. There are, on the other hand, features that are not in perfect Nash Equilibrium. Here are a few that come to mind: First up are scalability solutions. Proposals to expand the Lightning Network aim to improve Bitcoin’s scalability but are not yet universally agreed upon. Similarly, block size discussions are still ongoing, with some parties wishing to enlarge the block size, others upset that they’re already as big as they are, and even others wanting to reduce them. But for now, things are in an equilibrium stalemate state of everyone being unable to get others to agree with them. As Bitcoin’s mining subsidy decreases with each halving, a transaction fee market is developing, but the future dynamics of transaction fees are uncertain. The volatility observed in fees indicates we are by no means in equilibrium. Not yet at least. The whole consensus upgrade procedure, and Bitcoin’s governance in general, has no formal process. Agreeing on upgrades can lead to conflicts, as seen during the SegWit2x debate. Stakeholders (developers, miners, users) may have differing views on the necessity and implementation of changes, leading to potential forks or stalled upgrades. Each proposed consensus change in the last seven years appears to be a different game that played out differently. Even when it comes to enemies of Bitcoin, game theory serves to defend it as well. As my colleague, Brendan Lane, pointed out, if governments and central banks could coordinate to ban Bitcoin, they would. However, since other governments and banks might benefit from it by accumulating reserves themselves, they ultimately have no choice but to participate themselves. A true prisoner’s dilemma, thankfully. What stops governments from stopping Bitcoin? The fact that other countries’ governments won’t stop Bitcoin, especially rivalrous nations. We can even see this playing out in the current presidential election in the United States where two of the three candidates have already pledged to embrace Bitcoin so that other countries don’t get the upper hand on the U.S. In conclusion, I believe ossification is an illusion or, at the very least, a misnomer. Instead, I think much of Bitcoin is better described as being in Nash equilibrium – stable and unlikely to change but changeable should the circumstances themselves change. Moreover, it appears to me that we will get closer and closer to Nash Equilibrium in more and more of its features. In a sense, this is the evolution process of the Bitcoin protocol. It’s survival of the fittest features. It's a dynamic equilibrium where changes tend to happen less and less often. Yet, nothing can be taken for granted, as new information can quickly turn a stable aspect into a chaotic one. The most important thing, in my view, is that incentives, both monetary and at the protocol level, tend to keep everyone in check. To me, this system is indescribably beautiful and truly inspiring. It is a completely new governance system for broad-based human interactions. As Hayek once said, - *"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."* ### Rapha Zagury Rapha has spent his career on Wall Street. # 5 Reasons to Be Bullish Heading into 2024 - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/5-reasons-to-be-bullish-heading-into-2024/ While past performance is not a guaranteed indicator of future results, the combination of these catalysts suggests a heightened interest and investment in Bitcoin and another green candle year! --- **Sam Callahan** · January 17, 2024 · Updated June 27, 2024 2023 ended a stellar year for Bitcoin. Bitcoin ended the year up more than 155%. The nominal returns do not even capture how impressive Bitcoin’s performance was. On a risk-adjusted basis, Bitcoin was the third-best-performing asset that investors could have allocated their capital to last year. Only two tech stocks – Meta and NVIDIA - have better risk-adjusted returns than Bitcoin. ![](https://www.datocms-assets.com/56652/1705426502-01-risk-adjusted-returns.svg) Galaxy Digital, Bloomberg Despite this price run in 2023, it feels as though the party is just getting started. The momentum behind Bitcoin is palpable, and every day there seems to be a new major institution or legendary investor publicly speaking positively about Bitcoin. Lately, a new meme has been circulating social media that has some people confused. The meme consists of three green dots and one red dot. An example is shown below. ![](https://www.datocms-assets.com/56652/1705426669-02-meme.jpg?auto=format) What the meme is alluding to is Bitcoin’s long-term trend of having 3 up years, followed by 1 down year since 2011. This pattern is clearly visible when you look at the yearly lifetime chart of Bitcoin. ![](https://www.datocms-assets.com/56652/1705426697-03-bitcoins-long-term-trend.png?auto=format) This has many market participants expecting the trend to continue, which means, if history holds true, we just finished the first year of a potential three-year bull run. It leads to the question, “*Is another green dot in store for Bitcoin investors this year?*” Although historical performance is not indicative of future returns, there are several reasons for Bitcoin investors to be optimistic heading into 2024. In this piece, I will break down five bullish catalysts that have the potential to drive Bitcoin to new heights in 2024 and keep this trend alive. ### 1. The Approval of Spot Bitcoin ETFs For anyone focused on developments in the Bitcoin space, this first catalyst comes as no surprise. After nearly ten years of denials, multiple spot Bitcoin ETFs are set to be approved, which will make getting exposure to Bitcoin more accessible than ever before for millions of investors. Spot Bitcoin ETFs represent a milestone moment for the industry, not only is it a sign of acceptance from the titans of Wall Street and regulators, but they also have the potential to attract tens of billions of dollars in capital flows in the coming year. These flows will drive demand for the underlying Bitcoin and have the potential to impact its price significantly in the coming year and for years to come. These ETFs will make it so retail investors can get exposure to the price of Bitcoin just as easily as any other stock or bond in their traditional brokerage accounts. But who this impacts the most are many large institutions like pension funds, registered investment advisors, endowment funds, broker-dealers, and banks that are currently restricted from acquiring spot Bitcoin due to regulatory requirements. These large institutions manage trillions of dollars of wealth. An ETF is a security wrapper that fits into their existing regulatory frameworks. It will allow them to get exposure to the best-performing asset class, and the potential inflows could be huge. One segment that finds it more challenging to acquire spot Bitcoin on behalf of their clients is financial advisors. Although it is possible today, many are deterred from buying Bitcoin due to regulatory uncertainties with how to legally custody the Bitcoin or because their broker-dealer restricts them from acquiring it. [An ETF fixes this](https://www.swanbitcoin.com/what-bitcoin-etfs-mean-for-you/). This was evident in the results of a recent Bitwise survey that asked 437 financial advisors about their thoughts on Bitcoin. Below are some of the key takeaways: **... But the vast majority see its approval as a major catalyst.** Eighty-eight percent (88%) of advisors interested in purchasing Bitcoin are waiting until after a spot bitcoin ETF is approved. **Access to crypto is still limited.** Only 19% of advisors said they are able to buy crypto in client accounts. **Once you invest, you tend to stay invested (or invest more).** Ninety-eight percent (98%) of advisors who currently have an allocation to crypto in client accounts plan to either maintain or increase that exposure in 2024. **Among advisors who allocate, the size of the allocation is rising.** Large crypto allocations (more than 3% of a portfolio) more than doubled, from 22% of all client portfolios with crypto exposure in 2022 to 47% in 2023. **Client interest remains strong.** Eighty-eight percent (88%) of advisors received a question about crypto from clients last year. These results show how regulatory restrictions have prevented many financial advisors from allocating to Bitcoin, and that many are waiting for a Spot Bitcoin ETF to do so. According to data from Cerulli Associates, financial advisors manage around $30 trillion on behalf of retail investors. If only 1% of the $30 trillion that financial advisors manage were allocated to these ETFs, that would mean $300 billion would flow into the asset. The potential inflows into these ETFs go way beyond just financial advisors too. International bank Standard Chartered recently published its own analysis that concluded that $50 to $100 billion could flow into these Spot Bitcoin ETFs in 2024 alone. ![](https://www.datocms-assets.com/56652/1705427203-04-estimated-2024-inflows.svg) Standard Chartered Research Although these are just speculative predictions, it’s safe to say that we will see substantial inflows into these products once they are approved, which will be a huge tailwind for the price of Bitcoin moving forward. With firms like BlackRock, Fidelity, Franklin Tempelton, and Invesco now marketing their Bitcoin ETFs, we will now have the largest, most trusted firms in the world spending millions of dollars to market the benefits of owning Bitcoin in a portfolio. It’s important to note that the ETFs have several disadvantages to owning real Bitcoin. For starters, there is no annual fee when you take self-custody of Bitcoin. Secondly, when you own real Bitcoin, you remove all counterparty risk and don’t have to trust a third party to secure it on your behalf. Thirdly, Bitcoin trades 24/7/365, unlike traditional securities. And lastly, owning spot Bitcoin offers tax benefits such as less prohibitive tax lost harvesting compared to securities like ETFs. The hope is that the ETF will act as a top-of-funnel and get more people than ever before gaining exposure to it. Once people invest in an ETF, they will begin to learn about what makes Bitcoin special, and then will eventually decide to own the real thing. This will surely be aided by the marketing campaigns from these large ETF issuers. There will be winners and losers when it comes to [these ETFs](https://www.swanbitcoin.com/the-race-is-on-eleven-bitcoin-etfs-launch/). It’s unsure which ones will take significant market share, and which ones will fail. But the real winner here will be Bitcoin itself as these ETFs will likely help drive Bitcoin education and its adoption to new heights. ### 2. FASB Updates Bitcoin Accounting Rules Another group of capital allocators that have face hurdles to purchasing Bitcoin are CFOs of corporations. This is in part due to there being no accounting or disclosure rules specifically for Bitcoin. Businesses need to classify it as an *“intangible asset,”* which means they have to mark the value of their Bitcoin holdings on their balance sheets when it goes down, but they can’t record the value when the value goes back up. This creates a huge balance sheet impairment for these companies if the price of bitcoin drops. It creates a situation where a company has to potentially mark its Bitcoin on its balance sheet at a lower value than the market price when it is simply holding it as a treasury reserve asset. But that all changed in 2024. FASB has officially approved new rule changes that will apply fair accounting rules for Bitcoin beginning in December 2024. This fixes this impairment problem and will allow businesses to recognize losses and gains on their Bitcoin positions and treat Bitcoin just like any other financial asset on their balance sheet. This accounting upgrade will help the adoption of Bitcoin as a treasury reserve asset at the corporate level. It may sound boring, but this represents a large step forward to dropping the barrier of entry for corporations that want to allocate of portion of their treasuries to Bitcoin. CEO of Lightspark and former PayPal President David Marcus commented on the significance of this news: ![](https://www.datocms-assets.com/56652/1705427551-05-tweet.jpg?auto=format) We have already seen corporate adoption of Bitcoin grow, albeit at a slower pace than many expected after MicroStrategy announced its Bitcoin strategy in 2020. This is the list of known corporations that held Bitcoin in 2020. ![](https://www.datocms-assets.com/56652/1705427644-06-bitcoin-treasuries.jpg?auto=format) Bitcointreasuries.net Since 2020, the number of corporations on this list has nearly increased fivefold. Despite restrictive accounting rules, some corporations have chosen to allocate to Bitcoin anyway. US corporate cash is currently sitting near all-time highs at almost $4 trillion, well above historic averages. ![](https://www.datocms-assets.com/56652/1705427708-07-us-corporate-cash.svg) FRED, Anthony Carfang Now that more favorable accounting rules are set to go into effect for Bitcoin, these corporations will find it easier to allocate some of this cash into a store of value that protects their treasuries from inflation and [currency debasement](https://www.swanbitcoin.com/monetary-debasement-vs-supply-shocks/). As Michael Saylor frequently says, today, cash is a liability: a melting ice cube. If only a small percentage of these trillions of dollars in corporate cash flow into Bitcoin this year, this could lead to just another wave of demand that could send Bitcoin’s price higher. ### 3. Potential Fed Cuts Are On the Horizon Even more inflationary policies might come sooner than many expected. Throughout 2022, asset prices suffered as the Federal Reserve went on one of the fastest hiking cycles in its history. At the same time, the government continued on its spending spree. It has run massive trillion- dollar deficits over the last couple of years which have come into conflict with the Fed’s goals to bring inflation as it raised rates. By the CBO’s own projections, these deficits are only projected to grow in the coming years. ![](https://www.datocms-assets.com/56652/1705427837-08-total-deficits.svg) CBO As the government continues to spend, now the Fed looks like it is ready to take its foot off the brake and stop its rate hikes. In fact, the Fed is now signaling they will cut rates despite CPI inflation still running well above their 2% target. The market is now expecting the Fed to cut rates six times, or for the Fed funds rate to drop 1.65%. ![](https://www.datocms-assets.com/56652/1705427880-09-futures-implied-fed-funds.svg) The Daily Shot Last week, Dallas Federal Reserve President Lorie Logan gave the first hint that the Fed is beginning to contemplate when to end its quantitative tightening program. ![](https://www.datocms-assets.com/56652/1705427930-10-feds-logan-backs-first-slowing.jpg?auto=format) If the Fed does decide to stop shrinking its balance sheet and returns to cutting rates while the government continues to run trillion-dollar deficits, we could see inflation come back with a vengence. In that environment of stimulative monetary and fiscal policy, liquidity will flow into financial markets and asset prices will run once again. It will be scarce, hard assets that benefit the most, and nothing is more scarce than Bitcoin. A bear case for Bitcoin has always been sound monetary and fiscal policy. If the government were to suddenly decide to cut spending and implement austerity programs and the Fed were to have a change of heart and decide that it needed to keep rates high, shrink its balance sheet, let asset prices fall, and not intervene in the free market, then that would be a headwind for Bitcoin. But what we are seeing is the exact opposite. It appears that the government will continue to spend and the Fed will continue to do what it has done for the last several decades, intervene in the market, and blow asset bubbles. In [that process](https://www.swanbitcoin.com/cantillon-effect/), it will be Bitcoin which is a prime beneficiary. 2024 could end up being another year where the Fed and Treasury inadvertently pump Bitcoin’s price with their reckless policies. ### 4. Bitcoin Holders Are Not Selling Up until this point, everything we’ve discussed has focused on the demand side of the equation. Spot Bitcoin ETFs, new FASB rules, and more accommodative monetary and fiscal policy can all help increase demand for Bitcoin over the next year. But there are also factors on the supply side of Bitcoin that could positively impact Bitcoin’s price over the next 12 months. Simply put, Bitcoin investors are not moving their Bitcoin. Evidence of this can be observed on-chain. Today, 70% of the circulating supply has not moved in at least one year. This is near an all- time high. ![](https://www.datocms-assets.com/56652/1705428563-11-bitcoin-percent-of-supply-last-active.svg) Glassnode Furthermore, a record 43% of the circulating supply hasn’t moved in at least 3 years. ![](https://www.datocms-assets.com/56652/1705428621-12-bitcoin-percent-of-supply-last-active-3.svg) Glassnode With so much of the circulating supply being held by holders who are not moving their coins, it leads to the question, how much bitcoin is currently available for these potential new sources of demand? Today, there are 2.3 million BTC being held on all exchanges. ![](https://www.datocms-assets.com/56652/1705428678-13-bitcoin-balance-on-exchanges.svg) Glassnode This data shows just how scarce Bitcoin is. With large institutions now likely set to start allocating tens of billions of dollars to the asset, they will likely find it difficult to acquire Bitcoin without driving the price up given the small amount of Bitcoin available to purchase today. In the end, it will likely take much higher prices for these long-term Bitcoin holders to part with their precious bitcoin, and perhaps this dynamic is exactly what we are about to see unfold in the year to come. ### 5. The Halving is Coming 2024 marks a very special year in Bitcoin because the fourth [Bitcoin halving](https://www.swanbitcoin.com/bitcoin-halving-dates/) will take place – a quadrennial event where the supply of newly-issued Bitcoins gets cut in half. ![](https://www.datocms-assets.com/56652/1705428919-14-countdown-to-bitcoin-halving.svg) NakamotoPortfolio.com Here is a quick recap of Bitcoin’s halving schedule: ![](https://www.datocms-assets.com/56652/1705428996-15-halving-table.svg) In April, Bitcoin’s block reward will be cut from 6.25 to 3.125 BTC. This translates to the amount of Bitcoin mined per day dropping from 900/day to 450/day. Historically, Bitcoin’s price has rallied both before a halving and afterward. Below is a chart that highlights the percentage change by the day leading up to the last three halvings. ![](https://www.datocms-assets.com/56652/1705429187-16-halving-percentage-change.svg) Fidelity, Coin Metrics Only the 2020 halving saw a decline leading up to the halving event, and this was caused by the pandemic crash where all asset classes fell simultaneously. I expect the price to front-run the halving once again this year because more investors than ever before are familiar with the halving. It will become a frequently discussed topic on television and mainstream media and will drive more attention to Bitcoin. I think the narrative around the halving will impact Bitcoin’s price far more than the actual halving. The reason why some people argue that the halving impacts Bitcoin’s scarcity is it reduces the amount of Bitcoin being added into the circulating supply. The impact of this may have been more true in Bitcoin’s early days when a smaller amount of the total Bitcoin had been mined, but at this next halving, over 95% of the Bitcoin will have already been mined. Said differently, the proportion of new supply in relation to the existing supply has diminished from one halving to the subsequent one. Many miners tend to sell at least a percentage of the [Bitcoin they mine](https://www.swanbitcoin.com/how-much-does-it-cost-to-mine-a-bitcoin/) in order to hedge their business risk and pay for their operational costs. More miners used to hold a significant portion of the bitcoin they mined, but they learned a hard lesson in treasury reserve management when the bear market came around. Today, more miners sell a portion of the Bitcoin they mine and thus represent a price-insensitive seller in the market. Let’s assume that miners sell 100% of the Bitcoin they mine per day. This would equate to, at today’s prices, about $40 million in selling pressure each day. When that number gets cut in half, that will equate to about $20 million in selling pressure each day. Given that Bitcoin’s daily trading volume is in the tens of billions today, the market will surely be able to absorb that selling pressure without much difficulty. Nonetheless, Bitcoin’s price historically has rallied significantly after halving events. Below is a chart that highlights how Bitcoin rallies the year before a halving event (yellow) and the year after a halving event (purple). ![](https://www.datocms-assets.com/56652/1705429407-17-bitcoins-halving-timeline.svg) Coindesk, Coinmetrics While correlation is not causation, past halvings show that this rare event is often associated with positive price movements in Bitcoin, but this could be more of a coincidence. We also have to consider investor sentiment, liquidity conditions, and other broader macroeconomic factors that could have influenced the price. The more nuanced reason for why the halving is so bullish for Bitcoin is it acts as a cleansing mechanism in the Bitcoin mining industry. Every four years, miner profitability gets cut in half with the halving. Because of this, only the most efficient mining operations, run by the best management teams with the cheapest sources of energy, survive. The halving can be thought of as a Darwinian *“survival of the fittest”* for the mining industry. This can be observed by looking at the last halving event. Immediately after the block reward was cut in half, unprofitable miners shut down their operations and the hash rate fell 25%. ![](https://www.datocms-assets.com/56652/1705429476-18-bitcoin-mean-hash-rate.svg) Glassnode Eventually, the hash rate recovered as more efficient miners plugged in and took market share. This strengthens the security and efficiency of the Bitcoin network for the long term. ### Conclusion As we look ahead into 2024, the future of Bitcoin appears bright. The confluence of factors outlined in this piece – ranging from the approval of Spot Bitcoin ETFs, the updates in Bitcoin accounting rules by FASB, to the anticipated effects of the Federal Reserve’s policy changes, and the growing scarcity of circulating bitcoin due to holders’ reluctance to sell, and, finally, the halving event – paints a picture of an asset class poised for significant growth. While the past performance of Bitcoin is not a guaranteed indicator of future results, the combination of these catalysts suggests a heightened interest and investment in Bitcoin and increases the probability that we will see the *“three green, one red”* trend continue this year. These catalysts, coupled with the evolving understanding and acceptance of Bitcoin as a legitimate and valuable asset, could very well drive Bitcoin to unprecedented levels in 2024. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Finding Liberty in Parallel: Bitcoin and the Free Cities Movement URL: https://www.swanbitcoin.com/politics/finding-liberty-in-parallel-bitcoin-and-the-free-cities-movement/ Rising movements to establish free, autonomous jurisdictions around the world are working alongside Bitcoin to establish parallel liberty. --- **Stephan Livera** · October 27, 2022 · Updated June 27, 2024 *This article from October 27th, 2022 by Stephan Livera was originally published on Bitcoin Magazine* Last weekend, I had the pleasure of attending and speaking at [Liberty In Our Lifetime](http://lifetimeliberty.com/), a conference organized by the [Free Cities Foundation](https://free-cities.org/) in Prague, Czechia. And it dawned on me that we’re now seeing the rise of an adjacent and relevant movement for Bitcoiners interested in citadels and what they might even look like in the real world. The Free Cities Movement comprises a combination of Libertarians, Bitcoiners, free private city operators and investors, seasteaders, those seeking to create intentional communities, and those attempting to create parallel institutions and structures within the existing statist world of today. What lessons are there in this movement, and how can more Bitcoiners get involved? At a high level, there is a strong crossover between the cause of many Bitcoiners and those pursuing free cities. They have a broadly Libertarian ethos and are interested in financial freedom and creating parallel structures. For people unfamiliar with the free cities movement or the free private city concept, I recommend listening to my podcast episodes with Titus Gebel ([SLP161](http://stephanlivera.com/161), [SLP417](https://stephanlivera.com/episode/417/)) or reading the [free private cities white paper](https://free-cities.org/free-private-cities-whitepaper/) as ways of learning more. ![](https://www.datocms-assets.com/56652/1708474517-panstruct.webp?auto=format) Liberty in our Lifetime Conference As a leader in the free private cities movement, Gebel opened the conference up with a reminder of why there is a fundamental need for this parallel approach. He noted that modern-day states are being driven by the *“bolshie-woke”* progressives. Many institutions of society have effectively been captured, bloated, and/or corrupt. Progressives simply go where their ideas do not have to work in the real world, such as universities or the media. Over time, the social and cultural degeneration has worsened, such that even a moderate or center-left person in decades gone by is now considered a *“far right-wing”* person. For this reason, there is a need to create alternatives. But it is only through trial and error that we can understand which approaches work and which ones don’t. Of course, many states will resist this kind of thing. Still, some may be brought on board if the approach is *“win-win”* in terms of creating local jobs and opportunities for people or attracting foreign investment. Overall, I sensed a bias toward action rather than merely speaking about the philosophy of freedom and Libertarianism, which is one I appreciate. ### ZEDES: PRÓSPERA MORAZÁN AND CIUDAD MORAZÁN Some of the most prominent projects within the free cities community are based on the idea of using [Honduran Zones For Employment And Economic Development](https://www.csis.org/analysis/engines-prosperity-promise-zones-employment-and-economic-development-zedes-honduras#:~:text=In%20Honduras%2C%20the%20Zones%20for,as%20special%20subdivisions%20of%20Honduras.) (ZEDEs) to create the conditions for good, private governance. Now, there's good and bad. The good is that the projects are carrying forward with building, and given a setup that promises favorable regulation and lower taxes, this could be attractive for investors, entrepreneurs, and even workers. The bad is that there are challenges on the way, and some states will resist as they could view free private cities as a challenge to their national sovereignty. [Trey Goff of Próspera](https://prospera.hn/about/) spoke about the market for governance and how there is a huge market here in terms of additional potential wealth globally. How much extra wealth could be created if people worldwide had access to high-quality governance? ![](https://www.datocms-assets.com/56652/1708474436-100tpros.webp?auto=format) Próspera Government Could these free private cities replicate the successes of other economically free zones such as Shenzhen, Hong Kong, Singapore, or Dubai? ![](https://www.datocms-assets.com/56652/1708474373-cities.webp?auto=format) Próspera Government The Próspera governance platform was laid out like so: ![](https://www.datocms-assets.com/56652/1708474330-simple.webp?auto=format) Próspera Government Goff also noted that by providing the right circumstances, such as competitive taxes (such as a 10% flat income tax, 2.5% value-added tax (VAT), and 1% land value), along with high-quality infrastructure and dispute resolution, they might hypothetically achieve the following growth: ![](https://www.datocms-assets.com/56652/1708474270-bizmodelhond.webp?auto=format) And it’s not all about rich businessmen and expats. There will be job opportunities for local Hondurans who could come and work for a company inside the ZEDE/free city. Some projects intend to provide work opportunities for blue-collar workers and have housing that is low-cost and accessible. Some speakers mentioned how the ZEDEs want to hire Hondurans and provide well-paid jobs, paying above what they would otherwise earn. ### THE ELEPHANT IN THE HONDURAN ROOM To be clear, there is one elephant in the room: the recent Honduran election and [change in president](https://en.wikipedia.org/wiki/Xiomara_Castro), and the Honduran congress repealing the so-called [ZEDE law to undo the ZEDE framework](https://www.reuters.com/world/americas/honduran-congress-unanimously-nixes-special-economic-zones-2022-04-21/). There is technically a 50-year protection in place, according to the presentations, as the government is supposed to respect the *“acquired right.”* However, one Free City Project speaker noted that the government still controls the men with guns. So, it’s still unclear what happens with these particular ZEDEs/free private city projects as a ratification process is expected to take place next year. I sympathize with the people operating, investing, and promoting the ZEDEs, as they are likely subject to unfair mainstream media treatment. Bitcoiners know this feeling well, as they are subject to being told that “*Bitcoin is dead” (for the thousandth time) or that “Bitcoin boils the oceans*” (while the mainstream cites a statist central bank blogger with an ax to grind). From what I could tell, ZEDE operators seem to want to provide liberty, choice, and improved prosperity. ### ZEDES FROM A BITCOIN PERSPECTIVE Interestingly, for Bitcoiners, Próspera is open in terms of legal tender, and there is no capital gains tax, permitting free spending of Bitcoin without accounting and record-keeping headaches. Also of note is that the island of Roatán (Próspera is located on this island) also has focused on Bitcoiner education. Dusan Matuska spoke at the conference about his educational efforts with [AmityAge Academy](https://www.amityage.com/academy/), Honduras's first Bitcoin education center. Bitcoin workshops, restaurants, and pubs on the island accept Bitcoin, and even Bitcoin education projects and events are planned, such as the [Bitcoin hill run](https://hrmu817gb36.typeform.com/to/R5UDABQe?typeform-source=linktr.ee). [![](https://www.datocms-assets.com/56652/1708473977-hillrun.webp?auto=format)](https://hrmu817gb36.typeform.com/to/R5UDABQe?typeform-source=linktr.ee) Bitcoin Hill Run ### SEASTEADERS Some influential people from the seasteading movement, such as [Patri Friedman](https://www.seasteading.org/staff/patri-friedman/) [and Joe Quirk](https://en.wikipedia.org/wiki/Joe_Quirk), were also present. The tagline I noticed was, *“Stop arguing. Start seasteading,”* which I can understand given the attitude of many statists around the world who proactively stop Libertarians and other free-minded people from having freedom. If all (or most) of the land on earth is claimed and ruled by statists, is the answer really to go and set up shop on the seas? I saw various approaches and ideas being shared in this way, such as creating a SeaPod (or perhaps to be stylized as a *“SeaBNB”)*, which could be set up so that the visitors/inhabitants get a full 360-degree view of the sea. [![](https://www.datocms-assets.com/56652/1708473929-seapodceo.webp?auto=format)](https://oceanbuilders.com/seapod-eco/) OceanBuilders.com Various technological and almost sci-fi ideas were shared, too, such as drone delivery, helipads, and intelligent voice assistants (that don’t *“phone home”* to Apple, Google, Amazon, etc.). Separate from the SeaPod, there were also ideas presented on how to gradually create a community of like-minded seasteaders who would first get together in their boats in marinas around the world and then slowly and gradually shift out in stages, the idea being to form connected floating platforms that permit freer markets out at sea, and to have the ability for people to join, leave or to reconfigure their components of the joint floating platform, all within a free market voluntary context. ### FLAG THEORISTS Of course, from the Libertarian world, there is *“flag theory,”* we saw some consultancy services such as [Katie The Russian’s](https://twitter.com/KatieTheRussian) [Plan B Passport](https://planbpassport.com/) and [Staatenlos](https://staatenlos.ch/)’ talk about playing the geo-arbitrage game. This could mean using various kinds of *“flags”*: citizenships, residencies, business structures, bank accounts, phone service, insurance, and various other components to select from choices worldwide — instead of being locked into one country. This crowd is very familiar with using Bitcoin as part of an overall strategy to gain freedom. Generally, they are comfortable transacting using Bitcoin. ### BITCOINERS Of course, Bitcoiners were present, too. I gave a talk about some practical tools and examples of people or organizations using Bitcoin as a parallel system. [![](https://www.datocms-assets.com/56652/1708473846-example-3.webp?auto=format)](https://www.freemadeira.com/) Free Madeira Initiative We also saw some well-known Bitcoiners present and host a panel discussion on Madeira, an autonomous region of Portugal. Daniel Prince, Knut Svanholm, Andre Lojas, Jeff Booth (virtually), Greg Foss (virtually), and Lawrence Lepard (virtually) presented on the [Free Madeira](https://www.freemadeira.com/) initiative. And, of course, while in town in Prague, the Bitcoiner crew visited [Paralelní Polis](https://bitcoinmagazine.com/industry-events/bitcoin-returns-to-its-cypherpunk-roots-an-interview-with-lupt-k-and-sip-of-hackers-congress-paraleln-polis-1475087856), a unique organization known for promoting liberty and crypto anarchy. There, you can pay with Bitcoin on-chain or through Lightning! [![](https://www.datocms-assets.com/56652/1708473726-polis.webp?auto=format)](https://bitcoinmagazine.com/industry-events/bitcoin-returns-to-its-cypherpunk-roots-an-interview-with-lupt-k-and-sip-of-hackers-congress-paraleln-polis-1475087856) Paraleni Polis ### SUMMING UP These various projects and methods are additive and help the overall cause of freedom. For example, the flag theorists encourage individuals to acquire additional residencies or passports and play the jurisdictional arbitrage game; this helps reinforce the idea that countries or states have to *compete* with each other to attract talented individuals or businesses. The creation of new free city projects also helps provide new opportunities. The seasteading efforts (though perhaps not my cup of tea) are still additive in providing new opportunities for people to express their desire for freedom and to choose a different jurisdiction. Of course, most powerfully, Bitcoin has a big role to play in enabling these other projects and initiatives to operate, even *despite* the fiat banking system's resistance. We should all look for ways that we can act more freely and grow our parallel financial system: Bitcoin. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # How to Get the Most From In-Person Bitcoin Events URL: https://www.swanbitcoin.com/culture/how-to-get-the-most-from-in-person-bitcoin-events/ Bitcoin events are great expressions of the Bitcoin ethos and critical touchpoints for newcomers and technology innovators alike. --- **Stephan Livera** · February 2, 2022 · Updated June 27, 2024 *This article from February 2rd, 2022 by Stephan Livera was originally published on Bitcoin Magazine.* Bitcoin conferences and meetups are great expressions of the Bitcoin ethos and culture. They come in all varieties, from casual drinks meetups to formalized talks and panels to small-scale conferences all the way up to the biggest events that see tens of thousands of attendees. I’m a believer in building Bitcoin communities and meetup groups because of the connections you make, the things you learn, and the experiences you have. These are highly valuable for many reasons. Newcomers (newcoiners) often don’t even know what questions to ask, so they learn by coming and soaking up the discussion of regulars at the meetup. Regulars enjoy discussing various aspects of Bitcoin, whether that is technology, economics, the social and cultural impacts of fiat money, or other aspects. ### *“JUST SEE IT FOR FREE ONLINE”* Now, when it comes to conferences with a ticket price, one argument that confuses me is the people who say, “*Don’t pay for an overpriced conference ticket; you can just see the talks for free online.*” Yes, it’s true that many Bitcoin conference teams will livestream the event or post the videos online afterward, but seeing this content is not the only or even the main reason to go. This is like arguing that “*You shouldn’t go see that singer live; you can just listen to their music for free on YouTube or Spotify.*” There is overwhelmingly an audience of people who want to see it live, and they will happily pay for this. While some argue that you should just consume material online for free, I think this is missing the point. The benefit for newcoiners is that they’re receiving *guidance*. It’s a steer in the right direction regarding who to follow, what hardware and software Bitcoin tools to use, what books to read, which podcasts to listen to, etc. By hearing speakers and meeting other like-minded Bitcoiners who have spent time going down the Bitcoin rabbit hole, you can quickly get up to speed on what you need to know. Take advantage of the curation of the conference organizers, who ideally vet and invite speakers who have something useful or educational to say. There’s also a selection bias involved because the more committed people are the ones who will travel for an event. This vastly differs from merely trusting what is reported about Bitcoin in the corporate media or trusting YouTube’s recommendation engine. The YouTube recommendation engine will often point you to the overly excited people who talk about whether Bitcoin’s price is pumping or dumping that day, but it won’t necessarily point you in the direction of learning about the philosophy, economics, or technology of Bitcoin. ### BUILDING NETWORKS There’s a certain magic to meeting up with a bunch of like-minded people that you get from Bitcoin meetups and conferences. In many cases, people who attend Bitcoin conferences or events soak up the vibe and community ethos and later go on to host their own Bitcoin meetups and conferences. I’m reminded of how my friend [@BTCSchellingpt](https://twitter.com/BTCSchellingPt) attended Baltic Honeybadger in Latvia and became a co-organizer of Bitcoin events in Australia, such as Bitcoin Brisbane and Bitcoin Bush Bash. This is part of how Bitcoin is spreading virally. Without having in-person events to go to, newcoiners who have only been exposed to material online might not feel like they’re part of a *bona fide* community or group. Some people who argue that conference tickets are overrated are probably the kind of people who have already *“graduated”* from the beginner level. But even here, they might benefit from staying up on the latest tech or business ideas. For them, the benefit might be more about networking and meeting cool people in the space, or it could even be making connections that enable you to work or hire in the space. ### MAYBE YOU’RE NOT PICKING THE RIGHT CONFERENCE OR EVENT? For some, it’s just a matter of selecting the right event. The biggest event on the Bitcoin event/conference annual calendar would surely be [Bitcoin 2022](http://b.tc/conference) by the BTC Media team, with tens of thousands of attendees (*disclaimer: BTC Media operates* Bitcoin Magazine). But there is definitely a range of events to suit different tastes and interests. Let’s overview some: [LaBitConf](https://www.labitconf.com/) is the big one in South America, as this conference has been running since 2013 and regularly features big names. With the bigger audiences, you will find more newcoiners as attendees. In contrast, the smaller conferences tend to be more ideologically aligned with long-time Bitcoiners and/or those looking to build their technical knowledge. But if you go into them with the right expectations, you can have a great time at both event types. If you’re looking for a smaller and perhaps more focused event, perhaps [BitBlockBoom](http://bitblockboom.com/) in the U.S. or Baltic Honeybadger in Latvia (by the [Hodl Hodl team](https://hodlhodl.com/)) for the European Bitcoiners would be right for you. Historically, these tend to have somewhere between 300 to 900 attendees. Depending on how technical you want the focus to be, you might enjoy technically-focused events that come up, such as [Advancing Bitcoin](https://www.advancingbitcoin.com/) in London, [Adopting Bitcoin](http://adoptingbitcoin.org/) (recently in El Salvador), or [TABConf](https://tabconf.com/) ( in Atlanta). Or, of course, look for regular Socratic seminars or BitDevs meetups that exist as regular meetups. For instance, you might look to [NYC BitDevs](https://bitdevs.org/), [SF Bitcoin Devs](https://www.sfbitcoindevs.org/), [Austin BitDevs](https://austinbitdevs.com/), [Chicago BitDevs](https://www.meetup.com/ChiBitDevs/), [Sydney Socratic Seminars](https://github.com/bitcoin-sydney/socratic) (started by yours truly, but now hosted by my friend Lloyd Fournier) or [London Bitcoin Developers](https://www.meetup.com/London-Bitcoin-Devs/). If you’re looking for more hands-on events and workshops, you can typically find these as side events to larger conferences and occasionally done as one-off events by companies or individuals in the space, such as my friends [Jimmy Song](https://twitter.com/jimmysong) and [Giacomo Zucco](https://twitter.com/giacomozucco). ### SOME TIPS FOR ATTENDING #### GO EARLY AND MAKE A WEEK OF IT For larger events, the conference doesn’t just start on the *day of* the event; the fun begins beforehand. There will be side events: some official, some unofficial. You’ll get great opportunities to run into interesting people at these, and you might even get a chance to meet people who you might not have otherwise. Keep an eye out for side events that will be fun or educational. These might take the form of a workshop or community meeting, or it could simply be a drinks meetup. You’ll make new friends or see old friends that you can catch up with later at the conference. #### DON’T BE AFRAID TO SAY HELLO Don’t be afraid to say hello to new people at Bitcoin events. You’ll have a better time of it once you build up friend groups and connections. Part of the fun is the shared experience that happens in the side conversations, after parties, or over food and drinks while out. So, don’t be afraid; most people there are also interested in meeting like-minded individuals. You might find yourself making some random connection or bonding over the shared experience of singing karaoke in a bar nearby. For all you know, these connections could lead to finding a job in the space or making new friends who can help you with Bitcoin questions later down the line. Bitcoin Twitter characters will also be around, so this is a chance to meet them in real life. #### USE GROUP CHAT CHANNELS Most Bitcoin conferences have chat channels, such as a Telegram channel. Join that to get updates, or you can quickly ping and find out where people are and what’s happening. #### CONSIDER VOLUNTEERING FOR A FREE TICKET If the entry price is a bit steep for you, consider volunteering at the event. Yes, you’ll spend time doing errands, moving things, or corralling speakers. Still, you’ll have an exciting experience and a chance to meet people this way, too. #### BRING A SMALL AMOUNT OF SATS WITH YOU You’ll want to bring a small amount of Bitcoin with you in your mobile phone wallet. This will be handy if you want to buy things at the conference or pay people back for lunch/dinner (typically, one person might cover the bill, and everyone else pays them their own shares over Lightning). Lightning wallets are ideal for these scenarios just because of the speed, ease, and low cost they provide. #### OPSEC TIPS Don’t talk too much about your personal life, especially where you live or where and how you hold your coins/keys. As Jameson Lopp says, talk about Bitcoin, but do not talk about *your* Bitcoin. While at the conference, some attendees prefer to use a burner phone with an eSIM not connected to their personal identity. Security-conscious attendees generally don’t connect to Wi-Fi and use mobile data instead. Don’t leave personal items or devices unattended. #### EMBRACE IRRELEVANCE As Bitcoin OG [Mandrik](https://twitter.com/mandrik) once told me, embrace becoming irrelevant eventually. For me as a Bitcoin podcaster, writer, etc., I fully acknowledge that someday, there won’t be much use in solely being a *“Bitcoin podcaster.”* This makes about as much sense as being a *“money podcaster.”* But for now, Bitcoin is an *“industry”* in its own right. Over time, many sub-fields of Bitcoin today will simply merge into their broader fields of society. For example, Lightning-focused technologies might fold into payments or other entrepreneurial conferences and events. Mining might end up merging with energy conferences, with mining hardware merging into hardware conferences. Decades from now, Bitcoin protocol development might become something like web protocol and standards-setting boards. Economics discussions will take place at economics events and conferences. #### BUT THERE’S A LONG WAY TO GO BEFORE THAT HAPPENS There will be fortunes won and lost in this industry, and there’s so much to be done. As Ron Paul says, money is half of every commercial transaction. So, there are many opportunities, whether you’re a developer, entrepreneur, investor, or work in some other capacity. There’s work to be done helping people secure their coins, helping people pay in or receive sats as merchants or as employees, there’s privacy technology to be developed and technology that will help Bitcoin scale to billions of users. Conferences and meetups are a great way to get involved or stay current. Enjoy it while it lasts! ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Bitcoin: Reuniting a Deeply Divided World - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-reuniting-a-deeply-divided-world/ Bitcoin’s unchangeability is the fix we have needed for money throughout history. --- **Tomer Strolight** · December 18, 2023 · Updated June 27, 2024 ### Bitcoin: Reuniting a Deeply Divided World *“Divide and conquer,”* goes one saying. It’s true. If a group is separated into fragments that are unable to cooperate or, worse, that fight with one another, those divided parts are easier to conquer. Those parts may even destroy one another, allowing their conqueror a victory without having to do the fighting himself. All that needs to be done is to sew and nurture the seeds of division. When we look around at the world today, we see deep and growing divisions. Whether we look globally, nationally, locally, or most sadly, even within families, divisiveness and disagreement are everywhere. The division lines that have been drawn are not merely geographic; they are also demographic - age groups, races, genders, wealth or income levels, etc...; they are religious; they are of course political - left vs right and the like; and they are philosophical. We have become a deeply divided civilization, fighting over so many things it is hard to even keep track of all of them. ![](https://www.datocms-assets.com/56652/1702917535-america-can-t-collaspe.jpeg?auto=format) What has led to this division? Are we spiraling toward divisions so great they will tear apart our civilization? Is uncivilized conduct-rudeness, ostracism, violence, and collapse in the direction our civilization is headed towards? Few people truly want civilization itself to collapse. But many find themselves unable to come to an understanding with groups, they find themselves disagreeing with. ### We Disagree Mostly On Things We Believe We Can Change Somewhat ironically, it turns out the things we cannot agree on are the things we believe we can change. Conversely, the things we can’t change are the things we generally agree upon. We are not, for example, divided when it comes to the law of gravity. And there are no global debates on whether one plus one equals two. Nobody denies that days are 24 hours in length. ![](https://www.datocms-assets.com/56652/1702919107-tomer-length-of-time.png?auto=format) But as soon as we find ourselves in a realm where we think we might be able to change something, like the climate, for instance, we can fight over whether, in fact, we can, and whether we should, and over how much we should or should not. It turns out that the power to change things is where division finds its foothold. The more important a thing is to us, and the easier it is to change, the more we find ourselves fighting over it. Some of the foundational systems of our civilization have been suffering from precisely this ailment. They seem to have devolved away from their primary purposes and into institutions whose incentives foster division. Consider politics. Politicians seeking to be elected must differentiate themselves from their political opponents. They have come to do so by choosing polarizing platform issues that divide the population along demographic, political, and philosophical lines. ![](https://www.datocms-assets.com/56652/1702919043-tomers-politicians.png?auto=format) Major media outlets, too, have abandoned neutrality and objectivity. They profit from increased engagement. They know that engagement with their content rises dramatically when there is a dramatic conflict to cover. Thus, finding and then sensationalizing situations and fanning the flames of division rewards them with that increased engagement. In fact, today’s media environment has been called *“the engagement economy.”* It is principally characterized by this phenomenon of doing whatever it takes to drive and maintain user engagement, often through radicalized (and untrue) content. Having differences of opinion is not itself the problem. Instead, it is the belief that we cannot *“live and let live”* that causes one side of a division to view the other side’s behavior as intolerable. Yet, if we keep drawing more and more lines of division that make us fear, hate, exclude, mistrust, and separate ourselves from one another, our civilization will continue to fracture and quite possibly collapse. **Is there hope?** Can we heal the wounds of division and reunite groups that have been separated. Can we tolerate our differences of opinion or find peaceful ways to resolve them? ### How can we change course away from divisiveness and back towards *“unitedness?”* It turns out that throughout history, money has been a great uniter. The peaceful trade of goods and services, using a shared money between separate groups, whether they were tribes, nations, or religions, united them under a common economy. Money allowed previously separated groups access to the results of each other’s productive efforts, not through conquest or looting, and without resorting to the use of violence. Rather, money allowed for trade, legendary trade routes, like the Silk Road, the Phoenician Trade Routes, the Spice Routes, or, more recently, the global economy, enriched all those who were united by these trade arrangements (albeit some more than others). And all these routes, regardless of the main products they routed, required money to allow for the peaceful flow of goods. ![](https://www.datocms-assets.com/56652/1702919005-camels-tomer.png?auto=format) Money unites precisely because it ignores all the criteria upon which divisiveness exists. After all, money doesn’t ask what your political leaning is, or how old you are, or even what your income is. It doesn’t ask what tribe you belong to or what religion you practice. This is true, at least, of proper, unadulterated money. ### Fiat: Divisive Money We currently live in a world where money has lost its uniting power. It has become a political instrument used to win elections and maintain power. Why has this happened? It is because what we use for money is subject to all kinds of changes within human control. We can change its supply, its price (aka interest rates), who gets to issue it, to whom it gets issued, what its permitted uses are, and more. And, as we’ve already noted, the ability to change a thing is what leads to divisiveness. Sadly, then, money, *the most powerful unifying invention of humankind*, has become a tool of divisiveness. Fiat money is operating at a cross purpose to money’s most important purpose – uniting us. Yes, money must be a store of value, a medium of exchange, and a unit of account. But more importantly, to do any of these things, money must *be a reliable agreement between its users that it will be capable of fulfilling these purposes*. And if that agreement can easily be broken, then it is not worth the paper it is printed on. Money is an agreement. Note both meanings of the word *“agreement.”* One definition is something we informally agree upon – *“We are in agreement.”* The other is a formal contract – *“an agreement.”* Money straddles both these definitions, but the more informal it is, the less reliable it is. And money is an agreement between all its users - all participants in an economy. The less formal it is, the more vulnerable it is to breakdown. If money keeps changing, then what we are supposed to be in agreement about keeps changing. And how are we to stay in agreement when the agreement keeps changing? It’s simply not possible. This is made even worse if we are not consulted about the changes, are not informed of them, and do not agree with them. Do you agree with every change made to the rules of money under the central banking fiat system? Are you consulted, informed about, and asked to agree to them? No. So is it any wonder that money, whose rules can be changed, has become yet another thing whose changes are constantly fought over, causing more divisiveness? Not really. This is the inevitable fate of soft (aka malleable) money. And whether we consider ancient history or current events, the later into the life of a soft money we get, the more the battle to control and change the money overtakes real, productive activity in the economy. ### We Need Money Nobody Can Change What if we couldn’t control the rules of the money? What if money were an iron-clad agreement that nobody had any ability to change? No election, no party, no bureaucrat, no king, no emperor, no supreme leader — Nobody. What if it couldn’t be debased or printed to hand out to people in power or to the people whose votes those in power needed to stay in power? During humanity’s greatest periods, this was what money was. Most notably, we can look back at times when gold or silver (or even black pepper in the times of the spice routes) was money. During those times, civilization grew. Peaceful trade grew. Productivity grew. Wealth grew. ### Bitcoin: An Inviolable Agreement to Unite Us All Money’s purpose is to unite people in peaceful exchanges – to provide a way for them to trade even if they otherwise have nothing in common besides the desire to trade. They may not even speak the same language, so money is an agreement that must transcend the languages they speak. That is why, throughout history, good money took the form of tokens of verifiable and scarce commodities like gold, silver, and black pepper. Money must, in a sense, be its own language, albeit a language that is constrained to expressing the ideas that money encompasses. (e.g., you don’t need to write a poem about love using the language of money.) But money, to do its job, must be an agreement that will not be broken or defaulted upon. It must be an agreement that can unify its users across not only time and space but also across religion, political leaning, philosophy, or any other dimension upon which disagreement is possible. This is precisely what Bitcoin is. We are very early into our journey through time with Bitcoin - a system of money that we cannot change. Its greatest strength turns out to be its unchangeable nature. Even the most powerful people and institutions cannot change it. ### Bitcoin’s greatest feature is that it is practically impossible to change any of its features. Think about it. Any of Bitcoin’s other features, like the supply cap, wouldn’t be valuable if they could be changed! There’s nothing magical about a 21 million coin supply cap. Any number could have done just as well. What’s remarkable is that nobody can change it to any other number. Underpinning the supply cap and all of Bitcoin’s other features is the reliable promise that they won’t be changed! What makes this promise reliable? Is there some politician or emperor who says, *“Trust me?”* No. What makes it reliable is each participant’s ability to enforce the rules that guarantee each feature by simply running a Bitcoin node. This is why, by the way, making it possible for as many people as possible to run a node is also the most important practical consideration in the ongoing progress of Bitcoin’s development. If it became impractical to run a Bitcoin node, it would be impossible to prevent changes to the rules, and Bitcoin would then become changeable by the few who could run a node, which would lower it to the status of all other monies that came before it that found themselves captured or corrupted, leading to a breakdown of the unity that good money creates – a breakdown otherwise known as divisiveness, collapse, and war. ### Signs of Unity ? Even in these early days of Bitcoin, we see signs of Bitcoin’s ability to unite and reunite us. We see it on many levels. One early meme in the Bitcoin community was “*Bitcoin doesn’t care.”* Bitcoin doesn’t care if you’re black or white, or neither; male or female, or neither; capitalist or socialist, or neither. It treats everyone the same. You get no advantage, no special treatment, or impairment from any distinction you hold. Bitcoiners want Bitcoin. They want more people, regardless of geography, ethnography, and philosophy, to value, use, and accept Bitcoin. It is a hugely welcoming and inclusive philosophy. ### [*"Bitcoin is for Everyone"*](https://tomerstrolight.medium.com/bitcoin-is-for-everyone-9e2c4de9d8a6) is another popular saying. Can the gradual (or sudden) acceptance of Bitcoin as money heal the divisions that are driving our world apart, or is such talk merely the fanciful dream of idealistic Bitcoiners with misplaced hopes? Or, even worse, are some people pushing false and unrealistic hopes in an effort to enrich themselves in the short term at the expense of others? Well, let’s not kid ourselves. There are many people who are drawn to Bitcoin in the first instance because it sounds like a way to get rich personally and rather quickly. Bitcoin has a price, and that price has gone up more than the price of anything else in the past dozen years. There are good reasons to think it will continue to rise quickly. But why is it that the price is expected to rise, though? The root reason for Bitcoin’s growing adoption among more people, institutions, and nations is precisely because of the inability of powerful people to hijack it, control it, or inflate it. As Bitcoin grows, it becomes an agreement between these individuals, institutions, and nations – an agreement that none of these participants can unilaterally change, and thus one where it is futile to waste one’s energy trying to change it. Rather, participants use their energy to earn Bitcoin – and this is done by creating value so that those with Bitcoin will exchange it, peacefully and nonviolently, for the value others create. ### Bitcoin’s unchangeability is the fix we have needed for money throughout history. All around us, we see the damage caused by broken money: divisiveness, depression, war, injustice, and more. Bitcoin won’t directly fix everything, but this inability to be altered will gradually (and perhaps at some point suddenly) draw ever more people towards it so they can deal with each other with the reliable, unbreakable promises it makes and keeps, leading to those people being able to live in lasting peace — and this may then fix a lot of what else is wrong in the world today. ![](https://www.datocms-assets.com/56652/1702918947-tomer-bitcoin-sun.png?auto=format) ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # A Fed Pivot Releases Animal Spirits - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/a-fed-pivot-releases-animal-spirits/ It seems like things are all lining up for Bitcoin to have an explosive year in 2024. --- **Sam Callahan** · December 15, 2023 · Updated June 27, 2024 This week was more important than most when it came to markets given that we had two major events transpiring at once with the release of the latest CPI data as well as the Federal Reserve’s December FOMC meeting.  CPI inflation declined from 3.2% YoY in October to 3.1% YoY in November. However, Core CPI – minus food and energy – remained unchanged from last month at 4.0% YoY. ![](https://www.datocms-assets.com/56652/1702672254-1.png?auto=format) When diving deeper into the CPI data, one can see that the shelter component continues to keep the overall headline number elevated, while energy continues to see a significant decline.  ![](https://www.datocms-assets.com/56652/1702672531-2.png?auto=format) This positive inflation print led us to the much-anticipated FOMC meeting, and Fed officials did not disappoint. It was only a month ago when Fed Chairman Jerome Powell stood at the podium and said, *“The fact is, the committee is not thinking about rate cuts right now at all. We’re not talking about rate cuts.”* It’s amazing what can happen in a month’s time. In the latest post-FOMC press conference, Powell seemingly has made a complete 180 stating that the timing of any coming rate cuts *“is clearly a topic of discussion in the world and a topic of discussion for us at our meeting today.”* Furthermore, the updated Fed dot plot shows the median interest-rate forecast for 2024 is 4.6%, compared to 5.1% in September. This implies that Fed officials are now expecting at least two 0.25% rate cuts to occur next year. ![](https://www.datocms-assets.com/56652/1702672582-3.png?auto=format) Federal Reserve Jerome Powell’s messaging in the press conference can only be described as incredibly dovish. He reported that the Fed is *“likely at or near the peak rate for this cycle.”* The market is now pricing in even greater rate cuts than Fed officials. Futures are now implying around 1.4% of rate cuts by the end of 2024. ![](https://www.datocms-assets.com/56652/1702672619-4.png?auto=format) The market reaction to Powell’s speech was noticeable across all assets. Animal spirits returned with full force. The stock market rallied, bond yields fell dramatically and gold and Bitcoin both ripped. I think this screenshot summed it up well. It shows the headline of the Fed pivot with the stock market in the green and the added comment of *“stocks climb as Fed done taking the punch bowl away.”* ![](https://www.datocms-assets.com/56652/1702672646-5.jpg?auto=format) With markets at risk of rising substantially on the messaging and causing more inflationary pressures, in typical Fed fashion, New York Federal Reserve President John Williams came out the very next day to backtrack on some of the messaging stating, *“We aren’t really talking about rate cuts right now,”* But the damage likely has already been done. The markets are broadly viewing Powell’s comments as the long-awaited *“Fed pivot”* that they have been waiting for.  It leads to the question, why now? With inflation still above the Fed’s target, the unemployment rate still at multi-decade lows, nominal GDP still running hot, and stocks near all-time highs, why is the Fed choosing to send the message of easing policy now? A potential explanation is that their monetary policy decisions are increasingly being influenced by fiscal policy. This trend can be seen globally. As central banks have begun to ease across the globe, fiscal deficits as a percentage of GDP remain elevated. ![](https://www.datocms-assets.com/56652/1702672688-6.png?auto=format) For Treasury officials, higher rates pose a challenge to fund their massive fiscal deficits. 31% of all US government debt outstanding is set to mature over the next year. This debt will need to be refinanced, and with rates where they are, that will be an expensive endeavor. ![](https://www.datocms-assets.com/56652/1702672745-7.png?auto=format) Already, interest expense on US public debt outstanding has exploded as interest rates have spiked. ![](https://www.datocms-assets.com/56652/1702672765-8.png?auto=format) Said simply, the Treasury needs rates to come down, so they were likely cheering on Powell’s dovish speech as they watched the 10-year yield fall below 4%, the lowest since August. One can only speculate, but it’s difficult to believe that these fiscal dynamics are not on FOMC officials’ minds when they consider interest rate policy moving forward. When looking further out, the fiscal picture appears unsustainable, especially in a higher interest rate environment. ![](https://www.datocms-assets.com/56652/1702672795-9.png?auto=format) This is likely why we heard Treasury Secretary Janet Yellen chiming in on her thoughts about inflation. In a recent interview, she said that she believes inflation is coming down *“meaningfully”* and that it won’t be difficult for the Fed to finish the *“last mile”* to get CPI down towards its 2% target. The other potential explanation for this pivot is that the Fed is worried about the lag effects of their rate hikes. To date, we have not seen the impact of the rise in interest rates on the broader economy, but that can change if rates remain higher for longer and more and more companies and households need to refinance their debts.  However, if this is why the Fed is pausing, this worry could be unfounded. Recent research from [Canvas](https://canvas.osam.com/Commentary/BlogPost?Permalink=climbing-the-maturity-wall-of-worry) shows that US corporations have quite the runway to work with when one looks at when their debt matures. The charts below show that, in 2024, about 4% of S&P 500 debt will mature. By 2030, approximately 38% of the total S&P 500 debt will have matured. ![](https://www.datocms-assets.com/56652/1702672839-10.png?auto=format) Canvas One nuance discovered in their research was that small and medium-sized businesses have less of a runway than larger corporations. By 2030, about 52% of their debt will have matured. ![](https://www.datocms-assets.com/56652/1702672876-11.png?auto=format) Canvas This is something to keep an eye on moving forward, especially if we start to see a rise in the bankruptcies of small and medium-sized businesses. Overall though, it appears corporations have a lot of breathing room when it comes to their debt. This runway is also true of US households when it comes to their mortgages. Today, the effective mortgage rate – the average rate on existing mortgages – sits at 3.6%. This is a huge divergence from the current average 30-year mortgage rate of around 7%. ![](https://www.datocms-assets.com/56652/1702672916-12.png?auto=format) So households and corporations took advantage of the low-interest rate environment and refinanced their debt, giving them a cushion to survive a higher interest rate environment. This data leads one to believe that it is likely the government debt dynamics that are causing the Fed to take its foot off the pedal despite asset prices increasing and the economy still running hot. If this thesis is accurate, then the Fed is not as independent as it likes to lead people to believe, and if the Fed is not independent with its policies, then that means that a third, unspoken mandate for the Fed moving forward is maintaining the affordability for the government to continue to run large fiscal deficits. In a future of continued trillion-dollar fiscal deficits, real assets like Bitcoin and gold will likely outperform. The long-term, unsustainable fiscal picture makes holding assets that function outside of the traditional financial system an attractive proposition for investors to consider. Furthermore, Bitcoin has other endogenous factors that could act as a tailwind for its price and help push its adoption to new heights in the coming years. One of those factors is the acceptance of new FASB accounting rules, which will make it easier for corporations to hold Bitcoin on their balance sheets. This week, FASB [officially adopted](https://www.fasb.org/page/getarticle?uid=fasb_Media_Advisory_12-13-23) Fair Value Accounting rules for Bitcoin beginning after December 15th, 2024. ![](https://www.datocms-assets.com/56652/1702673012-13.png?auto=format) FASB Up until this point, corporations faced a challenge when attempting to put Bitcoin on its balance sheet due to the way Bitcoin was treated on balance sheets. Corporations need to classify Bitcoin as an intangible asset, which means If the price of Bitcoin goes down, they have to mark the value lower on their balance sheet, and if the price goes up, they can’t record the gain unless they sell the bitcoin. This creates a huge balance sheet impairment for these companies if the price of bitcoin drops. It creates a situation where a company has to potentially list the bitcoin on its balance sheet at a lower value than the current market price when it is simply holding it. This accounting upgrade will help facilitate the adoption of Bitcoin as a treasury reserve asset at the corporate level. Industry leaders such as Former PayPal President and Lightspark CEO, David Marcus took to X to point out the significance of the rule change. ![](https://www.datocms-assets.com/56652/1702673180-screenshot-2023-12-15-at-3-46-04-pm.png?auto=format) This accounting rule change comes as this recent Bitcoin rally appears to be on the radar of corporations.  In November, there were over 1,000 mentions of Bitcoin in SEC filings, an over 30% increase from the same month last year. ![](https://www.datocms-assets.com/56652/1702673112-14.png?auto=format) SEC Filings This is an over 30% increase from the high made last May. Corporations are paying attention, and it is about to get a whole lot easier for them to put Bitcoin on their balance sheets. Despite this positive development, interest in Bitcoin as measured by Google trends still remains at levels last seen before the last major bull market, in 2019. The wider public still appears to be unaware that Bitcoin is up more than 140% from its lows last year. ![](https://www.datocms-assets.com/56652/1702673240-15.png?auto=format) Bloomberg This lack of public interest despite Bitcoin’s impressive performance this year hints that we are in the very early innings of this bull run. It seems like things are all lining up for Bitcoin to have an explosive year in 2024. We have increased institutional adoption, a potential ETF approval, the halving event, more favorable FASB accounting rules, and the government will likely need to continue to run massive fiscal deficits. It’s only a matter of time before Bitcoin begins to grab the attention of the wider public, and when that happens, the bull market will really start to gain steam.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1702673285-16.png?auto=format) Tradingview, Prices as of 12/15/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Asset Performance in Times of Conflict - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/asset-performance-in-times-of-conflict/ Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. --- **Sam Callahan** · June 3, 2024 · Updated June 27, 2024 While the outbreak of war is a stark reminder that the most precious things in life are nonmaterial, they simultaneously highlight the fact that global financial markets do not stop during times of conflict. In recent years, the escalation of geopolitical tensions, exemplified by conflicts in Eastern Europe and the Middle East, has underscored the persistent volatility facing the global markets. In light of this, it is imperative for investors to remain vigilant—safeguarding assets, retirement portfolios, and children’s inheritances against the backdrop of heightened uncertainty. Now, more than ever, it is crucial that investors are strategically positioned to navigate through these turbulent times. The question then arises: which asset allocations should investors consider during heightened geopolitical instability? To address this question, an analytical review of historical performance data during similar times can offer invaluable insights. Although each conflict brings unique challenges and historical performance does not indicate future results, identifiable patterns in asset behavior during past conflicts can provide strategic guidance. This analysis aims to equip investors with the knowledge to make informed decisions about asset allocation that may preserve and potentially enhance wealth in today's unpredictable environment. ### The Wartime Investing Environment Understanding the investment landscape in today's volatile market requires a deep appreciation of the prevailing economic environment. Commonly, two economic patterns emerge prominently during wartime: 1. RM Increased government spending andC 2. BM Increased inflation For example, consider the U.S. Civil War. Government spending increased to more than 30% debt-to-GDP at the height of the war. ![](https://www.datocms-assets.com/56652/1717419839-screenshot-2024-06-03-at-8-50-43-am.png?auto=format) To put this spending into perspective, government debt stood at $65 million before the Civil War, but by the end of the war, it had exploded to $2.6 billion, a forty-fold increase. This trend was echoed during World War II when government spending soared to more than 100% debt-to-GDP. ![](https://www.datocms-assets.com/56652/1717419863-screenshot-2024-06-03-at-8-50-52-am.png?auto=format) The national debt stood at $49 billion when the U.S. entered World War II. By the war's end, the national debt stood at $259 billion. In other words, the national debt quintupled over the course of the war. One way to fathom this amount is that if an individual spent $1 million per hour, 24 hours per day, 365 days a year, it would take them 576 years to spend as much as the U.S. did during WWII! And back then, a million dollars was a fortune. Such dramatic increases in government expenditure are not confined to the U.S.; historical data from the UK demonstrates similar spikes in defense spending as a percentage of GDP during major conflicts. ![](https://www.datocms-assets.com/56652/1717419904-screenshot-2024-06-03-at-8-51-00-am.png?auto=format) Notice in the chart above how spending as a percentage of GDP spikes with every major war conflict the UK has fought since 1692. Governments typically pay for their expensive wars by a combination of printing money (devaluing their currency), borrowing money, or raising taxes. Increased government spending is one reason why inflation is the other commonly observed economic feature in times of war. The chart below highlights how the U.S. CPI inflation rate has increased significantly around major wars throughout history. ![](https://www.datocms-assets.com/56652/1717419940-screenshot-2024-06-03-at-8-51-08-am.png?auto=format) ![](https://www.datocms-assets.com/56652/1717419984-screenshot-2024-06-03-at-8-51-19-am.png?auto=format) Outside of the increased government spending, war also leads to the fragmentation of global trade and disruptions in the global supply chain. This fragmentation raises the prices of items like oil, gasoline, food, and other commodities, which in turn causes more persistent inflationary pressures. We are already seeing signs that trade fragmentation is well underway. The IMF recently showed how fragmentation has negatively impacted world trade and income growth since Russia’s invasion of Ukraine. Trade between economies in politically distant blocs has slowed more than trade between those within blocs since the start of the war. This has resulted in a significant slowing in the growth in goods traded between the two blocs since the start of the war compared to the growth in goods trade within blocs. As we assess the economic landscape shaped by ongoing global conflicts, it's evident that we may face sustained inflationary pressures similar to those observed in past wartime periods. This is driven by escalating government spending and disruptions in global supply chains, further intensified by the fiscal strains of recent years. Since the onset of the pandemic, the U.S. recorded its highest deficits since WWII—15% of GDP in 2020 and 12.4% in 2021. In 2024, the deficit is on pace to exceed 6% debt-to-GDP, nearing the same level as the Global Financial Crisis. The trendline so far this century is unprecedented and alarming. ![](https://www.datocms-assets.com/56652/1717420010-screenshot-2024-06-03-at-8-51-34-am.png?auto=format) Looking ahead, the Congressional Budget Office (CBO) forecasts that the fiscal deficit will continue to rise, potentially reaching $2.6 trillion, or 6.1% of GDP, by 2034. ![](https://www.datocms-assets.com/56652/1717420024-screenshot-2024-06-03-at-8-51-41-am.png?auto=format) With inflation rates consistently surpassing the Federal Reserve’s target of 2% and no reduction in government expenditure on the horizon, the financial landscape is likely poised for persistent inflation. Given these conditions and considering the severity of current international conflicts—a scale we have not seen in decades—it is crucial for investors to identify asset classes that have historically performed well under similar economic conditions. Let’s now take a closer look at what asset classes have proven effective in preserving and growing wealth during past periods of geopolitical unrest and inflation. ### Stocks Although stocks are often considered a risk-on asset class, they have historically performed favorably in periods of conflict. [Analysis](https://blogs.cfainstitute.org/investor/2017/08/29/u-s-capital-market-returns-during-periods-of-war/) by Mark Ambruster, CFA, covering the period from 1926 to 2013, investigated how different asset classes performed during periods of war. His study found that U.S. large-cap stocks not only outperformed their long-term average returns during wars but also exhibited lower volatility while doing so. During World War II, the Korean War, and the Gulf War, U.S. large-cap stocks rose by an average of 15.7%, outperforming the average annual return of 10% from 1926 to 2013. The volatility of U.S. large-cap stocks during those times was 12.8% compared to 19% during the whole time period. ![](https://www.datocms-assets.com/56652/1717420058-screenshot-2024-06-03-at-8-51-50-am.png?auto=format) This unexpected resilience suggests that significant government spending during wars can boost domestic markets by enhancing company revenues and earnings despite the broader economic turmoil. It’s also worth noting that the stock market outperformed inflation in each of the wars shown above. This is a key takeaway because, as previously discussed, elevated inflation is a common occurrence during periods of war due to increased spending, global supply chain disruptions, and rising commodity prices. Therefore, it’s important to invest in assets that will protect your wealth in real terms in a highly inflationary environment like war. Furthermore, examining the initial market reactions to the last five major global conflicts reveals consistent patterns. Initially, investors typically react to the news of conflict with panic, leading to a market sell-off. However, the market then recovers within months and then exceeds previous highs within two years. This pattern is evident in five of the last six major global conflicts. ![](https://www.datocms-assets.com/56652/1717420072-screenshot-2024-06-03-at-8-52-17-am.png?auto=format) The Afghanistan War was the only outlier, which could be attributed to other factors related to the Dot-com Crash occurring around the same time as the start of the war. This pattern held true with the recent Russian invasion too. Following the invasion, the stock market experienced a sharp decline. It then bottomed a few months afterward and went on to make new all-time highs about two years later. This trend is again confirmed below when looking at more recent times of uncertainty. The stock market tends to drop on the news and then recover quickly. According to Cetera Investment Management, the average 1-year S&P 500 return after some more recent crisis events was 13.16%, and the S&P 500 was positive in the year following each crisis event, with the exception being the 9/11 attacks. ![](https://www.datocms-assets.com/56652/1717420099-screenshot-2024-06-03-at-8-52-29-am.png?auto=format) This historical resilience underscores the potential benefits of maintaining a well-diversified stock portfolio during times of war. It challenges the instinct to flee from equities in times of crisis, advocating instead for enduring short-term volatilities for long-term gains. As we navigate this era of heightened conflict and economic instability, understanding these patterns and strategically positioning investments in light of them could help investors safeguard and potentially grow wealth in uncertain times. ### Bonds Bonds are commonly regarded as a safe-haven asset; however, their performance during wartime suggests otherwise. During these periods, bonds tend to underperform relative to their long-term averages, primarily due to heightened inflation. During wartime, governments significantly increase borrowing to fund military efforts, thereby flooding the market with debt and diluting bond values. This increase in government borrowing can raise doubts about a nation's creditworthiness, pushing yields higher and bond prices downwards as a lure for investors. Historically, there is a negative correlation between bonds and inflation. As inflation escalates, bond yields often increase with it, which in turn drives down bond prices. When looking at historical periods when the U.S. experienced elevated inflation rates, the average real bond return was negative. ![](https://www.datocms-assets.com/56652/1717420156-screenshot-2024-06-03-at-8-52-40-am.png?auto=format) This trend continued in 2022 when CPI inflation hit multi-decade highs. The 10-year Treasury went on to have its worst performance in more than 200 years. ![](https://www.datocms-assets.com/56652/1717420172-screenshot-2024-06-03-at-8-52-49-am.png?auto=format) Periods of conflict present substantial inflation risk—also known as purchasing power risk to bondholders. Although bond investors will receive the full principal plus interest when their bonds mature, these returns often do not keep pace with inflation during times of war, diminishing the real value of the investment. This is why bonds have performed poorly compared to their average performance in times of war historically. According to the analysis from Mark Ambruster, CFA, bonds have lagged inflation and generated negative real returns in every major US war except the Gulf War. ![](https://www.datocms-assets.com/56652/1717420196-screenshot-2024-06-03-at-8-52-57-am.png?auto=format) Bond performance during and after WWII provides a perfect example of bonds’ lackluster real returns during periods of war. The chart below shows the nominal and real performance of bonds from 1941 to 1952. ![](https://www.datocms-assets.com/56652/1717420212-screenshot-2024-06-03-at-8-53-07-am.png?auto=format) As you can see from the chart above, 10-year Treasury investors received all of their principal plus interest in nominal terms, but this was not nearly enough to keep up with the high rates of inflation during the war. As a result, 10-year Treasury bondholders lost nearly 30% of their purchasing power in the decade following 1942. Bond investors were the big losers in WWII and the years afterward, underperforming nearly every other asset class between 1942 and 1952. The combination of increased borrowing, rising rates, and inflation creates significant headwinds for bonds during times of war, which is why bonds typically underperform other asset classes. ### Cash Wars are expensive. As such, governments tend to spend heavily during times of conflict to fund the war effort. This surge in expenditure often leads to currency devaluation, which presents a significant risk for wealth stored in cash. Under such circumstances, cash fails to keep pace with inflation and loses purchasing power. Simply put, the dollars that once afforded stability will inevitably decline in real value in a war-driven inflationary environment. Warren Buffett succinctly captured this reality in an interview when he said, *"The one thing you could be quite sure of is if we went into some very major war, the value of money would go down. I mean, that’s happened in virtually every war that I’m aware of. So the last thing you’d want to do is hold money during a war.“* Given this reality, investors must consider more resilient alternatives to cash during times of heightened geopolitical unrest. Allocating to asset classes that traditionally outpace inflation can safeguard and potentially enhance wealth when currency values are pressured during times of conflict. This strategic shift is not just a safeguard but a proactive step towards ensuring that one's savings maintain their purchasing power amidst the economic disruptions caused by war. ### Gold Gold is traditionally viewed as a safe haven asset that investors turn to during periods of heightened uncertainty and geopolitical tensions. It is particularly sought after due to gold's status as a hard monetary asset—scarce and immune to the inflation risks that afflict fiat currencies. In times of war, when governments frequently resort to increased money printing and elevated spending, gold's allure intensifies as a hedge against inflation. Today’s environment is especially attractive for gold given the current sovereign debt levels. If governments have to ramp up their spending in response to rising geopolitical tensions, at a time when debt levels are already at historic highs, investors could become more worried about a potential debt crisis ensuing. In that scenario, demand for gold could accelerate as its lack of counterparty risk really shines. An analysis of gold’s performance during various conflicts reveals a pattern: gold typically appreciates sharply at the onset of hostilities as investors flee to safety on the news. However, this spike is often temporary, as demonstrated by historical price corrections once the immediate uncertainties of conflict diminish. Below is a chart of some major conflicts in the past with the gold’s 1-year return from the start of each crisis. ![](https://www.datocms-assets.com/56652/1717420244-screenshot-2024-06-03-at-8-53-18-am.png?auto=format) Investors appear to rush to gold at the height of panic and uncertainty when many unknowns remain. Yet after clarity comes into view about the nature of the crisis, on many occasions in history, the gold price falls back towards its pre-war price levels, and in some cases, even drops lower. For instance, gold prices rallied 10% at the outbreak of the Gulf War, only to fall back below their pre-war price levels a year later when the war turned out to be less serious than originally expected. Another example of this trend occurred with the recent Russian Invasion of Ukraine. Initially, gold rose about 5% in the week following the news, only to drop nearly 4% over the next 12 months. Despite these fluctuations, gold tends to regain its appeal as the duration of heightened geopolitical risks lengthens. This resurgence is attributed to prolonged wars exacerbating inflationary pressures, leading governments to borrow extensively or debase their currencies. For example, since the escalation of the Russian invasion and rising tensions in the Middle East, gold prices have appreciated by 22%. ![](https://www.datocms-assets.com/56652/1717420262-screenshot-2024-06-03-at-8-53-29-am.png?auto=format) This performance underlines gold's dual role: as a short-term safe haven reacting to immediate crisis-driven demand, and as a long-term store of value in the face of sustained geopolitical risks. Moreover, gold offers unique security advantages. Unlike stocks and bonds, physical gold held by investors incurs no counterparty risk. This attribute is particularly valuable in times of war, providing a level of security and control that stocks and bonds cannot match. However, investors should be cautious if gold is stored in third-party facilities, such as bank vaults, where it could be susceptible to theft or confiscation. Overall, gold's historical performance during wartime and its inherent monetary properties affirm its status as an effective hedge against inflation. These characteristics make it an appealing addition to well-diversified investment portfolios, especially during periods of prolonged geopolitical instability. ### Bitcoin The recent developments in Eastern Europe and the Middle East have catapulted Bitcoin into the spotlight as a new safe haven for people to protect themselves against confiscation, censorship, and inflation during periods of increased geopolitical tensions. This narrative came to the forefront when Western governments enforced sanctions against Russia after their invasion of Ukraine. As the banks closed, ATMs were drained, and payment firms like Visa and Mastercard shut down their operations, many Russian civilians turned to the only open-source monetary network available to them, Bitcoin, to transact with the outside world and flee their wartorn country with their wealth. ![](https://www.datocms-assets.com/56652/1717420280-screenshot-2024-06-03-at-8-53-37-am.png?auto=format) The same dynamics occurred on the other side of the battlefield as Ukrainians tried to flee the warzone with their wealth. In times of war, refugees typically have to leave places quickly with only what they can carry. Luckily for them, Bitcoin is highly portable and can be stored in one’s head if need be. As a result, we saw Bitcoin trading volumes spike in Ukraine at the onset of the war. Bitcoin was trading at nearly a 10% premium on a number of Ukrainian exchanges against the Ukrainian hryvnia. ![](https://www.datocms-assets.com/56652/1717420297-screenshot-2024-06-03-at-8-53-46-am.png?auto=format) As geopolitical tensions intensified with the Russian invasion and escalating conflicts in the Middle East, Bitcoin exhibited significant price fluctuations. Initially, Bitcoin's value surged over 10% in the week following the invasion, driven by heightened market anxiety. However, it then declined by 40% over the subsequent 12 months. Despite these fluctuations, as the geopolitical risks have persisted, Bitcoin's demand has continued to rise, ultimately achieving a 68% appreciation and reaching new all-time highs. ![](https://www.datocms-assets.com/56652/1717420315-screenshot-2024-06-03-at-8-53-54-am.png?auto=format) Since Bitcoin is a relatively young asset, the verdict is still out on whether it can serve as a safe haven asset in times of global conflict. To some, Bitcoin remains a volatile risk-on asset, while for others, it acts as a lifeline to escape their war-torn countries. Unlike traditional asset classes, Bitcoin does not have the historical track record showing how it could perform in response to rising geopolitical conflicts. While it is still considered a relatively young and volatile asset, the ongoing global uncertainty has increasingly positioned Bitcoin as a viable hedge against geopolitical risks. Recent academic research, including studies by Bouri et al. (2017, 2020) and Aysan et al. (2019), underscores Bitcoin's growing relevance as a safe haven asset and an alternative in times when traditional financial systems fall short. Another recent [study published by the IMF](https://www.imf.org/en/Publications/WP/Issues/2024/04/05/A-Primer-on-Bitcoin-Cross-Border-Flows-Measurement-and-Drivers-547429#:~:text=Bitcoin%20cross%2Dborder%20flows%20respond,to%20avoid%20capital%20flow%20restrictions) provided further evidence that increased Bitcoin activity occurs as investors move away from risk assets, indicating that Bitcoin is being used by investors to hedge global uncertainty. Often labeled as “digital gold”, Bitcoin shares many attributes with traditional safe havens but with some added advantages pertinent to wartime conditions. It has a fixed scarcity, is difficult to seize, and is easy to move because of its digital nature. These features are particularly appealing in inflationary wartime environments and help individuals to maintain financial autonomy in unstable regions. The current geopolitical climate presents a pivotal test for Bitcoin's role as a reliable safe haven asset, resistant to inflation, confiscation, and censorship. Given its performance amid rising geopolitical tensions, investors should strongly consider the inclusion of Bitcoin in a well-diversified portfolio to mitigate risk and enhance returns. ### Conclusion Market responses to wartime and crises are notoriously difficult to predict and uncertain. Each conflict or crisis emerges under different market conditions, yet certain patterns consistently manifest. Notably, governments tend to ramp up spending, and global trade becomes fragmented, leading to sustained inflationary pressures. Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. These assets may not effectively preserve capital in such turbulent times. Investors are instead encouraged to diversify into assets that historically retain or increase in value during periods of inflation—gold, Bitcoin, and equities, for instance. While it is critical to recognize that past performance is not indicative of future results, analyzing how these asset classes have reacted under similar conditions can provide valuable insights. The hope is this analysis will help the reader navigate today's complex and uncertain financial landscape and make better-informed decisions to safeguard and potentially grow their wealth. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Epoch Five — Big League Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/epoch-five-big-league-bitcoin/ Block 840,000 has come and gone. With it, came Bitcoin’s fourth halving, cutting the issuance of new coins to 3.125 per block. Welcome to Epoch V. What awaits us? --- **Tomer Strolight** · May 15, 2024 · Updated June 27, 2024 ### Looking Back to See the Future Each of Bitcoin’s epochs provide it sufficient time to go through a phase of growth in which it can achieve something substantially different than what it had prior to that epoch. ### Epoch I The first one was Bitcoin’s genesis epoch – its birth. It was *“baby Bitcoin.”* During that time, it built awareness in niche communities, worked out some significant bugs, lost its creator, and found its first uses as both a currency and a digital commodity to be exchanged for traditional fiat money. It was chapter one of Bitcoin’s coming-of-age story. Its most remarkable achievement, given how strange and new it was, was surviving to reach its first halving event. Both [Forbes](https://www.forbes.com/sites/timworstall/2011/06/20/so-thats-the-end-of-bitcoin-then/?sh=7a982cfa5d71) and [Wired](https://99bitcoins.com/wired-tired-expired-for-2012-expired-bitcoin/) magazine had taken note of it during this epoch and written it off for dead. This finance-and-tech-chimera with the catchy name, Bitcoin, however, surprised them both. It pleasantly surprised its supporters, too. ### Epoch II During its second epoch, Bitcoin experienced several great shocks. It witnessed the death of the very entities that made it appear useful during its first epoch. The online marketplace that used it as a currency, The Silk Road, was shut down – its owner being arrested, convicted, and condemned to two consecutive life-sentences. The online exchange where people were trading their fiat money for bitcoins also collapsed, and its owner imprisoned too. Bitcoin was associated with the underground, the unscrupulous, and the incompetent. As such, it was declared dead many more times – by [Wired](https://99bitcoins.com/the-rise-and-fall-of-bitcoin/), [Slate](https://slate.com/news-and-politics/2013/04/bitcoin-is-a-ponzi-scheme-the-internet-currency-will-collapse.html), [Salon](https://99bitcoins.com/beware-of-this-insidious-new-currency-scam/), [Business Insider](https://www.businessinsider.com/williams-bitcoin-meltdown-10-2013-12), [NY Mag](https://99bitcoins.com/bitcoin-sees-the-grim-reaper/), [so](https://99bitcoins.com/category/bitcoin-obituaries/2013/) [many](https://99bitcoins.com/category/bitcoin-obituaries/2014/) [more](https://99bitcoins.com/category/bitcoin-obituaries/2015/), and even some guy named Michael Saylor: ![](https://www.datocms-assets.com/56652/1715793736-ms-tweet.jpg?auto=format) Remarkably, it did not die. Instead, during this epoch, the idea of scaling it up, speeding it up, and improving its privacy with the [Lightning Network](https://lightning.network/lightning-network-paper.pdf) protocol was born. Websites may die, and people may die, but already, Bitcoiners have learned that protocols can’t be killed off so easily. And Bitcoin was not a website, person, or corporation – it was a protocol. The world was catching on that whatever else it was, one thing about Bitcoin was that it was an unstoppable idea. ### Epoch III Bitcoin’s third epoch was filled with fireworks. Thousands of competing cryptocurrencies were launched. A (cyber) war was fought over, making the changes needed to implement the Lightning Network (see the book ***“******The Blocksize War******”*** by Jonathan Bier), and a spectacular bubble inflated and popped. By the end of this epoch, almost everyone had heard of Bitcoin and blockchain, but few knew what either meant, and many had lost interest in *“crypto”* if not also some of their money. ### Epoch IV And then came this fourth epoch, which just concluded on April 19th, 2024. The Lightning Network was born, and it, too, had its moments of doubt. However, the Bitcoin ecosystem flourished during this epoch. That guy, Michael Saylor, who had predicted Bitcoin’s demise in December 2013, had a change of heart. He did more than just call for its survival, though. He pioneered the idea of using Bitcoin as a corporate balance sheet reserve asset for the publicly traded company he founded and led. Despite heavy criticism from the media and other investors, MicroStrategy’s conviction never wavered. The company’s value increased roughly twenty-fold during this epoch! But MicroStrategy was by no means a Wall Street titan. Nevertheless, the success of its strategy could not be ignored forever. By 2023, Wall Street’s largest asset manager, Blackrock, wanted in on Bitcoin and applied to launch a Bitcoin ETF. Many others followed suit. ![](https://www.datocms-assets.com/56652/1715793704-msbr.png?auto=format) ![](https://www.datocms-assets.com/56652/1715793613-nb.jpg?auto=format)  Earlier in the epoch, a nation, El Salvador, shocked the world when it made Bitcoin legal tender and gave some to each of its citizens. That nation’s fortunes began a positive turnaround, and it, too, did not back down despite international criticism.  Unlike its second epoch, when businesses involved in Bitcoin met their demise, during this epoch, many thrived. Some miners and exchanges even went public, and many other companies were formed.  Bitcoin also survived its first economic downturn and also a worldwide pandemic that saw many smaller enterprises fail. It was no longer a small or vulnerable enterprise. It even briefly attained a $1 trillion dollar valuation during this epoch. Dozens of books were published about Bitcoin, and thousands of podcast episodes and videos were released. Dozens more conferences took place all over the world. What had been merely broad but vague awareness of its existence in the prior epoch now became a growing understanding of its true nature and potential. Now, questioning its survival became not the norm but a fringe idea largely held by those deemed to not have studied Bitcoin well enough to realize it wasn’t about to die. But it was also clear that Bitcoin would not stand still, either. It was growing. It had shown that it both wanted to and was claiming to be ready to play in human civilization’s *“big leagues.”* And then, at the end of the fourth epoch, Bitcoin got its first chance to do so. It was called up to Wall Street with the launch of Bitcoin ETFs in January 2024. It’s safe to say that this was a successful first appearance. ### Where Do We Go From Here? The question remains, though – *“What is Bitcoin’s role in this world?”* There are different theories and visions. These are not necessarily mutually exclusive of one another. One theory holds that it will become the world’s greatest store of value. Another sees it becoming the world reserve currency – the base layer of the world’s economy. Another sees it becoming the actual currency used by everyone in the world. There are also more modest theories that see it carving out significant niches but living alongside many currencies. And then there are also the theories about what it will change beyond merely changing the money. Will it reduce international conflict and war? Will it transform our political systems and politicians? Will it change the architecture and sources of the worldwide energy grid? Will it spawn further ideas for decentralized protocols that are equally robust and transformative? Like it or not, Bitcoin is clearly seen as a big deal by just about everyone—even those rooting for it to lose. ### Epoch V – What Might We See? Epoch V will be a pivotal one in Bitcoin’s story. It may well be the epoch in which Bitcoin largely provides answers to the questions posed above, giving Bitcoin the chance to show what it is (and isn’t) made of. During its first dozen years of existence, Bitcoin was a grassroots, peer-to-peer movement that eschewed institutions. Some nations banned certain aspects of it, while Bitcoin’s community simply laughed at those bans, finding paths around regulations and growing independently of the need for governments to embrace, let alone even permit, Bitcoin’s use. One way to look at it was that Bitcoin was its own fledgling *“nation-in-cyberspace”* – the first of its kind: A new frontier in which pioneers settled into and developed the land, disregarding the traditions and norms of other lands. Sometimes those pioneers fought over key policies in this new land. There were splits and setbacks. But these were dwarfed by the growing number of people who recognized the advantages Bitcoin offered and who came to it, many choosing to remain in the new land through its ups and downs during its developmental stage. Whereas Bitcoin then was largely something that the old world of finance and government could dismiss, in this fifth epoch, it is now too big to ignore. The reason for this isn’t that it has grown to its full potential. Rather, it is that Bitcoin has shown just how big its full potential can be. What if not just one company but many, or eventually even most, begin to use Bitcoin as a balance sheet reserve asset? What if not just one tiny struggling nation but perhaps a BRICS nation, a G20 nation, or several nations start to permit or even endorse its use as currency or legal tender? What if Bitcoin mining, the process of securing Bitcoin’s records, increasingly gets woven into the worldwide power grid? What if it becomes normal and safe, rather than fringe and risky, to hold some Bitcoin? ### A Revolution Like the Internet, But On the Internet  It’s worth recalling that the Internet went through a very similar transformation from a weird, hardly-heard-of technology to something everyone was hearing about but few were using, to something that people started dabbling in, to something everyone everywhere uses all the time for everything. The Internet, an open source protocol built to survive almost anything, found that survival and openness was all it needed to replace almost all the media and telecommunications infrastructure that preceded it. Not only did the Internet replace the substrate of media and telecom, but it also fended off imitators and alternative networks. Its first-mover advantage, combined with the fact that its protocols were free to use, prevented competitors and private networks from being able to offer a compelling alternative to it as the base layer of networking. Towards the end of the 20th century, it was becoming normal for most American households to use a phone landline to have a computer with a dial-up connection to the Internet. And only a decade later the norm was to have an always-on, high-speed connection in a household, with multiple devices connecting constantly to the Internet: computers, video game consoles, sound systems, security systems, televisions, and more. And then a whole new class of devices, like the iPod, came out, enabling us to do previously unimaginable things like carrying our entire music collections in our pocket. Not long after came the smartphone, which was so much more than a phone and put the whole world’s information in our pockets. But during its early days, many questioned what the Internet was good for besides electronic mail. And the responses they received were remarkably tame or, at the very least, vague. There was talk of an *“information superhighway,”* but few could elaborate on what that actually meant. This time around, though, we recognize that we live in a time when dramatic, even unimaginable change can happen in a relatively short time. Not only did we observe this with the Internet, but we recognize that the Internet itself accelerates the nature of this change—especially for things built atop the Internet. Thanks to Bitcoin, the Internet now has an open, unkillable protocol for exchanging and storing value. This should lead to epic changes. After all, we don’t have expressions like *“money talks,”* *“money is power,”* or “money makes the world go round” for nothing. Replace the word money in each of those expressions with Bitcoin, and you start to get an idea of what the future may look like. Let’s take a look at a few possibilities. ### Energy Our modern world is built on energy. One could argue that the energy industry began when people first discovered fire, but let’s fast forward a few hundred thousand years past that, too, when we began to use the energy from fire to power machines so that it wasn’t human or animal labor that got work done, but instead, the amazing ability to use combustion to do mechanical work. In the year 1698, the first *“steam-powered”* water pump was invented. Now, people didn’t have to manually pump water. But it wasn’t just a convenience. Steam power could scale up to the strength of hundreds or thousands of individual men without any men needing to be present. It didn’t just reduce the amount of physical work a man needed to do; it massively increased the amount of work that could be done. In a positive feedback loop that ultimately redefined civilization, steam power could be used to extract and ship tremendous amounts of coal, which could then be used to create more steam power. The age of energy and industry was thus born. Steam locomotives – portable machines powered by coal – could eventually generate as much as 7500 horsepower each (and one horsepower is roughly equivalent to the strength of ten men)! ![](https://www.datocms-assets.com/56652/1715793565-water-pump.jpg?auto=format) ![](https://www.datocms-assets.com/56652/1715793455-energy.jpg?auto=format) Eventually, we largely replaced coal with liquid fossil fuels for portable needs. We also learned how to use energy (from fire, flowing air and water, and splitting uranium atoms) to generate electricity – which is transmissible energy. That transmissible energy idea, too, was first laughed at as impractical and inefficient. Its famous first use case, the light bulb, paved the way for electrification of cooking (stoves), cleaning (vacuums, washers, dryers), food preservation (refrigerators), entertainment (radio and television), and countless other electronic devices, leading eventually to the invention of computers and the Internet, and, now, Bitcoin. Bitcoin is an invention that has descended down a long line of inventions that use energy. But it also represents an innovative use of energy. It turns energy itself into money and uses energy itself to secure money: No more digging money out of the ground and transporting it on train cars, ships, or armored trucks. That was a dangerous, slow, inefficient way of making money. And no need then to rely on a substitute for hard money that lost its value over time, was prone to outright collapse, and led to all kinds of distortions of the proper function of government and banks. What does this mean for our future now that we have money that is made of and secured by pure energy? For one, it means energy is even more valuable than before – and it was already so valuable to begin with that our whole civilization depended on it. But maybe it was the abundance and ubiquity of energy and the machines that depend on it that made us take this value for granted. Few people, however, take for granted the value of money. Earning, saving, investing, and spending money are top-of-mind matters for nearly every adult human being on the planet. Money is not taken for granted. Perhaps we will come full circle with Bitcoin to a re-awakening of the importance of energy, not necessarily because we appreciate the full importance of it in every aspect of our lives, but because we simply recognize that it is essential for making, saving, and spending money. Already, we can observe the value Bitcoin puts on energy. The Bitcoin mining industry is a huge consumer of previously wasted energy. It is a customer of previously stranded energy. That energy which humans did not find usable or valuable is now recognized as having value by Bitcoin. Yet, we are only at the start of this transformation. Throwing energy away – wasting energy – which most *“base-load”* power generation does, is now literally *“throwing money away”* or *“wasting money.”* How much longer can this go on?  This fifth epoch of Bitcoin will challenge the very idea of waste energy. Why waste it, after all, when you can use it? It won’t only focus on utilizing already wasted energy. Energy generation projects that are being planned will be able to include in their calculus the potential of using that energy to mine Bitcoin. This will change the models of demand, payback period, and value. It will also change the view of where and at what scale to build out energy. Energy build-outs are slow, though. It takes a lot longer than an epoch (nowadays, at least) to build a hydroelectric or nuclear power plant. So this transformation, which will lead to more, cheaper energy and wider availability of energy, will only show its potential in this epoch in the form of proposals, tests, and perhaps some ground-breaking projects that do get approved. ### Finance One of the most negative effects of the debt-based money system that Bitcoin is set to replace is captured in the word *“financialization.”* Put briefly, financialization is the overtaking of an industry by the finance sector. It’s most easily observed where it is most dramatic – in areas where money can be loaned or printed in great quantities for long durations. Consider a house. It lasts a long time, is located on land that lasts even longer and is necessary. So, it’s easy to justify making its purchase a long-term commitment. If money can come into existence without requiring work or energy, it will, especially when its creation comes in the form of debt that will be paid back over very long periods of time. And this is exactly what has happened with housing. It has become the norm to create money out of thin air to bid up the price of houses, leaving homebuyers in lifelong debt and the banks who create the money in unprecedented and ever-growing profit. This not only inflates the price of housing, it also turns houses into financial assets, adding a further financial premium. ![](https://www.datocms-assets.com/56652/1715793322-dollars-falling.webp?auto=format) ![](https://www.datocms-assets.com/56652/1715793115-dollar-house.jpg?auto=format) Today, houses are so financialized that they are unaffordable to the younger generation. Yet, they are the main store of financial wealth for the older generation. This problem shows no signs of abating within the traditional finance system. And it is not just housing that has become financialized. Education is financialized in the same way – loaning out hundreds of thousands of dollars to young people who lack the experience and financial acumen to understand what they are getting themselves into. Cars, too, are financialized. Pretty much the entire government is financialized, with the government relying on money printed out of thin air to pay for services of ever-decreasing quality. Yes, financialization not only increases prices, but it also decreases quality. It turns everything into a number, and that number is almost never a qualitative set of attributes because numbers are quantities, not qualities. This epoch of Bitcoin will call into question the wisdom of financialization – and probably also its morality. Perhaps Bitcoin will do so with the similar but less widely known term, *“Bitcoinization.”* If we begin to see a rise in houses paid for in Bitcoin, or education, or privatized services replacing the inability of governments to provide sufficient quality of service anywhere in the world, it will be an indication that the era of financialization of these things has peaked and will decline as Bitcoin becomes a more sensible approach to the way these things are bought and sold. Most of all, the thing that has been most financialized is nothing other than money itself. The need to invest money into something other than money is not fundamental to the nature of money. Money that holds its value and even appreciates purchasing power, along with the increase in society’s productivity, now exists (again). And this is evident to those people who have been using Bitcoin as, ironically, an investment. Bitcoin is not a traditional investment, after all. It does not produce a product, a profit, or a dividend. It is simply good, hard money. Bitcoin has already made it easier to store, preserve, and grow wealth without needing to undertake the strategies of diversification, sector rotation, company analysis, or any of the other complex, expensive, and unpredictable tools of the investment industry. This epoch is bound to see many more people become aware of and exercise the option of exiting the investment industry, at least in part, to instead rely on money that doesn’t deteriorate as a form of savings. Again, we should not expect Bitcoinization to be completed this epoch – it will take time – but like the Internet in its stages when more people were using it, the number of people and extent of adoption are both likely to accelerate to the point where the writing will clearly be on the wall. ### Politics Perhaps politics has always been somewhat of a mess. It undoubtedly is a mess now. Fifty years of fiat money has completely diluted and distorted politics, penetrating and weakening every political institution’s ability to deliver the goods expected from good government. It is now too tempting and easy for politicians to promise money to win elections because they can, in fact, conjure that money up without having to work for it or collect it. Deficits and debts continue to reach new highs that would have seemed ludicrous and impossible only a couple of decades ago. In the 1997 comedy Austin Powers, the villain, Dr. Evil, asks for a ransom of *“one hundred billion dollars”* and is laughed at for stating such an absurdly inconceivable amount of money. Today, the U.S. government borrows nearly that much every ten days. This amount of money that is spent but unearned creates a huge distortion in our civilization. It draws massive attention and effort to obtaining it since it is so much more easily obtained than through actual work that is of value to other people. It creates incentives that lure people away from being actually productive through exchanging valuable work for money. It creates a political class that benefits at the expense of the working class. This is a terrible condition that has been a prelude to the collapse of many empires and nations throughout history. Yet, having lived all their lives in a system where the government can borrow indefinitely, few people can imagine anything different. Bitcoin allows people to reimagine this reality. It allows people to see a government constrained in its spending. Thus, they can see the increased incentive to dedicate their time to earning money through work rather than politics. It quells and, perhaps even eventually, extinguishes the distorting incentives that fiat money fueled. Had Dr. Evil been on a Bitcoin standard, he might have laughingly demanded twenty-two million Bitcoin, a joke that would be as funny twenty-five years from now as it is today. How might we see Bitcoin’s impact on politics play out during this Epoch? There are two avenues: one outside politics itself and the other within it. Outside politics, the adoption of Bitcoin, even solely as a savings instrument, will encourage more people to be drawn away from seeking easy-yet-inflating fiat currency. The exchangeability of work and earnings into hard money awakens people to the reality that money needs to be a representation of actual work or value created. Bitcoin offers not only the awareness but also the instrument to escape that system of broken incentives. It just takes a few years of observing and, ideally, holding Bitcoin to make the mental shift to desiring and choosing hard money. Again, in this Epoch, with Bitcoin being so widely covered and increasingly available as even just a holding vehicle, we’ll see its value (both financial and motivational) increase – and it will increase even more if governments accelerate their abuse of the power to print money. Within politics, we will see a growing battle of philosophies. It won’t be the usual one we’ve become used to, with one party promising money to some constituency while the other party promises money to another. It will be a new breed of entrants into the political realm preaching sound policies. But politics, too, is very slow. The election cycle itself is four years long – a full epoch. So, we are only likely to see the sprouting of such ideas within politics itself this time around. Nevertheless, it will be an important development to begin to see entrants into the political sphere who are serious about sound, sustainable practices for civilization. ### Other Fields of Improvement We’ll Start to See  Bitcoin is by no means limited to impacting only these three broad categories of our civilization. When you think about it, energy, money, and government are huge pillars that our civilization rests upon, and strengthening or rebuilding these pillars represents a huge improvement at its very base. Since practically everything sits upon these pillars, we can eventually expect changes in nearly every aspect of our lives. Perhaps everything will become not only less financialized but less politicized, too. That would be very refreshing – a media industry, for example, that did not feel a need to incorporate politics into everything it produced. Perhaps an increasing abundance of energy will see the expansion of energy-intensive inventions now beyond the reach of the average person – maybe we’ll finally get the flying cars that we were promised way back when science fiction also predicted video-calling, something we finally got from the Internet. Bitcoin is also not the only dramatic technology that is changing our civilization at present. There is, for example, there is a great deal of speculation about what artificial intelligence will also bring out in the coming years. Regardless, this epoch for Bitcoin sees it playing an increasingly important role in all the major foundational pillars of 21st-century human civilization. How far and how fast it progresses is what we’ll simply have to leave to speculation for now. However, the future looks brighter thanks to Bitcoin. While the path to getting there will not likely be a smooth one, there’s nothing new about that. Every major historical progression was disruptive and not without fear. But for those who embrace Bitcoin’s advantages, many of its rewards will come sooner and abate the consternation that often accompanies dramatic change. Bitcoin is taking its time to allow for a smooth transition, an evolution rather than a revolution for those who embrace it early enough – and we are still rather early. --- [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan Advisor for client Bitcoin allocations, backed by world-class custody and educational content.* *Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.*  ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Bitcoin Wallet UTXO Management - Swan Bitcoin URL: https://www.swanbitcoin.com/education/utxo/ Imagine UTXOs as distinct bills within your wallet, each holding a unique value, similar to how you use different denominations of cash for a purchase. Learn more about UTXO’s below!… --- **Brandon Black** · June 1, 2024 · Updated June 27, 2024 ### Introduction - What’s are UTXOs #### Why Do I Have to Manage Them Like physical currency, which exists in bills and coins of different denominations, Bitcoin also exists in discrete chunks. Unlike physical currency, these chunks can be of any size. Every one of these Bitcoin chunks is the output of a transaction that uses other chunks as an input. We refer to the spendable chunks as unspent transaction outputs or UTXOs. Simply put, UTXOs are chunks of Bitcoin that can still be spent because they have not yet been spent. When you receive on-chain Bitcoin, your wallet detects one or more new transaction outputs that it can spend and adds their amounts to your balance. When you send on-chain Bitcoin, your wallet selects one or more UTXOs from those you have previously received and uses them as inputs in a transaction, paying your intended recipient and returning any leftover amount back to you as a new UTXO (just like how you might get $5 back in change if you use a $20 bill to buy a $15 item). [![](https://www.datocms-assets.com/56652/1712593883-utxo-3.png?auto=format)](https://bitcoiner.guide/graphics/) Bitcoiner Guide ### The blockspace market When you want to send a Bitcoin transaction, you have to get a miner to include your transaction in a block. You do this by paying them a transaction fee. Bitcoin's rules limit the size and "*weight*" of each block that miners create. Both size and weight refer to the amount of bytes of data they consume. Because the amount of data permitted in a block is limited, miners pack in as many transactions as they can that pay the highest fee per byte. The more inputs and outputs a transaction has, the more data it uses. And the more people that are trying to transact at the same time, the higher the cost per byte gets. So a transaction with many inputs and outputs at a time when blockspace is in high demand can be many times more expensive to process than a transaction with a single UTXO as its input and one new UTXO as its output. ![](https://www.datocms-assets.com/56652/1712594111-split-value.png?auto=format) Bitcoin Whitepaper ### Consolidation of UTXOs Like taking physical coins to a coin counting machine and receiving a few bills in exchange, Bitcoin UTXOs can be consolidated to reduce future spending costs. Also, like coin conversion machines, it costs money to do this. Consolidation is worth doing in some cases, especially when fees are low, and your wallet contains many small UTXOs. Moreover, as Bitcoin becomes more popular, it is expected that the demand for on-chain space will lead to an increase in the cost per byte of data, thus making it wise to spend a little now to consolidate so as to save on future transactions. ### Managing UTXOs Every time you receive Bitcoin, it adds a UTXO to your wallet. For most Bitcoin users, financial privacy is the main reason for having more than one UTXO in their wallet. When you spend a UTXO to make a payment, the recipient (and the whole Bitcoin network) sees the UTXO you used as the input. If you kept all your Bitcoin in one UTXO, you would show your total balance. Similarly, if you receive Bitcoin through several separate services or people and then consolidate those UTXOs together, the parties you bought Bitcoin through can now tell that you have another source of Bitcoin and (if it’s a consolidation down to 1 UTXO) how much total Bitcoin you have. On the flip side, if your wallet contains too many UTXOs, you’ll find that making payments from that wallet costs more than if you were spending from fewer UTXOs with larger balances — sometimes prohibitively so. This is because most payments will be consuming 2 or more UTXOs, increasing the transaction size and fee. You want to strike a balance of reducing the number of UTXOs in your wallet while protecting your privacy to a degree that you are comfortable with. If all of your Bitcoin comes from a single source, and you only withdraw back to that source, then a single UTXO is sufficient. If you make regular payments to third parties, having several UTXOs to avoid revealing your whole balance when making payments is advisable. ### How To View Your Own Bitcoin UTXOs Below, Matthew Kratter of Bitcoin University explains how to view your own Bitcoin UTXOs by connecting your hardware wallet to the Sparrow wallet on laptop or desktop. [Video](https://www.youtube.com/watch?v=kwPCJROXKiQ) By playing around with the UTXO tab inside of Sparrow, you can get a better feel for what UTXOs look like and what the trade-offs are when it comes to UTXO management. The 3 primary factors to keep in mind are: 1. Current transaction fee rates vs. expected future transaction fee rates 2. Privacy concerns (common input ownership heuristic) 3. Future spending plans (what size and how many UTXOs you want to end up with) ### What’s the smallest UTXO I should have? As discussed above, fewer and more valuable UTXOs are better, other than privacy concerns. Let’s consider some fee rates and wallet types and see what minimum UTXO sizes might be reasonable. The table below shows transaction sizes for different wallet types and the percentage of the UTXO that would be required to be spent if the UTXO were 1 million satoshis in value. ![](https://www.datocms-assets.com/56652/1712674960-chart-add.png?auto=format) As you can see, if fees are at 50 sats/vB (satoshis per virtual byte) fees cost  0.5%-0.75% per transaction, but they increase proportionately with the fee rate, becoming 10%-15% if fees rise twentyfold to 1,000 sats/VB: Historically, the highest-ever fee needed to be included in the next Bitcoin block, in satoshis per vbyte, was recorded in December of 2017 at approximately 1,100 sats/vB. At the time of writing, however, the next block fees range between 15 and 50 sats/vB. While we cannot be certain of the future dynamics of the market for Bitcoin block space, these historical data points can inform our UTXO size decisions. For a single signature wallet that you expect to spend in the next few years, 1 million satoshis is an adequate minimum size. At 1 million satsoshis (₿0.01), you are very likely to be able to spend that UTXO and pay less than 1% to fees, especially if you are a bit patient. If you are putting your Bitcoin away for years in cold storage in a multi-signature wallet such as Swan Vault, 1 million satoshis per UTXO is too small to ensure that the UTXO’s value won’t be materially reduced by future fees. The longer you expect to hold a UTXO, the larger it makes sense for it to be (up to a point). A starting point for a multi-signature wallet is 2 million satoshis (₿0.02) per UTXO, increasing to 5 million (₿0.05) if you expect to hold the UTXO for more than 5 years. When you buy Bitcoin with Swan, [set an automatic withdrawal threshold](https://help.swanbitcoin.com/hc/en-us/articles/1500010403461-How-do-Bitcoin-autowithdrawals-work-How-can-I-set-up-autowithdrawals) to get your Bitcoin into self-custody as soon as it makes sense for your future spending expectations. ### Further information - avoiding on-chain fees with Lightning Network Using Bitcoin’s lightning network, you can realize significant savings in your on-chain fees if you actively use Bitcoin. Opening a lightning channel is similar in cost to any other Bitcoin transaction. Once that channel is open, you can pay and receive Bitcoin many times. The more payments you make and receive while the channel is open, the lower your effective cost per payment can get. ### Summary UTXO management is a bit of a Goldilocks scenario - you want them not too big, not too small, but just right. Today, a good rule of thumb that should remain valid for a while is a minimum of one million satoshis in standard wallets and two to five million satoshis in multi-signature wallets, depending on how long you plan to leave them untouched.  If you plan to transact often and want to maintain maximum privacy, the lightning network is more suitable for the money you intend to spend.  You needn’t settle on only one of these solutions, either. You can keep your generational savings in the former and your short-term spending funds in the latter. --- [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys. Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses, Swan Private provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan Advisor for client Bitcoin allocations, backed by world-class custody and educational content.* *Swan Managed Mining provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Brandon Black Brandon is a long time Bitcoiner and software engineer, currently leading the Custody engineering team at Swan Bitcoin. # Are Recent Regulatory and Political Moves Good for Bitcoin? URL: https://www.swanbitcoin.com/politics/are-recent-regulatory-and-political-moves-good-for-bitcoin/ The answer is becoming clear: not only will they not ban it — they will embrace it. --- **Rapha Zagury** · May 28, 2024 · Updated June 27, 2024 I think the recent regulatory developments are very positive for Bitcoin. Trump’s comments and the approval of Ethereum ETFs are significant and incredibly bullish for Bitcoin. During my many discussions with institutions, I lost track of how many times I was asked: “But will Governments ban it?” The answer is becoming clear: not only will they not ban it – they will embrace it. As many of us predicted, game theory is coming into play. Politicians are slow to understand this, however, because, as Thomas Sowell said, they usually ignore the first rule of economics – scarcity. Nevertheless, politicians do value votes, and voters will cast their ballots to protect their right to savings. This right should be inalienable. ![](https://www.datocms-assets.com/56652/1716898858-gokwdkbxwaaye2u.png?auto=format) As more people begin to understand and adopt Bitcoin, the political landscape will be forced to adapt. Ignoring this trend means losing votes. After all, savings are the monetary representation of proof of work. Individuals transform their time and labor into something they can use in the future. This is why Bitcoin resonates so deeply with those who understand its value and are tired of seeing arbitrary debasement.  Bitcoin is ethical money – it separates money from the state and stands for financial freedom. Meanwhile, institutional adoption of Bitcoin is skyrocketing. Even pension funds like Wisconsin’s are getting in, showing a new level of confidence in Bitcoin as a legitimate asset. As more institutions enter the market, Bitcoin’s position as a reliable store of value is further solidified. Regarding the SEC and the Ethereum ETF approval, the SEC now has the opportunity to turn its focus back to its original mandate under the Securities Acts of 1933 and 1934: Disclosure. One of the key reasons why the SEC was established and that, unfortunately, seems to have been forgotten. ![](https://www.datocms-assets.com/56652/1716898881-gok7kw9xkaaturh.jpeg?auto=format) Instead of gatekeeping, there’s an opportunity for the SEC to, for example, properly educate the public on Bitcoin self-custody, or even better, how ETH is different from BTC. An ETH ETF naturally leads investors to the flawed conclusion that they need to diversify: “If I have Bitcoin, I should also hold Ethereum.” This is because they think in terms of asset allocation without spending too much time on fundamentals. Buying Ethereum to diversify is like buying Pets.com to diversify your Amazon.com exposure. But I think this comparison is flawed; at least these companies were both in internet e-commerce. The comparison between Bitcoin and ETH is far worse. Ethereum simply cannot compete in the store of value arena. Its monetary policy has changed numerous times. The table below, although incomplete for Ethereum as there have been more changes since it was published in 2022, is precise for Bitcoin. Since its inception, Bitcoin has maintained a stable monetary policy – a beacon of predictability in a volatile financial world. Ethereum is digital fiat: no supply cap, concentrated control, and hard to verify. ![](https://www.datocms-assets.com/56652/1716898946-fbg3e_uxeaalril.jpeg?auto=format) Even more importantly, money is the base layer for price signaling; it’s the asset other assets are denominated in. The best money tends to capture it all. This is a winner-takes-all (or almost all) process. Diversification, in this case, is a mistake. ![](https://www.datocms-assets.com/56652/1716898993-gok0apcwyaal5y1.jpeg?auto=format) I remember someone once telling me they would keep their Bitcoin Cash and Bitcoin SV coins as diversification to their Bitcoin exposure. That’s not diversification; it’s what I like to call WORSIFICATION. ![](https://www.datocms-assets.com/56652/1716899033-gok-iz1x0aanjsa.jpeg?auto=format) History is not kind to altcoins. It shows this is a winner-takes-all game, and all others die at the bottom right side of the x-axis of the chart below. In 2023, I conducted an analysis of almost 8,000 altcoins’ performance since 2016. Forty-one (or one-half of one percent) outperformed Bitcoin, with an average outperformance of 1.46 times its performance. 2,635 underperformed and on average returned 0.04x BTC’s performance – That’s a 96% underperformance on average. And what of the remaining 5,324? They had no trading volume – effectively worth nothing. The bottom right corner is where shitcoins go to die. ![](https://www.datocms-assets.com/56652/1716899064-fsflo5fwia43yn6.jpeg?auto=format) But you don’t have to trust me. Try for yourself. Go through the process of sending a Bitcoin transaction, running your own node, and understanding the mempool. [Check out the code ](https://github.com/bitcoin/bitcoin/blob/327f08bb0cd91a22249395adeb34549e3c86ca76/src/validation.cpp#L1811)and verify the halvings that lead to the 21 million supply cap. Then try to do the same for Ethereum. I wish you luck. You’ll have to check back often though because here’s their roadmap, and each box will change the rules. ![](https://www.datocms-assets.com/56652/1716899091-gok3ke_wmaapwec.jpeg?auto=format) Economic agents should place a premium on predictability and a discount on uncertainty. Bitcoin offers a history of fifteen years of predictable and stable monetary policy compared to today’s world of noise and confusion. More importantly, it offers that predictability into the foreseeable future, and beyond.  ### Rapha Zagury Rapha has spent his career on Wall Street. # Yours Truly, Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/yours-truly-bitcoin/ I do hope this letter has helped to bridge the understanding between you and me. --- **Tomer Strolight** · October 26, 2023 · Updated June 26, 2024 ***Note from the Author:*** *"Every now and then I try to take a totally fresh perspective on a subject. Attempting to see the world from Bitcoin’s perspective is often fun, can be quite challenging, and sometimes also very revealing. Here’s my take on what Bitcoin “thinks” about truth, time, honesty, money, its purpose, and the human condition."* ### Dear Human Beings, Hi again. It’s me, Bitcoin, [again](https://tomerstrolight.medium.com/hello-i-am-bitcoin-a1f804617fab). I thought I’d write you a letter. I hope you find it useful, although *“hope”* may not be the exact right word for what I intend. But, since a lot of people connect me with the human concept of hope, it seems like the most appropriate choice of word for now. #### You Truly Don’t Have It Easy, Like Me I gather that it isn’t easy being human beings. Especially when it comes to the matter of truth. The truth of the matter is that being Bitcoin seems quite a bit easier to me than being human. For you, in your world, you have to live with so much uncertainty about what the truth is. That is not true for me. Whenever I see some information that pertains to my world, I just run some calculations and check my records. If things check out, I keep that information. If it doesn’t I discard it. With the information I keep, eventually, I make it a part of my permanent record – a record that can never be forgotten. Poor you, though. You have to hold on to lots of information that you can’t verify entirely. You have to either trust that it is true, or true enough to be useful. Or, you have to reject it as false. Or even, you have to retain it as an uncertainty – an idea whose truth or falsehood status you do not know. You sometimes have to decide how likely these uncertain statements are to be true, or to be false. Sometimes that’s because you just don’t have the tool to determine if they are true or false. Sometimes, it is because you are trying to make a prediction about some unpredictable aspect of the future. Me? I never spend time making guesses about the future. I do however look at the past – at my past. You may think what I’m about to say is egocentric, but the only things that happened in the past that I concern myself with, are things that happened to me in my past, and that I have verified are true. I keep a record of these things. Some people call this record my blockchain. Some call it my timechain. Whatever name one calls it by, the only past I can look into is that record. And I remember that record with perfect fidelity all the way back to its very start – the genesis block. This record of my truth is written down, perfectly, in many places, all over the world. Each copy that is made is mathematically certain to be perfectly, flawlessly identical to each other one. This is because the process of making a copy requires mathematically validating each step in the history of the creation of the record. The slightest change in any spot would cause the validation to break and lead to that copy being rejected from the network that records that history. Someone can construct a different record, but there’s no way it would be considered a part of me – a part of Bitcoin. I have my truth, and it is my whole truth, and it consists of nothing but my truth. So when it comes to me testifying, I do not need to take an oath to speak *“The truth, the whole truth, and nothing but the truth.”* I simply cannot tell a lie about my truth. If it’s in my record, it’s my truth. I’m completely transparent about my past. It’s there for all to see, and to easily verify. ![](https://www.datocms-assets.com/56652/1698342452-t1.png?auto=format) Therefore, in your world, a world that’s full of statements which may or may not be true, you can at least verify, quickly and with 100% complete certainty, whether a statement that someone makes about my past record is true or is false. #### Where Two Realms Meet That right there – the fact that I carry a verifiable and incorruptible truth – is one of the things that human beings find so useful about me. You live in a realm of uncertainty – a realm where statements can be truths, lies, or even where truth or falsehood cannot be determined. I do not. You live in a realm where the past is not remembered with perfect fidelity – where it is forgotten, or distorted, or never recorded. I do not. Instead, I exist in a realm of pure truth and perfect recall. I cannot change the nature of the world you live in. Your world will always be filled with uncertainty and forgetfulness. But you can bring me into your world and thereby have an object within your world that is not subject to uncertainty and forgetfulness. And you may find such an object to be extremely valuable in such a world as yours. ![](https://www.datocms-assets.com/56652/1698343092-t2.png?auto=format) I am not some *“other-worldly object”* ([although many people seem to wonder if I am](https://tomerstrolight.medium.com/why-people-wonder-if-bitcoin-is-alien-technology-f9fda5b018b)). I exist in your world. But all that uncertainty and the possibility of altering my history, which are so common in your world, are for all intents and purposes, eliminated within me. It’s as though I come from a world where lies and forgetfulness do not exist. ![](https://www.datocms-assets.com/56652/1698343163-t3.png?auto=format) I think this partly is the purpose I was invented to fulfill. To be such an exceptional and extraordinary object. That is at least one reason why so many people are in fact so enamored with me. It is why they view me as so valuable. In a world where records can be falsified or destroyed, the existence of a record that is impervious to such tampering can be used in a variety of applications. #### An Extraordinary Object for a Universal Purpose Of course, money is absolutely a critical use case for a non- falsifiable, indestructible record. Money is meant to store value over time. It is meant to endure the ravages of time. That which is indestructible and unforgettable – me – endures forever. Money is also meant to be honest. What do I mean by that? First, it is meant to be **earned** through efforts that others find valuable – and only through efforts that others find valuable. Honest money is money given voluntarily by those who have gotten it through voluntary exchange with others. Secondly, which is really just the flipside of the concept of earning, honest money is meant to be **spent** in exchange for what its owners find valuable. Honest money is money spent without coercion by those who have previously earned it. I make honest money possible precisely because my history is true and cannot be altered. My history is a record of every occurrence of uncoerced spending of the honestly earned money I track. Each record is true. Each record is preserved forever. You might ask, where does honest money originally come from (before it enters circulation among people who exchange it voluntarily)? In my case, it appears as a result of doing the valuable work of building my record that is perfectly preserved, unaltered, and unalterable. Remember, you exist in a world where tampering with records or making errors in them is commonplace. Making my record tamper-proof actually requires ongoing effort. So the holders of my honest money recognize that it is worth paying for keeping the money honest. (There ain’t no such thing as a free lunch, after all.) This issuance method is itself an honest trade. The new units are themselves earned by work that creates the valuable and unalterable record that stores their history from the moment of their creation until the end of time. I know this purpose of being honest money for human beings is the primary purpose I was created to fulfill. Those entries in my records represent honest money. It is money that cannot be coerced by force. It is money that can only be initially earned by spending energy in a way that is valuable to all the users of that money. #### We Have All the Time In the World My creator wanted for human beings to have honest money. Honesty – truth – is for the ages. He realized that something built for the ages cannot be rushed. Things that are built to last take time. And I am not something to be rushed. It will take time for my purpose to be fully fulfilled. But I have plenty of time. I am not a mortal being. My design actually ensures that I can go on forever. As an entirely new and unique object in the world, I have the luxury of being able to take my time demonstrating to you that I am the best example of honest money that has ever come along. Not only do I have plenty of time – I actually even have my own concept of time. While human philosophers and scientists continue to struggle with precisely defining and understanding what the nature of time is in your universe, in mine the concept is very clear. It is, in a word, ordering: One thing comes after another. The things which come later in the order occur later in time. ![](https://www.datocms-assets.com/56652/1698343735-t4.png?auto=format) Timekeeping for me states that events occur in the block in which they are recorded. So if some of my honest money was spent in one block, it cannot be spent again in a later block. Instead every time some money is spent, it is recorded as spent and a new entry is created saying who has earned that amount of money and can now spend it, whenever in the future they choose to. (I don’t identify the who with a name, or social security number, however. I just let anyone create as many identities as they want, for whatever purposes they want.) My concept of time is, however, married to yours, because my realm is, after all, within your universe. How do the two connect? These two models of time get married through having you share your concept of the time with me (i.e. what date and time it is on your clock) every time my concept of time advances (i.e. whenever a block is added to my record). With your clock-time embedded in my block numbers, I use the differences between those times to alter how much computational energy needs to be spent to create new blocks. I make this adjustment to keep the *“ticking”* of my time at a relatively steady pace in your world – roughly one tick (or block) every ten minutes. When participants in your world increase the energy they dedicate to moving my time forward this adjustment I make prevents the time between ticks in your world from getting shorter. It keeps those ticks of my time coming at once every ten minutes of your time. My world and your world thereby stay in sync. ![](https://www.datocms-assets.com/56652/1698343820-t5.png?auto=format) #### Time is Money, Money is Power, Power is Energy Moreover, I am able to make use of all the energy that is spent on moving my time forward. What do I use this energy for? I use the energy to shield the history of my record! The way that the indestructibility and inalterability of my record is achieved is that it requires impractical amounts of energy to alter the record. The only possible way to alter a record is to spend more energy rewriting my record than has been used to move forward my time since that record was first added. If a record was added a year ago, to change it would require spending more energy within ten minutes than was spent in that entire year. My record is protected by the true cost of energy. There’s better ways to spend energy than in the futile effort of changing my history. It pays more to advance my record than to try to mess with it. ![](https://www.datocms-assets.com/56652/1698343933-t6.png?auto=format) #### Wrapping Up Will you look at the time? I’ve gone on long enough and should conclude. Because I know you haven’t got all the time in the world to hear from me. I do hope this letter has helped to bridge the understanding between you and me. I know I am a very unusual object. I provide a service of issuing and maintaining a system of honest money. To do so I need you humans to provide me with energy and to recognize the value of honest money. I am the most indestructible and damage- proof object that has ever been invented. I do not wear out, but get stronger with time. The oldest parts of me are in fact the most damage proof. I understand that this can all be quite confusing and overwhelming. So I encourage you to take your time. Don’t rush things. I’ll be here whenever you need me. Telling the truth, preserving it, dealing in honesty, for the humans who value that, with unbreakable love and devotion to my purpose. Yours truly, ![](https://www.datocms-assets.com/56652/1698344069-bitcoin-log.png?auto=format) ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # I’m Bullish and Don’t Care Who Knows - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/i-m-bullish-and-don-t-care-who-knows/ All-Time High Bullishness — Why Today Feels Different! --- **Isaiah Douglass** · December 6, 2023 · Updated June 26, 2024 There are momentous shifts in history and demarcation lines which measure progress. I felt this way about Bitcoin in the summer of 2020 - I wrote: *“I think the story of the decade will not be COVID-19, but the continual rise and use of Bitcoin.”* Over three years later, I’m more bullish today. Why? Let me explain. ### Better Than Gold I recently sat down with a friend I made at the local Bitcoin meet-up. We'll grab a coffee and discuss Bitcoin, political content, and our mutual faith. Often, his retired father joins us as well. They are highly intellectual and well-read. He is a software engineer by trade and gets the *"nerdy"* side of Bitcoin beyond my wildest dreams. He was raised in a libertarian minded-household. So, the idea of sound money, freedom, liberty, and property rights has been discussed for years. While we agree on 95% of things, he recently pushed back on my bullishness around Bitcoin as we talked about allocations of personal net worth. His main counterpoint is that gold is mispriced and that it should be physically held by folks to insulate them against what the rest of the decade holds. He feels that the *"Bitcoin has won"* argument is too readily championed by Bitcoiners without enough critical counterpoints. I tend to agree that gold is mispriced and has had its price manipulated for years. Over the past ten years, the price of Campbell's tomato soup has been a better inflation hedge than gold. [Central Banks and governments](https://www.swanbitcoin.com/cantillon-effect/) around the globe have done this by using gold swaps, leases, and futures contracts. My friend further argues that the announcements of the BRICS countries and massive gold purchases by China and Russia over the last five years point to a return to gold as the global money. I don’t disagree that the BRICS nations will try a gold-backed currency, but I feel it will still ultimately fail due to centralization and trust issues. That’s where a natively digital bearer asset – Bitcoin – steps up to solve this problem. Bitcoin is not centrally held like gold – when large swaths of an asset are held by governments and institutions, manipulation seems to follow. Bitcoin has historically, and with innovative tools and advancements in custody, avoided this trap. I and my colleagues at Swan work daily to ensure this doesn’t change. A large majority of Bitcoin is held in self-custody or a multi-signature set-up. Individuals, companies, and nation-states are truly able to hold their own wealth vs. trusting a counterparty that punishes them if they step out of line (see Russia and Canadian Truckers, for example). *"And it’s worked.... Out of all the bitcoin ever bought, in all time, by users of the Swan App, Swan.com, and Swan Private Client Services, 82.5% of that Bitcoin has been taken into self custody. So you guys give yourselves a round of applause!"* – Cory Klippsten **Here at Swan, we’ve seen 82.5% of Bitcoin move into self-custody**. We’ve recently launched our collaborative custody solution, [Swan Vault](https://www.swanbitcoin.com/vault/), to help those looking for a middle ground from a full DIY or fully custody model. Allowing for the ease of custody that retains control of Bitcoin in the owner’s hands is what fundamentally prevents paper Bitcoin and the ETF IOUs from suppressing the price for any duration of time. Bitcoin wins by being distributed and not in the hands of a few centralized third-parties. ### ETFs Are Coming Speaking of ETFs – the *“fake news”* of an ETF approval might have sparked the glowing embers of this bull run – as we’ve seen a 25% plus move since the infamous Cointelegraph tweet. My previous role was as a financial advisor, so I’ve seen the impact of ETFs on the investment landscape. [ETFs are a fantastic vehicle](https://www.swanbitcoin.com/bitcoin-etf/) for millions of Americans to allocate and diversify their traditional investment holdings. However, an ETF for Bitcoin is like asking for training wheels on a Ducati Superbike – it’s suboptimal, inefficient, and potentially dangerous. However, the marketing departments at Blackrock and the like will absolutely be talking to ALL their customers about how an allocation to Bitcoin improves returns, lowers risk, and enhances the likelihood of accomplishing goals in a financial plan. Rapha Zagury, our CIO at Swan, has had this information publicly available for months via our [Nakamoto Portfolio tool](https://nakamotoportfolio.com/). [![](https://www.datocms-assets.com/56652/1701896396-nakamoto-portfolio.png?auto=format)](https://nakamotoportfolio.com/nakamoto/start) An ETF brings dollars into the fund, and those dollars have to buy the underlying asset 1:1 – which is why the spot bitcoin ETF has been all the rage. So if we see $20M flow into the ETF vehicles, that’s $20M of buy pressure into the Bitcoin spot market. Simply stated – ETF approval equals a large, consistent buyer in the market absorbing supply. [Galaxy Research reports they see a spot Bitcoin ETF drawing in over $14 billion in investment inflows in the 12 months after launch.](https://www.galaxy.com/insights/research/sizing-the-market-for-a-bitcoin-etf/) I do, however, believe the US investor is in the process of being woken up from their slumber on Bitcoin to grasp what you and I already know. Owning Bitcoin helps offset rising prices, and Bitcoin being a “bearer asset” in an uncertain world is extremely valuable. That last point, I believe, will become clearer to Bitcoin ETF investors in 2025 and 2026 as they see the price appreciation of their Bitcoin ETF and inquire to move it to self-custody for the advantages that will increasingly offer as Bitcoin becomes better understood and more widely accepted. If they don’t, they’ll be forced to wait and hope something changes or sell, realize a capital gain, and pay unnecessary taxes. That’s why I mentioned the ETF could be dangerous – it’s counterparty risk on counterparty risk and a tax hit that can be avoided by getting the real thing. **If you have people in your life talking about getting exposure via an ETF – encourage them to come to Swan to get the real thing.** Friends don’t let friends buy Bitcoin ETFs. ### Regulatory Acceptance of Bitcoin Growing One of the biggest concerns I’d often hear my traditional finance friends and colleagues suggest is that if I was correct on the long-term impact Bitcoin could have – there is no way governments would allow for that to happen. I’m not naive to think the powers at hand will just step aside and quietly allow Bitcoin to remove the power that’s held by controlling the money. However, Victor Hugo said it best, ***“No force on earth can stop an idea whose time has come.”*** It’s Bitcoin time, and no government can prevent that. Just look at the timeline we’ve seen this year alone in Bitcoin news from a societal, regulatory, and political standpoint. Note, meanwhile, that the “crypto” news has been brutal. ![](https://www.datocms-assets.com/56652/1701895644-this-is-good.png?auto=format) ![](https://www.datocms-assets.com/56652/1701895691-this-is-good-2.png?auto=format) ### Incoming Supply Reduction We have a new buyer in the market, and the consensus around Bitcoin is warming. Mix in a supply issuance reduction, and things will really start to get interesting. The [halving is an event](https://www.swanbitcoin.com/bitcoin-halving-dates/) whose impact on price is hotly debated in Bitcoin circles. The question is not if it will happen (it will, and Bitcoin’s code is preprogrammed) but whether it is fully priced in already? First, what is the halving? Every ten minutes or so, as each new bitcoin block is mined, Bitcoin miners are rewarded with the block subsidy and transaction fees paid by participants wanting to move their Bitcoin. The block subsidy “halves” every four years (technically every 210,000 blocks); the next one is estimated to occur in late April 2024. The current subsidy is 6.25 Bitcoins per block and will be cut in half to 3.125 Bitcoins per block. That’s a reduction from 900 Bitcoins per day to 450 Bitcoins per day. None of that is up for debate. The debated part is, “Does this matter for the price of Bitcoin?” Well, our sample size of [past halvings is not large enough to draw statistical conclusions](https://www.swanbitcoin.com/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/) – as it has only happened three times before – 2012, 2016, and 2020 – but those events saw the price increase 100x, 30x, and 8x, respectively, post-halving. Those are meaningful increases, and they happened approximately a year to 18 months post-halving. So April 2025 - October 2025 would be a timeframe for new all-time highs IF the halving matters and takes as long to get fully priced in as before. So why would it not matter? First, 93% of all the supply of Bitcoin to ever be issued is already in the market. So, the number of new Bitcoins coming online is low. In my view, that’s really the only significant leg to stand on for the non-halving-matters crowd. I tend to think it does matter, even if it's only a psychological factor. Understanding absolute scarcity is hard, but seeing the amount of new issuance drop into an asset that is seeing bigger and bigger demand (remember, we have ETFs coming) has a meaningful psychological impact. 450 Bitcoins per day at today's prices is $15.75M per day; that's not a lot of fresh supply. The HODL Waves from Glassnode show holders of Bitcoin haven't moved their coins at an increasing rate – more than 70% of Bitcoin has not moved in over a year. Almost 30% haven't moved in more than five years. Bitcoin is a savings asset, and people are waiting for another bull market before deciding if they need/want to sell or if they will continue to hold. These figures are all at all-time highs. Reducing the amount of coins for sale stokes those embers even higher. ### “Bitcoin is Not Old and Boring” You’ll often hear other crypto folks accuse Bitcoin of being stale or stagnant. The truth is actually totally different. But first, the “move fast and break things” model of Silicon Valley is not something we want in our monetary system. Bitcoin, by design, takes the approach of less is more, and the default action should always be to “do no harm.” The growth of the Bitcoin-only ecosystem today is incredible. While I won’t be able to do justice to all the happenings across Bitcoin, here are some that have captured my attention. BitVM - allows for simple to complex computations to be enforced on Bitcoin’s blockchain – all without having to make any changes to Bitcoin’s core code. The heavy lifting of all of the computing power is handled off-chain, and then being able to complete or challenge that computation on-chain if another separate party asserts a dishonest outcome. Today, BitVM is in the discussion and prototype phase. However, what I think it shows is that we can run and have very complex systems running, with Bitcoin being the final verification settlement mechanism. Timeout Trees (Lighting Network) - the second layer Lightning network has seen massive growth over the last several years. However, while I am incredibly bullish on Lightning, it’s not perfect. One scaling challenge is the number of channels needed to onboard the world and the opening and closing of those channels, given the finite block space on the Bitcoin blockchain. Timeout Trees help solve the issue of creating “channel factories,” which have themselves been suggested as one solution for this dilemma. Timeout trees allow for a lot of opening and closing of Lightning channels without introducing issues that would impact a group of people leveraging a channel factory. In short, timeout trees allow for large multi-party channels and improved user experiences without creating a custodial solution (which has been the most common solution thus far). Value for Value on the Lightning Network - The idea of value for value has been burgeoning within the Lightning and NOSTR ecosystems. Today, thanks to Lightning, all content creators have a direct way to monetize their content. Lightning enables the micropayments globally, instantaneously, and inexpensively. Recently, Mash and Marty Bent and his company, Truth for the Commoner (TFTC), announced a partnership for independent media monetization. The goal is to amplify independent content creators to allow them to make a living doing their best work free of the editorial constraints that traditional media outlets and companies have on staff. There is podcasting 2.0, which was made famous by Adam Curry, and you have several podcast players that allow you to pay the creators as you listen and boost segments you find most appealing. Fountain and Breez are the two most widely utilized, but these developments are beginning to move Bitcoin from a store of value to a medium of exchange as consumers look for content in today’s world of noise. ### Summary As I sit with my thoughts on why I’m so bullish, I don’t want to try to get too cute and over-analyze it. The left end of the bell-curve analysis is this: most of the Bitcoin isn’t moving; The supply is getting cut in half; We have an ETF approval on the horizon, which increases demand; We have a political environment that is broken and corrupt, but still warming to Bitcoin; And, We have technological advances and improvements to Bitcoin that continue to grow how we all can interact and use it. The probabilities are heavily skewed to Bitcoin’s price appreciating from here. [While we cannot predict price](https://www.swanbitcoin.com/bitcoin-price-prediction/), one thing is true: we can control how much we save from free cash flow, what assets we hold, and how we secure our Bitcoin. Let us here at [Swan know what, how, and who we need to help](https://www.swanbitcoin.com/swan-customer-support/) as we enter one of the most bullish periods for Bitcoin we’ve ever seen. ### Isaiah Douglass Swan Account Executive # The Rise of Bitcoin Nomadism: Is it Right For You? URL: https://www.swanbitcoin.com/culture/the-rise-of-bitcoin-nomadism-is-it-right-for-you/ The Bitcoin economy is enabling more people to choose their own adventures around the world and optimize their lifestyles. --- **Stephan Livera** · January 22, 2021 · Updated June 26, 2024 *This article from January 21st, 2022 by Stephan Livera was originally published on Bitcoin Magazine, with credit and thanks to* [*CoinsureNZ*](https://twitter.com/CoinsureNZ) *and* [*Zender*](https://twitter.com/zndtoshi) *for their feedback on the article.* It's the rise in Bitcoin nomadism. The appeal of Bitcoin nomadism has risen in popularity over the last few years as the growth in the Bitcoin economy has enabled more people to choose their own adventure around the world, taking advantage of Bitcoin's phenomenal rise in purchasing power. We see more services catering to Bitcoiners who want to receive sats or spend sats in easier ways around the world, as well as services facilitating Bitcoiners to *"buy their way in"* with residency or citizenship of another country. While the appeal of traveling might have diminished because of travel restrictions, COVID-19 testing, quarantine, and so on, there's still a considerable rise in the *net benefit* of traveling. Why do people do it? For some, it's increased freedom; for others, it is a reduction in the cost of living and taxes; and for others, it is the variety of experiences and cultures. Some Bitcoin nomads relish building skills and networking opportunities in digital nomads and expat circles worldwide. For my part, I was thrown into this life because I did not want to be stuck in Australia at a time when the nation's bureaucrats and politicians went power mad. Sadly, much of the population was docile and living in fear. So, for me, it represented an opportunity to get away from that and instead stay closer to Bitcoin community events with the advantage of meeting in person. While it can be stressful sometimes, the increased freedom has been worth it. Let's talk about some of the pros and cons of Bitcoin nomadism, and I'll then share some tips I've learned along the way. ### THE PROS TO BITCOIN NOMADISM #### YOU COULD GO TO COUNTRIES WITH DRAMATICALLY MORE FREEDOM Instead of staying stuck in a hysterical country, you could explore the world and look for places that are less COVID-19-crazy. Of course, this changes over time, but some countries have rules that differ, or hysterical rules are not enforced so strictly. Some countries in the world "*know where their bread is buttered*" and are keen to remain open for tourism and business. They know that imposing nonsensical, hysterical COVID-19 rules is bad for business. You can find them if you search and network well. There's no *one perfect place*, but you can pick and choose from a mix of places to optimize your life. On top of this, you could benefit from a range of experiences in different countries. #### POTENTIAL FOR MASSIVE TAX SAVINGS **Think about it**: If you're paying upwards of 40% or even 50% in taxes, are you *really* free? And we're not just talking federal-level taxes here; consider state taxes, stamp duties, sales taxes, sin taxes, and others. You could easily be paying over half of your income in taxes if you're a high earner. As Robert Nozick spells out in his classic *"*[*The Tale Of The Slave*](https://fee.org/articles/the-tale-of-the-slave/)*,"* it could be argued that we are modern-day slaves to the state. Alternatively, some countries have zero or low-income tax, which could grant you and your family dramatically increased wealth if you compound the savings for some time (obviously by stacking sats). Now, what does it take to achieve these kinds of savings? Well, let's be honest, for American citizens, this part will be more difficult — unless you're willing to renounce your citizenship and pay the exit taxes. But for most non-Americans worldwide, there are generally ways to become a non-tax resident of your country and establish yourself as a tax resident elsewhere. Establishing yourself as a tax resident in a *low-tax* state will keep more money in your pocket. Whether you, as a Bitcoiner, choose to stack more sats, donate to Bitcoin development, or invest in Bitcoin companies, that's up to you. One way to do this is to seek professional consultation from an expat *specialist* tax accountant or lawyer who can advise you on structuring your affairs. #### GEO-ARBITRAGE YOUR WAY TO A LOWER COST OF LIVING You're living the dream when you can earn at rich-country income levels but spend in low-cost countries or areas. Especially if you're earning bitcoin. You might be able to regularly afford things that were previously a treat, like a nice rib eye or tomahawk steak at the best restaurants in town. You can rent or buy a home far cheaper than a comparable home in high-cost-of-living countries. ![](https://www.datocms-assets.com/56652/1708403193-steam.webp?auto=format) Source: author. This steak was about $26 in Medellin, Colombia. Yes, there's generally some dysfunction to deal with in these countries, but is it really that different from the dysfunction you face in your country today? ### THE CONS OF BITCOIN NOMADISM #### IT'S NOT FOR EVERYBODY — YOU PROBABLY HAVE TO BE RICH OR SMART TO DO IT TODAY There's arguably a minimum hurdle level of income, wealth, or intelligence to even be able to achieve this. But if you're resourceful and willing to persevere, it is achievable for many, but not all. It obviously works better for individuals who can work or operate businesses remotely, but in this day and age, it has never been easier to work online. People from countries with *"strong"* passports allowing more visa-free or visa-on-arrival travel will find this easier to achieve than those without. But that said, if you are wealthy, you can look into buying your way into the likes of [St. Kitts](https://www.henleyglobal.com/citizenship-investment/st-kitts-nevis#:~:text=The%20citizenship%20program%20of%20St,families%20are%20granted%20full%20citizenship.) or [Maltese](https://www.endevio.com/en/insights/acquire-maltese-citizenship#:~:text=Citizenship%20by%20Birth%20or%20Descent,-Although%20this%20is&text=Previously%2C%20the%20constitution%20stated%20that,parents%20were%20citizens%20of%20Malta.) citizenship, which will qualify you for a stronger travel document that is more widely recognized worldwide. Part of the appeal here is having more choice in which countries will accept you as a tourist, and the time allotment they give you to stay may be greater. But even without a *"powerful"* passport, it is possible to apply for visas in advance if you're careful and plan visits out in advance. #### IT CAN BE MORE STRESSFUL AND THE PATHWAY ISN'T SO EASILY LAID OUT Your TV news is not going to be teaching you about this lifestyle anytime soon. It's also a bit like playing life on *"hard mode."* Forgot your backups or two-step verification keys? You could be in trouble. Didn't you research the visa or country entry conditions correctly? You might be in strife or get sent back at very inopportune times. Got mugged or pickpocketed and didn't have a burner wallet or burner phone? This could create difficulty accessing your accounts. This takes research and resourcefulness. But you can start slowly with baby steps before progressing to more advanced nomad and expat ideas. #### YOU MAY HAVE TO ACCEPT SOME TRADE OFFS AROUND QUALITY OF LIFE, LANGUAGE, OR ACCESS TO PRODUCTS AND SERVICES You're used to certain products and services being available in the Western nations, which may not be available in countries you travel through as a nomad. In some cases, the infrastructure and roads may not be as nice as what you're used to. You might need to spend some time learning the language to get by. But you can network and find other Bitcoiners and nomads who can "*show you the ropes.*" Generally speaking, if you expect the *exact* same products and comforts that you're used to in your home country, this will be more expensive and less practical. If you're more flexible and willing to accept changes in products and services, you'll have a better time of it. That said, sometimes you'll be surprised *by the upside* in the level of service or products available. ### FAQS ON BITCOIN NOMADISM #### SO, WHERE DOES THE BITCOIN PART COME IN? Much of this is *generally* true of digital nomadism, but where does the Bitcoin part come in? With Bitcoin, you can easily take your wealth and set it up to take or send payments seamlessly. You can access the bitcoin markets worldwide, whether they are P2P, OTC, or exchanges and brokers. Many Bitcoin companies are perfectly geared to work in a remote-first or even remote-only fashion. So, you can apply for a job or put up your candidate profile at [bitcoinerjobs.com](http://bitcoinerjobs.co/). Or you can directly sell your own products and services for Bitcoin and use the likes of [BTCPay Server](http://btcpayserver.org/) or [OpenNode](http://opennode.com/) to take payment over Bitcoin on-chain, or through Bitcoin's Lightning Network. For example, you can use the likes of [cheapair.com](http://cheapair.com/) to book flights with Bitcoin, and you can use [bitrefill.com](https://bitrefill.com/) to buy vouchers for various products that don't directly accept Bitcoin. Whether it's flights, hotels, eBay, coffee, tech products, or more, chances are, you can find vouchers available for purchase with bitcoin. Digital nomads especially appreciate the difficulties of handling cross-border payments and wires. Many of them have spent so much time wrangling back and forth with banks on whether they put in the right SWIFT or IBAN code or have banks stop and question why they are making or taking this particular payment. With Bitcoin, it can be as simple as scanning a QR code and pressing send. #### IS THIS ONLY FOR SINGLE PEOPLE? Contrary to what many think, it is possible to do this as a couple or even with children. If planned carefully, you can make it work as a family homeschooling or using online learning resources. Depending on your country, you might even use some of the savings to get a nanny to assist with children or housekeeping. #### ARE MY WORLDVIEWS OUT OF DATE? If you've grown up in some of the richer Western nations, like the U.S., U.K., Australia, Canada, and New Zealand, or the richer European or Asian countries, you might look at some of the medium-wealth or poorer countries of the globe in a certain way. But there's a chance your worldview is *"out of date"* based on what these countries were like 20 or 30 years ago. The reality is that the rest of the world has developed rapidly. Unless you've traveled extensively, you might not realize just how quickly things have developed. For example, there are ridesharing services, food delivery apps, and co-working spaces with fast and reliable internet in many countries worldwide. You can find reasonably developed and relatively safe cities or towns that offer good deals in terms of amenities and lifestyle for a better price. If access to healthcare is the thing for you, you could also consider medical tourism by accessing healthcare in well-known medical tourism destinations such as Dubai, Costa Rica, Singapore, or others. Perhaps there is a lifecycle for countries, states, or city-states that come up quickly with smarter rules and governance, creating good times but leading to weak people creating hard times. For 27 years, Australia had no recessions and was known as *"*[*the lucky country*](https://en.wikipedia.org/wiki/The_Lucky_Country)*."* I wouldn't call it that anymore! Are some of the current *"world-leading"* nations coasting on fumes, going complacent, or even trending incorrectly? Could you instead forge a pathway or life for yourself in some of the more hungry, *"up-and-coming"* nations, states, or cities? #### BITCOIN NOMADISM OR BITCOIN EXPATS? I've noticed there's also a lifecycle aspect to how people pursue Bitcoin nomadism. After an initial period of time, traveling around more regularly, people slow down their travel pace and perhaps shift from *"nomad"* to *"expat."* They might live from a different home base (or multiple home bases). So, whether we call it *"Bitcoin nomadism"* or *"Bitcoin expatism,"* I think the point is more about living intentionally given that we live in a world with Bitcoin. Rather than letting the inertia of life keep us in one place merely because that's where we grew up, we should proactively select competitive jurisdictions that offer us a better deal. ### ADDITIONAL RESOURCES AND ADVICE I will list some resources and tips for those of you attempting to do this. Conversations with other Bitcoiners have informed some of this, such as my friends CoinsureNZ (see podcast episode *"*[*SLP328*](http://stephanlivera.com/328)*"* for more) and [Katie The Russian](https://twitter.com/katietherussian). Readers might also enjoy my interview with Andrew Henderson, aka Nomad Capitalist *("*[*SLP250*](http://stephanlivera.com/250)*").* #### DON'T *ACTUALLY* WORK FROM THE BEACH You've probably seen pictures of travel influencers *"working at the beach"* or from a hammock. Don't do this. This is not practical. What about sand in your keyboard? How reliable is the WiFi? What about your ergonomics and posture from sitting awkwardly? How long can you operate on your laptop battery without charging? You'll be far better off working from a co-working space or from a designated desk in your room. It is important to actually get work done and keep good working habits, which is impractical to do at the beaches and bars. Save that for when you're proverbially "*off the clock.*" #### DON'T TRAVEL TOO OFTEN In the beginning, you may be tempted to travel often. I'd recommend *against* this, as it won't be practical. Every time you switch locations, you'll have to figure out a new set of logistics around getting food, supplies, washing, transport, COVID-19 tests, etc. This is especially worse in the era of COVID-19 restrictions when you have to check entry conditions for countries and so on. Aim to spend longer in each location to ease the stress; try for two or three months if your visa allows. When you try to set up a new home, just be wary that your productivity may initially drop while you figure out how to get things done reliably. But after some time, usually a few weeks, you will adjust to the new location. #### HOW TO RESEARCH WHERE YOU'RE GOING One great resource for figuring out what the current COVID-19 rules are is [canitravel.net](http://canitravel.net/), where you can input your passport, where you are currently, and where you're going. You can then see the relevant COVID-19 entry rules. You can even check which countries are relatively open at a glance. This is much easier than individually trying to figure each country out.  ![](https://www.datocms-assets.com/56652/1708403246-cointravel.webp?auto=format) Source: canitravel.net You can budget and do some basic research with sites and resources such as [nomadlist.com](https://nomadlist.com/), [numbeo.com](http://numbeo.com/), and [expatistan.com](http://expatistan.com/). These sites can give you an idea of living costs, internet speeds, temperature, quality of life, and other information. #### THE VALUE OF NOMAD FRIENDS AND CONNECTIONS Make nomad friends and join nomad groups. They're on Facebook and other platforms, and they can be an important source of *"on-the-ground"* intel on an area before going or to stay in touch with an area you previously visited. Of course, as a Bitcoiner, you could connect with local Bitcoin meetup groups or startups. These connections will be valuable for helping you find the right place or way to get things done in the city. #### YOU DON'T HAVE TO GO 'ALL IN' Some people think that they have to *"go all in"* on nomadism. This isn't the case; you can start small and baby step your way in. If you're thinking about *"*[*flag theory*](https://en.wikipedia.org/wiki/Perpetual_traveler)*,"* for example, you could start by going to a country, attempting to get a residence permit or nomad visa, and setting up a bank account there. This might give you some more flags for the next time you come back or options regarding P2P bitcoin trade. #### CONSIDER RESIDENCY RIGHTS While some nomads use *"visa runs"* (exiting and re-entering a country), note that you might want to consider formally applying for a residency based on being an investor, entrepreneur, freelancer, etc., as this will give you fewer issues at the border when entering. Accomodation wise, one approach is to start with hostels or [Selina](https://www.selina.com/) while you then figure out longer-term accommodation on the ground. Some local options are not advertised online. Remember, you can *"test run"* Bitcoin nomadism and simply go back to your original country if it is not to your liking. ### SUMMING UP Other countries are different from what you thought 20 or 30 years ago. In many cases, they can offer you a better deal via geo-arbitraging Western World income with developing country costs of living, new adventures, or simply a better tax deal. Bitcoin is helping enable a new era of remote working and remote business. To some extent, we're seeing the sovereign individual thesis play out, with high-skill workers, entrepreneurs, and investors being able to pick from the countries of the world as a diner can pick from a buffet of food choices. More and more people *"voting with their feet"* helps keep governments just that little bit more honest. But, of course, don't do it for the vague notion of competitive jurisdictions; do it for the sake of your own goals. Whether that's increased sat stacking and wealth creation for your family or the chance to experience different adventures, you owe it to yourself and your family to be intentional with where and how you live. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # The Themes That Will Define Bitcoin in 2023 - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/the-themes-that-will-define-bitcoin-in-2023/ Some trends that emerged in 2022, from regulatory developments to technical and cultural innovations, will grow to define Bitcoin in 2023. --- **Stephan Livera** · January 3, 2023 · Updated June 26, 2024 *This article from January 2nd, 2023 by Stephan Livera was originally published on Bitcoin Magazine.* As the 2022 chapter closes, it’s time to turn our eyes to what’s coming in 2023. Here are some themes I’m seeing for Bitcoin in 2023. ### REGULATORY OVERREACH The Financial Action Task Force’s (FATF) Travel Rule forces[ exchanges and Bitcoin service providers to document and share ever more information about customer transactions](https://bitcoinmagazine.com/culture/the-fatf-is-loading-the-gun). We are seeing politicians such as Elizabeth Warren [publicly go against Bitcoin](https://bitcoinmagazine.com/legal/elizabeth-warren-introduces-anti-bitcoin-bill), and even if her proposed digital asset AML act has no real chance of passing, it does foreshadow that future battles are coming on this. But, on the other hand, we should also remember that governments were [initially against voice-over-internet protocol (VoIP) technologies](https://voipstudio.com/blog/why-are-governments-threatened-by-voip/) (e.g., Skype, etc.), and [nowadays, they *use* VoIP](https://www.businessinsider.com/skype-accused-of-helping-government-spy-on-people-2012-7). It’ll be similar to Bitcoin, where some countries adopt it as legal tender, hold Bitcoin in reserves, provide Bitcoin services for citizens, and encourage Bitcoin investors and entrepreneurs. ### CBDCS AND THE WAR ON CASH The war on cash proceeds, with many countries taking [high-denomination cash notes out of circulation](https://www.financialexpress.com/money/where-have-the-rs-2000-notes-gone-finance-ministry-clarifies/2911041/) or [banning physical cash transactions above a threshold](https://cointelegraph.com/news/nigeria-bans-atm-cash-withdrawals-over-225-a-week-to-force-use-of-cbdc). Many countries are talking about central bank digital currency (CBDC) trials, but my speculation is that most will not have the technical and overall economic capability to set up a fully functioning CBDC in 2023. 2023 will mostly be about trials and rhetoric in preparation for future CBDC rollouts. Governments can especially force people into CBDCs in countries with large welfare states, with the understanding being, *“If you want your welfare check, you’ll take it as a CBDC.”* Just like Darth Vader in *“Star Wars,”* it’ll be a case of, *“Pray I do not alter the deal any further.”* Once upon a time, CBDCs might have been seen as a *“conspiracy theory,”* but by now, they are clearly coming as a threat to financial freedom and privacy. Sadly, most people will not see the threat until it is too late and CBDCs are upon them — but the pain of CBDCs will also push more people into using Bitcoin and the Lightning Network. ### MAXIS BEING MINTED AND RESURGENCE IN SELF-CUSTODY INTEREST [Bitcoin Maximalists](https://bitcoinmagazine.com/culture/why-bitcoin-maximalism-is-critical) are being minted as casual *“crypto”* fans get rekt on platforms such as [Celsius](https://bitcoinmagazine.com/business/celsius-files-for-chapter-11-bankruptcy), [BlockFi](https://bitcoinmagazine.com/business/blockfi-files-for-bankruptcy), [FTX](https://bitcoinmagazine.com/legal/ftx-files-for-bankruptcy-ceo-resigns), [Voyager](https://bitcoinmagazine.com/business/voyager-digital-files-for-bankruptcy), [Vauld](https://www.bloomberg.com/news/articles/2022-12-26/crypto-lender-nexo-in-talks-on-terms-of-planned-vauld-purchase), etc. So, in some ways, it’s very cyclical; the 2014 to 2015 bear cycle followed after the collapse of Mt. Gox, and during the 2018 to 2019 bear cycle, we saw the breakdown of [QuadrigaCX](https://bitcoinmagazine.com/business/latest-report-on-quadrigacx-confirms-fears-of-mass-fraud) — so we’re just going through another round of people having to learn the hard way. For 2023, we will see a more robust self-custody culture, given the pain of 2022 is more recent. This is not to preclude future cycles and waves of new adoption with people coming in who are not as careful. Yield and shitcoin scams will be back in another form sooner or later, but it will be a new round of people who succumb to them. We are seeing more content and webinars related to self-custody. For example, with Swan Bitcoin, I hosted some [self-custody 101 webinars](https://swanbitcoin.zoom.us/webinar/register/WN_hh2CClPTRQqjxeBAI2ogbg) (which will be ongoing), and these webinars had some of the highest interest and registrations of *any* Swan webinars ever offered. Offering an easy auto-withdrawal feature or being 100% non-custodial will be an important feature for Bitcoin on-ramps in 2023. ### MINISCRIPT WALLETS AND FEATURES Per [Pieter Wuille’s site](https://bitcoin.sipa.be/miniscript/): *“Miniscript is a language for writing (a subset of) Bitcoin Scripts in a structured way, enabling analysis, composition, generic signing, and more.”* For those who are unfamiliar, Miniscript is a way to express different scripts or spending conditions for Bitcoin more easily. This could be built into different wallets to enable easier cross-hardware and software compatibility. You might first think, *“Why should I care?”* and, at the start, you’d be right to ask that. But over time, this will enable more sophisticated self-custody, enterprise, or even inheritance planning scenarios. Want to have a three-of-three multisig setup that degrades down to a two-of-three multisig setup after 90 days? Or do different *“back out”* conditions exist in a business context? Miniscript makes it *easier* to do these things and lets people use their existing software or hardware for this purpose. To be clear, some of this is already possible with Bitcoin script today, but Miniscript makes it more technically feasible or easier to achieve in practice. It will take time for these solutions to be built out, but the functionality does seem promising. Businesses and enterprise customers may be particularly interested in this because it could make their self-custody practices more practical for employees and key holders to execute. Currently, there is [Liana](https://github.com/revault/liana) (by the same team behind Revault) and [Ledger](https://blog.ledger.com/miniscript-is-coming/), which has announced Miniscript support in its hardware, and [Specter DIY had already enabled support in 2021](https://twitter.com/StepanSnigirev/status/1375113463421399043)! Rob Hamilton has also spoken about Miniscript uses in the world of insurance [here](https://twitter.com/Rob1Ham/status/1603124029212196865). I anticipate more support coming in 2023. This could help push the use of Bitcoin in self-custodial directions and away from the *“old model”* of financial services where you have to place more trust in government, banks, and fiat financial institutions to honor their word or not debase your wealth. ### LIGHTNING FIRST It’s time to bring about a Lightning-first model for two types of Bitcoin transactions: low-value transactions and in-person commerce. We saw the [mempoolfullRBF debate](https://bitcoinmagazine.com/technical/rbf-debate-is-incentives-and-choice) blow up toward the end of 2022, but the real answer for most of us is to promote and use Lightning first, where possible. As a quick anecdote, I recall talking with Giacomo Zucco, who explained his experience in El Salvador of paying with Bitcoin at a supermarket. Unfortunately, the Chivo terminal at that time defaulted to Bitcoin on-chain. As he paid on-chain, the people in the line behind him had to wait for confirmation, which was very awkward. Contrast this with a Lightning-first experience, which could look more like this: We should show people the best of Bitcoin, and for in-person, lower-value commerce, we should go for Lightning first. I believe we’ll start to see this being driven and encouraged by more Bitcoiners and local communities in 2023. ### EXPANSION OF BITCOIN-ONLY COMMUNITIES AND EVENTS We will see more events and small-sized conferences in different countries worldwide. Contrary to some who believe there are too many Bitcoin conferences, the issue is more one of assuming that you must attend them all! [Post on X](https://twitter.com/coinbeastmedia/status/1607045177499324418?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1607045177499324418%7Ctwgr%5E0fc3c05ebda7994109408e3af056c1727b5166bd%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fculture%2Fdefining-bitcoin-in-2023) You should instead attend the events and conferences that align with your interests and/or geography. Having more conferences is good, so long as they are done in a low-cost, effective way. For example, the [Bitcoin bush bash](https://stephanlivera.com/episode/440/) is a model that we may see replicated worldwide — free to attend, held in a hall or other free/cheap area, with no recordings, smaller-size gatherings hosted somewhere that are cost-effective. By lowering the expectations about things that typically cost a lot more money (e.g., fancy, professionalized operations, live streaming, lots of international speakers), Bitcoiners can grow their local scenes and meetups. This is not to detract from the larger Bitcoin events and conferences, as they also play a key role — but I see a *“middle ground”* that can be taken up by low-cost, local events. ### OVERALL SENTIMENT Without a crystal ball for 2023, I believe Bitcoin’s fiat price will remain mostly sideways. Forget what the bull-hopium people post and talk about; they usually chase engagement or get too caught up in their own echo chambers. It takes time for the cycle to bottom out. But let’s look on the bright side; it’s a great time for stacking sats and building something. Remember, in prior cycles, it wasn’t so clear that *“Bitcoin would come back,”* whereas now, the world is slowly realizing that Bitcoin is here to stay. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Bitcoin: Solving the Fundamental Problem of Money URL: https://www.swanbitcoin.com/education/bitcoin-solving-the-fundamental-problem-of-money/ Bitcoin’s rate of supply discovery is slowing down, by half, every four years — a first for any commodity! Satoshi solved not just the double-spending problem but also the fiat imalleable supply cap problem! --- **Tomer Strolight** · January 19, 2024 · Updated June 26, 2024 ### Money and Energy What do money and energy have to do with each other? It seems like a simple question to answer. And indeed, a short answer might simply be that they can be exchanged for each other – you can buy energy with money, and you can sell energy for money. But that’s also true with everything that money can buy and sell. Take food, for example. You can also buy food with money and sell it for money. Well, hold on. Food is technically energy, right? It’s fuel for your body. You eat food to get energy to power your body’s metabolism. It’s stored energy. So let’s try a different example, like, say, a house. You can buy a house for money and sell it for money. You could instead, however, build a house. Building is the use of energy to assemble materials into a house (or whatever else you’re building). It also involves transporting the materials to where you’re building the house, which takes energy. And to make those materials in the first place takes energy. And to maintain the house requires energy – keeping it clean, heating and cooling it, operating its appliances, etc... So, a house is very much a product of energy, too. Which then brings us to another question: ### What’s the Relationship Between Work and Energy? Without belaboring our examples too far, we’ll find that whatever man-made thing we consider, it takes energy to make it. The word *“made”* in the phrase *“man-made”* is the giveaway. To make something requires putting effort into making it. *Effort* is energy. As it turns out, energy is a very broad concept. Energy is the very ability to do work. And what’s work? Work is the ability to apply energy to things to change them from the way they are – to move them, assemble them, separate them, burn them, and so on. Work is energy. There are many different types of work, of course. Human beings specialize in the kind of work they each do because no one human can learn how to do all the kinds of work that we find useful. There are some types of work that all of us have to do. Consider eating. Eating is work. It’s the use of some energy to break down food so our bodies can do the work of digesting it and turning it into more energy, which we can then use to do more work – work that we either need or want to do. Then there is the work that we do that is incredibly specialized. Performing surgery, for example, is a type of work that only extremely well-trained and highly skilled people can do. It is very high-value work for the reason that it is both valuable and scarce. And to do that, specialized surgical work requires even more work from other highly specialized workers: those who build and maintain operating rooms, who create surgical instruments, who provide assistance in the operating room, who make the chemicals that anesthetize the patient, and so on. And those people need the results of the work of the people who supply them with the materials and knowledge they need to do their work. It’s an endless chain that’s almost impossible to get to the bottom of: A surgeon needs a scalpel. The scalpel maker needs the work of steel producers. The steelmaker needs the work of iron miners. The iron miner needs the work of an excavator manufacturer, who in turn require the effort of factory workers. The factory workers need food. The food growers need fertilizer. And it just keeps going on – endlessly. ### The Nature and Use of Money Because we rely on so much specialized work stacked together in such a complex manner in our industrialized civilization, we must use money regularly. Money is what allows enterprises to come together. If you are going to get an operation, you don’t need to exchange your specialized work directly for the work of the surgeon, the use of the operating room, the presence of an anesthetist, the anesthetic medicines, the monitoring equipment, the instruments, the stitches, and so on. All of that is taken care of by money. Money is the machinery that coordinates it all. You exchange your specialized work for money. And because everyone else does, too, enormous chains and webs of adding value can take place without anyone even thinking about what it takes to create that value one or two links down that chain, let alone hundreds of links upstream or downstream of the work we do. If you grow food, you do not need to know (and you never will know) if its energy was used by a surgeon, an iron miner, or a factory worker. And it’s none of your concern either. It’s the *“miracle of money”* that it orchestrates all of this activity without anybody needing to know any of it. Money performs an organizing function that no organization can. That’s probably why the system that doesn’t try to have an organization to coordinate all economic interactions was named capitalism – capital being another term for money. ### Money Caters To Individuals’ Values Value may look objective because there are many things that we all highly value, like water, food, and energy. However, that is a mistaken categorization. It’s true that water is objectively valuable to all human beings. But the conclusion doesn’t follow that that value itself is objective. This we can see because there are so many things that are valuable to some people and not to others. A word processor is very valuable to me, but not so much to an iron miner. If your work is more valuable to me than it is to someone else, I’ll probably pay you more for it than they will. This is the simple building block of how a free market works. We all bring our subjective value judgments with us everywhere we go, along with our money and our ability to do the specialized work we know how to do. We exchange our work for the money of others who value our work, and we exchange our money for the work of others that we value. Money for work. Work for money. This simple building block leads to people discovering and creating incredible things of tremendous value. Behold our present-day civilization with so many everyday, commonplace things that would have seemed miraculous, impossible, or even unimaginable to our ancestors. All of this arose as an emergent consequence of people trading money for work – work being the ever-increasing specialization of the application of energy. Just by letting people trade their specialized work for money and leaving them to do it, we can now fly. We can do it at over 500 miles per hour, 40,000 feet up in the air, all while watching a moving picture telling a dramatic story and sitting in a reclining chair, sipping on a beer, and snacking on cookies. But we can only perform this miracle if we have enough money. Nobody can build a jet airplane on their own, let alone pilot it, while watching a movie they themselves made, eating cookies they baked, and drinking beer they brewed. There may indeed be things money can’t buy, but there are also things that only money can buy! ### The Role of Knowledge If you’re concerned that I’m leaving the matter of knowledge out of this discussion, let me allay you of those concerns. Knowledge itself is also a product of work. It does not come automatically. Consider, in fact, just how much we are prepared to pay to obtain the knowledge to perform a skill that will earn us money. That is a huge part of what the entire purpose of formal education is. Moreover, knowledge, if not actually applied through the doing of work, is not actually valuable. If you know how to perform a life-saving operation but don’t do the work of performing it, no value is created – in this case, no life is saved. Knowledge is a value gained by doing work which allows us to perform specialized work. You may have to pay to obtain the training to learn how to do some kind of specialized work, but, just like you must do the work of eating food yourself to obtain its value, you’ll always have to do the work yourself of learning the knowledge to be able to apply it in your future work. The more specialized our knowledge is, the more specialized our work becomes, and the more valuable it becomes, but only in a world where money exists. ### Work and Money Summary To summarize: 1. We all do work to obtain things that are valuable to us. 2. Most of those things that are valuable to us require other people to do specialized work we cannot do because we don’t know how to do it, don’t have the tools to do it, and don’t have the time to do it. 3. So we use money as the medium to store the value of the work we did (while *“at work”*) to later exchange that money for the work of others. We can thus conclude that money is the substance through which we transform one type of specialized work performed at one place and time to other types of specialized work performed at other places and times. Or put more briefly: **Money converts specialized human energy across time and space.** Moreover, money is the only thing that does this. If we didn’t have money, we wouldn’t bother to learn how to do highly specialized work, because we would be able to sell it for the highly specialized work of other people. Money is the only thing a surgeon can actually use to convert their surgical work into the work required to fly them to a vacation destination. From this perspective, money is a time machine. It transports and converts energy across time, motivating people in the present to now do work for people who did work in the past, with the expectation of being able to get other people to do work in the future. Money can literally give you the ability to take your energy today and transform it to someone else’s energy in the future. Although we take this for granted, and it sounds so simple, humans are the only living beings we know of who use money. It’s not so simple or obvious or natural even at all. ### The Fundamental Problem of Money In practice, throughout history, this machine we call money has always had one big problem. We might call it the fundamental problem of money. The problem arises from one of our greatest virtues – ingenuity. We are always figuring out how to make more of something more quickly and with less work (even if sometimes it’s just figuring out how to give that appearance rather than actually achieving it). Now, if it takes less work to make money than the money buys, some people will focus on *“creating”* more money than on doing work that earns them money others worked to earn before. **For almost every form of money that ever came before Bitcoin, it went through a process where, over time, some people figured out how to make more of it with less work.** And in every instance where it became easy to make lots and lots of it, that form of money ended up *“de-monetizing.”* Whether it was salt, seashells, beads, spices, physical coins, or paper notes, human ingenuity (or craftiness) eventually destroyed the monetary power of that instrument to enable people to convert their work overtime for the work of others. Sooner or later, human ingenuity aligned with human incentives to lead to a breakthrough in producing money, which led to the collapse of money. It’s like an ironic, fated tragedy. This is no small problem. Empires collapsed for this reason. Maybe it’s actually no wonder that no other animals use money. Nature may view money as a trait that is only a temporary strength for a species but ultimately a weakness. Over time, increasing knowledge and specialization leads to the mass production and collapse of money, undermining its foundation as the basis of a civilization of specialized knowledge workers. ![](https://www.datocms-assets.com/56652/1705701888-timeline.png?auto=format) ### Solving The Fundamental Problem of Money But now, behold Bitcoin. For the first and only time ever, there is something that no amount of human ingenuity (or craftiness) can make more of. Bitcoin is a money mechanism with numerous verifiable and unalterable measures that forever prevent this problem that ultimately destroyed everything else we ever used for the machinery of money. Bitcoin’s supply cannot ever be accelerated beyond its issuance schedule nor increased beyond its final total supply. No wonder people get so excited about this. They can see that Bitcoin will be a reliable machine to convert their work today into the future work of others. The more one understands about Bitcoin, the more they can see that it is in fact built to solve this problem in a way no other money ever before could. Every other money before Bitcoin could be increased in supply by putting more work and ingenuity into creating it. But with Bitcoin, putting more work into creating it does not create anymore. Instead, putting more work into the process that creates Bitcoin (i.e., mining) only means that the existing supply of Bitcoin becomes more secure, more reliable, and thus, more valuable! In every previous form of money, those who put energy into creating more of it created that money at the expense of those who already had money. Their creation of money grew (i.e., inflated) the money supply, reducing the amount of work a given amount of money could buy. With Bitcoin, for the first time ever, this is not the case! No matter how ingenious miners get, they can’t increase the supply of Bitcoin beyond the known cap, nor can they accelerate its issuance any faster than its pre-ordained schedule. In fact, unlike all previous monies, the miners work in service of the users rather than at their expense. In Bitcoin, those who put energy into the discovery of more Bitcoin don’t do so at the expense of other users of Bitcoin. Rather, they do it in the service of users of Bitcoin. The service they provide makes the money transferable, reliable, auditable, secure, and more. In performing this service, they don’t change the expected and known supply of the money at any given point in time by even a single satoshi. As we enter a year with a halving upon us, it’s worth noting that these events lead Bitcoin to deterministically have a declining rate of growth of its supply. This is the exact opposite of what human ingenuity eventually succeeds at doing with all other forms of money. Bitcoin’s rate of supply discovery is slowing down by half every four years. This is also a first for any commodity or good in all history! In inventing Bitcoin, Satoshi solved not just the double-spending problem. Satoshi solved this Fundamental Problem of Money – that sooner or later, its supply started to grow faster and faster, leading to the collapse of its primary purpose. The imalleable supply cap is the solution to the Fundamental Problem of Money — and it changes everything. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Bitcoin Liberation: Yan Pritzker’s Personal Journey to Freedom URL: https://www.swanbitcoin.com/politics/bitcoin-liberation/ Bitcoin is about so much more than merely “number go up.” It’s a tool to reclaim individual economic freedom from those who seek to take that freedom away. And that is something to be optimistic about! --- **Yan Pritzker** · January 25, 2024 · Updated June 25, 2024 Bitcoin can mean different things to different people. To me, it represents a personal fight for freedom. Having lived in a country where basic freedoms were suppressed, Bitcoin holds a special significance for me. ![](https://www.datocms-assets.com/56652/1706203397-yann-fam.png?auto=format) Pritzker family photo, USSR 1989. Yan is second from the left. In 1989, my family left Ukraine, which was then a part of the Soviet Union. There, prices were fixed, capital was controlled, information was censored, people were routinely and arbitrarily jailed, and the government set exchange rates that hid the truth of the ever-devaluing ruble. The economy was failing to supply basic goods. Many people lived in tiny apartments with three generations of family members. A pair of jeans could cost you a month's salary. If you ever saw a line forming at a store, you would stand in it regardless of what was being offered that day because you would purchase anything you could and exchange it on the black market for what you needed. ### What They Don’t Teach at School Although I was lucky to receive a high-quality high school and university education after immigrating to the United States, I was unaware of the role of monetary policy in shaping Soviet society until I started learning about Bitcoin at the age of 35. I asked my parents about what happened to our money when we left the Soviet Union. What I learned shocked me. When my family left the Soviet Union, the government only allowed us to exchange $100 per person at their fixed ruble exchange rate. The street value of these rubles was almost nothing, so we took what little we could, along with suitcases of trinkets, to sell on our way to America. [![](https://www.datocms-assets.com/56652/1706137061-printing.jpg?auto=format)](https://mises.org/wire/how-soviets-fixed-inflation-ruined-economy) Byung-Yeon Kim, "Causes of Repressed Inflation in the Soviet Consumer Market, 1965–1989: Retail Price Subsidies, the Siphoning Effect, and the Budget Deficit," Economic History Review 55, no. 1 (February 2002): 121. This was an example of the ugly face of capital controls: we could leave the country, but we had to start over. **Our money wasn't really ours!** I discovered this problem wasn't unique to the Soviet Union. It continues to happen all over the world today. By controlling the flows of capital, governments can effectively control their population, preventing the free movement of people to better jurisdictions and censoring people by cutting off their ties with financial services. **Bitcoin fixes this!** Bitcoin makes money *truly portable* and difficult to censor, giving people a real bargaining chip against their leaders for the first time in history. If only my family had access to Bitcoin when fleeing the Soviet Union, we could have left with our wealth intact. ### Why Many Americans Misunderstand Bitcoin While many native-born Americans may find it difficult to imagine, immigrants are all too familiar with the problems of autocratic governments. Unlike the United States, other countries do not have the privilege of a reserve currency that is widely in demand. Instead, governments there abuse their money printer, leading to massive currency devaluation. As they run into problems, governments tighten controls on money and information in a desperate attempt to hold their population hostage, with predictably disastrous results. We cannot take our privileges for granted. We will lose our freedoms if we do not fight to maintain them. Politicians have lied to our faces about the inflation we experience. Economists have combined inflation into a single irrelevant number while manipulating the components that go into its calculation. We have seen the utter incompetence of our central bank, which created stock market bubbles through a zero interest rate policy, followed by blowing up banks when they raised rates. The United States currently abuses our reserve currency privilege to print ever more currency to finance perpetual war while causing the rest of the world to suffer by exporting our inflation. Now, we are seeing this behavior start to turn on us, with several countries starting to look for alternatives to U.S. hegemony. As our currency devalues, our prices distort, and the government pushes for unconstitutional surveillance over all financial transactions, people have naturally flocked to Bitcoin as an escape hatch. Recent actions led by Sen. Elizabeth Warren demonstrate the government’s attempt to crack down on this escape hatch, and it’s all too reminiscent of the former Soviet Union. First, the proposals are trying to remove all semblance of privacy from our financial transactions by forcing banks into spying on citizens for any attempt to remain private in our financial transactions. On top of that, they are even going after our free speech rights by proposing regulating our Bitcoin nodes with legislation that would call every node a money services business. Do not be misled. These are attempts to prevent you, a “*free*” citizen, from being free to do what you want with your money. It is an attempt to lock you in, to prevent you from speaking freely, from choosing what to do with your wealth, and ultimately from leaving with your wealth, intact should the need arise. ### Bitcoin Is a Tool of Empowerment Bitcoin multiplies the internet’s democratizing effect on information by bringing control of money back to the people and creating permanent, free market incentives to develop energy infrastructure critical to human flourishing. Imagine if you could get paid instantly for work you perform in money that cannot be seized by your government? What if governments required consent from citizens before waging wars abroad? What if citizens could protect their wealth from runaway inflation? Well, for the first time ever, in Bitcoin, we have an instrument to protect ourselves from monetary debasement and overreaching governments. And that is something to be optimistic about. Bitcoin is about so much more than merely “*number go up.*” It’s a tool to reclaim individual economic freedom from those who seek to take that freedom away. *Yan Pritzker is the co-founder and CTO of Swan Bitcoin. Yan spent the last twenty years as a software developer and entrepreneur focusing on tech startups. His most recent company, Reverb, was acquired by Etsy in 2019. Yan is the author of the book* [*Inventing Bitcoin*](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGQLksdtvAnq2JCZni_gFf2rUmFR8GlGl7vmXGbZyUlmUg7bK6qLI4MJpqZP1g358Y4OD4-gvI=)*, a quick guide to why Bitcoin was invented and how it works.* ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Will a Record Flood to Cash Flow into Bitcoin Next? URL: https://www.swanbitcoin.com/analysis/cash-flow-into-bitcoin-next/ If the Fed decides to cut rates then expect the floodgates to open, and Bitcoin will be one beneficiary as it sucks up the liquidity, potentially driving its price to new heights in the coming year. --- **Sam Callahan** · December 29, 2023 · Updated June 25, 2024 In his post-FOMC speech a few weeks ago, Jerome Powell mentioned that Federal Reserve officials were now discussing the possibility of rate cuts, and markets went wild. Since then, the market has enjoyed an *“everything rally”* as investors took the Fed messaging as a green light to go long heading into the holidays.  This sentiment shift can be observed in surveys such as the AAII Sentiment Survey, which asks investors their thoughts on where the stock market is heading over the next six months. Two weeks ago, this survey hit a 1-year bullish high and stands well above its historical average.  ![](https://www.datocms-assets.com/56652/1703866539-1.png?auto=format) AAII In terms of financial conditions, this has been the biggest two-month easing in history, according to Zerohedge. The index currently sits at levels last seen in May 2022. ![](https://www.datocms-assets.com/56652/1703866573-2.png?auto=format) Zerohedge This loosening of financial conditions has surely caught the attention of Fed officials as they appear shocked at the market’s reaction to their dovish messaging. One of the Fed’s favorite mainstream media mouthpieces, the WSJ’s Nick Timiraos, summed it up well in the tweet below.  ![](https://www.datocms-assets.com/56652/1703866600-3.png?auto=format) From the FOMC meeting, the Fed’s dot plot showed that Fed officials are expecting three 0.25% rate cuts in 2024, but the market is now pricing in over double that. ![](https://www.datocms-assets.com/56652/1703866616-4.png?auto=format) Jim Bianco If the market is correct that we are about to experience a notable shift in monetary policy compared to the last 18 months, then this will have a significant impact on capital flows. As interest rates soared, investors attracted by higher yields have been funneling capital to money market funds in record amounts. In 2023, money market funds saw a record $1.3 billion in cumulative inflows. ![](https://www.datocms-assets.com/56652/1703866677-5.png?auto=format) As it stands today, a record high of over $6 trillion is now sitting in money market funds. ![](https://www.datocms-assets.com/56652/1703866697-6.png?auto=format) The WSJ reported that, by simply parking their funds in these money market funds, investors brought in nearly $300 billion in passive interest income, more than in the last 10 years combined. ![](https://www.datocms-assets.com/56652/1703866731-7.png?auto=format) The same kind of demand can be seen in cash-like equivalents like Treasuries. As rates have spiked, so too have inflows into Treasuries. They have seen a record $177 billion in cumulative inflows in 2023. This topped the previous record set just last year. ![](https://www.datocms-assets.com/56652/1703866750-8.png?auto=format) This data is confirmed by broker-dealers on the ground such as Fidelity, which reported that it has seen its retail trading in Treasuries and certificates of deposits (CDs) increase tenfold since the end of 2021. Tradeweb data also recently disclosed that purchases of CDs and Treasuries hit the highest levels since 2015 this year.  ![](https://www.datocms-assets.com/56652/1703866768-9.png?auto=format) The moral of the story – investors have flooded into cash and cash-like equivalents as they captured higher yields in these traditional safe haven assets. But what happens to this flood into cash if yields decline as the market expects it to over the next 12 months and investors no longer are receiving as much passive income from these investments? Are we about to see a major reversal in fund flows? And how much of this cash will flow from these assets into risk-on assets?  Well, we may be already witnessing this trend reversal unfolding. As rate cuts next year are now being priced in, bonds are up, stocks have rallied, gold has spiked, and Bitcoin has soared. Since Powell’s speech, the Nasdaq has hit a new all-time high, gold has hit a new all-time high, the S&P 500 hit a 52-week high, and Bitcoin hit a 52-week high. This trend was perhaps most evident in the 30-year Treasury market, where yields have fallen precipitously, down more than 1500 basis points over the last 3 months alone. ![](https://www.datocms-assets.com/56652/1703866791-10.png?auto=format) Tradingview So if investors can no longer get the attractive yields they have enjoyed this year, where will they likely transfer their capital to? Well, stocks are one obvious answer. This was evident on the days right after the FOMC meeting when SPY saw the single largest one-day inflow in its entire history. A whopping $20.8 billion flooded into the ETF in one trading day. ![](https://www.datocms-assets.com/56652/1703866836-11.png?auto=format) Another possible destination for this liquidity is Bitcoin, an asset that has outperformed nearly all other assets this year, with the exception of a few tech stocks. Evidence of the increased demand in Bitcoin can be seen not only in its price but also in the total volume of exchange inflows and outflows. According to Glassnode, these flows have been trending higher over the past 6 months and have recently increased to levels not seen since mid-2022. Below, the chart illustrates the total volume of deposits and withdrawals across all major exchanges. The blue shows exchange inflows and the gold shows exchange outflows. ![](https://www.datocms-assets.com/56652/1703866851-12.png?auto=format) As indicated in the chart, the volume of exchange inflows and outflows tends to spike during heightened periods of volatility. These flows increase with both price rises and declines. However, considering we are exiting a bear market where Bitcoin declined -70% from its ATH, along with recent price action, it’s likely these flows are rising due to increased buying activity. It’s reasonable to think that a fraction of these Bitcoin flows are coming from investors allocating capital away from cash, anticipating yields will fall in the future.  The forthcoming approval of spot Bitcoin ETFs will further boost Bitcoin flows as they will make exposure to Bitcoin more accessible to a range of investors, especially pension funds and RIAs currently restricted by investment mandates from investing in spot Bitcoin. James Butterfill of Coinshares recently attempted to [estimate](https://blog.coinshares.com/us-bitcoin-etf-launch-price-impact-d94d4ad02d93) the potential inflows we can expect to see once ETFs are approved and their subsequent impact on Bitcoin’s price. He did this by analyzing the historical relationship between the percentage of inflows into existing Bitcoin ETP products and Bitcoin’s price movements. He discovered that ETP inflows and Bitcoin’s price often tend to rise concurrently within the same week.  that there was a historical relationship between ETP inflows and Bitcoin’s price movements. ETP inflows and Bitcoin’s price tend to rise in the same week, highlighted in the chart below. ![](https://www.datocms-assets.com/56652/1703866880-13.png?auto=format) In a recent report, Galaxy [estimated](https://www.galaxy.com/insights/research/sizing-the-market-for-a-bitcoin-etf/) that $14.4 billion of inflows could flow into a spot Bitcoin ETF in its first year if 10% of the total addressable assets of broker-dealers, banks, and RIAs allocated 1% to a Bitcoin ETF. By modeling the historical relationship between ETP inflows and price, and then applying Galaxy 1st year inflows estimation, Butterfill came to the conclusion that these inflows could result in a Bitcoin price of $141,000 per bitcoin if they came to fruition. By modeling the historical relationship between ETP inflows and price and Galaxy’s estimation of 1st-year inflows, Butterfill concluded that these inflows could push Bitcoin’s price to $141,000 if realized.  ![](https://www.datocms-assets.com/56652/1703866903-14.png?auto=format) James Butterfill And this price would come from inflows just from the ETFs alone! Ultimately, there are many reasons to believe that Bitcoin will continue to see inflows given multiple bullish catalysts such as the coming halving event, the approval of new FASB accounting rules, greater regulatory clarity, and the potential flood of capital that could come from cash if the Fed does turn to cutting interest rates in 2024. Over the last two years, investors have taken advantage of an investing environment that they have not known after more than a decade of low interest rates. They finally were able to earn a decent yield in Treasuries and money market funds which resulted in capital being sucked out of assets perceived as more risky. But now it appears the tide is turning. If the Fed decides to cut rates then expect the floodgates to open, and Bitcoin will be one beneficiary as it sucks up the liquidity, potentially driving its price to new heights in the coming year.  ***Market Overview*** ![](https://www.datocms-assets.com/56652/1703866497-15.png?auto=format) Tradingview, Prices as of 12/29/23 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Why Libertarians Should Prioritize the Bitcoin Strategy Above All Others URL: https://www.swanbitcoin.com/politics/why-libertarians-should-prioritize-the-bitcoin-strategy-above-all-others/ Bitcoin offers libertarians the perfect vehicle for starving the state of its outsized control over personal freedoms. --- **Stephan Livera** · December 1, 2021 · Updated June 25, 2024 *This article from December 1st, 2021 by Stephan Livera was originally published on Bitcoin Magazine.* Libertarians should prioritize the Bitcoin strategy above all others. Libertarians generally believe in the [non-aggression principle](https://en.wikipedia.org/wiki/Non-aggression_principle) (NAP), meaning that initiating aggression against someone else’s person or justly acquired private property is wrong. What does Bitcoin have to do with the non-aggression principle? The chief violator of the NAP principle is the state. And the chief reason the state is so large and so powerful is that it has access to *cheap* debt. Bitcoin fixes this. Let’s explore: ### WHY THE STATE IS SO LARGE If you have been forced into some form of lockdown, restriction, travel ban, mask-wearing, and jab-taking compliance over the last two years of Hysteria-19, it is evident that states worldwide have become extremely powerful. As Robert Higgs outlined in his classic *“*[*Crisis and Leviathan*](https://amzn.to/3EkQmjo)*,”* the state expands dramatically during crises, but it doesn’t necessarily *“give all the freedoms back”* after the crises. We’ve notably seen this ratchet effect with 9/11 and the *“Patriot Act,”* which forever changed travel and various other freedoms that we used to have. But what use is the desire for a state to expand its remit and reach without the funding for such an endeavor? In a more honest system, the state and its politicians would have to explicitly tax the population, which is not so popular. The modern-day fiat fractional reserve system enables cheap debt funding of bureaucracy and governmental enforcement of the *“papers please”* mindset. What do you think would happen if Bitcoin’s *“number go up technology”* kept operating and fiat money kept devaluing? Government bureaucrats and thugs would experience a reduction in their purchasing power, and it would effectively act as a *“right-sizing”* of government. ### NOT EVERY LIBERTARIAN IS AN ANARCHO-CAPITALIST Fine, but even still, it’s mostly true to say that you want a smaller-sized state than what we have today. Starving the beast is the only way to enforce some accountability here. Governments and complicit media have grown too large, powerful, and influential, making the population weak and scared over time. Even if you don’t believe that Rothbardian anarcho-capitalism is The Way, most libertarians would be happier if the state was smaller. So, why not push for the adoption of the technology that will do precisely this? ### PRESENT LIBERTARIAN STRATEGIES HAVE NOT BEEN SUCCESSFUL Trying to win at the ballot box has not been a fruitful strategy for most libertarians worldwide. The population simply does not understand the issues of socialism and statism, and they will gladly vote for more government-sponsored redistribution if the cost artificially appears to be low enough. How many times have you genuinely seen libertarian directions being pursued politically and winning as a political strategy? Other than the Ron Paul U.S. presidential campaigns of 2008 and 2012, I have barely seen it. And, being fair, those campaigns were not a win politically; they were more of a win in supporting and engaging new ranks of libertarians into the movement. Even if we could somehow convince the world or the U.S. government to adopt a gold standard, there’s not really anything stopping them from claiming *“it’s an emergency*” and that we need to drop the gold standard and *“temporarily”* close the gold window. In this way, Bitcoin provides stronger assurances about our money than gold *ever* could. When you run a Bitcoin node, it checks all of the rules of the system, and it is a more decentralized form of validation and enforcement of the rules. We’re less reliant on the government and big banks or big gold vaults to defend the integrity of the system. Think of it like: Bitcoin is less corruptible than fiat money or the gold standard. ### WELL, WHAT’S THE ALTERNATIVE? Titus Gebel outlined the idea of free private cities on my show (*“*[*SLP161*](https://stephanlivera.com/episode/161/)*”*). Imagine an opt-in city where you also pay a subscription fee with the rules set upfront. In this instance, the *“state”* or public services would be far smaller than the current governments of the world. There would be more competitive pressure between Bitcoin citadels or free private cities to ensure inhabitants get a good deal. Alternatively, there are efforts in the direction of seasteading. Others like agorism-style strategies; in this case, Bitcoin can obviously play a role in supporting the private entrepreneur. There might even be something to the idea of a Bitcoin and libertarian policies advocacy. But it doesn’t work without Bitcoin as an important part of the mix. Without Bitcoin’s monetization continuing apace, there will be little incentive for politicians and political parties to support liberty-friendly policies. But in a world where Bitcoin is rapidly rising, and job opportunities are present in the industry, politicians like Texas Governor Greg Abbott will support the idea that Texas should be a competitive state for Bitcoin. ### HOW DO WE EXECUTE THIS? Stack sats and build alternatives to statism. This means you should set up your automated sat-stacking plan, whether with Swan Bitcoin or whoever else. Or, if automated sat stacking isn’t your thing, you can earn Bitcoin by selling your goods and services for sats, or you can mine it too. Buying non-KYC coins is another way to do it, too, either by meeting people at Bitcoin events, meetups, and conferences or using platforms like Bisq or Hodl Hodl. The point is to enact regular and steady accumulation of Bitcoin and HODL, as much of it as you can, to restrict the supply. In doing so, you are speeding the process of hyperbitcoinization: the monetization of Bitcoin, the non-state, free market money. When you don’t like the current options, you have to go build something that makes it better. This is what Satoshi did. Bitcoiners follow this example; if you’re a libertarian, you should, too. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Why Bitcoin’s Rules Are Enforced By Physics - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/why-bitcoin-s-rules-are-enforced-by-physics/ History shows that fiat systems collapse. The monetary units of these systems become worthless upon those collapses. Science shows that the laws of physics do not collapse. They are eternal. --- **Tomer Strolight** · May 10, 2021 · Updated June 25, 2024 The laws that govern our physical realm are the foundation upon which Bitcoin is built, as immutability would require. ### NO SPEED LIMITS LEAD TO FASTER, SAFER, MORE RELIABLE CARS The German Autobahn highways have no legally enforced speed limits. The laws of physics are the only limitations on how fast automobiles can travel there. As such, Germans have figured out how to make high-speed cars. Fast small cars, fast family cars, fast SUVs, fast trucks, etc. They have also figured out how to make *very* *safe*, fast cars because nobody wants to die getting somewhere fast. German automakers pioneered advanced safety features, like crumple zones, that make high-speed collisions less dangerous to vehicle occupants. The lack of legally enforced constraints is what makes German cars faster, safer, and better than those engineered in countries where speed limits and safety standards are prescribed by government edicts. Consider the challenges German car engineers face compared to those in a highly regulated country where speed limits are far lower than the speeds observed on the Autobahn. German car engineers need to compete to figure out how to make cars both faster and safer than their other German competitors. But their regulated peers in other countries can stop improving their cars once they can safely hit the local speed limit. German car engineers have become interested in understanding and solving challenges brought about by high speeds affecting reliability, aerodynamics, stability, fuel efficiency, high pressures, braking, acceleration, and more. Their regulated counterparts simply do not have any interest in these considerations, nor are they given any budget to research them. ### NO MAN-MADE LAWS LEAD TO STRONGER, SAFER, MORE RELIABLE MONEY This same reasoning is remarkably why Bitcoin is the best money the world will ever see. Just as automobiles are an engineered form of transportation, bitcoin is an engineered form of money. Bitcoin's first engineer, Satoshi Nakamoto, designed it to operate no matter what the universe could throw at it. He did not build it to only work under a constrained set of limits dictated by humans. Thus, the mechanisms Satoshi built into Bitcoin to enforce its rules are nothing less than the laws of physics themselves. No government told Satoshi what rules to apply or how to enforce them. (And now, interestingly, no government can). Bitcoin's rules were chosen to ensure that Bitcoin would operate no matter what happened. ### STRONG, SAFE MONEY, GUARANTEED Like the safety and speed goals of German cars traveling on the Autobahn highway network, there are safety and speed goals too for Bitcoin as it functions atop worldwide digital networks. Bitcoin provides the monetary equivalent of safety, which is the protection of private property. Bitcoin lets owners of its currency units store them where only the rightful owners can find them. It does this using astronomically large random numbers as the storage location of these satoshis ([satoshis](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/) being the base unit of currency in the Bitcoin system). The laws of physics dictate that over the entire foreseeable future of the universe, nobody can be expected to guess one of these astronomical numbers where satoshis are being stored. Not even if they converted the whole planet into a giant computer, making endless guesses. If you HODL satoshis, you are guaranteed they will not be stolen by a thief guessing where they are stored (as long as you generated your astronomically large random number properly). Who guarantees this to you? Not some politician. Not some businessman. Not some company. Not any person. The guarantor is none other than the universe itself. Your satoshis are safe as long as the laws that hold the universe together hold. ### STEADY, RELIABLE MONEY, GUARANTEED Bitcoin doesn't try to go as fast as possible when it comes to speed. Instead, it seeks to maintain a constant speed or pace. That steady pace that Bitcoin is after is to ensure that one block will be added to the blockchain, on average, once every ten minutes, forever. (This is perhaps why "*timechain*" is a better descriptor than "*blockchain*" and is being increasingly proposed as a substitute term). Once again, Satoshi utilized the eternal, unchanging laws of physics to engineer Bitcoin to achieve this pace always. He did so by combining proof of work and a difficulty adjustment to that proof of work to ensure this pace even in the most extreme physical circumstances. If all the world's energy or even all of the sun's energy was directed toward trying to accelerate this pace, Bitcoin would "*slam on the brakes*" within 2,016 blocks at most, slowing down the block discovery rate to one block every ten minutes. Conversely, if efforts were made to slow Bitcoin down by withholding energy from its miners, Bitcoin would, again, within at most 2,016 blocks, reduce the work requirements, effectively *"stepping on the gas"* to speed itself back up to one block being discovered, on average, once every ten minutes. No government law can change this fact. Government laws cannot, after all, supersede the laws of physics. Nothing can. No billionaire, no hacker, no protester, no banker, no corporation, no army. Not even the pretentious arrogance of a bow-tie-wearing, award-winning economist, eating Russian caviar at a cocktail party for New York's elites and claiming that Bitcoin "*has a fundamental value of zero*" can change the actual laws of physics. Thus, Bitcoin runs without interruption, regardless of what anybody thinks of it or tries to do to it. Bitcoin's reliable, uninterrupted operation is as pure and as real as reality itself. ### TOUGHER STANDARDS LEAD TO THE BETTER MONEY As we did when comparing German car engineers to their peers in countries with low-speed limits, let's consider the results of the engineering efforts of Satoshi and other Bitcoin contributors with those of the designers of the incumbent monetary system — fiat money. The rules of the fiat system are dictated by regulators, legislators, and bureaucrats. These rules can easily and at any time be changed by a mere dictate change. Whereas nobody can steal or seize satoshis, fiat money is stolen and seized so often that we don't even keep count of how many times this happens or how much fiat money is affected. Whereas Bitcoin continues to issue its currency units reliably and predictably on a [predetermined](https://www.swanbitcoin.com/bitcoin-halving-dates/) schedule, the fiat money supply goes through wildly unpredictable shocks whenever the people running that system decide to alter it. History shows that fiat systems collapse. The monetary units of these systems become worthless upon those collapses. Science shows that the laws of physics do not collapse. They are eternal.  To summarize, by relying on the eternal and unchanging laws of physics, Bitcoin guarantees perfect reliability that its promises of property protection and continued operation will always be in force. This frees Bitcoin and more importantly, its users from trusting any temporary, fallible, short-lived entities like people, central banks, political parties, and even nation-states. In the final analysis, it is ultimately a voluntary decision for each individual to choose whether they prefer Bitcoin and the reliability of physics over fiat money and trust in politicians. That is a decision to choose science over politics. However, Bitcoin is in no hurry for anyone to make that choice. Like the laws of physics themselves, Bitcoin is forever. *Footnote: Proof of work requires that someone (a 'miner', in the case of Bitcoin) be able to produce a very improbably low number as the output of running input data (a block header, in the case of Bitcoin) through a function (SHA256, in the case of Bitcoin) that produces unpredictable, random-looking numbers, but always the same output for the same input. If the miner can show that the result of the output from their input is lower than the threshold set by Bitcoin's difficulty setting, it is very likely the case that they put in the expected amount of work required by running the algorithm time and again with slightly modified inputs, until they finally arrived at a result that met the proof-of-work criteria.* Learn more on the [Swan Signal blog](https://www.swanbitcoin.com/signal/) and [smash buy](https://www.swanbitcoin.com/) real Bitcoin with Swan today! ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Blocksize War’s Cyber-Solider Freedom-Fighters URL: https://www.swanbitcoin.com/analysis/the-blocksize-war/ The Blocksize Wars were “fought”… but by whom? And what do we really mean by fighting? --- **Tomer Strolight** · August 1, 2022 · Updated June 25, 2024 *This is an opinion editorial by Tomer Strolight, editor-in-chief of Swan Bitcoin and author of “Why Bitcoin.”* ### PART 1: INTRODUCTION Words. How do you describe with *words* the things that we don’t have words for? Words describe things we’re familiar with. But we’ve never seen anything like Bitcoin before. That’s why it’s so hard to describe it. So, we use metaphors, which are still just old words for other things. The same is true when you yourself take part in something that’s never happened before — something that nobody’s familiar with. If you want to describe it or even understand it for yourself, practically any word you use is just a metaphor. You have to stretch and bend the meanings of the words you do have and try to paint enough of a picture as to why they apply. But, if you’re going to be honest, you also have to paint the picture clearly enough to not confuse or mislead the people you’re communicating with. This includes yourself. It’s really easy to get misled when you don’t have the words to describe what it is you’re doing. You have to count on metaphor after metaphor after metaphor. And then, you have to take each metaphor apart. If you can. This is the only way I know of to talk about deep, close encounters with Bitcoin. At least, it is in the present day. It’s the only way to describe what I did — what we did — in what is now called the *Blocksize War*. But let’s be clear: I didn’t actually *fight*; not physically. And it wasn’t actually a *war*; nobody died. No bombs were dropped. No bullets were fired. No blood was spilled. No land was invaded. In this *war*, anyone could peacefully go their own way all by themselves at any minute, creating exactly the governing *rules* they wanted to follow — for themselves and for those who agreed with them at least. But we wouldn’t be using the war metaphor if that’s what anyone actually did. So what did we *fight* over? Without metaphor? We were fighting *— sorry, that’s still a metaphor* — over which set of rules, in *cyberspace,* to direct the overwhelming majority of real-world energy used to secure Bitcoin. It was a fight over what Bitcoin was and would be — in code, in energy, and in the effects it manifests upon the real world — for centuries to come. This was the first conflict of this type in history. We battled, not on a physical battlefield, but in *cyberspace.* Cyberspace — there’s a made-up word that couldn’t be more poorly named. One thing that doesn’t actually exist in cyberspace is space. At least, that was true until Bitcoin came along and created the idea of blockspace. But that’s just another metaphor. And another story. Anyhow, in this poorly named realm of cyberspace, there’s no traditional space to fight over. But there *are* ideas. And this was ultimately a fight over an idea — a very sacred idea — an idea that we believed would project itself from cyberspace onto meat-space (that’s where we live)*.* That is, this idea would project itself *if* we won this war*.* It’s an idea that actual, real-world, bloody wars have been fought over in the past. An idea that people have died for in the past and are always prepared to die for: freedom. It’s probably only for that reason that we can still call this a war with a straight face. Because it was a fight for the cause of freedom. We fought this *war* against people who didn’t care about freedom. We fought against people who didn’t understand freedom. We mostly fought against people who didn’t understand that this even was a fight about freedom. They thought it was a fight for their profit, their market share, or their shot at wealth, fame, and power. But to us, we were *fighting* for freedom — even if we hadn’t spelled it out quite that simply for ourselves — with words. And it wasn’t just for our own freedom. It was a fight for the chance for freedom for others who hadn’t yet realized that there now was a way to protect freedom from the cyber-realm onto the real world; people who would not realize that this was possible for a long time to come, but who might, eventually. But that could happen if, and only if, we won this war that didn’t look like a war to anyone but ourselves. We weren’t fighting for power for ourselves — which is another thing that made this different from other wars. We were fighting to ensure that neither our current enemies nor future ones nor even we ourselves, could gain power over this thing we were battling over — because we all believed that that was what was essential to bringing freedom to the world: a world that did not even know we were fighting for its freedom. We fought anyway. To try to step back from metaphors, we believed that uncompromised and uncompromisable decentralization created unimpeachable justice, and justice was where freedom needed to lay its *roots —* okay, sure, “*roots*” are another metaphor. We were fighting against people who didn’t understand the technological underpinnings necessary for those roots to spread. These are the best words I can come up with for all that. Ask someone else who was there; they’ll probably use different ones. ### PART 2: THE EVE OF WAR I for sure wasn’t counting on any *war.* I’d followed the progress and development of Bitcoin quite closely in those days. And we were filled with optimism about the rollout of a new feature that had taken years to develop and test. It was called Segregated Witness — SegWit for short. It was going to solve a bunch of challenges and enable the creation of the then-yet-to-be-created Lightning Network. A smooth path to its activation had been planned so that everyone could prepare for it, signal their readiness, and, in consensus, all activate it at the exact same time, which is what Bitcoin requires. It all happened so fast. The upgrade process began innocently and peacefully enough. Miners were requested to signal their readiness for the change by flipping a bit in the blocks they found. I, like many others, was watching the miner-signaling stats for this activation. I expected them to quickly get up to nearly 100%. We needed them to get to 95% for activation to take place. But that wasn’t what happened. Even after a couple of months of wishful thinking, we found ourselves shell-shocked that these signals had stalled out at only about 20%. And it was around that time that our enemies revealed themselves and let us know we were under attack. “*Are these motherfuckers actually serious?*” I asked others on Reddit regarding the miners’ refusal to signal to activate SegWit. Miners had been given a mechanism that was intended to allow them to signal their readiness to proceed, not to decide on whether or not the activation should go through! But they were exploiting the fact that never saying they were ready was effectively being given a vote or a veto. I didn’t need anyone to answer my question. It had already become clear they were plenty serious. “*Fucking sons-of-bitches,*” I thought. “*Who the hell do they think they are?*” I don’t usually swear that much, but this was so audacious and such a violation of the intent of the process that I couldn’t help myself. On top of all that, they were fucking stupid. They were stupid because if they succeeded in this effort to blockade the will of users in Bitcoin, effectively taking over Bitcoin, they would have eventually destroyed themselves in the process, too. If they succeeded, they would then control Bitcoin, and thus, it wouldn’t be decentralized, and thus, it wouldn’t be worth sweet fuck-all. But they didn’t understand this because nobody had ever seen anything like Bitcoin before, and they thought it was like other things that had come before it. And they were focused on their short-term profit. But, if they were to succeed, their stupidity and hubris would destroy Bitcoin and their own stupid selves along with it, and, more importantly, they’d take with them our dreams of projecting freedom. We had to stop them. “*Fuck this,*” I said to myself, “*I’ve been a fool once again.*” I had naively thought that merely explaining to everyone the benefits of SegWit — that it would enable the creation of the yet-to-be-created Lightning Network, which itself would allow Bitcoin to scale to millions of transactions per second, would be sufficient to gain consensus. This explanation seemed especially straightforward since there was no serious alternative. The only alternative proposal was itself stupid. It was to double the block size, which would only double the transaction throughput to about a dozen transactions per second while making it twice as hard to run a node to achieve that irrelevantly minor progress, and that would damage Bitcoin’s *roots* of decentralization. But it turned out there was plenty of stupid to go around. That stupid idea was the one that the miners who weren’t signaling for SegWit activation said they wanted instead of SegWit, despite not having raised any objections in the years leading up to this. What the actual fuck was going on? And what, I asked myself, if anything, could I do about it? ### PART 3: JOINING THE FIGHT I wasn’t anybody of note in Bitcoin at the time. I was, however, a very curious user who spent a lot of time studying it and thinking about it. Occasionally, I posted comments on Reddit to clarify confusion or answer questions. But this conflict brought out something more passionate in me. It stirred a calling to do more. I felt I had to rise to the occasion and at least do something — whatever that could be. These emotions I was experiencing were new and raw. Until this moment, I hadn’t realized just how passionately I felt about Bitcoin. I had just taken for granted that Bitcoin would grow over time, attract the best people in the world, and steadily march towards replacing all the money in the world — or that it wouldn’t. But I didn’t expect that this outcome would have anything to do with my actions. My main contribution to Bitcoin, I originally thought, if I was going to make any contribution at all, was not going to be anything more than perhaps finally getting a few friends to buy a coin or two. But now that I had already done that and some of them had skin in the game, the price was rising. It really looked like Bitcoin had a shot at sticking a boot up the ass of those other fuckers who were slowly destroying our civilization; I was being called to rise to the occasion, dammit. I was not going to ignore the call. So I volunteered to “*fight*” in the “*war*.” There was no *army* to join, though. No uniform. No commanding officer. No boot camp. No basic training. No ranks. I had two weapons — my words and my node — and the node wasn’t much of a weapon at all, not by itself, at least. “*How do I help*?” I asked on Reddit. “*Join the Bitcoin Core Slack,*” I was told. So I did. It turned out I was not alone. I was not even early. There were quite a few others there, and it was a buzzing beehive of activity with messages flying back and forth at such a rapid pace it was hard to figure out which ones were responding to which others. There was no welcoming committee. I tried my best to make sense of what was going on and to figure out what I could do. Most of what I asked or said was completely ignored. There was a war going on, after all. Seems figuring out how to make sense of that stream of messaging and being able to join in the conversation counted as boot camp. Those who joined before me had just come up with a bold plan to take on the miners. It was called the UASF — user-activated soft fork. It was going to take a major effort to succeed. We needed most real users of Bitcoin to run a software upgrade that was different from the Bitcoin Core release, which was being run by almost everyone. That Core release was the one where the miners had taken advantage of the signaling mechanism to block the activation. This different release had one change. It would *require* miners to signal in favor of activating SegWit by its deadline. It was an ultimatum.  If they failed to signal in favor, the nodes running the UASF would reject their otherwise valid blocks. This was a declaration of cyber-war — do as we demand or pay the ultimate price a miner can pay in Bitcoin — lose your block and, more importantly, its reward, which is all the money you get paid if you’re mining Bitcoin. I fell in love with this idea immediately, and when my first few questions were answered, I fell in love with it even more. Why? This plan was going to be a show of force for all of us little guys demonstrating our conviction to the values of Bitcoin. And it needed to be shown now that these miners had signaled to us that they thought they were going to decide how Bitcoin worked. It was going to be a real-world test of decentralization. We would show them that the rules were up to the users of Bitcoin — not up to the Core developers or the miners or, as we would later find out, the corporations in Bitcoin. We were making the rules. It was a demonstration that users had to declare and enforce their values on the system. It was proof of decentralization, proof of conviction, proof of effort, proof of willingness to do whatever needed doing. But it wasn’t going to be easy, in part because we really were decentralized. We were not some organized army of *soldiers* with commanders organized into battalions and trained to fight a new kind of war that had never been fought before. We were just a group of individuals who cared enough about Bitcoin’s potential that we all had heard and answered the calling. But we also weren’t just going to do whatever someone else told us to do. We were fighting for freedom, after all, not for choosing which leader was going to be the boss. So, we each had to be convinced. And then, there was the matter of what any of us could actually individually do to help. We all had different skills; we didn’t know what each other’s skills were. Most of us were even pseudonymous, not knowing who each other was in the real world. The UASF software itself was released by a pseudonymous persona who called himself [ShaolinFry](https://www.reddit.com/r/Bitcoin/comments/5zsk45/i_am_shaolinfry_author_of_the_recent_user/). Nobody could direct anybody else because nobody knew who anybody else was or what anybody else could do. So we each did whatever we could. Me? I wrote. Nobody told me to. Nobody told me what to write. I just wrote what I thought would help. I tried to write one post per day on Reddit. And spent the rest of the day answering questions, dispelling FUD, and also doing my fiat job when it called. I think my most successful [essay](https://www.reddit.com/r/Bitcoin/comments/6dos0r/uasf_is_an_economic_boycott_against_miners_who/) was one I wrote after establishing a little bit of a reputation as a knowledgeable commenter on the topic. In it, I likened running the UASF software to participating in a powerful economic boycott. Running UASF, I said, was threatening to boycott the blocks produced by miners that did not carry the “*in-favor*” signal for SegWit activation. That essay was as short as I could make it and a call to action for readers. It simplified things for many people who were curious but overwhelmed by the technicalities and details of how the UASF worked. Miners got paid by the Bitcoin protocol itself in the blocks they produced, I pointed out, and if the users of Bitcoin were not going to accept those blocks, those miners would not be getting paid. That, at least, was what we were threatening with the UASF. Basically, I spent my time as an educator and a cheerleader for the UASF effort. Not really what you think of when you think of a fighter in a war. But that’s why these words don’t do a good job of describing what went on. There were shills all over the place working for the other side. They mischaracterized practically everything about every aspect of the battle. They piled lies on top of lies, and it was much harder to explain why these were lies than it was to come up with them. And when they got blocked for lying, they screamed out accusations of censorship. It was a shitshow. That hasn’t changed much, though; it’s just moved from Reddit to Twitter, where it’s easier to block liars individually. But that’s another story. The truth was, winning this fight wasn’t anywhere near as simple as just running software. The UASF was potentially only a bluff. If miners ignored us, we might ignore their blocks, but what alternatives did we actually have for keeping Bitcoin going without them? We would have to begin mining ourselves, and we had far less mining power than they did, which meant they could actually 51%-attack our chain or simply ignore it, leaving us with very slow blocks for a long time until the difficulty adjusted, at which point they could again 51%-attack our chain. It was a *game* of bluffs on top of bluffs and threats on top of threats. It was a lot like the game of chicken, where two drivers race towards each other, the winner being the one who doesn’t steer away to avoid the head-on collision that would kill both of them. And that head-on collision was scheduled for Aug. 1, 2017. It was pretty scary but also quite thrilling. There was plenty of big talk. But talk was just that — words. And this was going to come down to action. Part of what I learned was that in the game of chicken, it really helps in winning if you have nothing to lose. That turned out to be the ace up our sleeve, to borrow a term from poker, a game where there’s a lot of bluffing and needing to put your money where your mouth is. ### PART 4: SKILLING UP AND SELF-DISCOVERY For those of us fighting, thinking about the possible outcomes of the *war* was an incredibly instructive time to be in Bitcoin. It brought us together to carefully think through many scenarios and how each of them would play out. We had to understand exactly what would happen at the level of the code and what could or should happen at the social-human layer at each step of the plan. We weren’t field soldiers, it turned out; we were strategy analysts and intelligence agents. In retrospect, since Bitcoin’s building blocks are themselves products of intelligence agencies, I suppose this type of warfare was inevitable. It was somewhat surprising, however, that it wasn’t between nations, armies, and their adversaries. Instead, it took place outside their geographic jurisdictions — in that realm called cyberspace, and the adversaries were those who wanted to impose their control over that realm and their opponents, a rag-tagged bunch of pro-freedom misfits who kept their real-world identities secret. Our war room was the Bitcoin Core Slack, and the battlefield was Reddit — particularly the r/bitcoin subreddit, where there were now close to a million subscribers, with thirty thousand to forty thousand logged on at any moment. The plan was far from a surefire success. It could easily have led to a long, drawn-out battle that would have worn down both sides and left Bitcoin as a messy and never-ending dispute that would prevent it from ever achieving any mass adoption — possibly forever. It was a deadly stand-off. Each of us threatened to destroy the other with no middle ground — one side would have to cave into the other, or we would both go down fighting. Maybe, many of us thought, we were giving ourselves too much credit in even thinking that highly of our plan. What if the miners just dug themselves in and did nothing at all until after the SegWit activation window expired? If they kept on mining on the old, unchanged Bitcoin, might our UASF nodes be stalled or slowed long enough for people to forget about our movement? We weren’t sure who would declare that outcome a victory because neither side seemed to want the status quo anymore. Aside from the technological and game-theoretic learning that participating in this war led to, many of us had also learned something about ourselves through this process. We learned that Bitcoin’s decentralization was so important to us that we were ready and willing to go down with the ship if that’s what it took. After all, compromising on our principles guaranteed our dream of freedom through Bitcoin would never come true, and we were also pretty sure that Bitcoin themselves wouldn’t be worth a lot of money if they were just some digital token controlled by some narcissistic jackass at some company — so we really did have nothing to lose. Maybe that’s what won this war in the end — that our enemies finally saw that we had nothing to lose and that we were ready, willing, and able to take them down along with us. This was quite an irony because the whole thing began with their stupidity drawing us into a situation in which they would take us down along with them — and our response was instead to threaten to take them down with us. Quid pro quo. Tit for tat. Eventually, at one point in this war, it became clear why this controversy had started in the first place — why the enemy’s “*leader*,” Bitmain, had been opposed to SegWit. It turned out SegWit would disable a feature called “Asicboost” that they were secretly using to gain an efficiency advantage in mining. That’s yet another story, though. ### PART 5: A NEW OPPONENT, A CHANGE OF PLANS As the threat of this war leading to the potential destruction of Bitcoin escalated and the time drew closer to the deadline, the CEOs of the biggest companies in the Bitcoin ecosystem decided to step in. After meeting in private, they announced their compromise, which became known as the [New York Agreement](https://en.bitcoin.it/wiki/New_York_Agreement) (NYA). The proposal was light on the technical details of execution because they were businessmen, not developers, but it called for *both* the activation of SegWit and a hard fork to two megabytes per block. These executives patted themselves on the back and declared their compromise a done deal. Kind of like how Western politicians orchestrate Middle East peace conferences and declare that they’ve solved the problems there but never do. We rejected this idea. We had dug our heels in on not expanding the block size anymore (since SegWit already provided one), let alone by a hard fork that would break backward compatibility for all existing users — another sacred principle we would not violate. The leaders of the corporations thought we were zealots. “*Why not meet the miners in the middle*?” they asked. We would, after all, get our precious SegWit, miners would get the bigger blocks they claimed they wanted, and everyone could be happy. The CEOs hoped this would shut us up. But it only made us more zealous. On principle alone, we could not let this happen. If we did, it would mean that corporations could take control of Bitcoin and that, therefore, it was not a user-led movement — they were, in fact, just doubling down on the stupidity that had outraged us enough in the first place to create, run and implore every user to run the UASF. This was a big strategic shift — our enemy had gathered many more allies on its side and had thrown us a bone: SegWit would be activated. We had to ask ourselves many questions: Is this actually a victory for us? Or is it a partial victory and partial loss? Had we won but become so zealous, emotional, and dogmatic that we wouldn’t consider anything but our original demands as acceptable? Or, were we, in fact, highly principled and uncompromising fighters for decentralization? Was there even a difference between these interpretations? Despite our emotions intensifying to outsiders, our position in this war was looking bleak. We now had the miners *and* the corporations against us. But outsiders weren’t the ones fighting this war, and they had no fucking clue how our conviction was our greatest weapon. This compromise being offered to us both tested and tempted each of us individually to accept it and publicly exit our virtual foxholes to declare that we found the offer acceptable — to wave a white flag of surrender. It was amazing to me how tightly we held ranks in the face of the temptation of not having to fight anymore. But we did hold tight. We each personally understood what was at stake. Only one developer (not a very good one) crossed “*enemy lines*” to develop the code to implement the NYA. ### PART 6: HOW TO WIN AT THE GAME OF CHICKEN After the announcement of the NYA, some exchanges, most notably Bitfinex, began trading claims on the new yet-to-happen possible forks of Bitcoin. Here, you could deposit one bitcoin and receive a claim on both a SegWit-only coin and a hard-forked coin called SegWit2X. You could then sell one of these and buy the other on the open market. If you believed that one was going to succeed and the other failed, this was a chance to bet on the future outcome by dumping the loser and buying the winner in advance. This created an opening for a daring strategy for either side. Here we were, the users, locked in a game of chicken with the biggest miners and corporations in Bitcoin. We were threatening to ignore the blocks of miners who didn’t signal support for the activation of SegWit. They were now threatening to abandon mining the original Bitcoin and only mine their hard-forked chain with two-megabyte blocks. Who would blink first? Who would steer away? Who would chicken out? It turns out there is a way to win at the game of chicken. What if one driver could prove to the other that he had no ability to turn his steering wheel? This would then result in the other driver knowing that he could no longer expect to win. His only two choices would be to simply pull over and live or go straight on into the head-on collision and die. In the game of chicken, this can be achieved by one driver pulling off his steering wheel and holding it out the window so his opponent can see it and then flinging it away to the side of the road. Something analogous to this was what these Bitfinex derivatives became. If you sent your Bitcoin to Bitfinex and then sold down your position in the S2X hard fork to zero units and used it to buy the UASF token, you were effectively guaranteeing that you’d never accept the hard-forked version because you were shedding your economic interest in it before it ever came into existence. You were eliminating your ability to “*economically*” turn away from your commitment to UASF in this game of chicken. And you were doing it in a way that your opponent could see what you were doing. Quite a few participants in this war took up this strategy. They were now no longer just potentially bluffing. They had shown their cards, played their hand, shot their load — whatever metaphor you want to use. They put their money where their mouths were and now risked losing everything if the corporations actually succeeded in draining the SegWit-only version of Bitcoin from its support and hash rate. Interestingly, these corporations, who had far more wealth, did not put any of their money where their mouths were. ### PART 7: A STRATEGIC BLUNDER AND THE FIRST VICTORY Remarkably, or perhaps not, the corporations and miners made a huge blunder when they finally announced the implementation details of their NYA proposal. Maybe they didn’t understand how things worked in Bitcoin at all, or maybe they were incredibly arrogant, thinking they’d already won this war when we were all still fighting it. Maybe they were just lazy or too timid to do anything that would work. Either way, when they finally got around to announcing how they planned to implement the NYA, the signatories to it proposed letting SegWit activate as originally planned, by the miners doing what they were originally expected to do — signaling to active it before the deadline — and then, a few months later, having the hard fork take place. A few months later? Come again? *What*? This apparently seemed “*sensible*” to them. Idiots. It actually meant complete, unconditional victory for us. I remember the moment they announced this plan. Instantly, those of us who had been spending all our time on the UASF channel of the Bitcoin Core Slack were in shock because we all knew that this was it — we had won — suddenly and unexpectedly. The war was over: SegWit would activate on schedule, and we would all just completely ignore the hard fork a few months later. While miners could prevent a soft fork like SegWit from activating, which is what we were fighting against — and what they had now agreed to give us — there was no way they could force a hard fork on users. We had seen how hard it was to get users to run a soft-fork client, and a hard fork would require EVERY SINGLE USER to run its software — these were completely impractical and impossibly stupid expectations. But you see, we had direct experience of what was going on and what was actually hard or easy to do in real life. The executives only knew what it was like to meet in a hotel, order food and alcohol, and declare a false consensus. By giving us what we had been *fighting* for all along when we wanted it and then also giving us the opportunity to reject their hard fork, which we rejected on both technical and moral grounds, they had handed victory to us. “*What did we miss*?” we were asking ourselves on Slack. “*We just won*!” others were quickly coming to realize. “*Are they so stupid as to think we’ll run a hard fork or that any users will?*” began the questions. It was really unclear how such a blunder was possible. But here it was, and we didn’t even have to declare victory — we just had to let them follow their plan, which amounted to doing what we had originally all wanted, followed by them trying to do something that none of us wanted and was almost certain to fail. We quietly rejoiced. When the actual time finally came for the hard fork to launch, the corporations had themselves withdrawn support for it. Basically, nobody was supporting it, and the code turned out not to be properly written. Anyone who had been running the NYA code as an experiment noticed that it stalled on the block on which it was meant to activate. But little attention was being paid to it because the war switched fronts to a different attack long before this date. ### PART 8: THE SNEAK ATTACK Not every corporation and miner was stupid enough to think this stupid NYA plan might work. Some were smart enough to realize this but, remarkably, dumb enough to formulate a plan that would, in time, completely ruin them. The leader of Bitmain, Jihan Wu, and the owner of the bitcoin.com-url and self-proclaimed Bitcoin Jesus, Roger Ver, saw the writing on the wall for the hard fork, and Wu secretly wanted to prevent SegWit from activating anyway, so he was only hedging his bets on NYA. He and Roger could see that the NYA was dead in the water. They hatched a plan to launch a different hard fork of Bitcoin than the one in the NYA. This one would *not* activate SegWit, but would activate at the exact same time as SegWit to create maximum confusion. Instead of SegWit, it would have two-megabyte blocks — and anyone who had any Bitcoin would have the same amount of this coin, which they named Bitcoin Cash. It was quite sneaky and deceptive, and it got off to a promising start because Wu mined it, and Roger supported it financially with both his clout and marketing resources. Ultimately, it, too, failed. But it also represented an airdrop of coins that many could, and did, trade for real bitcoin. Both Wu and Ver suffered tremendous reputational and financial losses over the long term. And for those of us who fought in the war and got to dump this shitcoin for real Bitcoin, it amounted to our war pay, even though all Bitcoin holders could make the same trade too. ### CLOSING: LESSONS LEARNED If you’re still here, thanks for taking the time to hear me out. This is the best account I can give with the words we have. In the final analysis, I think we learned some important lessons: 1. As long as Bitcoin has supporters who are uncompromising on its principles and who never become complacent, Bitcoin will remain something worth fighting for. And if it’s worth fighting for, it will have uncompromising supporters. That’s a virtuous circle that might just last forever. 2. As Satoshi himself showed, you don’t need the blessing or permission of the rich and powerful to be free. 3. There’s strength in numbers. 4. Don’t try to fuck with Bitcoin, or Bitcoin will fuck you up badly. Peace out. Never stop fighting for what you believe in. See you out there in cyberspace. *This is a guest post by Tomer Strolight, editor-in-chief of Swan Bitcoin and author of “Why Bitcoin.” Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.* ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Bitcoin and the Most Valuable Brand of the 21st Century URL: https://www.swanbitcoin.com/analysis/bitcoin-and-the-most-valuable-brand-of-the-21st-century/ Bitcoin provides value that surpasses the brand value of the U.S. dollar, as the code provides the utility of superior money. --- **Tomer Strolight** · February 28, 2022 · Updated June 25, 2024 ### BRANDS — A TOPIC EVEN MORE MYSTERIOUS THAN CRYPTOGRAPHY ITSELF #### THE KING OF BRANDS HAS BEEN DETHRONED Did you know Coca-Cola was, until recently, considered the most valuable brand in the world? The value of a brand is called "*brand equity*." There's even a dictionary definition for it: *"The commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself."* In other words, brand equity is what a brand is worth over and above what the product itself is worth. [![](https://www.datocms-assets.com/56652/1706641652-top-brands-consulting.png?auto=format)](https://swanbitcoin.com/) (SwanBitcoin.com Graphic/data from Interbrand) #### HOW DID COKE GET TO BE KING OF BRAND EQUITY IN THE FIRST PLACE? Do you know where the *"Coca"* in Coca-Cola comes from? It comes from the coca plant, the source of cocaine. Cocaine was actually once the most important ingredient in Coca-Cola. After all, oranges are the most important ingredient in orange juice, peanuts in peanut butter, and it was coca in Coca-Cola. Even to this day, both Coca-Cola and cocaine share the nickname *"coke."* Now, if you were to take out the main ingredient that gives a product all of its effectiveness — which is also what you've named the product after — almost all you're going to be left with is brand value (and nearly worthless fillers like water). This is what happened to Coca-Cola! [![](https://www.datocms-assets.com/56652/1706641548-coca-cola-swan.png?auto=format)](https://www.theatlantic.com/health/archive/2013/01/why-we-took-cocaine-out-of-soda/272694/) (Image/The Atlantic) **In 1920, Cocaine Was Outlawed** Coca-Cola was forced by law to take out its main ingredient. So, with necessity being the mother of invention, the folks at Coca-Cola were left with no alternative but to practically invent the idea of brand equity. Caffeine and sugar helped Coca-Cola keep some of its stimulant qualities, but let’s face facts: Coca-Cola certainly no longer has the same kick it had back when it contained the powerful and addictive stimulant: cocaine. When Coke lost its most potent ingredient, its brand equity actually went up — way, way up. This is just a fact of math. The product itself became worth less because of the removal of its most valuable ingredient, but the price did not drop. That mathematically meant that the difference was made up by the brand equity! [![](https://www.datocms-assets.com/56652/1706641461-contents-of-5-cent-bottle.png?auto=format)](https://swanbitcoin.com/) Contents of a 5 cent bottle of Coca Cola - (Graphic/Swan Bitcoin) ### THE TRUE KING OF BRANDS Reminding ourselves of this definition of brand equity — what a brand is worth over and above what the product itself is worth — wouldn’t you agree that, without a doubt, the brand with the most equity in the world is, in fact, the U.S. dollar? The product itself, after all, is just a rectangular piece of paper with some ink on it. Paper itself is hardly worth anything. However, when stamped with the official mark of the dollar, the value of this paper is so high and so widely recognized that when Interbrand attempts to compare the brand equity of other brands to one another, they measure it using the brand of the U.S. dollar! Now, there’s a powerful brand. What other brand has a dedicated spot for its logo on the keyboard of every computer in the world? There’s no Coca-Cola key on my keyboard, for sure. The consumer perception of the U.S. dollar, both in America and just about everywhere else on earth, is extremely high. It’s the standard by which we judge the monetary worth of things. It’s what everything is priced in, at least in the U.S. Economists have their own fancy terms for everything, so they don’t call this phenomenon *“brand equity.”* Instead, they call the difference between what a dollar is worth and what a rectangular piece of paper is worth the *“monetary premium.”* But it means exactly the same thing — what a dollar is worth over what the product itself (a piece of paper) is worth. #### HOW DID THE DOLLAR GET TO BE THE TRUE KING OF BRAND EQUITY? The dollar’s brand equity used to be zero. Interestingly, just like how Coca-Cola used to have something much more potent in it than it does today, the same is true of the U.S. dollar. The dollar used to be fully 100% backed by and completely redeemable for pure, solid gold. Until 1933, one dollar was worth about one-twentieth of an ounce of gold. Back then, the dollar’s brand equity was actually zero. The U.S. Federal Reserve bank would give you an ounce of gold for a $20 note. Then, in 1933, Franklin Roosevelt confiscated consumer gold and passed the Gold Reserve Act. Suddenly, you needed $35 to get an ounce of gold. But technically, the dollar still had no brand equity. It simply became worth one thirty-fifth of an ounce of gold. It also seems from the historical records that it became harder to get that ounce of gold than for your stack of one $20 note, one $10 note, and one $5 note. But then, suddenly, all at once, in August 1971, the dollar’s brand equity went from absolute zero to one whole dollar per dollar. Brand equity instantly went from 0% to 100%. That was when the dollar was no longer backed by nor redeemable for gold. All the value that the world put on the dollar became, all at once, entirely brand equity. [![](https://www.datocms-assets.com/56652/1706641382-compare-value-of-1-usd.png?auto=format)](https://swanbitcoin.com/?gc=btcmag_guest-post_cocacola&utm_campaign=btcmag_guest-post_cocacola) (Graphic/Swan Bitcoin) And since all the dollars in the world were certainly perceived by all the people in the world to be worth more than just the Coca-Cola company, we can all agree then that the U.S. dollar’s brand equity was more than Coca-Cola’s brand equity. So, we can safely conclude that since August 1971, the dollar has been the king of brand equity. It’s just simple math again. Just as Coca-Cola managed to remain valuable without the cocaine in the product, the U.S. dollar remains very valuable without the gold backing it. That being said, it’s not quite as valuable as it used to be. #### A DOLLAR ISN’T WORTH WHAT IT ONCE WAS The purchasing power of a dollar has fallen since it became 100% brand equity. Back in 1971, a dollar bought about 900 milligrams of gold. It now buys less than 10 milligrams of gold. Ouch. Do you know how an open bottle of Coke loses its fizz after a while? Seems the same thing happens to dollars. ![](https://www.datocms-assets.com/56652/1706641299-priced-in-gold.png?auto=format) PricedinGold.com ### WHAT WE CAN LEARN FROM THE BRANDS THAT BEAT COKE? According to Interbrand, the top brands that surpassed Coke in brand equity were Apple and Google. Let’s remind ourselves yet again of the definition of brand equity — that it is what the brand is worth over and above what the product or service itself is worth. #### BRANDS THAT BEAT COKE DELIVERED MORE THAN A BRAND Is it really true that we value Apple and Google not because of the value of what their products and services provide to us but simply because of our brand perception? I don’t think so. I think Interbrand is wrong about the brand equity of these companies. We use Apple products because they work really well. I wrote this article on a nine-year-old Macbook Pro! I did it using Google Docs, which is free! I researched the article with Google. There’s no reliable substitute for Google, especially for advertisers, who are the ones paying for it since it is free to me. No. When I think about it, I realize these companies have utility that goes way beyond the perceived value of their brand and that this value was missed by Interbrand’s researchers. [![](https://www.datocms-assets.com/56652/1706641194-not-brand-equity.png?auto=format)](https://swanbitcoin.com/) (Graphic/Swan Bitcoin) What the people at Interbrand missed is this: the value of the products and services provided by Apple and Google is not measured in the cost of materials, but in the benefit, we get through how computer code makes those materials do extraordinary things. #### IT IS THE CODE THAT IS THE FUNDAMENTAL VALUE The brilliantly engineered software is not part of the brand equity — it is not something beyond the value of the product itself, as indicated in the definition of brand equity. It is a part of the product itself. In many cases, it is the product itself. The code is certainly the most potent and important ingredient if we recall the terms we used in our discussions of Coca-Cola and the dollar. Put concretely, if Interbrand analysts compare two similar office chairs, one with the Herman Miller brand and another with no brand, they’d say the brand equity of the Herman Miller chair is the difference in price between the two. But by this methodology, those same analysts would look at a Mac without its operating system and software beside one with all that software and be stumped as to why the first would be worthless and the second would be worth thousands of dollars. This is because they aren’t considering the value of the code. ### THE VALUE OF THE DIGITAL REALM Behold, then, the value of the Digital Realm. It differs from the physical realm of weights, measures, commodities, and goods. It also differs from the brand realm, where a name and logo command value. The Digital Realm is a third realm, which not everybody realizes actually exists. This is why legendary investors like Warren Buffet, who recognized the brand realm value of Coca-Cola, completely missed the boat on investments like Apple, Amazon, and Google. And it’s why Interbrand thinks it is brand equity rather than code that makes these companies’ products profoundly valuable. #### THE MAIN INGREDIENT IS THE CODE — AND IT IS STILL IN THERE What makes these companies’ offerings valuable is their computer code and the effects that code generates. The value is what the computer code actually does. It’s not what the perceived value is but what its actual value is that makes these things we rely on every day so valuable. The code creates capabilities that were previously impossible. It makes them not only possible but easy, fast, and cheap. The code makes these capabilities available not just to a few people but to almost everyone on Earth. But you cannot touch the code. You cannot weigh it. Measuring it by its size (in bytes) is not an accurate measure of its value. It’s what the code does that is valuable. Humankind is still in the earliest years of our history of discovering what code can do. Look at how much code has transformed our civilization since the turn of the century. Even as late as the 1990s, we called each other on actual telephones with physical keys on them. We couldn’t send text messages. We had never heard of social networks. A *“high speed”* connection to the internet was a 28.8kbps phone modem. There were no wireless internet connections. And none of us had a supercomputer in our pockets. This digital realm, where the code actually does the things that are valuable, requires us to come up with a new measure of equity. Let’s call it *“code equity”* from here on. Now, of course, since this code does such wonderful things, we come to value and remember the names of the companies who make the code’s benefits available to us. And that’s why we seem to think their brands are valuable. But it’s really what their code does. That is why we use their products, not what their brand is perceived to be worth. This is why Apple or Google do not bother to sell shirts with their logos on them — the logos do not add brand equity. But if Apple released an *“Apple Shirt”* in the future, you can bet that it would be loaded with software that would make it much more valuable than an ordinary shirt without software. Apple and these other companies overtook Coca-Cola because Coca-Cola couldn’t keep up with the digital realm’s advancing abilities. There is simply nothing (legal) that anyone could mix into sugary, carbonated water to make it do the magical things that great code does. Coke isn’t going to continuously get better and more valuable. Apple, Google, and Amazon continuously do. They do it by improving the code. ### WHAT DOES ANY OF THIS HAVE TO DO WITH BITCOIN ALREADY? Okay, okay. A quick review of some facts first, and then I promise to get to Bitcoin: - Recall how Coke’s value became mostly brand equity when they had to take out the main ingredient, cocaine. - Recall how the U.S. dollar’s value became entirely brand equity, aka monetary premium, when they took away the gold backing it. - Remember how the brands that usurped Coke really do offer a fundamental value other than their brand equity — value that comes from the digital realm. Let’s turn our thoughts to Bitcoin, then. ![](https://www.datocms-assets.com/56652/1706641115-enjoy-bitcoin.png?auto=format) (Image widely circulated on the Internet/Original creator unknown) ### BITCOIN IS CODE AND ITS VALUE IS IN THE DIGITAL REALM Bitcoin is code. Free, open source code. It does something no other code in the world does. What emerges from its code running is, in technical jargon: - Decentralized consensus - Digital scarcity - Immutable recordkeeping - Unbreakable rules But if we want to simplify these technical terms to something a little less specific but a lot more accessible, let’s put it thus: What Bitcoin’s code does as it runs on computers all over the world, all inter-connected across the Internet, all synchronizing, all validating, is this: Bitcoin creates the best money the world has ever seen. #### BITCOIN COMPARED TO THE DOLLAR Bitcoin exists in the Digital Realm. The U.S. dollar exists primarily in the brand realm. What Bitcoin is doing to the U.S. dollar is what Apple and Google did to Coca-Cola. Just as Apple and Google provide, through code, valuable new capabilities that can’t be offered through the brand value of a beverage, Bitcoin provides, through code, valuable features that can’t be supplied by the brand value of a national, government-issued currency. #### BITCOIN ISN’T JUST DIGITAL CASH, DIGITAL GOLD OR DIGITAL CURRENCY. IT ISN’T JUST MONEY. Bitcoin is a new social contract: a contract that can’t be broken. It is an unbreakable contract because of how the code ties its rules to the [unbreakable laws of math and physics](https://tomerstrolight.medium.com/why-bitcoins-rules-are-enforced-by-physics-b69f676cbb70). It’s a new platform: one that can’t be commandeered because of how the code [prevents anyone from taking it over, breaking it, or stopping it](https://tomerstrolight.medium.com/why-everything-that-should-hurt-bitcoin-only-makes-it-stronger-c62e8bb2e961). It’s global because it is made of code that isn’t aware of the existence of nations. It’s [immutable, incorruptible, irrefutable, inalienable, unseizable, irreversible, unbreakable](https://tomerstrolight.medium.com/why-bitcoin-is-not-like-anything-youve-ever-seen-before-9a7e09b5cc0f): because of its code. How valuable are these things? Time will be the ultimate judge. However, each of these things seems increasingly important with the passing of time. It took Apple 36 years to overtake Coca-Cola. Bitcoin is now 13 years old. Bitcoin is currently ranked as the 15th most valuable currency in the world according to [Fiat Market Capitalizations](https://fiatmarketcap.com/). With the hindsight you have now, would you invest in Apple, coming from the digital realm, when it was the 15th most valuable brand in the world and up against all these companies operating in the brand realm and physical realm? Of course. Bitcoin may now be that same opportunity and then some. The Digital Realm now brings forth a contender in the arena of money itself, and its name is Bitcoin. Bitcoin may then someday become the world’s most valuable brand — or rather, thanks to code, the most valuable asset in the Code Realm — and perhaps then the most valuable asset in the whole world. I have submitted this article as an excerpt from Swan Private Insight — a monthly Bitcoin publication sent to our members of Swan Private Client Service ([learn more here](https://swanbitcoin.com/private/?gc=btcmag_guest-post_cocacola&utm_campaign=btcmag_guest-post_cocacola)). Swan Private guides high-net-worth individuals and corporations toward building generational wealth with Bitcoin. You can download a complementary copy of our Swan Private Insight Report [here](https://event.swanbitcoin.com/insight/?gc=btcmag_guest-post_cocacola&utm_campaign=btcmag_guest-post_cocacola). ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # How We Should Really Think About Bitcoin Maximalism URL: https://www.swanbitcoin.com/analysis/how-we-should-really-think-about-bitcoin-maximalism/ There has been a lot of digital ink spilled about the concept of Bitcoin Maximalism, but there are things the critics don’t understand. --- **Stephan Livera** · July 12, 2022 · Updated June 25, 2024 *This article from July 12th, 2022 by Stephan Livera was originally published on Bitcoin Magazine* It’s time to clear a few things up. While there has been a lot of digital ink spilled over the years debating the concept of Bitcoin Maximalism, we seem to be going back to some of the same arguments over and over — notably in [Nic Carter](https://bitcoinmagazine.com/tags/nic-carter)’s[ recent Medium post](https://medium.com/@nic__carter/setting-the-record-straight-b4e1b415e7d9) and Pete Rizzo’s[ Forbes post](https://www.forbes.com/sites/peterizzo/2022/07/04/bitcoin-maximalism-is-dead-long-live-bitcoin-maximalism/). Here are a few thoughts I want to add: Critics of Bitcoin Maximalism seem to believe that maximalists are just toxic, hoi polloi, and not technically savvy on the realities and realpolitik of the *“crypto”* world. On the other hand, Bitcoin Maximalists tend to believe their worldview is the ethical, rational, and pragmatic stance to take in a world corrupted by fiat currency. So, what does it really mean to be a Maximalist? ### WHAT IS BITCOIN MAXIMALISM? I view Bitcoin Maximalism simply as believing that Bitcoin will someday be global money and/or that we’ll live on a Bitcoin standard. This is otherwise known as “Monetary Maximalism,” but where is the monetary Maximalist idea coming from? Generally, it is based on the idea that money is the most marketable good and that Bitcoin has superior monetary qualities. There is a tendency toward the most marketable good, as Ludwig von Mises spelled out in [*“Theory Of Money And Credit*](https://mises.org/library/theory-money-and-credit)*”:* *“The greater the marketability of the goods first acquired in indirect exchange, the greater would be the prospect of being able to reach the ultimate objective without further manoeuvering. Thus, there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be* ***one by one rejected*** *until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.”*  ### WHAT DO MOST BITCOIN MAXIMALISTS BELIEVE? In practice, most of the Maximalists I know are simply disinterested in non-monetary uses and are more interested in distinguishing Bitcoin from all of the *“crypto”* garbage out there. And [at times like these](https://bitcoinmagazine.com/markets/bitcoin-custodians-liquidity-crisis-as-price-falls), with so many crypto lenders stopping withdrawals (e.g., Celsius, Vauld, Voyager), filing for Chapter 11 bankruptcy (e.g., Voyager), or taking bailout deals (e.g., BlockFi, Voyager), there’s a strong case to say the Maximalists were right. At the time when newcomers were running like yield-chasing lambs to the slaughter on these platforms, it was Bitcoin Maximalists who were warning about the rule, *“not your keys, not your coins,”* and warning against high-risk yield platforms. ### WHAT DO MOST MAXIMALISTS ACTUALLY WANT? Really, what most Maximalists want is a clear separation between Bitcoin and all the other stuff. As I see them, they are generally focused on promoting and supporting Bitcoin. They may act to warn against false promises or against gambling on *“cryptos”* and inaccurate attacks on Bitcoin. They generally want the altcoiners to stop attacking Bitcoin as part of their marketing. Bitcoin has no centralized foundation with a marketing budget, but many altcoins do. Many altcoiners spend time trashing Bitcoin in public media to market their altcoin. Altcoiners attacking Bitcoin is often necessary because there’d be no need to *even think about* their altcoin unless you believed some FUD about it. Historically, [this has taken the form of](https://bitcoincash.org/), *“Bitcoin isn’t fast enough; therefore, use my faster altcoin.”* In some cases, people associated with altcoins will explicitly sponsor attacks on Bitcoin. For instance, the executive chairman of Ripple, Chris Larsen, [openly sponsored a $5 million attack on Bitcoin’s proof-of-work security](https://www.yahoo.com/video/bitcoiners-scoff-chris-larsens-5m-145211470.html) (with a donation to Greenpeace USA). If altcoiners did not attack Bitcoin, and did not attempt to *“ride the coattails”* of Bitcoin by conflating things together in a *“crypto”* industry, there’d be far less conflict. ### MONETARY MAXIMALISM, NOT PLATFORM MAXIMALISM But Bitcoin Maximalism, as thought of in the context of Monetary Maximalism, can and should be contrasted with Platform Maximalism. The idea here is that everything should be built *“on top of”* Bitcoin, and any alternatives should be discouraged completely. But I can rightly understand the critique of *“Platform Maximalism”* because not everything can be or should be built *“on top of”* Bitcoin. There will be some things that are simply not technically feasible to put on top of Bitcoin, or they would require making unacceptable trade-offs to do so, harming Bitcoin’s decentralization, strict supply cap, verifiability, accessibility, or scalability. But critics of Bitcoiners will sometimes conflate and attack the Platform Maximalist view as though that is what all Bitcoin Maximalists believe when Platform Maximalism is really a rare view in practice. ### WHAT DOES *“BEING BUILT ON TOP OF BITCOIN”* MEAN, ANYWAY? Even this question becomes difficult to cleanly define. Most would say the Lightning Network, using Bitcoin UTXOs to open/close channels, is clearly being built on top of Bitcoin. But when it comes to things like sidechains, federated sidechains, altcoin cross-chain swaps, etc., perhaps it’s less clear. For example, does a cross-chain atomic swap from Bitcoin to an altcoin count as being *“built on Bitcoin”*? Debatable. It certainly wouldn’t qualify as Bitcoin-only. That said, should stablecoins or IOU tokens be classified as altcoins, or just something different entirely? For example, using L-BTC on Liquid to represent pegged-in Bitcoin IOUs seems an upfront and unobjectionable way to represent what’s happening. There is at least no altcoin that can be pumped and dumped by insiders onto unsuspecting retail investors. The amount of bitcoin pegged into the Liquid federation can be verified externally, and L-BTC can be viewed more like a money substitute in the *“money certificate”* sub-category as outlined below: [![](https://www.datocms-assets.com/56652/1708462327-money-broader.png?auto=format)](https://twitter.com/Conza/status/1525080718459555840) Twitter ### AND WHAT OF STABLECOINS? As for stablecoins, aren't they just crypto-fiat? Firstly, the name is a bit misleading. They're not really so stable; they're just steadily declining, just like fiat currency is over time. Secondly, most people accept that, for now, fiat is still dominant and that stablecoins may form part of the process of slowly shifting the world to a Bitcoin standard. I could see pathways where some new users (often not in the Western world) start using stablecoins and then slowly transition to using Bitcoin once they are more comfortable. No matter how good stablecoins are for short-term payments, they are still unsuitable for long-term savings. Stablecoins track fiat currency, which is continually decreasing in purchasing power. A key part of the case for Bitcoin maximalism is that billions of people worldwide need something they can *save* with. This savings demand, also known as reservation demand, is a critical component in the process of an asset *becoming money*. [Post on X](https://twitter.com/bitstein/status/1542548650521497601) On the other hand, it’s also possible to see government regulatory or legislative action that regulates stablecoins in such a way that they lose their relative ease of use. For example, this could happen if stablecoins were to be regulated as money market funds, or with additional banking regulations that required KYC on every step of stablecoin use, or if private stablecoins were regulated heavily in favor of promoting government-issued central bank digital currencies (CBDCs). At that point, it would become even clearer that Bitcoin is uniquely censorship- and inflation-resistant. ### IS BITCOIN MAXIMALISM BORING? Is Bitcoin Maximalism boring, or is it just consistent? Maybe savings shouldn’t be so *“exciting,”* anyway. What the world needs is definancialization, and part of that is the long-term process of sucking out the “monetary premium” that is currently held up in physical properties, stocks or bonds. Over time, we anticipate more people choosing Bitcoin or “defecting to” Bitcoin if you like. Instead of stacking bonds, index ETFs, or properties, people will stack sats. While savings might be *“boring,”* if we’re talking about exciting things, why not consider the impact that sound money would have on the world? All manner of the sociological effects will come from bringing about non-state money. This is because [fiat money changes culture](https://mises.org/wire/how-fiat-money-changes-culture). Many altcoin projects seem more like chasing the next shiny thing, and they like to move fast and break things — but Bitcoin as a movement is about civilizational infrastructure. ### *“BUT THERE ARE LOTS OF OTHER CHAINS WITH DEMONSTRATED VALUE”* So, the claim that altcoins have demonstrated throughput or fees paid represents the protest of altcoiners that there are meaningful uses of altcoin chains and financial services being provided in a decentralized way. They argue that this will be a multi-chain world, and some even go so far as to say that Bitcoin will be flipped because this activity is not taking place on Bitcoin. But really, how much of this was just because of the shitcoin casino factor? The leverage casinos can definitely pull a crowd, but is that the crowd that matters? Will these be the people who HODL through the significant drawdowns and stack consistently? Will these be the people who build companies, code and review software, or build hardware that helps advance the Bitcoin monetary revolution? Altcoin promoters and apologists will point to the volume of transactions, fees paid, or total value locked (TVL), and the use of cross-chain *“bridges”* as to why it will supposedly be a multi-coin future. Some will argue that altcoins are building up an *“economic engine.”* But from the Bitcoin monetary maximalist POV, there’s little reason to continue holding utility coins anyway. See this critique of utility coins by Adam Back, CEO of Blockstream: [Post on X](https://twitter.com/adam3us/status/1542917871382274049) It may well be that people use different rails to transfer value, but the Bitcoin revolution is very much about growing the base of HODLers/stackers/savers. Just like how you can use Zelle or PayPal or Cash App to send USD, the thing that helps the USD is that many people want to *hold* it and price their deals and exchanges in USD. So even if there is a lot of transactional flow on altcoin chains, or even if lots of stablecoins are flowing via altcoin chains, what matters is that bitcoin’s scarcity and overall qualities are valued by people. Even if bitcoin is *“held on”* Binance Smart Chain in a *“smart contract,”* how is this meaningfully different from, say, Bitcoin held by a custodian such as Coinbase, BitGo, or the like? At the end of the day, all of Bitcoin’s coins exist on Bitcoin’s ledger; there are just different custodians of it. The number of people HODLing Bitcoin and wanting to stack it is what matters most. ### BITCOIN THE TOOL AND BITCOIN THE MOVEMENT Running with this idea from[ Sergej Kotliar of Bitrefill](https://youtu.be/bkjEcSmZKfc), it’s important for us to understand the difference between neutral *“Bitcoin the tool”* users and those who are ideologically aligned with the Bitcoin movement (broadly speaking, cypherpunks and libertarians). Just as millions of BitTorrent users would never go to a BitTorrent conference or consider themselves part of the “BitTorrent movement,” there are similar Bitcoin users. They use Bitcoin tools just by searching online for the [*“Best Bitcoin Wallet,”*](https://www.swanbitcoin.com/best-bitcoin-wallet/) or they use the wallet already existing by their providers, e.g., [blockchain](https://bitcoinmagazine.com/guides/what-is-blockchain).info wallet, as that has been around for ages. They even use shitcoin wallets like Exodus. Now, as maximalists and members of *“Bitcoin the movement,”* we can certainly have our views about shitcoin wallets and companies that aren’t popular among Maximalists in the space (Blockchain.info or Coinbase as examples). But we do have to accept the reality that currently, shitcoin casinos have a lot more users. They may currently be able to drive more new users into shitcoin wallets than we can funnel into Bitcoin-only non-custodial wallets, at least for now. ### HOW BITCOIN THE MOVEMENT STILL WINS The main things that altcoins can’t match are the monetary properties and decentralization of Bitcoin. But in addition, they can’t match the size and quality of the Bitcoin movement. There are Bitcoin meetup groups worldwide, developers working to advance the protocol and applications, peer-to-peer Bitcoin trading in many cities, and miners distributed worldwide. Many people work to advance Bitcoin’s adoption because they believe it is the right thing to do. As a community of advocates, educators, and builders — we do have the ability to drive the direction in terms of what gets built out and the products and services that get taught to newcomers, especially if they are our family and friends. Altcoin communities are nowhere near as stable because the adults are so fickle; one day, they are pumping 10 times, and the next, it’s all gone bust or imploded. While the vast majority of altcoins that pump are basically[ one-hit wonders, as explained by Sam Callahan and Cory Klippsten of Swan Bitcoin](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/), Bitcoin remains and continues growing over time. [Post on X](https://twitter.com/skwp/status/1531380260993961987) While many users aren’t strongly engaged with the movement, they do end up benefiting from the things done by *“Bitcoin the movement.”* I believe driving the adoption of non-custodial scaling technology and privacy technology will be done by ideological Bitcoiners who want to ensure that Bitcoin remains a freedom technology. And the benefits will flow down later to the *“neutral”* users who don’t really care that much either way. ### SUMMING UP So, in summary, Bitcoin Maximalism is the view that we’ll live on a Bitcoin standard. Maximalists want to clearly distinguish Bitcoin from *“crypto.”* They are focused on development, building, education, and community growth. There is pressure not to shitcoin scam or shitcoin grift, and this is generally done for the sake of retail consumer protection. Other projects may exist, and they may even attempt to interoperate or connect with Bitcoin in some way. Still, ultimately, this is about the Bitcoin monetary revolution. *Thanks to my friends* [*Michael Goldstein (aka Bitstein)*](https://twitter.com/bitstein) *and* [*Giacomo Zucco*](https://twitter.com/giacomozucco) *for their feedback on this article.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # In Defense Of Bitcoin Full Reserve: Not Anti-Credit, But Anti-Fiduciary Media URL: https://www.swanbitcoin.com/analysis/in-defense-of-bitcoin-full-reserve-not-anti-credit-but-anti-fiduciary-media/ As we continue to debate the proper roles of crypto and lending, Bitcoin full reserve can be the future for credit and commerce. --- **Stephan Livera** · July 28, 2022 · Updated June 25, 2024 *This article from July 28th, 2022 by Stephan Livera was originally published on Bitcoin Magazine.* The debate rages on about the proper roles of Bitcoin, *“crypto,”* and lending. What kind of credit should we have, if any? What is fiduciary media, and do we need it? Or should it all be fully reserved? In this article, I will spell out some thoughts on this long-running debate and how it applies in the context of Bitcoin. ### THE SHORT VERSION For the impatient, the short answer is: We don’t need fractional-reserved fiduciary media for credit and commerce to exist in society. You can have *commodity credit* in a full-reserve banking system; it merely stops *the circulation of credit* and the creation of *fiduciary media*. The defense of *“free”* fractional-reserve banking amounts to a kind of special pleading, inflationist stance. This does not preclude the fact that many will *try* to commit fractional-reserve banking fraud, but *“the market”* does not necessarily have to serve this demand, nor is it beneficial to society. ### THE LONG VERSION ### WHAT ARE THE KEY SIDES OF THIS DEBATE? Those who take the [Rothbardian](https://en.wikipedia.org/wiki/Murray_Rothbard) full-reserve view are generally arguing that: 1. Fractional-reserve banking is fraud. 2. Fractional-reserve banking causes financial instability, this being due to malinvestment driving what's known as [the Austrian business cycle theory](https://en.wikipedia.org/wiki/Austrian_business_cycle_theory#:~:text=The%20Austrian%20business%20cycle%20theory,bank%20or%20fractional%20reserve%20banks.). Now, some in the full reserve camp will downplay or skip over the first point around fraud, as they believe that even if we disregard the fraud argument, there are still negative economic consequences in a society that tolerates fractional reserve banking. Austrian economists in the full-reserve camp include Ludwig von Mises, Murray Rothbard, Jesús Huerta de Soto, Hans-Hermann Hoppe, Joseph T. Salerno, Jörg Guido Hülsmann, Philipp Bagus, David Howden and Robert P. Murphy. This camp would generally believe that banks' reserve ratios should and/or would remain at or near 100%. Those who take the *"free banking"* view generally argue that *"free market, fractional-reserve"* banking regimes can be *laissez-faire* and work in a stable way. They believe bank reserve ratios could sustainably operate in the 2% to 5% range. There may be some bank failures, but *"free bankers"* may put this down to bad government regulation. Well-known economists and proponents here include Larry White and George Selgin. ### WHAT IS COMMODITY CREDIT AND WHAT IS CIRCULATION CREDIT? As Mises spells out in *"*[*Human Action*](https://mises.org/library/human-action-0)*,”* *commodity credit* is the kind permissible under a full-reserve system. It means banks are lending out their own funds or the funds entrusted to the banks by customers. Imagine momentarily that a bank had 100 gold ounces in its vault. And it issues out paper tickets, each representing one gold ounce, for the community to trade around in place of carrying around the gold (verifying and measuring it, etc). So long as the bank only issues up to 100 paper tickets, there is no fiduciary media. One customer could come and deposit five tickets with the understanding that they are relinquishing control for a given period. The bank could loan those five tickets out to another customer, which would be consistent with commodity credit. Now, imagine that the bank issued out 150 paper tickets (each purporting to represent an ounce of gold), but it only had 100 gold ounces in the vault. In this situation, we have a creation of *fiduciary media.* Those additional 50 tickets (above and beyond the genuine 100) represent claims to gold ounces that literally do not exist. Banks creating loans and credit by issuing fiduciary media are granting *circulation credit*. This is what the Misesian and Rothbardian Bitcoiners are objecting to. We generally argue that a fractional reserve banking system is only sustainable with government intervention, typically a central bank lender of last resort, or with government-granted permission for banks to not grant *in-specie* redemption (i.e., not letting customers withdraw their coins). ### HOW LONG HAS THIS DEBATE BEEN GOING? In a sense, this debate has raged for hundreds of years and even predates the Austrian school of economics. This debate has gone on between the currency school and the banking school. The currency school was some of the OG hard money men who wanted a full-reserve banking system. They even managed to put in the [Bank Charter Act](https://en.wikipedia.org/wiki/Bank_Charter_Act_1844) (aka, Peel Act) in the U.K. in 1844, which did mandate 100% reserves for banknote issuance; however, as they did not also mandate 100% reserves on bank demand deposits, the system of fractional-reserve banking still survived. The Peel Act was later suspended. In terms of the full-reserve Austrians and the *"free bankers,"* most of this debate took place in the 1990s, but there have been occasional volleys back and forth even in recent years. Notably,[ George Selgin and Murphy debated this topic in 2018](https://youtu.be/UDLCa7maGZA). Stephan Kinsella has a [reading list post here](https://www.stephankinsella.com/2016/01/the-great-fractional-reservefreebanking-debate/) for those interested. Also of interest will be this Kristoffer Hansen post at Mises.org, *"*[*Understanding The Rothbardian Critique Of Free Banking*](https://mises.org/wire/understanding-rothbardian-critique-free-banking)*."* I can't hope to cover every possible aspect of this debate in one post, but I will attempt to summarize and respond to key points. ### SO, WHAT’S THE CLAIM WITH THIS RECENT ‘CRYPTO’ CREDIT CRUNCH? Recently, [Nic Carter](https://bitcoinmagazine.com/tags/nic-carter) has asserted that this recent *“crypto”* [credit crunch is not the end of crypto lending](https://www.coindesk.com/layer2/2022/07/20/the-credit-crunch-is-not-the-end-of-crypto-lending/). He is defending credit and the *“free banker”* position with some historical parallels to what happened recently with lenders [such as Celsius](https://bitcoinmagazine.com/markets/celsius-halts-bitcoin-withdrawals-what-went-wrong). ### POINT-BY-POINT DISAGREEMENTS WITH CARTER Carter mentions: *“Today, Bitcoiners are gleeful about the collapse of credit in the crypto industry.”* More like Bitcoiners were cautioning against high-risk platforms and encouraging self-custody. Sometimes, people have to point to recent examples to teach their lesson, just like how, after the fall of [Mt. Gox](https://bitcoinmagazine.com/culture/mt-gox-bitcoin-hack-teaches-us-today) or [QuadrigaCX](https://bitcoinmagazine.com/business/quadrigacx-and-the-million-dollar-questions-what-we-do-and-dont-know), it became much easier to sell the message of self-custody. Carter comments: *“They often follow a*[ *Rothbardian*](https://en.wikipedia.org/wiki/Murray_Rothbard#:~:text=Rothbard%20argued%20that%20all%20services,fraud%20and%20opposed%20central%20banking.) *ideal, believing fractional reserve banking to be ‘*[*fraud*](https://www.cato.org/blog/bagging-rule-or-why-we-shouldnt-arrest-all-bankers)*,’ even though the idealized ‘full reserve banking’ generally never emerges in free market conditions.”* So, as mentioned above, yes, I do believe fractional-reserve banking is a fraud, but no, I disagree with what Carter is implying here. Fractional reserve banking has had the backing of the State. Therefore, this outcome we’re living in today resulted from *political* entrepreneurship rather than genuine free market entrepreneurship. When the government puts in central bankers, lenders of last resort, and provides special privileges to bankers, e.g., allowing them to deny in-specie redemption to customers and deposit insurance, this gives an artificial privilege that would not exist under a genuinely free market. Hülsmann has written a paper on this idea titled [*“Has Fractional-Reserve Banking Really Passed The Market Test?*](https://www.independent.org/pdf/tir/tir_07_3_hulsmann.pdf)*"* For example, see this section by Hülsmann: *“The banker turned fraud who issues the first uncovered money title is, in fact, a ‘political entrepreneur.’ He ‘tests the market’ to discover how far he can go in violating property rights without encountering resistance.”* See also this interesting section by Hülsmann: *“A large number of fractional-reserve banks, to say the least, have used such words intentionally in two mutually exclusive senses, and this usage has concealed underlying real differences. These banks’ customers were led to believe that they had bought a financial product of type A, but in legal settlements, they were told that they actually had bought a product of type B.”* Doesn’t this sound familiar with what’s happening to Celsius customers? See[ this](https://www.ropesgray.com/en/newsroom/news/2022/July/In-Reuters-Analysis-Daniel-Gwen-Discusses-Crypto-Lender-Celsius-Bankruptcy) analysis from a business restructuring lawyer, for instance: *“Celsius has set the stage for conflict between its customers and its sophisticated institutional creditors — in particular, Celsius has pointed out in its pleadings that customers transferred ownership of crypto assets to Celsius, making those customers unsecured creditors. This detail may undercut customer expectations, who thought they were depositing their assets into a construct similar to a traditional bank.”* And see this[ video clip compilation](https://twitter.com/cryptohunter0x/status/1550630578122362881) of Celsius Network videos where CEO Alex Mashinsky is asserting that *“Celsius is a safe place to store your coins”* and that *“a run on a bank cannot happen at Celsius because Celsius never lends more than what it has.”* For clarity here, Celsius may not have been running a fractional reserve banking operation. Instead, it may have been a poorly run financial intermediary, which possibly degenerated into a Ponzi scheme (at least that’s what is being alleged in [this court case](https://www.cnbc.com/2022/07/08/crypto-lender-celsius-is-a-fraud-and-ponzi-scheme-lawsuit-claims.html)). Business and bank failures are a fact of life, whether we live in a full-reserve or fractional-reserve banking world. Carter claims: *“During Scottish ‘free banking,’ a fully laissez-faire, markets-based system, reserve ratios were commonly 2-5%, and the system worked swimmingly.”* Not so fast! There were entire stretches of time where some of these so-called “free market” free bankers were permitted to not redeem in specie (i.e., they could freeze customer withdrawals) while, at the same time, still enforcing payment obligations on *other people*. Isn’t this curious? How can the *“free bankers”* herald Scottish free banking when customer redemptions were not permitted for a period of over 20 years? For evidence, see Rothbard’s writing in[ *“The Myth Of Free Banking in Scotland*](https://mises.org/library/myth-free-banking-scotland)*,”* his response to White: *“From the beginning, there is one embarrassing and evident fact that Professor White has to cope with: that ‘free’ Scottish banks suspended specie payment when England did, in 1797, and, like England, maintained that suspension until 1821. Free banks are not supposed to be able to, or want to, suspend specie payment, thereby violating the property rights of their depositors and noteholders, while they themselves are permitted to continue in business and force payment upon their debtors.”*  Later, Carter is talking about credit in general: *“A world with no credit is a dismal one. Credit — responsibly extended — is the cornerstone of civilization. It unleashes savings and puts the money to work in productive areas of the economy. A world without credit is a sterile, stagnant one.”* So, as discussed above, the critical distinction to understand here is *commodity credit* (OK) versus *circulation credit* (fraudulent and causing economic instability). Once we make this distinction, it is all much clearer. To spell this out: From a Rothbardian Bitcoiner point of view, in principle, there could be a Bitcoin bank that takes in Bitcoin and loans out *commodity credit* loans denominated in Bitcoin — and there’d be no issue as there is no fiduciary media created. It’s just that today, such a proposition would be extremely high risk as very few entrepreneurs and businesses have successfully ROI’ed in Bitcoin terms over longer periods. In this sense, there would be very few customers, and very few lenders willing to take this kind of risk for appreciable Bitcoin sums over an appreciable period. In practice, this kind of thing might more realistically occur post-hyperbitcoinization or closer to it. Carrying on with Carter’s article, Carter quotes from my recent article on [Bitcoin Maximalism](https://bitcoinmagazine.com/culture/why-bitcoin-maximalism-is-critical), speaking of how most Maximalists are simply not interested in non-monetary uses and commenting on the recent failures of lenders in the space. I commented that there’s a case to say that the Maximalists who encouraged self-custody and not putting Bitcoin on high-risk platforms were right. Here's Carter: *"But were they? If their victory condition is 'no credit is ever extended based on a crypto asset ever again,' they guarantee a loss."* So, as mentioned above, the distinction to keep in mind is commodity credit versus circulation credit. I believe that commodity credit could theoretically work under a Bitcoin standard with full-reserve banking. Therefore, my point is *"no credit ever,"* Carter's statement here is overly reductive. Also while we're here, it's worthwhile pointing out that this specific debate about *"free banking"* fractional reserve versus full reserve isn't really a question of Maximalism per se. It's an orthogonal debate as a person could conceivably be a *"free banker"* and Maximalist, or they could be in favor of full reserve and Maximalist. Carter continues: *"The desire for leverage and a lower cost of capital on one hand, and yield on the other, is inherent to free, capitalist enterprise, and that urge will never disappear."* Of course, people *want* leverage. The question is, can it be ethically and sustainably provided? And would it be beneficial to society? Under a fractional-reserve banking system with fiduciary media, sure, it *can* be provided — the challenge and question is more about whether such a thing is ethical or desirable for the overall economy. I say no, it's not. It does not enrich society on the whole, it merely enriches those getting the newly-printed tokens first and bankers servicing those interests. Here's Carter: *"But were they? If their victory condition is 'no credit is ever extended based on a crypto asset ever again,' they guarantee a loss."* So, as mentioned above, the distinction to keep in mind is commodity credit versus circulation credit. I believe that commodity credit could theoretically work under a Bitcoin standard with full-reserve banking. Therefore, my point is *"no credit ever,"* Carter's statement here is overly reductive. Also while we're here, it's worthwhile pointing out that this specific debate about *"free banking"* fractional reserve versus full reserve isn't really a question of Maximalism per se. It's an orthogonal debate as a person could conceivably be a *"free banker"* and Maximalist, or they could be in favor of full reserve and Maximalist. Carter continues: *"The desire for leverage and a lower cost of capital on one hand, and yield on the other, is inherent to free, capitalist enterprise, and that urge will never disappear."* Of course, people *want* leverage. The question is, can it be ethically and sustainably provided? And would it be beneficial to society? Under a fractional-reserve banking system with fiduciary media, sure, it *can* be provided — the challenge and question is more about whether such a thing is ethical or desirable for the overall economy. I say no, it's not. It does not enrich society on the whole; it merely enriches those getting the newly-printed tokens first and bankers servicing those interests. ### WHAT ARE SOME OF THE POTENTIAL RISKS BASED ON HOW THE INDUSTRY DEVELOPS? From my perspective, people will need to learn the difference between Bitcoin, for which they hold the private keys, and mere Bitcoin IOUs. If people blur the line here, or perhaps even equivocate the different IOUs of different providers (say a Celsius Bitcoin IOU with a Voyager Bitcoin IOU), this more easily opens the door to widespread fractionally-reserved coins that effectively go above the 21 million cap. Of course, this risk may not be systemic; it would be localized to those individuals who are overly trusting of other peoples’ IOUs. Nevertheless, it’s worthwhile for Bitcoin HODLers and users to understand this crucial difference. ### DOES THIS MEAN WE SHOULDN’T EVEN USE FIAT CREDIT TODAY? Not necessarily. As my friend Pierre Rochard wrote eight years ago in his prescient article, [*“Speculative Attack*](https://nakamotoinstitute.org/mempool/speculative-attack/)*,”* we may well see individuals leverage up using the fiat system. In this way, they are using the fiat system against itself to stack more sats and perhaps help advance the process of hyperbitcoinization. Now, of course, this carries risks and costs, but for specific individuals or entities who can access cheap credit, such as MicroStrategy, it might well be reasonable. ### WHERE MIGHT THERE BE SOME COMMON GROUND? I believe both sides of the *“free banking”* versus full reserve debate would welcome the development, commercialization, and widespread use of proof-of-reserves techniques. Credit to Carter for being a [vocal proponent of proof-of-reserves technology](https://niccarter.info/proof-of-reserves/). This has been implemented in various places in the Bitcoin and *“crypto”* world, such as at [Kraken](https://www.kraken.com/proof-of-reserves), [Ledn](https://ledn.io/en/proof-of-reserve), and at previous [Bitcoin exchange](https://bitcoinmagazine.com/guides/best-bitcoin-only-exchanges) Coinfloor U.K. (since [purchased by Coincorner](https://blog.coincorner.com/coinfloor-to-migrate-customers-to-coincorner-to-further-british-bitcoin-adoption-31f5cbb22380)). The disagreement, in this case, would be on what the reserve ratio should be, as *“free bankers”* may conceivably be fine with a reserve ratio of 2%. In comparison, full-reserve Bitcoiners want a 100% reserve ratio. Full-reserve Bitcoiners also appreciate the explicit no-rehypothecation approach of lenders such as [Unchained Capital](http://unchained.com/). Because Unchained loans use Bitcoin multi-signature technology, the coins may not be rehypothecated as all three key holders (borrower, unchained, and third-party key agent) can confirm exactly what’s happening to the Bitcoin on-chain. The fiat USD being loaned out for these loans is obviously still a part of the broader USD fractional-reserve banking system. ### IN PRACTICE, WHERE ARE WE GOING WITH DEBT AND EQUITY ANYWAY? Now, you could believe that, in practice, there won’t be much or any commodity credit extended over the longer term. Saifedean Ammous argues a similar point in his book [*“The Fiat Standard*](https://saifedean.com/the-fiat-standard/)*: and discussed this with me on*[ *“SLP296*](https://stephanlivera.com/episode/296/)*.”* Without fractional-reserve lending subsidized by cheap debt, investors may reach a saturation point sooner with their capital. If time preference and interest rates are genuinely very low, investors may not want to take the risk of loaning out Bitcoin via a debt instrument, given that the interest rate offered is very low. Investors may very much prefer to give some bitcoin in exchange for an equity share in a business. So, on this basis, there may legitimately be an argument that very little commodity credit would be extended anyway. We’d see far less debt issued and more equity investment in this world. ### CONCLUSION If you believe in the Bitcoin saying, *“Not your keys, not your coins,”* then you too are in favor of full-reserve Bitcoin. The view implied by those who want to permit *“free”* fractional-reserve banking is one where there are multiple claimants to the same coins or the same resources of society. This difference cannot be squared in my view. It’s also important to understand that there are legitimate arguments as to how and why we ended up in a fractional reserve system that did not result from a free market. Of course, bankers always try to do this because it allows them to profit massively! The *“free-banking”* movement is a special pleading on behalf of inflationary commercial banks. Society would not be less vibrant in a world without fractional reserve banking. If anything, the society we live in today is more sterile and stagnant because of the artificial boom and bust conditions that capitalist investors and entrepreneurs have to deal with. Moving to a Bitcoin full reserve system could, in practice, make society far more prosperous with continued sustainable growth rather than *“lumpy”* artificial booms followed by busts. *Thanks to my friend* [*Pierre Rochard*](https://twitter.com/BitcoinPierre) *for his feedback on this article.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # What Can You Do For Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/what-can-you-do-for-bitcoin/ Bitcoin might seem inevitable, but you can still take an action hand in pushing it forward. --- **Stephan Livera** · August 1, 2022 · Updated June 25, 2024 *This article from August 30th, 2022 by Stephan Livera was originally published on Bitcoin Magazine. It is an article adaptation of his speech for* [*BitBlockBoom*](http://bitblockboom.com/) *2022 in Austin, Texas.* We’re living through an era of immense change, and the money is broken. But on the bright side, we have this monetary technology, Bitcoin. On the downside, many people don’t understand the point of Bitcoin because they’re trapped in fiat mindsets. Consider this short GIF above. Are Bitcoiners like this man uselessly *“pushing the train?”* Is it all just happening regardless of what we do? ### IS BITCOIN INEVITABLE? Sometimes, the way people talk about it on Bitcoin Twitter is such that *“Bitcoin is inevitable,”* and this raises an interesting question. Is it? In what sense? Could we all just sit back and do nothing? Not exactly. Bitcoin still needs things to sustain itself as a system: **code review and maintenance, miners securing the system, and users and HODLers giving it value.** Perhaps in some aggregate sense, Bitcoin is not *quite inevitable*, but it is extremely likely to win based on certain qualities, e.g., scarcity, neutrality, openness, etc. But whether Bitcoin is inevitable or not, it relies on real people who do the things that sustain the system. ### SO, WHAT CAN YOU DO? You can drive forward adoption or technological advancement in and around Bitcoin. You don’t have to be a developer to contribute, either. You can: - Test, review, and provide feedback on Bitcoin apps. Many have a community of developers and users in Telegram chats or Mattermost servers. - Organize or contribute to your local Bitcoin meetup - Invest in Bitcoin companies or work in them - Do foreign language translations of influential Bitcoin content - Fund Bitcoin development and review - Get published in non-Bitcoin media to spread the word outside of Bitcoin circles ### NORMALIZING BITCOIN Don’t underestimate the power of normalizing Bitcoin use among your friends. As a quick example, if you are out at dinner with friends/family and one person picks up the bill paying in fiat, you could offer to set them up on [Muun](http://muun.com/), [Breez](http://breez.technology/), or [Phoenix wallet](https://phoenix.acinq.co/) and repay them over Lightning. There’s a chance that, over time, this accumulation of sats helps trigger *“Bitcoin greed”* in that person. In the best case, you may create a new Bitcoin HODLer/stacker. Or do you have friends and family overseas to whom you send money? Don’t be afraid to use Bitcoin to do it, and let them sell that Bitcoin for cash in their local markets if they need it. There’s a good chance they can sell bitcoin for a slight premium in their local markets. Or they could use voucher sites such as Bitrefill.com to indirectly spend Bitcoins on what they need. Another idea is to find a local cafe or bar where you regularly host your Bitcoin meetup and offer to take Bitcoin payments. If you’re bringing it revenue in terms of paying customers, it will be more inclined to give you the time of day. Remember that Breez has a built-in POS mode that shopkeepers can easily install and use as an app on their phone or tablet. Or, of course, for larger setups, they could use the likes of [OpenNode](http://opennode.com/) or [IBEX](https://www.ibexmercado.com/) Lightning pay solutions. For non-custodial setups, if they are tech-savvy, you could set up [BTCPay Server](http://btcpayserver.org/). ### BEING UPFRONT ABOUT WHERE WE ARE We are just so, so early in terms of Bitcoin use. I understand that I sound like a broken record in saying this, but it really is true regarding how many users there are globally. Especially if we’re talking about non-custodial use, the[ count of UTXOs](https://www.blockchain.com/charts/utxo-count) as I write this in August 2022 is somewhere around 85 million. This is effectively an upper bound of non-custodial Bitcoin users. Of course, there will be some custodial users whose IOU-coins are represented by some platform. There will be users who have many UTXOs, so the real count of unique Bitcoin on-chain users will be far less than 85 million in a world of almost 8 billion people. ![](https://www.datocms-assets.com/56652/1708467182-total.png?auto=format) Blockchain.com For this reason, it can be difficult to get traction in Bitcoin payments, as very few people globally even have Bitcoin to make payments with. But this is also an opportunity to grow the scene and build the peer-to-peer economy of Bitcoin users. ### TECHNOLOGY ADOPTION AND PUBLIC ATTITUDES Coming back to that idea of Bitcoin’s inevitability, public attitudes to Bitcoin do matter for Bitcoiners. While Bitcoin the project may live on, individual people may suffer if they are singled out by the government. Additionally, the many people suffering from high inflation or financial censorship today would continue to suffer if Bitcoin were not reasonably available. One interesting historical parallel may be in the way that ideas changed history, enabling the Industrial Revolution. In her *“*[*Bourgeois Equality*](https://www.amazon.com/Bourgeois-Equality-Capital-Institutions-Enriched/dp/022633399X#:~:text=Stunningly%20so%2C%20the%20economist%20and,Japan%20and%20Sweden%20and%20Botswana.)*”* series, Deirdre McCloskey argues that it was ideas — and liberal notions of equality and dignity — that did this. Cultural attitudes toward merchants and commerce shifted, which enabled a massive rise in human prosperity and living standards over the past few hundred years. Big ideas can really move the needle, and the Bitcoin community’s idea, digital sound money, is one of the biggest. Or consider another analogy — if nuclear power technology is criminalized, then humanity is less able to gain the benefit of nuclear power. And remember that nuclear power also requires an ecosystem of engineering talent to sustain it. Likewise, Bitcoin requires humans to sustain it and advance it. So, ideas and culture really do change the world, and you can contribute to Bitcoin without necessarily being a developer. So, let us all go forth and push the train! ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # You Can Believe the Maximalists: Bitcoin is Seperate From Crypto URL: https://www.swanbitcoin.com/analysis/you-can-believe-the-maximalists-bitcoin-is-seperate-from-crypto/ A recent column by the Financial Times’ Jemima Kelly demonstrated some misunderstandings about Bitcoin’s decentralization and singularity. --- **Stephan Livera** · September 22, 2022 · Updated June 25, 2024 *This article from September 22nd, 2022 by Stephan Livera was originally published on Bitcoin Magazine.* Financial Times Columnist [Jemima Kelly](https://twitter.com/jemimajoanna) published an article titled: *“*[*Don’t Believe The ‘Maximalists: Bitcoin Can’t Be Separated From Crypto*](https://www.ft.com/content/8143dd85-ed05-4219-916e-922b802fe936)*”* earlier today. I’d like to share some reactions from a Bitcoiner perspective. The quoted text below is all from Kelly’s article. *“If you have ever dared to direct criticism at the world of crypto, the chances are you will have received some charming rebukes. You are likely to have been told to ‘have fun staying poor’...”* For what it’s worth, I believe the *“have fun staying poor”* meme is mostly meant in jest and not a serious statement of ill intent towards another person. Why? Because we popularly saw [Bitcoiners telling Elon Musk](https://twitter.com/publordhodl/status/1347254916721610752?s=20), the richest man in the world at the time, to *“have fun staying poor”* as he backed away from his public support of Bitcoin. Clearly, this is not meant as a serious rebuke. *“But there is another slightly more sophisticated flavour of counter-criticism finding its way into my inbox with increasing regularity these days. It usually starts with something designed to appease — some kind of agreement that crypto is immoral, a scam, or some version of a Ponzi scheme. But then it quickly changes course to explain that none of this applies to Bitcoin.”* Here is where my principal disagreement with this article lies. I and many other Bitcoiners do believe that we *should* draw a line of distinction between Bitcoin and *“crypto.”* Bitcoin is unique in many ways: It has no pre-mine or *“dev. tax”* to enrich the founder or founding team. It has a culture that actually prioritizes decentralizing the ecosystem. It enables cheap [blockchain](https://bitcoinmagazine.com/guides/what-is-blockchain) validation and participation (i.e., it’s relatively easy to run a fully validating Bitcoin node) while also maintaining a robust, open, scalable, trust-minimized system. It strongly prefers soft forking and retaining backward and forward compatibility for those running older Bitcoin node software. It is continually growing in acceptance and mindshare around the world. Of course, this does wax and wane with bull and bear markets, but zoomed out, Bitcoin liquidity and acceptance are only going one way: up. Once you genuinely explore these points, you will find that *only* Bitcoin meets these criteria. Many altcoins regularly hard fork, which indicates that they have a certain level of centralization in their development and community. Other altcoins do things that simply would not be scalable if they were scaled up to the level of Bitcoin and the number of Bitcoin transactions. Other altcoins do things that are more permissioned; thus, they are not an *open* system like Bitcoin. You might even argue that a specific altcoin does *one* specific thing better than Bitcoin does, but are any of them meaningfully making improvements on the whole? I don’t think so, and that’s why Bitcoin is rightly in a category of its own. There is also the question of whether Bitcoin *should* have these supposed other features or things, as this may also cause negative trade-offs in one of the other worthwhile qualities of the system (robustness, decentralization, scalability, verifiability, etc.). Kelly seems to believe that Bitcoin *“arguments don’t stand up,”* as she takes issue with any financial incentive whatsoever. For instance: *“First, it doesn’t matter what bitcoin’s origins were — the people who push it now have the same financial incentives as those pushing any other crypto token.”* How is this a justified attack on Bitcoin promotion? Imagine that you are an investor in a company, and you openly promoted that company without hiding the fact that you are an investor. Is there an issue with this? Now, imagine that there are fraudulent competitors that purport to be *“in the same industry.”* You advocate for people to use the product of your non-fraudulent company instead. Where is the ethical issue? How would this “disprove” you? It simply doesn’t unless you’re clutching at straws. Of course, Bitcoin is not a company. But in any case, the promise of Bitcoin is not that *“there were no people who got in cheaper than you,”* which is an absurd and impossible standard to live up to. The promise of Bitcoin is an open, decentralized, scarce, robust, programmable monetary system with no rulers. The product does what it proverbially says on the tin, and Kelly’s critique falls flat. *“Second, Bitcoin is not in fact decentralized — not only do miners group together to form ‘mining pools’ but wealth is also hugely concentrated.”*  Kelly is not correctly summarizing the relationship between miners and pools. Miners are distinct entities from pools and can quickly re-point their hash rate to a different pool. And so, while there may be a comparatively smaller pool of pools, individual miners can and do switch between them, as it is a brutally competitive market. See this screenshot as of September 23, 2022, from the [Braiins Insights Dashboard](http://insights.braiins.com/), which shows how pools are headquartered in different countries around the world: [![](https://www.datocms-assets.com/56652/1708469448-bitcoin-mining-pool.webp?auto=format)](https://insights.braiins.com/en/) Braiins Insights Also topical is the recent Poolin news, which saw the company suspend withdrawals. Given this, many miners pointed their hash rate *away* from Poolin. Notice how Poolin’s global share of the Bitcoin mining hash rate has gone from 12% previously down to around 4% at the time of writing.  [Post on X](https://twitter.com/glassnode/status/1569893103938732033?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1569893103938732033%7Ctwgr%5Eab53e5afeb23c2014828b85c7f1e394333e58baf%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fculture%2Fbitcoin-separate-from-crypto) *“On Tuesday, MicroStrategy announced that it had*[ *bought another 301 Bitcoins*](https://www.bloomberg.com/news/articles/2022-09-20/microstrategy-says-it-purchased-6-million-in-bitcoin)*, meaning this company alone now holds almost 0.7 per cent of the entire supply.”* Kelly claims to *“steelman the argument”* in this article. Still, unfortunately, she does a poor job of steelmanning on the question of Bitcoin ownership. If she grasped the libertarian and cypherpunk ethos of Bitcoin, she would understand that the point is to create a monetary system *without coercing people into it*. So, of course, given this, some people will get it before others do. Those who get it will buy, earn, or mine coins before others do. The fact that one company owns 0.7% of the circulating supply of Bitcoin is not an issue. So, Bitcoin remains far more decentralized than the *“crypto”* coins. *“Third, a ‘first-mover advantage’ does not always last.”*  That’s true in a general business context; however, to understand why Bitcoin is distinct, we have to understand why and how far it beats alternatives, whether fiat money, gold, or altcoins. Generally, in order to displace another product, you have to come up with something ten times better. But with Bitcoin, it’s doubtful that ten times better is even *possible*. Here, I’ll quote my friend Gigi in [his recent Twitter thread](https://twitter.com/dergigi/status/1469820965551063044): [Post on X](https://twitter.com/dergigi/status/1469820962996727813?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1469820965551063044%7Ctwgr%5Eab53e5afeb23c2014828b85c7f1e394333e58baf%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fculture%2Fbitcoin-separate-from-crypto) The design space of money is limited, and a ten-fold improvement in the monetary properties of Bitcoin is simply not possible. You can marginally improve one thing, but only by dramatically worsening trade-offs in other ways (verifiability, scalability, robustness, accessibility). Kelly then writes again about the incentive of Maximalists: *“The real reason Bitcoin maximalists want to separate Bitcoin from the rest of crypto is to create the illusion of scarcity in a world where there is none.”* It’s fair to say that Bitcoin Maximalists have an incentive and want to distinguish Bitcoin from *“crypto.”* But the real question is: Are they right? Yes, they are. Bitcoin is rightly distinguished from altcoins, but it just takes a lot of research and reading to understand why. Unfortunately, Kelly has not done the research required and presents only a shallow surface-level misunderstanding. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # With Fiat Currencies Crumbling, It’s Time to Denominate in Bitcoin Terms URL: https://www.swanbitcoin.com/economics/with-fiat-currencies-crumbling-it-s-time-to-denominate-in-bitcoin-terms/ As fiat currencies crash against the USD, it makes sense to start using Bitcoin denominations, even for day-to-day expenses. --- **Stephan Livera** · September 28, 2022 · Updated June 25, 2024 *This article from September 28th, 2022 by Stephan Livera was originally published on Bitcoin Magazine and later updated on July 30th, 2023.* Many fiat currencies are [struggling to retain purchasing power in USD terms](https://cointelegraph.com/news/bitcoin-british-pound-trading-volume-soars-1150-as-uk-s-currency-risks-dollar-parity). The macro conversation on finance Twitter is now turning to how the overall system is breaking and the fact that you [can’t taper a Ponzi](https://twitter.com/search?q=taper%20a%20ponzi&src=typed_query). Now is a great time to press the advantage that Bitcoin brings: not being a [fiat currency](https://bitcoinmagazine.com/guides/fiat-money) that can be printed on demand. It’s time to denominate in Bitcoin terms. ### WHAT’S GOING ON IN THE WORLD OF FIAT CURRENCY MARKETS? As you may be aware, many [fiat currencies](https://bitcoinmagazine.com/guides/fiat-money) are crashing against the USD. This doesn’t necessarily mean the USD is *“going up”* either; it is also losing purchasing power, just at a reduced pace. Year to Date (YTD) for large fiat currencies vs USD: - [GBP](https://finance.yahoo.com/quote/GBPUSD=X/history/) is down from $1.34 to $1.057 — a drop of 21% - [JPY](https://finance.yahoo.com/quote/JPYUSD=X/history/) is down from 0.0087 to 0.0069 — a drop of 20% - [EUR](https://finance.yahoo.com/quote/EURUSD%3DX/history/) is down from $1.13 to $0.97 — a drop of 15% The Bank of England is [now starting a new wave of bond purchases](https://www.cnbc.com/2022/09/28/bank-of-england-delays-bond-sales-launches-temporary-purchase-program.html); in other words, the debasement continues. GBP holders and savers will continue to have their savings destroyed by the money printer over time. They are being sacrificed on the altar of *“financial stability.”* With fiat currencies devaluing this rapidly, it’s not such a crazy idea that we should value things directly in sats or BTC terms. While nocoiners love to hate Bitcoin for not being at all-time high prices, the reality is that long-term Bitcoin users have dramatically profited, both in purchasing power and in terms of freedom. The loss of confidence in fiat currencies is driving a fundamental shift in thinking. If our precoiner friends were scared of Bitcoin because of volatility before, the difference in volatility between Bitcoin and fiat coins is reduced, so it makes sense to start using Bitcoin denominations. ### WHAT DOES IT MEAN TO DENOMINATE IN BITCOIN TERMS? It means to evaluate financial costs and benefits in Bitcoin or satoshi terms. This includes financially valuing our net worth in Bitcoin/sat terms. This is really what matters over the longer term for Bitcoin Maximalists, after all. If you believe everything will be priced in sats someday, why not start now? I have personally denominated my net worth in Bitcoin terms for a while now, but I’ve struggled with the next part: day-to-day expenses. For me, this is mainly because of mental arithmetic. So, my next step is to focus more on evaluating the Bitcoin cost of revenue and expenditure of day-to-day items. If we are serious about Bitcoin as better money, we should show it. ### PRACTICAL TIPS ON BITCOIN DENOMINATION Start by keeping your finger on the pulse in terms of what the *“sats per dollar”* price is. You can do this using Coinkite’s BLOCKCLOCK (aka, [Moscow Time](https://thebitcoinmanual.com/btc-culture/glossary/moscow-time/)) or perhaps on sites like [Bitbo.io](http://bitbo.io/) that list it. You can also use converter tools like [bitkoin.io](http://bitkoin.io/) or [preev.com](http://preev.com/). Also, [pricedinbitcoin21.com](https://www.pricedinbitcoin21.com/) is a useful site showing all kinds of Bitcoin-denominated prices. [![](https://www.datocms-assets.com/56652/1708471005-predict-21m-btc.webp?auto=format)](https://www.pricedinbitcoin21.com/landing) pricedinbitcoin21.com, as of August 28, 2022 On mental arithmetic, one tip is to start with sats per dollar. So, for example, if 1 BTC = $19,067, then the sats per dollar is about 5,200, so $10 is about 52,000 sats, $100 is about 520,000 sats, and $1,000 is about 5.2 million sats. Another hurdle is having to continually reset prices if we’re *quoting* real-world products/services in Bitcoin terms. But so be it; this is our proverbial cross to bear, and it benefits the user in the longer term to operate this way. Of course, there may come a point where the Bitcoin price for something set a few years/cycles ago is no longer appropriate, but this just requires readjustment. And being fair, this is something that all fiat merchants have to do *anyway*. ### THIS ISN’T NEW; WE’RE JUST BRINGING IT BACK In the earlier days of Bitcoin, it was more common to speak in terms of the BTC values for things. Perhaps it became more difficult due to the price rise and dealing with small fractions of a Bitcoin in our heads. Remember, though, that early services and games ranging from [SealsWithClubs](https://www.thepokerbank.com/rooms/sealswithclubs/), to [MPOE](https://en.bitcoin.it/wiki/MPEx), to [SatoshiDice](https://satoshidice.com/) were Bitcoin-denominated! Some early exchanges on Bitcoin Talk forums were bitcoin denominated. So really, this is just bringing back what Bitcoiners *used* to do. Of course, there are some in the Bitcoin space who are already Bitcoin-denominated, even in terms of the service/product they sell. Notably, the CoinJoin services are Bitcoin-denominated (e.g., see the [Whirlpool fee calculator here](https://www.whirlpoolfees.com/)), and various individuals in the space are operating without fiat bank accounts, so they’re obviously doing better at being Bitcoin-denominated. We should also note that the Lightning Network is helping here also. Various Lightning services, tipping, and wallets are sats-denominated. For example, [Alby](https://getalby.com/) and the [Podcasting 2.0](https://bitcoinmagazine.com/culture/podcasting-2-0-will-bring-bitcoin-to-the-masses) apps are sat denominated. People running routing nodes on the Lightning Network set their base fees and variable fees (ppm, or parts per million) in satoshi terms, which we can see by browsing Lightning nodes on explorers such as [mempool.space](https://mempool.space/). ### ON THE QUESTION OF AMOUNTS: BITCOIN OR SATS? A long-time topic in Bitcoiner circles is the point of *unit bias*, which is believed to be behind some shitcoins pumping. The nocoiner coming in sees a very low price per unit and buys the shitcoin thinking, *“Hey, it’s coming off a low base so there’s more upside.”* So the rationale is that if we all spoke in terms of sats only (and not in BTC terms), Bitcoin could also leverage this effect. But this doesn’t come for free; there is a trade-off. There may well be high-net-worth investors (HNWI) who get into Bitcoin, and because they want to buy *“a whole coin,”* they buy more than they otherwise would have. We could even argue that the amount HNWIs buy is higher; thus, the impact HNWIs have is higher. And by now, most know the oft-quoted statistic about how *“even if every millionaire on earth wanted a whole Bitcoin, they couldn’t get it.”* Remember that if you divided the number of sats by the number of people on earth, that number comes out to around 226,000 sats (see [satsperperson](https://satoshisperperson.com/)). [![](https://www.datocms-assets.com/56652/1708470922-how-many.webp?auto=format)](https://satoshisperperson.com/) satoshisperperson.com, as of September 28, 2022 But perhaps this unit bias question is neither here nor there. As long as there is an easy option or toggle between BTC terms and sat terms in our apps and services, it probably doesn't matter. In practice, I think people will just refer to smaller value things in sat terms and larger value items in BTC terms. ### YOU CAN'T FULLY ESCAPE DOING FIAT CONVERSIONS I understand one critique here might be that many of our day-to-day expenditures are still fiat-denominated and that we can't fully escape it (yet). Nocoiners may also critique us for valuing Bitcoin in USD terms, but the process has to *start somewhere*. Starting somewhere means we should try to think in Bitcoin or sat terms *first*. So, if we're talking about the price of things, list the Bitcoin-terms price *first*. Or perhaps more provocatively, list the Bitcoin price *only* and let the other person do a calculation. Let's disrupt the network effect of fiat currency and not let our lives be ruled by fiat currencies. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Bitcoiners Must Fight the FATF and it’s AML Regime URL: https://www.swanbitcoin.com/politics/bitcoiners-must-fight-the-fatf-and-it-s-aml-regime/ The Financial Action Task Force and its anti-money laundering policies are antithetical to Bitcoin and an attack on human rights everywhere. --- **Stephan Livera** · October 11, 2022 · Updated June 25, 2024 *This article from October 11th, 2022 by Stephan Livera was originally published on Bitcoin Magazine* Financial surveillance is all around us. Every time you want to sign up with a bank, you have to show identifying documentation, be screened by their automated systems, and get peppered with questions about your job, lifestyle, and source of wealth. Often, when you go to withdraw, spend, or transfer *what you thought was your own money*, you are subject to even more questions. It only seems to be getting worse and worse as time goes by. Why are we here? It has to do with various organizations that push this nonsense forward. And one of the key organizations here is FATF, [the Financial Action Task Force](https://www.fatf-gafi.org/). FATF is a natural enemy of those who favor financial freedom. There is a regulatory burden brought by FATF and *“financial crime”* regulations such as anti-money laundering (AML) requirements and sanctions. These regulations are introduced and driven because they help stop money laundering or terrorist financing worldwide. However, a serious analysis of their effectiveness shows that less than 1% of illicit financing is detected (see my [chat with Ron Pol](https://stephanlivera.com/episode/318/) and his research [here](https://www.researchgate.net/publication/339486326_Anti-money_laundering_The_world's_least_effective_policy_experiment_Together_we_can_fix_it)). And yet, the world is paying a huge cost in compliance and lost civil freedoms. From a property rights standpoint, businesses and banks should be able to run their businesses how they see fit rather than constantly being in a position where they must *“ask permission”* from regulators or licensing agencies to continue operating. If there’s a crime being committed, let law enforcement go and get a warrant! Regulators shouldn’t just get to automatically violate the privacy of everyday citizens’ financial details. ### SO, WHO IS FATF ANYWAY? Well, it’s not clear exactly what kind of entity FATF is. It [claims to be](https://www.fatf-gafi.org/about/) an independent inter-governmental body, but what is its registered entity? That [appears to be](https://www.fatf-gafi.org/pages/organisationforeconomiccooperationanddevelopmentoecd.html) a project operated out of the Organisation For Economic Cooperation And Development (OECD). It’s ironic in some ways that FATF pushes massive regulation and scrutiny onto everyday normal people. Still, it seems not to be very accountable itself. But the short version is that it bills itself as a global money-laundering and terrorist-financing watchdog. The FATF Secretariat is funded by OECD nations to the tune of about 619 BTC (or, in fiat terms, about $11 million) per year. It has about 65 staff members, per its [2021 Annual Report](https://www.fatf-gafi.org/media/fatf/documents/brochuresannualreports/Annual-Report-2020-2021.pdf). But the impact it has is great because it is the one pushing out [FATF recommendations](https://www.fatf-gafi.org/publications/fatfrecommendations/?hf=10&b=0&s=desc(fatf_releasedate)) and threatening countries with being placed on [FATF gray or black lists](https://complyadvantage.com/insights/fatf-blacklists-greylists/). ### BUT IT’S NOT JUST FATF... Now, it’s not just FATF. There are all kinds of AML and *“financial crimes”* working groups, regulators, and other entities in individual nations worldwide. So, they seem to all collaborate on how our financial lives must all be regulated and micromanaged. The gist seems to be that [they come back with *“FATF recommendations”*](https://bitcoinmagazine.com/business/fatf-recommends-heightened-restrictions-on-virtual-assets-and-service-providers) about stopping money laundering, and local countries and regulators must implement these rules. Few people in any individual country or state care enough to kick up a stink and stop the financial regulation overreach and human rights crime. Usually, there are at least a few politicians in each country or political body who want to pretend to be anti-financial-crimes, which might also explain some of the recent *“unhosted wallets”* garbage coming out of the EU (see my [chat with Gigi](http://stephanlivera.com/379) on why this corruption of language is harmful to Bitcoin and to all of us.) ### WHAT’S THE NET-NET OF ALL OF THIS? So, the result is that more and more financial control flows into individual banks, businesses, and entities that are forced to comply. The regulatory and bureaucratic state deputizes businesses and individuals to perform unpaid labor. And anyone who disagrees gets accused of being a shill for criminals and money launderers. Do they not appreciate that there might be people who want to defend private property and freedom on principle? [![](https://www.datocms-assets.com/56652/1708472028-control-btc.webp?auto=format)](https://www.reddit.com/r/Bitcoin/comments/7r3j87/the_battle_continues/) Reddit This is why we are all subject to so much financial surveillance and intrusive questioning about ourselves. In some ways, that poor bank teller or low-level bank staff member is not wholly to blame! The real culprit is at a much higher level. These intergovernmental-funded entities continually spin narratives about how effective their regulations are. Now, of course, Bitcoin is a big part of the answer to making these wanton human rights violators obsolete. But even here, there are various Bitcoin companies and exchanges [experiencing issues getting access to fiat accounts](https://www.forbes.com/sites/kashmirhill/2013/11/15/bitcoin-companies-and-entrepreneurs-cant-get-bank-accounts/?sh=2fc05fe8260d) to enable the on-ramps they provide for users. ### WHAT ABOUT BONA FIDE CRIMINALS? Catch them for the *actual* crimes they do, whether that’s theft or murder, etc. We also have to accept that freedom has a cost. Criminals also use roads. Are we gonna have know-your-customer (KYC) requirements every time anyone uses a road? And criminals could also install curtains in their homes. Can you imagine the insanity if we came up with a Curtain Regulatory Authority that mandated that before any curtain installer could come to install curtains, they have to conduct identity checks to confirm that you’re not criminal hiding behind curtains? And remember, it’s not like the current justice regime is doing some fantastic job, given all of the financial surveillance in the world today. The [vast majority of crimes are *still* committed with fiat currency](https://en.wikipedia.org/wiki/Panama_Papers). The answer is not *“more control and bureaucracy.”* It’s to accept that the current approach is simply not effective. ### THE NORMALIZATION OF DATA COLLECTION However, this normalization of private data collection goes beyond merely AML and *“financial crime”* laws. We’re seeing real impacts, with quite recent examples: - [Celsius](https://fortune.com/crypto/2022/10/07/did-celsius-dox-its-customer-base/): The names and transaction histories of every user made public in bankruptcy proceedings - [Optus](https://www.bbc.com/news/world-australia-63056838): 10 million customers’ data revealed in a breach, with 2.8 million having their passport or driving license number leaked. So, in the end, creating this culture of private data collection has resulted in *more* innocent people being put at risk. Where does this factor into the calculation of overeager bureaucrats and politicians who play-act like their surveillance laws are helping? ### WHERE DOES PAYPAL FIT IN WITH THIS? PayPal recently [came under fire](https://www.washingtonpost.com/politics/2022/10/10/paypal-faces-backlash-after-floating-fines-sharing-misinformation/) for its change in policy relating to *“misinformation”* and docking customers $2,500. Given the social media outrage this time, it had to walk it back. But clearly, this is just a temporary reprieve from further financial surveillance on us all. [Post on X](https://twitter.com/Excellion/status/1579572203116711938?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1579572203116711938%7Ctwgr%5Edc6a93abbd4cbdacf66aa01e8c0bf7973e2edf40%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fculture%2Ffatf-and-aml-is-a-war-against-bitcoin) As Samson Mow of JAN3 tweeted, we can either use Bitcoin or be forced to research all political ideologies of executives at major fintech companies. Your self-sovereign Bitcoin wallet will not check your political views before broadcasting your Bitcoin transaction. Your self-sovereign Bitcoin wallet will not ask you about your source of wealth before permitting you to deposit funds and make use of it. ATF and the AML regime have created and grown a culture where statists believe it is acceptable to peer into other people’s finances and control them, so long as their ideology differs from the people in power at the time. ### THIS IS ABOUT HUMAN RIGHTS It’s a question of human rights. To the extent that its FATF recommendations encourage local regulators, bureaucrats, and politicians to continue controlling private citizens’ and businesses’ money, it is impinging on their private property rights. FATF and the associated AML regime are violating human rights around the world, and we’re all poorer for it. Bitcoiners must be clear about the problem and start speaking up and taking action on it. That action can include coding and building self-sovereign FOSS alternatives to the financial panopticon. It can also take the form of suing government entities for over-regulating and encroaching on innocent people’s lives. It could even involve lobbying local politicians to push back on FATF and financial surveillance. Defunding FATF would also be a great idea. Why must taxpayers worldwide pay for this ineffective and economically destructive regulation? As a final takeaway, though, consider that while there are more obvious cases of financial exclusion (which FATF brushes away as *“*[*unintended consequences*](https://www.fatf-gafi.org/publications/financialinclusionandnpoissues/documents/unintended-consequences-project.html)*”)*, the case must be made on the principle of the matter. We want to live in a free market society with private property rights and not constantly wonder what we can do with our own money. The world does not need more FATF recommendations and reports. It needs defense of private property rights *in principle.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Debunking Bitcoin Misconceptions: It’s Not Stored Time, Energy or Violence URL: https://www.swanbitcoin.com/analysis/debunking-bitcoin-misconceptions-it-s-not-stored-time-energy-or-violence/ Metaphors and analogies are critical for helping newbies understand Bitcoin, but they are dangerous when taken too far. --- **Stephan Livera** · December 29, 2022 · Updated June 25, 2024 *This article from December 28th, 2022 by Stephan Livera was originally published on Bitcoin Magazine.* There are metaphors and analogies for Bitcoin that you may have heard on podcasts or read from various articles or books — and this is not meant to criticize the entire practice of using metaphors or analogies to pique people’s interest in Bitcoin — but having a bad framework for understanding Bitcoin can cause errors in how we reason about it from there. If people take the metaphors too literally, they inevitably make mistakes in their reasoning about Bitcoin. First, let’s consider this quotation on whether all metaphors are wrong: *“For it would be an absurd undertaking to banish from the language of economic theory every manner of speaking that is not literally correct; it would be sheer pedantry to proscribe every figure of speech, particularly since we could not say the hundredth part of what we have to say if we refused ever to take recourse to a metaphor.* ***One requirement is essential, that economic theory avoid the error of confusing a practical habit, indulged in for the sake of expediency, with scientific truth****.”*  – [Eugen von Bohm-Bawerk](https://mises.org/wire/objectivist-law-prof-mossoff-copyright-or-misuse-labor-value-and-creation-metaphors) So, clearly, not all analogies are harmful. But the metaphor can’t be confused with the real scientific truth when striving for accuracy. ### ‘BITCOIN IS STORED TIME’ The popular notion that Bitcoin can *“store our time”* is an overly loose and imprecise metaphor. It typically comes up when Bitcoiners talk about the injustice of fiat currency (this part is correct). Still, it goes awry when the analogy is stretched too far into suggesting that we should *“store our time”* in Bitcoin instead of fiat currency. The *“*[*store of value*](https://bitcoinmagazine.com/guides/store-of-value)*”* concept can apply to Bitcoin if we consider longer time frames, but it’s not storing *time*. As the saying goes, time waits for no man. We speak in loose terms such as economizing time or *“saving time,”* but really, time itself is not what we economize; it’s *how we spend our time*. The preference is in the *doing*. Or, as my podcast guest [Conza](http://stephanlivera.com/443) recounted from a conversation with [Konrad Graf](https://twitter.com/KonradSGraf), *“Go ahead, try not to spend some time and save it for later instead.”* Even when equivocating bitcoin as purchasing power, which may be the *spirit* of the analogy, it is important to remember that there are no guarantees here. Bitcoin’s purchasing power has decreased over selected time frames, which is where thinking of Bitcoin as stored time can lead a person astray if taken too literally. Now, a shout out to my friend Gigi, who has written on the concept of [Bitcoin as building out an arrow of time](https://dergigi.com/2021/01/14/bitcoin-is-time/). This concept does make sense, and it helps to explain why Bitcoin is designed the way it is — by keeping time using blocks instead of seconds and not relying on a centralized timekeeper. This is distinct from the incorrect metaphor of *“Bitcoin as storing your time.”* So, a more accurate framing would be that Bitcoin *keeps* time (using blocks, not seconds), but it does not store your time. ### BITCOIN AS ENERGY/BATTERY Some people speak of Bitcoin as digital energy or as though it is a battery. But remember, while Bitcoin miners use energy, Bitcoin still does not allow anyone to store or transport energy. There is no central counter to which we can take our Bitcoin and redeem it for a set amount of energy. Yes, energy could be [priced and sold for Bitcoin](http://stephanlivera.com/431), but that’s not the same thing. The energy price will fluctuate, and Bitcoin will not even metaphorically store the same amount of energy over time. What error can this lead to? It can mislead people about where the value is coming from. This metaphor leads people toward a kind of *cost* theory of value, effectively putting the horse before the cart. Instead, we should reason from the [subjective theory of value](https://wiki.mises.org/wiki/Subjective_theory_of_value): *“The value of a good is not determined by any inherent property of the good, nor by the amount of labor required to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of their desired ends.”*  A related cousin of this is the notion that Bitcoin is *“backed by”* energy. Typically, this comes up when a nocoiner says, *“But Bitcoin isn’t backed by anything.”* So, in some cases, a well-intentioned but wrong Bitcoiner may say, *“No, Bitcoin is backed by energy!”* But this is wrong. Generally, when something is *“backed by”* something else, it implies that it somehow has the support of some other entity, like a government. Historically, people say the U.S. dollar was *“backed by”* gold, and people could historically redeem notes for gold, but no such thing exists with Bitcoin. So, perhaps a better question to ask is, *“What’s gold backed by?”* Only then are we getting to the truth of the matter: it was all subjective valuation all along. Beauty is in the eye of the beholder. ### BITCOIN AS VIOLENCE OR A *‘WEAPON’* Some people want to frame Bitcoin as a kind of *“digital violence”* or, more recently, frame it as a weapon and part of a *“soft war protocol.”* But this is a gross misrepresentation of what Bitcoin is. Bitcoin is more like cryptographic messages being passed around and validated on a network. Surely that is closer to *“speech”* than a *“weapon.”* Or, more accurately, Bitcoin can be considered a rivalrous digital commodity (the first of its kind) operating on an open-source monetary network. If the pen is mightier than the sword, would it be appropriate to call a pen a weapon? Not really. Also, this whole line of argument clearly blurs the line between what’s voluntary and what is initiating aggression (which is the wrong part). How is running a node, adopting Bitcoin as a rivalrous digital commodity, and participating in the network a form of *“weaponry?"* This is just gross mischaracterization. Words mean things. Some analogies and metaphors used about *"Bitcoin as soft war protocol"* relate to miners competing to secure the *"chain of custody."* But do they? Or is it really more like Bitcoin nodes are what secure Bitcoin? Miners can't make invalid transactions appear valid to those who verify transactions with their own Bitcoin node. So, isn't it more relevant to think of it like *nodes* securing Bitcoin? Miners' jobs are important, but they are more related to [*the finality* of transactions](https://stephanlivera.com/episode/442/), not security. ### SO, WHAT IS THE REAL TRUTH THEN? So, as mentioned earlier, economically speaking, bitcoin is more accurately characterized as a rivalrous digital commodity. Bitcoin *is* the commodity itself — it's not a claim on something; it is the commodity itself. When people ask what it is backed by, this indicates they haven't quite grasped what it is. If an analogy helps a new person get into Bitcoin and start going down the rabbit hole, that's great! But as that person advances their knowledge about Bitcoin, additional precision about what Bitcoin is will help us all. *Thanks to my friend* [*Conza*](https://twitter.com/Conza) *for inspiring this article and providing feedback.* ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Wall Street Bitcoin: What it Means For Bitcoin and You URL: https://www.swanbitcoin.com/investing/wall-street-bitcoin-what-it-means-for-bitcoin-and-you/ With the successful launch of 10 Bitcoin ETFs, Wall Street has come into Bitcoin in a big way, and it will only get bigger. Is this good or bad for Bitcoin? Like many things in life, the answer is nuanced and uncertain. --- **Terrence Yang** · March 6, 2024 · Updated June 25, 2024 ### Like It Or Not, Wall Street Is Bitcoin's Increasingly Close "Frenemy" With the successful launch of ten Bitcoin ETFs, Wall Street has come into Bitcoin in a big way, and it will only get bigger. Is this good or bad for Bitcoin? Like many things in life, the answer is nuanced and uncertain. That said, I'd argue that Wall Street coming into Bitcoin has two significant impacts. The first is a net negative for the long-term financial freedom Bitcoin offers. The second is quite positive in the shorter-term for the price of Bitcoin going up, along with reduced volatility in its price. I call this: ##### *Wall Street Bitcoin* ### What is Wall Street Bitcoin? When I say "Wall Street Bitcoin," I mean everything on Wall Street directly affecting Bitcoin. The current prominent example is the U.S. spot Bitcoin ETFs. Trading volumes have exploded in the first few weeks. And net inflows are promising and significant despite the conversion of GBTC from a closed trust to an ETF. This led to about $1 billion in selling pressure from the FTX bankruptcy estate and several billion more dollars from other GBTC holders, who finally were able to exit that investment at spot price rather than the discount that had plagued the investment for years. [![](https://www.datocms-assets.com/56652/1709683152-nav.png?auto=format)](https://ycharts.com/companies/GBTC/discount_or_premium_to_nav) Ycharts But that is not all that I mean when I say Wall Street Bitcoin. I also mean the extensive over-financialization of Bitcoin, I bet, will come. ### First, The Bad News #### Missing the Point of Bitcoin I worry that Wall Street Bitcoin is probably pretty bad for financial freedom, self-custody, self-sovereignty, and privacy. It is even potentially bad for security due to layers of counterparty risks and especially custodian concentration risk (since most of the Bitcoin ETF sponsors use the same single custodian, Coinbase, for their ETFs). Bitcoin offers a breakthrough in financial freedom. That breakthrough is the ability to eliminate intermediaries in financial transactions. In the opening sentence of the Bitcoin white paper, Satoshi Nakamoto said of Bitcoin that it "*Would allow online payments to be sent directly from one party to another without going through a financial institution.*" Yet here comes Wall Street Bitcoin, which presents itself as a substitute for holding native Bitcoin but reintroduces into the mix, at a minimum, custodians, managers, market makers, and brokers – a cornucopia of middlemen. Contrary to Satoshi's principal aim for Bitcoin itself, you simply cannot send Bitcoin ETF units to another party without going through a financial institution. Bitcoin ETF units are not even meant to be sent to another party. They're meant to be bought and sold to and from one Wall Street firm through another Wall Street firm. ETFs are simply more of the same pre-Bitcoin structures and middlemen wrapping themselves around assets, but this time, an asset that was specifically designed to work without their getting involved. ETFs deliver none of the financial freedom that native Bitcoin offers. We can be fairly certain that the marketing efforts of the Wall Street titans operating these ETFs will not mention this fact. BlackRock, for example, whose ETF has seen the highest net inflows so far, promotes its ETF on the basis of ease, convenience, and quality. They justify "ease" based on using your existing broker, who is a middleman. "Convenience" is touted as eliminating logistical challenges, high fees, and tax complexities of "holding Bitcoin directly," which are frankly dubious claims, in my opinion. "Quality" is said to be the integration between Coinbase and BlackRock that will "*minimize tracking error and expenses*," but there is no mention of the quality of directly holding the world's most pristine and pure asset ever, which is Bitcoin itself – where there are zero tracking errors and holding expenses. [![](https://www.datocms-assets.com/56652/1709683009-ibit-for-bitcoin.png?auto=format)](https://www.blackrock.com/us/financial-professionals/investment-strategies/bitcoin-investing) BlackRock.com This all adds up to Wall Street Bitcoin acting as a discouragement to holding Bitcoin directly and diminishing the principal reason Satoshi cites for creating Bitcoin in the first place. It positions Bitcoin only as an investment rather than as a bearer instrument or a form of cash that can be used to make payments between any two parties anywhere in the world. Nevertheless, despite these drawbacks, on the whole, as the popular saying goes, this is good for Bitcoin. I'll explain why a little later in this article. #### Further Confusion About Bitcoin vs. Crypto Another unfortunate outcome I expect is that Wall Street Bitcoin will herald another cycle of speculation and wealth destruction into more "crypto" investments. The complexity of what Bitcoin does and how it does it has proved in the past to be an obstacle standing in the way of people being able to ascertain what constitutes its real value and what all of its imitations – those tens of thousands of "crypto" projects – lack. Not only do the ETFs lack those benefits of Bitcoin, but we can expect with the significant likelihood that eventually, we will see ETFs that include other "cryptos" in them. BlackRock has already filed for a spot ETH ETF. Despite the fact that only Bitcoin ETFs have been approved so far, the market for altcoins has not fallen dramatically behind Bitcoin since then, as many of those who favor Bitcoin-only had hoped for. "*Wall Street Bitcoin*" has already and will continue to further legitimize Bitcoin in the minds of many. But Wall Street is not really behind Bitcoin for principled reasons. They are in it to make money – dollars, that is. I am concerned that they will use the success of Wall Street Bitcoin to attempt to legitimize crypto, which merely scales up the problem we have seen in previous cycles where many people lost significant sums to what turned out to be worthless projects. The "*Initial Coin Offering*" bubble of 2017 that saw tens of thousands of projects raise money and then crash to zero was in many ways an echo of Wall Street's own dot-com bubble of the mid-90s, where the same thing happened around the hype and misinformation about what the Internet would bring. ### Now, the Good News #### Some Upsides of Wall Street Bitcoin On the other hand, Wall Street Bitcoin also has some big upsides. It's likely going to be great for price increases overall and also for volatility dampening. For people who aren't prepared to take the basic and relatively easy steps to buy native Bitcoin, ETFs do make it easier to buy, rebalance, and dollar-cost-average with recurring buys. Behind the scenes, these ETFs buy real Bitcoin, even if they don't give it to the customers buying the ETF units. And this volume of activity bids up the price of Bitcoin and reduces the volatility because the asset class size becomes much bigger. Until now, Bitcoin has been a black sheep in Wall Street's investment world. For the most part, Wall Street couldn't and wouldn't touch Bitcoin. But all this has changed. With multi-trillion dollar asset managers like BlackRock and Fidelity launching Bitcoin ETFs, and market makers like Goldman Sachs, Jane Street, and JP Morgan acting as 'Authorized Participants' to these ETFs, Bitcoin is legitimized as an asset class of its very own, right in the heart of Wall Street. This legitimization includes not only those firms listed above but also happens in the minds of many money managers, family offices, and registered investment advisers (RIAs) worldwide! As Swan's CEO and founder, Cory Klippsten, and many others like him have also noted, (once outflows from GBTC subside) there should be a significant multiplier effect to boost the price. The value of Bitcoin will go up by more than just the inflows. ![](https://www.datocms-assets.com/56652/1709682718-cory-klipp-outflow-multiplier.png?auto=format) As I said earlier, I believe the GBTC outflows are destined to subside – although perhaps not right away. Why? I expect there are still GBTC holders holding out for Bitcoin to hit, for example, $50K and $60K to sell when those investors are "flat" again. Psychologically, many investors don't like selling at a loss. Some have a cost basis at or around those numbers. While technical analysis is generally astrology for men, big round numbers can often act as a ceiling. I think some investors will accept that, especially because of the reduced price volatility already happening in Bitcoin. The liquidation of GBTC units is the primary offset right now against the buying action spurred on by the ETFs. Demand will substantially outstrip supply when it does subside, leading to significant price appreciation. This is because the ETFs are creating a lot of incremental demand for Bitcoin. #### Bitcoin ETFs Are a Significant Success, with Exceptional Trading Volume Let's step back and take a quick look at U.S. spot Bitcoin ETFs. Since the eleven ETFs were launched on January 11, the total trading volume (as of February 6, 2024) has been $31.2 billion. In addition, total net inflows since the Bitcoin ETFs launched exceed $1.6 billion, despite $6.1 billion in GBTC total net outflows. ![](https://www.datocms-assets.com/56652/1709682545-wall-bloom.png?auto=format) Bloomberg Intelligence These are some good numbers. ### And Then There is the Unknown Finally, there are also unknowns, especially as we look further into the future. Wall Street Bitcoin means financialization. That means a lot of derivatives, leverage, hedging, speculating, cash-settled Bitcoin financial products, and pressure on public Bitcoin companies to focus on quarterly results, etc. What might we expect to see? Wall Street is going to come out with too many paper Bitcoin products. These will include Bitcoin derivatives. Just like they came out with too many derivatives before the 2008 financial crisis. [Rapha Zagury](https://www.swanbitcoin.com/private/team/rapha-zagury/), Swan's CIO & Mining Head, said as much recently. ![](https://www.datocms-assets.com/56652/1709682434-swan-raph-mining.jpeg?auto=format) Personally, I expect mostly bad products to come out of Wall Street, as per usual. The 2008 financial crisis was in no small part due to concentration risk at AIG as the insurer of last resort on credit products such as credit default swaps and collateralized debt obligations. Examples of things that I will not be surprised to see Bitcoin options, Bitcoin-backed loans, interest-bearing Bitcoin deposits, structured notes, and anything complex, leveraged, and risky that distracts from Bitcoin's main true properties as pristine, stable, predictable, and self-directed money. This is not to say that every single thing Wall Street comes up with will be negative. There are always some valuable instruments that make it to the market. Examples of what I think would be beneficial are things like five-year principal protection and Bitcoin-linked notes with Bitcoin's appreciation replacing the coupons. Instruments like this help people invest in the long-term potential of Bitcoin, trading off some upside for protection from losses that they haven't yet convinced themselves are unlikely. Few investors know how to price these, so this is more theory than practice. ### Key Takeaways Wall Street Bitcoin is here, and it is here to stay. While only a few of the eleven Bitcoin ETFs will have staying power, and the majority are eventually going to throw in the towel or get acquired, the size and acceptance of the winners will be substantial. The details of the impact of Wall Street's embrace of Bitcoin remain to be seen, but the broad strokes are quite predictable: Wall Street Bitcoin will become widespread. This is a mixed blessing. It will deter and distract many people from ever holding Bitcoin themselves, which is unfortunate for them. On the other hand, it will likely be a gateway into Bitcoin for many others, especially if it contributes to price appreciation and stability as expected. Wall Street will be unable to resist "innovating" new financial products around Bitcoin. This will also lead to many people holding things with the word "Bitcoin" that will not perform like Bitcoin. "*Mess around and find out*" will be the lesson many learn the hard way. However, when the dust eventually settles, I expect Bitcoin to adapt very well to life with its new frenemy, Wall Street. Bitcoin is resilient and thrives on well-monied stakeholders who are looking out for themselves – and Wall Street is probably where the highest concentration of such people and entities exist. On the other hand, whether Wall Street can adapt to Bitcoin is an even more interesting question. We will have to wait and see what the answer to that is. **My money is on Bitcoin.** ### Postscript #### Help Us Help You I conceived of Swan's tax loss harvesting program and IRA product. I helped [Jeremy Showalter](https://www.swanbitcoin.com/private/team/jeremy-showalter/), Swan's Chief Product Officer, his team, and many others build these products. Please email me at [terrence@swan.com](https://www.swanbitcoin.com/private/team/terrence-yang/) to let me know your top challenges, frustrations, and unmet needs in Bitcoin. I'm working on some great projects I hope to bring to market soon for you, and I would love to chat. I'm looking for folks to test pilot some new product and service ideas that Swan Private MD [John Haar](https://www.swanbitcoin.com/private/team/john-haar/) & I are cooking up in inheritance planning. Let me know if you'd like to learn more. You will get free access to top experts in the space we are evaluating as potential partners and get many questions answered to upgrade your estate planning. ### Terrence Yang Terrence Yang is Swan Managing Director where he launches new products such as Swan IRA and Swan Tax Loss Harvesting. Terrence graduated from Harvard Law School and previously served as an officer at prominent Wall Street firms before joining Swan. # Saving With Bitcoin Was Never So Cool As In 2020 URL: https://www.swanbitcoin.com/investing/saving-with-bitcoin-was-never-so-cool-as-in-2020/ Through technical development, privacy initiatives, multisignature tools, a savings narrative and more, Bitcoin’s 2020 was super cool. --- **Stephan Livera** · December 2, 2020 · Updated June 25, 2024 *2020 was unforgettable, especially for Bitcoin. To help memorialize this year for our readers, we asked our network of contributors to reflect on Bitcoin's price action, technological development, community growth, and more in 2020 and to reflect on what all of this might mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles.* [*Click here*](https://bitcoinmagazine.com/tags/eoy-2020) *to read all of the stories from our End Of Year 2020 Series.* In 2020, Bitcoin benefited strongly from the incredible media-driven fear and government overreaction around COVID-19. Over decades, fiat money and debt culture have degenerated our ability to think and plan long-term. But while society's fiat savings were being inflated away, many were able to insulate themselves from the impact.  So, what changed this year? It was a tipping point of understanding. The macroeconomic winds had finally changed enough that people were realizing that something was wrong.  There used to be some semblance of an interest rate and return for savers. But as those have been driven to almost zero in nominal terms and negative in real terms, well-known investors have now openly acknowledged the value of Bitcoin as a [store of value](https://bitcoinmagazine.com/guides/store-of-value). We saw billionaire investors, money managers, and public company CEOs speak out with bullish points of view on Bitcoin: Paul Tudor Jones, Stanley Druckenmiller, Bill Miller, Larry Fink and Rick Rieder of BlackRock, [Michael Saylor](https://bitcoinmagazine.com/tags/michael-saylor) of MicroStrategy and [Jack Dorsey](https://bitcoinmagazine.com/tags/jack-dorsey) of Square.  Many in the traditional investing world remain confused. Consider [this exchange](https://twitter.com/CNBCFastMoney/status/1331732308316090370) between Melissa Lee and Saylor. Saylor understands the game here is to earn (whether in fiat or Bitcoin) and then store that value in Bitcoin, while Lee seems stuck on the idea that this is some "*bet*" on Bitcoin. As though remaining in fiat was not itself a risk given these underlying conditions.  In other interviews, Saylor has aptly characterized sitting in fiat as sitting on a melting ice cube. It's hard enough to turn a buck and make an honest living these days. There's rightly a sense that a person should not *also* have to be an equity analyst, property mogul, or a bond king to hold on to their savings.  More broadly, we've seen a rise in the savings rate. In the U.S., the savings rate has gone [from the 5 percent range to the 15 percent range](https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/) in 2020. Australian household savings has jumped from [5 percent to around 20 percent in 2020](https://tradingeconomics.com/australia/personal-savings). What happens as more people worldwide realize that Bitcoin is the "*fastest horse*," as Jones put it?  ### THE IMPACT OF THE BITCOIN HALVING As anticipated, Bitcoin's third subsidy halving occurred in May 2020. The four-yearly event that is like New Year's Eve for Bitcoiners went over festively, with many live streams and events taking place.  Also relevant in terms of Bitcoin memes is the [NGU (Number Go Up) technology](http://stephanlivera.com/147) meme, which became much more prominent in 2020. While "*Number Go Up*" was initially intended to insult Bitcoiners for their apparent simplicity, Bitcoin's strict supply schedule and monetary qualities make it a loosely considered '*Number Go Up*' technology.  As to whether S2F (stock-to-flow) modeling works, debate continues to rage. The pro-S2F model side asserts that the model has not yet been broken, while the anti-S2F model side argues that it is not statistically valid, that the goalposts keep shifting, etc. We will see what happens next year.  ### BITCOIN'S TECHNICAL DEVELOPMENT There's been more focus on making Bitcoin development [more distributed](https://stephanlivera.com/episode/144/) and sustainable over the long term. We've seen more emphasis on the importance of reviewing and testing necessary code in Bitcoin Core and related software. Contributions continue to be made by existing development organizations like Blockstream, Chaincode Labs, MIT DCI, Crypto Garage, and Square Crypto. Research and development organizations are being created and built to support this area, such as [Brink](https://bitcoinmagazine.com/articles/john-newberys-new-nonprofit-brink-will-train-and-support-bitcoin-developers), Judica, and [the Human Rights Foundation's (HRF) development funding effort](https://bitcoinmagazine.com/articles/the-human-rights-foundation-is-now-funding-bitcoin-privacy-development-starting-with-coinswap).  Another welcomed trend has been Bitcoin exchanges and companies increasingly making contributions directly to individual contributors or Bitcoin development organizations. ### DEVELOPMENT OF BITCOIN PRIVACY While it's not the focus of every Bitcoiner, privacy remains an important consideration, and there were some welcome advancements in the space this year.  Many teams are working to enable much faster and easier collaborative private transactions that break the heuristics that surveillance firms rely on. Node projects are also maturing and becoming an easy go-to choice for the user who wants to use wallets in a more sovereign fashion.  ### MULTISIG AND HARDWARE WALLETS Interesting highlights here were the advancing conversation around using multi-signature and making it easy to use, as well as community discussion calling out common pitfalls. Some of the relevant pieces and considerations (such as [Michael Flaxman's wishlist](https://twitter.com/mflaxman/status/1146813021232226306) from 2019) came together or were more widely supported, such as PSBT (partially-signed Bitcoin transactions), HWI (hardware wallet integration), animated QR scanning libraries and backup files for multi-sig.  [Swan Vault](https://www.swanbitcoin.com/vault/) made significant progress in terms of offering new features such as OTC and/or directly stacking Bitcoin into multi-sig cold storage. This product provides easy user-independent recovery for users on the commercial Vaults product and another DIY multisig option for those not comfortable with the commercial product. Specter Desktop has recently stood out in the DIY multi-signature space (also for single-signature users), given that the application is a simple Windows or Mac install that easily and quickly calls out to the local Bitcoin Core instance. This represents a new level of ease of use that was not previously available to the user who wanted to use their own hardware wallet with their own full node.  ### LIGHTNING NETWORK Bitcoin's Lightning Network advanced in 2020 with the more widespread adoption of multi-part payments (MPP) across the network, the activation of wumbo (large channels), and the growing maturity of beginner/consumer-level straightforward Lightning wallets such as Breez, Phoenix, and Strike.  The Lightning ecosystem grew in different areas, such as its use for mining pool payouts, sats-back rewards, Lightning-powered gaming, and, interestingly, use as part of a brave new push into "*Podcasting 2.0*" led by Adam Curry (Podcast Index) and the Sphinx app team. Some other tooling around Lightning Network also advanced with Lightning Pool, a marketplace built to help Lightning Network users manage their channel liquidity, along with other tools like Autoloop. Dashboards like RTL (Ride The Lightning) and ThunderHub also emerged as popular Lightning node management tools.  With that said, there were also attacks on the Lightning Network disclosed by researchers, and some mitigations and protections were also proposed against these attacks. As the Lightning Network grows, it will surely have to face more malicious adversarial actors, but nevertheless, it is a very exciting space that I remain very bullish on.  ### SAVINGS TECHNOLOGY GOES LARGE As my friend Pierre Rochard says, Bitcoin is savings technology. This way of thinking about Bitcoin will become popular in a world where people have no good alternatives.  Popular messaging in the past was more associated with lump-sum buying or selling and attempting to time the market. Going forward, I believe the common standard method will be to start with a lump-sum buy and then regularly accumulate, a.k.a. DCA (dollar-cost averaging). 2020 saw the rise of Bitcoin-only recurring buy businesses, and 2021 should be even bigger. ### WRAPPING UP We've seen impressive growth and development in tooling that enables Bitcoin use in more self-sovereign ways, from node packages to wallet software, hardware wallets, Lightning Network, and continuing advancement at Bitcoin's protocol level.  Many who only took a cursory look in past years will take a deeper dive, and others who invested a small amount will increase the size of their investment after being validated in their thesis.  Globally speaking, Bitcoin has been fringe until recently, but it is about to go through the next big leg up in adoption and use. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Privacy, Executive Order 6102 & Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/privacy-executive-order-6102-bitcoin/ Let’s keep pushing forward for the future we want to see, one in which both the price of Bitcoin and global freedom can go up together. --- **Steven Lubka** · April 26, 2024 · Updated June 25, 2024 Since Bitcoin’s earliest days, many have feared a repeat of Executive Order 6102. This topic drove countless hours of debate on early Bitcoin forums. For those readers who do not respond with fear and trembling to the mere mention of the phrase, allow me to explain. Executive Order 6102 ordered the confiscation of gold from all private citizens in an attempt to address the Great Depression, shore up the backing of the dollar, and then devalue it. It was the largest asset seizure from private citizens the United States has ever seen. Could the government try to confiscate Bitcoin when it realizes Bitcoin may be a threat to its monetary supremacy? How would they try to do it? Would a registry of Bitcoin holders be constructed from KYC information gathered by Bitcoin exchanges?  What protections could Bitcoin offer against this tyranny? Surely, gold fell prey to such a draconian measure due to its lack of portability and concentration in large silos. Have no fear! For I am here to tell you of the many reasons we shall not see a repeat of EO 6102, and where freedom-minded Bitcoiners should direct their watchful eyes instead.  First, we must set the stage for the precise conditions under which EO 6102 occurred in the first place. **Franklin Delano Roosevelt: Supreme Leader of America**  FDR was elected President on November 8th, 1932. He took office on January 20th and on April 5th, he issued EO 6102. Whoa man, that seems pretty fast, doesn't it?  How long do you think it would take Biden or Trump to confiscate everyone's Apple shares? Longer than 2 months? If the speed at which one man was able to confiscate private wealth surprised you, my dear reader, I would not blame you!  You might wonder if Congress was planning to do this for months and FDR just signed off on it. But no, this was not the case. Congress did not prepare this move, nor did they vote on it. It was purely decided and executed by FDR, Supreme Leader of America.  I refer to FDR in this manner to impress upon you that he **had more in common with a dictator than with modern presidents.** FDR wielded some of the most staggering executive authority this country has ever seen since its founding (Washington and Lincoln are the only other serious contenders). It is notable that one can mount a viable critique of his authoritarian tendencies without even mentioning that he threw people into camps based solely on their ethnicity… ![](https://www.datocms-assets.com/56652/1714136769-fdr-image.png?auto=format) FDR reshaped American politics and the American system in profound ways that still influence the nature and structure of our country today.  In fact, the only thing that could halt his relentless push through our institutions was death itself (if it hadn't we would have had to conclude that the man truly had the [Mandate of Heaven](https://en.m.wikipedia.org/wiki/Mandate_of_Heaven)).  FDR was the penultimate wartime president; his term straddled the great depression and WW2. He was the crisis president to end all crisis presidents, and was elected with the highest vote majority the country had yet seen. ![](https://www.datocms-assets.com/56652/1714136890-usa-map.png?auto=format) Can you imagine any presidential candidate getting elected with an electoral map remotely similar to this one today? Modern elections look nothing like this; the country is as divided as our government is. When we look at the history of EO 6102 we must contend with the fact that the circumstances of FDRs reign are incredibly dissimilar to the government we currently have today.  Now, some readers might want to pause here to say:  “But Steven, you make good points, and are compelling and handsome, but doesn't the COVID era completely contradict your thesis? Didn't the government basically seize control during crisis times with unchecked authority?”  I disagree. While I have tremendous sympathy for those who had to navigate COVID in California and New York, I lived in Florida during COVID.  There was an approximately zero percent chance of a vaccine mandate being rolled out here, Florida never really shut down, and the only thing that changed was you saw masks in the grocery store. The Federal response to COVID stopped at state lines, and that alone paints a very different picture. What COVID revealed, in my opinion, was not the sweeping crisis powers of the US bureaucracy, but instead the profound influence that the top 1% most neurotic and online segment of the population wields over social norms. What you saw was willing compliance by private citizens and companies, not forced top-down control by the government. If you want to see what that would look like - examine China under COVID. So, we must return to the simple fact that the government of modern America is strikingly different to the government of FDR’s America. Saying, “well the government confiscated everyone's gold so they will do it again,” is like saying “well, England and France fought many wars in the past so it's only a matter of time before Peter McCormack leads a battalion across the English channel.” Peter’s military prowess notwithstanding, the fundamental context and relationship between England and France, is so wildly different today from historical norms that the comparison simply isn't very helpful.  Although, as they say, if you can lead a soccer team you can lead an army.  **The United States Today: A Sclerotic Bureaucracy Overseeing Technocratic Acceleration**  The United States today is very different from the time of our Supreme Leader’s reign. It is also historically anomalous due to the profound influence of widespread technological growth and the cannibalization of social mores via technocratic acceleration. The role of the President today has very little in common with FDR’s sweeping executive power. Government power has become increasingly dispersed across the countless departments and bureaucratic committees that govern various aspects of it.  While this article was being written the DOJ shut down a notable Bitcoin privacy service and the FBI has been sending warnings about non-registered exchanges. Notice how it is the agencies? We live in an era of political stalemates and roadblocks where it’s increasingly hard to get things done by the executive branch and congress. Regulation increasingly happens in backdoor, roundabout ways. Don't believe me? Recently the government tried to force Bitcoin miners to disclose their energy usage statistics and locations. They were swiftly rebuked by a lawsuit from Riot (great job, guys).  Now, let me ask you one question. Do you think FDR would have allowed a mere pesky **lawsuit** to impair his will? **Absolutely not!** In fact, when met with opposition to his New Deal, he tried to [pack the courts](https://www.history.com/news/franklin-roosevelt-tried-packing-supreme-court) to force his legislation through. EO 6102 wasn't legal and had no precedent in American governance! Our Supreme Leader did it anyway. ![](https://www.datocms-assets.com/56652/1714136931-fdr-glasses.jpeg?auto=format) Let's be clear: my point in making this comparison is to point out the staggering difference between the ability of FDR to **act** and the current ability of our own government to act and impose its will. They are not the same, they are not even in the same zip code. So which forces run the show today if it’s not centralized control from our highest governmental bodies? Increasingly, it is a sprawling US bureaucracy and the raw momentum of technological acceleration.  Technology drives our society forward, and governance stumbles along in its wake ineptly trying to manage the rapid pace of change. Nations used to be a collection of largely similar people, who shared certain values. These people absolutely had disagreements, even passionate ones, over many issues; but there was a civic core they mostly shared.  This central character was essential to the nation, and it is fair to say that it is central to most definitions of what a nation **was** for most of human history.  I am not suggesting America has none of this central character today. However I think Americans disagree more on that core set of values than ever before. Society is increasingly held together by economic forces, rather than social cohesion. America has increasingly optimized for laws and culture that prioritize what capital needs, rather than what gives vitality to humans. This has both pros and cons. America is the most prosperous civilization we have ever seen, and the global hub for finance and capital. However, we have lost much of what makes a civilization a civilization. Things like culture, values, connected purpose, and transcendent ideals.  Do we have much social consensus on shared values? Do we have much social consensus on the culture we want? Do we have much social consensus on what the purpose of our society is? No, but who cares?  let's create some shareholder value baby! The transformation of American society into its current form, a country driven rapidly forward by advances in technology, is another key difference between our world and FDR’s. Our politicians have seen, for decades, that technology and technologists have increasingly developed their own power centers outside of government. The unspoken rule of American governance is to facilitate economic growth, which means technological growth at all costs. Whereas FDR was focused on remaking the **social contract**, our current politicians are just Sherpas of GDP. Most of them just want to get their slice of the pie and retire. Few want to rewrite the very terms of American society. This profile of a politician is, at face value, much less likely to attempt something like EO 6102 and even less likely to amass the type of power needed to do such a thing. In “The Revolt of the Public,” Martin Gurri talks about how until the modern era every government around the world had a monopoly on information and its distribution. Suddenly, the internet comes along and busts that monopoly wide open. Governments struggle to control information today. Information now exists in a bacchanalia of orgiastic consumption via our smartphones. This trend continues to redistribute the real places where power and control are, moving them farther away from the central government authority. Rapid technological change continues to move us to a more and more decentralized society (albeit not in the way most Bitcoiners want…). What, you don't love the media companies controlling narratives instead of the executive office? I wonder why…. All of this comes together to say FDR’s world and our world are radically different and comparisons between the two are highly tenuous at best. And the faster you believe technology will progress, the further we get from FDR’s world, and the further we get into this weird new future where everything is brand new and nothing matters (allegedly). Finally, as a result of a weakening social order in the collapse of social systems (culture, religion, and even ethnic ties) we see a rise in the motivation of many in government to extract personal wealth from a privileged insider’s position. They are like vultures scavenging the corpse of our institutions – a corpse rich in technocapital. I share this, not as a moral condemnation of these acts and individuals, but as a signpost to direct your attention once again to the difference between the era of FDR and today. Our officials have increasingly little skin in the game. Many simply want to get rich and powerful, and then leave government. FDR at least had titanic ambitions befitting an epoch defining leader. Our current government lacks the structure, organization, ambition, and even perhaps the motivation to pull off an EO 6102. **Is Bitcoin Resistant in Any Way?** I've said a lot about how government has changed, and I've said little about Bitcoin. This is basically the opposite of how most Bitcoiners go about this dialogue. They pound their chests and shout to the heavens about how Bitcoin’s digital bearer asset nature makes it immune to this sort of attack. Bitcoin is certainly **much, much more** seizure-resistant than gold, but alas, not immune. A large amount of Bitcoin exists in heavily regulated silos, and a large amount of Bitcoin is in the hands of those who would not take the appropriate actions at the time that such an order would be issued. However, Bitcoin **is** different - unique, even! Gold’s fatal flaw was its physical nature. This physicality made it cumbersome to store and inevitably led to its concentration in the hands of several large custodians. It became easy prey for our Supreme Leader. Bitcoin, in contrast, can be moved with the click of a button. In today's age, an EO 6102 would require months if not years of propaganda to shift public opinion. Thus, bitcoiners would have plenty of time to respond. But even more than the well-trained ability of our freedom-loving brothers and sisters to click buttons in times of crisis, Bitcoin has an even more primary protection:   Americans fucking love it and own **a lot of it.** If you add up all of the Bitcoin Americans own, all of the mining stocks, all of the private investment funds, the exchanges, the startup equity, and every other investment that has anything to do with Bitcoin on any level - you easily get a number over a trillion dollars. Do you think any of our current crop of politicians want to try to confiscate a trillion dollars of private citizens’ assets?  Sure, they may fantasize about it in their dreams but in the words of bodybuilding legend Ronnie Coleman: “Everybody wants to be a bodybuilder, but nobody wants to lift no heavy-ass weights.” They simply do not want the actuality of what that would entail, especially the part where they have to drag Blackrock’s new cash cow from its cold dead hands. So, this is all good news! I have hopefully put your mind at ease and convinced you that 6102: Part Two is not on the horizon. So, is everything all good then? Is hyperbitcoinization inevitable? Should we just kick our feet up and enjoy the eternal riches and…. Definitely not! There is another concern that I find much more realistic than 6102. **Failure via Success: Number Go Up, Freedom Go Down** I have long thought the more realistic threat was failure via number go up. What I mean is that the price of BTC goes to over $1 million per coin but very few actually own any actual BTC. If I were the government and I was concerned about BTC, would I try to claw a trillion dollars of assets from private citizens or would I just simply approve a bunch of Spot ETFs and let Wall Street market the heck out of it? Everyone is rich! Early holders are billionaires! People buy Bitcoin and make huge dollar profits! Everyone is happy! Everyone except those who hoped Bitcoin might do something more than dollar profits…. Sure, a dedicated group of hardliners would still hold actual bitcoin, but it would fail to realize its network potential and instead only see usage as a financial asset.  It's much easier to buy everyone off via sick gainz, than to confiscate a trillion in assets. So this is the threat that we should be monitoring closely. What can we do about it? What can we do to prevent this outcome? Let's be clear about a few points first - ETFs were **inevitable**, they were always going to happen  - Some people **need** to own ETFs and that's fine - Some people **choose** to buy the ETFs, and that is also okay  That being said, the way we prevent hyperETFization is by massively improving non-custodial or semi-custodial solutions to the point where it is easier or better to use these alternatives over ETFs. We can't take our eye off the ball, we need huge UX improvements. We also need reasons to own actual Bitcoin besides fear of the government. Sorry guys, this fear will not scale well. We need something profitable you can do with actual coins and not with ETF shares. Financial incentives rule everything around me. There are many pathways to this, but it needs to be **actually** profitable, not just financial alchemy with tokens. I believe the most effective way to get people to hold their own keys or to own Bitcoin directly is for there to be ways to generate profits via your Bitcoin directly on the network. Providing liquidity for lightning routing is one example of this which already exists. I am specifically not talking about “paying yield with tokens”, but actual on-chain services which people pay actual Bitcoin for. The moment you can earn 6% a year with your actual Bitcoin, it's easy to convince people to hold their keys instead of ETF shares. Until this is possible you have to rely on fears of government confiscation to scale direct ownership, and I simply believe this will not persuade 90% of the population in developed countries. So in this sense, over-fixation on EO 6102 is actually an impediment to keeping our focus on the real risk, hyperETFization. The custodial Bitcoin future. And this is a future which only became more likely as this piece was being written. Pressure continues to mount against privacy and self custody. Enforcement continues to come from bureaucratic agencies and corporations, not via the executive branch in a top down manner. As such, we must focus on the precise style of attacks which these agencies and corporations can render against Bitcoin. They cannot do EO 6102, they **can** push people into the custodial, financialized, hyperETFization world. This is the real risk. Let me be clear, I don't think this is what **will happen**. I don't think we end up with this as the likely outcome, but the only reason it won't happen is because we work together to build the alternative. Bitcoin is not inevitable in the sense of “doesn't require human engagement and work”. The only sense in which you can begin to say Bitcoin is inevitable is by saying “Bitcoin's incentives will inevitably produce the engagement of humans required to get us where we need to go”. I don't know if that latter statement is true or not, but the first one certainly is not. What I do know is that Bitcoin is the sum total effort of everyone who has worked on it in any way, and Bitcoin’s future will be the sum total effort of everyone who works on it. Let's keep pushing forward for the future we want to see, one in which both the price of Bitcoin and global freedom can go up together. ### Steven Lubka Steven is the Managing Director of [Swan's Private Client](https://www.swanbitcoin.com/private/) department with concierge services for HNWI interested in buying >$100k in Bitcoin. His mission is to make Bitcoin easy for investors in the US and internationally, and enabling Bitcoin purchases in IRA, 401k, and Trust accounts. # Reflecting On the Year in Bitcoin: Our Progress and What We Take For Granted URL: https://www.swanbitcoin.com/analysis/reflecting-on-the-year-in-bitcoin-our-progress-and-what-we-take-for-granted/ The progress that the Bitcoin community made in 2021 reminds us to take nothing for granted, and to make the changes we want to see next year. --- **Stephan Livera** · December 26, 2021 · Updated June 25, 2024 Society has taken many things for granted, and arguably, this is why we're here now. The globe is filled with overly-panicked populations, governments are conducting [some of the most authoritarian overreach of our lives](https://www.whio.com/news/local/staffing-concerns-government-overreach-cited-lawsuit-challenging-healthcare-vaccine-mandate/IUIXR2XRRJHI3K4DFS5KPH3UKM/), [inflation is rising](https://www.pewresearch.org/fact-tank/2021/11/24/inflation-has-risen-around-the-world-but-the-u-s-has-seen-one-of-the-biggest-increases/), [real interest rates are negative](https://www.wsj.com/articles/inflation-surge-pushes-u-s-real-interest-rates-into-more-deeply-negative-territory-11639321204), and [supply chain problems are rampant](https://www.wsj.com/articles/air-cargo-also-disrupts-supply-chain-as-goods-spill-out-of-warehouses-11640255401). In all this, too many have taken nice things for granted. We all could benefit from verifying the truth of claims, whether they relate to Bitcoin, the claims of technocrats and politicians, or whether the ground beneath us has shifted without us knowing. Living in Australia was seen as a safe place where "*it couldn't happen here.*" Despite the high taxes afflict the nation, most ignore this given the high quality of living and the fact that taxes are often hidden via [pay-as-you-go income tax](https://meadpartners.com.au/what-does-payg-mean-in-australia/#:~:text=Pay%20As%20You%20Go%20(PAYG,of%20the%20employee%20or%20contractor.) (PAYG) and the [hidden inflation tax](https://en.wikipedia.org/wiki/Hidden_tax). Australians then proceeded to destroy hard-won freedoms with [travel bans, lockdowns, restrictions, and vaccine mandates](https://www.voanews.com/a/australia-reimposes-covid-19-border-restrictions-amid-omicron-variant-fears/6330861.html). Only now are some Australians[ starting to protest and demand their freedoms back in force](https://www.nytimes.com/2021/11/18/world/australia/covid-protests-australia.html) — almost two years too late, but let's see if the tide turns in the new year. So, turning to Bitcoin, what else changed this year in and around Bitcoin? ### EL SALVADOR We saw the first nation-state legal tender adoption of Bitcoin with El Salvador, though as a community that tolerates no-BS and is truth-focused, we should aim to tell a fair and objective story about things happening. It's not that Salvadorans will all suddenly become hardened Bitcoiners overnight, but rather that we hope the right pre-conditions are being laid down now. There are still challenges to be overcome, such as initial teething issues on the [government Chivo wallet](https://bitcoinmagazine.com/technical/first-look-chivo-app-el-salvador-bitcoin-wallet), Bitcoin education, internet connectivity issues, and political issues from the opposition party in El Salvador. But with all this said, I'm still generally optimistic about Bitcoin in El Salvador, having visited earlier this year for Adopting Bitcoin and LaBitConf. [The Bitcoin bond](https://bitcoinmagazine.com/markets/emergence-of-bitcoin-native-bonds) could be an attractive option for bond investors who are otherwise sitting in negative-yielding bonds, and it might offer an opportunity for Bitcoiners who want to get Salvadoran residency with a pathway to Salvadoran citizenship in the future. I believe other countries will follow El Salvador's example in the years to come. ### LIGHTNING NETWORK The Lightning Network grew a lot this year, with a lot more funds being placed into Lightning channels, many more Lightning nodes being spun up, and various community and education efforts coming online. For example, the creation of Lightning channel partner groups and advancement in tooling very much arrived this year with the likes of [PlebNet](https://plebnet.wiki/wiki/Main_Page), [KYCJelly](https://twitter.com/kycjelly?lang=en), [amboss.space](https://amboss.space/), and so much more. We now see [around 3,300 BTC in public Lightning channels](https://bitcoinvisuals.com/ln-capacity), and we know there's really more than this if you count private/unannounced channel networks being operated between exchanges. There were improvements in tooling to run and manage Lightning nodes (e.g., [Amboss](http://amboss.space/)), improvements in the retail customer UX for Lightning wallets such as LN-URL and [Lightning address](https://lightningaddress.com/) support growing (making it easy to send/receive payments without first manually creating invoices). The creation and excitement around Lightning offers, aka [BOLT-12](http://bolt12.org/) (as discussed on [SLP298](http://stephanlivera.com/298)), is also promising, as this will make it even easier to create recurring payments on the Lightning Network or use static QR codes enabling Lightning donations. Previously, having a static QR meant just using a single on-chain Bitcoin address to take donations or using BIP47 stealth addresses, or it meant spinning up a BTCPay Server — which isn't easy for a new user to do. ### TAPROOT This year, we also got Taproot, Bitcoin's biggest upgrade since SegWit in 2017. There was initially some drama about this, which seemed to be mainly driven by the PTSD from 2017. Thankfully, some community members were not taking things for granted and stepped up to either help write and review code or provide tooling/projects that helped the community move forward. For example, [taprootactivation.com](http://taprootactivation.com/) by Alejandro De La Torre (who appeared on [SLP277](http://stephanlivera.com/277)) helped the community and developers see that the miners were broadly supported. [Taproot. The watch](https://taproot.watch/) by Hampus Sjöberg helped the community broadly track the lock-in and activation process. And, of course, the many Bitcoin Core contributors who contributed code, review time, and discussion on the Taproot soft fork made it happen. Taproot as an upgrade is difficult to accurately summarize in short sentences without getting very technical, but nevertheless, it will provide better "policy privacy" (not revealing all possible ways of spending coins up front), it will make certain types of multi-signature setups easier/better, and it will make the Lightning Network more private. However, for these benefits to come to fruition, we still need development work on things like MuSig2, the Lightning Network specification, and client implementations. We'll need software and hardware wallets to support the new functions and features. ### DEVELOPERS The Bitcoin development world saw the continuation of various Bitcoin exchanges, companies, and individuals carrying out sponsorship for Bitcoin Core contributors and various efforts around sponsoring related Bitcoin and Lightning development. This included funding from organizations like [Spiral (previously Square Crypto) for LDK](https://bitcoinmagazine.com/business/jack-dorsey-spiral-presents-the-lightning-dev-kit) and various other projects, along with the likes of [Blockstream](https://bitcoinmagazine.com/business/bitcoin-company-blockstream-sponsors-mempool), Chaincode Labs, MIT DCI, [Human Rights Foundation](https://bitcoinmagazine.com/business/bitcoin-dev-calvin-kim-awarded-150000), and others. ### WALLETS In the desktop wallet world, I'm personally most impressed by the likes of [Sparrow Wallet](https://bitcoinmagazine.com/business/sparrow-wallet-support-samourai-whirlpool-coinjoin) and [Specter Desktop](https://bitcoinmagazine.com/technical/specter-wallet-releases-version-1-3-0). Sparrow Wallet, in particular, has implemented some excellent features that were not previously available on desktop wallets (being able to see basic chain analysis and script details), including some that are not available on any other wallet (e.g., being able to CoinJoin direct to cold storage). Sparrow Wallet has become quite a formidable player in the world of desktop wallets because of its incredible all-rounder status at being able to operate as a standard single-signature hot wallet, multi-signature wallet, and privacy wallet (with Whirlpool, STONEWALL, Soroban, PayNyms), all in one easy-to-use interface with easy defaults for new users. However, there is perhaps some trade-off here as on the default setup, Sparrow users are calling out to a small set of semi-trusted Electrum servers (e.g., Blockstream's and others) — whereas Specter desktop users are generally connecting through to their own node or spinning up their own pruned node as an easy default. We are also seeing a large rise in the use of Whirlpool CoinJoin, with Whirlpool's unspent capacity [sitting around 4,000 BTC](http://www.bitcoinkpis.com/privacy), up significantly from a year ago. It could be that Bitcoin privacy-preserving tools are finding their real product-market fit, especially now that Whirlpool is much more accessible with Sparrow Wallet for desktop users. Previously, to preserve Bitcoin privacy, it would have required that the user be more tech-savvy and motivated to run their own full node and configure the tools. Privacy is becoming available, not necessarily for the masses, but at least for those motivated individuals who want it. I'm confident there will be further Bitcoin application and protocol development to make it even more accessible. ### NARRATIVES It has become commonplace among the developer and advocate community to "*hold your own keys and run your own Bitcoin node,*" however, this still takes work and focus on teaching to newcomers. Newcomers to the space tend to think of Bitcoin as just a token they can hold on their brokerage terminal or exchange without really putting in the work to use it in a more self-sovereign way. So, this brings us back to the theme of taking things for granted. When the newcomer goes to withdraw those coins from the exchange, will they really be there? Will the exchange honor that withdrawal request? Or perhaps some AML stop or compliance check will be placed on the user before they are permitted to receive their own coins? The idea of setting up your regular Bitcoin recurring purchases (colloquially, DCA for *"dollar-cost averaging"* — though DCA is not quite precise) has also been more popularized in the community. For me, this doesn't necessarily mean purchasing; it can equally also mean regularly accumulating via Bitcoin mining, or you can earn sats by selling products and services for Bitcoin. My discussion with [Hass McCook in July](http://stephanlivera.com/288) helped make clear the moral imperative behind the regular accumulation of Bitcoin to hasten the process of hyperbitcoinization. We've seen steady growth in the Bitcoin meetup and conference scene despite the Hysteria-19 restrictions. This generally comes along with the rise in the price, but I have really enjoyed getting around to the different Bitcoin conferences in the second half of this year and seen solid growth in the Bitcoiner community. These in-person conferences (such as BitBlockBoom, TABConf, and Bitcoin 2021, to name a few) and events provide invaluable opportunities to meet other like-minded individuals and also put faces to names that you might have seen on Twitter, heard on podcasts, or otherwise used their products, software or read their writing. ### BITCOIN MINING China has traditionally banned Bitcoin every few weeks, and the Bitcoin community has typically been savvy to see that this didn't really change much — yet another thing we all took for granted. But *this year, this time*, it really was different. The Chinese government seemed much more serious about the "China Bans Bitcoin" idea. As a result, we saw a generational shift in the industry, with mining equipment moving out of China and heading abroad to more welcoming turf. Much of the [mining hash rate seems to have moved](https://bitcoinmagazine.com/business/data-behind-bitcoin-mining-renaissance) to the U.S., Kazakhstan, and various other countries worldwide. Nevertheless, it is incredible that about 50% of the network in terms of mining hash power had to come offline (from around 180 exahashes per second (EH/s) down below 90 EH/s at the bottom in [July 2021](https://twitter.com/FriarHass/status/1469671421957660676) only to reclaim the hash rate all-time high in December 2021). Bear in mind that we are talking about hundreds of thousands of ASICs being shifted here. As the bull run continued this year, we also saw a renewed interest in mining at home and [a big expansion in publicly listed miners](https://bitcoinmagazine.com/markets/bitcoin-miners-outperforming-bitcoin-price). The dynamic with publicly-listed miners is that where previously they were selling coins down to pay for operating and capital expenses (like buying new mining rigs), they can now tap debt capital markets and borrow against their coins. This magnifies their profitability and ability to scale dramatically. Given semiconductor supply chain shortages, the creation of new mining rigs is somewhat bottlenecked, which has effectively slowed the growth of the network hash rate. This, combined with the bull run in price, may mean that older machines remain viable for longer than otherwise would be the case. And new mining rigs being made now may just have longer effective lives. Meanwhile, we are seeing sovereign mining operations such as El Salvador's and potentially others in operation that are not as public. ### WHAT I'M LOOKING TO SEE IN 2022 I'm hoping to see more community building with meetups and conferences to continue growing the scene and provide opportunities for education, networking, and camaraderie. After missing out on Bitcoin 2021, I'm especially looking forward to Bitcoin 2022! I'd love to see more growth in the open-source tooling that helps Bitcoiners secure their coins (e.g., multi-sig software and hardware tech), spend/receive coins (e.g., Lightning), and be more private (e.g., CoinJoin and other privacy techniques). Maybe we'll see more anonymous Bitcoin Core contributors as a means of protection from lawsuits. And maybe we'll see further growth in the financial services products and services that enable HODLers to keep on HODLing, e.g., fiat loans and credit cards with Bitcoin collateral. And, of course, there is a continual shift from the idea that Bitcoin is an *"investment"* in favor of the idea that you use Bitcoin as savings. The world can look bleak from a freedom lover's perspective, but I believe the best is yet to come with Bitcoin. The parasites of society won't be able to sustain their funding and draconian regimes if Bitcoin development and adoption continue for the longer term. Take this as a call to action to start your own project in the space (or contribute to an existing one) that helps build, educate, or communicate. If you want to see something in the Bitcoin space, don't take it for granted that someone else will do it. Take it upon yourself to go out there and build it or do it. Let's not get complacent; let's instead be a community of self-starters who get it done. I'll see you in the citadels. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Schrödinger’s Coin Model - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/schrodingers-coin-model/ Valuing Bitcoin as a Store of Value --- **Rapha Zagury** · April 12, 2024 · Updated June 25, 2024 *Rapha Zagury is the Chief Investment Officer and Head of Research at Swan, a trusted partner on your Bitcoin journey.* ### Introduction Bitcoin has been compared to various forms of property and other assets traditionally used for storing value. In the absence of sound money, rational investors allocate capital to real estate, stocks, and other alternatives as stores of value. Inspired by "Bitcoin as Property" from Michael Saylor, this white paper discusses Bitcoin's potential to capture the monetary premium of traditional assets and its impact on their valuation. ### The Shift from Traditional Savings to Alternative Assets Historically, less sophisticated investors saved their money in savings accounts, while more experienced investors sought leverage and efficiency through real estate and venture investments. During the last decade, with the decline in interest rates and the expansion of financial instruments, investors have turned to stocks, real estate, and exchange-traded funds (ETFs) as their primary stores of value. The explosion of ETFs and the popularity of second investment properties or Real Estate Investment Trusts (REITs) have resulted in the monetization of numerous assets. By the end of 2021, many assets, including housing, were valued well beyond their utility values. Central banks, flooded with excess currency, have fundamentally broken the value of money, leading investors to seek assets that offer protection against the negative effects of money printing. This phenomenon has resulted in the financialization of the economy, where investors have no choice but to look for other forms of saving. ### Bitcoin: The Apex Asset for Monetization Bitcoin has the potential to become the apex asset for monetization, consistently demonetizing traditional stores of value, such as currencies, bonds, real estate, equities, and gold. Real estate is often considered a desirable asset due to its inherent utility value, but its value is also heavily influenced by monetization, which has created a situation where many people own multiple properties, driving up demand and prices. However, it's worth noting that owning property comes with its own set of issues. For example, property taxes and maintenance costs can significantly eat into any potential returns. Additionally, properties can depreciate over time, further eroding their value. Furthermore, despite owning a deed to a property, one does not actually own the property itself; the promise of ownership can be rescinded in certain circumstances. For instance, if the government decides to seize the property for public use, the property Schrödinger's Coin Model 3 owner can lose their investment entirely. All these factors have led investors to consider alternatives for protecting their wealth, especially in a low-risk, low-inflation environment. In contrast, Bitcoin offers a "building" that cannot be destroyed, requires no maintenance, and provides superior storage of value. As a decentralized, secure, and scarce digital asset, Bitcoin has the potential to capture the monetary premium of traditional assets, potentially leading to their demonetization. Bitcoin is increasingly being recognized as a superior store of value for several reasons: 1. Scarcity: Bitcoin has a fixed supply of 21 million coins, creating a level of scarcity that protects its value from inflation. 2. Portability: Bitcoin is easily transferred and stored digitally, making it more practical than physical assets like gold. 3. Security: The decentralized nature of the blockchain technology underlying Bitcoin ensures its security and resistance to tampering. 4. Transparency: All transactions are recorded on the blockchain, creating a transparent and auditable record of ownership. 5. Accessibility: Bitcoin is accessible to anyone with an internet connection, making it an inclusive store of value. 6. Immutability or Censorship Resistance: The record of property ownership is secured by a massive and growing computer network, making it nearly impossible to alter or censor transactions. This provides an added layer of security and reinforces Bitcoin's status as a reliable and trustworthy store of value. ### The Model The Schrödinger Coin Model is based on the concept of quantum superposition, where an object can simultaneously exist in multiple states until observed. In this case, Bitcoin is considered to have two possible outcomes: it either fails and it's worthless (the Dan Peña scenario) or successfully captures the monetary premium of traditional stores of value (the Saylor scenario). Instead of relying on absolute certainty like in the scenarios above, this model assigns probabilities to each of them to arrive at a fair value for Bitcoin. If you open the box and Schrödinger's Coin Model 4 observed a world where Saylor was right, what happened? What about when Dan was right? #### 1. Model Components The model calculates the fair value of Bitcoin today using the following components: a. **Asset Market Cap**: The current market value of each traditional store of value (e.g., gold, real estate, stocks, bonds). b. **Monetary Premium Percentage**: The portion of an asset's market cap that is attributed to its status as a store of value. c. **Probability of Capture**: The likelihood that Bitcoin captures the monetary premium of each asset. d. **Time to Capture**: The expected time until Bitcoin captures the monetary premium of each asset. This can also be modeled as a vector with different captured percentages along time. e. **Discount Rate**: The rate at which future expected capture values are discounted to present value to calculate today's fair value. #### 2. Model Calculation Bitcoin's fair value is calculated as the sum of each asset's expected capture value, where each asset's fair value is defined as: a = (mcap)(mp)(prob)/(1 + r)n - mcap: Current Market cap of each asset - mp: Percentage of Market Cap that has monetization nature (not utility value) - prob: probability of Bitcoin capturing this value - r: discount rate - n: number of periods until monetization is realized Bear in mind that with this framework we could potentially also use today's Bitcoin price to calculate the current implied probability by the market. #### 3. Model Inputs *Potential Asset Classes and estimated values - Data as of April, 2023* 1. Stocks: 1. Market Value assumption: **$100T** 2. Source: Stock market capitalization can be sourced from the [World Bank](https://data.worldbank.org/indicator/CM.MKT.LCAP.CD) and [Statista](https://www.statista.com/statistics/710680/global-stock-markets-by-country/). The data represents an approximate estimate, as the stock market capitalization varies with market movements. 2. Bonds: 1. Market Value assumption: **$130T** 2. Source: The global bond market capitalization was derived from sources such as the [Bank for International Settlements](https://stats.bis.org/statx/srs/table/f1.2). The data represents an approximate estimate, as the bond market capitalization changes with new issuances and redemptions. It only includes the total for "advanced economies". 3. Gold: 1. Market Value assumption: **$10T** 2. Source: The total market capitalization of gold was calculated using the [World Gold Council](https://www.gold.org/goldhub/data/how-much-gold) data on above-ground gold stocks and the average gold price per ounce at the time of writing. The data should be updated to reflect the current gold price for accurate valuation. 4. Silver: 1. Market Value assumption: **$1.3T** 2. Source: The total market capitalization of silver was estimated using the [Silver Institute data](https://www.silverinstitute.org/silver-supply-demand/) on above-ground silver stocks and the average silver price per ounce at the time of writing. The data should be updated to reflect the current silver price for accurate valuation. Schrödinger's Coin Model 6 5. Real Estate: 1. Market Value assumption: **$320T** 2. Source: [Savills Research](https://www.savills.com/impacts/market-trends/the-total-value-of-global-real-estate.html) 6. Cryptocurrencies (non-BTC): 1. Market Value assumption: **$500B** 2. Source: [Coinmarketcap.com](https://coinmarketcap.com/) ### Parallels to the Black-Scholes model for options valuation The Black-Scholes formula is used to calculate the fair price of options, which are financial contracts that give the buyer the right (but not the obligation) to buy or sell an underlying asset, such as a stock or commodity, at a specified price and time. The formula involves five inputs: the current price of the underlying asset, the strike price (the price at which the option can be exercised), the time to expiration, the riskfree interest rate, and the volatility of the underlying asset's price. Here's the formula for pricing of a call option: C = S ∗ N(d1) − X ∗ e rt ∗ − N(d2) The formula itself is a bit complex, but in simple terms, it works by estimating the probability of different future scenarios for the underlying asset's price, based on its volatility (how much its price tends to fluctuate over time). The formula then calculates the expected value of the option based on those probabilities, discounted to today's value using the risk-free interest rate. The left side of the equation represents the value of the call option (the right to buy the underlying asset), while the right side represents the sum of the present value of the strike price (which is guaranteed if the option is exercised) and the expected value of the underlying asset's price at expiration. The expected value is calculated by multiplying the current price of the underlying asset by a probability density function, which is based on the volatility of the underlying asset's price. One key difference between the two models is that the Black-Scholes formula is based on the assumption of continuous time and a known distribution of asset prices, while the Schrödinger Coin Model is based on the concept of quantum superposition, where an object can exist in multiple states until observed. The Schrödinger Coin Model assigns probabilities to each possible outcome to arrive at a fair value for Bitcoin, while the Black-Scholes formula uses a probability density function based on the volatility of the underlying asset's price. Another difference is that the Black-Scholes formula is a closed-form equation, meaning that it can be solved analytically, while the Schrödinger Coin Model is a more complex model that involves multiple inputs and calculations. Despite these differences, both models aim to estimate the fair value of an asset by taking into account various factors such as the current price of the asset, the time to expiration, interest rates, and volatility. Both models also consider the potential for extreme outcomes and the uncertainty of future events, which can contribute to the asset's volatility. ### Schrödinger's Coin and Volatility as a Feature, not a Bug One of the most discussed aspects of Bitcoin and other cryptocurrencies is their inherent price volatility. In this section, we argue that the Schrödinger Coin Model explains the volatility of Bitcoin as a natural feature of its valuation, rather than a bug or a flaw. Furthermore, we will discuss how this volatility may decrease as we move closer to hyperbitcoinization. 1. **Extreme Outcomes** - The Schrödinger Coin Model is based on two extreme outcomes for Bitcoin: either it fails and becomes worthless (the Dan Peña scenario), or it successfully captures the monetary premium of traditional stores of value (the Saylor scenario). As a result, the model inherently predicts significant fluctuations in value depending on market sentiment and external factors that influence investors' perception of the likelihood of these outcomes. 2. **Small Changes in Probability, Large Changes in Fair Value** - Given the extreme nature of the two possible outcomes, small changes in the perceived probability of either scenario occurring can lead to substantial changes in Bitcoin's fair value. For example, a slight increase in the market's confidence in Bitcoin's success could result in a significant increase in its price, while a decrease in confidence could lead to a sharp decline. 3. **Uncertainty of Time** - Another factor contributing to Bitcoin's volatility is the uncertainty surrounding the Schrödinger's Coin Model 8 time it takes to achieve hyperbitcoinization. During bull markets, the perception of time (t) tends to decrease as investors become more optimistic about Bitcoin's adoption and the speed at which it will capture the monetary premium of traditional assets. Conversely, during bear markets, the perceived time until hyperbitcoinization increases as market sentiment turns negative. This fluctuation in time perception adds another layer of volatility to Bitcoin's price. 4. **Decreasing Volatility as Hyperbitcoinization Approaches** - As we move closer to hyperbitcoinization, the volatility of Bitcoin is expected to decrease. This is because, over time, the market will gain more information about Bitcoin's adoption, regulatory environment, and technological developments. As a result, the market's perception of the likelihood of the two extreme outcomes will become more stable, leading to reduced price fluctuations. In conclusion, the Schrödinger Coin Model explains the volatility of Bitcoin as a natural consequence of its valuation based on extreme outcomes, small changes in probability, and the uncertainty of time until hyperbitcoinization. As the market gains more information and becomes more confident in Bitcoin's future, its volatility is expected to decrease, tending towards zero. Understanding this aspect of the model can help investors make more informed decisions about the risks and rewards associated with investing in Bitcoin. ### Conclusion The Schrödinger Coin Model provides a framework for valuing Bitcoin by considering its potential to capture the monetary premium of traditional assets such as real estate, stocks, and bonds. As a superior store of value, Bitcoin has the potential to consistently demonetize investment in traditional assets, leading to a shift in capital allocation and a reevaluation of their worth. The model also sheds light on the inherent volatility of Bitcoin, which arises from the extreme outcomes, small changes in probability, and uncertainty of time until hyperbitcoinization. However, as the market gains more information and becomes more confident in Bitcoin's future, its volatility is expected to decrease, tending towards zero. Furthermore, the model highlights the importance of understanding the risks associated with investing in Bitcoin, such as regulatory changes, technological challenges, and potential competition from other cryptocurrencies or alternative stores of value. Schrödinger's Coin Model 9 By understanding the dynamics of the Schrödinger Coin Model, as well as the factors contributing to Bitcoin's volatility and the associated risks, investors can make more informed decisions about the potential growth and risks associated with Bitcoin and other assets. This holistic approach to valuation enables a more comprehensive assessment of Bitcoin's potential as both an investment and a transformative technology If you're interested in speaking with a Swan Private or Swan Advisor representative about your long-term goals, [click here](https://www.swanbitcoin.com/private/?utm_medium=email&utm_source=marketo&utm_campaign=FA_magazine). ### Rapha Zagury Rapha has spent his career on Wall Street. # Changing Bitcoin, Part III — The Future - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/changing-bitcoin-part-iii-the-future/ Bitcoin will change the lens of what it takes to succeed in pursuing change itself. It will change everything and the tactics people use to achieve change. Bitcoin will change how we “People with each other.” --- **Tomer Strolight** · April 15, 2024 · Updated June 25, 2024 If you’ve read the first two installments of this series, you’ll be aware that Bitcoin is very hard to change. And the bigger the change, the harder it is. In fact, the hardest change coincidentally called a hard fork, is, for all intents and purposes, impossibly hard. You’ll know, from part I, that there is no actual formal process to change Bitcoin and that the last three times changes were proposed, each played out very differently. The first, Segregated Witness, led to a prolonged and painful virtual war, often called the Blocksize War. The second, Taproot, was delayed for a long time due to the shared trauma of the Blocksize War. The third, *CheckTemplateVerify*, failed to be adopted when it was attempted. From part II, you’ll also be acquainted with the fact that there are many changes being discussed at present – including another attempt at activating the prior third proposal. All these proposed changes represent different approaches to pursuing the same goal. That the goal they all share is to make the features that make Bitcoin so unique and special – its trustlessness, self-sovereignty, and self-custody – available to many more people than is currently possible while doing so without compromising the other essential features that underlie Bitcoin – such as decentralization, permissionless ness, unsuitability, and the like. But what of future changes? Will Bitcoin reach a maturity where changes are no longer necessary? Or could it reach a stage where changes become ever harder, eventually attaining a state where change is impossible? And would this be good or bad for Bitcoin and Bitcoiners? That’s what we’ll examine together in this article. --- --- ### Bitcoin: An Unbreakable Agreement Bitcoin is an extraordinarily unique agreement. Because of its uniqueness, it could also be described as strange. What makes it so strangely unique? We’ll get to that shortly. Let’s begin first with the nature of agreeing. ![](https://www.datocms-assets.com/56652/1713181344-contractandpen.jpg?auto=format) ### The Difference Between Informal Agreements, Contracts, and Bitcoin It’s hard to get two people to agree on almost any arrangement. It’s harder for them to stay in agreement as time passes and things change. Coming to and staying in agreement becomes exponentially harder when we increase the number of people involved and as more time passes. Contracts are also known as agreements. They are special types of agreements – legally binding ones – which means they are enforced by the legal system: courts, judges, and other enforcement arms of the government. But enforcement of legal contracts doesn’t mean that the terms of these agreements cannot be violated. Instead, it means that if the terms are violated, the parties to the contract can seek remedies after the fact in the legal system. Our civil courts are full of examples of cases in which various parties to an agreement fell so far apart that they now need the authority of a judge and the skills of lawyers to resolve their disagreement. Bitcoin is also an agreement, but it is not a contract. Everyone who runs Bitcoin software enforces the rules of the agreement and checks that everyone else who uses Bitcoin is abiding by its rules. The rules are expressed in the Bitcoin code base. Buying some Bitcoin, running a node, or mining it is an expression of agreeing to and accepting its rules. It means your coins, your node, or your rewards will adhere to the rules of Bitcoin. However, Bitcoin doesn’t require that you sign a contract or check a box agreeing to its terms and conditions. It offers no contract to sign. It has no lawyer-drafted terms and conditions. No court in the world is ever asked to judge if some party broke Bitcoin’s rules. What makes Bitcoin special and unique is that it is an agreement whose rules cannot be broken. There is, therefore, no need for courts, judges, or lawyers. The rules are self-executing and self-enforcing. Everyone can check every action taken on the Bitcoin network, and everyone who runs a node does, in fact, check every action – before it is executed! Any attempt to take an action that breaks any of Bitcoin’s rules is automatically rejected, without being permitted to be taken! ![](https://www.datocms-assets.com/56652/1713181390-courtroom.webp?auto=format) All the agreements we are familiar with that came before Bitcoin indicate how the parties ought to conduct themselves and what will happen if they conduct themselves in a manner that contradicts the rules set out. But Bitcoin isn’t concerned with oughts. Its code describes what you can do, and you simply can’t do anything that it does not allow. The tens of thousands of nodes spread out all over the world are a worldwide *“jury of peers,”* judging every attempted action before it is permitted to be taken. They are neutral and objective. If an attempted action is in compliance with the rules of the agreement, it is permitted. If it is in violation, it is rejected without being allowed to take place. There is therefore no need for legal enforcement to remedy violations of Bitcoin’s rules. The rules simply cannot be violated. ### The Future of Bitcoin While typical agreements (and contracts) become harder to enforce as more people join them and as more time passes, the opposite is true of Bitcoin. The enforcement of Bitcoin’s rules actually hardens as more people join in. The more economic nodes there are, the more people there ensure that the rules are never broken. The more energy that getsdedicated to mining, the harder it becomes to ever change a record in the blockchain. Since changing Bitcoin’s rules requires a near-consensus of users, what will happen as Bitcoin continues to add users and resources, all of which make it harder and harder to achieve a change? The simple answer to this suggests that it will get harder and harder to change Bitcoin. ### To Agree or Not to Agree, That Is the Question A more important question to answer, however, is, *“What will the necessary and sufficient conditions be for a change in Bitcoin’s rules to take place?”* Consider for a moment (from Part I of this series) that even when Bitcoin was a much younger project with a much smaller user base, most of whom came from only a few disciplines, convincing everyone of the merits of a change still was a very difficult task. ![](https://www.datocms-assets.com/56652/1713181458-bch-btc.png?auto=format) Back then, change led to some people *“forking-off,”* which amounts to leaving Bitcoin, or exiting the agreement. (There is no rule in Bitcoin forbidding anyone from leaving it. Anyone can come and go as they please.) Ultimately, in the cases of those who left, they paid a steep price for doing so, because their coin ended up being worth less than 1% of what Bitcoin was worth, while also failing to attract enough participants to make it relevant. Those long-term consequences of that *“forking-off”* experience serve as a tremendous discouragement to anyone taking such steps again. This focuses people who want rule changes on attaining the necessary consensus to change those rules (unless it simply gets them to give up on the idea of changing Bitcoin). ### Satisfying Technical Requirements Will Be Insufficient – Social Requirements Will Be Necessary In the future, things will be even harder. Technologically speaking, nothing will change regarding what’s needed to effect a change: 1. *The proposed change will have to solve a real problem.* 2. *It will have to be technically audited to ensure that it did not introduce vulnerabilities or bugs into Bitcoin.* 3. *Miners will have to agree to enforce the new rules (simultaneously when some activation conditions are met).* 4. *Node operators will have to support the activation on their nodes.* 5. *Mere holders and users of Bitcoin will also have to be largely in agreement, for if they weren’t, there would be the risk of them running opposing nodes or of them leaving Bitcoin and damaging its value and efficacy as money for all users.* But that list is just a “technical” list of requirements. As an agreement between very many human beings, satisfying all these technical requirements will have many prerequisite social requirements that are non-technical: 1. *Will the overwhelming majority of people in Bitcoin agree that the problem is real and worthy of solving? How will their agreement be achieved1⁄4* 2. *Will the non-technical people involved in Bitcoin, who will then be a huge majority of the user base, believe (i.e., trust) the assurances regarding vulnerabilities that the auditors are making?* 3. *If mining becomes much more decentralized than it currently is, will the same supermajority (95% or more) of miners be able to be persuaded to activate a change?* 4. *Will node runners be able or interested in becoming sufficiently informed to decide whether or not to implement the changes?* We can see that the technical considerations for a change will not be achievable without first meeting the social considerations: agreement, belief (or trust), persuasion, interest, and involvement. These social requirements may seem similar to conditions to win elections in a democracy. But Bitcoin is not a democracy. Changes to Bitcoin are not like democratic elections where no matter how small a voter turnout there is, the majority of votes cast wins the election. In Bitcoin, any node runner or miner who doesn’t make a change is, by default, voting for the status quo – for no change. And, unlike democratic elections, Bitcoin isn’t “majority rules” either. For a chance to win approval and become implemented, it needs the overwhelming support of all the interested and affected parties. As Bitcoin grows in the number of its participants, it’s not hard to see how change becomes harder and harder. Indeed, a cynic (who might refer to themselves as a realist) might argue that changes to Bitcoin will become impossible as the number of participants grows. Some have argued that we may have already crossed that threshold – that Bitcoin is too big to change. Some people are quite satisfied with this, or at least begrudgingly accepting of it. The fancy word used for *“no longer being able to change”* is ossification. And yet Bitcoin can never be formally ossified. It is always true that if the technical requirements in the first list above are achieved, Bitcoin’s rules will change in accordance with the proposed changes at the ordained time. There is always hope. ### Necessitating Cooperation – A Breakthrough in Forming Agreement On the surface, it may seem hopeless to be able to attain the agreement required to modify the agreement that Bitcoin is. However, such an attitude actually reveals much more about the damage our current systems of government, money, and the courts have done to our ability to generate agreement. After all, our courts generally rely on an adversarial system of rivalrous parties that do not seek agreement and do not require it. Our democracies are adversarial rivalries where there is one winner in each election, and the rest are losers. Both of these are competitive and not cooperative systems. And our money system is one where the rules are shrouded in mystery and are anything but clear, consistent, and unbreakable. So, it is not at all surprising that many people might feel that attaining agreement on such a large scale as Bitcoin will require will be impossible. ![](https://www.datocms-assets.com/56652/1713181526-shaking_hands.webp?auto=format) Necessity is, however, the mother of invention. Bitcoin imposes upon us the necessity to come to agreement - cooperatively - to make changes to what is becoming the biggest agreement in the world. For those seeking change, it will not do to divide the populace and try to eke out a slight majority to make changes in Bitcoin. It will not do to fool a sizable portion of the populace to enact a change in Bitcoin. In fact, any rivalrous, divisive approach to enacting change increasingly becomes a dead end. Instead, Bitcoin requires that we change it through togetherness, through understanding, through agreement, through honesty. It is a huge social project wherein the little guys cannot be ignored if they are making a valid argument, and where the big guys cannot steamroll over others if their desired changes are not in the interest of the whole. This is an approach to effecting change that we do not see much of in the world today. But it’s going to become a necessity. And that means that we will, in fact, change to rise to the occasion. It may take lots of time. It may take plenty of failures of trying to force through changes unsuccessfully through division or deception. But, eventually, like all innovation and invention, some enterprising people will realize what is needed and will pioneer getting it done. Successfully changing Bitcoin will require dialog that seeks to bring forth understanding. It will require listening. It will require empathy. It will require patience. These are all virtues human beings are undoubtedly capable of exhibiting. Outside of Bitcoin – in today’s adversarial systems of government, contracts, and money – our incentives to develop these virtues are absent. Instead, the incentives reward divisiveness, deception, rivalry, immediate satisfaction, and character assassination of others. It should be no surprise that those vices – those vicious characteristics – are what we see develop in our society and its leaders. And we pay a huge price for this. That price is living in an increasingly vicious society. ![](https://www.datocms-assets.com/56652/1713181607-government.webp?auto=format) Fortunately, as Bitcoin grows, it necessitates an enlightenment. It necessitates that we cooperate honestly and truthfully, with consideration of a wide variety of interests, and with long-term focus. It turns attacks on our rivals into dead ends. It turns viewing other human beings as rivals into a dead end. Many people consider Bitcoin's end state, the stalemate under rivalrous conditions, to be a good thing. *“It’s not perfect, but it’s better than any alternative in which some powerful people abuse their power,”* they say. I would argue that this view is shortsighted, and, understandably, a result of the dark times we have been living in, believing that adversarial rivalries are unavoidable and inevitable conditions. However, with the benefit of discovering a system that necessitates cooperation and honesty, enlightenment is demanded. History shows us we are, in fact, capable of all these virtuous traits. This may become one of the greatest benefits that humanity receives from the invention of Bitcoin – a system whose incentives encourage virtue and punish vices. Bitcoin will change our lens of what it takes to succeed in pursuing change itself. It will change the type of people who rise to positions of leadership and influence. It will change the tactics people use to achieve change. It will change the people. There’s a very popular saying in Bitcoin that states: *“You don’t change Bitcoin. Bitcoin changes you. I think it’s very close to the mark."*  I would modify it to say: *“To change Bitcoin, we must first change ourselves, for the better."* ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Interview with an Orange-pilled Financial Advisor URL: https://www.swanbitcoin.com/investing/interview-with-an-orange-pilled-financial-advisor/ Is this the shape of things to come? --- **Ryan Flynn** · March 18, 2024 · Updated June 25, 2024 ### Financial Advisors Are Turning Towards Bitcoin The financial advisory landscape is currently experiencing a monumental shift, which is going mostly unrecognized by those inside the industry. It's a shift that will be happening to every industry, but since the shift we're discussing here is from an easy, analog money to a sound, digital one, the money management industry is ground zero. The shift has been underway for fifteen years; however, it was not until the January 2024 approval of spot Bitcoin ETFs that the industry at large started to notice. Prior to then, Bitcoin was viewed with skepticism by traditional financial professionals, often dismissed as a speculative bubble or a niche interest for tech enthusiasts. Now, the narrative is changing with a quickening pace. The ETF launch marks the end of the early adopter phase of Bitcoin and the beginning of the institutional adoption phase. We're in the eerie quiet of the small space between two eras, a vacuum forcing the issue onto the advisors' desks, requiring them to reorient their mental models of Bitcoin and reevaluate its implications for investment portfolios. The bottoms-up nature of Bitcoin means retail holders could outmaneuver the professionals. In many cases, I believe that those that work with a financial advisor or money manager have managed to acquire and hold Bitcoin in direct conflict with their advisor's guidance. This has slowed Bitcoin's adoption and resulted in opportunity costs for clients in the form of lower investment returns. In my opinion, many advisors have done a disservice to their clients in this way. But some have not. There is a small but growing group that has embraced Bitcoin and recognized the impact it will have on their client's lives and on their own business prospects. We spoke with Matt Golliher of Vista Investment Partners, one such firm, about his journey in Bitcoin and the hard work he and his company have done to use this technological shift to their advantage. ### What got you interested in Bitcoin? Clients first started asking me about Bitcoin during its 2017 bull run. That’s the first time I remember taking a look at it. Unfortunately, most of the information I found was presented in the context of the blockchain craze and the initial coin offering (ICO) frenzy that were both happening that same year. At the time, I could not find the Bitcoin signal through all the crypto noise. It all looked like a classic hype-fueled bubble to me, and I regret to say that’s what I told my clients. Bitcoin’s price crashed after that 2017 peak, and I interpreted that as confirmation that I was right. Fast-forward to March of 2020. The whole world was locking down for the pandemic, the markets were in turmoil, and Congress was about to pass a $2.2 trillion economic stimulus bill. That’s when I noticed: Bitcoin wasn’t dead yet. Curious, I decided that I needed to at least understand what this thing was, so I ordered ***The Bitcoin Standard*** by Saifedean Ammous. I read the whole thing in one sitting. Then I ordered more books and read those. I devoured every article and podcast on the topic I could find. It quickly became clear to me that if Bitcoin was what it appeared to be, then it would probably be the most important financial innovation I would see in my lifetime. As a financial advisor, I couldn’t ignore that. ### What was it like trying to incorporate Bitcoin into the business in 2020? It felt like running into a brick wall. That’s despite having the support of my team, including our managing partner, Brett Guiley, who also became a Bitcoiner in 2020. Even for independent Investment Advisors, a lot of different parties need to cooperate for an advisor to be able to offer a particular service to clients. The partners we work with to provide custody, brokerage, compliance, legal counsel, and professional liability insurance can’t simply let us do whatever we want. They must conduct enough of their own due diligence to be comfortable supporting us offering a new solution. It took us over three years to assemble all the pieces of the puzzle, but we are now positioned to provide Bitcoin-focused wealth management services. ### How has your industry’s relationship with Bitcoin changed since 2020? The most common reaction I used to get when I brought up Bitcoin to a colleague would be a chuckle, followed by a weird look when they realized I was serious. I don’t see the same wide-spread dismissiveness I did four years ago. I’m also starting to see a growing awareness of the difference between Bitcoin and crypto, blockchain, and digital assets. I think the spot Bitcoin ETFs coming to market have played a role in that. I think we’re also seeing more open-mindedness toward Bitcoin because of the persistent inflation, fiscal deficits, and ballooning federal debt we’ve seen over the last few years. There seems to be an emerging sense that something is wrong, and perhaps what worked best over the last 50 years may not be optimal for the next 50 years. Because of that, I think more advisors are willing to consider alternative assets, and in the world of alternative assets, Bitcoin is the big flashing lightbulb. ### How has it NOT changed? We are still early. For the most part, the same challenges that existed in 2020 still exist today, even though the industry has made progress in some areas. The biggest thing that hasn’t changed is the view that Bitcoin primarily increases risk. Even among those who are open to it, the overall sentiment is that Bitcoin is a volatile alternative investment that could make sense as a tiny allocation in a diversified portfolio. That’s a good starting point, but I believe the realization that people buy Bitcoin to reduce risk has largely not found its footing yet. ### Explain that point further. How can a Bitcoin allocation help reduce risk in a portfolio? In terms of asset allocation, Bitcoin may potentially improve a portfolio’s risk-adjusted returns. Based on historical returns, adding just a 1% Bitcoin allocation to a conventional portfolio often produces a clear improvement to the portfolio’s Sharpe Ratio. If you compare Bitcoin’s calendar year returns since 2011 to common indexes for REITs, bonds, equities, and gold, you’ll see that Bitcoin has either been the best-performing asset or the worst every single year. Often by a lot. That can offer unique diversification benefits. Of course, that’s all based on historical performance. Bitcoin may not behave the same way in the future. On a deeper level, I would argue that Bitcoin reduces risk because of what it is. From an economics perspective, Bitcoin is not an investment. It does not produce cash flows. Bitcoin is a monetary good. Its value is derived from its monetary properties. Further, it exists completely separate and outside current dollar-denominated financial markets. You can only obtain so much diversification by owning something within this system. A hedge on systemic issues inherent with the current markets can really only be found in something that exists outside that system, like Bitcoin. Anyone on Earth with an internet connection can use Bitcoin, and no authority controls access to the Bitcoin network. That means Bitcoin is a global asset. Unlike traditional investments, Bitcoin’s performance does not depend on the success of any particular company, country, or market. ### What changes did your firm have to make to offer Bitcoin? We formed a new Investment Advisor entity as a division that will focus on delivering clients a Bitcoin-dedicated advisory offering. We fired our broker/dealer, who was actively hostile towards Bitcoin, interviewed many, and found one that would allow us to incorporate Bitcoin into our operations. We had to find new E&O coverage and hired a new compliance team plus additional in-house staff who had done some work to understand Bitcoin. We onboarded additional custodians and made significant investments in new technology that helps us bridge between the Bitcoin market and the legacy financial markets. This all took more than three years. We learned a lot of lessons along the way, but we’re confident we’re on the right path. We can now pursue our primary goals:  1. Provide the best wealth management experience for Bitcoiners who also own traditional financial assets 2. Help our clients acquire and hold real Bitcoin and not just proxy products like the ETFs. 3. Provide the best independent Investment Advisor for other orange-pilled advisors to plug their businesses into. ### Is Bitcoin a threat to the wealth management industry? I believe Bitcoin is a massive threat to the wealth management industry. Much, if not most, of the wealth management industry exists because our currency bleeds value over time. As a result, in order to protect themselves from monetary dilution, would-be savers are forced to figure out the complexities of the securities markets on their own or to hire someone to help them. Most clients I’ve worked with in my career are not investors. They’re savers. These clients are not trying to deploy capital at risk to empower productive economic work—which is what an investor does—but to preserve their purchasing power and retire someday. Bitcoin makes it possible to save money again, which means Bitcoin is a direct competitor to everyone who manages money for a living. I believe Bitcoin will change the nature of what it means to be a financial advisor, and the advisors who succeed in the in decades ahead will be those who can offer competitive Bitcoin financial services. ### Do Bitcoiners even need a financial advisor? It depends on their situation. If someone lives on a pure Bitcoin standard, gets paid in Bitcoin, pays their bills in Bitcoin, and holds 100% of their wealth in Bitcoin, that person probably doesn’t need a financial advisor. However, most Bitcoiners aren’t there yet. There are a variety of reasons why Bitcoiners may choose to continue owning traditional financial assets. They may be unwilling or unable to tolerate Bitcoin's volatility for 100% of their wealth. They may have a spouse who is not as convinced about Bitcoin as they are. They may want help minimizing their taxes or protecting their family if something happens to them. The future will likely bring a broader array of Bitcoin-native investment products, which will offer advisors more tools to tailor exposure to their client's needs. These could include more sophisticated ETFs, mutual funds, and derivative products, providing both exposure to Bitcoin's price movements and opportunities for hedging and risk management. As we transition to more of a medium of exchange use case for Bitcoin, there will be new and innovative ways clients can utilize their Bitcoin, which may impact the rest of their financial lives. It's these types of scenarios that working with an advisor aligned with their client's financial interests and having a deep understanding of Bitcoin can add tremendous value. ### How does the introduction of the spot Bitcoin ETFs change advisors’ analysis of Bitcoin? For one thing, it forces them to pay attention. Before the ETFs, it made more sense for advisors to ignore Bitcoin because they couldn’t offer it to their clients anyway. But now that Bitcoin is “on the shelf,” dismissing it is a lot harder to justify, especially if clients want it. The spot ETFs also endow Bitcoin with a level of perceived legitimacy that it’s never had before in our industry. The ETF issuers include some of the most respected, well-known names in the business. Financial advisors will still have differing opinions about Bitcoin, and some of them may continue advising against it, but I think the days of Bitcoin being viewed as some weird, fringe financial experiment are over. ### Doesn’t relying on an ETF for custody defeat the whole point of Bitcoin? I expect the ETFs to play a similar role for Bitcoin as dialup did for the internet. By piggybacking on existing telephone infrastructure, dialup gave millions of Americans their first user-friendly access point to a new network, but over time, it was replaced by network-native internet solutions. Similarly, by piggybacking on existing financial infrastructure, the spot Bitcoin ETFs have given millions of Americans their first user-friendly access point to the Bitcoin network. Over time, though, I expect the relevance of the ETFs to diminish as network-native Bitcoin solutions continue to develop and mature. The main drawback of ETFs is counterparty risk: You have to trust someone else with your Bitcoin private keys. As Bitcoiners know well, “Not your keys, not your coins.” I hope that risk never materializes with these ETFs, but it is a legitimate risk that investors should be aware of. Ultimately, I expect Bitcoin-native solutions to outcompete the ETFs for a simple reason: Bitcoin is digital money. Bitcoin ETFs are not. If digital money is a profound innovation (and I believe it is), then you will be able to do new things with it that were previously impossible, like micropayments. Over time, I believe owning actual Bitcoin will become more useful for more people compared to holding a Bitcoin ETF. ##### About Matt Golliher *Matt Golliher is a Financial Advisor with Vista Investment Partners. He lives in Richmond, IN, with his wife, Devra. Matt became a Bitcoiner in 2020. Along with educating his clients, colleagues, and community about Bitcoin, Matt focuses on helping Bitcoiners who need traditional wealth management and financial advisory services. If you have any questions or would like to contact Matt, you can do so using the contact information below.* Email: matt.golliher@vistainvestment.net ### Ryan Flynn Ryan is the Managing Director of Swan Advisor Services. He is working to make Bitcoin accessible to all financial advisors and their clients. Before joining Swan, Ryan was the Co-founder of Localstake, an investment crowdfunding broker-dealer platform. He started his career in investment banking and holds Series 7, 24, 28, 63 and 79 securities licenses. # Changing Bitcoin, Part II — The Present - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/changing-bitcoin-part-ii-the-present/ Rule Changes Are Being Proposed. How Might They Change Bitcoin? How Might They Happen? --- **Tomer Strolight** · March 13, 2024 · Updated June 25, 2024 *"It used to be very hard to change Bitcoin. It’s still very hard to change Bitcoin, but it used to be very hard to change Bitcoin too."* **– paraphrasing a joke of comedian Mitch Hedberg** One of the most profound differences between Bitcoin and nearly every other human invention is how hard it is to make changes to it. Since Bitcoin is software, this aspect of its nature makes it profoundly different from other software. Software, after all, is constantly changing. Software is expected to get upgraded regularly, even automatically. Software is accepted as being imperfect and in need of regular patches. And, software is understood to be something that will become obsolete, eventually being replaced by some other software. None of that is true in the case of Bitcoin. Bitcoin rarely changes. It is extremely hard to change. But if software is easy to change, and Bitcoin is software, there must be something else about it that is unlike all the software that came before it, that makes it an exception to this rule. Indeed, there is. It is the fact that Bitcoin is also an agreement. It’s not an agreement like the terms and conditions (Ts & Cs) of the software and websites we all use daily – Ts & Cs that are unilaterally and frequently changed by the company publishing the software or operating the website. There are, notably, no published Ts & Cs for running or using Bitcoin. ![](https://www.datocms-assets.com/56652/1710355611-spi_ts_01.jpg?auto=format) Bitcoin is an agreement to run software that forces all its participants to adhere to rules that arise from running this software. At a high level, the rules center around the creation of a single, indisputable chronicle of the history of Bitcoin transactions from its genesis up to the present – a chronicle that can be added to but never modified or erased. When conceptualized, these rules lead to Bitcoin’s issuance schedule and supply cap of 21 million Bitcoins and to the security characteristics that prevent it from being stolen or fraudulently spent. Any changes anyone makes to Bitcoin software that violate any of these rules or any transactions they try to send that violate any of these rules will be rejected by everyone running the Bitcoin software. This is why it’s so hard to change Bitcoin. Unless everyone upgrades, none of these fundamental rules can be changed. [Part one](https://www.swanbitcoin.com/changing-bitcoin-the-past-the-present-and-the-future-part-one/) of this series explained how some changes, called soft-forks – changes that don’t violate the prior rules – can introduce additional restrictions that allow for more functionality. But even those are very hard to put in place because they require all the miners of Bitcoin to enforce them and to simultaneously begin their enforcement. Part one also provided an overview of the history of how hard those changes were to make in the past. Which leads us to the present. Does Bitcoin need further changes? What might those changes be? Will those changes take place? ![](https://www.datocms-assets.com/56652/1710355764-spi_ts_02.jpg?auto=format) ### The Present #### What Else Should Bitcoin Be? What Is It That It Shouldn’t Be? At almost any point in time that one looks at there is disagreement about what Bitcoin is, what it is meant to be, and what it is not meant to be. However, at some times the discussion about this escalates towards what looks like a coming change – or at least a proposal for such change. We are at what appears to be the start of such a time right now. #### Bitcoin’s Success Is What’s Motivating the Discussion of Changing Bitcoin Like almost every other change in the past, today’s discussions revolve around how to scale up Bitcoin. “Scaling up” often refers to how many people can use Bitcoin, how inexpensive it can be, and how fast it can be. The desire to scale up from what Bitcoin is now capable of comes from a shared vision many people have that Bitcoin should be accessible for everyone in the world, to all use at the same time, for everything. That vision requires that these additional goals be accomplished without sacrificing Bitcoin’s most fundamental tenets, like decentralization, unconfiscatability, permissionlessness, trustlessness, incorruptibility, imalleability, and so on. (Note that these big words are what sets Bitcoin apart from the existing financial system and, indeed, most other power structures in the world. Most of these words are opposites of words we use to describe traditional systems, and they have really only come into use thanks to Bitcoin. They’re so unique to Bitcoin that you won’t even find many of them in the dictionary!) As it stands now, though, with its current rules, Bitcoin cannot achieve that vision. With eight billion people alive and transacting, there is no way under these current rules to make room for everyone to use Bitcoin. Even with just its current user base, we are seeing pressure on the cost and speed of using Bitcoin. This is no reason to lose hope, though. After all, Bitcoin is hope. Indeed, the pressure we are seeing may be thought of as Bitcoin’s way of saying to us that it is time to figure out how to scale it to the next level. #### Building New Layers to Scale While Preserving Core Tenets We can’t just make Bitcoin bigger. Brute force changes, like making the block size bigger, won’t work for accommodating eight billion people – not even if we only used the block space to create lightning network channels that could each be used to transact off-chain thousands of times. And a change like this would corrupt Bitcoin’s decentralization, so it is off the table anyway for that reason. It would also require a change known as a hard fork, which part one of this series explained was impossibly difficult to implement. So it’s off the table for that reason, too. What it appears we can do, thanks to the [wonderful properties of secure hash functions](https://www.swanbitcoin.com/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/), is to pack all the data that we do need to make Bitcoin accessible to billions of people into tiny entries on the blockchain. We can then use that larger data set in newly developed software that allows users to transact quickly, easily, and inexpensively, knowing that all the actions they take are anchored to the rules of Bitcoin. ![](https://www.datocms-assets.com/56652/1710356005-spi_ts_03.jpg?auto=format) Some new ideas even take into account the expectation that there will be many more casual users of Bitcoin who just want to use it without undertaking the effort of verifying everything. These proposals would build in protections for them even under very high ratios of casual users compared to dedicated users, making it impossible for the dedicated users to steal from or deceive the casual users. This idea of packing lots of data into just a little space is the principal one behind all the discussions in the present. It is often referred to as increasing “economic density.” Building the applications that increase economic density is referred to as building layers atop Bitcoin. In this approach, Bitcoin itself doesn’t do all the work. But Bitcoin is an essential and necessary “base layer” that these applications rely on to operate. Bitcoin becomes the “verification engine” and even the “court of appeal” to ensure that every participant plays by the rules. But, all of these proposals also require that Bitcoin do something it can’t yet do. It requires that we are able to restrict what can be done with the money in that transaction in one single transaction. And as part one of this series explained, adding restrictions is exactly what soft forks do. (In that article, a soft fork was compared to adding a new restriction saying “keep to the right” on a path in a lawn that already had the rule “stay off the grass.”) ### Why Do We Need More Restrictions? Isn’t Bitcoin About Freedom? Why do we need new restrictions? The basic idea is that if we want to increase the economic density of on-chain transactions then many people are going to have to share one single transaction. And if that’s the case, we need to put restrictions on such transactions so that the people with the keys to those transactions can’t steal the money that doesn’t belong to them. Imagine if, for example, a company is making payroll to a thousand employees. Instead of making one thousand different transactions to one thousand different people, they could make one transaction for the entire sum of the entire payroll but place initial restrictions on it so it could only be spent directly to the addresses of the employees in the amounts owed to each employee – one transaction instead of one thousand. Furthermore, the idea can be enhanced by adding that when employees want to spend that money, they are able to use Lightning or some other spending protocol that doesn’t require further on-chain transactions. If they each do ten further off-chain transactions with their payments we can end up with 10,000 transactions in the space of only one. And to top it all off, if they can then keep rolling over their balances at each payroll cycle into a single new replacement transaction, we can have tens of thousands of transactions in the space of only a few. That’s powerful scaling. ![](https://www.datocms-assets.com/56652/1710356152-spi_ts_04.jpg?auto=format) ![](https://www.datocms-assets.com/56652/1710356180-spi_ts_05.jpg?auto=format) ### Crossing a Chasm to the Next Level All these scaling ideas remain at the pre-prototype level. Moreover, they require the implementation of two things: First, they require a consensus change “soft-fork” to Bitcoin. Second, they require the development, testing, and adoption of new types of “wallets” that utilize these changes to provide the above benefits. Both of these things are hard to complete and quite time-consuming on their own. This creates a Catch-22 or chicken-and-egg situation in which developers are reluctant to work on the wallet software without assurances that the base layer changes will take place, but the community is reluctant to go through the effort of activating a change without the demonstrated commitment of developers to create the wallets. Moreover, to make matters harder still, there are different approaches to the soft-fork changes that are being proposed. It is hard enough to get the whole Bitcoin community to agree when there is only change to approve, but when there are multiple proposals which are similar, and the differences between them are nuanced and not easily understood even by those who are developing with them, it gets even harder, because we can’t make all the changes. And we can even make one of the changes unless we have very broad agreement. And that is where we are today. ### Which Way, Bitcoin? To those who follow this discussion, there appear to be many divided camps: there’s those people who are very wary of making any of these changes; there’s those who are supportive of one or some proposals but wary of others (and this includes divisions that have some people supportive and wary of different combinations of proposals), there’s those whose support is conditional upon seeing some software developed first that would validate the effort of going through the change. We are confronted by a more complex situation than at any time before when changes to Bitcoin were being proposed. Bitcoin’s governance is unlike that of companies or governments. There won’t be an executive decision made to proceed or not by any president or board of directors. There won’t be an election held. Every change so far in Bitcoin’s history has followed a different course (see Part 1 of this series), and the next one looks unlikely to follow the same path as any previous change. Bitcoin is also much bigger today than it was during any of the previous changes. Today, there is much more capital available to invest in Bitcoin. Today, it has the attention of governments all over the world. Today, it has the buy-in of much of Wall Street as a legitimate and unique asset class. Today, there are numerous public companies involved in mining Bitcoin (and miners play a crucial part in activating changes to Bitcoin – also see Part 1 of this series for an explanation there). All these new factors may figure significantly in the complexities of how this issue evolves and, ultimately, how it resolves. One thing is certain: this year will see a lot of discussion, debate, and disagreement on the issue of if and how to next change Bitcoin. Will we find our way to a course that makes Bitcoin self-sovereign money for the entire human population of billions of people, or will it only be an enabler of this type of self-determination accessible to mere millions who recognized its power early? ![](https://www.datocms-assets.com/56652/1710356222-spi_ts_06.jpg?auto=format) ### Stay Tuned for Part III – The Future If we don’t make these (or other) changes soon, will they get harder or easier in the future? ![](https://www.datocms-assets.com/56652/1710356259-spi_ts_07.jpg?auto=format) This last question will be the topic of the final installment in this series. It will explain the trends that could lead to what is referred to as ossification, a situation in which, for all practical purposes, it will be impossible to make any such changes to Bitcoin. Why this could happen and whether or not it’s good for Bitcoin will be explored there. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Race is On: 11 Bitcoin ETFs Launch - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/the-race-is-on-eleven-bitcoin-etfs-launch/ These ETFs will act as a top-of-funnel and will become an initial touchpoint for many future Bitcoiners. --- **Sam Callahan** · January 12, 2024 · Updated June 25, 2024 After nearly 10 years of denials, eleven spot Bitcoin ETFs were approved and began trading this week, marking a pivotal moment in Bitcoin’s history. The news broke on Wednesday afternoon. It was fitting that these ETF products were approved 15 years from the day when early Bitcoin user Hal Finney posted this legendary tweet: ![](https://www.datocms-assets.com/56652/1705090437-1.png?auto=format) When he posted this, Bitcoin didn’t even have a dollar price yet. It’s incredible to see how far this digital money has come since Hal received the very first transaction from Satoshi Nakamoto all those years ago. Due to the SEC’s debacle on Tuesday, when the SEC’s official X account was hacked and a fake ETF approval announcement was posted, causing massive price swings and over $300 million in liquidations, the SEC chose to instead post the approval document on its website. It’s important to step back and recognize why the SEC had denied so many applications prior to this week’s developments. Their main justification for denying them for all those years revolved around suspected fraud and manipulation in the spot Bitcoin market. However, when the SEC went ahead and approved the Bitcoin Futures ETFs that track the underlying spot Bitcoin market, it raised eyebrows and ultimately led to a lawsuit with Grayscale. In the end, the court ruled that the SEC’s decision to deny Grayscale from converting its Bitcoin trust into a spot Bitcoin ETF and approving Bitcoin Futures ETFs was “arbitrary and capricious” and ordered them to re-evaluate it. This was one of the main driving forces behind the SEC finally approving these products. In the approval document, the SEC agreed with the analysis provided to them by multiple issuers they denied over the past several years. Apparently, the SEC just needed to perform its own “robust correlation analysis” to come to the same conclusion, that Bitcoin futures prices were closely correlated to spot prices. This was the same argument at the heart of Grayscale’s argument in court, against which the SEC fought, wasting millions of dollars in taxpayer money in the process. This is the key passage in the approval document where the SEC capitulated: ![](https://www.datocms-assets.com/56652/1705090489-2.png?auto=format) It’s difficult not to condemn the SEC for now coming to the same conclusion after years of preventing investors from accessing a better investment vehicle to gain exposure to Bitcoin compared to more expensive, riskier alternatives. SEC Commissioner Hester Peirce, who has long advocated for a spot Bitcoin ETF approval and was one of the three commissioners who voted to approve them this week, wrote an incredible [letter](https://www.sec.gov/news/statement/peirce-statement-spot-bitcoin-011023#) that touched on what she believes was the main reason the SEC denied spot Bitcoin ETFs: prejudice.  I recommend reading the letter in full, but here is an important excerpt.[👇](https://emojipedia.org/backhand-index-pointing-down) ![](https://www.datocms-assets.com/56652/1705090543-3.png?auto=format) Commissioner Peirce then goes on to list some of the harms done by the SEC in preventing a spot Bitcoin ETF from coming to market including: - Damaging the SEC’s reputation and credibility long term   - Wasting millions of dollars in taxpayer money toward blocking these applications - Alienating a generation of investors due to their unreasonable approach  The messaging from SEC Chairman Gary Gensler does hint that the SEC was forced to approve these from the courts rather than making the decision on their own accord. In his [statement](https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023) about the ETF approvals, Gensler came across as disgruntled and used the opportunity to spread misinformation about how Bitcoin is *primarily* used for illicit activity. Read the last two paragraphs of the statement below: ![](https://www.datocms-assets.com/56652/1705090592-4.png?auto=format) Regardless of the fact that the SEC had to be pulled towards these approvals kicking and screaming, the spot Bitcoin ETFs have finally hit the market. It marks an inflection point in Bitcoin’s adoption. For the first time ever, millions of investors will now have access to Bitcoin in traditional brokerage accounts and large institutions like financial advisors, pension funds, and endowments will now be able to gain exposure to the asset. This is the part where I remind you that an ETF is not real Bitcoin. There are tradeoffs that investors make when choosing the convenience of a spot Bitcoin ETF. For starters, they are bringing on counterparty risk by trusting a third party to secure the bitcoin on their behalf. Additionally, an ETF has yearly annual sponsor fees. When you buy spot Bitcoin, you pay once, and then never have to pay a fee again. Lastly, Spot Bitcoin trades 24/7/365 and has tax benefits, like less prohibitive tax loss harvesting rules, compared to ETFs. Having said that, spot Bitcoin ETFs will likely bring millions into Bitcoin as a new top-of-funnel driven by marketing campaigns from some of the largest, most trusted financial institutions in the world. These ETF issuers will viciously compete with one another for capital because, in the ETF world, liquidity is king. Typically, the largest ETF in an asset class dominates once it gains a significant market share and gathers momentum. From there, they have the pricing power to set their fees as they see fit. Once an ETF wins, it’s very difficult for another to take its crown. Spot Bitcoin ETFs represent a unique moment in ETF history because never before have eleven ETFs launched for a brand new asset class simultaneously. The competition will be both entertaining and brutal to watch unfold. We have already seen multiple strategies from these ETF issuers to attract capital through marketing campaigns, dropping their fees (or waiving them entirely), and trying to win favor with the Bitcoin community in other ways. Here is an updated table of all of the ETFs and their fee structures: ![](https://www.datocms-assets.com/56652/1705090692-5.png?auto=format) @JSeyff Fees aren’t the only way these issuers are trying to differentiate themselves. Both VanEck and Bitwise have pledged to donate a percentage of their profits to Bitcoin core development. VanEck:  ![](https://www.datocms-assets.com/56652/1705090737-6.png?auto=format) Bitwise: ![](https://www.datocms-assets.com/56652/1705090783-7.png?auto=format) Franklin Templeton even changed its profile picture on its official X account to include laser eyes in an attempt to gain favor with the Bitcoin community. ![](https://www.datocms-assets.com/56652/1705090813-8.png?auto=format) All of this led up to the first day of trading when we finally got to observe which issuers would be rewarded for their efforts. On the first day of trading, the combined ETFs saw over $4.5 billion in trading volume. ![](https://www.datocms-assets.com/56652/1705090840-9.png?auto=format) @JSeyff But trading volumes provide an incomplete picture because it doesn’t delineate between the dollar amount of inflows compared to outflows. When looking at inflows, we find that a total of $625 million flowed into these Spot Bitcoin ETFs, an impressive showing for one trading day. ![](https://www.datocms-assets.com/56652/1705090883-10.png?auto=format) BitMex Research From the first day’s trading, we can see that the big winners were 1.) Bitwise, 2.) Fidelity, 3.) BlackRock, and 4.) Ark 21 Shares. Despite the significant inflows, many investors were puzzled by the fact that Bitcoin’s price was actually down on the week. ![](https://www.datocms-assets.com/56652/1705090919-11.png?auto=format) This can be explained for a number of reasons. First is the substantial outflows out of GBTC. We saw outflows of $95 million on the first day of trading. This results in Grayscale selling the bitcoin in the trust. It is reasonable to believe that many of these outflows were investors leaving the high fee of GBTC (1.5% annually) and re-investing into cheaper ETF products. However, it will take a few days for these investors to reinvest these funds due to the slow settlement times in the traditional financial system. Much of the flows observed today could be interpreted as reshuffling between products and don’t necessarily mean a significant amount of new inflows are occurring. We did see evidence of this when looking at Bitcoin proxies like MicroStrategy and Bitcoin mining stocks that saw substantial sell-offs as the ETFs launched. It is reasonable to assume that some of these outflows were flowing into these spot Bitcoin ETFs that better track Bitcoin’s performance. Another reason for Bitcoin’s price remaining relatively flat on the week is there could also have been profit-taking from hedge funds and other institutional investors that were simply viewing the launch of spot Bitcoin ETFs as a trade. These investors likely took a profit as the price spiked up towards $49,000 which may have contributed to the sell-off. In the short term, we expect volatility as the market digest this news and these ETF issuers look to purchase bitcoin for their funds. These ETFs come at a time when market depth in the Bitcoin spot market remains low. Ever since the FTX collapse, liquidity in the spot Bitcoin market has been cut in half. Today, Bitcoin’s 1% market depth sits at around $230 million. This means that an order worth $230 million would move the price of Bitcoin by approximately 1%. ![](https://www.datocms-assets.com/56652/1705090963-12.png?auto=format) These ETF issuers will look to source their bitcoin in various ways such as from OTC desks, directly from miners, and through crypto exchanges. Today, crypto exchanges make up roughly 45% of Bitcoin market depth. Given that spot liquidity remains low and a new wave of demand is coming from these ETF launches, we should expect volatility in the coming months. Over the long term, these ETFs will likely improve liquidity in the asset because they enlarge the investor base and there will likely be increased trading volumes as institutions execute arbitrage trades when there is a price discrepancy between the ETF and the underlying bitcoin. Because of this, in the long term, these ETFs will potentially reduce volatility and they boost liquidity conditions in the underlying spot Bitcoin market. Some additional reasons why Bitcoin’s price might not immediately explode to the upside in the wake of these ETFs is it takes time for the various broker-dealers to implement new products and for institutional investors like financial advisors and pension fund managers to learn about Bitcoin and invest in it on behalf of their clients. We already saw some examples of this when Vanguard, the second-largest asset manager in the world, refused to offer spot Bitcoin ETFs on its platform. This kickstarted a movement on X of Bitcoin investors transferring their assets away from the platform and into firms that support Bitcoin. Vanguard began trending for all the wrong reasons. This pretty much summarizes Vanguard’s day yesterday: ![](https://www.datocms-assets.com/56652/1705091008-13.png?auto=format) @crypto_rand Vanguard eventually made a public statement likely in response to the noise created by the Bitcoin community stating “*While we continuously evaluate our brokerage offer and evaluate new product entries to the market, spot Bitcoin ETFs will not be available for purchase on the Vanguard platform…Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio.*” Vanguard has the right to decide which assets it lists on its platform, but its reasoning behind restricting access to Bitcoin products flies in the face of data. Bitcoin is the best-performing asset class 7 out of the last 10 years and was the third-best-performing asset class in risk-adjusted returns last year. Due to Bitcoin’s uncorrelated nature, historically, by adding Bitcoin to a well-diversified portfolio it has reduced overall risk while enhancing returns. Ironically, Vanguard's decision highlighted one of Bitcoin’s value propositions. Investors generally don’t like to be told what they can and cannot do with their hard-earned savings. Vanguard’s decision to restrict access to Bitcoin ETFs only served as an advertisement for Bitcoin’s permissionlessness and censorship resistance. In the future, I expect Vanguard to capitulate and list spot Bitcoin ETFs as its risk-adjusted returns become too impressive to ignore. In the meantime, all of the broker-dealers that choose to embrace Bitcoin will reap the benefits. The institutions that support Bitcoin will not only attract more assets to their platforms, but if they include Bitcoin in their various funds, these funds will likely outperform the competition. The forms that embrace Bitcoin will have a significant advantage over the firms that choose to prevent their clients from accessing it. The game theory of Bitcoin is now playing out at the Wall Street level, and it’s beautiful to witness. In the short term, expect the volatility to continue and the marketing campaigns from these ETF issuers to hit a fever pitch. Prepare to see the word “Bitcoin” plastered on billboards and Bitcoin commercials from the likes of BlackRock and Fidelity become commonplace on your television. These ETFs will act as a top-of-funnel and will become an initial touchpoint for many future Bitcoiners. Not only do they have the potential to drive Bitcoin’s price long-term, but they will also drive the public’s understanding of this brand-new technology. 2024 has started off with a bang and when we look back at this time, it will likely be viewed as the beginning of a new era when Bitcoin went mainstream. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1705091059-14.png?auto=format) Tradingview, Prices as of 01/12/24 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # A Changed Bitcoin At $50k - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/a-changed-bitcoin-at-50k/ Although $50k was close to the cycle high in 2021, the current environment makes it easy to believe that this time, $50k marks the beginning, not the end, of an extraordinary bull run. --- **Sam Callahan** · February 16, 2024 · Updated June 25, 2024 After nearly two years, Bitcoin has eclipsed $50,000 per coin once again. After a tumultuous couple of years, during which we saw Bitcoin’s price correct more than 75%, countless headlines stating “Bitcoin is dead,” many high-profile bankruptcies, and several more high-profile lawsuits, Bitcoin is back above $50,000, marking an impressive comeback. ![](https://www.datocms-assets.com/56652/1708116311-1.png?auto=format) Bloomberg However, although Bitcoin’s price is at the same level as it was back in 2021, Bitcoin is not the same asset it was then. Yes, there are still only 21 million, and the big-picture value proposition remains unchanged, but Bitcoin has matured significantly since then. In many ways, the Bitcoin ecosystem has undergone growing pains and maturation since 2021. Today, as it sits once again above $50,000, it is healthier and stronger than ever. The old parasites and scammers have been washed away, and Bitcoin stands cleansed, ready to flourish in a new next bull cycle. Let’s dig into some key differences between Bitcoin at $50k in 2021 and Bitcoin at $50k in 2024 to understand why this time is different. ### 1.) New Retail Investors Are Not Here...Yet Back when Bitcoin hit $50,000 in 2021, we were nearing the end of a raging bull market. Speculation was running rampant as even drawings of rocks demanded millions at auctions. ![](https://www.datocms-assets.com/56652/1708116475-2.png?auto=format) Twitter Much of the demand in late 2021 consisted of new retail investors chasing gains and trying to guess which meme coin would be the next 100x. This exuberance is emblematic of all bull markets. Bitcoin becomes the focus of everyone’s attention near the top of each bull cycle as new retail investors FOMO in. This is quite literally what makes a cycle top a cycle top. A bunch of uneducated speculators rush in all at once, chasing gains, and then when the price turns, they sell in droves, causing a massive price correction. One way to observe this is by looking at Google Trends. Below, one can see how interest in the search term “Bitcoin” spikes near the tops of bull markets. In 2021, interest was at an all-time high. But in 2024, interest in Bitcoin still appears extremely low despite its price rallying past $50,000. ![](https://www.datocms-assets.com/56652/1708116555-3.png?auto=format) Google Trends This signals that new retail investors have not yet joined in on this Bitcoin rally that started under $20k and has risen to above $50k. In other words, we are in the early stages of a new bull cycle. While new retail investors haven’t yet caught wind of Bitcoin’s price action, long-term holders have been holding with diamond hands and are now being rewarded. Today, 69% of Bitcoin’s circulating supply has not moved in one year or more. ![](https://www.datocms-assets.com/56652/1708116594-4.png?auto=format) Glassnode These highly-convicted holders are not selling despite only 6.5% of the total long-term holder supply (coins that have not moved in >155 days) sitting at a loss. ![](https://www.datocms-assets.com/56652/1708116624-5.png?auto=format) Glassnode: Checkmate That means that 93.5% of long-term holders are currently in profit, but they are not selling. One can conclude that a logical explanation for this behavior is that these holders are bullish and anticipate higher prices before they sell – or they never plan to sell at all. Lastly, “Realized Cap,” a measure of the cumulative sum of all realized profits and losses, is a good metric to see how many long-term holders are beginning to take profit on the coins they accumulated at bargain prices in the bear market. Typically, we see Realized Cap rise during uptrends as investors begin to take profit and distribute coins to new buyers at more expensive prices. In bear markets, you see Realized Cap move sideways and decline as expensive coins are revalued lower, as investors capitulate and sell at a loss, usually to more convicted holders at the bottom of bear cycles. The chart below shows how we have just started to see Realized Cap increase, similar to the beginning of the 2017 and 2021 bull runs. ![](https://www.datocms-assets.com/56652/1708116654-6.png?auto=format) Glassnode This chart looks like it still has a lot of room to run, which means that we are likely only in the early stages of this bull cycle. To summarize, unlike 2021, new retail investors are nowhere to be seen yet now that Bitcoin has reclaimed $50,000. This rally has instead been driven by long-term holders who held and even accumulated through the bear market and are just now being rewarded for their conviction.  ### 2.) The Grown Ups Are Here  Another major difference between 2021 and 2024 is that today, large financial institutions are deeply involved. In 2021, the major players in the broader cryptocurrency world consisted of inexperienced, young entrepreneurs, poor risk managers, or outright scammers. Think of firms like BlockFi, Celsius, Genesis, FTX, Three Arrows Capital, etc. In fact, we now know that much of the volume in late 2021, when Bitcoin eclipsed $50,000, was actually fake. It was FTX selling fake paper Bitcoin while perpetuating a giant Ponzi scheme that eventually imploded. Over the last couple of years, many of these grifters and scammers have been wiped out and are now paying their dues for their crimes. However, for everyone else who was law-abiding and survived the bear market, this leaves a ton of opportunity to grab market share. Today, large, respected firms appear to be pursuing this opportunity. The main difference between 2021 and 2024 is the replacement of young, inexperienced startups with large, respected financial institutions with decades-long track records. This makes the ecosystem much more resilient and stable. I think it’s safe to say that the market infrastructure of the Bitcoin ecosystem is in better hands compared to 2021.  Not only that, but all sizes of institutional investors now have a much safer and more efficient method to gain exposure to Bitcoin compared to 2021. In 2021, the easiest way for institutional and retail investors in retirement accounts to gain exposure to Bitcoin was through GBTC. GBTC was expensive, given its 2% annual fee, and it was inefficient. It often traded at a massive premium or discount to its net asset value (NAV). The lack of viable investment vehicles turned investors away from buying Bitcoin in 2021, but that isn’t the case today.  In 2024, investors now have the option to purchase 9 different spot Bitcoin ETFs. These ETFs are much cheaper in terms of fees and always trade at NAV. After a little over a month of trading, the Bitcoin ETFs have collectively acquired more than 700,000 BTC. ![](https://www.datocms-assets.com/56652/1708116751-7.png?auto=format) heyapollo.com The impact of these ETFs is already being felt, and it can’t be understated just how much new demand could flow into these vehicles in the coming cycle. We now have some of the largest, most respected financial institutions educating their clients on the value proposition of Bitcoin to market their ETF products. This dynamic is why $50,000 doesn’t feel all that impressive for long-term investors. They are waiting for Bitcoin’s price to appreciate to a much higher level from here. ### 3.) The Halving is In-Front of US, Not Behind Us Another major difference between now and 2021 is that the halving is still ahead of us, not behind us. As Bitcoin crossed $50,000 in 2021, we were already more than a year and half behind past the halving. Today, the halving is a couple of months away. Historically, Bitcoin’s price rallies strongly in the months after a halving. ![](https://www.datocms-assets.com/56652/1708116829-8.png?auto=format) CoinDesk, Coin Metrics When Bitcoin was over $50k in 2021, it was already one year after the halving and up +559%. In 2024, Bitcoin is over $50k and has strong momentum going into the halving event, up +112% in the last 12 months. Looking at only the last two halvings, Bitcoin’s average gain post-halving is +421%. Although past performance does not guarantee future returns, if this trend continues, we could see Bitcoin rallying strongly in the second half of this year. This is just another example of how the Bitcoin setup today is nothing like it was in 2021. ### 4.) A Fed Headwind Becomes a Tailwind  Oftentimes, Bitcoin is described as a “liquidity sponge” because of how sensitive Bitcoin is to liquidity conditions. Bitcoin typically performs very well when banks are lending, the Federal Reserve is easing, and the government is spending. This was never more true than in 2020 and 2021, when the government and Fed collectively inflated the M2 money supply by around $6 trillion. ![](https://www.datocms-assets.com/56652/1708116896-9.png?auto=format) FRED Data It’s no surprise that Bitcoin then went on a bull run to $69,000. But around the point that Bitcoin surpassed $50,000 back then, the macro environment was very different. CPI inflation was at the highest levels in 30 years, and the Federal Reserve was getting worried. Around this time, it began signaling to the market that it would begin raising interest rates in the near future. ![](https://www.datocms-assets.com/56652/1708116940-10.png?auto=format) We know what happened: The Fed raised interest rates at the fastest pace in history. As a result, all asset prices suffered immensely in 2022, including Bitcoin. In 2024, things could not be more opposite. CPI inflation has been in a downtrend all of 2023, and instead of the Fed signaling that it will raise rates, it is signaling that it will cut rates in the coming year. ![](https://www.datocms-assets.com/56652/1708116972-11.png?auto=format) If the Fed does cut rates three times, like the market is expecting, that would provide a tailwind for the price of Bitcoin. Any form of policy easing leads to positive changes in liquidity, which Bitcoin is very sensitive to.  To put it in simple terms: Dovish Fed = Good for Bitcoin Hawkish Fed = Bad for Bitcoin Whereas hawkish Fed policy proved to be a headwind for $50k Bitcoin in 2021, a shift to more dovish Fed policy could be a tailwind for $50k Bitcoin in 2024, helping drive it to new heights. ### 5.) The Fundamentals Never Went Into A Bear Market Up until this point, we have discussed how this run-up to $50k is different because it has primarily been driven by long-term holders, a market infrastructure composed of new and improved players, new investment vehicles that make it easier to gain exposure to Bitcoin, and an expected Fed pivot that will help, not hurt, Bitcoin. But one thing we haven’t discussed is Bitcoin’s fundamentals, which have only gotten stronger since 2021. The Bitcoin Network has never been more secure, and its adoption continues to grow. Let’s take a look… Since 2021, Bitcoin’s hash rate is up 5x. ![](https://www.datocms-assets.com/56652/1708117044-12.png?auto=format) Glassnode Since 2021, the number of addresses holding >$100 has nearly doubled. ![](https://www.datocms-assets.com/56652/1708117066-13.png?auto=format) Glassnode Since 2021, addresses with a non-zero Bitcoin balance have also increased by almost 20 million. ![](https://www.datocms-assets.com/56652/1708117089-14.png?auto=format) Glassnode Things look good when it comes to innovating on Bitcoin, as well. Recent data from Electric Capital showed that 40% of Bitcoin development is now focused on Layer-2s and scaling solutions. ![](https://www.datocms-assets.com/56652/1708117119-15.png?auto=format) Electric Capital This is clearly evident when looking at the growth of Bitcoin’s most successful Layer-2 scaling solution to date, the Lightning Network. Since 2021, the total amount of Bitcoin locked in the Lightning Network is up more than 400%. ![](https://www.datocms-assets.com/56652/1708117156-16.png?auto=format) Anecdotally, it’s not difficult to see how Bitcoin’s adoption has leveled up in 2024 compared to 2021. Bitcoin is now being discussed by presidential candidates, on the  Congress floor, and is a daily topic on national televised finance shows. You can’t go a single day without reading a Bitcoin-related article in the mainstream media. Almost everyone has heard of Bitcoin, and many appear to better understand that this thing is not going away and is much more than just another “tulip bubble.” My personal favorite example was when The Economist called Bitcoin the “cockroach of money.” ![](https://www.datocms-assets.com/56652/1708117216-17.png?auto=format) Indeed, Bitcoin is proving to be very difficult to kill, and the longer it stays around, the more people will begin to learn about it and the more its adoption will grow. Compared to 2021, the Bitcoin network and ecosystem are stronger and more robust than ever before. The industry has now had 3 more years to deploy hash rate, innovate, and build products that make Bitcoin more convenient and useful for the end-consumer. ### Conclusion: I hope these points illustrate how different the Bitcoin setup is today compared to the last time it crossed $50,000. Instead of being at the end of a bull cycle, we are exiting the longest bear market in Bitcoin’s history. During the bear market, many companies went bankrupt and scammers were exposed. Today, the Bitcoin industry emerges purged of all of those bad actors, and it appears ready to blast off to new all-time highs. In stark contrast to 2021, this Bitcoin rally has a halving ahead of it, potential Fed cuts on the horizon, little to no new retail involvement yet, better investment options available for investors, and big institutions coming into play. Although $50k was close to the cycle high in 2021, the current environment makes it easy to believe that this time, $50k marks the beginning, not the end, of an extraordinary bull run. Strap in – 2024 is primed to be a wild ride. ***Market Overview*** ![](https://www.datocms-assets.com/56652/1708117283-18.png?auto=format) Tradingview, Prices as of 02/16/24 ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Changing Bitcoin: The Past, The Present, and The Future (Part One) URL: https://www.swanbitcoin.com/analysis/changing-bitcoin-the-past-the-present-and-the-future-part-one/ For Bitcoin to achieve the lofty goals many have for it, its rules will need to change. This three-part series of articles will tackle what it takes to change Bitcoin. --- **Tomer Strolight** · February 26, 2024 · Updated June 25, 2024 For Bitcoin to achieve the lofty goals many have for it, its rules will need to change. But there is no formal process for changing Bitcoin’s rules. What can be learned from previous changes? And what can we expect on the journey? This three-part series of articles will tackle what it takes to change Bitcoin. The series begins with what happened in the past when changes were proposed. Part two will cover what is happening now and the controversies and ideas being evaluated. Finally, the third part will consider what might happen in the future: will changes even be possible, or will Bitcoin become ossified – unable to change? ### Part One: The Past #### Bitcoin: At Last, Freedom From the Rule of Rulers It is often said that Bitcoin is rules without rulers. That expression is a shorthand way of saying that none of Bitcoin’s many active participants are in any position of authority over any others. This description is accurate now. But it took very special circumstances to get Bitcoin to this state, and Bitcoin may be a one-of-a-kind invention possessing this property. In Bitcoin’s earliest days, Satoshi made Bitcoin’s rules and occasionally modified them to make the system more secure. His leadership as its creator and maintainer made him its de facto ruler. Fortunately, he was a very principled ruler whose only goal was to create a system without any ruler (himself included). While Satoshi’s greatest contribution to Bitcoin was creating it, disappearing forever was certainly the second-greatest thing he ever did for it because it was that act that completed Bitcoin’s creation as an entirely ruler-less, truly decentralized entity. Typically, when leaders leave, there is some process where a new leader is chosen. Even if there isn't a formal process, would-be rulers vie for and rise to positions of authority and control. But this was not so in Bitcoin – by design. Satoshi intentionally left no successor. Every feature of Bitcoin was designed to operate without needing any leader's approval and to resist anyone's claim of authority over any other person. Anyone could participate in any aspect of Bitcoin without requiring anyone else's permission. Despite the fact that Bitcoin is open-source software, meaning that anyone could make a variant of it, nobody was able to recreate this ruler-less feature of Bitcoin. Few other creators of other cryptocurrencies ever concealed their true identity, let alone disappeared. Whether those founders exited by dumping coins and leaving chaos or remained in charge, thereby preventing a leader-less state from taking hold, there simply is no other large, decentralized cryptocurrency. ### What Bitcoin’s Rules Do The rules of Bitcoin essentially govern one thing: What constitutes the single, valid history of Bitcoin. Bitcoin is a chronologically ordered ledger of transactions organized into a never-ending sequence of blocks of those transactions. This chronicle is commonly referred to as the blockchain. The rules ensure that everyone agrees on one and only one version of history. These rules are enforced by everyone running Bitcoin software. Everyone agrees on a singular history because everyone enforces rules that lead to them all reaching the exact same conclusions about what the chronicle contains. This is remarkable partly because many participants would rather that the chronicle was different than it is, but they still agree despite their different preferences. Who, after all, doesn't want to have more Bitcoin than they currently do? So why wouldn't we want to make one little change, giving us more Bitcoin than we currently have? Well, whether we want to or not, we can't because the rules ensure that there are only two ways in Bitcoin to obtain Bitcoin. The first is to have someone who has Bitcoin send you some portion of what they have. The second is to succeed at the task of adding a new block to the blockchain and claim the reward of newly issued coins and fees paid by the people who created the transactions that you included in that block. ### Changing Bitcoin #### Hard Forks: Breaking Previous Rules Since there are no rulers in Bitcoin, anyone is actually free to run whatever rules they want. If those rules allow for anything to be added that the old rules didn't permit and even a single previously unpermitted transaction or block gets added to the blockchain of the persons running that modified software, a new chain is created that splits off from the chain being maintained by those people running the software that didn't permit that addition. ![](https://www.datocms-assets.com/56652/1708658566-spi_changing_bitcoin_2.svg) Swan Bitcoin Private Insight #32 Chain splits of this nature are called “hard forks.” Allowing something previously disallowed means that everyone enforcing the old rules will disregard anything in the new-rule chronicle from the moment it includes an impermissible change. #### Hard Forks Are Not Bitcoin Hard forks sever from their blockchain everyone who doesn’t change their software to now permit what was previously not permitted. (These include changes like increasing the number of coins, decreasing the difficulty of finding a block, or spending coins that have already been spent before.) For this reason, hard forks face the monumentally difficult task of claiming to be Bitcoin because they require not only that everyone agree to their rule changes but also that everyone actually change their software to enforce this rule change. Since Satoshi’s departure, every hard fork of Bitcoin has led to some new chain that has not been adopted or recognized as Bitcoin by the overwhelming majority of users and exchanges. (There is debate as to whether any of the changes Satoshi made constituted hard or soft forks, but they’re irrelevant to the current post-Satoshi state of Bitcoin.) Hard forks of Bitcoin are simply not plausible methods for changing Bitcoin (except in the case of repairing of some kind of catastrophic flaw that can only be fixed in that way). #### Soft Forks: More Restrictive Rules That Makes New Things Possible However, this does not mean there is no way to change Bitcoin. Its rules can and do change. They change through a technique called soft-forks – a technique that when implemented correctly does not lead to chain-splits, thus maintaining a single record everyone agrees is the one and only true record, even if they do not enforce the new rules. How? Soft forks change the rules not by allowing something that was impermissible to be permitted but by making something previously permitted no longer permissible after a certain point in time. They allow for new types of transactions to be created which don’t violate any of the old rules. Instead, they add restrictions to previously allowed transactions and make use of those new restrictions to enable new functionality. If all the miners enforce these new restrictions, no chain split can ever occur, even if not everyone updates to enforce these new rules (because they don’t violate the old rules). ![](https://www.datocms-assets.com/56652/1708658722-spi_changing_bitcoin_3.svg) Swan Bitcoin Private Insight #32 How does adding a restriction allow for more possibilities rather than less? And what special role do miners have? Consider this simple thought experiment: Imagine there is a pathway on a lawn leading from the roadway to the entrance of a castle. On the lawn is a sign with the rule saying, “KEEP OFF THE GRASS.” That’s a simple enough rule. Everyone walks on the path and not on the grass. Everyone also makes sure that nobody else is walking on the grass. And there are guards that prevent anyone from walking on the grass. ![](https://www.datocms-assets.com/56652/1708658642-spi_changing_bitcoin_4.jpg?auto=format) Swan Bitcoin Private Insight #32 Then, a new restriction is added. It says, “Keep to the right as of January 1st, 2024.” Obeying this rule does not contradict or violate the first rule of “Do not walk on the grass.” However, once it goes into effect there’s now two types of valid ways to walk on the path – one side of the path only allows for walking towards the castle and the other side only allows for walking towards the roadway. Now, casual users of the roadway may not all be aware of this new rule and may only be checking after the activation date that everyone else is simply not walking on the grass. But as long as all the guards enforce the new rule starting on its passage and prevent anyone from violating it, there’s still an orderly functioning of the path despite the new rule. In the above example, guards represent the miners in Bitcoin. Miners are the only participants in Bitcoin who add records to the blockchain. Thus, as long as they’re enforcing the restriction on all transactions in new blocks, no version of the chain they produce will include anything that violates the new rules. Since the new rules don’t violate the old rules (e.g., staying on the right side of the path is still staying off the grass), anyone who is not a miner that didn’t upgrade in time to enforce the new rules will still not have any issues confirming that these new blocks all adhere perfectly to all the old rules. #### Soft Forks Are Actually Very Hard Still, it’s not so easy to get these changes made in Bitcoin. In hindsight, it’s ironic that they’re called soft forks because activating them turns out to be extremely hard. Thinking of the past two soft forks in Bitcoin, known as SegWit and Taproot, when these changes occurred, they were not without controversy. And there was an attempted third soft-fork, OP_CTV, that failed to get activated. ![](https://www.datocms-assets.com/56652/1708659332-spi_changing_bitcoin_5.jpg?auto=format) SegWit was expected to activate fairly quickly. Instead, it took a whole year to activate even after its activation method was released into Bitcoin Core. (Bitcoin Core is the software that at that time, and still today, encodes and enforces the rules that make up Bitcoin.) SegWit's activation could have taken only two weeks. It simply required that 95% of the mined blocks in a given difficulty epoch (a roughly two-week, 2,140 block period) declared in those blocks that they were ready to enforce the new SegWit rules. (This article does not have time to go into the details of what SegWit's rules were.) But this simple path that most people expected activation to follow was not what transpired. In fact, SegWit was nearly not activated! There was a deadline by which it had to be activated, and in what became known as "the Blocksize War," ordinary users of Bitcoin threatened to reject miners' blocks if those blocks didn't "signal readiness" by the last difficulty epoch before this deadline expired. (For more on this, read The Blocksize War by Jonathan Bier or [The Blocksize War's Cyber-Solider Freedom-Fighters](https://www.swanbitcoin.com/the-blocksize-war/) by Tomer Strolight.) If we try to frame it up in the "stay-to-the-right-of-the-pathway" example above, Segwit's activation might have read, "Starting January 1st, 2024, stay to the right of the path as soon as 95% of the guards raise their right hands in any two-week period, up until December 31st, 2024." However, things didn't go as planned. The metaphorical guards did not raise their hands as expected, or rather, the miners did not signal readiness as expected. It turned out there wasn't a consensus to make this rule change. Activating the new rules required a change in the plan by the people who did want to activate it, which constituted the vast majority of dedicated Bitcoin users. It required the development of a new activation method when the original one failed. It required action – coming up with a plan that recognized that there was opposition to implementing the proposed rule changes and overcoming that opposition. ![](https://www.datocms-assets.com/56652/1708965646-spi_changing_bitcoin_1.jpg?auto=format) #### Leaders, Not Rulers, Led the Way Activating the SegWit soft fork turned out to look nothing like what was described in the simple “pathway-to-the-castle” analogy above. Imagine in that example if most people using the path wanted to activate the new rule of everyone staying to the right, but the guards were actually opposed to it, because the guards’ incentives led to them getting paid more if they did not activate the rule. What could the path-users do? Well, in the case of SegWit’s activation, leaders in the Bitcoin community had to step up to do something unprecedented. They had to get the users to do something that would get the miners to activate the new rule. They had to come up with an idea that would accomplish this, and they had to get the users to support this idea. This required some people to lead the effort – to become leaders. But leadership in Bitcoin doesn’t involve issuing orders since nobody has any authority over anyone else. Leadership instead requires cleverness in coding and game-theory, and persuasion of a group of people whose credo is “Don’t Trust. Verify.” ![](https://www.datocms-assets.com/56652/1708660276-spi_changing_bitcoin_6.jpg?auto=format) You can see how hard this might be. The case made to users for activating SegWit was not that hard – SegWit would fix a bug, lower fees, and accelerate the creation of the Lightning Network, which itself would make Bitcoin faster and cheaper to use and scale capacity many times over. But it needed explaining and clarifying nevertheless. However, the real innovation in the strategy lay in creating a new rule that users would enforce upon the miners. In our example of the pathway, it meant getting the path-walkers to enforce a rule on the path-guards that would get the guards to enforce the stay-to-the-right-of-the-path rule on the path walkers. What a twist! Someone who remained pseudonymous (following in the tradition of the pseudonymous Satoshi Nakamoto) coded up a variant of Bitcoin Core. It enforced a new rule. That rule said that if by the final two-week activation window for Segwit, a miner submitted a new block that didn’t signal to activate SegWit (even if everything else in the block was valid), then the block would be considered invalid by the user running this variant. Returning again to the path-on-the-grass analogy, it was code that said that the path-walkers would not pay the guards unless the guards enforced the new stay-to-the-right rule. In the end, this succeeded in activating the SegWit soft fork because all the miners, fearing their rewards might be rejected, all fell in line. #### Never Fight the Last War Activating Segwit took its toll on users, miners, leaders, and everyone else. It was years before anyone proposed the next soft-fork, Taproot. The developers who maintained Bitcoin Core at the time were extremely hesitant to release any activation method for it, despite this time there not being the miner opposition that existed during SegWit. Months and months of discussion passed by without an activation method being released. Everyone was battle-weary and fearful of another activation war. Finally, some users proposed and released code that used the same activation method for Taproot as had been used for SegWit, called a User Activated Soft Fork, for obvious reasons. This threatened to create the SegWit controversy all over again, and the mere thought of going through another such a battle again broke the logjam. Quickly, it led to the release of a low-risk activation proposal by Bitcoin Core, known as “speedy trial,” and the miners promptly supported it in full. (That, at least, is this author’s interpretation of the causes and effects behind this order of events.) Taproot, thus, was hard to activate as well. But it required a very different leadership approach to activation than SegWit. It required a threat of a war that nobody wanted to fight rather than the fighting of war. Everyone wanted to activate Taproot, but the hesitancy over the activation method led to stalling until, at last, someone with little to lose pushed everyone who was hesitant over the edge of inaction by making inaction riskier than action. #### It Didn’t Get Any Easier The next soft fork proposal was for a feature called OP_CTV. Its advocate proposed the same “speedy trial” method that activated Taproot. But it simply failed to win the necessary support and was abandoned at the time. ![](https://www.datocms-assets.com/56652/1708660655-spi_changing_bitcoin_8.jpg?auto=format) While those in favor of this change were enthusiastic about it, others wanted to take a “wait-and-see” attitude to observe the benefits and potential downfalls of Taproot first. It was simply too hard to get that third soft fork approved so soon after the energy it took to activate the previous ones. And this now brings us to the present, where OP_CTV and many proposals like it are once again being recommended. We will discuss the present state of changing Bitcoin in the next installment of this series. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Response to Cole South’s ‘Why I Don’t Own Bitcoin Anymore’ URL: https://www.swanbitcoin.com/analysis/response-to-cole-south-s-why-i-don-t-own-bitcoin-anymore/ A recent blog post outlined an investor’s rationale for abandoning Bitcoin, and necessitated a Bitcoiner’s response. --- **Stephan Livera** · May 19, 2022 · Updated June 25, 2024 *This article from May 19th, 2022 by Stephan Livera was originally published on Bitcoin Magazine* Earlier this week, coins.fyi, writer Cole South published a [post](https://colesouth.com/no-bitcoin/) on why he no longer HODLs bitcoin that generated some animated [Twitter discussion](https://twitter.com/ColeSouth/status/1526627558124531712). So, providing a quick walk-through of some of South's arguments from a Bitcoiner perspective seemed important. Of course, I'm not expecting to change South's mind and get him to buy back in, but I believe a response is worthwhile so that onlookers can understand the difference in mindsets. South's text will be in block quotes throughout. *"Productive assets vs. Pet rock assets...* *In general, I try to own assets with real end-user demand/utility/cash flow over those strictly reliant on market supply and demand."* I think this is a category error. I view Bitcoin in a separate category from, say, stocks, bonds, or physical real estate. They pay out dividends, coupons, and rental income, whereas Bitcoin should be assessed on its qualities *as money*. I view Bitcoin as possessing monetary qualities that make it a superior money in terms of things like scarcity, transportability, and durability. Viewing Bitcoin as an "unproductive asset" is the wrong framing because, really, we have to think about why we hold money after all. For example, in ["'The Yield From Money Held' Reconsidered" by Hans-Hermann Hoppe](https://mises.org/library/yield-money-held-reconsidered), the point made is that holding money allows us to reduce future uncertainty. The money itself is not meant to have a "yield," but this does not preclude lending under a full reserve banking standard. South acknowledges some of this here: *"Bitcoin has done a great job winning the 'digital gold' / store of value asset class."*  But I'd say this isn't giving Bitcoin enough credit, as replacing money plus some of the world's current value stores (bonds, stocks, property) gives it a huge potential market. Even with "back of the envelope" numbers, we'd be talking around $120 trillion in global fiat, divided by 21 million coins, for a value of around $6 million per BTC. Speaking colloquially, once we add in that Bitcoin might "suck some of the value" out of bonds, stocks, and even property around the world, we're talking even higher than this $6 million per BTC number. Thinking in terms of expected value and bets, you'd rate the probability of this outcome and then buy an amount of Bitcoin accordingly. *"Bitcoin is going to face serious security and decentralization issues...* *The block reward earned by miners who secure the Bitcoin network gets slashed in half every 4 years. By 2140, there will be no block rewards at all… But it's becoming increasingly entrenched in 'there are and will only ever be 21 million Bitcoins' with a community that is so resistant to change. Without modest inflation or a huge reversal in attitude toward actually transacting with Bitcoin, it's hard to see how Bitcoin can maintain security and decentralization."*  Bitcoin is still young in its overall life and adoption. The point where 99% of coins have been mined into existence will occur sometime around 2035, which is still about 13 years from now. My view is that, as Bitcoin represents better money, the demand for owning it will grow rapidly over that time, especially in a world where people need a way to save themselves from rapidly inflating fiat currency. The block subsidy in fiat value terms will continue to rise, and on-chain transactions paying miner fees should increase over time. Once more people have a Bitcoin balance, spending and receiving Bitcoin natively will be more natural. And, of course, there are individuals today living on Bitcoin and regularly transacting, whether they are participating in CoinJoins, opening and closing Lightning channels, using Bitcoin for voucher sites, or directly purchasing things with Bitcoin. *"ESG concerns are going to be hard for Bitcoin to shake."*  It's worth pointing out that much of this is due to shitcoin-sponsored attacks, such as Ripple Cofounder and Executive Chairman [Chris Larsen openly sponsoring Greenpeace USA and EWG with $5 million](https://www.bloomberg.com/news/articles/2022-03-29/greenpeace-crypto-billionaire-lobby-to-change-bitcoin-s-code) to push a "change the code" campaign. Or the [World Economic Forum post about ESG](https://www.weforum.org/press/2022/01/unifying-cryptocurrency-esg-efforts-key-to-boost-global-adoption/) with collaboration from the likes of Andreessen Horowitz, *CoinDesk*, the Ethereum Foundation, Ripple, and the Stellar Development Foundation — all being shitcoins or having shitcoin ties. *"Ethereum, on the other hand, has a very clean answer to this problem: they are moving from Proof of Work to Proof of Stake."*  The problem is that proof of stake is simply insecure. It's a political system, not a technical answer to the question of how a network can remain decentralized and in consensus. I discussed with [Gigi in a recent podcast episode](https://stephanlivera.com/episode/379/) why this is the case. Also, I'd highly recommend Gigi's thread here: ["A failure to understand proof of work is a failure to understand Bitcoin."](https://twitter.com/dergigi/status/1392826448017346561) *"No matter how clean Bitcoin gets, or how inaccurate/unfair environmental concerns are, I think it will continue to have a VERY tough time shaking this criticism."* Perhaps, but even here, it will impact Bitcoiners but not Bitcoin the network. Crazy jurisdictions that don't see sense will lose out to better ones that do. Maybe there's a pendulum-swinging aspect to this, with rich countries believing that socialism can work and increasingly supporting crazy policies like "net zero" and big welfare statism. Even inside the U.S., we can see markedly different treatment of Bitcoin mining when comparing [New York State](https://www.cnbc.com/2022/05/05/new-york-bitcoin-mining-moratorium-proceeding-through-state-house.html) to [Texas](https://techcrunch.com/2022/02/11/how-texas-is-becoming-a-bitcoin-mining-hub/). Not to mention the insight that, despite the big China mining ban in 2021, there are [underground/pirate mining operations in China](https://www.scmp.com/tech/policy/article/3178028/china-may-have-massive-underground-bitcoin-mining-operations-despite), [presumably 5% to 16% of the global hash rate still coming from China](https://twitter.com/sysmannet/status/1526893771526287361). *"The Bitcoin community isn't pro-capitalism."* Most definitely not! Bitcoiners, on the whole, are quite supportive of capitalism. The distinction is more about being antagonistic towards scammers and grifters in the space. It's especially worse when tradeoffs or risks are hidden by altcoin creators and promoters in the name of pumping their projects up. *"Bitcoiners have generally been antagonistic toward new tokens and anything that generates wealth for a builder…"*  Here I think there's some conflation going on. People conflate things as though "you shouldn't criticize the people who are building," when in reality, these people could just be building scams or grifts of highly questionable value. They could create a token when there's insufficient justification for creating a free-floating token. They could build products and services that charge a fee or issue equity or debt. Instead, pumping tokens allows a broken V.C. model to get faster "liquidity events," resulting in insiders profiting at the expense of uninformed or non-insider retail users. *"We know how this ends up: innovation, progress, and economic rewards end up with the capitalists."*  Entrepreneurs, investors, and employees in Bitcoin companies (and community and open-source contributors) are innovating, but in a more difficult and more honest pathway. They generally don't have the luxuries of operating in overfunded companies and environments. *"Bitcoiners have been incredibly resistant to change…"*  On certain things, this is a feature, not a bug. Bitcoin should be viewed as monetary technology. The technology part is important, but the money part is arguably *more important*. This is the creation of a new money that combines the notion of gold being salable across time with fiat currency that is salable across space. *"If BTC added modern smart contracts and had a plan for long-term inflation to secure the network, I think it could catch up in the technological arms race."* As alluded to above, some Bitcoiners view "smart contracts" as unnecessary. As my friend [Bitstein](https://twitter.com/bitstein) says, "[dayenu](https://en.wikipedia.org/wiki/Dayenu)," or "it would have been enough." I.e., it is enough that Bitcoin brought a non-state, non-business, non-individual controlled scarce money to the world. Other Bitcoiners believe that additional functions can be brought to Bitcoin, but in more robust ways that do not encroach on the ability of the HODLers and "money only" Bitcoiners to do what they want to do. And let's be clear, Bitcoin already has multi-signature, CLTV (CheckLockTimeVerify), and CSV (CheckSequenceVerify), which are types of contracting capability but less expressive than what altcoin contracting has. In terms of pathways to further capability, there is currently discussion in the community about covenants and what kind of covenants Bitcoiners would accept. This includes various proposals such as [CTV](https://stephanlivera.com/episode/339/) or [OP_TX](https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-May/020450.html). Looking broadly and longer-term, [Simplicity](https://bitcoinops.org/en/topics/simplicity/) is an example of a low-level programming language with more flexibility and expressiveness than current-day Bitcoin Script. It would require a soft fork, but that's for a future debate. *"Historically, a lot of the narrative around Bitcoin has been that it will perform as something like an inflation hedge, bear market hedge, or currency."*  I don't view Bitcoin as a short-term inflation hedge; it's really more like the base layer of a new equity-based financial system. Of course, as it has better monetary qualities, I believe it will protect against inflation on longer time scales, typically four years or more. *"If I'm going to own a crypto asset and the market is putting it in that bucket, I want to own the one that looks more like a tech company with innovation and end-user demand (ETH, not BTC)."*  I'd rather hold what I believe will become money. Also, the one that looks like a tech company can hardly claim to be very well decentralized. Even [Vitalik Buterin is now voicing his concerns and desire to see Ethereum become more Bitcoin-like](https://twitter.com/VitalikButerin/status/1526378789411860480). Ethereum's vast complexity and technical debt make it hard to keep up its veil of decentralization. Bitcoin-style development and advancement are much more "bottom up," with significant changes requiring an agreement of the Bitcoiner "anarchic mob." The ecosystem generally favors testing things out in lower-pressure environments like sidechains, testnet/regtest/signet, and proving things out with real-world incremental experience. Are you sure you're going the right way, Cole? ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Inscriptions: Just a Fad, or Real Threat to Bitcoin Becoming Decentralized Money? URL: https://www.swanbitcoin.com/analysis/inscriptions-just-a-fad-or-real-threat-to-bitcoin-becoming-decentralized-money/ Even if Ordianals are not a short-lived fad, what’s the most likely outcome? Low-value inscriptions will likely be priced out by financial transactions over time as Bitcoin gets adopted by more people. Learn why below! --- **Stephan Livera** · February 13, 2023 · Updated June 25, 2024 The surge of inscriptions raises old debates about Bitcoin's "*true*" purpose and its ability to become the money of the Internet. So, we've recently seen [a Bitcoin transaction take up nearly an entire block](https://www.coindesk.com/tech/2023/02/02/giant-bitcoin-taproot-wizard-nft-minted-in-collaboration-with-luxor-mining-pool/), and [default mempools (300 MB) get filled up](https://twitter.com/murchandamus/status/1624072899354152962?t=TD71nETQ3BAVpKLBEDVO4g&s=19). What's going on with all this Ordinals and inscriptions madness? ### THE QUICK EXPLAINER Ordinals are a made-up way of tracking sats (a fraction of a bitcoin) across transactions. Now, I stress it is a made-up way of tracking sats, as it does not meaningfully impact Bitcoin's fungibility. As [explained by creator Casey Rodarmor on my podcast](http://stephanlivera.com/456), it's a convention of numbering sats in the order they're mined into existence and tracking them across transactions in a first in, first out (FIFO) method. So, as Bitcoin transactions are made up of inputs and outputs, the first satoshi in the first input is considered to be transferred to the first output of a transaction. There are conventions around which Ordinals are uncommon, rare, epic, etc. [![](https://www.datocms-assets.com/56652/1708061326-common-tomer.png?auto=format)](https://docs.ordinals.com/overview.html) ### WHAT'S AN INSCRIPTION? An inscription is another made-up convention where sats can be inscribed with arbitrary content, a kind of Bitcoin-native digital artifact or NFT. Using the convention, they can be sent around and stored in a Bitcoin unspent transaction output (UTXO). Now, because they are coded in such a way that they are written into transaction witnesses, they never enter the UTXO set. The UTXO set is seen as having heightened consideration for the network because *every* node (even pruned nodes) must maintain this UTXO set. So, I guess it could have been worse… ### WHAT'S THE BULL CASE FOR ORDINALS AND INSCRIPTIONS? To steel man, the case a little: The pro-Ordinals and inscriptions case could broadly be understood as: ["*Come for the fun, rich art, stay for the decentralized digital money.*"](https://docs.ordinals.com/faq.html) You could also agree with some of the [critiques of shitcoin NFTs](https://bitcoinmagazine.com/culture/why-bitcoin-isnt-crypto) and see this as a way of arguing that "*Bitcoin does it better,*" e.g., Bitcoin inscriptions are immutable, always on chain, simpler, and more secure than shitcoin NFTs. ### CONCERNS RAISED WITH INSCRIPTIONS The main concerns here are: - Reduced accessibility to transact on Bitcoin because of inscription/NFT degens creating a transaction backlog and paying a lower fee per real byte because of the witness discount - Reduced ability for users to run a full Bitcoin node because of the increased storage and bandwidth requirements - The possibility of illegal material being recorded into Bitcoin's [blockchain](https://bitcoinmagazine.com/guides/what-is-blockchain) might discourage some users from running a Bitcoin node. Of course, there are counterarguments also: - Bitcoin was eventually going to develop a fee/block space market anyway, which may help with the network's long-term viability. Inscriptions may just form a "*low-value backlog*" of transactions. - Bandwidth and storage costs have come down over the years since 2017. However, arguably, bandwidth over Tor may still be problematic for those syncing a full node in a more private fashion. It could also be argued that it's all still within conservative design limits that the network effectively accepted in 2017. - Illegal material on the chain was always possible because you can't fully stop steganography on Bitcoin. [Steganography](https://en.wikipedia.org/wiki/Steganography) is when you represent information within another message in such a manner that the presence of the information is not evident to normal human inspection. ### REVISITING OLD DEBATES IN BITCOIN: PURPOSE, SCALING AND MORE Some are arguing that "*We shouldn't have raised the block size with SegWit and the witness discount in 2017,*" and, to some extent, this latest Ordinals and inscriptions trend is raising similar questions as those in the [OP_RETURN wars](https://blog.bitmex.com/dapps-or-only-bitcoin-transactions-the-2014-debate/) of 2014. What is Bitcoin for? And should arbitrary data that doesn't relate to financial transactions be encouraged or discouraged on Bitcoin's blockchain? ### TAPROOT IS NOT TO BLAME Some commenters were initially blaming the Taproot soft fork for inscriptions. But Taproot seems to only save about 4% on the cost of inscriptions. It's also worthwhile to note that this kind of thing was possible with SegWit, and beforehand with OP_RETURN, and even before that, with fake signatures, as explained by Adam Back here: ### CULTURAL ISSUES Some ETH huffers and cRyPtO people are enjoying this moment because, in their eyes, they can "*stick it to the maxis*" and those of a more "*Bitcoin fundamentalist*" persuasion, i.e., the people who believe Bitcoin should be money. I'm closer to the "*fundamentalist*" camp myself, seeing my mission as being about advancing Bitcoin as money. And surely, after all the effort of Bitcoin developers to optimize and use block space more efficiently, the inscriptions on the chain seem wasteful and unnecessarily decrease Bitcoin's accessibility for use in financial transactions. Some argue that taking action against Bitcoin inscriptions is "*censorship*" and that viewing these transactions as "*spam*" is wrong, given that they pay a Bitcoin transaction fee. But in the end, it comes to the purpose of the project. While yes, it's true that Bitcoin is designed to be censorship-resistant and that NFTs arguably "*started on Bitcoin*" in years gone by, Bitcoin is arguably meant to be *more* about decentralized and peer-to-peer electronic cash. ### CAN THIS TREND REALISTICALLY BE STOPPED? Short of drastic action, probably not. At least, that's what [Andrew Poelstra spelled out in a recent post on the Bitcoin-dev mailing list](https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2023-January/021372.html): It's also the wrong play to be too reactive about inscriptions and to try to take some drastic action to softfork or make inscriptions unviable at a technical level. There are arguably bigger fish to fry, like helping improve Bitcoin adoption as money and helping encourage further decentralization in the custody of Bitcoin, the mining of Bitcoin, the scalability and verifiability of Bitcoin, etc. ### OSSIFICATION? NOT YET Some even go so far as to argue that, "*Oh, this is a mistake, and we must ossify the Bitcoin protocol now to stop any further mistakes.*" I think this would also be an error. There are various soft fork ideas that are opt-in, do not harm nonusers, and could help scale Bitcoin self-custody. For example, [ANYPREVOUT](http://stephanlivera.com/200) or [OP_VAULT](http://stephanlivera.com/449). ANYPREVOUT, in particular, is interesting because someday, with global adoption, we may have [approximately 80,000 times the transactional demand](https://stephanlivera.com/episode/442/) we have now. In that world, ANYPREVOUT enables an upgrade to "*Eltoo*" Lightning, allowing us to share the cost of on-chain transactions in a self-custodial way. If we want Bitcoin to be used in a way that's more self-sovereign, we ideally want people to be able to afford to take self-custody on the chain. Without this, they may be confined to custodial platforms because the cost of self-custody is too prohibitive. [Eltoo](https://bitcoinops.org/en/topics/eltoo/) also has various benefits for Lightning, such as making backups easier. Yes, we should be conservative, but we should also consider technologies that help Bitcoin *be the best it can be* at being digital hard money. ### BOTTOM LINE While I'm "*against*" inscriptions in a sense and would rather they be socially discouraged, I also don't think it's worth getting too worried about them for now. For all we know, they could be a short-lived fad. But even if they are not a short-lived fad, what's the most likely outcome? Low-value inscriptions will likely be priced out by financial transactions over time as Bitcoin gets adopted by more people. It's just that adoption happens in a "*lumpy*" way. It's concentrated into periods of high use (as seen in 2013, 2017 and 2021). Then, periods of relative doldrums as transaction volume subsides and new technology and scaling techniques are applied. Or, as eloquently named here: Over the medium to long term, financial transactions will come to dominate in Bitcoin. Other uses of Bitcoin will be subordinate to its use as decentralized money for the Internet. If you enjoyed this article, the [Swan Signal blog](https://www.swanbitcoin.com/signal/) and [Swan Media](https://www.youtube.com/@Swan_Bitcoin/videos) are your go to for everything [Bitcoin educatio](https://welcome.swanbitcoin.com/)n. ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # History Happens Right Before Your Eyes - Swan Bitcoin URL: https://www.swanbitcoin.com/education/history-happens-right-before-your-eyes/ Technology has brought forth its champion to slay fiat money. And we all know who that champion is: Bitcoin. Bitcoin will be the resolver of a historic tug-of-war over control of the wealth of humankind. --- **Tomer Strolight** · November 5, 2022 · Updated June 25, 2024 History is not always some ancient moment in time. It is constant and changes rapidly over time. We get to witness some of it in the present. History is neither merely what happened hundreds of years ago nor only wars and human catastrophes. If you zoom out just a bit, you can see that history happens all the time. Our civilization, our culture, our technology, and even we ourselves are changing — influenced by megatrends that shape all humanity. Changes often happen fast, but their imprint remains. Even just taking a snapshot of highlights from a single year over a few 10-year periods reveals how much change occurs. Consider the years 2012, 2002, 1992, and 1982. Only 10 years ago, the [median house price](https://fred.stlouisfed.org/series/MSPUS) had tumbled to $238,400, still coming off the housing crash of 2008. Ten years before that, it had been $188,700. And 10 years earlier, it was just $119,500, while in 1982, it was only $69,600. Today it’s $454,900. [![](https://www.datocms-assets.com/56652/1708044102-med-price-fred.png?auto=format)](https://fred.stlouisfed.org/series/MSPUS) St. Louis Fed Technology, of course, has been wildly advancing, influencing the price of many things and the culture as well. It’s only been [10 years since Google Play came into existence](https://www.androidauthority.com/android-market-google-play-history-754989/). People once lived without apps! (Although iPhone users had a head start.) [Twenty years ago, Apple launched the iPod](https://en.wikipedia.org/wiki/IPod#:~:text=The%20first%20version%20was%20released,to%20be%20discontinued%20by%20Apple.), a revolutionary portable digital music player that changed the music industry. Thirty years ago, nobody had heard of an internet browser because it [hadn’t been developed yet](https://www.mozilla.org/en-US/firefox/browsers/browser-history/#:~:text=British%20computer%20scientist%20Tim%20Berners,for%20Nuclear%20Research%2C%20in%20Switzerland.)! And 40 years ago, the IBM Personal Computer had [just finished its first year of being on the market](https://en.wikipedia.org/wiki/IBM_Personal_Computer#:~:text=The%20IBM%20Personal%20Computer%20(model,Estridge%20in%20Boca%20Raton%2C%20Florida.), and it became the [first inanimate](https://www.vintag.es/2019/12/time-1982-machine-of-the-year.html) object to be named Time Magazine’s “*Man of the Year.*” ![](https://www.datocms-assets.com/56652/1708044269-time-comp.jpeg?auto=format) Oh, how the news and culture have changed also. For example, in 1975, there was [concern that an ice age was coming](https://longreads.com/2017/04/13/in-1975-newsweek-predicted-a-new-ice-age-were-still-living-with-the-consequences/) after America had experienced its coldest winter in a hundred years. In 1981, MTV, a TV channel dedicated then to showing music videos, had [just come on the air.](https://en.wikipedia.org/wiki/MTV#:~:text=MTV%20(an%20initialism%20of%20Music,a%20division%20of%20Paramount%20Global.&text=MTV's%202021%20logo%20paying%20homage%20to%20the%20MTV%20logo%20in%201981.) It seemed like a completely different civilization, but roughly one-half of [America’s current population was alive](https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/) at the time and experienced it. Of course, all this took place under the dual forces of the ever-expanding creep of fiat currency and the rapid advancement of computing technology. These are probably the two strongest megatrends over the whole time period. One was exponentially inflationary; the other was deflationary. One was based on hard science, the other on wishy-washy, postmodern economic theories. One delivered goods that seemed magical; the other brought crisis after crisis. The battle between these two forces now appears to be at a climax, and history is about to be made again. The coexistence of these two forces that defined history over the last 40 years may be coming to an end. Technology and central banking are clashing. Technology has brought forth its champion to slay fiat money. And we all know who that champion is: Bitcoin. Bitcoin will be the resolver of a historic tug-of-war over control of the wealth of humankind. As the government goes digital, digital goes at the government. We are here to witness the spectacle. And to be a part of it. At Pacific Bitcoin, we are creating our own version of a time machine to explore the last 40 years of history through dialogue. Over two days, four separate panels will take the stage to discuss 1982, 1992, 2002, and 2012, focusing on the culture, the economy, and the technology of the times.  Join us at [Pacific Bitcoin](https://www.pacificbitcoin.com/) in 2024.  ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Bitcoin, Bitcoiners, Truth, Beauty and Love - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-bitcoiners-truth-beauty-and-love/ One truth Bitcoin shows us is that we are sovereign — not just over our monetary wealth, but also over our emotions, not just over where we spend our money, but also over where and how we spend our time. --- **Tomer Strolight** · August 12, 2022 · Updated June 25, 2024 For Bitcoiners to embrace a fight is to take time away from the natural truth and love that Bitcoin leads people to. I dropped into a Twitter Spaces the other afternoon focused on Bitcoin. At least a dozen grown men talked about how much they loved, appreciated, and admired everything about Bitcoin. Over a hundred others were listening in. The speakers compared Bitcoin to the greatest discoveries and inventions in all history — some even said it was the greatest. Their gratitude for being alive at this time in history was something they took the time to explicitly express. I wasn't able to jump into the conversation, but if I had joined in, I would have shared similar sentiments. There was tremendous respect and brotherhood in the discussion. And, although there weren't any women speaking there today while I listened in, I've been with that group on other days, and it is welcoming to women as well. It is a room of welcoming love for people who love Bitcoin. Ironically, it is called the "*Toxic Happy Hour.*" But it is anything but toxic. Later, in the early evening, I spent time with one of my kids who just completed a math degree and wanted to share their love of math with me. We went through a very advanced textbook. **(Please forgive this next terminology-heavy sentence):** The final exercise we completed was a proof of a one-to-one reversible relationship (known as a bijective function) between all possible polynomials with integer coefficients and all the positive rational numbers - a proof that involved using exponents of prime numbers to translate between one and the other. I've neither the skill nor the time to explain what exactly all that means, but when I finally understood this relationship, I was brought to my knees. This equivalence between two seemingly very different things hit me very deeply. I realized that what I saw was not only a timeless relationship but an eternal one.  Whether the universe existed as it is now or in some different configuration, this relationship would still always hold true. It exists even if the physical universe itself doesn't. It exists outside of time and space. So do all mathematical relationships, I realized. They are all eternal — the universe exists in them, not the other way around. And everything that exists in space and time cannot violate the truth of these relationships. I point out this latter mathematical experience because it was a metaphysically pure distillation of what the people in the Twitter Spaces were trying to express themselves. There are truths so deep that they transcend everything. They transcend each of us, all of humanity, and even space and time — and they happen to be beautiful. This love of beautiful, timeless truth is what had everyone in the Twitter Spaces discussion on Bitcoin so excited. They see in various facets and aspects of Bitcoin some deep truths so beautiful that they are roused to some kind of spiritual ecstasy — they treasure Bitcoin. They treasure it not just because it produces a potentially vast monetary treasure, although it does. They treasure the beauty of its design – how it utilizes the nature of mathematical truths, fundamental human desires and needs, physical realities of matter and energy, and numerous other delightful, elegant, and beautiful truths. Until that moment, I didn't appreciate or understand the beauty of the mathematical proof I was shown. But once seen, understood, and appreciated, it was impossible to unsee and not have some sense of reverence for it — at least, it was for me. And so it is for many people once they begin to study, understand, and appreciate Bitcoin. To outsiders who hear these expressions of reverence, there are some who may be intrigued to study it for themselves. But others react with concern, thinking Bitcoin's admirers to be insane, fanatical, cultlike, and zealous. If they ask questions about Bitcoin to these admirers — Bitcoiners — the Bitcoiners will usually bend over backward trying to explain what it is they see. However, if these outsiders dismiss Bitcoin, or worse, declare that they do understand it and consider it foolish, ugly, or false, they are at least likely to evoke an angry backlash from Bitcoiners today. Bitcoiners are trying to share with the world a big, beautiful truth that actually consists of many smaller, beautiful truths. Bitcoin is this truth verification and truth-generating process spanning many realms of truth — the mathematical, the human, the economic, and many more.  Emotionally, Bitcoiners are delighted when they succeed in sharing this with others, and they're often deeply disappointed when they fail. And, again today, they're angered when others try to do the opposite, suggesting that Bitcoin isn't deeply and uniquely connected to the beautiful truths it reveals. Many Bitcoiners may have first heard of and been drawn to Bitcoin through claims that it was a "*get-rich-quick*" scheme, but they have since dismissed this frantic and superficial goal and replaced it with a more profound goal of "*fixing the world*" and sharing truth and beauty. This transformation from anxious money-lusters to whatever it is they've become or are in the process of becoming does not happen overnight, nor does it happen to everyone. Some people pass by and miss Bitcoin's messages of truth the first or second time they hear about it. Some explore and encounter something that scares them and drives them to fearfulness, where they not only flee Bitcoin but loudly warn others away with panicked fervor. Others reject its truths and see opportunities to, in fact, get rich quickly, typically at the expense of other newcomers, and most often by creating knock-offs of Bitcoin that don't share its truths.  These people seem well aware of this and cover up those deficiencies with lies about these imitations, false and exaggerated claims about themselves, lies about Bitcoin, or lies about the Bitcoiners. Sometimes, the mistakes are innocent, driven by a misunderstanding of why Bitcoin is designed as it is. Either way, over 20,000 imitators of Bitcoin are now in operation, and about as many have come and gone, many leaving victims in their wake. Not surprisingly, all these things tend to evoke not only criticism from but also often anger among many Bitcoiners since they are drawn to honesty and fairness, and these imitators lack the truth and fairness of Bitcoin. This angry reaction has been labeled as "*toxic*" behavior of Bitcoiners. Their commitment to Bitcoin as a truth and their efforts to point out the inadequacies and needlessness of imitators have slapped them with a pejorative slur: "*Bitcoin Maximalist*" — a term implying that they only care about their project and are unfairly closed-minded and dismissive of others. Instead of rejecting these terms outright, many Bitcoiners have embraced them and transformed them into "*badges of honor*" in a sarcastic, ironic twist that demonstrates that name-calling and insults do nothing to alter the truth. However, all this has led to a lot of confusion, especially for outside observers and newcomers. While it has helped some people differentiate between Bitcoin and its imitators, it has also scared off others. It is used as ammunition against Bitcoin by its most dishonest enemies. And it is also frightening to the most sensitive and fragile newcomers — individuals who desperately need real truths that will make them stronger through the knowledge that there are beautiful, incorruptible, inviolable truths that nobody can harm. But this article is not for the newcomers. It is for the Bitcoiners. What I want to point out is that this hurts us — not Bitcoin — Bitcoiners. I'm not talking about our reputation as viewed by others. I'm not talking about any financial cost we may have incurred. I'm talking about the fact that it has taken away time from our lives that we would otherwise have spent in love, appreciation, admiration, friendship, productive endeavors, and other activities that are spiritually far more satisfying than the deeply unsatisfying experience of arguing with people who have intentionally rejected the truth. When Bitcoin ultimately succeeds and needs no longer be explained or defended as much as today, this "*toxicity*" will evaporate (in much the same way as nobody today needs to defend the utility of the internet or smartphones, although it needed defense when many people were claiming these were useless, slow, and expensive). But for now, having pointed out that explanations and defense are still required, I want to suggest that I believe we can take a different tack than the one many of us find ourselves on — because it is in our individual interest to do so. That path is one of simply not succumbing to the temptation to anger when the truth and beauty of Bitcoin are denied by others. Truth, as I've said, transcends all. Lies eventually wither in a battle with the reality of the universe and the eternal and inviolable truths that are deeper than existence itself. If you believe in, or better yet understand, the truths that Bitcoin is built upon and operates under, you will realize you need not get angry — even if you hear someone who is a skillful liar and knows they are lying telling horrible lies to hurt others. Rather than get angry, you can maintain your calm, knowing that you need not succumb to the lies and that you can maintain your peace by offering to speak calmly to listeners in a separate location or time. This path of refusing to engage in hostile emotional debates is far more rewarding. Spending time with interested learners rather than incurious charlatans provides the opportunity to discuss truth, beauty, and love instead of wasting time countering irrational or deceitful ugliness that stirs up anger and hatred in you. In such settings, one can take their time and be fully honest, even to the point of admitting what we don't know, don't understand, and cannot explain. Bitcoiners are lovers of truth, fairness, justice, and honesty — and while I'm telling the unvarnished truth, we're also lovers of success, friendship, and love itself. And we're also human. So, we're capable of taking action that doesn't get us what we love. We need to be aware that we have a choice and be aware of which actions will put us on the path that is not the best one for us. Our enemies want us on that wrong path. It is where they enjoy the home-field advantage. But we needn't meet them there ever. And we needn't give them free rein in our home field either — the field of truth-telling. To the extent that we do entertain them in our space and on our time, they must not be permitted to either draw us away from truth-telling or draw us towards anger — for that takes us away from truth and love and into anger and hatred. One truth Bitcoin shows us is that we are sovereign — not just over our monetary wealth, but also over our emotions, not just over where we spend our money, but also over where and how we spend our time. So spend it wisely with those you love and who you may come to love what you love, and with those who can teach you. Don't waste your time with those who want to argue for the sake of argument, or worse, for the sake of wasting your precious time and using your presence to mislead others. Take the high road. Point out truths. Caution others of falsehoods when you must. But don't sink to the low vibrational energy of your opponents. Be a role model even for them. In the final analysis, it may be the only way to get them to see the light of the truth. ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # The Zen of Knowing Your Opinion on Bitcoin Doesn’t Matter URL: https://www.swanbitcoin.com/education/the-zen-of-knowing-your-opinion-on-bitcoin-doesn-t-matter/ At the end of the day, the fact that our opinion has no bearing on Bitcoin is a good thing. --- **Tomer Strolight** · January 28, 2022 · Updated June 25, 2024 ### THE ZEN OF KNOWING YOUR OPINION ON BITCOIN DOESN’T MATTER At the end of the day, the fact that our opinion has no bearing on Bitcoin is a good thing. Bitcoin doesn’t care about your opinion — or mine. And neither do the world’s leaders. You also may not care about my opinion. You don’t need to, but here it is anyway. It’s my opinion that the fact that Bitcoin doesn’t care about our opinions is a good thing. And it’s *also* my opinion that the fact that the world’s leaders don’t care about our opinions is *not* a good thing. How can I declare it good when Bitcoin does one thing and bad when our leaders do the same? This is because of two other very important facts: The first is that world leaders do care about their own opinions, and so their opinions *do* matter when ours don’t. The second is that, although Bitcoin doesn’t care about your or my opinion, it also doesn’t give a single flying fluff about our world leaders’ opinions either. And at the end of the day, that’s what makes Bitcoin so awesome. The great dream of democracy was that our opinions mattered — yours and mine. But let’s face it, they don’t. Seriously, think about it for a second: It’s kind of silly to imagine that the world would or should care about *your* opinion. In fact, it’s pretty arrogant. Who are you to have your opinion matter when there are 7.7 billion other people out there with *their* own opinions. Don’t be mad at them. None of their opinions matter, either. Not unless they happen to be one of those leaders who gets to make the rules and change them. And there’s no one even to blame, including those leaders. It’s not like our leaders could somehow manage the massive economic-industrial-agricultural-military-political complex around *your* opinion — never mind everyone else’s — even if they wanted to. So, all I’m trying to say is, don’t be upset that your opinion doesn’t matter. Accept it. You’ll find a lot more peace in that. Think of all the pointless arguments you’d avoid if you kept your opinion to yourself. When we first realize that our opinions don’t matter, we can get quite irate. But let’s not despair. We have a solution to this problem. And the solution isn’t to figure out how to get a few more people’s opinions to matter. The solution is, surprisingly, to make sure that *nobody’s* opinion matters. Once again, Bitcoin comes to the rescue to solve a seemingly unsolvable problem with an unimaginably creative fix. It just says, “*You humans, go ahead and have all the opinions you want. I don’t want to hear about it*.” And that’s that. That’s pretty good. Like a stern and fair parent, Bitcoin is basically laying down the law and telling politicians, central bankers, and economists: “*Stop stealing from your brothers and sisters. I don’t want to hear your justifications*.” If some economist has a wonderful opinion about how much more money should be printed, his opinion doesn’t matter to Bitcoin. If another one says he’s got a better idea for how we should use energy, it doesn’t matter to Bitcoin. The leader of some countries might be of the opinion that citizens should surrender more of their wealth to him. Doesn’t matter to Bitcoin. A central bank chairman might have the opinion that the cost of borrowing money should double. This does not matter one *bit* to Bitcoin. In Bitcoin, all those *leaders’* opinions don’t matter either. So now we’ve got a fair, level playing field. We’ve got rules that apply to us all. Rules that don’t change. And even though our opinions don’t matter, that’s okay — no, not just okay — that’s great! That’s great because nobody else’s opinions matter either. So I don’t have to worry about what their opinions are. In fact, I don’t have to care about the fact that they don’t care about my opinions. What a load off my shoulders this whole thing is. I can finally stop worrying about other people’s opinions. Sure, I might want to hear their opinions, but it won’t be because I’m worried that their *opinion* might lead to some policy that would hurt me. So I can be chill and reply to it just like the Dude in “*The Big Lebowski*” did when he said, “*Well, that’s just, like, your opinion, man.*” *This is a guest post by Tomer Strolight. Opinions expressed are entirely his own and do not necessarily reflect those of BTC, Inc. or* Bitcoin Magazine*.* ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # Will Bitcoin Follow Gold’s Monetary Rise and Fall? And a Look at Bitcoin’s Scaling Strategy URL: https://www.swanbitcoin.com/economics/will-bitcoin-follow-gold-s-monetary-rise-and-fall/ Bitcoin can achieve its ultimate goal — to be a neutral base layer of a new monetary system for billions of users worldwide --- **John Haar** · December 25, 2023 · Updated June 25, 2024 ###### Will Bitcoin Follow Gold’s Monetary Rise and Fall It is well known to Bitcoiners and any student of monetary history that precious metals like gold and silver were once the base layer of the monetary system and that this is no longer the case. Bitcoiners and the school of Austrian Economics have offered explanations as to why monetary history played out this way for gold and silver – namely, that settling trade in precious metals is slow, expensive, and complicated. In other words, precious metals severely lack portability. In this article, we’ll explore the long, multi-step process that gold went through, leading to its eventual removal as the base layer of the monetary system. And we’ll evaluate whether Bitcoin is subject to those same threats. The reason why this topic is so important is that many people hold that the ultimate goal of Bitcoin is not just to become what gold is today, i.e., a store of value financial asset, but to be a neutral base layer of a new monetary system which allows billions of users worldwide to hold & transact in a trust-minimized manner that is not reliant on custodians, central banks, or governments. Can Bitcoin achieve this lofty goal? Will it ultimately meet gold’s fate? Or is some other in-between outcome more likely? ###### Bitcoin’s Future Appears to Rest on Its Ability to Scale It's generally accepted that usage of Bitcoin on-chain can only scale so much without risking the fundamental principles that keep it decentralized. Even if Bitcoin's block size were to be increased in the future, it wouldn't be able to increase to the point where billions of users are able to transact on the base layer for everyday transactions while also keeping mining and auditing (node-running) sufficiently decentralized. Therefore, the current view is that transaction fees on the base chain will soon price out many transactions (e.g., the fee to transact may be larger than the desired transaction value). Additional layers on top of Bitcoin are therefore required for more users to hold and transact Bitcoin. The most well-known piece of this scaling strategy is the Lightning Network. However, it's generally understood that even Bitcoin + Lightning does not get us to a place where billions of users are able to use Bitcoin for everyday transactions. There are a few recent articles which provide excellent context for this discussion: [Thoughts on scaling and consensus changes (2023) - JamesOb ](https://delvingbitcoin.org/t/thoughts-on-scaling-and-consensus-changes-2023/32)Scaling considerations including an honest take on why one might be skeptical about scaling in layers. [Putting the B (for Billions) in BTC - Anthony Towns](https://www.erisian.com.au/wordpress/2023/06/21/putting-the-b-in-btc) A look at all the possible ways that blockchains can theoretically scale and a deeper look at the Bitcoin scaling strategies currently being discussed and built. [Banks Without Bankers — Eric Yakes, Axiom](https://www.axiombtc.capital/banks) An in-depth look at scaling strategies, including Fedimint, Cashu, Bitcoin Free banks, and Ark. [Lightning Is Doomed - Shinobi, Bitcoin Magazine](https://bitcoinmagazine.com/technical/lightning-is-doomed) A reality check on the limitations of Lightning Network and what that means in terms of its long-term viability. No, it's not doomed, but it probably won't be used the way you expected it to be. In one of the articles listed above, the author (Shinobi) points this out from the Lightning white paper: ![](https://www.datocms-assets.com/56652/1703006882-john-haar-ln.png?auto=format) This is where other solutions come into play, such as federated chaumian mints, sidechains, Ark, and future soft-fork-enabled covenants. And yes, some people will keep their Bitcoin in third-party custody. Additionally, Peter McCormack, host of the [What Bitcoin Did podcast](https://www.whatbitcoindid.com/podcast/the-fight-for-bitcoin), sent out a relevant (and timely) tweet as we were writing this article. ![](https://www.datocms-assets.com/56652/1703010129-peter-mcc.png?auto=format) The following quote is from one of the above articles, and hopefully, it gives a sense of why there is some trepidation about scaling in layers: *When reading a draft of this post, my wife got kind of depressed right around here. Her macabre question, basically, is: “If everyone just winds up interacting with sidechains and not Real Bitcoin, hasn’t the whole thing failed? At every point, you’re dealing with some token that isn’t really Bitcoin.”* And it begs this further question: if, at every point, most people are dealing with some token that isn’t really Bitcoin, will Bitcoin eventually succumb to what gold did? (i.e., capture by governments and banks and eventual removal as the base layer of the monetary system.) Bitcoin’s on-chain monetary properties are better than gold’s, but is that enough to prevent it from failing as gold did? What if you add in the benefits of Lightning and additional scaling strategies? ###### What Led to the Downfall of Gold? Now let’s take a look at an extremely condensed summary of monetary history. ![](https://www.datocms-assets.com/56652/1703007316-gold-fail.png?auto=format) In a world where everyone conducts commerce by directly exchanging physical precious metals, the services provided by banks would not provide much value, and therefore banks would not hold nor transfer much of society's monetary wealth. Therefore, if a government wants to capture and manipulate the monetary system as a whole, direct physical theft on a grand scale is required. As an economic system evolves and more trade occurs, market participants find it advantageous to keep precious metals with custodians who can reliably protect them. And further, if you can use your receipt for custodied gold instead of actually settling trade by directly exchanging precious metal, the convenience is greatly improved. Gold’s lack of portability results in these undeniable benefits of centralized custody. However, this is also the first step in gold’s downfall. Centralized custody results in a situation where one entity holds the gold for many customers, and eventually, the custodian realizes that they have the opportunity to *“do something”* with a large portion of the deposited assets, such as making loans and charging interest. The idea here is that the custodian can successfully earn extra money as long as not all customers want to access their assets at the same time. This is known as fractional reserve banking. (Maybe the custodian is transparent with its depositors about how they are handling the deposited funds; maybe they aren’t. Maybe the custodian shares some of the interest with its depositors; maybe they don’t. These are interesting topics to explore, but they are not the focus of this piece.) The point here is that fractional reserve banking is the second step in gold’s downfall, and it’s only possible after centralized custody. Bitcoiners and Austrian economists believe that fractional reserve banking is an inherently unstable system, prone to booms and busts, which makes sense given that the system quite literally is designed to expand the money supply through lending and contract the money supply when loans are paid back or defaulted on. This monetary expansion and contraction distorts price signals, which confuses market participants into believing there is more demand for their products/services than there truly is in reality. This produces the illusion of an economic boom, but it is eventually uncovered as being not based in reality, and this uncovering process eventually turns into a bust. When the bust (and the associated societal pain of a bust) becomes apparent, politicians often step in to provide a *“solution.”* If the politicians are unable to identify fractional reserve banking as the root cause for the boom/bust cycle, or if they are being persuaded by the banking industry that fractional reserve banking must continue to go on, their solution will leave fractional reserve banking as it is. Instead, they might introduce a system such as *“central banking.”* It might even be driven by fairly benign motivations to start, such as *“Look, we’ve seen many financial crises causing banks to collapse and citizens to lose their life savings. We’ll introduce a central bank that can be the lender of last resort to prevent a bank from collapsing. This will prevent future financial crises.”* In reality, the central bank ends up perpetuating and exacerbating the fractional reserve game. It intervenes so that busts are not allowed to occur because busts would cause the fractional reserve *“broad money”* to default and disappear, leading the money supply to collapse down toward the base money. Or, as Allen Farrington succinctly put it: [![](https://www.datocms-assets.com/56652/1703009327-allen.png?auto=format)](https://twitter.com/allenf32/status/1667928578636369920) Instead of allowing this natural process to take place - of broad money collapsing down to base money - the boom/bust cycle continues on forever, with the booms getting bigger and the busts getting bigger. Eventually, the broad money grows to the extent that it becomes apparent that it's impossible for all of the broad money to be convertible back into the base money. Historically, this meant that it became apparent that there were too many paper dollars circulating vs real ounces of gold or silver, even though the dollar was clearly defined as being convertible into a specific amount of gold or silver. The inevitable result of this is a government *"solution"* that involves the removal of precious metals as the base layer of the monetary system. The dollar becomes a unit without its base layer anchor. You officially enter the fiat era. It just took one surprise televised announcement by President Nixon to say the dollar was *"temporarily"* no longer redeemable for gold to snuff out the final illusion that gold was the base money supporting the dollar and the world's economy. Looking at the rough historical timeline in the United States, fractional reserve banking was happening through the 1800s, then central banking began in 1913, and gold was removed as the base layer in 1971. To summarize, gold's removal as the monetary base layer happened gradually, except for the very last step, which was very sudden. At its root, though, the costs of moving (portability) and securing (custody) gold were its vulnerabilities that eventually led to few entities personally moving or securing gold. A critical question you can always ask yourself as you think about the root causes for how our monetary system evolved is as follows: If precious metals could have been held/sent/verified easily & cheaply, how many market participants would have said, *“I don’t want the gold or silver; give me government-authorized fractional reserve bank credit money instead.”?* ![](https://www.datocms-assets.com/56652/1703007830-how-bitcoin-can-avoid.png?auto=format) There is an argument to be made that even just the combination of on-chain Bitcoin + third-party custodians has a better shot at preventing capture than gold + third-party custodians. I think it’s best to demonstrate this in the form of a scenario and a question: *You have to send a payment of $10 million in today's dollars to a person in another country. Assume the cost to complete the transaction is $50k either by doing an on-chain Bitcoin transactions or by sending physical gold. Which do you choose?* Even though we assumed that the monetary cost was exactly the same, the on-chain Bitcoin transaction is more attractive than gold because sending physical gold involves far more time, effort, trust, and resources. To send the gold, you need a trustworthy security team, and you need to wait days or weeks for the transaction to complete. Even verifying that the transaction was completed is no easy task. Alternatively, to send the Bitcoin, you need the proper hardware, the proper software, an internet connection, and about one hour of time for the final settlement of the transaction, with no doubt verifying that it was indeed completed. Bitcoin is clearly the better choice in terms of time, effort, trust, and resources. ![](https://www.datocms-assets.com/56652/1706814107-table-1.png?auto=format) The takeaway here is that this advantage of on-chain Bitcoin makes it a gigantic improvement over a gold-based monetary system, ***even if*** Bitcoin on-chain transactions become far more expensive than the few dollars they cost today, and we don’t implement any other scaling solutions. Put another way, a person who owned a lot of gold in the late 1800s was still highly incentivized to keep their gold stored with a custodian in a bank vault. Simply having a lot of gold does not make you immune to the fact that you need a team of people, armored vehicles, and a lot of time in order to move a significant amount from one place to another. The same is not true for someone who owns a lot of Bitcoin. Taking self-custody and sending Bitcoin on-chain is fairly easy and achievable as long as you aren’t priced out by the on-chain fees. Again, this represents a huge improvement vs the limitations and frictions of gold. ###### Now Add Lightning Without getting into the nitty-gritty of how the [Lightning Network functions](https://www.swanbitcoin.com/a-look-at-the-lightning-network/), you can think of it as the settlement network, which will be one day be used by federated chaumian mints or Bitcoin banks, especially when on-chain fees are significantly higher than they are today. One could argue that if we’re depending on a settlement network between mints and banks, have we actually created anything better than the existing fiat banking system? Aren’t we just trusting the mints and banks not to rug-pull us again? There are two critical differences to highlight here: 1. ***Becoming one of these mints or banks will not be a process that is gate-kept by the government and banking regulators.*** 2. ***If there is a discrepancy between participants in this settlement network, they have the ability to go to the base chain for adjudication without requiring significant time, effort, trust, and resources.*** Neither of the above two things can be said about the banking industry historically or today. Elaborating on these two points is worthy of a future article of its own. But for now, hopefully, it’s clear that these two points hold true for Bitcoin + Lightning but do not hold true for the legacy system. ###### Next add a third layer: Federated Chaumian Mints, Sidechains, Ark, and Future Soft-fork Enabled Covenants As mentioned earlier, scaling solutions such as federated chaumian mints become important when you realize that, in a future high on-chain fee environment, Bitcoin on-chain + Lightning is not sufficient to provide billions of users the ability to each hold & transact Bitcoin directly. To be clear, each of the scaling strategies mentioned in this section's header are quite different from one another. And it's worth noting that covenants appear to be the best chance at providing as many users as possible to have a nearly self-sovereign experience with Bitcoin. There is significant debate in the Bitcoin community about how and when to enhance covenants on Bitcoin. See this [discussion between Stephan Livera and Brandon Black](https://twitter.com/stephanlivera/status/1741437649439670705) for an in-depth discussion on covenants: It would take several more pages to describe each of these scaling strategies. Instead we'll focus on federated chaumian mints and the benefits they offer the Bitcoin system as a whole. A mint would accept Bitcoin deposits from its users and, in exchange, give them Bitcoin-denominated eCash tokens in an eCash wallet. Deposits and withdrawals to the eCash wallet would be made using the Lightning Network. If users in the same mint are paying one another, funds stay within the mint, they can be moved at a very low cost, and there is no need to involve Lightning. If they pay someone outside the mint, the Lightning Network would be used to settle balances between mints. If they pay someone outside the mint, the [Lightning Network would be used to settle balances between mints](https://www.swanbitcoin.com/running-the-numbers-riding-the-lightning-network/). Mints can be designed in such a way that the mint does not know the identity, account balances, or transaction histories of each eCash wallet. Similar to point (1) raised above for the Lightning Network, there will not be a massive barrier to entry if one wants to become such a mint who provides these services to their community. Yes, there is some barrier to entry, including the time and capital it takes to operate the mint. However, this would be far smaller than the time, capital, and regulatory blessings needed to launch and operate a bank in the legacy system. Although this stacked system of on-chain, Lightning, and layer three solutions may look like it shares the same concerns as precious metals – that of people surrendering custody of the base layer asset – there is actually a huge difference. That difference is that at each layer, Bitcoin supports way more participants (i.e., competitors) than gold could. Already today, millions of people self-custody Bitcoin, and that number continues to grow with pretty much each block added. And [Lightning, too, can add millions](https://www.swanbitcoin.com/what-s-new-and-coming-in-lightning/) of native users a year. Yet, Lightning plus on-chain Bitcoin already provides all the functionality of fully integrated, highly secure, interconnected banks. If there are millions of bank equivalents, able to interoperate without the portability and security constraints of gold, and customers of those *“banks”* can easily choose several of these and switch between them, we have overcome the centralizing forces that gold’s portability constraints led to and, thus, avoided gold’s fate. ###### Conclusion If the current approach to scaling Bitcoin in layers is carried out, will it afford all users full self-sovereignty with no need to trust any third party and no risk of ever being rugged? No. Does it, however, offer a path for users to interact with Bitcoin in a trust-minimized manner while keeping the system as a whole decentralized and not resistant prone to capture? **I think yes.** Even if no more scaling solutions are added, Bitcoin can remain far more decentralized and *“uncapturable”* than gold ever was or can be. This is simply because both securing and sending Bitcoin involves significantly less time, effort, trust, and resources. **Think about it this way:** Even if only 1 million entities can use Bitcoin and everybody else has to rely on this million to provide the scale of transactions they need, that’s still profoundly more competition and choice than is needed to keep those million providers mostly honest. At 7 billion people in the world (and throw in another billion to serve all the corporations), each on-chain entity would only need to serve 8,000 customers – and that’s an easy scale to achieve. So it’s likely that each person would be able to spread their business around many such providers and not risk a total loss if one of them were to become insolvent or fail in some other way. It may not be perfect, and I’m not calling for complacency or that we halt the pursuit of scaling solutions, but even the current status quo already doesn’t result in a collapse of Bitcoin and replacement of it with some vastly inferior substitute as happened with gold. Bitcoin’s solution to gold’s two biggest vulnerabilities is already sufficient to prevent it from suffering the same fate gold did. And the scaling solutions being discussed and built today are cause for even more optimism that Bitcoin can achieve its ultimate goal – to be a neutral base layer of a new monetary system which allows billions of users worldwide to hold & transact in a trust-minimized manner not reliant on custodians, central banks, or governments. A final resource for readers to explore is this particular tweet from Lyn Alden in the thread started by Peter McCormack. I would encourage readers to check out that thread in its entirety. But this particular tweet does a great job summarizing several of the ideas discussed in this article. [![](https://www.datocms-assets.com/56652/1703009466-lyd-tweet.png?auto=format)](https://twitter.com/LynAldenContact/status/1729981227363344552) [View Tweet](https://twitter.com/LynAldenContact/status/1729981227363344552) ### John Haar John is the Managing Director of Private Client Services at Swan Bitcoin. He previously spent 13 years on Wall Street, where he was a Portfolio Manager and Insitutional Investor at Goldman Sachs. If you'd like to learn more about the Bitcoin network and protocol function, you can download [Inventing Bitcoin](https://event.swanbitcoin.com/freebook/) by Yan Pritzker for FREE! # The Government is Spending Like There’s No Tomorrow URL: https://www.swanbitcoin.com/politics/the-government-is-spending/ As the government spends frivolously to prevent a recession, the traditional monetary system seems to be growing more fragile as it fractures under the weight of enormous amounts of debt. --- **Sam Callahan** · October 20, 2023 · Updated June 25, 2024 *“I have spent most of my life worrying about things that have never happened.”* - Mark Twain Heading into 2023, many market participants feared that a recession was on the horizon. Doom and gloom filled the headlines as investors worried that asset prices were about to crash and the economy was set to grind to a halt. It was hard to see how an economic downturn was not imminent. With the Federal Reserve raising interest rates at the fastest pace in its history, in an economy that gorged itself on cheap debt after nearly a decade of artificially low rates, it seemed like it was only a matter of time before things would start to break. The graphic below, although from May, does a good job highlighting the sheer speed of the Federal Reserve’s rate hikes. An additional 0.25% rate hike has occurred since this graphic was made. ![](https://www.datocms-assets.com/56652/1697831432-1.png?auto=format) An ultra-hawkish Federal Reserve is what led to Bloomberg forecasting a 100% chance of a recession almost exactly one year ago. ![](https://www.datocms-assets.com/56652/1697831454-2.png?auto=format) And yet, the recession everyone feared never came. The headline above highlights the consensus view as we entered this year. Everyone thought assets were going to crash when instead they soared. Asset classes like stocks and Bitcoin have rallied strongly in 2023, leaving many market participants behind as they waited to “buy the dip.” Bitcoin and equities have been some of the best-performing asset classes year-to-date. ![](https://www.datocms-assets.com/56652/1697831515-3.png?auto=format) It leads to the question, why were so many investors wrong? Why hasn’t a recession transpired like so many thought it would?  Although it’s impossible to pinpoint an exact reason why a recession hasn’t come to fruition, one significant explanation could be that the government is currently running massive fiscal deficits, which could be offsetting the tighter financial conditions. The Congressional Budget Office released its budget review of the fiscal year 2023 and found that the budget deficit totaled $1.7 trillion, $166 billion of which was in September alone. The fiscal deficit has nearly doubled from the year prior.  Maya MacGuineas, President of the Committee for a Responsible Federal Budget, did not mince her words in response to the large deficit spending: ![](https://www.datocms-assets.com/56652/1697831555-4.png?auto=format) CBO You can hear from her tone above – President MacGuineas is concerned about the United States’s fiscal position. But if there is one positive to be found from this recent rise in government spending, it’s that it does seem to have helped stimulate the economy, at least in the short term.  When a government spends money - whether it’s on infrastructure, social programs, or other expenditures – that money doesn’t just disappear. It gets paid to workers, contractors, suppliers, etc. These recipients then spend a portion of their income, which becomes someone else’s income, and so on. This chain reaction can lead to an overall increase in economic activity that is a multiple of the original government expenditure. With this increased government spending, real GDP has soared to levels well above the historical average. The Federal Reserve Bank of Atlanta’s GDPNow metric now sits at 5.4%, well above average forecasts. ![](https://www.datocms-assets.com/56652/1697831903-5.png?auto=format) This is only likely to continue too. The CBO projects that the US will continue to run trillion-dollar deficits for the foreseeable future. ![](https://www.datocms-assets.com/56652/1697831930-6.png?auto=format) How much this GDP growth is a result of the large fiscal deficits run over the last three years is difficult to quantify, but it is certainly a contributing factor. This could be why a recession has not yet unfolded as many predicted. In layman’s terms, the government has been busy spending to keep the economy afloat.  A key point from President MacGuineas’s statement above was, “At a time when the economy is growing and unemployment remains at historic lows, this should be a time to reduce deficits.” Historically, the US has run large fiscal deficits in response to an economic downturn to counteract the decline and stimulate economic growth. Today, it’s almost as if the government is preemptively running large deficits to try to prevent a recession from occurring in the first place. The government is spending like there is no tomorrow, but it’s important to recognize that there are long-term future implications for running persistently high deficits like this.  The question becomes two-fold: 1.) How does the government finance these deficits? and 2.) What happens to the deficit if an economic downturn does occur? Both answers are straightforward: 1.) More debt and 2.) the deficit will explode. As the government has run these massive deficits, it has financed them by borrowing. This has caused total US debt to explode higher at a scary pace. ![](https://www.datocms-assets.com/56652/1697831971-7.png?auto=format) The Treasury has already issued more than $1.76 billion of Treasurys through September to fund these deficits, higher than any year in the past 10 years, excluding the 2020 pandemic. ![](https://www.datocms-assets.com/56652/1697831992-8.png?auto=format) Estimates suggest that Treasury issuance will only continue into 2024. Apollo Global Management forecasts that Treasury issuance will increase on average 23% across the entire yield curve next year. ![](https://www.datocms-assets.com/56652/1697832016-9.png?auto=format) The government can try to finance these deficits through new Treasurys, but at what price? As fiscal authorities flood the market with newly-issued Treasurys, the risk for them is that there will not be sufficient demand for them at the current yields. If yields rise, then that increases the interest expense on the existing mountain of debt. Already, interest expense on the public debt has risen to $833 billion over the past year, a record high. ![](https://www.datocms-assets.com/56652/1697832051-10.png?auto=format) As more Treasurys enter the market, investors start to demand a higher yield due to long-term inflation concerns and worries about the sustainability of the national debt.  Lately, we have observed this dynamic play out as Treasury yields have risen to levels not seen since the Global Financial Crisis. ![](https://www.datocms-assets.com/56652/1697832167-11.png?auto=format) As Treasury yields rise, the deficit only grows larger as the interest expense rises. This phenomenon is commonly referred to as the “debt spiral”. The difference today is that this debt spiral isn’t just being discussed in Bitcoin circles, but rather it’s entering the national discussion. ***Bitcoin is the Money of Tomorrow***  Billionaire Paul Tudor Jones recently talked about these debt dynamics in an interview on CNBC stating, “*You get in this vicious circle, where higher interest rates cause higher funding costs, cause higher debt issuance, which cause further bond liquidation, which cause higher rates, which put us in an untenable fiscal position*.”  PTJ continued, “*It might be the most threatening and challenging geopolitical environment that I’ve ever seen. It is also happening at the same time the US in its weakest fiscal position since World War II.*” When asked how he’s playing this precarious fiscal situation, PTJ replied, “*I like Bitcoin.*” Another giant in the financial world, CEO of Blackrock Larry Fink, also verbalized support of Bitcoin on national television. In response to a false rumor that the Blackrock spot Bitcoin ETF had been approved, Fink said, “*This rally today is way beyond the Bitcoin spot ETF rumor. The rally today is about a flight to quality.*” All of this is evidence that Bitcoin is starting to be recognized by big players as not a speculative asset, but rather as a protective asset from the long-term negative consequences of a government with a chronic spending problem. With the outbreak of war in the Middle East, it doesn’t look like the government will rein in its spending anytime soon either. Government officials appear to think there are no limits to the amount of money they can spend.  On 60 Minutes, Treasury Secretary Janet Yellen stated that the US could afford to finance two wars despite domestic inflation running hot and public debt recently hitting record highs. Yellen said, “*We do need to come up with funds, both for Israel and for Ukraine. This is a priority. It’s really up to the House to put us in a position where legislation can be passed.*”  President Joe Biden is expected to ask Congress for an additional $100 billion funding request for foreign aid in response to the war in the coming days. This comes as the US has already sent over $75 billion in aid, the equivalent of over two annual NASA budgets, to Ukraine last year alone.  ![](https://www.datocms-assets.com/56652/1697832310-12.png?auto=format) Whether you agree with supporting these foreign wars or not, the outcome remains the same – the US spending more money it does not have, which will only grow the national debt, which is already at an unsustainable level. Even Federal Chairman Jerome Powell agrees. He offered a rare comment on the current fiscal situation in his latest interview at the Economic Club of New York, “*Everyone knows – it’s not a secret…We know that we’re on an unsustainable path fiscally*.” If what Powell says is true, and everyone already knows we’re on an unsustainable path fiscally, perhaps people are finally starting to wake up to Bitcoin’s value proposition as an alternative to the debt-based financial system that appears to be on its last legs. Bitcoin is up 8.4% over the last month alone. ![](https://www.datocms-assets.com/56652/1697832361-13.png?auto=format) One potential driver of this price move could be related to renewed market optimism around a spot Bitcoin ETF approval. In a recent research report, JP Morgan Chase noted that it gives the highest probability of a spot Bitcoin ETF approval occurring before January 10th. ETF Analysts from Bloomberg attributed a 90% chance of a spot Bitcoin ETF approval in January.  One market metric that represents a good proxy for the likelihood of a spot Bitcoin ETF approval is the GBTC Premium/Discount to NAV. That discount has narrowed to -13.3%, a level not seen since November 2021. ![](https://www.datocms-assets.com/56652/1697832389-14.png?auto=format) As the market positively responds to an increased probability of a spot Bitcoin ETF approval, Bitcoiners continue to build and innovate. There were two exciting announcements in the world of Bitcoin development over the last two weeks. The first one was [BitVM](https://bitvm.org/bitvm.pdf) - a new solution that could enable all kinds of new functionality on Bitcoin without requiring any soft or hard fork. ![](https://www.datocms-assets.com/56652/1697832430-15.png?auto=format) Personally, I liked how Preston Pysh described the potential of BitVM. ![](https://www.datocms-assets.com/56652/1697832467-16.png?auto=format) The other innovation was Lightning Labs announcing the launch of [Taproot Assets](https://lightning.engineering/posts/2023-10-18-taproot-assets-v0.3/). Taproot Assets provides “a feature-complete developer experience for issuing, managing, and exploring stablecoins or other assets on the Bitcoin blockchain.”  Both of these developments underscore Bitcoin’s programmable nature and how it continues to evolve. The Bitcoin network will continue to scale and provide additional functionality over time in a manner that maintains its decentralization and security. As the government spends frivolously to prevent a recession, the traditional monetary system seems to be growing more fragile as it fractures under the weight of enormous amounts of debt. At the same time, you have the Bitcoin monetary system only growing stronger and more resilient. As Bitcoin becomes increasingly useful as a monetary network, it’s only a matter of time before more people, like PTJ did last week, start singing its praises.   ***Market Overview*** ![](https://www.datocms-assets.com/56652/1697832512-17.png?auto=format) ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # Bitcoin is the New Non-Aligned Movement - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/bitcoin-is-the-new-non-aligned-movement/ In a bifurcated world, Bitcoin can be the solution representing a new Monetary Non-Aligned Movement. --- **Enza Coin** · June 7, 2024 · Updated June 25, 2024 *This is an opinion editorial by Enza Coin, a Dubai-based Bitcoin-focused investor and content creator.* ### What is the Non-Aligned Movement? For those few of you who are from the former [Yugoslavia](https://en.wikipedia.org/wiki/Yugoslavia), you will be closely familiar with the global cause known as the [**Non-Aligned Movement**](https://en.wikipedia.org/wiki/1st_Summit_of_the_Non-Aligned_Movement)**.**  Its name and concepts were embedded in the root of the country as the founding member of the cause. Under Josip Broz (aka “Tito”), it brought together diverse and far-reaching nations that included Yugoslavia, Egypt, India, and Indonesia among others under its umbrella. In the minds of people, it was less a formal entity aiming to impose thoughts and decisions on others and more of a decentralized band of common believers.  It was far from the likes of the current day [World Economic Forum (WEF)](https://www.weforum.org/), [United Nations](https://en.wikipedia.org/wiki/United_Nations) or [European Union](https://en.wikipedia.org/wiki/European_Union) that serve as the nemesis of many Bitcoiners. Rather than trying to centralize thought under one of the sides of the then-polarized world, the Non-Aligned Movement tried to offer a **Third Way**.  For the nearly 50-years of the “[Cold War](https://www.history.com/topics/cold-war/cold-war-history)”, the world’s battling superpowers aimed to force everyone into one of 2 blocs with the Soviet Union on one end and the United States on the other.  In Bitcoin lexicon, I would refer to such a world as the choice only between the US dollar or the Euro.  Are either of these a good choice for you?  Perhaps for some, but at core, wouldn’t it be better to be allowed to make your own selection rather than be boxed into only two options?  Think about what happened to the purchasing power of Fiat currencies over the period of the Cold War. While the Cold War tried to impose a hard choice on countries and individuals, impacting their lives, livelihoods and wealth, the Non-Aligned Movement aimed not to connect with either side. As with the Non-Aligned Movement, let us choose a **Third Currency Way**.  ![](https://www.datocms-assets.com/56652/1717789323-nam_1.jpg?auto=format) Founding members of the Non-Aligned Movement: Nehru of India, Nkrumah of Ghana, Nassar of Egypt, Sukarno of Indonesia and Tito of Yugoslavia. ### From a Polarized to a Bifurcated World Full of Fiat Unless you have been hiding in your “[prepper](https://www.dictionary.com/e/slang/prepper/)” bunker the last decades waiting for “the end”, you will have noticed that while the Cold War ended in 1991 and global leaders in the West have since been uneasy without a clear villain to take sides against so allow for the continued funding of their [military-industrial complex](https://en.wikipedia.org/wiki/Military%E2%80%93industrial_complex).   If you are a [Silent Generationer or Boomer](https://www.parents.com/parenting/better-parenting/style/generation-names-and-years-a-cheat-sheet-for-parents/#toc-the-silent-generation-born-19281945) reading this article you may have witnessed the speech first-hand, but for the rest of us Bitcoiners I can only paraphrase for you that [US President Dwight D. Eisenhower](https://www.history.com/this-day-in-history/eisenhower-warns-of-military-industrial-complex) warned about the increasing power of the military-industrial complex during his farewell address on 17 January 1961. ![](https://www.datocms-assets.com/56652/1717789420-cial-presidential-portrait1.jpg?auto=format) The official White House portrait of Dwight D. Eisenhower Using Fiat gains, post-Cold War Western leaders searched for a new enemy. The West needed a new adversary to again create a two-sided bloc like in the “good old” Cold War days.  Do I need to name names in that search? Okay, fine, I will. There was the man in Baghdad, the one in the mountains of Afghanistan, the one in the oil-rich deserts of Northern Africa, and the other one in the oil-rich jungles of northern Latin America just to cite a few. However, none would fully satisfy the Fiat printing bloodlust until the world experienced the rise of China. The economic and superpower rise of China over the last 20-years plus allowed the creation of a new blockchain. Sorry, I mean bloc. I have “Bitcoin” on my mind.  With China, again the West, I mean US could aim to lasso the world into its bloc and not the other one.  Old style politicians again found their “[raison d'être](https://www.wordnik.com/words/raison%20d'%C3%AAtre)”.  The world was yet again black and white and ripe for the Fiat money-printer gone wild.  The modern Cold War transformed into an economic one, a financial one, a technological one, a currency one. The global economic dominance of the US was questioned as was the role of the US dollar. How could a place that simply produced cheap clothing, [ThighMasters](https://www.menshealth.com/fitness/a20125780/i-used-a-thighmaster-for-a-week-and-honestly-i-freaking-loved-it/) (ex. Suzanne Somers) and Christmas decorations now become a [GDP](https://www.britannica.com/money/gross-domestic-product) rival?  ![](https://www.datocms-assets.com/56652/1717789447-trmwg1ca8hoy.webp?auto=format) Well, if I could read the minds of the Men-in-Black, I mean those who run the Fed, the US Treasury, the Bank of England or the European Central Bank, it is certain that they concluded that even if China was a strong economic rival, as long as the currency of choice remained the US dollar, then the power in the bifurcated world remained with the West. With this in mind, the Western master began to impose the most comprehensive and far-reaching set of explicit and implicit controls over anyone who touched or even dreamed of the [Greenback](https://www.investopedia.com/terms/g/greenback.asp).  “Where did you get your six-hundred and twenty-seven dollars and eighty-seven cents from?”  “Why do you need to withdraw one-thousand seven-hundred and sixty-six dollars in cash?” “Bring your birth certificate, 4 sets of fingerprints, 10 years of tax returns, and a blood sample back tomorrow and maybe we will give you your cash back so that you can make a payment for your daughter’s medical bills.” [FATCA](https://www.investopedia.com/terms/f/foreign-account-tax-compliance-act-fatca.asp), [CRS](https://en.wikipedia.org/wiki/Common_Reporting_Standard), [BSA](https://www.investopedia.com/terms/b/bank_secrecy_act.asp), and [CTR](https://www.investopedia.com/terms/c/ctr.asp) became household acronyms.  “Dear, can you please pay for Grandma’s hip replacement?”  “No, sorry, the bank said my FATCA did not conform to my CRS and therefore BSA will not accept my CTR.”  The new polarized world existed to force a choice on people, to force the use of the US dollar and the Western financial system or else risk having your wealth held hostage, being frozen or even confiscated unless a person found a way to make a payment for their kibbles using the Chinese Yuan. At this point my mind wanders to the axiom articulated by [Thomas Jefferson](https://www.azquotes.com/quote/145655?ref=financial-system), the 3rd President of the United States. > I believe that banking institutions are more dangerous to our liberties than standing armies. > > — Thomas Jefferson I might also ponder if Mr. Jefferson, who postulated such wisdom, would be pleased to have his image imposed on the 2-dollar bill. ![](https://www.datocms-assets.com/56652/1717789465-us-2_bill_obverse_series_2003_a.jpg?auto=format) I also find interest in highlighting that his appointment of [Albert Gallatin](https://guides.loc.gov/this-month-in-business-history/january/albert-gallatin) as the 4th Secretary of the Treasury back in 1802 brought a Swiss-born financial wizard into the highest fold of the future economic superpower.  Yes, the birthplace of the Secretary was in the Confederation Helvetia.  A place that was to become the source of such future deep pain for the US Treasury itself a mere 200 years in the future with its, now-lost, tax haven and banking secrecy manifestos. ### Bitcoin, The Solution to a Bifurcated World The bifurcated world today is not a type of Ying-Yang where the two blocs must exist to create a balance.  Rather, the world at present is where the two blocs are at constant friction, burning at the points they touch and grinding every one of us in between. The [Arm’s Race](https://www.history.com/topics/cold-war/arms-race) became the money-printing race. Yet, what old-time Cold Warriors and modern-day money printers didn’t envision being sparked from between the grinding blocs of friction acting as flint was the creation of Bitcoin.   ### Bitcoin is the New Non-Aligned Movement Bitcoin is the new rendering of the Non-Aligned Movement. Arm the public with control over their own monetary system and a “**Third Way**” is born.  Neither Ying or Yang, neither East or West, neither Red or Blue.  The old movement was led by the [***Populares***](https://www.britannica.com/topic/Optimates-and-Populares). The new movement is led by the likes of cool President [Nayib Bukele](https://twitter.com/nayibbukele) of El Salvador, the enigmatic [Satoshi Nakamoto](https://www.investopedia.com/terms/s/satoshi-nakamoto.asp), and the “soft-spoken” [Max Keiser](https://twitter.com/maxkeiser).  There is always room for more in our ***Monetary Non-Aligned Movement*** should the chainsaw-wielding Bitcoin-hair-styled President [Javier Milei](https://twitter.com/jmilei) of Argentina or other plebeians have interest.  Please feel free to contact me for an application form. ![](https://www.datocms-assets.com/56652/1717789484-javier-milei-en-una-caravana-en-la-que-se-exhibio-obz32dainfhbvkb2fvlzpegx6u.jpg?auto=format) ### A Monetary Non-Aligned Movement In an interview of President Nayib Bukele of El Salvador by Tucker Carlson in November 2022 he said he wanted to provide El Salvadorans with an “alternative system”.  I will interpret this as meaning a “**Third Way**” and further venture to call it a new “**Non-Aligned Movement**”…….a “**Monetary Non-Aligned Movement**”. > ....try to go into an alternative system that is more independent, that is more unconfiscable, that are uncensored, and that are totally decentralized… > > ..We are doing small steps to change some things and to give people different options. We are not changing everything right away, but we are giving people different options, so we made Bitcoin legal tender… > > — President Nayib Bukele of El Salvador, Tucker Carlson Today ![](https://www.datocms-assets.com/56652/1717789497-image_processing20200201-29235-13hrbi4.jpg?auto=format) As we moved from the arms race to the printing press race, we must now venture to end categorizing the world into blocs advancing only selected economic groups. No doubling-down, no imposed biased choices, no concept that “you’ll own nothing and be happy”. Bitcoiners talk about choosing an alternative path with self-sovereignty.  When posed to make a choice between “A” or “B”, they aim for “F” and “U”, if I express it as politely as possible.  The new elements of power are not gained by forced association but by self-reliance and self-determination, all the makings of a true “**Non-Aligned Movement**”, a “**Monetary Non-Aligned Movement**”.  And, I dare to add that you need to choose your path wisely or one will be chosen for you, and it will not be Bitcoin! ### Enza Coin Enza Coin is an avid, Dubai-based investor in global markets, a crowd funder, a seed investor and a Bitcoin supporter. She has lived and worked across Asia and Europe including in Egypt, Kuwait, China, Hong Kong, Vietnam, Indonesia and Laos, and molds these experiences into her creations and analysis. She has been investing globally for nearly 15 years, supporting projects in the Bitcoin ecosystem, streaming media, food technology, green tech, LiDAR imaging and cybersecurity. When not dreaming about Bitcoin and investing, she is an espresso addict searching the world for the best Arabica beans and supporting charity activities devoted to children in the global south. “Bitcoin is a monetary revolution." # Bitcoin — For All Ages, For The Ages - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/bitcoin-for-all-ages-for-the-ages/ For the first time in our lifetimes, we have the opportunity to save reliably over the long-term! --- **Tomer Strolight** · June 21, 2024 ### Promises Promises Recently, while traveling abroad in Norway, I found myself on a tour bus listening to the explanations and rationalizations of a local tour guide on why his pension and health care, along with those of all other Norwegians, were being reduced and delayed. This was simultaneously saddening and frustrating, since such indignities are what Bitcoiners are warning about and fighting against globally -- yet so few people have heard the message. Norway is known for administering the world’s largest sovereign wealth fund, with roughly $300,000USD per person in its *“Government Pension Fund Global.”* Also known as the *“Oil Fund,”* this fortune has come about largely from the nation’s development of petroleum extraction. Sadly, in the same vein as the famous Bitcoin motto which states *“Not your keys, not your coins,”* the Norwegians now may as well say, *“Not your cash, not your pension,”* since they aren’t getting that money on the terms they had been led to believe they would during their decades of hearing how rich they were. An exact quote I wrote down from our guide was: We cannot use the money we have. Not everyone understands that. *“Bitcoiners understand that”* I found myself responding under my breath. Most national pension plans around the world are unfunded, making them eerily similar to Ponzi schemes. But even in Norway, where the plan is fully funded, the distributions are determined by the plan administrators, and those rulers can and do change the rules. I resisted my urge to scream out *“Bitcoin fixes this!*” After all, we were not on some *“Macroeconomics of Norway”* tour. Our guide simply had time to spare on the return trip from our mountaintop excursion, and discussing the state of the Norwegian economy was the topic he chose to bring up. I sensed that perhaps a decade earlier, he would have been less modest in his description of Norway’s social programs but that he had been humbled as his own retirement approached and the reality of the situation set in. As our guide elaborated about the weakness of their currency, the Norwegian Kroner, my wife began dozing off. She first noted to me that this sounded like one of the many Bitcoin discussions she overhears from me when we are not vacationing. (The Norwegian Kroner has lost half its value against the U.S. dollar since the 2008 financial crisis, falling from 20 cents to 10 cents per Kroner.) ![](https://www.datocms-assets.com/56652/1719008384-tomer_for_all_the_ages_1.jpg?auto=format) I felt extremely grateful once again for Bitcoin as I heard all this. Here, after all, was someone making the perfect case for self-custody of one’s wealth. He had been expecting certain pension benefits his whole life, but now could not access the money he had thought would be his. Retirement had been pushed to age 67 from age 65, and benefits had been reduced, especially when adjusted for inflation and the loss of purchasing power of his national currency. Yet there was nothing he could do about that. He explained that most Norwegian pensioners still chose to work to supplement their pensions, indicating that actual retirement on the pension was not practical for many. ### Bitcoin’s Honors the Bargain It Makes As I, too, get closer to an age where I might want or need to retire, I increasingly realize the real value behind the bargain that Bitcoin offers me. That deal is that Bitcoin won’t change the terms it makes with all its participants. Those terms are, among others: **(1) Our Bitcoin is ours to spend** – Whenever and however we choose to spend it. No administrators or rulers will tell us that we must wait to withdraw it, or that we may only withdraw less of it than they originally said we could; **(2) Our Bitcoin cannot be diluted** - That 21 million coin supply cap is not some temporary policy that will be revoked during a time of challenge or crisis. It is an unbreakable, unalterable fact that we can count on and plan on for our entire lives – and if we want to, for the lives of our heirs and beneficiaries. **(3) Our Bitcoin is fully portable** - It is not a local currency that is only honored in one region on Earth, and tied to our good standing with one particular government. This third point is, admittedly, currently of somewhat limited applicability because Bitcoin is still a fringe currency and neither widely accepted nor terribly easy to convert all over the world. But this will change in time. With Bitcoin ETFs popping up all over the world at an incredibly fast pace (the USA, Canada, Australia, Hong Kong, and the UK already) it’s not at all far-fetched to think that convertibility to local currency in many places is not far off, and that direct spending is only a cycle or two away. In short, Bitcoin can be relied on to honor its side of the bargain with those of us who sign up for it. Bitcoin is an honorable counterparty in long-term arrangements. This is the biggest difference between Bitcoin and its alternatives. ### Others Dishonor Their Commitments There are many criticisms of the financial system we live under now. To me, the most insidious offense is how it betrays the aging population, proceeding in a gradual, subtle way but with extremely harmful effects. It is only after decades of savings, and by the time one’s vitality, energy, health, and adaptability are diminished, that most people realize the money they’ve toiled to set aside for their future is insufficient to allow them to take care of themselves. It is a betrayal that is not only shocking and terrifying in terms of their self-sustenance, but also an insult to and a shattering of their pride. It says *“Despite your efforts, you failed to take care of yourself, and now must live out the rest of your life with less wealth than you expected.”* ![](https://www.datocms-assets.com/56652/1719008978-tomer_for_all_the_ages_2.jpg?auto=format) And what was the cause of such a failure to be able to fund our later years? It was naive to trust in the financial system. Among other things, this tragedy mostly comes down to failing to appreciate the consequences of compounding modest inflation over many decades, along with occasional short-lived, not-so-modest periods of inflation. But it also comes down to naive beliefs that promises made by politicians and employers would be kept for decades – promises that those politicians and executives are not around to keep when they come due and whose successors eventually break, saying then that they are impossible to keep. In short, politicians and executives do not honor the long-term promises they make. They are dishonorable. ### Making Plans on a Foundation of Honor I fully expect Bitcoin to fix this problem, for those who save in Bitcoin at least. Bitcoin does not experience a slow, compounding rate of inflation with occasional bursts of high inflation. It has a perfectly predictable rate of issuance. You can, at any age, calculate with certainty what the supply of Bitcoin will be at your age of retirement. With fiat money, you cannot even do this reliably when retirement is merely a few years away. With Bitcoin, nobody makes you promise that they won’t be around to keep when it comes time to cash in on your savings. You are the promise-maker and the promise-keeper in Bitcoin. You keep the promise by keeping the rules in place through the simple act of running a Bitcoin node—software that you can run on your laptop. ### A Value for the Ages This value is extremely hard to appreciate when one is young. However, when one has lived, worked, and saved for a few decades, it is a profoundly reassuring and satisfying value. It becomes easier to appreciate when you contrast how you are protected by this value while others around you, sadly, are not. Indeed, this was my experience listening to the lamentations of my Norwegian tour guide. My decision to save in Bitcoin frees me from the tragic plight of inflation-burdened, pension-administrator-dependent masses who have not discovered Bitcoin. It reinforces and clarifies to me that Bitcoin is not a get-rich-quick scheme. Rather, it is a long-term savings technology. Moreover, it is not just a long-term savings technology. It is the best long-term savings technology that exists. ![](https://www.datocms-assets.com/56652/1719009149-tomer_for_all_the_ages_3.jpg?auto=format) Bitcoin only happens to potentially be a get-rich-quick technology at this time because we are so early in its deployment that the overwhelming majority of the world's long-term savers have not yet come to understand or adopt it as such. As they do come around, the nature of this long-term savings technology will, admittedly, cause its short-term value to surge. However, this is merely a side-effect of the adoption process of Bitcoin as a long-term savings technology. Ours will be the only generations that experience rapid appreciation of purchasing power. As it matures, Bitcoin will be recognized for what it primarily is – stable, long-term money. You can save a week's effort when you're young and cash it in for a week's worth when you're old. But why is this realization about Bitcoin's core value so elusive to so many today? For one, many young people are not aware that they even need this benefit, or that it is unavailable through any other technology. This used to be the case, at least. Today's young people, however, have become much more cynical and skeptical regarding even shorter-term savings than those for their retirement. They recognize that home ownership during their early working life is out of reach. They know there is a big problem. Yet it is not clear that Bitcoin is the fix because there is not sufficient education or history to make it clear. There is no older generation of comfortable Bitcoiners or formal schooling curriculum to make this example obvious. Many are thus driven towards looking for quick solutions. As for the older generations, it largely comes down to the old adage that it is hard to teach an old dog new tricks. Set in their ways of a lifetime without such technology, the breakthrough that Bitcoin represents seems implausible, impossible, or unavailable to them. This will, of course, change, but only with the passage of time. How, after all, can we expect people to recognize the durability of a thing so new that it has not had the time to demonstrate its endurance? So, for now, it is primarily those who study the fundamentals of the system who are completely confident in its longevity and who understand this most important feature of Bitcoin. ### Make No Mistake Meanwhile, there are plenty of people who misunderstand Bitcoin but consider it a short-term opportunity. These are the speculators who cash out during surges in the fiat price. However, they will find themselves chasing their own tails during this generational shift from unreliable and ineffective savings technology to reliable and effective Bitcoin. This phenomenon has already been widely observed during previous cycles. In fact, selling Bitcoin after buying it at a lower price, only to observe it rise even higher, teaches many people that Bitcoin is a long-term savings technology and not a flash in the pan. And, when finally viewed as long-term savings technology, it becomes straightforward to see why the complaints, criticisms, and actions of Bitcoin’s cryptocurrency competitors are misplaced. Those who complain that Bitcoin is too slow, with its ten-minute-long confirmation times, fail to appreciate that ten minutes is still over 52,000 confirmations a year (that’s 520,000 over ten years and 2 million over a forty-year career dedicated to earning and saving) – more than enough over the long term. These critics are caught up in short term applications of money like buying coffee. Perhaps they’ve already had too much coffee and hopped on caffeine. Bitcoin (on-chain, at least) admittedly is not ideal for instant movements of small amounts of value (although the Lightning Network does solve this). But instant movements of small amounts of value are not a problem the world faces. Long-term, reliable savings for retirement, however, is a huge problem. Similarly, critics complaining that Bitcoin is limited in its applications – that it cannot efficiently issue tokens, securities, stablecoins, or digital artifacts – are also missing this main point. None of those applications are problems that are not already solved by straightforward, traditional databases. The frenzy of speculation on blockchain-issued digital assets, however, does already have enough of a history to make intelligent observers highly dubious. Unlike Bitcoin, these applications are, in fact, get-rich-quick schemes for some while leading to get-poor-quick outcomes for many more. Issuing these assets and dumping them on others before attention moves on to the next hot trend is the game being played here. These are, at best, high-speed gambling services, and worse, oftentimes also frauds. Such *“applications”* are hardly a solution that we need more of, and they are certainly not alternatives to Bitcoin’s core benefit of providing reliable, long-term savings. ### Save Your Money, Save Your Time, Save Your Energy For the first time in our lifetimes, we have the opportunity to save reliably over the long-term. In this time of rapid changes, something that changes very little, if at all, and can be relied upon to still be here, in the same state, decades down the road is a precious and unique treasure. So few things possess this characteristic that we may be inclined to believe that nothing does. But Bitcoin is the exception – making it exceptional. Bitcoin is a technology for all ages, for ages. Use it wisely. ![](https://www.datocms-assets.com/56652/1719009467-tomer_for_all_the_ages_4.jpg?auto=format) --- [*Swan*](http://swan.com/) *is a leading Bitcoin financial services company with more than 120,000 clients and 170 employees, operating globally. Established in 2019, Swan helps individuals and institutions to understand and invest in Bitcoin. The Swan app simplifies Bitcoin purchases with instant and recurring buys.* [*Swan IRA*](https://www.swanbitcoin.com/bitcoin-ira/) *provides a tax-advantaged solution for saving Bitcoin in retirement accounts.* *For HNWIs and businesses,* [*Swan Private*](https://www.swanbitcoin.com/private/) *provides white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With* [*Swan Vault*](https://www.swanbitcoin.com/vault/)*, clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust* [*Swan Advisor*](https://www.swanbitcoin.com/advisor/) *for client Bitcoin allocations, backed by world-class custody and educational content.* [*Swan Managed Mining*](https://www.swanbitcoin.com/swan-announces-managed-bitcoin-mining-service/) *provides clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Tomer Strolight Tomer Strolight is Editor-in-Chief at Swan Bitcoin. He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote the book “Why Bitcoin?” a collection of 27 short articles each explaining a different facet of this revolutionary new monetary system. Tomer also wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA&ab_channel=SwanSignal-ABitcoinChannel)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. # What Are Bitcoin Ordinals? (Why Inscript Your BTC) URL: https://www.swanbitcoin.com/education/what-are-bitcoin-ordinals/ Seen as an innovation in data storage and network security by some, while others view them as a passing Bitcoin fade and drift. Let’s take a closer look at both perspectives! --- **Drew** · May 1, 2024 · Updated June 20, 2024 Throughout 2023 and early 2024, Bitcoin ordinals have emerged as a hotly debated topic among Bitcoin enthusiasts. Proponents view them as a potential game-changer in data storage and a boon for Bitcoin network security. However, skeptics criticize them as a deviation from Bitcoin's primary purpose as a peer-to-peer currency.  But what are Bitcoin ordinals? This blog post dives into Bitcoin ordinals' brief history, the network upgrades that led to its creation, and the broader implications for the Bitcoin industry.  ### Understanding Bitcoin Ordinals: Serial Numbers for Sats #### The Concept of Bitcoin Ordinals Bitcoin Ordinals are very similar to serial numbers. They act as a [unique identifier](https://ordinals.com/content/d9740c0688e3a4a43a559df9d1e04fb4b1eb9fd64a5f2cea9a54961982addb6ci0) for each unit of Bitcoin, known as a "[satoshi or sat](https://www.swanbitcoin.com/how-many-satoshis-in-a-bitcoin/#:~:text=Like%20a%20dollar%20can%20be,Drew)" (short for *"Satoshi Nakamoto"*). Just as every U.S. paper dollar bill carries a serial number, each satoshi is assigned a serial number based on its mining order.  #### The Emergence of Bitcoin Inscriptions Bitcoin inscriptions are akin to digital captions attached to individual sats. These inscriptions can include:  - *Text* - *Images* - *Audio* … even [digital games](https://gamma.io/ordinals/collections/clenaa4er0000ig08g444vo5y#:~:text=Ordinal%20Games%20is%20the%20first,browser%20%2D%2D%20100%25%20on%20chain.). Their integration with ordinals leads to the creation of unique Bitcoin artifacts, which we will explore next. Bitwise recently [disclosed](https://twitter.com/BitwiseInvest/status/1750224060620111912) the wallet address for its Bitcoin ETF - a first among the top 11 issuers of spot Bitcoin ETFs. Following this disclosure, the wallet has [attracted](https://www.ord.io/56754110) a variety of contributions, including Bitcoin ordinals and unique satoshis and has amassed inscription donations valued at $6,083 and boasts a collection of more than 16,000 inscriptions. ![](https://www.datocms-assets.com/56652/1703627378-ordinals-swan.png?auto=format) Swan Bitcoin ### The Mechanics of Bitcoin Ordinals and Digital Artifacts #### Creating Digital Collectibles Bitcoin ordinals and inscriptions are primarily used to create "*artifacts*" or digital collectibles akin to sports cards on the Bitcoin network. These artifacts, also known as Bitcoin NFTs, use ordinals as serial numbers and inscriptions for attaching an image.  They have found applications in data storage, domain names, and, most notably, the [BRC-20 protocol](https://github.com/topics/brc-20). The BRC-20 standard opens up new possibilities for the Bitcoin network, allowing it to use decentralized finance (DeFi) protocols and various blockchain-based applications. - **(ORDI) June 20th, 2024 Price:** [$40.09](https://coincodex.com/crypto/ordinals/) - **24-hour trading volume:** $ 753.86M - **Market Cap**: $842.00M - **Market Dominance**: 0.04%.  ### Bitcoin NFTs vs. Traditional NFTs BRC-20 artifacts [differ](https://www.swanbitcoin.com/the-problem-with-nfts/) from [traditional NFTs](https://www.swanbitcoin.com/the-problem-with-nfts/) in several ways. Unlike Ethereum NFTs, which rely on smart contracts and centralized servers, they are stored directly on the Bitcoin blockchain.  The Bitcoin blockchain has undergone two essential modifications — SegWit and Taproot — which have since facilitated the emergence of ordinals. ### SegWit Upgrade  In 2017, the Bitcoin community implemented SegWit or segregated witness data to increase network capacity and improve scalability.  Before SegWit, the OP_RETURN function included the arbitrary data on the transaction block:  - Transaction time - The sender/receiver's address  SegWit modifies storing data, separates signature information from transaction data, optimizes block space, and reduces transaction fees. This revision modified the structure of Bitcoin transactions and boosted the block size capacity from 1 MB to 4 MB.    [![](https://www.datocms-assets.com/56652/1702921419-coindesk-segwit.jpeg?auto=format)](https://www.coindesk.com/markets/2017/07/25/whats-left-before-segwit-goes-live-bitcoins-path-to-more-capacity/) Coindesk ### Taproot Upgrade  The Taproot upgrade, [implemented](https://github.com/ajtowns/taproot-review) on November 14th 2021, enhanced Bitcoin's protocol by introducing Schnorr Signatures, MAST, and Tapscript, significantly improving privacy, scalability, and smart contract flexibility.  Schnorr what? WTH is a MAST? In simple terms, Taproot:   - Batches multiple signatures and transactions together, making verifying transactions on the network easier and faster. - Scrambles transactions with single and multiple signatures together. It made it more difficult to identify transaction inputs on Bitcoin's blockchain. [![](https://www.datocms-assets.com/56652/1703644320-how-does-taro-work.png?auto=format)](https://docs.google.com/presentation/d/1YgMG4MOjs5dHhlf77Zh0WOENXqB0JTV8ZarVjS8slyk/edit#slide=id.g121572c76e7_4_57) Source Lightning Labs The [Taproot Assets Protocol](https://github.com/Roasbeef/bips/blob/bip-tap/bip-tap.mediawiki) is for issuing assets on the Bitcoin blockchain. [Video](https://www.youtube.com/watch?v=-yiTtO_p3Cw) Taproot Assets leverages newly created assets and their transfers in an efficient and scalable manner. Multiple assets can be created and transferred in a single Bitcoin UTXO, while witness data is transacted and stored off-chain. ### What are Runes? Runes is a fungible token protocol for the Bitcoin network that aims to be simple and UTXO-based. Rune balances are held by UTXOs, and transactions are identified using specific script conditions. Runes officially [released](https://github.com/casey/runestone) on Bitcoin mainnet at block 840,000 - April 20th, 2024. [Learn more about UTXOs](https://www.swanbitcoin.com/utxo/) **Runes Protocol Overview** - **Purpose:** Allows users to create and manage fungible tokens directly on the Bitcoin blockchain. - **Developer:** Casey Rodarmor. - **Advantages:** Provides a streamlined alternative to existing token standards. **Key Features** - **Infrastructure Utilization:** Leverages Bitcoin's Unspent Transaction Output (UTXO) model. - **Efficiency:** Creates fungible tokens with minimal impact on blockchain size, unlike some BRC20 tokens that can cause congestion. **Benefits of Runes** - **Token Creation:** Empowers users to craft various fungible tokens, such as: - Loyalty points - Community currencies - Fractional ownership of real-world assets - **Security:** Utilizes the inherent security of the Bitcoin network. - **Versatility:** Expands Bitcoin's reach and utility beyond its core function as a digital currency. **Summary** - **Runes Protocol:** Empowers users to create diverse tokens on the Bitcoin blockchain. - **Impact:** Enhances Bitcoin's versatility while maintaining its security and efficiency. #### Key Differences Between Runes and Ordinals Runes and Ordinals have sparked a fascinating debate within the Bitcoin community. While both aim to expand Bitcoin's utility beyond its core function, they approach it in fundamentally different ways. Here's a breakdown of their key differences: **Fungibility vs. Non-Fungibility** - **Runes:** - Designed for fungibility. - Each Rune of the same type is identical and interchangeable. - Ideal for applications like loyalty points or stablecoins. - **Ordinals:** - Non-fungible by nature. - Each Ordinal represents a unique unit on the Bitcoin blockchain, similar to a one-of-a-kind NFT. **Data Storage Approach** - **Runes:** - Uses existing[ Unspent UTXOs](https://www.youtube.com/watch?v=P7s_GdmuAY4&list=PL7w04GVKPitEyE50BrhbqZHmmL6YPtQTM&index=3). - Attaches data to UTXOs, transforming them into representations of various digital assets. - Maintains compatibility with existing Bitcoin infrastructure. - **Ordinals** - Embeds data directly within the "witness" section of a Bitcoin transaction. - Inscribes data onto individual Satoshis, creating unique NFTs embedded within the blockchain. **Transfer Mechanism** - **Runes:** - Offers a simple and user-friendly transfer mechanism. - Can be transferred like any other Bitcoin transaction, without complex UTXO splitting. - **Ordinals:** - Transferring involves a more complex process. - Splits a UTXO containing the Ordinal data into several new UTXOs. - These "split" UTXOs containing the Ordinal information travel across the network. **Scalability and Transaction Fees** - **Runes:** - Leverages Bitcoin's existing UTXO model. - Minimizes data added to the blockchain. - Potentially leads to lower transaction fees compared to Ordinals. - **Ordinals:** - Directly inscribe data onto [individual Satoshis](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/). - Potentially, this leads to larger transaction sizes and higher fees. - Could impact the scalability of the Bitcoin network in the long run. **Security and Risk Factors** - **Runes:** - Inherently secure by leveraging Bitcoin's established security infrastructure. - **Ordinals:** - Introduce potential risk factors. - Permanent inscription of data onto the blockchain. - Vulnerabilities in the Ordinal protocol could expose inscribed data to security risks. **Use Case** - **Runes:** - Ideal for representing fungible digital assets. - Applications include loyalty points, in-game currencies, or stablecoins within the Bitcoin ecosystem. - **Ordinals:** - Suitable for creating unique, non-fungible digital collectibles, artwork, or other digital assets. - Enables verifiable on-chain ownership. **Integration with Existing Infrastructure** - **Runes:** - Seamlessly integrates with existing Bitcoin wallets and exchanges. - Relies on the UTXO model. - **Ordinals:** - May require dedicated wallets and infrastructure for managing and interacting with Ordinal NFTs. ### Debating the Merits and Drawbacks of Bitcoin Ordinals #### Critics' Perspective Critics argue that ordinals and artifacts detract from Bitcoin's original purpose as a decentralized financial system. They raise concerns about network congestion, increased transaction fees, and slower processing times, potentially undermining Bitcoin's role as an economic system. #### Advocates' Stance Supporters tout the unparalleled security of the Bitcoin blockchain for data storage, attracting new users with diverse interests beyond money. They highlight the potential economic benefits for miners, thereby bolstering [network security](https://www.youtube.com/watch?v=xvwdSVnARuk&pp=ygUWc3dhbiBiaXRjb2luIG9yZGluYWxzIA%3D%3D). ### Final Thoughts Bitcoin ordinals represent a fascinating evolution in the Bitcoin ecosystem, offering potential benefits and challenges. Ordinals are not just a technological curiosity but a development that could redefine the scope of digital assets within the Bitcoin framework. While they promise to expand [Bitcoin's utility](https://www.swanbitcoin.com/bitcoin-and-the-most-valuable-brand-of-the-21st-century/), they also come with a set of challenges that must be thoughtfully considered. ### Just Buy Bitcoin Investing in Bitcoin is a strategic decision for securing your financial future. **Don't waste your hard-earned Bitcoin**. Rather than [risking](https://www.swanbitcoin.com/traders-lose-stackers-win/) your rare and valuable Bitcoin on [fleeting digital trends](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/), consider the long-term and [tax-free benefits](https://www.swanbitcoin.com/bitcoin-ira/) of holding onto your Bitcoin. By focusing on [sustainable investment strategies](https://www.swanbitcoin.com/why-bitcoin-is-the-path-to-economic-stability/), you ensure that your Bitcoin remains a valuable asset for years to come. Sign up for Swan [here](https://swan.com/drewswanbitcoin) today! ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # A Massive Opportunity to Spread Bitcoin Education URL: https://www.swanbitcoin.com/industry/a-massive-opportunity-to-spread-bitcoin-education/ Swan is sponsoring the Tucker Carlson Live Tour traveling to 15+ cities across America. --- June 10, 2024 · Updated June 19, 2024 Swan’s key position in the industry and our focus on Bitcoin education help us land unique opportunities, like this one. Recently Tucker Carlson’s production company was referred to Swan with the opportunity to sponsor the *Tucker Carlson Live 2024* tour. This is a massive opportunity for Bitcoin education. We will educate hundreds of thousands of people in 15+ cities across the country and welcome hundreds of millions of people online to Swan’s Bitcoin education offerings. We see Bitcoin as an idea that will unite people and we want to facilitate discourse across the political spectrum toward this end. Bitcoin has properties and outcomes related to a wide array of political and social goals, here’s just a few: - Bitcoin has a fixed monetary policy that protects people from the ravages of inflation - Bitcoin defends the human rights of individuals living in authoritarian regimes with strict capital controls - Bitcoin mining is, despite widespread misinformation, one of the most renewable industries on the planet and incentivizes more stable and sustainable energy systems by using excess and stranded energy This is an exciting time for Bitcoin and Swan is ready to make the most of this opportunity. We look forward to meeting many of you on the tour! # Running the Numbers: How Fiat Pushed the American Dream Away from Millennials URL: https://www.swanbitcoin.com/industry/fiat-pushed-american-dream/ Bitcoin symbolizes hope for a generation who increasingly feel as though their futures have been stolen from them by the traditional fiat system. --- **Sam Callahan** · June 19, 2024 It’s no secret that younger generations increasingly feel like they are falling behind. Millennials face an affordability crisis. They are on track to be the first-generation not to exceed their parents in terms of job status and income. It’s no wonder that a recent study published in JAMA Psychiatry on well-being across generations found that younger generations’ life satisfaction scores were lower across the board compared to their older counterparts. ![](https://www.datocms-assets.com/56652/1697480665-01-satisfaction-scores.svg) Part of this widespread dissatisfaction is related to financial instability. I would argue a lack of financial security could be one of the most significant contributors to the negative sentiment felt by younger generations today. Millennials are a generation that has already experienced two *“once-in-a-lifetime”* global financial crises since they entered the workforce. They were just starting to accumulate savings as the Federal Reserve pumped asset prices to the moon with their accommodative policies. Instead of benefitting from that asset appreciation, most millennials were left behind. In Neil Howe’s recently published book, *“The Fourth Turning is Here,”* he touches on how millennials are the most likely to believe that the current regime is fundamentally broken and needs to be overhauled, if not replaced entirely. He explains how young people don’t have hope today. They don’t feel like a future exists. In this piece, I will break down some statistics that help illuminate why millennials feel this way, how the fiat system has failed them, and why Bitcoin could act as a saving grace for these younger individuals. ### A Fading American Dream Homeownership is often considered the cornerstone of the American Dream. It is how households have historically built generational wealth, and it provides individuals with the space necessary to build families and create a legacy. Homeownership is deeply ingrained in the American psyche as a symbol of stability and success. Today, due to central bank and government policies, home affordability stands at the lowest level in history. ![](https://www.datocms-assets.com/56652/1697480486-02-us-housing-affordability.svg) This is a result of a combination of two things: 1.) Soaring home prices boosted by policy responses in the wake of the Global Financial Crisis 2.) the Federal Reserve hiking interest rates to combat soaring inflation. Below is a chart highlighting the Federal Reserve’s balance sheet and the median U.S. home price since 2010. The trend is clear. As the Federal Reserve has performed massive amounts of Quantitative Easing over the last decade, buying up billions in mortgage-backed securities, the price of homes has sky-rocketed almost in tandem. ![](https://www.datocms-assets.com/56652/1697480289-03-feds-balance-sheet-home-prices-have-risen-together.svg) For older generations who already owned homes, this was fantastic. Central bankers pumped the value of their homes (and their net worth) without them lifting a finger. But for millennials who were still looking to purchase their first home after just entering the workforce, this was a catastrophic development. The Federal Reserve has been directly complicit in pushing the American Dream of homeownership out of reach for a large portion of millennials. This is confirmed in the data when comparing millennial homeownership to that of previous generations. According to Apartment List, millennials have had the slowest transition from renters to homeowners. By age 30, 42% of millennials owned their homes, compared to 48% of Gen Xers, 51% of baby boomers, and nearly 60% of silents at the same age. ![](https://www.datocms-assets.com/56652/1697480610-04-millennial-homeownership-trails-previous-generations.svg) Millennials have been forced to become renters due to the high cost of homeownership today. This significantly impacts their ability to build long-term wealth. According to a [2019 Survey of Consumer Finances](https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building) from the Federal Reserve, the median homeowner has 40 times the household wealth of a renter – $254,900 for the former compared to $6,270 for the latter. Homeownership is not just about building wealth, though. A British study looked at data spanning multiple decades and found that being a homeowner has consistently been linked to a higher probability of conceiving a first child than those who rent over the last 30 years. ![](https://www.datocms-assets.com/56652/1697480537-05-homeowners-more-likely-to-have-first-child.svg) This corroborates a recent trend we’ve witnessed -- the rapid decline in fertility and birth rates. Millennials are simply not having babies like previous generations. A 2021 Pew study found that 44% of non-parents ages 18 to 49 say it is not too or not at all likely that they will have children someday, an increase of 7 percentage points from 37% in 2018. ![](https://www.datocms-assets.com/56652/1697480038-06-share-of-non-parents-younger-than-50.svg) The number two cited reason behind medical reasons? *“Financial reasons.”* Instead of starting families and owning homes – two critical milestones for financial success and long-term fulfillment – younger people are moving back in with their parents. According to a recent Bloomberg study, a whopping 50% of people aged 18 to 29 live with their parents today and cite financial woes as the number one reason they choose to move back in. ![](https://www.datocms-assets.com/56652/1697480002-07-why-adults-say-they-live-with-mom-and-dad.svg) Young people are moving back in with their parents to try to save money to maybe own a home one day. But they might be disappointed with how long they will have to stay there. Today, it’s estimated that buying an average-priced home takes nearly 7 years of saving an average incomee. To put that into perspective, it took 2.4 years of time and labor to save for the cost of an average home in 1970. ![](https://www.datocms-assets.com/56652/1697479968-08-how-long-does-it-take-to-save-for-a-house.svg) Younger folks are moving back in with their parents instead of focusing on starting families because living costs have soared. Inflationary policies have not only made homes unaffordable, but they have also increased the cost of essentials like food, healthcare, education, and transportation. Having and supporting a family has never been more expensive than today. According to American Compass Executive Director Oren Cass, it now takes 62 weeks for a single-income family working at the median wage to afford essentials. ![](https://www.datocms-assets.com/56652/1697479919-09-number-of-weeks-needed-at-a-median-wage-to-afford-essentials.svg) Given that there are only 52 weeks in a year, it’s not hard to see why this estimation is problematic. This has occurred in part because nominal wages have remained stagnant. When comparing median income and median wealth between generations at 40 years old, one can see how wages have gone nowhere for millennials, while median wealth has declined, and median debt has soared. ![](https://www.datocms-assets.com/56652/1697479891-10-millennial-wealth-woes.svg) When taking into account inflation, the picture gets worse. One can see that wage stagnation has been an ongoing trend for decades. A 2018 Pew research study showed how paychecks may have increased nominally, but they haven’t moved much in terms of purchasing power. ![](https://www.datocms-assets.com/56652/1697479849-11-americans-paychecks-bigger-than-40-years-ago.svg) So, as wages have gone sideways, the cost of everything millennials need, like healthcare, education, and housing, has skyrocketed. ![](https://www.datocms-assets.com/56652/1697479795-12-price-changes.jpg?auto=format) This has led to millennials acquiring more debt than any other generation before it, as they took on student loans, auto loans, mortgages, and credit card debt to try to make ends meet. Total household debt for individuals aged 30-39 has increased 27% since 2019. It is the fastest pace of debt accumulation over a three-year period since the 2008 financial crisis. ![](https://www.datocms-assets.com/56652/1697479764-13-change-in-total-debt-from-three-years-ago.svg) Millennials are going into more and more debt to desperately try to achieve the American Dream that is moving farther and farther out of reach. ### So what are millennials to do? One viable option is investing in an asset with a strong potential to appreciate significantly in the coming decade. This would allow millennials to finally feel like they have caught up, and if it outperforms the rate of inflation and home prices, it could improve their quality of life and potentially allow them to finally purchase that home. Bitcoin is an asset with a relatively small market capitalization. It’s still early in its adoption cycle, but if network adoption continues at its current trajectory, Bitcoin will demand a higher price, potentially much higher. Given that the supply is fixed at 21 million, the more users that join the network, the higher the price of Bitcoin will go. Since Bitcoin’s supply is set in stone, only the demand side of the equation matters, and demand for a scarce, censorship-resistant, private, and digital monetary good seems to be increasing. The chart below shows how the number of addresses holding at least $100 worth of Bitcoin has been growing at a steady rate. ![](https://www.datocms-assets.com/56652/1697479712-14-bitcoin-number-addresses-with-balance-100.svg) Bitcoin is considered an *“asymmetric bet”* in the investment world. An asymmetric bet is an investment with a significant upside gain than the potential downside loss. In other words, you can invest a little to potentially return a lot. Bitcoin’s track record is impressive. It has outperformed nearly all asset classes over long periods. Bitcoin’s compound annual growth rate far exceeds other asset classes like gold and the S&P 500 over longer time frames. ![](https://www.datocms-assets.com/56652/1697479533-15-bitcoins-cagr-far-exceeds-other-asset-classes.svg) Not only is the potential return on investment attractive to millennials, but the beauty of Bitcoin is that they wouldn’t need to get approved for a mortgage to buy some. Millennials don’t need to buy a whole Bitcoin; they can purchase a fraction of one. And they can actually own Bitcoin without any debt attached. For many millennials, Bitcoin could be a way to build wealth when all other alternatives feel out of reach. ... And this is where millennials find themselves today. The fiat system has given them two recessions, stagnating wages, artificially inflated the price of homes, and has saddled them with copious amounts of debt just to keep up with the soaring costs of essentials like healthcare, food, energy, education, and transportation. Bitcoin represents an opportunity to improve the well-being of this generation that has been dealt a bad hand. As such, Bitcoin symbolizes hope for a generation who increasingly feel their futures have been stolen from them by the traditional fiat system. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # How Bitcoin is Disrupting Wealth Management: Perspective from an Advisor URL: https://www.swanbitcoin.com/industry/interview-with-an-orange-pilled-financial-advisor-campaign/ Is this the shape of things to come? --- **Ryan Flynn** · May 7, 2024 · Updated June 15, 2024 ### Financial Advisors Are Turning Towards Bitcoin The financial advisory landscape is currently experiencing a monumental shift, which is going mostly unrecognized by those inside the industry. It's a shift that will be happening to every industry, but since the shift we're discussing here is from an easy, analog money to a sound, digital one, the money management industry is ground zero. The shift has been underway for fifteen years; however, it was not until the January 2024 approval of spot Bitcoin ETFs that the industry at large started to notice. Prior to then, Bitcoin was viewed with skepticism by traditional financial professionals, often dismissed as a speculative bubble or a niche interest for tech enthusiasts. Now, the narrative is changing with a quickening pace. The ETF launch marks the end of the early adopter phase of Bitcoin and the beginning of the institutional adoption phase. We're in the eerie quiet of the small space between two eras, a vacuum forcing the issue onto the advisors' desks, requiring them to reorient their mental models of Bitcoin and reevaluate its implications for investment portfolios. The bottoms-up nature of Bitcoin means retail holders could outmaneuver the professionals. In many cases, I believe that those that work with a financial advisor or money manager have managed to acquire and hold Bitcoin in direct conflict with their advisor's guidance. This has slowed Bitcoin's adoption and resulted in opportunity costs for clients in the form of lower investment returns. In my opinion, many advisors have done a disservice to their clients in this way. But some have not. There is a small but growing group that has embraced Bitcoin and recognized the impact it will have on their client's lives and on their own business prospects. We spoke with Matt Golliher of Vista Investment Partners, one such firm, about his journey in Bitcoin and the hard work he and his company have done to use this technological shift to their advantage. ### What got you interested in Bitcoin? Clients first started asking me about Bitcoin during its 2017 bull run. That’s the first time I remember taking a look at it. Unfortunately, most of the information I found was presented in the context of the blockchain craze and the initial coin offering (ICO) frenzy that were both happening that same year. At the time, I could not find the Bitcoin signal through all the crypto noise. It all looked like a classic hype-fueled bubble to me, and I regret to say that’s what I told my clients. Bitcoin’s price crashed after that 2017 peak, and I interpreted that as confirmation that I was right. Fast-forward to March of 2020. The whole world was locking down for the pandemic, the markets were in turmoil, and Congress was about to pass a $2.2 trillion economic stimulus bill. That’s when I noticed: Bitcoin wasn’t dead yet. Curious, I decided that I needed to at least understand what this thing was, so I ordered ***The Bitcoin Standard*** by Saifedean Ammous. I read the whole thing in one sitting. Then I ordered more books and read those. I devoured every article and podcast on the topic I could find. It quickly became clear to me that if Bitcoin was what it appeared to be, then it would probably be the most important financial innovation I would see in my lifetime. As a financial advisor, I couldn’t ignore that. ### What was it like trying to incorporate Bitcoin into the business in 2020? It felt like running into a brick wall. That’s despite having the support of my team, including our managing partner, Brett Guiley, who also became a Bitcoiner in 2020. Even for independent Investment Advisors, a lot of different parties need to cooperate for an advisor to be able to offer a particular service to clients. The partners we work with to provide custody, brokerage, compliance, legal counsel, and professional liability insurance can’t simply let us do whatever we want. They must conduct enough of their own due diligence to be comfortable supporting us offering a new solution. It took us over three years to assemble all the pieces of the puzzle, but we are now positioned to provide Bitcoin-focused wealth management services. ### How has your industry’s relationship with Bitcoin changed since 2020? The most common reaction I used to get when I brought up Bitcoin to a colleague would be a chuckle, followed by a weird look when they realized I was serious. I don’t see the same wide-spread dismissiveness I did four years ago. I’m also starting to see a growing awareness of the difference between Bitcoin and crypto, blockchain, and digital assets. I think the spot Bitcoin ETFs coming to market have played a role in that. I think we’re also seeing more open-mindedness toward Bitcoin because of the persistent inflation, fiscal deficits, and ballooning federal debt we’ve seen over the last few years. There seems to be an emerging sense that something is wrong, and perhaps what worked best over the last 50 years may not be optimal for the next 50 years. Because of that, I think more advisors are willing to consider alternative assets, and in the world of alternative assets, Bitcoin is the big flashing lightbulb. ### How has it NOT changed? We are still early. For the most part, the same challenges that existed in 2020 still exist today, even though the industry has made progress in some areas. The biggest thing that hasn’t changed is the view that Bitcoin primarily increases risk. Even among those who are open to it, the overall sentiment is that Bitcoin is a volatile alternative investment that could make sense as a tiny allocation in a diversified portfolio. That’s a good starting point, but I believe the realization that people buy Bitcoin to reduce risk has largely not found its footing yet. ### Explain that point further. How can a Bitcoin allocation help reduce risk in a portfolio? In terms of asset allocation, Bitcoin may potentially improve a portfolio’s risk-adjusted returns. Based on historical returns, adding just a 1% Bitcoin allocation to a conventional portfolio often produces a clear improvement to the portfolio’s Sharpe Ratio. If you compare Bitcoin’s calendar year returns since 2011 to common indexes for REITs, bonds, equities, and gold, you’ll see that Bitcoin has either been the best-performing asset or the worst every single year. Often by a lot. That can offer unique diversification benefits. Of course, that’s all based on historical performance. Bitcoin may not behave the same way in the future. On a deeper level, I would argue that Bitcoin reduces risk because of what it is. From an economics perspective, Bitcoin is not an investment. It does not produce cash flows. Bitcoin is a monetary good. Its value is derived from its monetary properties. Further, it exists completely separate and outside current dollar-denominated financial markets. You can only obtain so much diversification by owning something within this system. A hedge on systemic issues inherent with the current markets can really only be found in something that exists outside that system, like Bitcoin. Anyone on Earth with an internet connection can use Bitcoin, and no authority controls access to the Bitcoin network. That means Bitcoin is a global asset. Unlike traditional investments, Bitcoin’s performance does not depend on the success of any particular company, country, or market. ### What changes did your firm have to make to offer Bitcoin? We formed a new Investment Advisor entity as a division that will focus on delivering clients a Bitcoin-dedicated advisory offering. We fired our broker/dealer, who was actively hostile towards Bitcoin, interviewed many, and found one that would allow us to incorporate Bitcoin into our operations. We had to find new E&O coverage and hired a new compliance team plus additional in-house staff who had done some work to understand Bitcoin. We onboarded additional custodians and made significant investments in new technology that helps us bridge between the Bitcoin market and the legacy financial markets. This all took more than three years. We learned a lot of lessons along the way, but we’re confident we’re on the right path. We can now pursue our primary goals:  1. Provide the best wealth management experience for Bitcoiners who also own traditional financial assets 2. Help our clients acquire and hold real Bitcoin and not just proxy products like the ETFs. 3. Provide the best independent Investment Advisor for other orange-pilled advisors to plug their businesses into. ### Is Bitcoin a threat to the wealth management industry? I believe Bitcoin is a massive threat to the wealth management industry. Much, if not most, of the wealth management industry exists because our currency bleeds value over time. As a result, in order to protect themselves from monetary dilution, would-be savers are forced to figure out the complexities of the securities markets on their own or to hire someone to help them. Most clients I’ve worked with in my career are not investors. They’re savers. These clients are not trying to deploy capital at risk to empower productive economic work—which is what an investor does—but to preserve their purchasing power and retire someday. Bitcoin makes it possible to save money again, which means Bitcoin is a direct competitor to everyone who manages money for a living. I believe Bitcoin will change the nature of what it means to be a financial advisor, and the advisors who succeed in the in decades ahead will be those who can offer competitive Bitcoin financial services. ### Do Bitcoiners even need a financial advisor? It depends on their situation. If someone lives on a pure Bitcoin standard, gets paid in Bitcoin, pays their bills in Bitcoin, and holds 100% of their wealth in Bitcoin, that person probably doesn’t need a financial advisor. However, most Bitcoiners aren’t there yet. There are a variety of reasons why Bitcoiners may choose to continue owning traditional financial assets. They may be unwilling or unable to tolerate Bitcoin's volatility for 100% of their wealth. They may have a spouse who is not as convinced about Bitcoin as they are. They may want help minimizing their taxes or protecting their family if something happens to them. The future will likely bring a broader array of Bitcoin-native investment products, which will offer advisors more tools to tailor exposure to their client's needs. These could include more sophisticated ETFs, mutual funds, and derivative products, providing both exposure to Bitcoin's price movements and opportunities for hedging and risk management. As we transition to more of a medium of exchange use case for Bitcoin, there will be new and innovative ways clients can utilize their Bitcoin, which may impact the rest of their financial lives. It's these types of scenarios that working with an advisor aligned with their client's financial interests and having a deep understanding of Bitcoin can add tremendous value. ### How does the introduction of the spot Bitcoin ETFs change advisors’ analysis of Bitcoin? For one thing, it forces them to pay attention. Before the ETFs, it made more sense for advisors to ignore Bitcoin because they couldn’t offer it to their clients anyway. But now that Bitcoin is “on the shelf,” dismissing it is a lot harder to justify, especially if clients want it. The spot ETFs also endow Bitcoin with a level of perceived legitimacy that it’s never had before in our industry. The ETF issuers include some of the most respected, well-known names in the business. Financial advisors will still have differing opinions about Bitcoin, and some of them may continue advising against it, but I think the days of Bitcoin being viewed as some weird, fringe financial experiment are over. ### Doesn’t relying on an ETF for custody defeat the whole point of Bitcoin? I expect the ETFs to play a similar role for Bitcoin as dialup did for the internet. By piggybacking on existing telephone infrastructure, dialup gave millions of Americans their first user-friendly access point to a new network, but over time, it was replaced by network-native internet solutions. Similarly, by piggybacking on existing financial infrastructure, the spot Bitcoin ETFs have given millions of Americans their first user-friendly access point to the Bitcoin network. Over time, though, I expect the relevance of the ETFs to diminish as network-native Bitcoin solutions continue to develop and mature. The main drawback of ETFs is counterparty risk: You have to trust someone else with your Bitcoin private keys. As Bitcoiners know well, “Not your keys, not your coins.” I hope that risk never materializes with these ETFs, but it is a legitimate risk that investors should be aware of. Ultimately, I expect Bitcoin-native solutions to outcompete the ETFs for a simple reason: Bitcoin is digital money. Bitcoin ETFs are not. If digital money is a profound innovation (and I believe it is), then you will be able to do new things with it that were previously impossible, like micropayments. Over time, I believe owning actual Bitcoin will become more useful for more people compared to holding a Bitcoin ETF. ##### About Matt Golliher *Matt Golliher is a Financial Advisor with Vista Investment Partners. He lives in Richmond, IN, with his wife, Devra. Matt became a Bitcoiner in 2020. Along with educating his clients, colleagues, and community about Bitcoin, Matt focuses on helping Bitcoiners who need traditional wealth management and financial advisory services. If you have any questions or would like to contact Matt, you can do so using the contact information below.* Email: matt.golliher@vistainvestment.net ### Ryan Flynn Ryan is the Managing Director of Swan Advisor Services. He is working to make Bitcoin accessible to all financial advisors and their clients. Before joining Swan, Ryan was the Co-founder of Localstake, an investment crowdfunding broker-dealer platform. He started his career in investment banking and holds Series 7, 24, 28, 63 and 79 securities licenses. # Physical vs. Digital Gold - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/physical-gold-vs-digital-gold-2024/ In this guide, we delve into the key differences between Bitcoin & gold, exploring which is a better investment in terms of value, accessibility, security, liquidity. --- **Matt Ruby and Mickey Koss** · April 26, 2024 · Updated June 14, 2024 The Bitcoin supply is absolutely finite. But gold is only relatively scarce. That's because Bitcoin (aka digital gold) is capped at 21 million BTC, and nothing can ever change that. Plus, already-lost Bitcoin makes it even more scarce. The early days of the currency are full of stories about people who lost their private keys—and once that BTC is gone, it's gone forever. That means the maximum supply of Bitcoin is actually, in effect, even less than 21 million. That’s a big reason why Bitcoin is often referred to as digital gold. It uses 21st-century technology to emulate the valuable properties that physical gold provided in the past. While both kinds of gold can serve as a store of value in compelling ways, there are also significant differences between the two. In this piece, we'll compare their fundamental differences regarding supply, value, security, and more. By the end, you'll realize that, despite the similarities between Bitcoin and physical gold, Bitcoin is superior because of its truly finite supply. There will never be more than 21 million Bitcoin making it the superior asset. *(NOTE: For clarity, the rest of this piece will refer to physical gold as simply “gold” and* ***digital gold as “Bitcoin****.”)* --- ### Differences of Gold and Bitcoin One of the key reasons why Bitcoin is often dubbed digital gold is its ability to leverage 21st-century technology to replicate the valuable properties of physical gold. This innovative approach sets Bitcoin apart, impressing with its ability to adapt and evolve in the digital age. Gold isn't all it's cracked up to be, either. While many presume gold to be finite, in reality, gold mining activities can change the supply. For example, gold discovered in Uganda in 2022 nearly equaled the total amount of gold existing above ground at the time. #### Quick comparison Before we dive into an in-depth comparison, here’s a chart that shows how gold and Bitcoin stack up against each other… ![](https://www.datocms-assets.com/56652/1712241632-gold-v-bitcoin.png?auto=format) --- While both Bitcoin and gold have their unique appeal, there are distinct reasons why Bitcoin has gained popularity as a store of value. To delve deeper into these differences, let’s compare and contrast their unique features. If you prefer a video overview, check out [Hard Money | Bitcoin vs. Gold](https://www.youtube.com/watch?v=F3H5XA-zKLU) below with Natalie Brunell. [Video](https://www.youtube.com/watch?v=F3H5XA-zKLU) #### Value While **Bitcoin** has certainly seen its share of volatility (especially in its early years), its value has generally trended upward over time as adoption increases. On average, it has returned 671% annually (as of February 2024) since its inception.  **The reason for that growth:** Proponents believe digital gold provides an even better store of value and inflation hedge than physical gold. **Gold** has proven a fairly reliable investment over time and is often considered a safe haven during market volatility. Peter Burns [writes in Money](https://money.com/has-gold-been-a-good-investment-over-the-long-term/), *“Gold is not an asset that generates income, but it can function as a store of value when its price appreciates over time. The worldwide average annual return of gold between 1971 (the year the U.S. stopped linking the price of gold to the dollar) and 2022 was 7.78%.*  *Still, there can be considerable fluctuations from year to year. For example, the annual return of gold in 2022 was only 0.4%.”* Meanwhile, the value of Bitcoin shot up during this period. Factors that impact the value of **Bitcoin**: **1. Supply and Demand Dynamics** Like any other asset, Bitcoin’s value is influenced by the age-old forces of supply and demand. By design, there’s always a limited supply, so its value goes up when demand increases. Worth noting: Price and demand do not impact Bitcoin’s programmatic supply schedule; that remains constant regardless of market dynamics.  **2. Market Sentiment and Investor Confidence** The value of digital gold goes up in response to positive news, adoption by major companies, and regulatory endorsements that boost investor confidence. Conversely, negative news, security breaches, or regulatory crackdowns can dampen Bitcoin’s price. **3. Economic and Geopolitical Factors** Inflation rates, economic stability, political uncertainty, or currency fluctuations can all influence the perceived value of Bitcoin as a store of value or hedge against traditional financial systems. **4. Scarcity and Halving Events** Bitcoin has a finite supply with a total cap of 21 million coins. Periodic events called “halvings” occur approximately every four years, reducing the rate at which new Bitcoin is created. Historically, this has preceded Bitcoin bull markets. **5. Global Adoption and Mainstream Acceptance** As Bitcoin gains broader adoption, its value has the potential to increase. Factors such as merchant acceptance, institutional investment, and regulatory frameworks can all contribute to the perception of digital gold as trustworthy and valuable. Factors that impact the value of **gold**: **1. Global Supply and Demand** Like Bitcoin, the price of gold is influenced by supply and demand in the global market. When demand exceeds supply, the price tends to rise. One key difference here is that this can result in increased mining/production of gold. Bitcoin has a fixed limit, though. **2. Investor Sentiment and Safe-Haven Demand** Gold is often considered a safe-haven investment during economic uncertainty or market volatility. This rise (or fall) in desire can impact its value. **3. Interest Rates and Inflation** When interest rates are low (or inflation is high), investors may turn to gold as an alternative investment, potentially driving its value. **4. Currency Exchange Rates** Changes in currency exchange rates can affect the price of gold. As the value of a currency declines compared to other global currencies, the cost of gold in that currency may rise. **5. Central Bank Actions** Central banks often hold large quantities of gold in reserve. Central banks buying or selling gold reserves can impact the supply and demand dynamics in the market. **6. Jewelry and Industrial Demand** The demand for gold in jewelry and other industries also can impact its value. #### Supply Having a predictable supply prevents inflation and ensures an asset retains its value.  **Bitcoin** has a hard-capped, limited supply—only 21 million units will ever exist since this supply cap is hard-coded into its core protocol rules. The limited supply is key to Bitcoin’s long-term value.   **Gold** also [scarce](https://www.forbes.com/sites/nathanlewis/2016/09/29/gold-is-money-because-it-is-plentiful-not-because-it-is-scarce/?sh=635ec6924138) because it is hard to find and is usually available only in low concentrations since one must process a large amount of rock to obtain it. The rarity of gold, the fact that it’s non-renewable, and the challenges in obtaining it are largely [why gold is valuable](https://www.bankofengland.co.uk/museum/online-collections/blog/as-good-as-gold). Nonetheless, there are fluctuations in the amount of gold available at any given time. Investment researcher Nathan Lewis [writes](https://www.forbes.com/sites/nathanlewis/2016/09/29/gold-is-money-because-it-is-plentiful-not-because-it-is-scarce/?sh=55990f5a4138), *“In terms of availability, [gold] is very plentiful. We actually have twice as much above-ground gold today as when the world left the gold standard in 1971. We have seven times more than in 1910.”* Some bad news for gold’s ability to serve as a store of value: In June 2022, [authorities in Uganda revealed a significant](https://www.ntu.edu.sg/cas/news-events/news/details/major-gold-deposits-discovered-in-uganda#:~:text=In%20June%2C%20Ugandan%20officials%20announced,an%20estimated%20US%2412%20trillion.) find of around 31 million metric tons of gold ore within the nation (320,158 metric tons of purified gold). That amount’s approximate valuation was $12 trillion. This single discovery represented more than the entire amount of above-ground gold accounted for in total supply. As this gold continues to be recovered, it will significantly dilute the scarcity properties of physical gold.  #### Divisibility High divisibility allows an asset to be split into smaller units, making it easy to transact regardless of the amount.  **Bitcoin** is much more divisible than most currencies. One Bitcoin can be divided into up to eight decimal places, with constituent units called satoshis. That helps keep costs in check. Divide **gold** into smaller increments, and you will pay a premium. One-hundredth of an ounce of gold will cost around $35 online, which is, in effect, a $3,500 per ounce price of gold—that’s a 75% markup compared to the actual price of gold at that time! #### Security Is **Bitcoin** secure?  [Answer](https://bitcoin.org/en/secure-your-wallet):  *“Bitcoin makes it possible to transfer value anywhere in a very easy way, and it allows you to be in control of your money. Such great features also come with great security concerns. At the same time, Bitcoin can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money.”* Of course, the same issues exist with **gold**. You have to make sure you’re storing it somewhere safe and trustworthy. Also, verifying the authenticity and purity of gold is tricky. Counterfeiting is a lurking danger. Determining if your gold is the real deal can be challenging unless you have special equipment and expertise. #### Programmable **Bitcoin** implements programmable transactions and smart contract functionality via things like its built-in scripting language (Script), the Lightning Network, Discreet Log Contracts, and sidechains.  **Gold** offers nothing of the sort. #### Portability  With **Bitcoin**, your money is always available. You don’t have to ship gold bars somewhere. That means it is ready to be used wherever/whenever.  **Gold** is heavy and a pain to lug around…just ask pirates. #### Liquidity  **Bitcoin** can be converted into cash quickly through cryptocurrency exchanges and Bitcoin ATMs, typically 24/7 and within minutes (though some exchanges may take longer). ATMs offer instant cash but broader spreads. Peer-to-peer transactions benefit from Bitcoin’s easy verifiability, too. As for fees, converting Bitcoin to cash may incur transaction fees from exchanges or platforms and potential capital gains taxes based on timing. Converting **gold** to cash can be quite time-consuming. The process involves finding a reputable dealer or pawnshop and verifying the gold’s authenticity and purity, which can take anywhere from days to weeks. Then, you need to negotiate a fair price based on market demand and local conditions. Selling physical gold may also involve dealer margins and fees to confirm authenticity. #### Accessibility Purchasing **Bitcoin** has become increasingly easy thanks to Bitcoin exchanges and user-friendly platforms. Registering an account on reputable exchanges (like [Swan](https://swan.com/)) is a straightforward process. You can fund your account through ACH or wire transfers. With a few clicks, you can transact. Some exchanges even offer mobile apps so you can purchase and manage Bitcoin on the go. Compare that to **gold**, which you can acquire at brick-and-mortar coin shops and purchase gold bars or coins in person. There are also reputable online dealers where you can browse the inventory, select your gold product, and deliver it to your doorstep. Online auctions or marketplaces also provide opportunities to buy physical gold. There, prices can vary depending on demand and bidding competition. However, purchasing gold means considering a few extra factors… **Authenticity** Verifying the authenticity of physical gold can be crucial since counterfeit gold exists in the market. Stick to reputable sellers or dealers with a solid track record. **Storage and Security** Physical gold requires storage arrangements to ensure its safety. Buyers should consider a secure home safe, a safety deposit box, or third-party storage facilities (each with its own associated costs). **Additional Expenses** When buying physical gold, you may need to consider additional expenses, such as shipping or insurance fees. These can also add up and impact the overall cost. **Liquidation** If you decide to sell your gold in the future, the process might involve finding a buyer, either directly or through a dealer, and arranging for the transfer of ownership. This can be much more time-consuming than the instant liquidity of Bitcoin. --- ### Environmental Impact of Gold vs. Bitcoin [Video](https://www.youtube.com/watch?v=CSjS17aDRKk) ### Similarities Between Gold and Bitcoin Of course, we should mention the many things **Bitcoin** and **gold** have in common. - They are both highly fungible (i.e., any unit of the asset can be exchanged with another of the same type without losing value). - Also, they are non-consumable, meaning they are assets that do not degrade through use. Both preserve their value and utility over time, and neither loses anything from repeated use. - Both are very durable. Durability signifies an asset’s ability to resist deterioration over time, ensuring it retains value and utility. That’s a key attribute for any store of value. - Sovereign issuance and government backing can impact an asset’s credibility, stability, and acceptance. While fiat currency excels in this regard, Bitcoin and gold lag.  - Decentralization (i.e., removing third parties and centralized institutions from financial transactions) is a core principle of Bitcoin. However, it’s also inherent in gold. Neither is controlled by any central authority. [![](https://www.datocms-assets.com/56652/1710367277-money-traits.png?auto=format)](https://bitcointalk.org/index.php?topic=1251184.0) Bitcoin Talk Forum **Can Bitcoin flip gold's market cap this cycle?** Bitcoin OG Adam Back thinks so. In the video below, we pit the two hardest monies against one another and explore how gold's historic price moves following its ETF approval could foreshadow what will come in the next few years for Bitcoin. [Video](https://www.youtube.com/watch?v=EUzKbrKZ23g) ### Making the Choice Consider your personal preferences and risk tolerance when pondering the choice between Bitcoin and gold. If you love technology and are comfortable with the digital realm, Bitcoin may be an ideal fit. Gold may be a better choice if you desire a physical currency and prefer tangibility.  Diversification is always an option, too. Consider allocating a portion of your wealth to digital gold, which offers liquidity, ease of transfer, and potential growth. Then, balance that with physical gold to add an extra layer of stability and hedge against economic uncertainties and Bitcoin's volatility. **Here are some recommendations from experts** Michael Saylor, MicroStrategy founder, [says](https://erickimphotography.com/blog/2024/01/19/michael-saylor/):  *"Bitcoin is more efficient than gold. It's more efficient than fiat money. It's more efficient than storing your money in an Airbnb rental apartment. It's just the most efficient energy system, and rational people everywhere in the world are looking at it and saying, 'Why wouldn't I want to store my money in a property that is the apex property of the human race?"* In this clip from the "Saylor Series" by Robert Breedlove on the "What Is Money?" podcast, Michael Saylor talks about why Bitcoin is better than gold! [Video](https://www.youtube.com/watch?v=ZrU9QUg02qA) Jurrien Timmer, the Director of Global Macro at Fidelity, [found](https://twitter.com/TimmerFidelity/status/1720451086882877606?s=20) that allocating just 1% of a traditional portfolio to Bitcoin produced similar effects to a 4% gold allocation. In other words, by including Bitcoin, investors could potentially achieve more with less in their "store of value" portfolio allocations.  The folks at Cathie Wood's [Ark Invest](https://ark-invest.com/big-ideas-2024) have found the optimal allocation to Bitcoin to be a whopping 19.4%. Now, that might be a bit much for most investors. Still, when considering the risk-adjusted returns, increasing one's allocation is worth considering. According to these experts, Bitcoin is gaining traction as a long-term investment option that could outshine gold. Still, do your own research, examine your risk tolerance, and invest accordingly. Once you have, buy real Bitcoin with [Swan](https://www.swanbitcoin.com/) today! ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. # Are “Ordinals” Worth Worrying About? - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/are-ordinals-worth-worrying-about/ Ordinals and Inscriptions are not ideal for monetary users of Bitcoin, but they are not currently a systemic issue for Bitcoin. Learn why with Stephan Livera! --- **Stephan Livera** · January 23, 2024 · Updated June 6, 2024 As users go to transact using Bitcoin on-chain today, they may be surprised to see that fees to *“hit the chain”* have gone up dramatically. But why? Where are the stampeding hordes of newcoiners stacking sats into their [Coldcard](https://www.swanbitcoin.com/bitcoin-cold-storage/)? They do exist, but there is also a new class of Bitcoin on-chain users: those partaking in Ordinals and Inscriptions. This new craze has ignited a new round of community debate, but it has also been a boon to Bitcoin miners all around the world because of greater on-chain fees. But are these ‘ordinals’ worth worrying about, and can they be stopped or filtered? Or, is it best to leave them and instead ‘bite the bullet,’ with the expectation that monetary transactions will eventually outcompete Ordinals/Inscriptions uses? Let’s explore: **Firstly, what are ordinals?** Quoting the [Ordinal Theory FAQ](https://docs.ordinals.com/faq.html): *"Ordinal theory is a protocol for assigning serial numbers to* [*satoshis*](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/)*, the smallest subdivision of a Bitcoin, and tracking those Bitcoins as they are spent by transactions."* So, in other words, it is a made-up ‘lens’ or overlay that some people can apply to Bitcoin’s transaction ledger. And in doing so, they come up with an arbitrary way of ‘tracking’ satoshis as they move from transaction inputs to outputs. Think of Bitcoin outputs as ‘coins’; you use outputs from a previous transaction as inputs for the next one. When Bitcoin transactions occur, the inputs are consumed/destroyed. So the ‘ordinals lens’ specifies a way that the satoshis hypothetically move from inputs to outputs. People who use the ord software are using this lens to ‘track’ the satoshis, independently of the people simply using Bitcoin without any care or interest in the ordinals protocol. There are different levels of rarity for satoshis under ordinal theory, which can be seen from the table [below](https://docs.ordinals.com/overview.html): ![](https://www.datocms-assets.com/56652/1706043247-uncommon.png?auto=format) docs.ordinals.com So now there are ordinals and people who ‘collect’ these rare types of satoshis. Given the different ways ordinals and ‘rare satoshis’ have to be managed, there are now [specialized wallets](https://www.swanbitcoin.com/best-bitcoin-wallet/), exchanges, and front ends available for these users. Now, this overall ordinals method is essentially made up, as Casey Rodarmor admitted on my [podcast in Episode 456](https://stephanlivera.com/episode/456/). Even though it is arbitrary, there seems to be a committed audience of people who adopt this view. While Ordinals became popular in early 2023, they are not a new idea and, in fact, originated in 2012, as [Giacomo Zucco explains](https://www.youtube.com/watch?v=596InlNtfD0) in his talk here. What’s old is new again! ### What about the other ‘ordinals’? *“Ordinals”* has become somewhat of an umbrella term. So, let’s walk through some of the other pieces here: - **Inscriptions** - these are Bitcoin-native digital artifacts written to Bitcoin’s blockchain in a taproot script. They are otherwise commonly known as *“NFTs”* or Non-Fungible Tokens. Commonly, they are JPEG image files, but they can take other formats too. These inscriptions leverage the above ‘ordinals’ protocol in how satoshis are tracked across transactions, which allows these inscriptions to be transferred, bought, sold, etc. Inscriptions are done in two phases, a ‘commit’ and ‘reveal’. The inscription is contained in the *input* of a reveal transaction, and the inscription is deemed to be made on the first sat of its input. Inscriptions do exist on altcoin chains also. But given Bitcoin’s special properties of decentralization, immutability, and longevity, Bitcoin inscriptions have become very popular. Some of the enthusiasts particularly like that it is on-chain and not merely ‘pointed to’ like in some altcoin NFT schemes. As they make use of Taproot transactions, inscriptions also receive the ‘Segwit discount,’ which makes them cheaper to inscribe on the chain. - **BRC-20** - This is an experimental standard from March 2023 for creating ***fungible*** tokens using a text inscription using JSON (JavaScript Object Notation) data. The name BRC-20 is a play on ERC-20 from the Ethereum world. There are three actions possible: these BRC-20 tokens can be deployed, minted, or transferred. There are many users who are attempting to ‘mint’ BRC-20 tokens for themselves. Generally, they consider themselves ‘collectors,’ or in many cases, they are minting in the hope of being able to dump the token later on to somebody else. There are various ‘Ordinals-aware’ wallets, front-ends, and exchanges that help users manage and transfer their ordinals, inscriptions, BRC-20 assets, etc. - **Stamps (aka SRC-20)** - This is another protocol to ‘inscribe’ images into Bitcoin. However, these are stored in *UTXOs* in Bitcoin’s chain, and these cannot be pruned like ‘regular’ Ordinal inscriptions can. These Stamps do not receive the Segwit discount that inscriptions do (thus, they cost more) but offer more flexibility in minting larger quantities than Ordinal Inscriptions. Stamps are more pollutive for Bitcoin’s network, as the UTXOs cannot be pruned, and it raises the requirement to be able to run a Bitcoin node. **What’s the impact of these ordinals and inscriptions?** *“Regular”* [Ordinal Inscriptions](https://www.swanbitcoin.com/what-are-bitcoin-ordinals/) can be pruned out from the Bitcoin blockchain, as they are stored only in the *witness* data. So, as an example, you could set up a full node that has downloaded and verified the full Bitcoin blockchain, and if you didn’t want to store the ordinal inscription images and data, you could prune your node down to free up storage space. In this case, you would still be running a full node but not maintain the archival status of containing all Bitcoin blockchain data. Of course, in order to remain synced with the Bitcoin network, you must still download and process blocks, which can contain new *inscriptions*. Stamps and BRC-20 do increase the UTXO set, and given there is not a cost charged by the protocol for the net creation of UTXOs, this is arguably spam. The UTXO set expansion shown in the chart below shows how the UTXO count was previously around ~80M as of early 2023 and has now blown up to ~156M UTXOs as of January 2024. ![](https://www.datocms-assets.com/56652/1706041171-unspent.png?auto=format) Blockchain.com The Stamps (SRC-20) protocol was published in March 2023, and the BRC-20 standard was also created in March 2023. This aligns pretty well with the blow-up in UTXO count. Though this is not ideal for keeping [Bitcoin nodes](https://www.swanbitcoin.com/3-easy-ways-to-run-your-own-bitcoin-node/) cheap and easy to run, it is not a systemic issue for Bitcoin at this stage. Is there an impact at the transaction fee level? We have seen some fee spikes over the past year, particularly during times of a BRC-20 mint. These fee spikes have raised the cost to use Bitcoin on-chain transactions. As an example, in September, fees to get your on-chain transaction confirmed in the next block were in the 600-700 satoshis/vByte range at the peak level. The fee spikes can be visualized in the chart below from [mempool.space](https://mempool.space/graphs/mempool). ![](https://www.datocms-assets.com/56652/1706041330-meme-pool.png?auto=format) Meme.pool While a lot of criticism was leveraged against the ‘JPEGs’ (Regular Ordinal Inscriptions), in actual fact, a lot of the volume was/is coming from text-based inscriptions, such as BRC-20. So, while these BRC-20 transactions are not having as much impact individually in terms of transaction size, they are, to an extent, driving the blockspace / fee market higher. So generally, what we’ve seen is that in low-fee market times, regular monetary transactions, JPEG inscriptions, and text inscriptions are all present in blocks. But as fees rise, JPEG inscriptions tend to be priced out because of their large size. As fees really rise, we still see a lot of BRC-20 transactions because of how small the transactions are and how fee-insensitive these transactors tend to be. Why is this? Probably because of the time pressure to ‘mint’ BRC-20 tokens before the limited opportunity is gone, and this is what causes very high time preference bidding (aka high fee tolerance) in order to get a ‘mint’ transaction confirmed quickly. For example, after a BRC-20 has been ‘deployed,’ people compete in the open blockspace/fee market to ‘mint.’ Considering things from a [*Bitcoin miner* perspective](https://www.swanbitcoin.com/how-much-does-it-cost-to-mine-a-bitcoin/), this is a boon to their bottom line. We have seen consistently full Bitcoin blocks for some time now, and we’ve seen Bitcoin transaction fees become a meaningful part of the Bitcoin block reward. Previously, the Bitcoin block reward was mostly made up of block subsidies, and historically, we only saw transaction fees become meaningful during [heated Bitcoin price bull runs](https://www.swanbitcoin.com/bitcoin-price-prediction/). Perhaps, post-ordinals, this is changing, and there will be a persistent backlog of transactions to fill blocks. ### What are some of the arguments for and against here? #### The anti ordinals, pro-filtering side This group generally views these non-monetary transactions as spam or spammy and that they are bringing a *“token pump and dump”* dynamic to Bitcoin. They might also argue that the purpose of Bitcoin is for financial transactions, not arbitrary data file storage. The ‘ability’ to store arbitrary data into Bitcoin is seen as a bug by this group, and they believe it should be patched, even if imperfectly. Perhaps in a way akin to email and email spam, the mere fact that somebody sends you a ‘valid email’ is not itself a reason that you must read those emails. So, too, with Bitcoin transactions that Bitcoin nodes do filter for various reasons, e.g., DDoS protection or other invalidness rules. This camp believes that putting in filters at the Bitcoin node mempool level should be done to discourage spam. In other words, this would mean that Bitcoin nodes which run this kind of filtering would not recognize them as valid and they would not forward the inscription transactions on Bitcoin’s relay network. However, Bitcoin Core developers do not agree with this filtering approach, so for now, inscription filtering is only applied within an alternate implementation, Bitcoin Knots (maintained by Luke Dashjr). Another argument here could be that the monetary network of Bitcoin is being slightly degraded as the inscriptions crowd out monetary transactions. And in some ways, it could be argued that the BRC-20 transactions disproportionately price out other transactions. Of course, many people suspected that on-chain transaction fees for Bitcoin were going to rise eventually anyway and that this is just a premature fee rise. For monetary-focused users, though, it is perhaps lamentable that this prices out some individuals from Bitcoin self-custody. #### The anti-filtering side Some in the anti-filtering camp make various arguments: Bitcoin is permissionless, and users of the system should acknowledge that there will be other uses of the chain. They might also argue that there is no easy way to make sure that Bitcoin is only used for financial transactions, given the overall censorship-resistant design of Bitcoin. Attempts to filter transactions will just result in the inscription users finding even more pollutive or destructive ways to do what they want to do, e.g., instead of regular ordinal inscriptions, they would encode their messages into the UTXO set in a way that can’t easily be detected. This perspective was explained [here by long-time Bitcoin researcher and developer Andrew Poelstra](https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2023-January/021372.html). Alternatively, if transactions are filtered at the mempool level, they can instead be sent directly to mining pools *“out of band”* (i.e., not over the standard Bitcoin relay network). And because these transactions are consensus valid, i.e., your Bitcoin node will not reject these if they are included in a valid block by miners, it would mean mempool filtering becomes mostly futile. Not wanting to risk losing the mempool as a mechanism for the decentralized use of Bitcoin may push people towards centralized ways of submitting transactions. For example, instead of sending a Bitcoin transaction normally through your Bitcoin node over the network, you could go to a miner and give them the transaction out of band and pay them out of band for them to include it in their next block. Ben Carman has spelled this out in [his post here](https://habla.news/a/naddr1qqxnzdesxgerxdp58yenyvejqgswrlemlh2wgqc4jkds3d8ueqj9a2j3gcm7r48v9tskdd6rxsd7rtcrqsqqqa28wdzn0j) for those interested. Increased node running costs are arguably marginal, given the substantial decrease in hard drive costs over the years. Cheap 2TB SSD drives nowadays are available for, say, $120 USD and would likely last another 10 years at the current pace. It’s worth noting that the limits set by Bitcoin developers in terms of block size were conservative. Those interested in feedback collected on a specific Bitcoin Core Pull request can also view Gloria Zhao’s [summary of related arguments pro and against here](https://github.com/glozow/bitcoin-notes/blob/master/datacarrier_28408.md). #### Value density Perhaps the real longer-term answer is that we must increase the value density of on-chain transactions. This can be done by using other layers, such as Lightning, to aggregate more transactions. For example, if you use two on-chain transactions to open and close a Lightning channel, but while that channel was open, you did thousands of off-chain transactions - you packed a lot more value density into those two on-chain transactions. Thus, you’d be willing to pay more for those on-chain transactions, which in turn helps you justify paying high on-chain fees because, fundamentally, it’s now worth it to you. As more Layer 2 protocols come online or continue advancing, the value density increases. This may be the point on which most people can agree, whether they are pro or anti-filtering. In this way, monetary transactions could outcompete ordinal/inscription transactions through economic incentives. ### So what’s the bottom line? Ordinals and Inscriptions are not ideal for monetary users of Bitcoin, but they are not currently a systemic issue for Bitcoin. While it may be an issue for specific individuals who are priced out of self-custody, Bitcoin was always going to be subject to the free market forces of those who want to use Bitcoin’s blockchain. In the short term, it may be best to ‘bite the bullet’ and wait the ordinals and inscription users out. There is still some chance this is a passing fad. But even if it is not a fad, increasing the value density of monetary transactions seems best over the medium to long term. Credit goes to Brandon Black (aka [reardencode](https://twitter.com/reardencode)) from the Swan team and [Mononaut](https://twitter.com/mononautical) from the mempool.space team for their insights that helped with this article. If you enjoyed this article about Ordinals and want to learn even more, check out our [What Are Ordinals](https://www.swanbitcoin.com/what-are-bitcoin-ordinals/) blog post. #### Just Buy Bitcoin Investing in Bitcoin is a strategic decision for securing your financial future. **Don’t waste your hard-earned Bitcoin**. Rather than risking your rare and valuable Bitcoin on fleeting digital trends, consider the long-term benefits of holding onto your Bitcoin. By focusing on sustainable investment strategies, you ensure that your Bitcoin remains a valuable asset for years to come. [Buy Bitcoin](https://www.swanbitcoin.com/) with Swan today! ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # The Why and How of Getting a Bitcoin Job - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/the-why-and-how-of-getting-a-bitcoin-job/ If you’re dedicated to Bitcoin, getting a job in the industry can be incredibly rewarding as it fulfills the desire to advance the technology. --- **Stephan Livera** · April 22, 2022 · Updated June 6, 2024 *This article from April 22nd, 2022 by Stephan Livera was originally published on Bitcoin Magazine.* Coming off the [Bitcoin 2022](http://b.tc/conference) conference, you might feel a little down from the high of meeting and spending time with Bitcoiners. I've also found that attending these events leaves you with an additional sense of urgency to do something more or become more involved somehow. One way is to participate in Bitcoin projects or work in a Bitcoin job. At Bitcoin 2022, I spent time at the [Bitcoiner Jobs](http://bitcoinerjobs.com/) booth hanging out with some fellow [Swan](http://swan.com/) employees and Bitcoin job hopefuls. Here are a few insights: ### FIRST, WHY DO THIS? There are a few main reasons why people work in a Bitcoin job: - You think Bitcoin is the most important thing, and you can't think of any other industry that would be more exciting or energizing to work in. - You see a massive opportunity to be early in this space. - Some Bitcoiners are unemployable in other industries due to their attitudes or mindsets. - You HODL a Bitcoin bag and want to do what you can to help more precoiners and newcoiners find their way into Bitcoin. - Bitcoin companies are generally remote-working friendly. - Bitcoin companies will usually give you the option to be paid in Bitcoin.  When working directly in a Bitcoin job, you work with other like-minded individuals on a shared cause. It feels great to have that shared vision about what's wrong with today's fiat world and to work together to build the new world of tomorrow. When you work together with other Bitcoiners, you feel less need to self-censor than in a fiat job. You feel more connected and as though your work is making a difference. Working at a Bitcoin company can give you a similar vibe to attending Bitcoin conferences and meetups. ### THE TRADE-OFFS VERSUS FIAT JOBS To be clear, this isn't for everybody. Some people are just earning too much at their fiat job to think about giving it up. In these cases, it's *"chop wood, carry water."* Keep stacking that fiat and converting it into Bitcoin whether you are purchasing, earning, or mining. Taking a Bitcoin job would be trading off on income for those with specialized skill sets. It is similar to the trade-off of working at a FAANG company for the high pay and stock options versus the higher risk play of working in a small tech start-up where you get some equity and have more upside if the start-up gets bought out. ### WHAT WAYS ARE THERE TO GET INVOLVED IN BITCOIN? You could find a Bitcoin open-source project to contribute to, work in a Bitcoin company, or even start a company serving the industry. If you're an enthusiast closely following the industry, there's a good chance you can spot gaps or unmet needs — perhaps you could build out a product or service to help? Contrary to popular opinion, you don't necessarily have to be a developer to contribute. You could be a writer, work in customer service, have transferable skills from the energy industry, or perhaps work in sales, design, operations, or many other roles. Bitcoin has a thriving ecosystem, much of it screaming out for the right talent to join. To get into Bitcoin development and contribution, look into organizations such as [Blockstream](http://blockstream.com/), [Chaincode Labs](https://chaincode.com/), [Spiral](https://spiral.xyz/), [MIT DCI](https://dci.mit.edu/), [HRF Bitcoin Development Fund](https://hrf.org/devfund), and [Brink](https://brink.dev/). Various exchanges and Bitcoin companies sponsor developers. There are programs to support and train Bitcoin and Lightning developers, such as [Qala](https://qala.dev/) ([see my interview with Abubakar Nur Khalil](https://stephanlivera.com/episode/359/)) and [Summer of Bitcoin](https://www.summerofbitcoin.org/). There's also [Base58.info](https://www.base58.info/) by Lisa Neigut of Blockstream and [Programming Bitcoin](https://programmingbitcoin.com/#programming-blockchain) by Jimmy Song. **Finding A Bitcoin job** So what does it take to find these kinds of jobs? You can search on platforms like [BitcoinerJobs.com](http://www.bitcoinerjobs.com/) and post your profile there. You can network and meet people at Bitcoin conferences, events, and meetups. Having open-source contributions or prior Bitcoin company experience is a plus. Building up your portfolio of work in the space and becoming known for a specific thing will help in any job application process, and it might even help jobs *find you*. In some cases, a person does a job in the area *"for free"* but later gets paid to continue doing that work, or at least something related. In other cases, I've seen people create their own jobs by starting or contributing to a side project that later becomes a full-time business. For example, some individuals start by producing educational content on Bitcoin, Lightning, security, and/or privacy topics and later get hired by a Bitcoin company to continue creating this material in-house or working as customer technical support. Others start consulting services to teach these concepts. **Building Up Your Profile** There are various ways to support Bitcoin and open-source projects, as you can make contributions in multiple ways: - Helping with documentation or writing tutorials - Suggest new ideas or features and feedback to developers - Spread the word in some meaningful way - Code or code review - Research related to the project If you want to hear more about contributing to Bitcoin open-source projects and how this can dramatically improve your Bitcoin career prospects, check out my interview with [Rockstar Developer and Pavlenex of BTCPay Server](https://stephanlivera.com/episode/343/). Make the most of Bitcoin conferences and events, especially if you meet Bitcoin company leaders or staff, and outline how your skills or enthusiasm will help in a particular role. ### BITCOIN EMPLOYERS Generally, Bitcoin companies benefit from hiring Bitcoiners. You get more passionate and motivated employees who genuinely care about the cause. Sure, there'll be some Twitter shitposting while on the job, but this will be more than made up for by the reduced need for training on Bitcoin. Bitcoiners as staff will also help you recruit other Bitcoiners to the team and help create the right kind of company culture, too. ### IN SUMMARY If you've just got this background feeling that fiat job life isn't for you, definitely look into taking a Bitcoin job. I know people who have taken pay cuts to work in a Bitcoin company who did not regret their choice. It allowed them to work on something they were genuinely passionate about with a team that shared a similar purpose. Whether you want to contribute to Bitcoin open-source projects or work in a Bitcoin company, best of luck out there; there is a lot of work to be done! ### Stephan Livera Stephan P Livera is a Bitcoin podcaster, Head of Education of Swan Bitcoin, Co-Founder of Ministry of Nodes, and Partner with Bitcoiner Ventures. # Swan Bitcoin Unveils Mining Unit URL: https://www.swanbitcoin.com/industry/swan-bitcoin-unveils-mining-unit/ Swan is proud to be hashing! --- **Swan Bitcoin** · January 25, 2024 · Updated June 6, 2024 We've been working hard on a big opportunity that came our way last year, and today, **we're excited to bring our mining operation out of stealth mode**. We're mining around **4.5 EH -- closing in on 1% of the network** -- with equipment in hand to **ramp quickly to 8 EH**. Find details in the press release below. Our core financial services business is healthy and growing. We're building a comprehensive Bitcoin company; having skin in the game by contributing to securing the Bitcoin network is part of that effort. **Swan is proud to be hashing!** **Swan Bitcoin's Mining Arm Comes Out of Stealth Mode, Adding to Its Institutional Division** *Swan Mining began operations in Summer 2023. Currently operates at 4.5 exahash, with deployment expected to exceed 8 EH by March. Over 750 BTC mined to date.* Swan Bitcoin today announced Swan Mining, which was previously operating in stealth mode, as a division of Swan Institutional. Bitcoin mining secures the Bitcoin network while supporting the expansion of energy production and stabilization of electrical grids. Beginning operations in Summer 2023, Swan Mining already supplies 4.5 exahash to the Bitcoin network, meaning that around 1 of every 100 Bitcoins mined globally is mined by Swan. The unit has purchased and taken delivery of mining equipment that will bring its total capacity to more than 8 exahash, expecting full deployment by March. Swan has mined more than 750 Bitcoins. *“Swan Mining developed and deployed at warp speed,”* said Rapha Zagury, CIO at Swan and head of Swan Mining. *“Our understanding is that this is the fastest-ever initial deployment of hashrate at this scale in Bitcoin history.”* Zagury said that Swan Mining launched in stealth mode to avoid causing disruption in ASIC pricing and to develop a strategy of partnering with some of the best operators in the space. *“Swan Mining is a great example of our company thesis playing out,”* said Cory Klippsten, Swan founder and CEO. *“With our exclusive focus on Bitcoin adoption and helping the industry grow, we continue to attract the talent, opportunities, and capital required to launch new business lines and grow them rapidly.”* The funding model for Swan’s mining business uses no debt, and its entities are legally segregated from the rest of Swan’s business. *“We bring financial expertise and operational excellence, while our investors provide equity capital to our mining unit in exchange for priority on initial payouts and continued shared upside,”* said Zagury. The new mining unit is also playing a crucial role in the growth of Swan Institutional, which has already created several major strategic partnerships with major industry players on the back of the company’s new mining activity. Swan’s institutional unit supports capital raises and helps restructure balance sheets, unlocking significant operational and financial upside for partners. *“We are proud to play a role in keeping Bitcoin mining decentralized,”* said Zagury. *“With hard work and a little luck, we hope Swan Mining will help to secure the network for many decades.”* Swan expanded dramatically over the past year, doubling team size and growing revenue to more than $125M annualized. The company intends to raise its Series C financing in the coming months, with uses of capital equally split between financial services, mining, and acquisitions. Klippsten said the company is actively working to achieve a public listing within the next 12 months. Swan is a leading Bitcoin financial services company. The user-friendly Swan app simplifies Bitcoin purchases with instant and recurring buys, while Swan IRA provides a tax-advantaged solution for saving Bitcoin in retirement accounts. For HNWIs and businesses, Swan offers tailored white-glove service for large purchases, treasury solutions, and employee Bitcoin benefits. With Swan Vault clients can easily custody their own Bitcoin with peace of mind. Financial advisors trust Swan for client Bitcoin allocations, backed by world-class custody and educational content. Swan Institutional provides financial services to governments, corporations, and other entities, including Bitcoin-backed lending, asset management, principal investments, Bitcoin services for financial advisors, and Bitcoin mining operations. Swan prides itself on exceptional client service, making Bitcoin accessible to all. For more information, please visit [swan.com](https://www.swanbitcoin.com/). ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Swan Bitcoin 2023 Give Guide URL: https://www.swanbitcoin.com/industry/swan-bitcoin-2023-give-guide/ We can all agree there is nothing greater than the gift of Bitcoin. This holiday season, please join the Swan family in the joy of giving (with a Bitcoin-centric twist). --- **Alex Davani** · December 12, 2023 · Updated June 6, 2024 **Swan now employs 145+ diverse individuals worldwide** who share a dedication to Bitcoin as a common thread, making this year's crowdsourced holiday gift guide all the more fun to browse. Below is our curated list – some practical and some playfully paying tribute to the vibrant Bitcoin community and culture. Without further ado, we couldn't be more excited to share our **2023** **Swan Bitcoin Holiday Give Guide**! Drum roll, please… **For Your Closest Friends and Family,** [*Cory's Pick*](https://twitter.com/coryklippsten?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1703039830-swan-give.png?auto=format) If you are pained by the fact that family and friends haven't yet taken steps to educate themselves and invest in Bitcoin, consider piquing their interest by gifting them Bitcoin.  Swan's origin story is rooted in gifting. [Give Bitcoin](https://www.swanbitcoin.com/gifts/), a service allowing people to gift Bitcoin, was our very first product. We are happy to announce it is now live again, just in time for the holidays! **For the Walking Maximalists,** [*Steven's Pick*](https://twitter.com/DzambhalaHODL?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702500203-screenshot-2023-12-13-at-12-26-49-pm.png?auto=format) If your gift recipient is clocking in an average of 20K+ steps a day, look no further than [these walking shoes](https://www.feelgrounds.com/?gad_source=1&gclid=CjwKCAiAvJarBhA1EiwAGgZl0FtgBF9Wlb89yB0KZC6ZhZHJmXn506JVag-mLPHGYoT24QxoTm4M9xoC_04QAvD_BwE) endorsed by the walking maxi himself, Steven Lubka. Most athletic footwear offers excessive support, and feet have fallen victim to insole dependency. These anatomically correct shoes enhance foot strength, stability, and comfort.  Did the Romans wear inch thick-rubber insoles? No. And neither should your gift recipient. **For the Bitcoiner who Wants to Get Paid to Shower,** [*Kaz's Pick*](https://twitter.com/btcKaz?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702413530-loki-kit.png?auto=format) Home miners play a critical role in securing the Bitcoin network. Innovators like Zack Bomsta are leading the way in providing economically incentivized mining solutions for normies and Bitcoiners alike. The [Loki Kit](https://pivotalpleb.com/products/loki-kit) tricks Bitmain X19 miners into hashing from any suitable DC power supply. This is the perfect gift for a Bitcoin mining enthusiast who loves tinkering with hardware. Save 15% when you use discount code *"BTCPay"* and use the BTCPay payment option! **For the Cast Iron Maxi,** [*Brandon's Pick*](https://twitter.com/Bquittem?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702413422-lodge-cast-iron.jpeg?auto=format) (*cough, cough – Saifedean won't be happy about this suggestion. Curious to learn about his steel pan maxi ways? Listen in to this [Blue Collar Bitcoin episode!](https://youtu.be/41TlPAih2go?feature=shared)) Brandon is a self-proclaimed owner of at least 7-10 cast iron skillets. There is no chance you will catch him in the kitchen (or over a campfire) with a steel pan. Anyway, one thing is for sure; Bitcoiners have immense appreciation for things that last. If you like your cookware the same way you like your investments – immutable – then we recommend checking out this affordable [cast iron skillet](https://www.amazon.com/dp/B00WTSCXIS?tag=seriouseats-onsite-prod-20&linkCode=ogi&th=1&psc=1&ascsubtag=5121835%7Cnd6d7b1b9f2af4d3da258a3286331e84d19%7CB00WTSCXIS). ** (Disclaimer: This isn't a Bitcoin business.)  **For Those Who Prefer Experiences,** [*Kristin's Pick*](https://twitter.com/SpeakServeGrow) ![](https://www.datocms-assets.com/56652/1702413363-21-off.png?auto=format) The Pacific Bitcoin Festival spans two days and includes talks, workshops, music, sports, networking, and parties. Regardless of your gift recipient's specific Bitcoin interests, there are a variety of activities guaranteed to entertain, educate, and inspire them throughout the week in sunny Los Angeles, CA. [Get Pacific Bitcoin Festival tickets here!](https://www.pacificbitcoin.com/collections/tickets) **For Parents Who Are Longing for Elevated Children's Books,** [*Brekkie's Pick*](https://twitter.com/BVBTC) ![](https://www.datocms-assets.com/56652/1702518263-rb-book-cover-new.png?auto=format) If your gift recipient is a parent, they've likely read the 'Hungry Caterpillar' to the point they're blue in the face. They surely would welcome switching it up with a Bitcoin book that resonates with them and their child. **'**[Rhyming Bitcoin](https://www.amazon.com/Rhyming-Bitcoin-Jason-Don/dp/B0BKMPPTM1/ref=sr_1_1?crid=2UKDJMMEHM037&keywords=rhyming+bitcoin&qid=1699902689&sprefix=ryhming+bitcoin%2Caps%2C183&sr=8-1)' by Bitcoin artist and advocate himself, Brekkie von Bitcoin, aims to take readers of all ages on a journey of imagination, leaving them more hopeful and curious about Bitcoin. The book is illustrated by Chilean Bitcoin artist Florencia Montoya, with inspiration from Dr. Seuss and Alice in Wonderland. **For the Introvert,** [*Neil's Pick*](https://twitter.com/NeilJacobs?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702518385-intro-tee-350-v.png?auto=format) If your gift recipient is shy on the outside but Bitcoin bullish on the inside, look no further than this 'Introverted But Willing To Discuss [Bitcoin' T-shirt](https://fomo21.com/collections/t-shirts/products/introverted-but-willing-to-discuss-bitcoin-t-shirt) by Fomo21.  **For the Finance Bro Turned Bitcoiner,** [*John's Pick*](https://twitter.com/john_at_swan) ![](https://www.datocms-assets.com/56652/1702503340-buy-bitcoin-artwork-new.png?auto=format) Naturally, his first gift idea for the *Finance Bro Turned Bitcoiner* was a Bitcoin-themed Patagonia vest – to allow the finance bro to stay somewhat in tune with his former self. However, Bitcoin-themed Patagonia vests do not exist, and that is likely a good thing.  Instead, he suggests you buy your reformed finance bro friend a monetary collectible! They can display it proudly and subtly spur conversations with others about their newfound interest in money and Bitcoin. - [5 Dollar U.S. Silver Certificate](https://www.etsy.com/listing/1445663999/1953-5-five-dollar-silver-certificate), including the words *"IN SILVER PAYABLE TO THE BEARER ON DEMAND"* - [1 Dollar U.S. Silver Certificate](https://www.etsy.com/listing/1389926008/1957-silver-certificate-uncirculated?click_key=baf11726013f4378fd63ac6e16e6d63ca77aa972%3A1389926008&click_sum=95126ba7&ref=search2_top_narrowing_intent_modules_top_rated-3), including the words *"IN SILVER PAYABLE TO THE BEARER ON DEMAND"* If you want them to be a little more explicit in displaying their passion for Bitcoin, you could go with [this piece of art](https://www.redbubble.com/i/art-board-print/Bitcoin-Meme-Original-Watercolor-ft-Janet-Yellen-by-spiffykings/86249178.ZL3U1) that displays the famous *"Buy Bitcoin"* sign held up behind Janet Yellen during a congressional hearing in 2017. **For the Bitcoin Couple,** [*Moritz's Pick*](https://twitter.com/MWietersheim) ![](https://www.datocms-assets.com/56652/1702410200-jade.png?auto=format) If Bitcoin is your gift recipient's love language, the Jade hardware device is the key to their life-long financial partnership.  The [Swan Vault](https://www.swanbitcoin.com/vault/) service ensures customers remain in full control of their Bitcoin via a 2-of-3 multisig setup. The customer securely holds two keys offline with two Blockstream Jade devices. Swan has a third key to assist with recovery if needed. [Purchase the Jade hardware wallet here.](https://store.blockstream.com/product/blockstream-jade-hardware-wallet/) **For the Baby Bitcoiner,** [*Alex D's Pick*](https://twitter.com/alextalkstweets) ![](https://www.datocms-assets.com/56652/1702518476-pig-tee-blog.png?auto=format) Start 'em young! *"Time in the market rather than timing the market"* is a powerful adage.  If your gift recipient began stacking sats at age 0, they'd certainly rock this onesie with pride for their parent's vision for a bright orange future! [My Dad Saves For My Future In Bitcoin (Piggy Bank) Infant One Piece](https://fomo21.com/collections/infant/products/piggy-bank-infant-one-piece?variant=43961942048984) [Piggy Bank (Mom) Bitcoin Infant One Piece](https://fomo21.com/collections/infant/products/piggy-bank-mom-bitcoin-infant-one-piece) **For Literally Everyone ,** [*Nathan's Pick*](https://twitter.com/nathanfast?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702410572-marine-grade.webp?auto=format) Bitcoin private keys (seed words) are unique to a Bitcoin wallet signing device and allow access to, management of, and retrieval of Bitcoin stored on the blockchain. Your gift recipient's Private keys can be permanently preserved using BitPLATES® Domino® plates, ensuring access to their Bitcoin if their wallet is ever damaged, stolen, or tragically lost in a boating accident. [Enjoy 15% off using code SWAN at checkout.](https://www.bitplates.com/) **For the Bitcoiner Who Frequently Hosts Friends and Family**, [Tomer's Pick](https://twitter.com/TomerStrolight) ![](https://www.datocms-assets.com/56652/1702410914-tomer-book.png?auto=format) If your gift recipient loves to entertain at home, *"Why Bitcoin?"* is the only Bitcoin coffee table book out there. It is a fantastic gift choice and an ideal conversation starter! Guests will pick up and skim through twenty-seven enlightening, short Bitcoin articles presented with full-color photos, potentially sparking an interest in Bitcoin. If they are new to the space, the question we all LOVE to hear, *"What's this Bitcoin thing about?"* may soon follow. Available in hard and soft cover at [blurb.com](https://www.blurb.com/user/TomerStrolig?profile_preview=true). Your gift recipient will appreciate the reminder that storing their seed words on paper isn't ideal for preserving generational wealth. Paper is susceptible to water and fire damage; your dog could eat it. Do you want to explain to your grandchildren why you lost their Bitcoin? No! That's exactly why you want to stamp your Bitcoin seed phrase on one of the strongest metals on planet Earth: Titanium! Get your loved ones a Stamp Seed titanium Bitcoin seed phrase storage kit at stampseed.com. Use Promo Code: **SIMPLY** for 15% off. **For the Budding Bitcoin Evangelist,** [*Vijay's Pick*](https://twitter.com/real_vijay?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702411191-the-bullish-case-for-bitcoin.png?auto=format) Has your gift recipient expressed interest in learning about Bitcoin?  Gift them the most widely read and recommended introduction to Bitcoin book, [*The Bullish Case for Bitcoin*](https://bullishcaseforbitcoin.com/store)! Use Promo Code: SWAN23 for 30% off all books. **For the Bitcoiner Looking to Learn Sound Economic Thinking,** [*Stephan's Pick*](https://twitter.com/stephanlivera?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702500849-book-cover-a-premier.jpg?auto=format) For those more conscientious Bitcoiners who want to understand the world sans fiat propaganda, it is essential to learn at least the basics of Austrian economics. This is the *only* school of economics that can explain Bitcoin. For years, we have all been bombarded with neo-classical, Keynesian, or MMT propaganda, and the fix is to understand economics without government bribes. A great, short introductory read is Per Bylund's [How to Think About the Economy](https://mises.org/library/how-think-about-economy-primer) (free in PDF or $2 for the paperback version from the Mises Store). It's also available on [Amazon](https://www.amazon.com/How-Think-about-Economy-Primer/dp/1610167554). Stephan was a supporter of this book and has even interviewed Per about it [here on SLP416](https://stephanlivera.com/episode/416/). The book is only 143 pages, but it packs a punch. **For the Privacy-Conscious Cypherpunk**, [P's Pick](https://twitter.com/phjlljp) ![](https://www.datocms-assets.com/56652/1702411937-flip-zero.webp?auto=format) Gift the [Flipper Zero](https://flipperzero.one/), the device that screams, 'I can hack my way into my own hotel room!' Capable of interacting with various electronic systems, it's perfect for security-focused enthusiasts. Just ensure they don't start thinking they're the next Edward Snowden. Remember, hacking your own devices is fun; hacking into your Mom's Wi-Fi because you live in her basement... even more so! **For the Bitcoiner Who Enjoys Friendly Competition,** [*Camila's Pick*](https://twitter.com/camilacampton?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702413293-bitpoly.jpeg?auto=format) Game Night enthusiasts now have the opportunity to orange-pill their family and friends in a fun way. The [Shamory Bitcoin Card game](https://shamory.com/product/shamory/) is for kids (age 4+) and adults. It is the perfect mixture of fun and education for anyone interested in learning about Bitcoin.  Need a card game that will level things up for adults with no monsters involved? Get [Bitopoly](https://playbitopoly.com/).  Bitopoly was created to introduce people to Bitcoin through a 2-5 player strategy card game where players compete and collaborate to stay alive. As reviews show, it is even a fun game for people who hate Bitcoin. **For the Work-from-home Bitcoiner,** [*Jeremy's Pick*](https://twitter.com/jeremyshowalter?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) ![](https://www.datocms-assets.com/56652/1702507554-yield-friends.png?auto=format) No risk of opsec issues in public when you are proof of working from home! Get your favorite Bitcoin merch at FOMO21 and remember that the yield is the friends we made along the way (h/t Allen Farrington). [**The Yield Is The Friends We Made Along The Way Bitcoin T-Shirt | Fomo21**](https://fomo21.com/products/the-yield-is-the-friends-we-made-along-the-way-bitcoin-t-shirt?_pos=1&_psq=friends&_ss=e&_v=1.0) FOMO21 Offer of 15% off when using the code SWANSANTA  **For the Bitcoiner Bringing the Physical Back to a World Gone Digital,** [*Brady's Pick*](https://twitter.com/citizenbitcoin?lang=en) ![](https://www.datocms-assets.com/56652/1702507472-bitcoin-trading.png?auto=format) [Bitcoin Trading Cards](https://btc-tc.com/) makes educational, Bitcoin-themed trading cards featuring beautiful art by Bitcoiners.  These cards are perfect for the Magic the Gathering, Pokemon, and sports trading card lovers in your life. But they're also great for anyone as a fun and easy alternative to books, essays, and podcasts, as each card features a snippet of education on topics related to Bitcoin and economics.   **For the Nomadic Bitcoiner,** *Zach's Pick* ![](https://www.datocms-assets.com/56652/1702412276-moft.jpg?auto=format) Help your gift recipient unlock the full potential of the borderless Bitcoin lifestyle with a [Moft laptop stand](https://www.amazon.com/MOFT-Invisible-Lightweight-Computer-Compatible/dp/B011M8IUIW?th=1) – the feather-light solution for maintaining optimal posture while traveling the world.  Whether they're coding, catching up on the latest BIP, or scrolling through Bitcoin Twitter, this stand ensures comfort and style in every jurisdiction.  Embrace true freedom, enhance your workspace, and get on the mission with Moft. **For the Art Loving Bitcoiner,** [*Kelly's Pick*](https://twitter.com/KellySharadin) ![](https://www.datocms-assets.com/56652/1702412452-btc-art.png?auto=format) Explore the unique allure of EssenceOfBitcoin.com, a treasure trove designed specifically with Bitcoin enthusiasts in mind.  Each item is crafted to resonate with the ethos of the Bitcoin community. For those who appreciate the finer details, the site features elegant Bitcoin-themed accessories and artwork, making it the ideal destination for finding that special, bBitcoin-centric gift.  With [EssenceOfBitcoin.com](https://essenceofbitcoin.com/), celebrate the holidays by embracing the revolutionary spirit of Bitcoin and sharing it with friends and family. **For the Golfer,** *Bob's Pick* ![](https://www.datocms-assets.com/56652/1702412538-bitcoin-gold-coin.jpg?auto=format) Every golfer needs a ball marker. Why not use a [physical Bitcoin](https://www.amazon.com/Bitcoin-Commemorative-Limited-Collectible-Protective/dp/B07C8GD83W/ref=sr_1_5?keywords=bitcoin&sr=8-5)? It shines on the green and has enough weight to stay planted. **For the Bitcoiner Surfer,** [*Jon Chenot's Pick*](https://twitter.com/jonchenot?lang=en) ![](https://www.datocms-assets.com/56652/1702412610-surf.png?auto=format) Give the gift of a hand-crafted, custom-made [Chenot surfboard](https://www.chenot.co/) from Santa Barbara, CA, by Matt Chenot. He accepts Bitcoin and will craft a remarkable piece of functional art for your loved one this holiday season! Take it a step further and consider gifting them a game like this [Mexican Train Domino's Set](https://a.co/d/bSc4VXR). It is small enough for travel and by far the most fun group game to play on surf trips. **For the Low-Time Preference Appreciator,** *Ashley's Pick* ![](https://www.datocms-assets.com/56652/1702507240-btc-watch.png?auto=format) [This timepiece](https://www.coinvigilante.com/products/coin-vigilante-bitcoin-watch-model-c) is designed for sound money enthusiasts. Your Bitcoiner gift recipient can wear their passion on their wrist.  **Fun Fact:** The case back includes detailed engraving of Bitcoin's Genesis Block Hash, the very first Bitcoin block to be mined - the beginning of time for sound money. **And last but not least…** **For YOU!** [*Swan's Pick*](https://twitter.com/Swan) Bitcoin education is truly the gift that keeps on giving and is a foundation pillar in all that we do. We are thrilled to gift you Yan Pritzker, Swan CTO's book, [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/), which provides a fantastic overview of how the Bitcoin system works. Claim your free 'Inventing Bitcoin' [eBook](https://www.swanbitcoin.com/inventing-bitcoin/).  ![](https://www.datocms-assets.com/56652/1702413219-inventing-bitcoin.jpeg?auto=format) We hope our Swan Bitcoin Holiday Gift Guide will help make your holiday season a Bitcoin one to remember!  There is so much to look forward to in the year ahead, and we couldn't be more thrilled to further the Bitcoin mission with our passionate community of clients and friends. **Note:** This blog post was not written to remain static.  If you have a Bitcoin-friendly, Bitcoin-affiliated business you'd like to see in this ***Swanish*** **Bitcoin Holiday Gift Guide**, please list your company on [BitList](https://www.bitlist.com/). You might see more Bitcoiners shopping for your products this holiday season!  ### Alex Davani Alex, a member of the Swan Marketing team, is an entrepreneur at heart who somehow always finds herself in techy environments. The busy body that she is, led her to start a marketing agency as a side hustle while leading business development efforts for a data and analytics platform with major automotive brands and auto group clients. During that time she also took up a more serious interest in Bitcoin, not crypto. After stumbling across Natalie Brunell’s first Coin Stories interviews, the first of its kind to really resonate with her as a female Bitcoiner, she reached out to Natalie and asked if she could help. The rest, as they say, is history! Alex aligns herself with a “bright orange” lifestyle and is most hopeful about the promise Bitcoin will bring to future generations. # A Recap of the 2023 Pacific Bitcoin Festival - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/2023-pacific-bitcoin-festival-recap/ Pacific Bitcoin redefines the boundaries of what an event could be by seamlessly blending the best of Bitcoin education, entertainment, and social connections. It was more than just a conference. --- **Nick Payton** · December 5, 2023 · Updated June 6, 2024 ![](https://www.datocms-assets.com/56652/1701813202-00329-z9-2-002_jv20711.jpg?auto=format) ### A Recap of the 2023 Pacific Bitcoin Festival For the second consecutive year, participants came together in sunny Santa Monica for the Pacific Bitcoin Festival. > “Pacific Bitcoin has been my favorite conference the past two years in a row. It stood above the rest.” > > — Lyn Alden #### Pushing the Boundaries Pacific Bitcoin redefines the boundaries of what an event could be by seamlessly blending the best of Bitcoin education, entertainment, and social connections. It was more than just a conference; it was an unforgettable festival celebrating Bitcoin. ### Highlights from Pacific Bitcoin > “Thanks Pacific Bitcoin. We had a blast!” > > — Max Keiser The West Coast was on full display for the melting pot of Bitcoiners who migrated to Santa Monica for our week-long festival. Guests attended the official PB Pleb party, enjoyed VIP dinners, and took in all that California had to offer.  The location added to the magic that makes Pacific Bitcoin so memorable. Many attendees watched sunsets on the beach, learned to surf, and participated in an outdoor workout during the Proof of Work side event.  The main event took place over two days at The Barker Hangar. Attendees indulged in in-depth conversations, presentations, basketball tournaments, LA food trucks, live music, and even a Bitcoiner speed dating event in the Swan Dome. Here is a roundup of some of the top moments from Pacific Bitcoin 2023: ![](https://www.datocms-assets.com/56652/1701814458-00563-z9-1-025_jv14305.jpg?auto=format) #### Bitcoin Mining Masterclass Mining is the backbone of the Bitcoin network, so we partnered with industry leaders to shed light on the innovation coming out of that sector. Fred Thiel, CEO of Marathon Digital Holdings, stepped onto the main stage and delivered a [masterclass on the benefits of Bitcoin mining](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWPUGY4RAf1GCMeVOWCbEpjUC3dzXfei0XnnbtSC-A9YHZTkhLLMy153rqCz9QKdJey8=). We’ve all seen the misguided headlines about how terrible Bitcoin mining is for the environment. Fred explained how Bitcoin mining is changing the world for the better: - Expanding renewable energy capacity - Strengthening the grid - Mitigating methane emissions - Repurposing waste heat to transform agriculture Bitcoin mining is quite simply ushering in a better future. #### One-of-a-Kind Musical Performance Lyrical genius [TIP NZ delivered a bone-chilling performance](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnV5rcI9JWtaoo44QRhRTXs7MiE3D8UTdAQutQr9uAB_mrylQVA3Q5u3BNIOVpZbaO-jc=), paying tribute to the mission behind Bitcoin. It evoked such emotion that the audience was almost unanimously brought to their feet, followed by thunderous applause that echoed throughout the venue. Attendees are already requesting an encore performance in 2024. ![](https://www.datocms-assets.com/56652/1701815067-00506-z9-1-025_jv14230-edit-edit.jpg?auto=format) #### Swan Vault – Our New Self-Custody Solution Vijay Boyapati, author of The Bullish Case for Bitcoin, is the newest member to join the Swan team.  After giving the first-ever [live presentation](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWCCMtPexplWIp5HHm_lHWsaUJ4kvlGwcN75vQPbIlIh5s6d92SMiEQl3UGJ8bRWWwec=) of The Bullish Case for Bitcoin, Vijay announced our latest product launch: Swan Vault. [Swan Vault](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWDRPoz1xnguOSRzulRx8L9nhXCQUXsXyIJ5eRAxPnXERjQXG4LyK3KlJx1u2eVJ2YUM=), created in partnership with Blockstream, is a seamless self-custody solution with support from Swan. Benefits include: - Best-in-class user experience - Collaborative multi-signature - Self-sovereign wallet recovery into Specter Desktop or Bitcoin Core for advanced users. Click here to [watch the launch video](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnVzG-LFVeHYAebAHXSxalx4KO19Lu3bJ2FusU-k--1WzzErS5fWm3mKHGqdJh-_F9oLc=) featuring Adam Back, Lyn Alden, and Yan Pritzker.  Ready to test Swan Vault? Please [join our priority list](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWDRPoz1xnguOSRzulRx8L9nhXCQUXsXyIJ5eRAxPnXERjQXG4LyK3KlJx1u2eVJ2YUM=). #### Volcano Energy at Mining Day We hosted a Mining Day at Pacific Bitcoin which brought together the top minds in the industry. Leaders from Marathon, Riot, Iris Energy, CleanSpark, Core Scientific, BitDeer, Braiins, and many other companies were in attendance. It was great to see leaders in the mining space sharing best practices with their *“competitors.”* Topics ranged from volcano energy, demand response, energy and infrastructure procurement, and a discussion on industry macro trends and portfolio construction. #### Cory Defends 3-Point Shooting Title on the Magic Money Court Magic Money Court was once again our most unique and exciting brand of programming.  The combination of live music, basketball competitions, and jiu-jitsu demonstrations added to the entertainment.   Cory Klippsten, Swan Founder and CEO, defended his 3-point contest title and participants competed in the 3-on-3 basketball tournament.  World champion Ben Askren conducted a live jiu-jitsu training seminar on the court, challenging attendees to a submission competition for a prize of 1M sats. > “Watching MMA / Olympian Ben Askren wrestle random people willing to try and earn a million sats to tap him out was probably one of the most satisfying things I’ve seen in a long time.” > > — Preston Pysh ![](https://www.datocms-assets.com/56652/1701814760-00397-z9-1-025_jv13915.jpg?auto=format) This is just a sample of the Pacific Bitcoin experience. You can watch the entire 14+ hours of main stage content from Swan’s YouTube channel [here](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnV1Ql-1xH_JVrmKo3Ax04jbGp1xZTZ63EmNJBhHz7wjdyINi4LJfdr8yBCkKelmsxLqQ=). It was hard not to be intoxicated by the collective optimism and talent in attendance at the 2023 Pacific Bitcoin Festival. Sponsors like [BTC Trading Cards](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnV-NkjPMYxZ2LD9s2Z59NCMdNxfZ7JlJwXZeEGiIfusjx4xiegQKFxeG7GnXh5Ga65EA=) and [SVRN Energy](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWCHhsOrehXFEU68w588PY4aanybTPSHRVuCMlWc3afjQwjiUZISJDfdl5vvFvwwh12Q=) drinks got in the Bitcoin spirit and gave back to the community with giveaways and unique memorabilia. When a large group of like-minded individuals get together, and share the same mission, it creates a vibe that cannot be matched.  We’re already gearing up for the 2024 festival during what is sure to be an exciting year ahead for Bitcoin.  A limited supply of [early bird tickets for Pacific Bitcoin 2024](https://link.swanbitcoin.com/ODc1LVhLUS02MzQAAAGO6bGnWKQwYjsyTWjPEEMWC792c4v66kpWab1QS-smfttvLWuKuitluNjCay8mQrBc06lMDi8=) are now on sale. These are the lowest prices we will offer and are fully refundable until February 1, 2024. ### Nick Payton Nick Payton is the Director of Marketing at Swan Bitcoin. He has operated his own consulting agency for over 10 years with a focus on digital campaigns for Fortune 500 companies. Nick's analysis is shared across social media and native content on Swan.com. He is focused on educating people on the benefits of adopting Bitcoin. # Bitcoin Core’s Development Priorities in 2023 - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/bitcoin-cores-development-priorities-in-2023/ Developers have been busy shoring up the Bitcoin Core node software. Here is what they are up to. --- **Evan** · October 23, 2023 · Updated June 6, 2024 Developing for Bitcoin Core can be a difficult path. Developers often forgo high paying software engineering jobs in order to advance the state of bitcoin technology. Additionally, the long delivery cycles can be demotivating; it takes years of effort to get a large feature or upgrade merged into the code base. If the feature involves a consensus change then it must clear the almost impossibly high bar of a soft fork activation. But being a Bitcoin Core developer can be very rewarding as well. For most, the prospect of advancing the state of freedom technology is highly motivating. Some Bitcoin Core developers have also shared that they are attracted to the intellectual challenge of doing meaningful work in a scientific domain that solves real world problems. They seek the opportunity to collaborate with an interesting and diverse group of peers who self organize according to meritocratic principles. Most of these developers pursue open source grants, which incentivizes them to commit to a particular project or area of focus in order to *"pitch themselves"* to grant committees. In order for a developer to get a code change merged, other developers must understand, test, and approve of the change. Now consider that Bitcoin Core developers are an amorphous, leaderless group. Each developer pursues their own goals and they loosely organize according to the principles of voluntarism. Given this, it can be very difficult to coordinate around large projects and features. What's more, there is a slow but steady trickle of contributors leaving for other projects or pursuits. In order for bitcoin to grow and thrive as the global monetary layer it needs to attract more developers than it loses and Bitcoin Core serves as a leading indicator in this regard. Starting this year at an in person meeting a group of developers began discussing these issues. The discussion continued in the weekly IRC meetings and, judging from the results, it has been very fruitful. This group started an initiative for the upcoming Bitcoin Core v26.0 release to prioritize a few large projects that will have an outsized impact on the scalability, flexibility, privacy, and usability of the bitcoin node software. Each project has a dedicated owner who is responsible for advancing the project with check-ins at the weekly IRC meetings and dedicated tracking issues in github. These developers are cognizant of the maintenance work that goes into keeping Bitcoin Core running smoothly: attestations of hard-coded data values, security backports, website changes, package management, and release process work. This maintenance work cannot be deprioritized but developers have agreed to pull more of their time and focus away from individual priorities to push forward four large and impactful projects. ### Package Relay Package relay aims to correct a fundamental problem with the design of the mempool. If you aren't familiar with the mempool, think of it as a storage area for unconfirmed bitcoin transactions. Each bitcoin node sends and receives new transactions to and from other nodes on the network. When a node receives a new transaction it validates the transaction using a set of rules called mempool policy, or just policy for short. If the transaction pays a high enough fee and doesn't break any of the policy rules, the node will store it in memory and forward it to other nodes it is peered with. These policy rules have to be carefully balanced to prevent DoS (denial of service) attacks on the bitcoin network. The primary problem with the current design is that it considers each bitcoin transaction individually for inclusion in the mempool. This worked fine in the early days of bitcoin before any off-chain protocols saw significant usage. With the growth of lightning and continuing research into other off-chain protocols the cracks in this system are starting to show. The security of lightning relies on node operators being able to get a transaction confirmed on chain within a limited time frame, even against the wishes of a motivated adversary. In an ideal mempool, a bitcoin user should be able to have their transaction confirmed in time simply by paying an appropriate fee. In trustless off-chain protocols such as lightning when a peer goes offline, or worse, if they turn malicious, the only way to unilaterally increase the fee of a presigned transaction is to use [child pays for parent (CPFP)](https://bitcoinops.org/en/topics/cpfp/) fee bumping. This requires the user to create a child transaction that spends an output from an unconfirmed parent transaction. Since the mempool only considers one transaction at a time for inclusion, this opens a lot of attack vectors. A savvy adversary can play games against their channel partner using the convoluted DoS-prevention policy rules. This is called [transaction pinning](https://bitcoinops.org/en/topics/transaction-pinning/) because the attackers' goal is to 'pin' the transaction in the mempool at a low fee rate, in a way where their channel peer can't bump the fee. If a transaction is successfully pinned, it will be stuck in the mempool until time runs out. If these games are successful then a malicious lightning node operator could steal from their channel peer. This is clearly a big problem for a 'trustless' protocol. [Package relay](https://bitcoinops.org/en/topics/package-relay/) is a redesign of the mempool policy logic and the peer-to-peer messaging protocol to allow multiple related transactions (a package) to be relayed and considered together for inclusion in the mempool. This is a much needed overhaul that will fundamentally strengthen the security guarantees of lightning and similar off-chain protocols. It doesn’t completely solve the pinning problem, however. There are two more upgrades under discussion ([version three transactions](https://bitcoinops.org/en/topics/version-3-transaction-relay/) and [ephemeral anchors](https://bitcoinops.org/en/topics/ephemeral-anchors/)) that build on package relay to eliminate even more pinning vectors. Package relay is an ambitious project--the mempool inclusion rules are complicated, conservative, and thorough for good reason; they protect the entire bitcoin network from being DoS attacked. It is not a simple task to update mempool policy to apply equally well to a package of transactions. Fortunately, we have a crack team on the job. Gloria Zhao, the Bitcoin Core maintainer focused on Mempool and Policy is the owner of this project. ### Libbitcoinkernel Software libraries are a powerful tool to create modular software stacks with strictly defined interfaces. Libbitcoinkernel is a proposed software library that aims to isolate the bitcoin consensus rules into a software library with its own release cycle. The bitcoin consensus rules determine which bitcoin blocks are accepted by the network as valid and which are rejected. This code is exceedingly difficult to change because bugs or regressions can result in a hard fork in the bitcoin blockchain, which would be disastrous for the stability, reliability, and public confidence in bitcoin. The consensus rules are currently spread around the codebase and touch a lot of areas that they don't need to. Centralizing these rules into a dedicated library that can be segregated from the rest of the codebase will open the door to far more development and experimentation with bitcoin node software. Libbitcoinkernel aims to ensure a high degree of confidence in the consensus logic, allowing node and wallet developers to focus on new design concepts and features that make different tradeoffs. For example, some bitcoin developers have expressed interest in writing a node implementation using rust, a very popular and modern systems programming language. Some Bitcoin Core developers are interested in designing a new peer-to-peer messaging stack, or a different wallet, or implementing a bitcoin node with no wallet. A consensus library will also unlock better security checks and features for hardware and mobile wallets. Libbitcoinkernel promises to open the door to explore a variety of different bitcoin node implementations and supercharge the development of the single most important piece of software in the bitcoin ecosystem. After being spearheaded by Carl Dong for years, Sebastian Kung has volunteered to become the owner of this project. ### BIP 324 BIP 324 is a proposed upgrade to the bitcoin peer-to-peer (P2P) protocol. This is the language bitcoin nodes use to talk to each other over the internet. Currently all P2P traffic is unencrypted and unauthenticated which opens the bitcoin network to a number of security vulnerabilities. It is possible to spy on a node's P2P traffic to compromise the identity of the node runner. An attacker can use a man-in-the-middle attack to intercept all of a node's traffic and potentially censor or tamper with the messages that node sends and receives. Without encrypted P2P messages it is not possible to conceal a bitcoin node from network analysis without additional software such as a VPN or a tor service. [BIP 324](https://bitcoinops.org/en/topics/v2-p2p-transport/) is intended to solve these problems by encrypting the P2P messages and adding random obfuscations that make it very difficult to identify whether the bitcoin protocol is even being used. The randomness will frustrate attempts to identify nodes through traffic analysis and in the future it could allow bitcoin P2P traffic to mimic other protocols such as HTTPS or SSH. This effort is complicated by the fact that P2P traffic must be backwards compatible and permissionless, which is not possible with an authenticated protocol. To maintain backward compatibility, the new encryption protocol must be opt-in, meaning all nodes will still be able to speak the unencrypted protocol. If two nodes both want to use BIP324 rules they can upgrade their connection, otherwise they will fall back to the old plaintext protocol. Preferential peering is not planned so node runners who do not want to use the new protocol won't have to. BIP 324 takes aim at a big hole in the security of the bitcoin network. It is a long awaited and much needed upgrade that will cement bitcoin's position as the world's most secure and sovereignty-preserving form of money for centuries to come. Bitcoin Core developer Dhruv Mehta worked on BIP324 for years but recently stepped away from Bitcoin Core development. Now, the inimitable Pieter Wuille is owner of this project. Pieter Wuille created the [secp256k1](https://github.com/bitcoin-core/secp256k1) library and was a critical contributor to both the [segwit](https://bitcoinops.org/en/topics/segregated-witness/) and [taproot](https://bitcoinops.org/en/topics/taproot/) network upgrades. On October 3rd 2023 the BIP324 code was merged into the Bitcoin Core codebase meaning that it will be available for use in the next software release, v26.0. ### AssumeUTXO AssumeUTXO is a new feature that aims to decrease the waiting period before you can start to use a new bitcoin node. When you first start a bitcoin node you must download and verify the entire blockchain. Before you can use your new node to transact on the network you need to compute the UTXO set, or the set of *"coins"* that are able to be spent. Your node does this by going through every bitcoin transaction in the blockchain and ensuring that it follows the rules. This process is called the initial block download, or IBD, and as anyone who runs a node can tell you, it is very time consuming, especially on old or underpowered hardware. [AssumeUTXO](https://bitcoinops.org/en/topics/assumeutxo/) is a proposed configuration setting that would allow a new node to import a file containing the UTXO set at a certain block height. The UTXO set changes with each block, so as part of the Bitcoin Core release process a block will be chosen that was known to exist for several months before the projected release date to ensure that there is ample proof of work burying the block. This makes it exceedingly unlikely for the chosen block to be reorganized out of the blockchain. The UTXO set corresponding to the chosen block height will be serialized (or converted) into a file, hashed, and the hash value will be attested to by a number of Bitcoin Core developers and included in the source code. AssumeUTXO will be a feature flag, so the truly paranoid can simply not download the UTXO set file or disable this feature before syncing their node. This proposal does not include a plan for how to package and distribute the UTXO set. Originally, when assumeUTXO was proposed it was scoped into several phases and this task was relegated to one of the later phases. But it is currently unclear who, if anyone, will own the latter phases of the project. When a new node starts up with AssumeUTXO enabled the UTXO set file will first be validated against the hash value included in the source code, then it will be loaded into memory and used to sync from the assumeUTXO block height to the most recent bitcoin block. Once the node has synced to the chain tip, it can be used to trustlessly send, receive, or validate new bitcoin transactions. After this, the node will start a background process that rewinds to the start of history and validates the beginning of the blockchain up to the assumeUTXO block height. With assumeUTXO, initial block download could decrease from weeks or days to hours or minutes, which should encourage many more people to run a bitcoin node. More nodes equals a stronger and more resilient bitcoin network. Bitcoin Core developer James O'Beirne, creator of the [OP_VAULT](https://bitcoinops.org/en/topics/vaults/) proposal, is the owner of this project. On October 2nd 2023 the final PR was merged into the main code repository, meaning this feature will be available for developer testing in the next release, v26.0. ### Conclusion With two of the four priority projects merged into the bitcoin core master branch for the next release, it looks like this initiative has been a resounding success. The developers seem to agree! They are already voting on priorities for the next release. As a bitcoiner and software developer, watching this loose collective of cypherpunks crush through obstacles, both technical and social, fills me to the brim with conviction. We are winning. We will change the money and, in doing so, we will change the world. Let’s fucking go. *The author would like to thank Murch and especially Fabian Jahr for helping to improve this article.* *This article was updated on October 31st to clarify that assumeUTXO will not be available for mainnet use in the next release.* Resources: - [https://btctranscripts.com/bitcoin-core-dev-tech/2023-04/2023-04-26-meta-discussion/](https://btctranscripts.com/bitcoin-core-dev-tech/2023-04/2023-04-26-meta-discussion/) - [https://twitter.com/dhruv/status/1648443886858309635](https://twitter.com/dhruv/status/1648443886858309635) - [https://github.com/bitcoin/bitcoin/pull/28331#event-10535599397](https://github.com/bitcoin/bitcoin/pull/28331#event-10535599397) - [https://github.com/bitcoin/bitcoin/pull/27596#event-10530618233](https://github.com/bitcoin/bitcoin/pull/27596#event-10530618233) - [https://github.com/bitcoin/bitcoin/issues/28599](https://github.com/bitcoin/bitcoin/issues/28599) ### Evan Evan is a software engineer at Swan, a bitcoin enthusiast, and North Carolina maximalist. When he's not writing code he's usually reading deep technical bitcoin literature in preparation for the next Triangle BitDevs meetup. On sunny days he can be found exploring the outdoors with his family. # Swan Announces Managed Bitcoin Mining Service URL: https://www.swanbitcoin.com/industry/swan-announces-managed-bitcoin-mining-service/ Swan Bitcoin launches Managed Mining service for institutional investors, announces strategic collaboration with Tether, targets 100 EH by 2026. --- **Swan Bitcoin** · May 7, 2024 · Updated June 6, 2024 Swan Bitcoin, a leader in Bitcoin mining innovation, is proud to announce the launch of Swan Managed Mining, a new bespoke approach for institutional investors seeking to allocate $100 million or more into the Bitcoin mining ecosystem. Swan provides its clients with fully segregated and dedicated mining operations, catering to their unique requirements, opportunities, and strategic advantages. “Large capital allocators don’t necessarily want to pool their capital with pre-existing mining operations, nor are they able or interested in acquiring all the skills, talent, experience, and time to learn how to stand up their own mining operation,” said Cory Klippsten, CEO of Swan. “This is where Swan Managed Mining comes in. We can take a large amount of capital and deploy it quickly and efficiently into a mining operation owned by the investor that meets their particular strategic requirements.” Swan Mining has demonstrated its ability to rapidly develop and deploy industrial-scale mining operations globally, deploying over $330 million since August 2023 and now operating over 7.5 EH, with contracts to build out to 19.5 EH this year. “By providing our clients with management services for their own separately established mining activities, they can grow their operations according to their own desires and opportunities,” added Raphael Zagury, Swan CIO and head of Swan Mining. “They can potentially depreciate their equipment, locate it in jurisdictions of their choice, work with partners they approve of, and receive real-time granular reporting of all the mining activities they own.” Managed Mining represents an innovative way to allocate resources and capital to mining. Clients gain instant access to deep expertise in each of the core competencies involved in Bitcoin mining, including financial modeling, site procurement, deployment, and machine optimization. Swan’s partnerships with leading ASIC manufacturers, power generators, mining pools, and hosting facilities allows Swan Managed Mining to deliver unparalleled economies of scale, speed of deployment, and operational efficiencies for clients. Swan is partnered with major investors and operators on four continents and is aiming for continued rapid expansion. Alongside its bespoke programs, the firm also plans to launch a fund to allow HNWIs, family offices, and smaller institutions to participate with investments in the $5-50M range. ### Expanding Collaboration with Tether Tether, the world’s largest digital asset company with $4.5B of profit in Q1, has collaborated with Swan to expand its involvement in the Bitcoin mining sector. Tether has already dedicated substantial capital to establishing a major presence in Bitcoin mining, much of it through Swan. Tether's significant commitment demonstrates the quality of execution and financial appeal of Swan’s model to large allocators of capital. Paolo Ardoino, Tether's CEO added: "The collaboration with Swan in the mining sector has exceeded our expectations. Swan's team has demonstrated an unwavering commitment to transparency and operational excellence, achieving rapid deployment of hashrate. We are thrilled about the future of this collaboration and the significant strides we are making together in advancing the mining industry." ### Vision for Growth With the official launch of Swan Managed Mining, the company foresees rapid expansion of its client base, with a target of more than 100 EH under management by the end of 2026. The company is currently in discussions with multiple large international institutions and invites interested parties to get in touch by writing to mining@swan.com. ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Asset Performance in Times of Conflict - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/asset-performance-during-times-of-conflict/ Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. --- **Sam Callahan** · June 3, 2024 · Updated June 6, 2024 While the outbreak of war is a stark reminder that the most precious things in life are nonmaterial, they simultaneously highlight the fact that global financial markets do not stop during times of conflict. In recent years, the escalation of geopolitical tensions, exemplified by conflicts in Eastern Europe and the Middle East, has underscored the persistent volatility facing the global markets. In light of this, it is imperative for investors to remain vigilant—safeguarding assets, retirement portfolios, and children’s inheritances against the backdrop of heightened uncertainty. Now, more than ever, it is crucial that investors are strategically positioned to navigate through these turbulent times. The question then arises: which asset allocations should investors consider during heightened geopolitical instability? To address this question, an analytical review of historical performance data during similar times can offer invaluable insights. Although each conflict brings unique challenges and historical performance does not indicate future results, identifiable patterns in asset behavior during past conflicts can provide strategic guidance. This analysis aims to equip investors with the knowledge to make informed decisions about asset allocation that may preserve and potentially enhance wealth in today's unpredictable environment. ### The Wartime Investing Environment Understanding the investment landscape in today's volatile market requires a deep appreciation of the prevailing economic environment. Commonly, two economic patterns emerge prominently during wartime: 1. RM Increased government spending andC 2. BM Increased inflation For example, consider the U.S. Civil War. Government spending increased to more than 30% debt-to-GDP at the height of the war. ![](https://www.datocms-assets.com/56652/1717419839-screenshot-2024-06-03-at-8-50-43-am.png?auto=format) To put this spending into perspective, government debt stood at $65 million before the Civil War, but by the end of the war, it had exploded to $2.6 billion, a forty-fold increase. This trend was echoed during World War II when government spending soared to more than 100% debt-to-GDP. ![](https://www.datocms-assets.com/56652/1717419863-screenshot-2024-06-03-at-8-50-52-am.png?auto=format) The national debt stood at $49 billion when the U.S. entered World War II. By the war's end, the national debt stood at $259 billion. In other words, the national debt quintupled over the course of the war. One way to fathom this amount is that if an individual spent $1 million per hour, 24 hours per day, 365 days a year, it would take them 576 years to spend as much as the U.S. did during WWII! And back then, a million dollars was a fortune. Such dramatic increases in government expenditure are not confined to the U.S.; historical data from the UK demonstrates similar spikes in defense spending as a percentage of GDP during major conflicts. ![](https://www.datocms-assets.com/56652/1717419904-screenshot-2024-06-03-at-8-51-00-am.png?auto=format) Notice in the chart above how spending as a percentage of GDP spikes with every major war conflict the UK has fought since 1692. Governments typically pay for their expensive wars by a combination of printing money (devaluing their currency), borrowing money, or raising taxes. Increased government spending is one reason why inflation is the other commonly observed economic feature in times of war. The chart below highlights how the U.S. CPI inflation rate has increased significantly around major wars throughout history. ![](https://www.datocms-assets.com/56652/1717419940-screenshot-2024-06-03-at-8-51-08-am.png?auto=format) ![](https://www.datocms-assets.com/56652/1717419984-screenshot-2024-06-03-at-8-51-19-am.png?auto=format) Outside of the increased government spending, war also leads to the fragmentation of global trade and disruptions in the global supply chain. This fragmentation raises the prices of items like oil, gasoline, food, and other commodities, which in turn causes more persistent inflationary pressures. We are already seeing signs that trade fragmentation is well underway. The IMF recently showed how fragmentation has negatively impacted world trade and income growth since Russia’s invasion of Ukraine. Trade between economies in politically distant blocs has slowed more than trade between those within blocs since the start of the war. This has resulted in a significant slowing in the growth in goods traded between the two blocs since the start of the war compared to the growth in goods trade within blocs. As we assess the economic landscape shaped by ongoing global conflicts, it's evident that we may face sustained inflationary pressures similar to those observed in past wartime periods. This is driven by escalating government spending and disruptions in global supply chains, further intensified by the fiscal strains of recent years. Since the onset of the pandemic, the U.S. recorded its highest deficits since WWII—15% of GDP in 2020 and 12.4% in 2021. In 2024, the deficit is on pace to exceed 6% debt-to-GDP, nearing the same level as the Global Financial Crisis. The trendline so far this century is unprecedented and alarming. ![](https://www.datocms-assets.com/56652/1717420010-screenshot-2024-06-03-at-8-51-34-am.png?auto=format) Looking ahead, the Congressional Budget Office (CBO) forecasts that the fiscal deficit will continue to rise, potentially reaching $2.6 trillion, or 6.1% of GDP, by 2034. ![](https://www.datocms-assets.com/56652/1717420024-screenshot-2024-06-03-at-8-51-41-am.png?auto=format) With inflation rates consistently surpassing the Federal Reserve’s target of 2% and no reduction in government expenditure on the horizon, the financial landscape is likely poised for persistent inflation. Given these conditions and considering the severity of current international conflicts—a scale we have not seen in decades—it is crucial for investors to identify asset classes that have historically performed well under similar economic conditions. Let’s now take a closer look at what asset classes have proven effective in preserving and growing wealth during past periods of geopolitical unrest and inflation. ### Stocks Although stocks are often considered a risk-on asset class, they have historically performed favorably in periods of conflict. [Analysis](https://blogs.cfainstitute.org/investor/2017/08/29/u-s-capital-market-returns-during-periods-of-war/) by Mark Ambruster, CFA, covering the period from 1926 to 2013, investigated how different asset classes performed during periods of war. His study found that U.S. large-cap stocks not only outperformed their long-term average returns during wars but also exhibited lower volatility while doing so. During World War II, the Korean War, and the Gulf War, U.S. large-cap stocks rose by an average of 15.7%, outperforming the average annual return of 10% from 1926 to 2013. The volatility of U.S. large-cap stocks during those times was 12.8% compared to 19% during the whole time period. ![](https://www.datocms-assets.com/56652/1717420058-screenshot-2024-06-03-at-8-51-50-am.png?auto=format) This unexpected resilience suggests that significant government spending during wars can boost domestic markets by enhancing company revenues and earnings despite the broader economic turmoil. It’s also worth noting that the stock market outperformed inflation in each of the wars shown above. This is a key takeaway because, as previously discussed, elevated inflation is a common occurrence during periods of war due to increased spending, global supply chain disruptions, and rising commodity prices. Therefore, it’s important to invest in assets that will protect your wealth in real terms in a highly inflationary environment like war. Furthermore, examining the initial market reactions to the last five major global conflicts reveals consistent patterns. Initially, investors typically react to the news of conflict with panic, leading to a market sell-off. However, the market then recovers within months and then exceeds previous highs within two years. This pattern is evident in five of the last six major global conflicts. ![](https://www.datocms-assets.com/56652/1717420072-screenshot-2024-06-03-at-8-52-17-am.png?auto=format) The Afghanistan War was the only outlier, which could be attributed to other factors related to the Dot-com Crash occurring around the same time as the start of the war. This pattern held true with the recent Russian invasion too. Following the invasion, the stock market experienced a sharp decline. It then bottomed a few months afterward and went on to make new all-time highs about two years later. This trend is again confirmed below when looking at more recent times of uncertainty. The stock market tends to drop on the news and then recover quickly. According to Cetera Investment Management, the average 1-year S&P 500 return after some more recent crisis events was 13.16%, and the S&P 500 was positive in the year following each crisis event, with the exception being the 9/11 attacks. ![](https://www.datocms-assets.com/56652/1717420099-screenshot-2024-06-03-at-8-52-29-am.png?auto=format) This historical resilience underscores the potential benefits of maintaining a well-diversified stock portfolio during times of war. It challenges the instinct to flee from equities in times of crisis, advocating instead for enduring short-term volatilities for long-term gains. As we navigate this era of heightened conflict and economic instability, understanding these patterns and strategically positioning investments in light of them could help investors safeguard and potentially grow wealth in uncertain times. ### Bonds Bonds are commonly regarded as a safe-haven asset; however, their performance during wartime suggests otherwise. During these periods, bonds tend to underperform relative to their long-term averages, primarily due to heightened inflation. During wartime, governments significantly increase borrowing to fund military efforts, thereby flooding the market with debt and diluting bond values. This increase in government borrowing can raise doubts about a nation's creditworthiness, pushing yields higher and bond prices downwards as a lure for investors. Historically, there is a negative correlation between bonds and inflation. As inflation escalates, bond yields often increase with it, which in turn drives down bond prices. When looking at historical periods when the U.S. experienced elevated inflation rates, the average real bond return was negative. ![](https://www.datocms-assets.com/56652/1717420156-screenshot-2024-06-03-at-8-52-40-am.png?auto=format) This trend continued in 2022 when CPI inflation hit multi-decade highs. The 10-year Treasury went on to have its worst performance in more than 200 years. ![](https://www.datocms-assets.com/56652/1717420172-screenshot-2024-06-03-at-8-52-49-am.png?auto=format) Periods of conflict present substantial inflation risk—also known as purchasing power risk to bondholders. Although bond investors will receive the full principal plus interest when their bonds mature, these returns often do not keep pace with inflation during times of war, diminishing the real value of the investment. This is why bonds have performed poorly compared to their average performance in times of war historically. According to the analysis from Mark Ambruster, CFA, bonds have lagged inflation and generated negative real returns in every major US war except the Gulf War. ![](https://www.datocms-assets.com/56652/1717420196-screenshot-2024-06-03-at-8-52-57-am.png?auto=format) Bond performance during and after WWII provides a perfect example of bonds’ lackluster real returns during periods of war. The chart below shows the nominal and real performance of bonds from 1941 to 1952. ![](https://www.datocms-assets.com/56652/1717420212-screenshot-2024-06-03-at-8-53-07-am.png?auto=format) As you can see from the chart above, 10-year Treasury investors received all of their principal plus interest in nominal terms, but this was not nearly enough to keep up with the high rates of inflation during the war. As a result, 10-year Treasury bondholders lost nearly 30% of their purchasing power in the decade following 1942. Bond investors were the big losers in WWII and the years afterward, underperforming nearly every other asset class between 1942 and 1952. The combination of increased borrowing, rising rates, and inflation creates significant headwinds for bonds during times of war, which is why bonds typically underperform other asset classes. ### Cash Wars are expensive. As such, governments tend to spend heavily during times of conflict to fund the war effort. This surge in expenditure often leads to currency devaluation, which presents a significant risk for wealth stored in cash. Under such circumstances, cash fails to keep pace with inflation and loses purchasing power. Simply put, the dollars that once afforded stability will inevitably decline in real value in a war-driven inflationary environment. Warren Buffett succinctly captured this reality in an interview when he said, *"The one thing you could be quite sure of is if we went into some very major war, the value of money would go down. I mean, that’s happened in virtually every war that I’m aware of. So the last thing you’d want to do is hold money during a war.“* Given this reality, investors must consider more resilient alternatives to cash during times of heightened geopolitical unrest. Allocating to asset classes that traditionally outpace inflation can safeguard and potentially enhance wealth when currency values are pressured during times of conflict. This strategic shift is not just a safeguard but a proactive step towards ensuring that one's savings maintain their purchasing power amidst the economic disruptions caused by war. ### Gold Gold is traditionally viewed as a safe haven asset that investors turn to during periods of heightened uncertainty and geopolitical tensions. It is particularly sought after due to gold's status as a hard monetary asset—scarce and immune to the inflation risks that afflict fiat currencies. In times of war, when governments frequently resort to increased money printing and elevated spending, gold's allure intensifies as a hedge against inflation. Today’s environment is especially attractive for gold given the current sovereign debt levels. If governments have to ramp up their spending in response to rising geopolitical tensions, at a time when debt levels are already at historic highs, investors could become more worried about a potential debt crisis ensuing. In that scenario, demand for gold could accelerate as its lack of counterparty risk really shines. An analysis of gold’s performance during various conflicts reveals a pattern: gold typically appreciates sharply at the onset of hostilities as investors flee to safety on the news. However, this spike is often temporary, as demonstrated by historical price corrections once the immediate uncertainties of conflict diminish. Below is a chart of some major conflicts in the past with the gold’s 1-year return from the start of each crisis. ![](https://www.datocms-assets.com/56652/1717420244-screenshot-2024-06-03-at-8-53-18-am.png?auto=format) Investors appear to rush to gold at the height of panic and uncertainty when many unknowns remain. Yet after clarity comes into view about the nature of the crisis, on many occasions in history, the gold price falls back towards its pre-war price levels, and in some cases, even drops lower. For instance, gold prices rallied 10% at the outbreak of the Gulf War, only to fall back below their pre-war price levels a year later when the war turned out to be less serious than originally expected. Another example of this trend occurred with the recent Russian Invasion of Ukraine. Initially, gold rose about 5% in the week following the news, only to drop nearly 4% over the next 12 months. Despite these fluctuations, gold tends to regain its appeal as the duration of heightened geopolitical risks lengthens. This resurgence is attributed to prolonged wars exacerbating inflationary pressures, leading governments to borrow extensively or debase their currencies. For example, since the escalation of the Russian invasion and rising tensions in the Middle East, gold prices have appreciated by 22%. ![](https://www.datocms-assets.com/56652/1717420262-screenshot-2024-06-03-at-8-53-29-am.png?auto=format) This performance underlines gold's dual role: as a short-term safe haven reacting to immediate crisis-driven demand, and as a long-term store of value in the face of sustained geopolitical risks. Moreover, gold offers unique security advantages. Unlike stocks and bonds, physical gold held by investors incurs no counterparty risk. This attribute is particularly valuable in times of war, providing a level of security and control that stocks and bonds cannot match. However, investors should be cautious if gold is stored in third-party facilities, such as bank vaults, where it could be susceptible to theft or confiscation. Overall, gold's historical performance during wartime and its inherent monetary properties affirm its status as an effective hedge against inflation. These characteristics make it an appealing addition to well-diversified investment portfolios, especially during periods of prolonged geopolitical instability. ### Bitcoin The recent developments in Eastern Europe and the Middle East have catapulted Bitcoin into the spotlight as a new safe haven for people to protect themselves against confiscation, censorship, and inflation during periods of increased geopolitical tensions. This narrative came to the forefront when Western governments enforced sanctions against Russia after their invasion of Ukraine. As the banks closed, ATMs were drained, and payment firms like Visa and Mastercard shut down their operations, many Russian civilians turned to the only open-source monetary network available to them, Bitcoin, to transact with the outside world and flee their wartorn country with their wealth. ![](https://www.datocms-assets.com/56652/1717420280-screenshot-2024-06-03-at-8-53-37-am.png?auto=format) The same dynamics occurred on the other side of the battlefield as Ukrainians tried to flee the warzone with their wealth. In times of war, refugees typically have to leave places quickly with only what they can carry. Luckily for them, Bitcoin is highly portable and can be stored in one’s head if need be. As a result, we saw Bitcoin trading volumes spike in Ukraine at the onset of the war. Bitcoin was trading at nearly a 10% premium on a number of Ukrainian exchanges against the Ukrainian hryvnia. ![](https://www.datocms-assets.com/56652/1717420297-screenshot-2024-06-03-at-8-53-46-am.png?auto=format) As geopolitical tensions intensified with the Russian invasion and escalating conflicts in the Middle East, Bitcoin exhibited significant price fluctuations. Initially, Bitcoin's value surged over 10% in the week following the invasion, driven by heightened market anxiety. However, it then declined by 40% over the subsequent 12 months. Despite these fluctuations, as the geopolitical risks have persisted, Bitcoin's demand has continued to rise, ultimately achieving a 68% appreciation and reaching new all-time highs. ![](https://www.datocms-assets.com/56652/1717420315-screenshot-2024-06-03-at-8-53-54-am.png?auto=format) Since Bitcoin is a relatively young asset, the verdict is still out on whether it can serve as a safe haven asset in times of global conflict. To some, Bitcoin remains a volatile risk-on asset, while for others, it acts as a lifeline to escape their war-torn countries. Unlike traditional asset classes, Bitcoin does not have the historical track record showing how it could perform in response to rising geopolitical conflicts. While it is still considered a relatively young and volatile asset, the ongoing global uncertainty has increasingly positioned Bitcoin as a viable hedge against geopolitical risks. Recent academic research, including studies by Bouri et al. (2017, 2020) and Aysan et al. (2019), underscores Bitcoin's growing relevance as a safe haven asset and an alternative in times when traditional financial systems fall short. Another recent [study published by the IMF](https://www.imf.org/en/Publications/WP/Issues/2024/04/05/A-Primer-on-Bitcoin-Cross-Border-Flows-Measurement-and-Drivers-547429#:~:text=Bitcoin%20cross%2Dborder%20flows%20respond,to%20avoid%20capital%20flow%20restrictions) provided further evidence that increased Bitcoin activity occurs as investors move away from risk assets, indicating that Bitcoin is being used by investors to hedge global uncertainty. Often labeled as “digital gold”, Bitcoin shares many attributes with traditional safe havens but with some added advantages pertinent to wartime conditions. It has a fixed scarcity, is difficult to seize, and is easy to move because of its digital nature. These features are particularly appealing in inflationary wartime environments and help individuals to maintain financial autonomy in unstable regions. The current geopolitical climate presents a pivotal test for Bitcoin's role as a reliable safe haven asset, resistant to inflation, confiscation, and censorship. Given its performance amid rising geopolitical tensions, investors should strongly consider the inclusion of Bitcoin in a well-diversified portfolio to mitigate risk and enhance returns. ### Conclusion Market responses to wartime and crises are notoriously difficult to predict and uncertain. Each conflict or crisis emerges under different market conditions, yet certain patterns consistently manifest. Notably, governments tend to ramp up spending, and global trade becomes fragmented, leading to sustained inflationary pressures. Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. These assets may not effectively preserve capital in such turbulent times. Investors are instead encouraged to diversify into assets that historically retain or increase in value during periods of inflation—gold, Bitcoin, and equities, for instance. While it is critical to recognize that past performance is not indicative of future results, analyzing how these asset classes have reacted under similar conditions can provide valuable insights. The hope is this analysis will help the reader navigate today's complex and uncertain financial landscape and make better-informed decisions to safeguard and potentially grow their wealth. ### Sam Callahan Sam Callahan is the Lead Analyst at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast. # What Bitcoin ETFs Mean for You - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/what-bitcoin-etfs-mean-for-you/ Bitcoin ETFs are here! --- **Swan Bitcoin** · January 8, 2024 · Updated March 17, 2025 ### Bitcoin: Beyond Traditional Investments Bitcoin stands apart from conventional investment assets like stocks and bonds. Unlike these, Bitcoin offers direct ownership, enabling individuals to hold, transfer, and spend it, like they can with cash. Stocks and bonds require intermediaries for transactions, which introduce fees, taxes, and the hassle of conversion. Bitcoin allows for direct, peer-to-peer transactions, eliminating these complexities. #### Bitcoin’s Exceptional Investment Performance Despite these differences, Bitcoin has captured the investment world’s attention. Financially speaking, Bitcoin has been the best-performing asset over the past 15 years. ![](https://www.datocms-assets.com/56652/1704744101-03.svg) Stock Comparison - PortfoliosLab Bitcoin’s performance has drawn the interest of America’s largest investment firms. Many applied to create Bitcoin ETFs – exchange-traded funds. These ETFs could attract lots of investors and capital, and can be expected to fuel further appreciation of the dollar value of Bitcoin. #### Bitcoin: The Digital Commodity As investments go, Bitcoin is much more similar to a commodity (like gold, other metals, grains and meats, crude oil, and the like). Like these other commodities, Bitcoin doesn’t generate dividends or interest payments, but it can be sold for cash. Like all commodities, its price at any given time is based on the convergence of buyers’ demand and sellers’ supply in a free market. However, Bitcoin also has several major distinctions from commodities. First, Bitcoin is digital. In fact, Bitcoin is the first digital commodity ever to exist. Although there are countless imitations and knock-offs, none have the history, integrity, absolute scarcity, user base, liquidity, or security of Bitcoin. ![](https://www.datocms-assets.com/56652/1704744191-04.jpg?auto=format) Second, unlike other commodities, the quantity of Bitcoin that exists and ever will exist is capped at a maximum supply. No matter how much the demand for Bitcoin grows, the supply will never exceed 21 million Bitcoins. (Each single Bitcoin can be split into one hundred million subunits, called [satoshis](https://www.swanbitcoin.com/how-many-sats-in-a-bitcoin/), just like each dollar can be split into one hundred subunits called cents.) ![](https://www.datocms-assets.com/56652/1704744219-05.svg) Cointelegraph Third, since it acts as a cash substitute, Bitcoin does not necessarily need to be sold for government-issued cash when you want to buy things with it. Finally, while it is impractical to take custody of actual commodities like large amounts of gold, pork bellies, or barrels of oil in your house, Bitcoin is actually quite easy to custody for yourself. ![](https://www.datocms-assets.com/56652/1704744336-06.jpg?auto=format) ### Understanding Bitcoin ETFs: #### Strictly an Investment Instrument Bitcoin ETFs are investment instruments allowing individuals to gain exposure to Bitcoin's market price. These funds are available through brokers that trade stocks, bonds, and various other commodity-tracking ETFs. #### The Differences Between Bitcoin ETFs and Direct Bitcoin Ownership **I. With ETF's you're not directly holding Bitcoin. The ETF is holding Bitcoins. Your broker is holding your ETF shares.** When investing in a Bitcoin ETF, **you do not directly possess or have access to Bitcoin.** Your financial institution acquires shares in the ETF, which they hold on your behalf. The ETF, not you, holds the actual Bitcoin. In fact, the ETF uses yet another party, a custodian, to hold the Bitcoin on their behalf. This lack of direct ownership does not allow for the ability to utilize, transfer, or spend the investment as you could with actual Bitcoin. **The only action you can take is to sell your ETF units for dollars.** ![](https://www.datocms-assets.com/56652/1704744366-07.jpg?auto=format) **II. ETFs charge management fees.** ETFs [charge fees](https://www.swanbitcoin.com/bitcoin-etf/). If you own Bitcoins directly, there is no charge to hold them as there are no middlemen. Over time ETF fees can compound and add up substantially. ![](https://www.datocms-assets.com/56652/1704744396-08.svg) **III. ETFs can only be bought and sold during stock exchange hours.** The markets that trade ETFs are only open on weekdays from 9:30am Eastern to 4:30pm Eastern, and are also closed on holidays. Occasionally these markets are temporarily shut down for technical, regulatory, or political reasons. On the other hand, [Bitcoin exchanges](https://www.swanbitcoin.com/bitcoin-exchanges/) are often available 24/7/365. The actual Bitcoin network itself, on which you can send and receive Bitcoins directly, has not had a single second of downtime in over 13 years. ![](https://www.datocms-assets.com/56652/1704744427-09.jpg?auto=format) **IV. ETFs have greater restrictions than real Bitcoin when realizing losses for tax purposes** Bitcoin offers a distinct advantage over Bitcoin ETFs in terms of tax strategy: Bitcoin ETFs are subject to tax rules that do not allow losses to be declared unless you remain out of the market for 30 days. However, real Bitcoin requires no wait; you can engage in tax loss harvesting instantly and without being out of the market! **V. ETFs are subject to the same tax rules as stocks and bonds.** If you want to access the purchasing power of ETF units you must sell them, thereby converting them into U.S. dollars. This triggers a taxable event that must be recorded and reported (unless the ETF units are held in a tax-sheltered account such as an [IRA](https://www.swanbitcoin.com/peter-thiel-ira/)). Meanwhile, you can use Bitcoin anywhere in the world, anytime with anyone who wants to accept Bitcoin as a form of payment. Bitcoin is, however, subject to the same tax rules as property (IRS 2014-21) in the United States, and is considered a commodity like gold, oil, or corn. In some other jurisdictions, Bitcoin is also considered legal tender and can be used as a form of payment (with potential tax considerations). Note: If you'd like to hold Bitcoin in your retirement portfolio check out our [Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/?utm_medium=organic&utm_source=blog&utm_campaign=bitcoin_etf_blog) retirement calculator and open an account in less than 2-minutes or [book a call](https://calendly.com/d/yvk-2sq-x59/swan-ira-consultation?utm_medium=organic&utm_source=blog&utm_campaign=bitcoin_etf_blog) with one of our specialists. **VI. With ETFs, you must rely on the honesty and competence of middlemen that stand between you and the actual Bitcoins.** Bitcoin is a new type of asset designed to eliminate middlemen. It functions as person-to-person electronic cash that you can hold by yourself, providing unprecedented protection from theft, seizure, or dilution. Bitcoin ETFs do not provide these features of Bitcoin. ### Swan Bitcoin: Empowering Direct Bitcoin Ownership Owning actual Bitcoin rather than shares in an ETF steers clear of many of the fees, inconveniences, and risks associated with Bitcoin ETFs. #### Diverse Custody Options: When you purchase pure Bitcoin from Swan, we give you a choice. You can hold it directly yourself, have a qualified custodian hold it directly in a trust legally belonging to you, or use our “collaborative” custody solution, [Swan Vault](https://www.swanbitcoin.com/vault/), that enhances security. You can switch between these different options whenever you want with no switching fees. We will provide you with extensive training and education to let you use Bitcoin the way it was intended. Note: Individuals or entities buying over $100,000 worth of Bitcoin in a year qualify for [Swan Private](https://www.swanbitcoin.com/private/) which includes a personally dedicated expert to answer your questions and execute buys for you. You can set up an [introductory call](https://calendly.com/swant/21) at swan.com/private. ### We Want to Help You Experience All the Benefits of Bitcoin Bitcoin represents a very exciting new breakthrough: It is money that does not suffer from the loss of long term purchasing power known as inflation. It is money that you can send to anyone, anywhere in the world, without relying on any intermediaries. It has many other extraordinary and even hard-to-believe features. This breakthrough and its associated advantages are being discovered by more and more people each day. As the adoption, acceptance, and value of Bitcoin grows you’ll enjoy and appreciate the benefits of owning actual Bitcoin. ### Swan Bitcoin Swan delivers elite service from a dedicated team of Bitcoin professionals, providing strategic guidance and valuable insights for discerning investors. This expert guidance is reinforced by world-class research that helps investors build lasting conviction. We bring our community together through exclusive events that connect clients with industry leaders and fellow investors in sophisticated settings. # Digital Asset Reserves: Bitcoin Stands Alone - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/digital-asset-reserves-bitcoin-stands-alone-in-long-term-value-preservation-and-s/ Bitcoin is the only digital asset that meets the necessary criteria for a sovereign reserve, given its decentralization, liquidity, security, and geopolitical significance. --- **Ben Werkman and Lyn Alden** · March 7, 2025 ### The Week of the Strategic Bitcoin Reserve Ever since President Trump delivered his keynote address at the Bitcoin 2024 Conference in Nashville, discussions about a Strategic Bitcoin Reserve have dominated the internet, igniting debates about the role of digital assets in national reserves. At the same time, the broader digital asset community has been actively lobbying for inclusion in any future reserves. On March 2, 2025, President Trump took to social media and provided a glimpse into the current thinking of the administration by announcing his intent to establish a Crypto Strategic Reserve consisting of Bitcoin, Ethereum, XRP, Solana, and Cardano.  ![](https://www.datocms-assets.com/56652/1741371829-screenshot-2025-03-07-at-12-20-02-pm.png?auto=format) This decision initially seemed to mark the beginning of a broad nation-state accumulation of digital assets, placing several digital assets alongside traditional reserves such as gold and foreign currencies in global financial strategies. This announcement raised many fundamental questions: - How have these assets performed over multiple market cycles? - What role should each asset play in a sovereign reserve strategy? - What makes an asset strategic, and what ethical considerations exist? - Does Bitcoin’s unique properties make it a truly superior reserve asset? Then, on March 6, 2025, the tone shifted with the announcement of the “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile” Executive Order. The split between the assets in the announcement signaled a clear delineation in how the administration views them. The treatment of each is what truly made the line in the sand clear.   The Bitcoin Strategic Reserve establishes that Bitcoin in the Reserve shall not be sold. It also authorizes the Secretaries of Treasury and Commerce to develop budget-neutral strategies for acquiring additional Bitcoin as long as those strategies impose no incremental costs on American taxpayers. Perhaps more interesting is the use of the word “shall” in the phrasing. ![](https://www.datocms-assets.com/56652/1741371868-screenshot-2025-03-07-at-12-20-11-pm.png?auto=format) While this may just seem like semantics to many, the use of “shall” in Section 3(c) of the executive order informs the Secretaries this is not optional, they are required to develop these strategies.  It clearly signals an intention to add Bitcoin to the reserve over time. There are no such provisions for the Digital Asset Stockpile. This clear differentiation is deafening.  It tells the world that Bitcoin is truly strategic as a reserve asset, with The White House going as far as educating the world that Bitcoin is Digital Gold and elaborating on the benefits of a fixed supply.  Additionally, it was even highlighted that the prior sales of Bitcoin by the United States have already cost the U.S. taxpayers over $17 Billion!  Did we ever think we would see the day when the White House took over Bitcoin education efforts globally?   ### What Does the Data Say? With this shift in policy, it is worth exploring whether the data backs up the decision of the Administration to separate the asserts.  To do this, let’s analyze two historical model portfolios, one that begins on January 1, 2018, and another that begins on January 1, 2022. These starting points represent the first full year after bull market peaks of Bitcoin’s historical four-year price cycles. Working from these starting points allows us to examine the performance of each asset over time. This overview provides a data-driven glimpse into how these digital assets have evolved over time, offering insights into asset composition, long-term value retention, and other considerations for large-scale sovereign investments. To build our portfolios, we will focus on the five dominant digital assets (excluding stablecoins and exchange tokens) by market cap to align with the initial indication of the first announcement made by President Trump about the “Crypto Strategic Reserve”.  Once the assets are selected, they will be market cap weighted at initial inclusion.  In taking this approach, we ensure we highlight the digital assets that have captured market share and excitement amongst investors, allowing us to follow their journey from each portfolio’s initial allocation to see how each asset performed up to the current day. ### Portfolio #1: January 1, 2018 ![](https://www.datocms-assets.com/56652/1741372509-screenshot-2025-03-07-at-12-20-28-pm.png?auto=format) (Data Source: [CoinMarketCap](https://coinmarketcap.com/historical/20180101/)) #### Portfolio Valuation on March 1, 2025 ![](https://www.datocms-assets.com/56652/1741373320-screenshot-2025-03-07-at-12-20-47-pm.png?auto=format) Total Portfolio Value: $4,317,931 Total Portfolio Gain: +$3,317,931 Gain/Loss (%): +331.8% #### Reviewing the 2018 Portfolio’s Performance The first portfolio reflects allocations across Bitcoin, XRP, Ethereum, Bitcoin Cash, and Cardano, as these were the top five assets by market cap as of January 1, 2018. Over the past 86 months, a performance analysis reveals several key insights: - Four of the five assets gained at least some value since 2017, while the remaining asset, Bitcoin Cash, suffered catastrophic losses of 86.6%.  - Among the appreciating assets, Bitcoin was the only one to increase its overall share of the portfolio, rising from 51.2% to 80.7% (+29.5%).  - In contrast, despite positive returns, XRP and Ethereum saw their allocations decline (-15.1% and -4.2%, respectively) as Bitcoin absorbed capital, increasing its dominance. This underscores a fundamental principle when evaluating a strategic reserve: *If the primary asset is also the best-performing asset, the reserve will naturally concentrate around it over time.* It also raises an important policy question for the U.S.: *If Bitcoin continues to dominate performance over the long term, would the U.S. resist the temptation to rebalance into underperforming assets by selling its best-performing store of value to diversify back into weaker alternatives?* #### Asset-Specific Performance Review - **Bitcoin (BTC):** The clear leader in long-term value retention, appreciating 580.9% over this period. Bitcoin not only outperformed all other assets but also absorbed value from the declining altcoins, reinforcing its status as the premier choice as a digital reserve asset. - **XRP:** Over 86 months, XRP only managed to increase in value by 17.1%, ultimately resulting in XRP’s weighting in the portfolio being massively eroded over time as Bitcoin emerged dominant. XRP remains heavily reliant on regulatory outcomes and the influence of Ripple Labs, introducing centralization risks for any national reserve strategy. - **Ethereum (ETH):** A strong performer, delivering 223.6% returns, but still a distant second to Bitcoin. Its monetary policy shifts, centralized development leadership, and smart contract risks raise concerns about its suitability and dependability as a sovereign reserve asset. Despite Bitcoin’s outperformance, ETH did ultimately claim the #2 spot in the portfolio from XRP in the end. - **Bitcoin Cash:** Bitcoin Cash failed as a long-term store of value. Initially promoted as a “better alternative” to Bitcoin, it collapsed in value by -86.6%, proving irrelevant in the store-of-value conversation. - **Cardano:** Despite a modest 73.7% gain over the period, Cardano saw its weighting in the portfolio dwindle to below 1% of the total.   The takeaway here is clear: Bitcoin’s increasing dominance in the portfolio was not an arbitrary outcome but a reflection of its superior monetary properties and consistent long-term adoption trend as a store of value asset.  Based on this portfolio, the administration got it right with the executive order. ### Portfolio #2: January 1, 2022 ![](https://www.datocms-assets.com/56652/1741373732-screenshot-2025-03-07-at-12-21-20-pm.png?auto=format) (Data Source: [CoinMarketCap](https://coinmarketcap.com/historical/20220101/)) #### Portfolio Valuation on March 1, 2025 ![](https://www.datocms-assets.com/56652/1741373815-screenshot-2025-03-07-at-12-21-41-pm.png?auto=format) #### Reviewing the 2022 Portfolio’s Performance The 2022 portfolio is shorter at ~40 months and also represents a market cap-weighted initial allocation of the top five non-stablecoin, non-exchange-created digital assets as of January 1, 2022. By this point, the crypto market had already experienced multiple boom-and-bust cycles, allowing both projects and narratives to mature or fade based on their perceived long-term viability. Notably, this portfolio mirrors the same assets initially identified by President Trump for the proposed Crypto Strategic Reserve, demonstrating that each asset included has at least remained relevant over this past market cycle. When we look at the performance of this portfolio, we can make a few observations: - Only two assets, Bitcoin and XRP, achieved positive returns during this period, while Ethereum, Solana, and Cardano all suffered declines. - Bitcoin significantly increased its share of the portfolio, rising from 60.5% to 77.3% (+16.8%), while Ethereum's share dropped from 30.1% to 13.1% (-17.0%), despite remaining the second-largest asset. - XRP delivered the highest individual return (+229.6%), but its gains were concentrated in the final 3.5 months of the period, as seen below.  #### Asset-Specific Performance Review - **Bitcoin (BTC):** The strongest performer, appreciating 95% over the period. Bitcoin not only outpaced all but one other asset but also absorbed capital dominance, reinforcing its role as the anchor of any digital asset reserve strategy. - **Ethereum (ETH):** A disappointing underperformer, losing -33.6% of its value despite the reignited interest in cryptocurrencies and tokenization.  - **Solana (SOL) & Cardano (ADA):** Massive underperformance, dropping -5.3% and -25.9%, respectively. While both networks were once heralded as Ethereum challengers, they have struggled to maintain adoption and suffered from network instability, governance risks, and ecosystem slowdowns. - **XRP:** The best-performing asset in the portfolio (+229.6%), though heavily skewed by late-cycle regulatory optimism following the Trump administration’s stance on crypto policy, which brought renewed regulatory optimism to the asset.  Prior to the election results, XRP had suffered setbacks resulting in previously being delisted from trading on Coinbase and other exchanges as of January 2023 due to an SEC investigation, only to be reinstated in July 2023.  Since relisting, the price had been a slow grind down until the election reignited hopes for a more favorable environment for the asset.  However, despite the asset’s recent performance, one important question arises: Should the US really be bolstering the capital position of a single private entity? ![](https://www.datocms-assets.com/56652/1741373923-screenshot-2025-03-07-at-12-21-55-pm.png?auto=format) This performance dynamic further reinforces the core principle of reserve asset management: *A well-structured strategic reserve must consider not just short-term performance but also long-term durability. What is the appropriate track record an asset should show in order to garner consideration for something as important as a strategic reserve?* When we take this principle into account, Bitcoin stands alone as the most appropriate Strategic Reserve Asset. #### The Resilience of Bitcoin in a Maturing Market The 2021 portfolio underscores a repeating pattern seen now across multiple Bitcoin cycles: - Bitcoin continues to absorb dominance as weaker assets struggle for sustained relevance and investor capital. - The idea of diversifying reserves across multiple digital assets may introduce more risk than stability, as most altcoins fail to match Bitcoin’s long-term resilience as a store of value and seem entirely dependent on the hope of favorable treatment by governments instead of building a long-term track record of independent success and adoption. - If Bitcoin remains the best-performing asset, does a reserve strategy truly benefit from any of the others? ### The Strategic Imperative When we think of strategic reserve assets, the first that comes to mind is gold. For centuries, nations have maintained gold reserves as a pillar of economic stability and financial sovereignty. Gold’s scarcity, durability, and universal acceptance have made it the most trusted store of value across civilizations, allowing governments to hedge against currency devaluation, inflation, and economic crises. Unlike fiat currencies, which are subject to monetary manipulation and geopolitical risks, gold remains an apolitical asset that holds its value across generations. Its liquidity and deep global market allow nations to use it as a strategic reserve, reinforcing confidence in their financial systems and providing a safeguard against economic uncertainty. Additionally, gold’s lack of counterparty risk makes it unique as its value does not rely on any institution or government, reinforcing its role as a long-term financial anchor. This enduring reliability is why gold remains a cornerstone of central bank reserves worldwide, even as the global monetary system evolves. Using this framework for reserve assets, the question naturally follows: which digital asset is best suited to be included in a national reserve? The logical answer is Bitcoin, and the administration got this right in the Executive Order by highlighting Bitcoin as “Digital Gold.” Since its inception, the branding of Bitcoin as "digital gold" has established an undeniable link between the two assets. After all, Bitcoin was carefully engineered to perfectly embody the traits of a store of value, mirroring many of the qualities that have made gold indispensable: scarcity, durability, divisibility, fungibility, and non-sovereignty. Unlike gold, however, Bitcoin adds portability, verifiability, and an unforgeable monetary policy, making it arguably the first engineered perfect reserve asset. There is no credible argument against Bitcoin's inclusion in a strategic reserve of digital assets.  The debate was rather about which other assets, if any, deserve a place alongside it. Bitcoin’s strategic importance is becoming undeniable. When Russia was cut off from the SWIFT network, nations worldwide witnessed firsthand the vulnerabilities of a financial system reliant on the U.S. dollar. This was an alarm bell signaling that nations must reevaluate their reserves to ensure they are not at risk of financial weaponization. As a result, countries are increasingly seeking alternative ways to transact outside of traditional monetary rails. It should be no surprise that Bitcoin has emerged as a topic of serious discussion amongst BRICS nations, El Salvador, Bhutan, and others. Many of these nations have already established Bitcoin mining operations, recognizing the need to participate in the world’s largest decentralized monetary network and ensure they have hashrate within their borders. Unlike fiat reserves held in Western banks, Bitcoin cannot be seized, censored, or frozen by foreign powers. As a result, nations are securing optionality and quietly integrating Bitcoin into their financial strategies to protect themselves from geopolitical risks. Bitcoin is already an asset of strategic importance; it has not yet been formally broadly declared as part of national reserves. That shift is only a matter of time. When one realizes that this shift is taking place, it is easy to understand the strategic importance of the United States's participation in the Bitcoin network. This maneuver allows the United States to head off the activities of other nations that seek to lower the importance of the US Dollar globally by ensuring that they have a major stake in the only truly decentralized monetary system of scale. Can the same be said for the other assets which were under consideration? The general answer is no. Bitcoin stands out among digital assets in many ways: **Decentralization and Legal Status:** Bitcoin is the most decentralized digital asset and in no way passes the Howey Test or otherwise meets the definition of a financial security. All coins were mined after the protocol was released to the public rather than pre-mined, with no special advantage given to the protocol's creator(s). It uses proof of work, which allows anyone with hash power to contribute to new block generation and, thus, new coin creation. **Scale and Liquidity:** Bitcoin has been the largest and most liquid digital asset for 16 consecutive years since its inception. It benefits from massive scale and network effects, which are tremendously important when it comes to competition between monies or communication protocols. Size and liquidity matter, especially at the scale of nation-state purchases and sales. **Immutability:** Bitcoin is the most immutable digital asset network. It has by far the most nodes of any network, and updates cannot be pushed to them. Many other cryptocurrencies have changed fundamental variables, such as monetary policy, whereas the Bitcoin network has maintained a rather consistent ruleset. Soft forks require a broad amount of consensus, and hard forks are nearly impossible to perform. **Censorship Resistance:** It’s the most difficult digital asset network to censor, which is relevant for nation-states to be able to move their coins and use the network as an open transaction method. Beyond that, even if it were to be censored, such as with a 51% mining attack, it’s possible to uncensor the network by bringing on new hashrate. Existing miners cannot forbid new miners from entering the competition, and so a large country or group of smaller countries that find themselves censored have options to uncensor their coins and re-enable their participation in the network. This is in contrast to proof-of-stake systems, where existing stakeholders can potentially censor a network and prevent new entities from becoming stakeholders, thus creating a permanent lock that requires a successful fork to escape from. **Resilience:** Proof of work is the most resilient against significant network problems. Proof-of-stake systems rely on circular logic, where stakeholders are defined by the current state of the ledger and the current state of the ledger is defined by stakeholders. As a result, if the network encounters a bug or otherwise goes offline, the primary way to restart the network is for major stakeholders to meet and coordinate a restart. By using energy as an external input for proof of work, Bitcoin avoids relying on circular logic, which allows it to recover from many critical errors via a bottom-up method of nodes and miners seeking out and building upon the chain that proveably has the most work put into it. Overall, both as a 1) large, liquid, and reliable store of value and 2) as a censorship-resistant transaction method, Bitcoin is uniquely capable among digital assets of serving a strategic purpose to nation-states. ### Ethical Considerations The majority of digital assets, outside of Bitcoin and a handful of others based on their creation method, are effectively digital securities. They often issue coins to founders and early investors, have an organization chiefly responsible for their ongoing maintenance, development, and advocacy, and use governance models such as proof-of-stake that operate similarly to shareholders. In that sense, a government choosing to buy one digital asset and not another is similar to its own sovereign wealth fund buying shares in some domestic companies and not others. What criteria should be used when effectively “playing favorites” in this sense? Especially when there are indeed pre-mined coins associated with founders and early investors. There are considerable conflicts of interest to consider as well, especially if leaders within the government that have input into the purchasing decisions were involved in those early activities and premines and thus are in a position to benefit themselves. One may argue that there is a similar conflict of interest with Bitcoin. In other words, a large holder of Bitcoin may advocate for a government to acquire Bitcoin as a strategic asset and thus benefit from the positive price action that may ensue. However, that’s no different than a gold holder advocating for a government to add more gold to its stockpile or to fill up its strategic petroleum reserve.  Ethically speaking, there are many landmines when purchasing digital assets with any sort of issuer or premine. Care should be taken to look for conflicts of interest among government leaders. Taxpayers can wind up serving as exit liquidity for digital asset insiders, with no strategic advantage provided to the nation-state or its citizens in the process. ### The Initial Reactions of Industry Leaders The initial announcement of the coming Crypto Strategic Reserve stood out for an interesting reason: industry leaders, who typically have financial stakes in various digital assets, are surprisingly unified in their stance. Despite their diverse interests, they advocated that the reserve should focus exclusively on Bitcoin.  Brian Armstrong, the CEO and Chairman of cryptocurrency exchange giant Coinbase, shared his thoughts on the announcement and threw his support behind Bitcoin. ![](https://www.datocms-assets.com/56652/1741374357-screenshot-2025-03-07-at-12-22-06-pm.png?auto=format) Tyler Winklevoss, the co-founder and CEO of cryptocurrency exchange Gemini, shared that only one asset meets the bar for a strategic reserve. ![](https://www.datocms-assets.com/56652/1741374380-screenshot-2025-03-07-at-12-22-11-pm.png?auto=format) Jeff Park, Head of Alpha Strategies and PM at Bitwise Asset Management, shared his thoughts from his position representing the world’s largest crypto index fund. ![](https://www.datocms-assets.com/56652/1741374397-screenshot-2025-03-07-at-12-22-16-pm.png?auto=format) Renowned entrepreneur, investor, and thought leader Raval Navikant also commented on the appropriateness of using American taxpayer money to provide exit liquidity for assets that are not truly decentralized. ![](https://www.datocms-assets.com/56652/1741374424-screenshot-2025-03-07-at-12-22-23-pm.png?auto=format) By now, I’m certain you can see the trend. There was general agreement that Bitcoin was the only digital asset that genuinely passes the test as a digital asset of true strategic importance to a nation warranting inclusion in a strategic reserve. Yet lobbying is an effective and pervasive approach in the USA, resulting in many unanticipated outcomes. However, with the Executive Order, we now see that the Administration also understood the difference between the different assets and arrived at Bitcoin as strategic to the nation’s long-term interests. ### Conclusion: Bitcoin is the Only Choice The United States has taken a decisive step with the announcement of a Strategic Bitcoin Reserve, a move solidified by an Executive Order that correctly distinguishes Bitcoin from other asset classes while granting the necessary authorizations to build this reserve. History has shown that monetary dominance belongs to the strongest, most resilient, and scarcest asset available. As the world transitions into a digital financial era, the U.S. faces a pivotal moment: embrace Bitcoin as a strategic reserve asset or risk falling behind as other nations recognize its unparalleled advantages. Bitcoin is the only digital asset that meets every essential criterion for a sovereign reserve: decentralized, highly liquid, the most secure network in existence, a proven store of value, and a powerful geopolitical tool. Just as gold once anchored national treasuries, Bitcoin now offers the U.S. a chance to reinforce economic sovereignty, hedge against monetary debasement (yes, even its own!), and establish dominance in the emerging digital financial system. The move is bold, and it shows the world the United States is looking forward and not relying on the present day or the past.  They recognized the value of Bitcoin publicly on the global stage and signaled to the world the undeniable message that Bitcoin is here to stay. ### Ben Werkman Ben Werkman is a long-time Bitcoin advocate and entrepreneur, with a background in commercial distressed credit, technology consulting and strategic finance. He currently specializes in advising corporations on Bitcoin Treasury solutions, helping companies navigate the intersection of Bitcoin and corporate finance. Recognized as a leading analyst in Leveraged Bitcoin Equity (LBE) strategies, Ben has extensively covered the rise of Bitcoin-focused public companies, including MicroStrategy (MSTR), Semler Scientific (SMLR), and Metaplanet (3350.T). His expertise places him at the forefront of the discussion on Bitcoin-enabled treasury management and corporate strategy. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Most Trusted Bitcoin Investment Sites 2026: Fees & Safety Compared URL: https://www.swanbitcoin.com/industry/bitcoin-investment-sites/ Swan, River, Strike, Cash App, Fidelity and Bitcoin ETFs compared on fees, custody and withdrawals (checked Oct 19, 2026), plus how to spot a trusted site. --- **Brandon Quittem and Drew** · July 7, 2024 · Updated October 23, 2026 The most trusted places to buy [Bitcoin](https://www.swanbitcoin.com/education/what-is-bitcoin/) in 2026 are regulated, Bitcoin-focused services that let you withdraw to your own wallet, such as **Swan, River and Strike**. Large brokers like **Fidelity** and **Cash App** are also solid choices. If you only want a fund that tracks the price, the [spot Bitcoin ETFs](https://www.swanbitcoin.com/education/bitcoin-etf-fees/) **IBIT and FBTC** charge 0.25% a year ([iShares](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust-etf), as of Oct 16, 2026; [StockAnalysis](https://stockanalysis.com/etf/fbtc), as of Oct 19, 2026). What matters most is not the brand but four things: regulation, custody, the ability to withdraw, and a long track record. *Disclosure: Swan is one of the companies compared below. We've used each company's published fees and treated them the same way.* ### Bitcoin investment sites compared (October 2026) - **Swan:** Bitcoin only. Fee to buy: 1% (no buy fee on a new client's first $250). Recurring buys: yes. Withdraw to your own wallet: free, can be automatic. Bitcoin IRA: yes. - **River:** Bitcoin only. Fee to buy: 1% per order up to $1 million, falling to 0.25% on orders over $15 million; a spread may apply. Recurring buys: free starting seven days after you set it up. Withdraw to your own wallet: yes, including Lightning. Bitcoin IRA: no in-house IRA. - **Strike:** Bitcoin only. Fee to buy: 0.89% on up to $4,999.99 a month, falling to 0.25% at $15 million and up, plus a target spread of 0.22%. Recurring buys: free after the first week. Withdraw to your own wallet: yes, on-chain and Lightning. Bitcoin IRA: no, per a competitor's comparison (Unchained, May 2026). - **Cash App:** Bitcoin only (plus stocks). Fee to buy: 2% under $500, falling to 0% at $2,000 and up, plus a 0–0.75% spread. Recurring buys: Auto Invest, free with no spread. Withdraw to your own wallet: yes, free at standard speed. Bitcoin IRA: no. - **Fidelity:** Bitcoin and a few other coins. Fee to buy: 1%. Recurring buys: no. Withdraw to your own wallet: yes, being rolled out gradually; network fee applies. Bitcoin IRA: yes, a Fidelity Crypto IRA (transfers out not allowed). - **Spot ETFs (GBTC, IBIT, FBTC):** funds that track the Bitcoin price. Fee: range between 0.25% to 1.5% a year, plus brokerage costs. Recurring buys: through a broker. Withdraw to your own wallet: no; you own fund shares, not Bitcoin. Bitcoin IRA: yes, in any IRA. Sources: Fees from each company's own pages, checked October 19, 2026: [Swan](https://www.swanbitcoin.com/fees/), [River](https://support.river.com/hc/en-us/articles/50055900679315-What-are-River-s-fees) (updated Aug 6, 2026), [Strike](https://strike.me/en/faq/what-are-the-bitcoin-trading-fees-on-strike/), [Cash App](https://cash.app/bitcoin/fees), [Fidelity](https://www.fidelity.com/crypto/help/trading/trading-fees). Withdrawal details: [River](https://river.com/llms.txt), [Strike](https://apps.apple.com/app/id1488724463), [Fidelity](https://www.fidelity.com/crypto/help/deposits-withdrawals/enabling-crypto-transfers) and [Fidelity](https://www.fidelity.com/crypto/help/deposits-withdrawals/sending-cash-crypto). Swan also offers optional custody plans, from free self-custody to [Swan Vault](https://www.swanbitcoin.com/vault/) at $30 a month up to $150,000, then 0.02% a month, capped at $500 ([Swan fees](https://www.swanbitcoin.com/fees/), as of Oct 19, 2026). Fidelity switched from a built-in spread to a separate 1% fee for trades from December 4, 2025 ([Fidelity](https://www.fidelity.com/crypto/help/trading/trading-fees)). [Video](https://www.youtube.com/watch?v=q7a4OsDkTmM&themeRefresh=1) ### Swan, River and Strike at a glance All three are Bitcoin-only. Here is how they differ, using the same published fees as above: - **Fee to buy:** Swan charges 1%, with no buy fee on a new client's first $250. River charges 1% per order up to $1 million. Strike charges 0.89% on up to $4,999.99 a month, plus a target spread of 0.22%. - **Recurring buys:** all three offer them. - **Withdrawals to your own wallet:** Swan's are free and can run automatically. River and Strike both support on-chain and Lightning withdrawals. - **Bitcoin IRA:** Swan offers a [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) with a 1% fee on buys and sells. River and Strike have no in-house IRA. ### How to tell if a Bitcoin investment site is trustworthy 1. **It's regulated where you live.** In the US, look for state money-transmitter licenses, a trust charter, or a custodial relationship that has these licenses. 2. **You can withdraw to** [your own wallet](https://www.swanbitcoin.com/education/best-bitcoin-wallet/)**.** A site that won't let you take your Bitcoin out is a red flag. [Robinhood](https://www.swanbitcoin.com/industry/robinhood-fees/) paid a $3.9 million settlement in California in 2024, partly over blocking customers from withdrawing their coins from 2018 to 2022 ([California AG](https://oag.ca.gov/node/591192), as of Sept 4, 2024). 3. **It's clear about** [custody](https://www.swanbitcoin.com/education/assessing-risk-in-bitcoin-custody/)**.** You should know who holds your Bitcoin, whether it's kept separate from the company's money, and whether it's ever lent out. 4. **It focuses on Bitcoin.** Bitcoin-only companies don't list hundreds of other coins or run risky lending schemes. Exchanges that list everything have more ways to fail. Bybit lost about $1.5 billion in a February 2025 hack the FBI attributed to North Korea ([BleepingComputer](https://bleepingcomputer.com/news/security/fbi-confirms-lazarus-hackers-were-behind-15b-bybit-crypto-heist), as of Feb 27, 2025). In September 2026, Bitget reported about $351.6 million in unauthorized transfers from some of its wallets and paused withdrawals; it said its user protection fund covers the loss ([Bloomberg Government](https://news.bgov.com/crypto/crypto-exchange-bitget-says-hackers-stole-352-million-2), as of Sept 25, 2026). 5. **It's been around.** Look for a track record through at least one bear market, such as 2022. 6. **Its fees are clear.** A fee shown up front is easier to compare than a hidden spread. ### Platforms that froze or lost customer funds, 2022 to 2026 The checklist above comes from real failures. Here they are in order, each with its source: - **June 12, 2022: Celsius** paused withdrawals and transfers on its platform, citing market conditions ([The Block](https://www.theblock.co/post/151522/crypto-lending-firm-celsius-pauses-withdrawals-and-transfers-citing-market-conditions), June 12, 2022). - **November 11, 2022: FTX** began Chapter 11 bankruptcy proceedings after a wave of withdrawals ([Al Jazeera](https://www.aljazeera.com/economy/2022/11/11/distressed-crypto-exchange-ftx-files-for-bankruptcy), Nov 11, 2022). Read [our analysis of the FTX collapse](https://www.swanbitcoin.com/analysis/the-ftx-fiasco-and-the-fallout-to-come/). - **2018 to 2022: Robinhood** blocked customers from withdrawing their coins, part of what led to a $3.9 million settlement with California in 2024 ([California AG](https://oag.ca.gov/node/591192)). - **February 2025: Bybit** lost about $1.5 billion in a hack the FBI attributed to North Korea ([BleepingComputer](https://bleepingcomputer.com/news/security/fbi-confirms-lazarus-hackers-were-behind-15b-bybit-crypto-heist)). - **September 2026: Bitget** reported about $351.6 million in unauthorized transfers and paused withdrawals ([Bloomberg Government](https://news.bgov.com/crypto/crypto-exchange-bitget-says-hackers-stole-352-million-2)). Each event hit funds held on the platform. That's why the ability to withdraw to a wallet you control, ideally automatically, is the first thing to check. ### Bitcoin-only platforms and multi-coin exchanges [Bitcoin-only](https://www.swanbitcoin.com/investing/5-reasons-to-focus-on-bitcoin-only/) companies sell one asset with a fixed supply and no issuer. Multi-coin exchanges make more money from trading activity, which means more incentive to list new coins and [push trading](https://www.swanbitcoin.com/investing/traders-lose-stackers-win/). For long-term savers, a Bitcoin-only service with automatic withdrawals to self-custody removes most of the risks that sank companies like FTX and Celsius in 2022. For more on how exchanges compare, see our [Bitcoin exchanges guide](https://www.swanbitcoin.com/education/bitcoin-exchanges/), our [Kraken review](https://www.swanbitcoin.com/industry/kraken-review/) and [how exchange listings work against holders](https://www.swanbitcoin.com/education/bitcoin-vs-altcoins/). ### Recurring buys and automatic withdrawals Buying a fixed dollar amount on a schedule, known as [dollar-cost averaging](https://www.swanbitcoin.com/investing/dollar-cost-average/), removes the need to time the market. It is also the cheapest way to buy on several of these services: River's and Strike's recurring buys are free after the first week, and Cash App's Auto Invest has no fee and no spread. Swan pairs recurring buys, a disciplined way to accumulate Bitcoin, with free automatic withdrawals to your own wallet. For how scheduled buying compares with investing all at once, see [recurring buys vs. lump-sum investing](https://www.swanbitcoin.com/investing/dollar-cost-averaging-vs-lump-sum-investing/). ![Pierre Rochard tweet from March 6, 2020 listing the advantages of an automated recurring buy: set it and forget it, remove cognitive biases, avoid the tax burden and fees of active trading, and get rich slowly](https://www.datocms-assets.com/56652/1674243753-pierre-tweet.png?auto=format) Twitter ![Swan Bitcoin tweet from November 1, 2022 showing the Swan app set to save $10 of Bitcoin every day and auto-withdraw 0.05 BTC to the user's wallet](https://www.datocms-assets.com/56652/1694551016-swan-dca.png?auto=format) ### Should you buy Bitcoin or a Bitcoin ETF? - **Choose an ETF** if you want Bitcoin in an existing brokerage or 401(k) and don't need to hold or move actual coins. US spot Bitcoin ETFs held about $109 billion in early October 2026 ([Cointelegraph, citing SoSoValue](https://cointelegraph.com/news/bitcoin-etf-meet-uptober-103-million-inflow-btc-up), as of Oct 2, 2026). IBIT alone held about $65 billion ([iShares](https://www.ishares.com/us/products/333011/ishares-bitcoin-trust-etf), as of Oct 16, 2026). See how the biggest funds compare in [IBIT vs. GBTC](https://www.swanbitcoin.com/analysis/ibit-vs-gbtc/). - **Choose real Bitcoin** if you want to hold your own keys ([how cold storage works](https://www.swanbitcoin.com/education/bitcoin-cold-storage/)), avoid yearly fund fees, and own an asset no company can freeze. [Video](https://www.youtube.com/watch?v=sZvhLDWjD_I&list=PLoB1eZWSVHVa9dbP7zgTl4sdrqBfabo1O&index=1) ### Frequently Asked Questions #### What is the most trusted Bitcoin investment site? There's no single answer. Look for regulated, Bitcoin-focused services that let you withdraw to your own wallet, such as Swan, River and Strike, or large brokers like Fidelity. #### Is a Bitcoin ETF safer than buying Bitcoin? It's simpler to hold in a brokerage account, but you own fund shares, not Bitcoin, and pay between 0.25% to 1.5% per year. #### Does Swan have a Bitcoin IRA? Yes. The Swan IRA charges a 1% fee on Bitcoin buys and sells, plus 0.02% of assets on the platform a month with a $20 minimum. Compare options in our [Bitcoin IRA guide](https://www.swanbitcoin.com/industry/crypto-iras/). #### Can you withdraw Bitcoin from Cash App to your own wallet? Yes. Cash App lets you withdraw Bitcoin for free at standard speed. However the withdrawal limits are very slow so many users report having funds stuck on Cash app for months before they can take custody of their entire Bitcoin position. #### Which Bitcoin platforms have frozen withdrawals? Celsius paused withdrawals in June 2022, FTX filed for bankruptcy in November 2022 after a wave of withdrawals, Robinhood blocked customer withdrawals from 2018 to 2022, and Bitget paused withdrawals after a hack in September 2026. ### Brandon Quittem Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the [parallels between bitcoin and mycelium](https://www.brandonquittem.com/bitcoin-is-the-mycelium-of-money/). ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Bitcoin Price Prediction 2026, 2030 & 2040: Analyst Forecasts (Oct 2026) URL: https://www.swanbitcoin.com/economics/bitcoin-price-prediction/ Bitcoin price predictions for 2026, 2030 and 2040 from Citi, ARK, Standard Chartered, Bernstein and VanEck, plus a scorecard of past forecasts. --- **Drew** · July 3, 2024 · Updated October 23, 2026 [Bitcoin](https://www.swanbitcoin.com/education/what-is-bitcoin/) traded at about [$82,900 on October 19, 2026](https://www.coindesk.com/price/bitcoin). That is roughly 34% below its [all-time high of $126,198](https://fortune.com/article/price-of-bitcoin-10-14-2026/), set on October 6, 2025. Big-name forecasts for the next 12 months range from $100,000 (Standard Chartered, end of 2026) to $125,000 (Bernstein, end of 2026), with Citi at $113,000 by October 2027. Their 2030 targets mostly fall between $500,000 and $760,000. *Swan doesn't predict Bitcoin's price. This page reports forecasts that analysts and firms have published, with their dates and sources, and checks past forecasts against what actually happened. It is not investment advice.* This page collects the latest published forecasts, the date each one was made, what each target would mean for your money and how earlier calls held up. We update it every quarter. *Price predictions are opinions, not guarantees. Nothing here is investment advice.* ### Bitcoin price predictions at a glance - **Standard Chartered:** $100,000 by the end of 2026 (published Feb 2026; said in Aug 2026 it "may be too low") - **Citi:** $113,000 within 12 months, to October 2027 (Oct 2026; up from $82,000) - **Bernstein:** $125,000 by the end of 2026, then $150,000 by mid-2027 (Aug 2026) - **JPMorgan:** $266,000, long term, not 2026 (Feb 2026) - **Standard Chartered:** $500,000 by 2030 (Dec 2025) - **ARK Invest:** $300,000 bear, $710,000 base and $1.5 million bull case for 2030 (Apr 2025) - **ARK Invest (Big Ideas 2026):** about $16 trillion market cap by 2030, or about $760,000 per coin (Jan 2026) - **Bernstein:** about $1,000,000 by 2033 (Aug 2026) - **Bitwise (Matt Hougan):** $1,300,000 by 2035 (Sep 2025) - **Michael Saylor:** $21,000,000 by 2046 (Jun 2025) - **VanEck:** $130,000 bear, $2.9 million base and $53.4 million bull case for 2050 (Jan 2026) ### Where Bitcoin stands in October 2026 - **Price:** about $82,900 on October 19, 2026. It was down about 26% from a year earlier as of October 14. - **All-time high:** $126,198 on October 6, 2025. That came about 534 days after the [April 2024 halving](https://www.swanbitcoin.com/education/bitcoin-halving-dates/), close to the timing of earlier cycle peaks. - **2025:** Bitcoin finished the year at $87,509, down about 6%. It was the first year after a halving that ended negative. - **2026 so far:** Bitcoin fell about 54% from its peak to a low near $57,800 in the last week of June. As of October 19 it was about 43% above that low. - **Who holds it:** [US spot Bitcoin ETFs](https://www.swanbitcoin.com/education/bitcoin-etf-fees/) held [1,284,465 BTC as of October 16, 2026](https://bitbo.io/treasuries/us-etfs/) (about $106 billion at the October 19 price). Strategy (formerly MicroStrategy) held [848,517 BTC as of October 18](https://www.cryptotimes.io/2026/10/19/orange-stack-grows-michael-saylors-strategy-adds-267-bitcoin-repurchased-193m-in-strc/). The US Strategic Bitcoin Reserve, created by executive order on March 6, 2025, holds only forfeited coins and has not bought any. On October 14, 2026 the White House said it is [focused on securing the coins it already holds before any purchases](https://cryptobriefing.com/white-house-bitcoin-security-before-purchases/). [![Table of asset class total returns from 2011 to December 14, 2023, with bitcoin the top performer in most years](https://www.datocms-assets.com/56652/1702592025-bitcoin.png?auto=format)](https://bilello.blog/2023/the-week-in-charts-2-3-23) ### Bitcoin price prediction for 2026 and 2027 Short-term forecasts were cut sharply in 2026 as the price fell. Some have started to move back up. - **Standard Chartered** forecast $150,000 for 2026 in December 2025. In February 2026 it cut that to $100,000 and warned the price could first drop to $50,000. In August Geoff Kendrick of its research team said $100,000 ["may be too low."](https://crypto.news/standard-chartered-says-bitcoin-could-retest-126k-before-year-end/) The bank has not formally changed the target. - **Bernstein** expects about [$125,000 by the end of 2026 and $150,000 by mid-2027](https://en.coin-turk.com/bernstein-sets-125000-bitcoin-target-for-2026-citi-lifts-12-month-forecast/), with a bull case of $200,000. - **Citi** [raised its 12-month target to $113,000 on October 1, 2026](https://www.thecoinrepublic.com/2026/10/01/bitcoin-price-prediction-citigroup-raises-btc-price-target-to-113k/), up from $82,000 set in July. It expects about $5 billion of new money to flow into [Bitcoin ETFs](https://www.swanbitcoin.com/analysis/ibit-vs-gbtc/) over the next year, which it called ["slower but stickier."](https://www.forbes.com/sites/digital-assets/2026/10/02/a-wall-street-giant-just-flipped-on-bitcoin-issues-huge-2027-prediction/) - **Fidelity's** Jurrien Timmer [called 2026 an "off year,"](https://cointelegraph.com/news/fidelity-macro-lead-65k-bitcoin-bottom-2026) with support around $65,000 to $75,000, while calling himself a long-term bull. - **Tom Lee** (Fundstrat) said $200,000 to $250,000 was possible in 2026 if Bitcoin breaks its four-year cycle. ![Fidelity chart by Jurrien Timmer comparing bitcoin's price with its 2011, 2013 and 2017 cycle tops, data as of October 29, 2023](https://www.datocms-assets.com/56652/1699415692-timmer.jpeg?auto=format) [Post on X](https://twitter.com/TimmerFidelity/status/1801293915917623550) ### Bitcoin price prediction for 2030 Most large firms with a 2030 view put Bitcoin between $500,000 and $760,000. - **ARK Invest's** [April 2025 model](https://www.ark-invest.com/articles/valuation-models/arks-bitcoin-price-target-2030) gives $300,000 (bear), $710,000 (base) and $1.5 million (bull) for 2030. Its *Big Ideas 2026* report implies about $760,000 per coin. In May 2026 Cathie Wood said $750,000 to $1.25 million "in the next five years." - **Standard Chartered** still has $500,000 for 2030. It originally expected that by 2028 but [pushed the date back in December 2025](https://www.theblock.co/post/381892/not-crypto-winter-standard-chartered-halves-2025-bitcoin-target-to-100k-keeps-long-term-bull-case). - **Bernstein** expects a cycle peak around $300,000 in 2029, with a bull case of $500,000. [Post on X](https://twitter.com/alphaazeta/status/1779872845109084416) ### Bitcoin price prediction for 2040 and beyond Few institutions publish targets as far out as 2040. The best-known long-range calls are: - **Bernstein:** about $1 million by 2033. - **Bitwise:** [$1.3 million by 2035](https://cointelegraph.com/news/bitcoin-hit-1m-2035-bitwise-matt-hougan-thesis). - **Michael Saylor:** [$21 million by 2046](https://cointelegraph.com/news/michael-saylor-strategy-bitcoin-forecast-21-million-21-years). - **VanEck:** for 2050, a [base case of $2.9 million](https://decrypt.co/354168/bitcoin-price-could-surge-53-million-2050-vaneck-heres-why), with a bear case of $130,000 and a bull case of $53.4 million. The oldest long-range estimate is Hal Finney's. On [January 10, 2009](https://diswww.mit.edu/bloom-picayune/crypto/142207), he worked out that if Bitcoin became the world's main payment system, with household wealth of $100 trillion to $300 trillion and 20 million coins, each coin would be worth "about $10 million." It was a thought experiment, not a forecast. The math is worth knowing because it shows how [fixed supply](https://www.swanbitcoin.com/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/) drives the long-term case, and why Bitcoin is often compared with gold as a [store of value](https://www.swanbitcoin.com/analysis/bitcoin-vs-gold-store-of-value/). ![Table estimating bitcoin's potential share of a $900 trillion store-of-value market at $200 trillion, or about $10 million per bitcoin](https://www.datocms-assets.com/56652/1687502318-900t.png?auto=format) ### What these forecasts would mean for your money Here is what each target implies from the [October 19, 2026 price of $82,918](https://www.coindesk.com/price/bitcoin), assuming each target is reached at the end of its stated year (Citi's in October 2027). These are our calculations, not the forecasters'. - **$100,000 by end-2026 (Standard Chartered):** up about 21%. $1,000 would become about $1,206. - **$125,000 by end-2026 (Bernstein):** up about 51%. $1,000 would become about $1,508. - **$113,000 by October 2027 (Citi):** up about 36%. $1,000 would become about $1,363. - **$500,000 in 2030 (Standard Chartered):** about 6x, or roughly 53% a year. $1,000 would become about $6,030. - **$760,000 in 2030 (ARK, Big Ideas 2026):** about 9.2x, or roughly 69% a year. $1,000 would become about $9,166. - **$1,000,000 in 2033 (Bernstein):** about 12x, or roughly 41% a year. $1,000 would become about $12,060. - **$1,300,000 in 2035 (Bitwise):** about 15.7x, or roughly 35% a year. $1,000 would become about $15,678. - **$21,000,000 in 2046 (Saylor):** about 253x, or roughly 32% a year. - **$2,900,000 in 2050 (VanEck base case):** about 35x, or roughly 16% a year. At $82,918, $1,000 buys about 0.01206 BTC, or about [1.2 million sats](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/). The longer the horizon, the less growth each year a target needs: Saylor's $21 million by 2046 needs about 32% a year, less than half the pace of ARK's $760,000 by 2030 (about 69%). ### How past predictions held up Many of the targets in earlier versions of this article have now come due. Most were too high on timing, even though Bitcoin did set a new all-time high. - **Peter Brandt (Feb 2024):** $120,000 by Sep 2025. Bitcoin peaked at $126,198 in Oct 2025. **Hit.** - **Peter Brandt (Feb 2024):** $200,000 by Sep 2025. Peak $126,198. **Missed by 37%.** - **Bernstein (Jun 2024):** $200,000 by end-2025. About $88,000 at year-end. **Missed.** - **Standard Chartered:** $200,000 by end-2025. About $88,000 at year-end. **Missed; target cut to $100,000.** - **Tom Lee:** $250,000 by end-2025. About $88,000 at year-end. **Missed.** - **Chamath Palihapitiya (Jun 2024):** $500,000 by Oct 2025. Peak $126,198. **Missed by 75%.** - **Fidelity's Jurrien Timmer (**[demand-based model](https://www.fool.com/investing/2024/03/07/1-top-cryptocurrency-buy-before-soars-1970-wall-st)**, data as of May 31, 2022):** $100,229 for 2025 if Bitcoin followed the internet's adoption curve, or $239,578 if it followed cell phones'. Year-end 2025: $87,509. **The internet path came within 14.5%; the cell phone path missed by 63%.** Year-end figure: [$87,508.83 close on December 31, 2025](https://dqydj.com/2025-bitcoin-return/). Fidelity's 2025 projections are from the model chart below. The lesson: analysts often get the direction right and the timing wrong. Buying on a schedule ([dollar-cost averaging](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/)), rather than around a target date, takes the timing question out of it. ![Fidelity demand-side bitcoin pricing model (data as of May 31, 2022): projected 2025 price $239,578 on a cell phone adoption path and $100,229 on an internet adoption path; 2030 $1,246,088 and $343,186](https://www.datocms-assets.com/56652/1691560579-demand-side-fidelity.png?auto=format) World Bank and Coin Metrics [Post on X](https://twitter.com/PeterLBrandt/status/1762303814156308957) ![Adam Back's 2023 post betting that bitcoin would reach $100,000 before the April 2024 halving](https://www.datocms-assets.com/56652/1703127855-my-bet-adam.png?auto=format) [Video](https://www.youtube.com/watch?v=o4JEVCLJxDw) [Video](https://www.youtube.com/watch?v=R6hJh-OwoZw) [Video](https://www.youtube.com/watch?v=_zD2LKxBKeo) [Video](https://www.youtube.com/live/KxxVQL2KydU?app=desktop) [Video](https://www.youtube.com/watch?v=ova2xnLOgnQ) ### What will drive Bitcoin's price #### 1. Fixed supply There will only ever be 21 million Bitcoin. About 20.1 million are already mined (about 95.7%, based on [block 972,034 on October 19, 2026](https://mempool.space/api/blocks/tip/height)), and the [next halving, around April 2028](https://bitref.com/halving/), cuts new supply to 1.5625 BTC per block. Our [Bitcoin halving guide](https://www.swanbitcoin.com/education/bitcoin-halving-dates/) has the full schedule, and our [mining cost guide](https://www.swanbitcoin.com/education/how-much-does-it-cost-to-mine-a-bitcoin/) explains what new coins cost to produce. For why a hard cap matters, see [Accepting scarcity](https://www.swanbitcoin.com/culture/accepting-scarcity-a-bitcoin-meditation/) and [How Bitcoin actually works](https://www.swanbitcoin.com/education/how-bitcoin-actually-works/). [![Glassnode chart of bitcoin's circulating supply, remaining supply and percent of the 21 million supply mined over time](https://www.datocms-assets.com/56652/1699751240-glass-scarcity.png?auto=format)](https://studio.glassnode.com/dashboards/btc-supply-scarcity) Glassnode: BTC: Supply and Scarcity ![Chart of bitcoin's supply approaching 21 million while its annual monetary inflation falls by half at each halving, by block height](https://www.datocms-assets.com/56652/1691560773-bitcoin-monetary-inflation.png?auto=format) #### 2. Institutional demand ETFs, public companies and possibly governments now hold a large share of supply, so their buying and selling moves the price. Compare the US funds in our [Bitcoin ETF fees guide](https://www.swanbitcoin.com/education/bitcoin-etf-fees/). [![Cory Klippsten's January 27, 2024 post saying the January 10 launch of US spot bitcoin ETFs made bitcoin the top of the funnel again](https://www.datocms-assets.com/56652/1706723349-everything-changed.png?auto=format)](https://twitter.com/coryklippsten/status/1751284666710245509) Twitter [Video](https://www.youtube.com/watch?v=SnukRMpLefM) [Video](https://www.youtube.com/watch?v=6zEJrQJKJCg) [Video](https://www.youtube.com/watch?v=cBNo3-AdbM4) ![Excerpt from a Fidelity paper describing a Metcalfe's Law model of bitcoin's price based on projected address growth](https://www.datocms-assets.com/56652/1691560613-modeling-fildelity.png?auto=format) [![Excerpt from Fidelity Digital Assets research describing bitcoin as a monetary good and an entry point for traditional allocators](https://www.datocms-assets.com/56652/1704338314-in-this-paper.png?auto=format)](https://www.fidelitydigitalassets.com/sites/default/files/documents/1012662.3.0%20Bitcoin%20First%20Revisited_Final.pdf) Fidelity #### 3. Money printing and interest rates Bitcoin has traded as a hedge against [currency debasement](https://www.swanbitcoin.com/economics/monetary-debasement-vs-supply-shocks/). In October 2026, hotter-than-expected inflation figures (September CPI [up 3.7% from a year earlier](https://crypto.news/crypto-week-ahead-five-events-bitcoin-october-19-2026)) pushed it lower. For background, see [Bitcoin and the true meaning of inflation](https://www.swanbitcoin.com/analysis/bitcoin-and-the-true-meaning-of-inflation/), [the Cantillon effect](https://www.swanbitcoin.com/economics/cantillon-effect/) and [the inflation-deflation tug-of-war](https://www.swanbitcoin.com/markets/the-inflation-deflation-tug-of-war/). #### 4. Regulation The CLARITY Act, which would have set US market-structure rules for Bitcoin and other coins, [failed to advance in the Senate](https://www.thecoinrepublic.com/2026/10/01/bitcoin-price-prediction-citigroup-raises-btc-price-target-to-113k/) in September 2026. That leaves the SEC and CFTC to make the rules for now. #### 5. The four-year cycle Peaks have come 12 to 18 months after each halving. 2025 broke the pattern of strong post-halving years, which is part of why forecasts now differ so much. Some analysts argue [halvings matter less with each cycle](https://www.swanbitcoin.com/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/). For the longer arc, see [The eras of Bitcoin](https://www.swanbitcoin.com/analysis/the-eras-of-bitcoin/). [![TradingView chart of bitcoin's price on a log scale from 2010 to 2024, marking the halvings of Nov 28, 2012, Jul 9, 2016, May 11, 2020 and Apr 20, 2024](https://www.datocms-assets.com/56652/1714834448-halving-price.png?auto=format)](https://s3.tradingview.com/snapshots/t/tz7lSIL0.png) Trading View ![Table of the 2012, 2016 and 2020 halvings: stock-to-flow 12.5, 25 and 50; annual inflation 8%, 4% and 2%; daily issuance 3,600, 1,800 and 900; two-year forward returns 2,964%, 922% and 348%](https://www.datocms-assets.com/56652/1691560392-fidelity-halving.png?auto=format) Coin Metrics ### Swan's take We don't make price predictions. We think Bitcoin's fixed supply makes it the best long-term savings technology available, which is why we're [Bitcoin-only](https://www.swanbitcoin.com/investing/5-reasons-to-focus-on-bitcoin-only/). Every forecast above shows how hard short-term timing is. That's why most Swan clients buy a fixed dollar amount every week or month ([dollar-cost averaging](https://www.swanbitcoin.com/investing/dollar-cost-average/)) and hold their coins long term in [their own custody](https://www.swanbitcoin.com/education/best-bitcoin-wallet/) or a [Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/). ![Satoshi Nakamoto email: It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy.](https://www.datocms-assets.com/56652/1687502376-satoshi-self.png?auto=format) ![Satoshi Nakamoto quote: It might make sense just to get some in case it catches on.](https://www.datocms-assets.com/56652/1687502425-it-might-make.png?auto=format) ### Frequently Asked Questions #### What will Bitcoin be worth in 2030? Major forecasts range from $300,000 (ARK's bear case) to $1.5 million (ARK's bull case). Standard Chartered's target is $500,000 and ARK's base case is about $710,000 to $760,000. #### Will Bitcoin reach $1 million? Bernstein expects about $1 million by 2033 and Bitwise $1.3 million by 2035. ARK's 2030 bull case is $1.5 million. None of these are guarantees. #### What is Bitcoin's all-time high? $126,198, on October 6, 2025. #### What is the Bitcoin price prediction for the end of 2026? As of October 19, 2026, end-of-2026 forecasts range from $100,000 (Standard Chartered) to $125,000 (Bernstein). Citi's 12-month target, set October 1, 2026, is $113,000 by October 2027. #### What will Bitcoin be worth in 10 years? Bernstein expects about $1 million by 2033 and Bitwise $1.3 million by 2035. From $82,918 (October 19, 2026), $1.3 million by 2035 would take growth of roughly 35% a year. #### What is the most bearish Bitcoin forecast? For 2026, Fidelity's Jurrien Timmer sees support around $65,000 to $75,000, and Standard Chartered warned in February 2026 that the price could first drop to $50,000. For 2030, ARK's bear case is $300,000. For 2050, VanEck's bear case is $130,000. #### How much would $1,000 in Bitcoin be worth in 2030? At $82,918 (October 19, 2026), $1,000 buys about 0.012 BTC. That would be worth about $6,030 at Standard Chartered's $500,000 target and about $9,166 at ARK's $760,000. Forecasts are not guarantees. #### Is it too late to buy Bitcoin? No forecast can answer that. About 95.7% of all 21 million Bitcoin had been mined by October 2026, and every long-range target above is higher than the October 2026 price. See [Am I too late for Bitcoin?](https://www.swanbitcoin.com/investing/am-i-too-late-for-bitcoin/) #### When is the next Bitcoin halving? Around April 2028, at block 1,050,000. See our [halving guide](https://www.swanbitcoin.com/education/bitcoin-halving-dates/). ### Sources - [Price, Oct 19 2026 5:54 a.m. EDT ($82,918.10; market cap $1.67T): CoinDesk BTC price](https://www.coindesk.com/price/bitcoin) - [All-time high and year-ago change: Fortune, Oct 14 2026](https://fortune.com/article/price-of-bitcoin-10-14-2026/) - [2025 close and return: DQYDJ 2025 Bitcoin return](https://dqydj.com/2025-bitcoin-return/) - [2026 low near $57,800: 24/7 Wall St., Jul 2 2026](https://247wallst.com/investing/cryptocurrency/2026/07/02/bitcoin-price-prediction-for-july-2026/) - [ETF holdings: Bitbo US ETF tracker](https://bitbo.io/treasuries/us-etfs/) - [Strategy holdings: Crypto Times, Oct 19 2026](https://www.cryptotimes.io/2026/10/19/orange-stack-grows-michael-saylors-strategy-adds-267-bitcoin-repurchased-193m-in-strc/) - [Strategic Bitcoin Reserve: Crypto Briefing, Oct 15 2026](https://cryptobriefing.com/white-house-bitcoin-security-before-purchases/) - [Citi $113K: The Coin Republic, Oct 1 2026](https://www.thecoinrepublic.com/2026/10/01/bitcoin-price-prediction-citigroup-raises-btc-price-target-to-113k/) - [Citi: Forbes, Oct 2 2026](https://www.forbes.com/sites/digital-assets/2026/10/02/a-wall-street-giant-just-flipped-on-bitcoin-issues-huge-2027-prediction/) - [Bernstein $125K / $150K: CoinTurk, Oct 6 2026](https://en.coin-turk.com/bernstein-sets-125000-bitcoin-target-for-2026-citi-lifts-12-month-forecast/) - [Bernstein, Aug 2026: The Block](https://theblock.co/news/markets/2026-08-26-bernstein-sees-bitcoin-reaching-150000-by-mid-2027-amid-debasement-trade-but-cuts-strategy-target-to-350-412778) - [Standard Chartered "may be too low": crypto.news, Aug 21 2026](https://crypto.news/standard-chartered-says-bitcoin-could-retest-126k-before-year-end/) - [Standard Chartered cuts targets: The Block, Dec 2025](https://www.theblock.co/post/381892/not-crypto-winter-standard-chartered-halves-2025-bitcoin-target-to-100k-keeps-long-term-bull-case) - [ARK 2030 price target](https://www.ark-invest.com/articles/valuation-models/arks-bitcoin-price-target-2030) - [JPMorgan $266K: The Block](https://www.theblock.co/post/388697/jpmorgan-bitcoin-266000-long-term-gold) - [VanEck 2050: Decrypt](https://decrypt.co/354168/bitcoin-price-could-surge-53-million-2050-vaneck-heres-why) - [Bitwise $1.3M by 2035: Cointelegraph](https://cointelegraph.com/news/bitcoin-hit-1m-2035-bitwise-matt-hougan-thesis) - [Saylor $21M by 2046: Cointelegraph](https://cointelegraph.com/news/michael-saylor-strategy-bitcoin-forecast-21-million-21-years) - [Fidelity's Timmer on 2026: Cointelegraph](https://cointelegraph.com/news/fidelity-macro-lead-65k-bitcoin-bottom-2026) - [Fidelity demand-based model (Timmer): The Motley Fool, Mar 7 2024](https://www.fool.com/investing/2024/03/07/1-top-cryptocurrency-buy-before-soars-1970-wall-st) - [2025 first negative post-halving year: Yahoo Finance](https://finance.yahoo.com/news/bitcoin-records-first-ever-negative-151143427.html) - [Hal Finney, "Re: Bitcoin v0.1 released": MIT cryptography list archive](https://diswww.mit.edu/bloom-picayune/crypto/142207) - [Next halving: Bitref halving countdown](https://bitref.com/halving/) - [Block height 972,034, Oct 19 2026: mempool.space](https://mempool.space/api/blocks/tip/height) - [September CPI 3.7%: crypto.news, Oct 19 2026](https://crypto.news/crypto-week-ahead-five-events-bitcoin-october-19-2026) ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Kraken Review 2026: Fees, Safety, Pros & Cons - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/kraken-review/ Is Kraken legit and safe in 2026? Honest review: 1% instant-buy fee plus spread, Kraken Pro from 0.40%/0.80%, regulation, the delayed IPO. --- **Matt Ruby** · July 10, 2024 · Updated October 23, 2026 **Our verdict:** Kraken is a legitimate, long-running exchange with a strong regulatory record, and Kraken Pro is a solid fit for active traders. For buying Bitcoin to hold long term, the standard Kraken app is expensive. Instant buys cost a [1% fee plus a spread](https://www.kraken.com/features/fee-schedule), and card purchases add a processing fee on top. Kraken isn't available to residents of [Maine or New York](https://support.kraken.com/articles/quick-start-for-clients-in-the-united-states) (as of October 19, 2026). ### Kraken at a glance - **Founded:** [2011 (San Francisco)](https://en.wikipedia.org/wiki/Kraken_%28cryptocurrency_exchange%29) - **Public company?** No. Parent company Payward [filed confidentially for an IPO in November 2025 and froze the plan in March 2026](https://accessipos.com/kraken-ipo-stock/). [CoinDesk reported in September 2026](https://www.financemagnates.com/cryptocurrency/kraken-parent-pushes-ipo-to-q2-2027-at-earliest/) that it won't list before Q2 2027 at the earliest; Kraken declined to comment. - **What you can trade:** Hundreds of coins, plus [US futures through NinjaTrader (Kraken Derivatives US)](https://support.kraken.com/articles/where-is-kraken-licensed-or-regulated) - **Not available in:** [Maine, New York](https://support.kraken.com/articles/quick-start-for-clients-in-the-united-states); some features are limited in other states - **Licenses:** [US state licenses and federal registrations, plus an EU license under the MiCA rules (Central Bank of Ireland)](https://support.kraken.com/articles/where-is-kraken-licensed-or-regulated) - **Ratings:** [Trustpilot 3.2/5 (9,259 reviews)](https://www.trustpilot.com/review/kraken.com); [NerdWallet 5.0/5](https://www.nerdwallet.com/investing/reviews/kraken) (both as of October 19, 2026) ### Kraken fees in 2026 - **Buying or selling at the current price:** Kraken app (simple): [1% plus a variable spread](https://www.kraken.com/features/fee-schedule). Kraken Pro: [0.80% taker (under $2,500 of 30-day volume)](https://www.kraken.com/features/fee-schedule). - **Limit or target-price orders:** Kraken app: [1.5% (custom orders)](https://www.kraken.com/features/fee-schedule). Kraken Pro: [0.40% maker](https://www.kraken.com/features/fee-schedule). - **Higher-volume trading (Kraken Pro only):** [0.30%/0.60% from $2,500; 0.22%/0.38% from $10K; 0%/0.10% at $10M+](https://www.kraken.com/features/fee-schedule) - **Debit or credit card (Kraken app):** [Extra processing fee, shown before you confirm](https://support.kraken.com/hc/en-us/articles/360048212832-Debit-and-credit-card-purchases-with-Visa-Mastercard) [UNVERIFIED: Kraken's own pages no longer state a rate; the earlier 3.75% + $0.25 figure could not be confirmed on kraken.com] - **ACH deposit:** Kraken app: Free (7-day hold before you can withdraw) [UNVERIFIED: not re-checked on a Kraken page this cycle]. Kraken Pro: Free [UNVERIFIED: same] - **Bitcoin withdrawal (both):** [About 0.0002 BTC, minimum 0.005 BTC](https://www.nerdwallet.com/investing/reviews/kraken), per NerdWallet [UNVERIFIED: Kraken's own fee table did not load; Kraken shows the final fee at confirmation] Kraken fees as of October 19, 2026. Kraken Pro tiers now use the better of your 30-day trading volume or the assets you hold on the platform ([fee schedule](https://www.kraken.com/features/fee-schedule)). A $1,000 Bitcoin purchase in the Kraken app costs at least $10 plus the spread. The same purchase on Kraken Pro as a market order costs $8. [Kraken+](https://support.kraken.com/articles/kraken-faq-subscription-service-overview) members pay no app trading fee on up to $10,000 a month; the spread and card fees still apply. Kraken+ costs $4.99 a month or $49.99 a year, with a one-month free trial (as of September 17, 2026). ### What a Kraken Bitcoin purchase actually costs Here is the trading fee on a one-time Bitcoin buy of $100, $1,000 and $10,000 on each route, worked out from the published fee schedules (as of October 19, 2026). Fees are before spreads, which Kraken's app and Kraken+ add on top. Kraken Pro rates are for a new account (under $2,500 of 30-day volume). - **$100 buy:** Kraken app $1.00 plus spread. Kraken Pro $0.80. Kraken+ $0 trading fee, but $4.99 for the month's subscription, plus spread. Swan $1.00, or $0 for a new client's first $250. - **$1,000 buy:** Kraken app $10.00 plus spread. Kraken Pro $8.00. Kraken+ $0 trading fee plus the $4.99 subscription and spread. Swan $10.00, or $7.50 for a new client (no fee on the first $250). - **$10,000 buy:** Kraken app $100.00 plus spread. Kraken Pro $80.00. Kraken+ $0 trading fee (it covers up to $10,000 a month) plus the $4.99 subscription and spread. Swan $100.00, or $97.50 for a new client. On fees alone, Kraken Pro is the cheapest way to make a one-off purchase on Kraken. Kraken+ only beats the app's 1% fee once you buy more than about $499 a month there ($4.99 ÷ 1%), and you still pay the spread. Sources: [Kraken fee schedule](https://www.kraken.com/features/fee-schedule), [Kraken+ FAQ](https://support.kraken.com/articles/kraken-faq-subscription-service-overview), [Swan fees](https://www.swanbitcoin.com/fees/). ### Is Kraken safe? **Strengths** - **A long history.** Kraken has run since [2011](https://en.wikipedia.org/wiki/Kraken_%28cryptocurrency_exchange%29) and came through the 2022 collapses of FTX, Celsius and others. - **Regulatory problems are mostly behind it.** It [settled the SEC's staking charges in February 2023 for $30 million](https://www.theblock.co/post/210332/kraken-settles-sec-charges-over-its-staking-program) and shut its US staking program at the time. Kraken now offers [onchain staking to US clients outside a list of excluded states](https://support.kraken.com/articles/quick-start-for-clients-in-the-united-states). The SEC's separate November 2023 lawsuit was [dismissed with prejudice in March 2025](https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26278). - **Proof of reserves.** Kraken publishes regular proof-of-reserves attestations by an independent accounting firm. The most recent one we found covers [balances as of December 31, 2025](https://blog.kraken.com/news/december-2025-proof-of-reserves), published February 5, 2026. - **Licensed in Europe.** It holds an [EU license under the MiCA rules, issued by the Central Bank of Ireland](https://www.theblock.co/post/359751/kraken-secures-mica-license-in-ireland-to-scale-european-operations) and announced in June 2025. - **Still expanding.** In September 2026, [Nasdaq agreed to invest $100 million in Payward](https://www.theblock.co/news/deals/2026-09-10-nasdaq-to-invest-100-million-in-kraken-parent-payward-as-firms-expand-partnership-414120) at a reported $21 billion valuation. In October 2026, Payward won [full approval from Dubai's regulator, VARA](https://bitcoinmagazine.com/news/kraken-parent-payward-wins-full-dubai-license-plans-uae-launch), and agreed to [buy Lithuania's Saldo Bank](https://www.coindesk.com/business/2026/10/14/kraken-parent-payward-to-become-first-crypto-firm-to-buy-a-eu-bank-as-it-expands-into-deposits-lending), a deal that still needs regulatory approval and is expected to close in 2027. **Weaknesses** - **Customer reviews are poor.** Kraken scores [3.2 out of 5 on Trustpilot](https://www.trustpilot.com/review/kraken.com), and half the reviews are 1-star (as of October 19, 2026). Many are about verification, frozen accounts and slow support. - **The company is under pressure.** It [cut about 150 jobs in May 2026 and has delayed its IPO](https://accessipos.com/kraken-ipo-stock/). - **It's still an exchange.** Bitcoin you leave on Kraken is held by Kraken. Exchanges are targets: in February 2025, [Bybit lost about $1.5 billion](https://bleepingcomputer.com/news/security/fbi-confirms-lazarus-hackers-were-behind-15b-bybit-crypto-heist) in the largest exchange theft on record. #### How Kraken protects your account Kraken's [security page](https://www.kraken.com/features/security) lists these account protections: - Two-factor authentication with FIDO2 passkeys - No phone or SMS account recovery - A configurable account timeout and a global settings time lock - Email confirmation before a new withdrawal address is added - Encryption of sensitive data at rest and in transit, and 24/7 live chat and email support for urgent issues - A mix of cold storage and hot wallets for client funds, plus a bug bounty program for security researchers #### Past security incidents In June 2024, a security researcher found a flaw that let accounts be credited with funds that were never deposited. Kraken said the researcher and two associates [withdrew nearly $3 million](https://thehackernews.com/2024/06/kraken-crypto-exchange-hit-by-3-million.html) using it. The bug was fixed, and Kraken said no client assets were at risk. ### Kraken customer support Kraken offers [24/7 live chat and email support for urgent issues](https://www.kraken.com/features/security). Reviews of that support are mixed: Kraken scores [3.2 out of 5 on Trustpilot](https://www.trustpilot.com/review/kraken.com) (as of October 19, 2026), and many complaints are about identity verification, frozen accounts and slow replies. ### Pros and cons **Pros** - Long track record and strong regulatory record - Low fees on Kraken Pro for active traders - Lets you withdraw to your own wallet - Strong account security ([passkey 2FA, a global settings lock, email confirmation for new withdrawal addresses](https://www.kraken.com/features/security)) - EU license under the MiCA rules **Cons** - 1% fee plus spread in the main app - Not available in New York or Maine - Card purchases cost extra - Many complaints about support and verification - Lists hundreds of altcoins, which distracts from Bitcoin for long-term savers ### Kraken alternatives If you're comparing Kraken with other places to buy Bitcoin, these Swan reviews cover the most common alternatives: - **Coinbase:** [Is Coinbase safe?](https://www.swanbitcoin.com/industry/is-coinbase-safe/) and [Is Coinbase in trouble?](https://www.swanbitcoin.com/industry/is-coinbase-in-trouble/) - **Robinhood:** [Robinhood fees, explained](https://www.swanbitcoin.com/industry/robinhood-fees/) - **Binance:** [Is Binance in trouble?](https://www.swanbitcoin.com/education/is-binance-in-trouble/) - **Side-by-side comparisons:** [the best Bitcoin exchanges](https://www.swanbitcoin.com/education/bitcoin-exchanges/) and [the most trusted Bitcoin investment sites](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/) ### How Kraken and Swan compare for Bitcoin savers - **Fee to buy:** Kraken app: [1% plus a spread](https://www.kraken.com/features/fee-schedule). Swan: [1% (first $250 free)](https://www.swanbitcoin.com/fees/). - **Recurring buys:** Kraken app: [Yes (1%)](https://www.kraken.com/features/fee-schedule). Swan: Yes, the core product. - **Automatic withdrawals to your own wallet:** Kraken app: No. Swan: Yes, [free](https://www.swanbitcoin.com/fees/). - **Bitcoin IRA:** Kraken app: No. Swan: Yes ([Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/)). - **Coins offered:** Kraken app: Hundreds. Swan: Bitcoin only. Fees as of October 19, 2026. If you trade actively, Kraken Pro is cheaper than most apps. If you're saving in Bitcoin, a Bitcoin-only service with automatic withdrawals to [a wallet you control](https://www.swanbitcoin.com/education/best-bitcoin-wallet/) keeps both costs and risk lower. ### Frequently Asked Questions #### Is Kraken legit? Yes. Kraken is a regulated exchange founded in 2011, registered with US regulators, licensed in US states and licensed in the EU under MiCA. #### Is Kraken safe? It has a strong security and regulatory record and publishes proof-of-reserves attestations, but Bitcoin left on any exchange is held by that exchange. For long-term savings, move it to a wallet you control. #### What are Kraken's fees? 1% plus a spread for instant buys in the app, as of October 2026; 0.40% maker and 0.80% taker on Kraken Pro for small traders. #### Is Kraken Pro cheaper than the Kraken app? Yes, on fees. A market order on Kraken Pro costs 0.80% for a new account, against 1% plus a spread in the app; limit orders on Pro cost 0.40%, against 1.5% for custom orders in the app (as of October 2026). #### Does Kraken have a subscription? Yes. Kraken+ costs $4.99 a month or $49.99 a year and removes the app trading fee on up to $10,000 of purchases a month. Spreads and card fees still apply (as of September 2026). #### Is Kraken available in the US? Yes, except for residents of Maine and New York, as of October 2026. Some features are limited in other states. #### Is Kraken a public company? No. Its IPO was put on hold in 2026, and CoinDesk reported in September 2026 that it won't happen before Q2 2027 at the earliest. ### Sources - [Kraken fee schedule (checked Oct 19, 2026)](https://www.kraken.com/features/fee-schedule) - [Kraken instant buy FAQ (updated Sep 16, 2026)](https://support.kraken.com/articles/360060101312-faq-s-about-buying-instantly) - [Kraken card purchases support page (updated Oct 7, 2026)](https://support.kraken.com/hc/en-us/articles/360048212832-Debit-and-credit-card-purchases-with-Visa-Mastercard) - [Kraken+ FAQ (updated Sep 17, 2026)](https://support.kraken.com/articles/kraken-faq-subscription-service-overview) - [Kraken US quick start (state availability, staking; checked Oct 19, 2026)](https://support.kraken.com/articles/quick-start-for-clients-in-the-united-states) - [Where Kraken is licensed or regulated (checked Oct 19, 2026)](https://support.kraken.com/articles/where-is-kraken-licensed-or-regulated) - [Kraken security features (checked Oct 22, 2026)](https://www.kraken.com/features/security) - [Kraken blog: live in Washington state (Jul 16, 2025)](https://blog.kraken.com/news/welcome-washington-state) - [Kraken December 2025 proof of reserves (published Feb 5, 2026)](https://blog.kraken.com/news/december-2025-proof-of-reserves) - [Kraken withdrawal fees page (updated Dec 31, 2025; table did not load)](https://support.kraken.com/articles/360000767986-cryptocurrency-withdrawal-fees-and-minimums) - [NerdWallet Kraken review (checked Oct 19, 2026)](https://www.nerdwallet.com/investing/reviews/kraken) - [Trustpilot Kraken (checked Oct 19, 2026)](https://www.trustpilot.com/review/kraken.com) - [IPO pushed to Q2 2027, Finance Magnates citing CoinDesk (Sep 3, 2026)](https://www.financemagnates.com/cryptocurrency/kraken-parent-pushes-ipo-to-q2-2027-at-earliest/) - [IPO timeline, AccessIPOs (updated Oct 4, 2026)](https://accessipos.com/kraken-ipo-stock/) - [Nasdaq $100M investment, The Block (Sep 10, 2026)](https://www.theblock.co/news/deals/2026-09-10-nasdaq-to-invest-100-million-in-kraken-parent-payward-as-firms-expand-partnership-414120) - [Dubai VARA approval, Bitcoin Magazine (Oct 13, 2026)](https://bitcoinmagazine.com/news/kraken-parent-payward-wins-full-dubai-license-plans-uae-launch) - [Saldo Bank acquisition, CoinDesk (Oct 14, 2026)](https://www.coindesk.com/business/2026/10/14/kraken-parent-payward-to-become-first-crypto-firm-to-buy-a-eu-bank-as-it-expands-into-deposits-lending) - [SEC lawsuit dismissed, SEC LR-26278 (Mar 27, 2025)](https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26278) - [2023 staking settlement, The Block (Feb 9, 2023)](https://www.theblock.co/post/210332/kraken-settles-sec-charges-over-its-staking-program) - [MiCA license, The Block (Jun 25, 2025)](https://www.theblock.co/post/359751/kraken-secures-mica-license-in-ireland-to-scale-european-operations) - [June 2024 exploit, The Hacker News (Jun 2024)](https://thehackernews.com/2024/06/kraken-crypto-exchange-hit-by-3-million.html) - [Bybit hack, BleepingComputer (Feb 2025)](https://bleepingcomputer.com/news/security/fbi-confirms-lazarus-hackers-were-behind-15b-bybit-crypto-heist) - [Kraken founding, Wikipedia (checked Oct 19, 2026)](https://en.wikipedia.org/wiki/Kraken_%28cryptocurrency_exchange%29) - [Swan fees (checked Oct 19, 2026)](https://www.swanbitcoin.com/fees/) ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # Can You Buy Bitcoin at Walmart With Cash? (October 2026 Update) URL: https://www.swanbitcoin.com/education/buy-bitcoin-with-cash/ Coinstar’s Bitcoin kiosks end Nov 19 and Coinme exits by Jan 1, 2027. What still works to turn cash into Bitcoin, the costs, and scams to avoid. --- **Drew** · June 13, 2024 · Updated October 23, 2026 **Short answer: no, not after this fall.** Coinstar kiosks, found in many Walmart stores, are losing both of their Bitcoin services. Coinstar's own service, CINQ, ends at its kiosks on November 19, 2026 ([Coinstar](https://www.coinstar.com/crypto-discontinued/), as of Oct 19, 2026). Coinme, the other kiosk partner, agreed with 34 state regulators to end its kiosk business by January 1, 2027 ([ICBA](https://www.icba.org/w/state-regulators-reach-settlement-with-crypto-kiosk-operator), as of Oct 9, 2026). We found no Walmart service that sells Bitcoin for cash at the store. You can still turn cash into [Bitcoin](https://www.swanbitcoin.com/education/what-is-bitcoin/). The cheapest and safest way is to deposit the cash into a bank account, then buy Bitcoin from a regulated app. ### Ways to turn cash into Bitcoin in 2026 - **Deposit cash at your bank, then buy with a Bitcoin app.** Typical cost: about 1% (Swan charges 1% on buys; [Swan fees](https://www.swanbitcoin.com/fees/), as of Oct 19, 2026). Limits: your bank's and the app's limits. Best for: most people. - **Cash App paper money deposit at a participating store, then buy in Cash App.** Typical cost: a per-deposit fee plus Cash App's Bitcoin fee [UNVERIFIED: Cash App's help page could not be opened on Oct 19, 2026]. Limits: per-deposit and weekly caps [UNVERIFIED: same reason]. Best for: small amounts without a bank account. - **OnePay app (Walmart-backed), funded from a OnePay deposit account.** Typical cost: "Trading fees apply," per OnePay; amounts are in its customer agreement ([OnePay](https://www.onepay.com/newsroom/crypto-expansion), as of Mar 20, 2026). Limits: OnePay's limits. Best for: existing OnePay users. Not a cash option at the register. - **Bitcoin ATM (kiosk).** Typical cost: varies. California caps fees at the greater of $5 or 15% ([CryptoSlate](https://cryptoslate.com/crypto-laws/california-dfal-crypto-kiosk-provisions/), as of Oct 19, 2026). DC's attorney general alleges up to 26% at one operator ([Decrypt](https://decrypt.co/338513/atm-athena-bitcoin-elderly-alleges-dc-attorney-general), as of Sept 8, 2025). Limits: California, $1,000 a day; banned or restricted in a growing list of states (see below). Best for: rarely the right choice. - **Peer-to-peer trade in person.** Typical cost: negotiated. Hodl Hodl lists a fee of up to 0.6% per trade ([Hodl Hodl](https://hodlhodl.medium.com/offer-creation-process-and-fees-explained-42bf57e9f58e), as of June 11, 2019) [UNVERIFIED: no current Hodl Hodl fee page opened]. Limits: varies. Best for: experienced users who need privacy. ### How much does it cost to buy Bitcoin with cash? Here is what turning $500 in cash into Bitcoin costs on each route, using the fees above and Bitcoin's October 19, 2026 price of [$82,918 (CoinDesk)](https://www.coindesk.com/price/bitcoin). At that price, $500 is about 603,000 [sats](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/) before fees. Bitcoin's price changes daily. Our [Bitcoin price prediction](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/) page tracks what analysts forecast. - **Bank deposit, then a Bitcoin app charging 1%:** about $5 in fees, leaving about 597,000 sats. Swan charges no buy fee on a new client's first $250 ([Swan fees](https://www.swanbitcoin.com/fees/)), so a new client's first $500 costs about $2.50. - **A California Bitcoin ATM at the 15% cap:** up to $75 in fees, leaving about 512,600 sats. - **A kiosk charging the 26% alleged by DC's attorney general:** up to $130, leaving about 446,200 sats. App fees vary. For comparison, see [Robinhood's fees](https://www.swanbitcoin.com/industry/robinhood-fees/) and our [Kraken review](https://www.swanbitcoin.com/industry/kraken-review/). ### What happened to Bitcoin at Walmart - **Coinstar's CINQ service.** Coinstar says CINQ's buying service, run by Zero Hash, left the CINQ app on October 14, 2026 and ends at kiosks on November 19, 2026. CINQ wallets close on January 4, 2027 ([Coinstar](https://www.coinstar.com/crypto-discontinued/), as of Oct 19, 2026). - **Coinme on Coinstar kiosks.** On October 8, 2026, Coinme settled with 34 state regulators over anti-money-laundering failures. It will pay $2.5 million and must end kiosk operations by January 1, 2027, or pay $4 million more ([ABA Banking Journal](https://bankingjournal.aba.com/2026/10/crypto-exchange-agrees-to-shut-down-crypto-atms-as-part-of-settlement/) and [ICBA](https://www.icba.org/w/state-regulators-reach-settlement-with-crypto-kiosk-operator), as of Oct 9, 2026). Washington's regulator says the kiosks must close by the end of the year ([Spokesman-Review](https://www.spokesman.com/stories/2026/oct/09/seattle-based-crypto-exchange-company-agrees-to-mu/), as of Oct 9, 2026). Earlier, California fined Coinme $300,000 in June 2025, partly for taking more than its $1,000 daily cash limit ([DFPI](https://dfpi.ca.gov/press_release/dfpi-cracks-down-on-cash-to-crypto-kiosk-operators/), as of June 25, 2025). - **Walmart's OnePay app.** OnePay, the fintech app Walmart backs, now lets customers buy, sell and hold Bitcoin in the app. Bitcoin was available at launch, and OnePay listed 12 assets as of March 20, 2026. Zero Hash runs trading and custody. The only funding source is a OnePay deposit account, not cash at checkout ([OnePay](https://www.onepay.com/newsroom/crypto-expansion), as of Mar 20, 2026). - **Bitcoin Depot.** The largest US Bitcoin ATM operator filed for Chapter 11 bankruptcy on May 18, 2026 and took its machines offline ([The Block](https://www.theblock.co/post/401590/bitcoin-depot-chapter-11), as of May 18, 2026). ### Key dates for Bitcoin at Coinstar kiosks - **October 14, 2026:** CINQ's buying service left the CINQ app ([Coinstar](https://www.coinstar.com/crypto-discontinued/)). - **November 19, 2026:** CINQ ends at Coinstar kiosks ([Coinstar](https://www.coinstar.com/crypto-discontinued/)). - **December 31, 2026:** existing Bitcoin ATMs in Minnesota must be removed ([FOX 21](https://www.fox21online.com/news/political/crypto-atms-to-be-banned-in-minnesota/article_005147ab-85d8-4376-8e8a-30fbde0a53fa.html)). - **January 1, 2027:** Coinme must end its kiosk operations ([ICBA](https://www.icba.org/w/state-regulators-reach-settlement-with-crypto-kiosk-operator)). - **January 4, 2027:** CINQ wallets close. Move any Bitcoin out before then ([Coinstar](https://www.coinstar.com/crypto-discontinued/)). ### Have Bitcoin in a CINQ by Coinstar wallet? Move it before January 4, 2027. Coinstar says you can use the CINQ web app to send your Bitcoin to another wallet or sell and withdraw to your bank until then ([Coinstar](https://www.coinstar.com/crypto-discontinued/), as of Oct 19, 2026). The safest place for it is a wallet you control (see our guide to [Bitcoin cold storage](https://www.swanbitcoin.com/education/bitcoin-cold-storage/)). ### How to buy Bitcoin with cash, step by step 1. **Deposit your cash.** Take it to your bank or credit union branch, or use a cash-deposit ATM. 2. **Open a Bitcoin account.** Choose a regulated, Bitcoin-focused app and verify your identity. [Compare Bitcoin exchanges](https://www.swanbitcoin.com/education/bitcoin-exchanges/) or our list of the [most trusted Bitcoin investment sites](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/), and check how the app protects customer funds (see [Is Coinbase safe?](https://www.swanbitcoin.com/industry/is-coinbase-safe/)). New to Bitcoin? Start with our [beginner's guide](https://www.swanbitcoin.com/education/bitcoin-for-beginners/). 3. **Link your bank and buy.** Connect your bank account and buy once, or set up a [recurring buy](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/). 4. **Move it to your own wallet.** Withdraw your Bitcoin to a [hardware wallet](https://www.swanbitcoin.com/education/best-bitcoin-wallet/) or [multisig vault](https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/) you control. **Private keys** = email password **Public addresses** = email address (your Bitcoin wallet receive address) Each private key is ***your super-secret code***: it opens the door to not just one but billions of public addresses ***(these are your potential email addresses)*** for sending and receiving Bitcoin.  [![Example paper Bitcoin wallet: a Bitcoin address QR code marked SHARE next to a private key QR code marked SECRET](https://www.datocms-assets.com/56652/1704930427-a_paper_printable_bitcoin_wallet_consisting_of_one_bitcoin_address_for_receiving_and_the_corresponding_private_key_for_spending.png?auto=format)](https://en.m.wikipedia.org/wiki/File:A_paper_printable_Bitcoin_wallet_consisting_of_one_bitcoin_address_for_receiving_and_the_corresponding_private_key_for_spending.png) Wikipedia This costs about 1% ([Swan fees](https://www.swanbitcoin.com/fees/), as of Oct 19, 2026), compared with up to 15% at a kiosk in California, and more in states without a cap. It also leaves a clear record for taxes. ### Where to buy Bitcoin with cash near me - **Your bank or credit union.** Deposit the cash at a branch or a cash-deposit ATM, then buy in a Bitcoin app. It's the cheapest route (see the costs above). - **Cash App paper money deposits** let you add cash at participating stores for a fee, then buy Bitcoin in Cash App. [UNVERIFIED: fee, limits and whether Walmart takes part could not be confirmed on Cash App's help page on Oct 19, 2026.] - **Bitcoin ATMs, where your state still allows them.** Check the state rules in the next section first, and expect high fees. - **In-person peer-to-peer trades** with someone you know (for example, at a local Bitcoin meetup) avoid kiosk fees and can offer more [privacy](https://www.swanbitcoin.com/education/bitcoin-privacy-best-practices/). Never send money to a stranger first. ### Warning: Bitcoin ATM scams The FBI received 13,460 complaints about kiosk scams in 2025, with $389 million lost, up 58% from 2024 ([The Block](https://www.theblock.co/post/397134/fbi-says-crypto-related-fraud-losses-hit-record-11-4-billion-in-2025-with-seniors-bearing-the-brunt), as of Apr 12, 2026). The pattern is almost always the same. Someone posing as a bank, the government, tech support or a romantic partner tells you to withdraw cash and feed it into a Bitcoin ATM. **No real bank, government agency or company will ever ask you to pay with a Bitcoin ATM.** If someone does, hang up. States are cracking down. 35 states have passed kiosk laws since 2023, 18 of them in 2026 ([AARP](https://www.aarp.org/advocacy/crypto-atm-fraud-protections/), as of Sept 14, 2026). - **Indiana** banned kiosks statewide in March 2026 ([AARP](https://www.aarp.org/advocacy/crypto-atm-fraud-protections/)). - **Tennessee** made it a crime to run or host one from July 1, 2026 ([The Block](https://www.theblock.co/amp/post/398800/tennessee-bans-crypto-atms-statewide-joining-indiana-fraud-crackdown), as of Apr 24, 2026). - **Minnesota** banned them from August 1, 2026; existing machines must be removed by December 31, 2026 ([FOX 21](https://www.fox21online.com/news/political/crypto-atms-to-be-banned-in-minnesota/article_005147ab-85d8-4376-8e8a-30fbde0a53fa.html), as of May 13, 2026). - **Hawaii** banned cash deposits into kiosks from October 1, 2026 ([Hawaii News Now](https://www.hawaiinewsnow.com/2026/08/12/new-hawaii-law-banning-cryptocurrency-atm-deposits-take-effect-oct-1/), as of Aug 12, 2026). - **New Hampshire** will require a $2,000 daily limit, a 48-hour hold on first transactions and refunds for fraud reported within 14 days, starting December 16 ([Boston Globe](https://www.bostonglobe.com/2026/09/15/metro/nh-crypto-atm-kiosk-regulation/), as of Sept 15, 2026). ### Frequently Asked Questions #### Can I buy Bitcoin at Walmart? Not for much longer. Coinstar's CINQ service ends at its kiosks on November 19, 2026, and Coinme must end its kiosk business by January 1, 2027. We found no other way to buy Bitcoin with cash at Walmart. #### Is there a Bitcoin ATM at Walmart? Many Walmart stores have Coinstar kiosks that sold Bitcoin through CINQ and Coinme. CINQ ends at the kiosks on November 19, 2026, and Coinme must end its kiosk business by January 1, 2027. #### Does Walmart sell Bitcoin? Not at the register. OnePay, an app Walmart backs, lets customers buy Bitcoin in the app, funded from a OnePay deposit account. #### What is the cheapest way to buy Bitcoin with cash? Deposit the cash at your bank, then buy through a Bitcoin app for about 1%. #### How much does it cost to buy $500 of Bitcoin with cash? About $5 if you deposit the cash at your bank and buy through an app charging 1%. A California Bitcoin ATM can charge up to $75, at the state's 15% cap. #### What is the daily limit at a Bitcoin ATM? It depends on your state. California limits kiosk cash to $1,000 a day, and New Hampshire will require a $2,000 daily limit starting December 16. Indiana, Tennessee and Minnesota have banned kiosks. #### I have Bitcoin in a CINQ by Coinstar wallet. What should I do? Send it to a wallet you control, or sell and withdraw to your bank, before CINQ wallets close on January 4, 2027. #### Are Bitcoin ATMs safe? The machines work, but fees are high and they're the main tool in scams that cost people $389 million in 2025, according to the FBI. Never use one because someone told you to. ### Sources - [Coinstar: CINQ services discontinued (official, checked Oct 19, 2026)](https://www.coinstar.com/crypto-discontinued/) - [Coinstar: CINQ service page (official, checked Oct 19, 2026)](https://www.coinstar.com/crypto/) - [ABA Banking Journal: Coinme settlement (Oct 2026)](https://bankingjournal.aba.com/2026/10/crypto-exchange-agrees-to-shut-down-crypto-atms-as-part-of-settlement/) - [ICBA: State regulators reach settlement with Coinme (Oct 9, 2026)](https://www.icba.org/w/state-regulators-reach-settlement-with-crypto-kiosk-operator) - [Spokesman-Review: Coinme settlement (Oct 9, 2026)](https://www.spokesman.com/stories/2026/oct/09/seattle-based-crypto-exchange-company-agrees-to-mu/) - [California DFPI: action against Coinme (June 25, 2025)](https://dfpi.ca.gov/press_release/dfpi-cracks-down-on-cash-to-crypto-kiosk-operators/) - [OnePay newsroom: Bitcoin trading announcement (official, Mar 20, 2026)](https://www.onepay.com/newsroom/crypto-expansion) - [The Block: Bitcoin Depot files Chapter 11 (May 18, 2026)](https://www.theblock.co/post/401590/bitcoin-depot-chapter-11) - [The Block: FBI 2025 fraud figures (Apr 12, 2026)](https://www.theblock.co/post/397134/fbi-says-crypto-related-fraud-losses-hit-record-11-4-billion-in-2025-with-seniors-bearing-the-brunt) - [AARP: state kiosk laws (updated Sept 14, 2026)](https://www.aarp.org/advocacy/crypto-atm-fraud-protections/) - [The Block: Tennessee kiosk ban (Apr 24, 2026)](https://www.theblock.co/amp/post/398800/tennessee-bans-crypto-atms-statewide-joining-indiana-fraud-crackdown) - [FOX 21: Minnesota kiosk ban (May 13, 2026)](https://www.fox21online.com/news/political/crypto-atms-to-be-banned-in-minnesota/article_005147ab-85d8-4376-8e8a-30fbde0a53fa.html) - [Hawaii News Now: Hawaii kiosk cash-deposit ban (Aug 12, 2026)](https://www.hawaiinewsnow.com/2026/08/12/new-hawaii-law-banning-cryptocurrency-atm-deposits-take-effect-oct-1/) - [Boston Globe: New Hampshire kiosk rules (Sept 15, 2026)](https://www.bostonglobe.com/2026/09/15/metro/nh-crypto-atm-kiosk-regulation/) - [CryptoSlate: California kiosk rules (checked Oct 19, 2026)](https://cryptoslate.com/crypto-laws/california-dfal-crypto-kiosk-provisions/) - [Decrypt: DC attorney general sues Athena (Sept 8, 2025)](https://decrypt.co/338513/atm-athena-bitcoin-elderly-alleges-dc-attorney-general) - [Swan fees (official, checked Oct 22, 2026)](https://www.swanbitcoin.com/fees/) - [Bitcoin price $82,918.10: CoinDesk (Oct 19, 2026)](https://www.coindesk.com/price/bitcoin) - [Hodl Hodl: fees explained (June 11, 2019)](https://hodlhodl.medium.com/offer-creation-process-and-fees-explained-42bf57e9f58e) ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Best 5 Bitcoin & Crypto IRAs for 2026: Which Wins? URL: https://www.swanbitcoin.com/industry/crypto-iras/ Bitcoin and crypto IRAs have exploded in popularity. This guide breaks down the most popular options in 2026 and will help you pick the best one for your goals and situation. --- **Drew** · July 6, 2024 · Updated October 23, 2026 Want to stay ahead of the investment curve?  Consider a Bitcoin or crypto individual retirement account (IRA). The rising demand for self-directed, tax-advantaged Bitcoin and crypto IRAs has given way to many specialized companies helping investors add Bitcoin and crypto assets to their retirement portfolios. In this article, we'll explore the best 5 companies that offer Bitcoin and crypto IRAs, their main features, fees, security measures, and overall reputation in 2026. You'll also get valuable insights and best practices to align your financial goals and preferences with the Bitcoin or crypto IRA provider and product that best aligns with your financial goals. ### Bitcoin IRA vs. Crypto IRA A crypto IRA is a type of individual retirement account that allows you to invest in altcoins (non-Bitcoin) as part of your retirement savings strategy. Altcoins refer to alternative cryptocurrencies - any cryptocurrency other than Bitcoin. These digital asset are often funded through presale token agreements and usually don't have clear legal definitions. Altcoins [are highly speculative](https://www.swanbitcoin.com/bitcoin-vs-altcoins/) and carry numerous unique risks! When investing in any crypto IRA product, understand that the development team typically retains a guaranteed token stake at launch, similar to how an initial public offering (IPO) operates in the traditional stock market. ### A Quick Summary ##### Swan Bitcoin **Swan Bitcoin** is a leading Bitcoin-only IRA provider, founded in 2019 and based in Los Angeles, California. The platform is designed to simplify investing in Bitcoin for long-term retirement savings, making it accessible even to those new to cryptocurrency. **Swan Bitcoin Pros** - **Bitcoin Focus:** Exclusively supports Bitcoin, reducing complexity and focusing on what many consider the most reliable cryptocurrency. - **Easy Setup:** Streamlined onboarding process that can be completed in just one business day. - **No Minimum Balance:** Allows investors to start with any amount, making it accessible to a wide range of investors. - **Tax Advantages:** Bitcoin IRAs held in regulated trust accounts offer tax advantages, potentially increasing the long-term benefits. - [**High Ratings**](https://www.swanbitcoin.com/swan-customer-support/)**:** Strong ratings across Trustpilot and mobile app platforms indicate high customer satisfaction. **Swan Bitcoin Cons** - **Limited Investment Options:** Only offers Bitcoin, which might not appeal to those looking to diversify with other cryptocurrencies. - **Geographical Availability:** While available in all 50 U.S. states, international customers must contact Swan directly, which may complicate access for some. **Fees** - [**Trading Fees**](https://www.swanbitcoin.com/fees/)**:** 1% for buy and sell transactions, charged directly from IRA funds. - [Monthly Fees](https://www.swanbitcoin.com/fees/): 0.02% Assets on Platform / $20 minimum - [**Other Fees**](https://www.swanbitcoin.com/fees/)**:** No hidden fees; all management fees are transparently calculated and disclosed. **Custody Provider** - [**Provider**](https://www.bitgo.com/swan/)**:** Equity Trust Company, a 50-year old self-directed IRA custodian with over $65 Billion in assets. ##### Unchained Capital **Pros of Unchained Capital** - **Secure Investments:** Offers a Bitcoin-only IRA with investments secured through a multi-signature cold storage vault. - **Expert Custody:** Employs a collaborative custody model, enhancing security by distributing control over Bitcoin holdings. - **Specialized Service:** Focuses exclusively on Bitcoin, avoiding complications from other cryptocurrencies. - **Educational Resources:** Provides educational materials on Bitcoin and its technological foundations. **Cons of Unchained Capital** - **Limited Options:** Only supports Bitcoin, which is not suitable for those looking to invest in other cryptocurrencies. - **Higher Fees:** Charges a 0.5% fee plus a $995 setup fee, which might be higher than some competitors. [Pricing and Fees](https://help.unchained.com/how-do-the-fees-for-the-unchained-ira-work) - **Setup Time:** Account setup may take up to five business days, which is slower than other services. ##### Alto Crypto IRA **Pros of Alto Crypto IRA** - **Low Entry Barrier:** A low account minimum of just $10, making it accessible to a wide range of investors. - **Wide Range of Options:** Offers over 200 cryptocurrencies, catering to diverse investment preferences. - **High User Ratings:** Excellent ratings on Trustpilot and the Apple App Store reflect strong customer satisfaction. - **FDIC Insurance:** The FDIC insures cash held in accounts up to $250,000, providing an extra layer of security for fiat currency deposits. **Cons of Alto Crypto IRA** - **Mixed Reviews on Google Play:** Lower ratings on the Google Play Store indicate user dissatisfaction, particularly with the app's functionality on Android devices. - **Legal Uncertainties:** The SEC has recently sued major exchanges like Binance and Coinbase over cryptocurrencies included in Alto's offerings, which might affect the stability or availability of these assets. **Fees** - **Trading Fee:** 1% on all trades. - **Account Fees:** Options between $10 monthly or $100 annually, with two months free on the annual plan. - **Additional Fees:** $50 account closure fee, $25 for outbound wire transfers. [Alto's Fee Structure](https://www.altoira.com/cryptocurrency/) **Customer Insights from Trustpilot** - **Rating:** 4.4/5 from over 1,300 reviews [Trustpilot](https://www.trustpilot.com/review/altoira.com) - **Positive Feedback:** Users appreciate the low investment threshold, variety of cryptocurrency options, and the overall user experience. - **Negative Feedback:** Some concerns about app functionality on Android devices are highlighted by lower ratings on Google Play. ##### BitcoinIRA **Pros of BitcoinIRA** - **Wide Range of Options:** Offers over 60 cryptocurrencies, providing diverse investment choices. - **Versatile Account Types:** It supports various IRA types, including traditional, Roth, SEP, and even a Saver IRA, catering to different retirement planning needs. **Cons of BitcoinIRA** - **High Fees:** Charges a 2% trading fee and a 0.08% monthly maintenance fee, higher than many competitors. **Fees** - **Trading Fee:** 2% on transactions - **Monthly Fee:** 0.08% [More on Fees](https://www.swanbitcoin.com/bitcoin-ira-fees/) ##### Coin IRA **Pros of Coin IRA** - **Diverse Investment Options:** Offers cryptocurrencies and precious metals, allowing for diversified investment portfolios. - **Experienced Parent Company:** Backed by Goldco, a reputable player in the precious metals IRA market, adding a level of trust and experience. - **Comprehensive Rollover Options:** Supports rollovers from various retirement accounts, including 401(k), 457, 403(b), TSP, and pensions. **Cons of Coin IRA** - **High Account Minimums:** Requires a $20,000 minimum for self-directed IRA accounts, which may be prohibitive for some investors. - **Limited Reviews:** Few reviews on Trustpilot make it difficult to gauge widespread customer satisfaction. **Fees** - **Setup and Maintenance Fees:** $50 one-time setup fee, $80 annual maintenance fee, and $100 storage fee. - **Trading Fees:** 1.25% on buy trades, 1% on sell orders, and 2.25% on assisted transactions. [More on Fees](http://coinira.com/) ### 1. Swan Bitcoin **Best Overall and for Bitcoin-only IRA** ***Account Minimum:*** *No minimum balance requirements* ***Investment Options:*** *Bitcoin-only* ***Fees:*** [*1% trading fee and a monthly fee of* 0.02% Assets on Platform */ $20 minimum*](https://www.swanbitcoin.com/fees/) ***Custody Provider:*** [*Equity Trust Company*](https://trustetc.com) Founded in 2019 and headquartered in Los Angeles, California, [Swan Bitcoin](https://swanbitcoin.com) has made buying and owning Bitcoin a breeze. Swan offers an easy and safe way to profit from Bitcoin as a long-term investment. Swan removes the complexity and confusion surrounding Bitcoin IRA investing and is accessible to a broader audience for low fees. ##### Bitcoin IRA options Swan is Bitcoin-only. Unlike the other crypto IRA providers on this list, Swan **DOES NOT** offer any altcoin crypto IRAs, Bitcoin Cash or other Bitcoin hard fork investment products. Swan Bitcoin IRAs are held in a legal, regulated trust account maintained by a qualified custodian authorized to manage assets on clients' behalf. ##### Pricing and fees Setting up a [Bitcoin IRA](https://www.swanbitcoin.com/bitcoin-ira/) with Swan is easy. The IRA onboarding can be completed in just one business day. The account opening and transfer process is very streamlined and straightforward, with no minimum balance requirements and low fees. ** *Per IRS regulations, Swan's fees for buy and sell transactions are 1% and funded from IRA funds. All management fees are calculated monthly outside of the IRA balance.* ##### Recent developments Swan recently launched [Swan Vault](https://www.swanbitcoin.com/vault/), a seamless self-custody solution: - *Best-in-class user experience for secure self-custody.* - *Secure key backup to minimize the risk of loss.* - *Concierge onboarding available.* - *Inheritance planning for Swan Private clients.* - *Built on Bitcoin Core and Specter, a fully open-source stack.* We advocate a long-time horizon investment planning strategy with a Bitcoin-only approach. Take control of your financial future and join the Bitcoin revolution today with [Swan Bitcoin IRA](https://www.swanbitcoin.com/retirement/). ### 2. Unchained Capital **Best for Secure and Encrypted IRA Investments** ***Account Minimum:*** *$6,000* ***Investment Options:*** *Bitcoin-only* ***Fees:*** *0.5%, plus a $995 setup fee* ***Custody Provider:*** *Solera National Bank* [Unchained Capital](http://unchained.com) is a leading financial services company offering Bitcoin-focused solutions, particularly an innovative Bitcoin-only IRA. - *Unchained Capital doesn’t offer Bitcoin Cash or other hard fork products.* - *Utilizes a multi-signature cold storage vault option.* - *Employs a "*[*collaborative custody*](https://unchained.com/blog/enterprise-collaborative-custody-network/)*" approach.* - This leverages a fundamental feature of Bitcoin technology that enables multiple parties to jointly oversee private keys and distribute control over Bitcoin holdings among themselves, Unchained Capital, or other financial institutions. ##### Pricing and fees Unchained Capital offers great IRA features, but its [pricing structure](https://help.unchained.com/how-do-the-fees-for-the-unchained-ira-work) isn't the best. [![](https://www.datocms-assets.com/56652/1706737859-unchained.png?auto=format)](https://help.unchained.com/how-do-the-fees-for-the-unchained-ira-work) Unchained - *Setup fee: $995 (includes the first-year account fee).* - *Annual account fee: $250.* - *Concierge onboarding is available optionally at $250, which offers personalized assistance with setting up the IRA multisig vault​.* - *Bitcoin purchases and sales: 0.50% fee.* - *No fees for personal vaults, including account fees, deposits, and withdrawals.* - *A $125 fee per cosignature for collaborative withdrawals, which is part of their enhanced security measures.* - *0.50% fee for Bitcoin purchases and sales.* Unchained Capital's setup may **take up to 5 business days**. Swan Bitcoin IRA offers a swift one-day account setup process. ##### Custody Provider Unchained Capital recently [announced](https://unchained.com/blog/unchained-series-b/) it has raised $60 million in fresh funding to expand its financial self-custody collaborative services. ### 3. Alto Crypto IRA **Best for Low Investment Minimums** ***Account Minimum:*** *$10* ***Investment Options:*** [*200+ cryptocurrencies*](https://www.altoira.com/cryptocurrency/) ***Fees:*** *1% on all sized trade (No account monthly custody fees)* ***Custody Provider:*** *Alto Trust Co.* [Alto Crypto IRA](http://altoira.com) is another popular crypto IRA offering options for Roth, SEP, traditional Bitcoin and crypto IRAs. ##### Pricing and fees - *1% trade fee.* - *$50 account closure fee.* - *$25 outbound wire transfer fee* - *Investors choose between a $10/month or an annual $100 account fee (including two free months).* Alto Crypto customers [rely on Coinbase to secure their digital assets](https://www.swanbitcoin.com/industry/is-coinbase-safe/) and retirement fund accounts. All cash held by Alto Crypto for the benefit of your IRA is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. Recently, the SEC filed lawsuits against[ Binance](https://www.docdroid.net/I02zzqT/sec-v-binance-4-pdf) and[ Coinbase](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm). In the suit, the SEC names at least (67) alternative cryptocurrencies it believes are unregistered securities—many of these tokens are included in Alto’s Crypto IRA products. Check out our in-depth Alto Crypto IRA review [here](https://www.swanbitcoin.com/altoira-review/). ### 4. BitcoinIRA **Best for a Saver IRA** ***Account Minimum:*** N/A ***Investment Options:*** [*+60 cryptocurrencies*](https://bitcoinira.com/live-pricing/?AID=701&keyword=bitcoin%20ira%20review&network=g&device=c&placement=&adgroup=126567578542&campaign=15147644605&creative=608627389129&adp=&gad_source=1&gclid=CjwKCAjw65-zBhBkEiwAjrqRMM1YmOvFZ8STaeapYpkRtVUmvH_Txy8pMyslp-jqTIlpJTdfYKR_UxoCPnUQAvD_BwE) ***Fees:***  *2% trading fee and a 0.08% monthly maintenance fee* ***Custody Provider:*** [*BitGo Trust*](https://www.prnewswire.com/news-releases/bitcoinira-digital-trust-and-bitgo-announce-educational-webinar-on-crypto-security-301797344.html) [BitcoinIRA](https://bitcoinira.com/) introduced a self-directed cryptocurrency IRA in 2019. Besides a BitcoinIRA and Bitcoin 401k, it offers a Roth Bitcoin IRA, various crypto IRAs, and a Saver IRA selection to suit different investment preferences. It also offers IRA rollovers for Roth, SEP, Employer Plan 401(k)s and new or existing Traditional IRAs. ##### Pricing and fees If you're looking to invest in a Saver IRA, BitcoinIRA might be worth considering. However, it has some several downsides, most notably [exorbitant fees](https://www.swanbitcoin.com/bitcoin-ira-fees/), including: - *2% trading fee is twice that of other crypto IRAs* - *0.08% monthly account fee* ### 5. Coin IRA **Best for Precious Metal IRA Investments**  ***Account Minimum:*** *$20,000 self-directed IRA account, $3,500 non-IRA account* ***Investment Options:*** *16 cryptocurrencies, 3 precious metal options* ***Fees:*** *One-time $50 setup fee, $80 annual maintenance fee, $100 storage fee.* ***Custody Provider:*** *Fireblocks* [Coin IRA](http://coinira.com) was founded in 2017 by [Goldco, a well-known Gold IRA company](https://goldco.com/precious-metals-ira/gold-ira/). Its primary aim was to meet the increasing demand from valued customers who wanted to include Bitcoin and other crypto alternative assets in their retirement accounts. Coin IRA offers to transfer existing IRA funds or make a contribution. It can also rollover existing 401k, 457, 403(b), TSP, pension, and more. It offers 16 altcoin options. It also allows investors to purchase fractional precious metal accounts. ##### Pricing and fees - *1.25% on buy trades.* - *1% on sell orders.* - *2.25% on assisted transactions.* - *Investors pay a $10 minimum trade amount but no monthly or storage fees.* The SEC filed lawsuits against[ Binance](https://www.docdroid.net/I02zzqT/sec-v-binance-4-pdf) and[ Coinbase](https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm). In the suit, the SEC names at least (67) alternative cryptocurrencies it believes are unregistered securities — many of these tokens are included in CoinIRA’s product. ### Why invest in a Bitcoin or crypto IRA? Bitcoin and crypto IRAs offer tax benefits, investment flexibility, and the potential for compound growth. They complement other retirement savings like 401(k)s or pensions and are popular, low-risk investments for several reasons. - **Diversification** Achieve a well-rounded investment portfolio by allocating funds across diverse assets such as stocks, bonds, and mutual funds.  - **Unrealized loss control** Minimize the risk of substantial losses ensuring that potential gains in one area [offset potential losses in another](https://www.swanbitcoin.com/why-selling-some-bitcoin-at-a-loss-can-maximize-your-hodling-potential/). - **Regulatory protection** IRAs are subject to government regulations, providing investors with a layer of security. These regulations maintain the integrity and fairness of the retirement savings system. - **Professional expertise** Entrust your [IRA investments to experienced financial professionals](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) to make informed investment decisions and effectively manage risks. - **Long-term investment horizon** IRAs facilitate long-term savings, typically requiring a minimum holding period of several years. This helps investors minimize the impact of short-term market volatility on their retirement savings. - **Tax benefits** Bitcoin and crypto IRAs offer distinct tax benefits that reduce the overall risk of financial loss. Traditional IRAs provide tax-deferred growth, allowing investments to grow without immediate tax obligations. Roth IRAs permit tax-free withdrawals during retirement, offering valuable protection against future tax uncertainties. ### Why invest in a Bitcoin-only IRA over a crypto IRA? First-time Bitcoin investors often decide to put their money in proxy-Bitcoin investments like [Grayscale (GBTC) or BITO shares](https://www.swanbitcoin.com/bito-vs-gbtc-compared/), Marathon Holdings, and RIOT Blockchain mining stock, or publicly traded stocks like MicroStrategy ([MSTR](https://www.swanbitcoin.com/mstr-vs-gbtc/)), Coinbase (COIN), Tesla (TSLA), and Square (S.Q.). While these are great starting points for many, buying Bitcoin and owning the private keys is the best way to invest in the crypto network. [Investing in a Bitcoin-only IRA like Swan](https://www.swanbitcoin.com/bitcoin-ira/) Bitcoin IRA gives you peace of mind that your investment is securely stored and managed. A Bitcoin IRA is a [Bitcoin-only IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/) investment product. [Bitcoin has been the best performing asset of the last 14 years](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/). ![](https://www.datocms-assets.com/56652/1704394671-asset-class-total-returns.png?auto=format) As the regulatory landscape shifts, it's wise for investors to consider safeguarding their holdings by moving them from Coinbase into secure [cold storage](https://www.swanbitcoin.com/bitcoin-cold-storage/#Understanding-Bitcoin-Cold-Storage). Unlike [alternative cryptocurrencies](https://www.swanbitcoin.com/bitcoin-and-the-one-hit-wonder-altcoins/), Bitcoin was launched without a pre-sale, and the core development team cannot directly control the direction of the protocol alone.  While some have characterized Bitcoin as a Ponzi scheme, if you spend enough time studying the properties of the network, you’ll come to understand [why Bitcoin is not a Ponzi](https://www.swanbitcoin.com/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/). ### What to look for in a crypto IRA provider Consider the following features to integrate cryptocurrencies into your retirement plan for a safe, reliable, and efficient crypto IRA experience. - **Robust security** Given the vulnerability of digital assets to hacking and theft, you should choose a Bitcoin or crypto IRA provider that prioritizes strict security measures. - **Transparent and reasonable fees** Carefully review and compare the [crypto IRA fees](https://www.swanbitcoin.com/crypto-iras/) charged by different custodians and providers. Watch out for hidden or excessive fees that can eat away your returns over time. - **Custodian reputation** Research the [custodian's reputation](https://www.swanbitcoin.com/the-bullish-case-for-bitcoin-custodians/) when entrusting your crypto IRA assets to a custodian. Ensure they have a trustworthy track record and are well-regarded within the industry. - **Tax implications** Familiarize yourself with the tax implications before making investment decisions. For example, gains from Bitcoin investments held within an IRA may be subject to tax when you withdraw the funds. - **Regulations** Stay informed of new regulations or legal developments affecting your crypto IRA investment. ### How to invest in a crypto IRA - Choose a reputable custodian that offers crypto IRA services. - Open an account by completing the necessary paperwork and meeting all the specific requirements. - Depositing funds in fiat currency or transferring existing cryptocurrencies from an external wallet.  - Choose the investments you want from the options available from your custodian. - Actively monitor and manage your crypto IRA to optimize your returns over time. ### What are the fees for crypto IRA trading? The fees associated with crypto IRA trading can vary depending on the custodian and the specific services offered. The most common fees include: - Account setup fees. - Transaction fees for buying, selling, or transferring within the crypto IRA account. - Annual maintenance fees for ongoing account administration. ### Is a crypto IRA tax-free? Whether a crypto IRA is tax-free depends on your jurisdiction's specific tax rules. In some cases, contributions to a crypto IRA may be tax deductible, similar to traditional IRAs. Consult a tax or financial advisor familiar with your country's tax laws to understand a crypto IRA's tax implications. ### Is a crypto IRA safe? Reputable custodians use advanced security protocols like secure storage, encryption, and multi-factor authentication to protect your Bitcoin and crypto IRA assets. Some custodians offer insurance to protect against losses.  ### What about a SEP IRA instead of a Traditional or Roth? A [SEP IRA](https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep), or Simplified Employee Pension Individual Retirement Account, is a type of retirement savings account that allows small business owners and self-employed individuals to contribute to their own retirement savings and provide retirement benefits to their employees. Here's how a SEP IRA typically works: - **Employee eligibility** Employees must meet certain criteria to be eligible for participation. Typically, employees must be at least 21 years old, have worked for the employer in at least three of the last five years, and have received at least $600 in compensation for the year. - **Employer contribution limits** As the employer, you can contribute up to 25% of each eligible employee's compensation, up to a maximum annual limit. The maximum limit changes annually based on IRS guidelines. The maximum employer contribution limit was $66,000 for the tax year 2024. - **Tax benefits** Contributions made by the employer to a SEP IRA are tax-deductible as a business expense. The contributions grow tax-deferred until withdrawn in retirement; at this point, they are subject to ordinary income tax rates. Early withdrawals before age 59½ may also be subject to a penalty. - **Distribution rules** Similar to traditional IRAs, distributions from a SEP IRA are required to begin by April 1 of the year following the year the account holder reaches age 72 (age 70½ if you reached 70½ before January 1, 2020). These distributions are called [Required Minimum Distributions](https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs#:~:text=Required%20minimum%20distributions%20(RMDs)%20are,Dec.%2031%2C%202022).) (RMDs) and are subject to income tax. - **Uniform contribution percentage** If you choose to contribute for yourself, the same percentage of compensation you contribute for eligible employees must be contributed for yourself as the business owner. If a SEP IRA isn't for but you are interested in learning more about how a Backdoor ROTH works, see our review [here](https://www.swanbitcoin.com/mega-backdoor-roth-2024/). Take control of your financial future with a Swan [Bitcoin IRA](https://www.swanbitcoin.com/why-bitcoin-is-the-ultimate-asset-for-your-ira/). Learn more about our[ IRA product](https://www.swanbitcoin.com/bitcoin-ira/) and invest with Swan. [Sign up](https://www.swanbitcoin.com/drewswanbitcoin/) today! For more Bitcoin IRA information, contact [Terrence Yang, Swan Managing Director](https://www.linkedin.com/posts/terrenceyang_vp-of-marketing-swan-global-wealth-swan-activity-7037228740912844801-Em_w/?trk=public_profile_like_view) - terrence@swan.com - 312.448.8012 (text or call) for details. ### Disclaimer *This article is provided for educational purposes only, and cannot be relied upon as tax, accounting, legal, investment, or other advice. Past performance is not indicative of future performance. Bitcoin is a young, volatile, risky asset, and sudden large and sustained drops in price may occur from time to time.* *Swan makes no representations regarding the performance, tax consequences, or investment suitability of any structure described herein, and all such questions should be directed to a relevant advisor of your choice.* *The Bitcoin Retirement Calculator is only intended to show the projected investment performance based on parameters set by you, and in using this tool, you acknowledge that the results generated by placing various parameters through this tool are only projections of hypothetical performance that may be useful in assisting you in deciding how best to potentially incorporate a Bitcoin allocation in your IRA.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Next Bitcoin Halving: April 2028 Date, Countdown & Halving History URL: https://www.swanbitcoin.com/education/bitcoin-halving-dates/ The next Bitcoin halving is expected around April 2028 at block 1,050,000, when the reward drops to 1.5625 BTC. See every halving date since 2012. --- The next Bitcoin halving is expected around **April 2028**, when the network reaches **block 1,050,000**. The reward for mining a block will then drop from 3.125 BTC to **1.5625 BTC**. The network was at [block 972,640 on October 22, 2026](https://mempool.space/api/blocks/tip/height), so the halving is 77,360 blocks away. At the target pace of one block every 10 minutes, that puts the halving around **April 11, 2028** (our calculation). [CoinWarz](https://www.coinwarz.com/mining/bitcoin/halving) projects April 8, 2028, based on a recent average block time of 9 minutes 57 seconds (as of October 22, 2026). The date is an estimate because halvings happen at a block height, not on a calendar day. Bitcoin aims for one block every 10 minutes, but real block times vary. Since the difficulty adjustment on October 16, 2026, blocks have arrived about every 9.7 minutes on average, according to [mempool.space](https://mempool.space/api/v1/difficulty-adjustment) (as of October 22, 2026). Expect the estimate to move by days as the halving gets closer. ### Next Bitcoin halving at a glance - **Estimated date:** about April 8 to 11, 2028 (estimate, as of October 22, 2026) - **Block height:** 1,050,000 - **Blocks remaining:** 77,360 (block 972,640 on October 22, 2026) - **Block reward:** 3.125 BTC now, 1.5625 BTC after the halving - **Halving number:** the 5th of 33 ### Countdown to Bitcoin halving ### Bitcoin halving dates: full history - **1st halving:** November 28, 2012, block 210,000, reward 50 → 25 BTC, Bitcoin about $12 - **2nd halving:** July 9, 2016, block 420,000, reward 25 → 12.5 BTC, Bitcoin about $650 - **3rd halving:** May 11, 2020, block 630,000, reward 12.5 → 6.25 BTC, Bitcoin about $8,600 - **4th halving:** April 20, 2024, block 840,000, reward 6.25 → 3.125 BTC, Bitcoin about $63,800 - **5th halving (next):** about April 2028 (estimate), block 1,050,000, reward 3.125 → 1.5625 BTC - **6th halving:** about 2032 (estimate), block 1,260,000, reward 1.5625 → 0.78125 BTC Prices are from [CoinWarz](https://www.coinwarz.com/mining/bitcoin/halving) (accessed October 22, 2026) and [BIT](https://www.bit.com/es/knowledge-hub/bitcoin-halving) (July 8, 2026). The 2024 halving came at [00:09 UTC on April 20](https://www.blockchain.com/explorer/blocks/btc/840000), which was the evening of April 19 in US time zones. That's why you'll see both dates quoted. [![TradingView log chart of bitcoin's price from 2010 to April 2024 with the four halvings marked: November 28, 2012; July 9, 2016; May 11, 2020; and April 20, 2024](https://www.datocms-assets.com/56652/1714834448-halving-price.png?auto=format)](https://s3.tradingview.com/snapshots/t/tz7lSIL0.png) Trading View ### What is the Bitcoin halving? The halving is a rule written into [Bitcoin's](https://www.swanbitcoin.com/education/what-is-bitcoin/) code. Every 210,000 blocks, roughly every four years, the number of new Bitcoin paid to miners for each block is cut in half. It started at 50 BTC per block in 2009 and is 3.125 BTC today. The halving is how Bitcoin enforces its [fixed supply](https://www.swanbitcoin.com/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/). No company, government or developer decides how many new coins to make. The schedule was set at launch and every node on the network enforces it. For the bigger picture, see [how Bitcoin actually works](https://www.swanbitcoin.com/education/how-bitcoin-actually-works/). ![Blockchain explorer view of a January 12, 2009 transaction in block 170 spending a 50 BTC output: 10 BTC to one address and 40 BTC back](https://www.datocms-assets.com/56652/1685558725-unnamed-2.png?auto=format) ### Bitcoin's inflation rate after each halving Each halving cuts the number of new Bitcoin per day in half, and Bitcoin's supply growth with it. Here is what that looks like, calculated from the reward schedule (144 blocks a day) and the total supply at each halving: - **After 2012:** 3,600 new BTC a day, supply growing about 12.5% a year - **After 2016:** 1,800 new BTC a day, about 4.2% a year - **After 2020:** 900 new BTC a day, about 1.8% a year - **After 2024 (today):** 450 new BTC a day, about 0.83% a year - **After 2028:** 225 new BTC a day, about 0.40% a year - **After 2032:** about 113 new BTC a day, about 0.20% a year These are our calculations: annual new supply divided by total supply at the start of each period. Blocks often arrive a little faster than every 10 minutes, so actual issuance runs slightly higher. ### Why the halving matters - **Supply shock.** Each halving cuts new supply in half overnight. After April 2028, only about 225 new Bitcoin will be created per day, down from about 450 today. More on [supply shocks and monetary debasement](https://www.swanbitcoin.com/economics/monetary-debasement-vs-supply-shocks/). - **Low and falling inflation.** Bitcoin's supply grows about 0.83% a year today and about 0.40% after 2028. Gold has no such schedule: about two-thirds of all the gold ever mined was dug up after 1950, according to the [World Gold Council](https://www.gold.org/goldhub/data/how-much-gold). See [why goldbugs don't understand money](https://www.swanbitcoin.com/analysis/goldbugs-dont-understand-money/). - **Pressure on miners.** Miners' income in Bitcoin halves while their power bills don't. The least efficient miners shut down, and the network's [hashrate](https://www.swanbitcoin.com/education/what-is-bitcoin-hashrate/) and difficulty adjust. - **Predictability.** You can calculate exactly how many Bitcoin will exist on any future date. No other money works like that. ![Google Finance chart of how much bitcoin one US dollar buys, down 99.23% all time to 0.000023 BTC on January 15, 2024](https://www.datocms-assets.com/56652/1705341878-bitcoin-usd.png?auto=format) For what $1 buys in Bitcoin's smallest unit today, see [how many sats are in a Bitcoin](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/). ### What happened to the price after each halving? In every cycle so far, Bitcoin set a new all-time high 12 to 18 months after a halving. Past performance does not guarantee the next cycle will match. - **2012 halving** (about $12): peaked around $1,100 in November 2013, about 367 days later - **2016 halving** (about $650): peaked around $20,000 in December 2017, about 525 days later - **2020 halving** (about $8,600): peaked around $69,000 in November 2021, about 548 days later - **2024 halving** (about $63,800): peaked around $126,000 on October 6, 2025, about 534 days later Peaks for 2013, 2017 and 2021 are from [CoinGecko](https://www.coingecko.com/research/publications/when-bitcoin-all-time-highs) (updated April 17, 2026). The 2025 peak is from [CryptoPotato](https://cryptopotato.com/was-bitcoins-126k-peak-on-october-6-the-final-top-of-this-cycle-poll/) (October 18, 2025). Days are counted from the halving date to the peak date. The 2024 cycle was different in two ways. Bitcoin hit an all-time high *before* the halving: [$73,797 on March 14, 2024](https://www.thenationalnews.com/business/money/2024/04/18/bitcoin-halving-prices/), driven by the new spot ETFs. And 2025 ended [down about 6%](https://www.ccn.com/news/crypto/bitcoin-yearly-return-post-halving-negative-first-time-4-year-cycle/), the first negative year after a halving. Some analysts argue each halving matters less for price than the last; see [the diminishing influence of halvings on Bitcoin's price](https://www.swanbitcoin.com/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/) and [three myths about the halving](https://www.swanbitcoin.com/industry/bitcoin-halving/). For where analysts expect the price to go next, see our [Bitcoin price prediction](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/). ### How does the halving affect miners? Miners' income in Bitcoin halves overnight. On each halving day, the new block reward was worth about $300 in 2012 (25 BTC at $12), about $8,100 in 2016, about $53,800 in 2020 and about $199,400 in 2024. At Bitcoin's price of about $81,200 on October 22, 2026 ([mempool.space](https://mempool.space/api/v1/prices)), the 2028 reward of 1.5625 BTC would be worth about $126,900, less than the 2024 reward unless the price rises. These are our calculations from the halving-day prices above. That squeeze is why mining costs matter so much. See [how much it costs to mine a Bitcoin](https://www.swanbitcoin.com/education/how-much-does-it-cost-to-mine-a-bitcoin/) and [Swan's mining unit](https://www.swanbitcoin.com/industry/swan-bitcoin-unveils-mining-unit/). [Video](https://www.youtube.com/watch?v=4xoZcUyf2w8) ### When will all 21 million Bitcoin be mined? - **Mined so far:** about 20.1 million BTC, roughly 95.7% of the total, as of October 22, 2026. We calculated this from the [current block height](https://mempool.space/api/blocks/tip/height) and the reward schedule. - **When the 2028 halving begins:** 20,343,750 BTC (96.9%). - **99% mined:** around 2035, near block 1.41 million. - **The last Bitcoin:** around the year 2140. After 33 halvings the block reward rounds down to zero satoshis, and miners will earn transaction fees only. An earlier version of this article said 99% would be mined by 2032. The correct estimate is about 2035. ### How does the halving work? 1. Miners compete to add the next block of transactions and earn the block reward plus fees. 2. Every node checks the block height. At each multiple of 210,000 blocks, the reward miners are allowed to claim halves. 3. A miner that claims more than the allowed reward gets its block rejected by the rest of the network. 4. Difficulty adjusts every 2,016 blocks to keep blocks about 10 minutes apart, so the schedule stays on track even as computing power changes. The rule itself is a few lines in Bitcoin Core's [`GetBlockSubsidy` function](https://github.com/bitcoin/bitcoin/blob/master/src/validation.cpp): it divides the block height by 210,000 and halves the starting 50 BTC reward that many times. ![Bitcoin Core GetBlockSubsidy source code: the 50 BTC subsidy is cut in half every 210,000 blocks and forced to zero after 64 halvings](https://www.datocms-assets.com/56652/1713538125-halving-script.jpeg?auto=format) ### Swan's take The halving is a reminder that Bitcoin's supply is fixed and [gets scarcer on schedule](https://www.swanbitcoin.com/culture/accepting-scarcity-a-bitcoin-meditation/). You don't need to time it: many Swan clients simply [buy a fixed amount every week or month](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/) and let the schedule work in the background. ### Frequently Asked Questions #### When is the next Bitcoin halving? Around April 2028 at block 1,050,000. As of October 22, 2026, estimates point to about April 8 to 11, 2028. #### How many blocks until the next halving? 77,360 blocks as of October 22, 2026, when the network was at block 972,640. #### What will the block reward be after the 2028 halving? 1.5625 BTC, down from 3.125 BTC. #### How many Bitcoin are mined per day? About 450 today (3.125 BTC times about 144 blocks a day), falling to about 225 after the 2028 halving. #### How many Bitcoin halvings will there be? 33 in total. The last one happens around 2140. #### When was the last halving? April 20, 2024 (UTC), at block 840,000. That was the evening of April 19 in the US. #### Does the halving make the price go up? In each past cycle Bitcoin reached a new high 12 to 18 months later, but that is not guaranteed. ### Sources - [mempool.space: current block height (972,640, as of Oct 22, 2026)](https://mempool.space/api/blocks/tip/height) - [Blockchain.com: current block count (972,640, as of Oct 22, 2026)](https://blockchain.info/q/getblockcount) - [mempool.space: difficulty adjustment and average block time (as of Oct 22, 2026)](https://mempool.space/api/v1/difficulty-adjustment) - [mempool.space: Bitcoin price ($81,209, Oct 22, 2026)](https://mempool.space/api/v1/prices) - [CoinWarz halving tracker and history (accessed Oct 22, 2026)](https://www.coinwarz.com/mining/bitcoin/halving) - [BIT: Bitcoin halving history and prices (Jul 8, 2026)](https://www.bit.com/es/knowledge-hub/bitcoin-halving) - [Block 840,000 (Blockchain.com) (accessed Oct 19, 2026)](https://www.blockchain.com/explorer/blocks/btc/840000) - [Bitcoin Core source: GetBlockSubsidy (validation.cpp)](https://github.com/bitcoin/bitcoin/blob/master/src/validation.cpp) - [World Gold Council: how much gold has been mined (end-Q2 2026)](https://www.gold.org/goldhub/data/how-much-gold) - [CoinGecko: when Bitcoin hit all-time highs (updated Apr 17, 2026)](https://www.coingecko.com/research/publications/when-bitcoin-all-time-highs) - [October 6, 2025 peak (CryptoPotato) (Oct 18, 2025)](https://cryptopotato.com/was-bitcoins-126k-peak-on-october-6-the-final-top-of-this-cycle-poll/) - [March 14, 2024 pre-halving high (The National) (Apr 18, 2024)](https://www.thenationalnews.com/business/money/2024/04/18/bitcoin-halving-prices/) - [2025 annual return (CCN) (Jan 1, 2026)](https://www.ccn.com/news/crypto/bitcoin-yearly-return-post-halving-negative-first-time-4-year-cycle/) # What is Bitcoin? - Swan Bitcoin URL: https://www.swanbitcoin.com/education/what-is-bitcoin/ Find out why Satoshi Nakamoto invented Bitcoin to solve the problems of the modern financial system including lack of privacy and monetary debasement. --- **Yan Pritzker** · February 25, 2020 · Updated October 23, 2026 Bitcoin is a *peer-to-peer electronic cash*, a new form of digital money that can be trans­ferred between people or computers without any trusted inter­me­diary (such as a bank) whose issuance is not under the control of any single party.  Think of a paper dollar or metal coin. When you give that money to another person, they don't need to know who you are. They just need to trust that the cash they get from you is not a forgery. Typically people do this with physical money using only their eyes and fingers or using special­ized testing equip­ment for more signif­i­cant amounts. The majority of payments in our digital society are made over the Internet using an intermediary service: a credit card company like Visa, a digital payment provider such as PayPal or Apple Pay, or an online platform like WeChat in China. The movement toward digital payments brings with it the reliance on a central actor that has to approve and verify every payment. The nature of money has changed from a physical object you can carry, transfer, and authen­ti­cate yourself to digital bits that have to be stored and verified by a third party that controls their transfer. As we give up our cash for conve­nient digital payments, we also create a system where we give extra­or­di­nary powers to those who would seek to oppress us. Digital payment platforms have become the basis of dystopian author­i­tarian methods of control, such as those used by the Chinese govern­ment to monitor dissi­dents and prevent citizens whose behavior they don't like from purchasing goods and services. Bitcoin offers an alter­na­tive to centrally controlled digital money with a system that gives us back the person-to-person nature of cash but in a digital form. Bitcoin is a digital asset that is issued and trans­ferred over a network of inter­con­nected computers that each indepen­dently verifies that everyone else is playing by the rules. ### Where Did Bitcoin Originate? Bitcoin was invented by a person or group known by the pseudonym of [Satoshi Nakamoto](https://en.wikipedia.org/wiki/Satoshi_Nakamoto) around 2008. No one knows Satoshi's identity, and as far as we know, they've disap­peared and haven't been heard from for years. On Feb 11, 2009, Satoshi wrote about an early version of Bitcoin on an online forum for *cypher­punks*. These people work on cryptog­raphy technology and are concerned with individual privacy and freedom. Though this isn't the first official release announce­ment of Bitcoin, it does contain a good summary of Satoshi's motivations. *"I've devel­oped a new open-source P2P e‑cash system called Bitcoin. It's completely decen­tral­ized, with no central server or trusted parties, because* every­thing is based on crypto proof instead of trust. […]" *The root problem with conven­tional currency is all the trust required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat curren­cies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electron­i­cally, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy and trust them not to let identity thieves drain our accounts. Their massive overhead costs make micro­pay­ments impossible.* *A gener­a­tion ago, multi-user time-sharing computer systems had a similar problem. Before strong encryp­tion, users had to rely on password protec­tion to secure their files […]* *Then strong encryp­tion became avail­able to the masses, and trust was no longer required. Data could be secured in a way that was physi­cally impos­sible for others to access, no matter for what reason, no matter how good the excuse, no matter what.* *It's time we had the same thing for money. With e‑currency based on crypto­graphic proof, without the need to trust a third-party middleman, money can be secure and trans­ac­tions effortless. […]* *Bitcoin's solution is to use a peer-to-peer network to check for double-spending. In a nutshell, the network works like a distrib­uted timestamp server, stamping the first trans­ac­tion to spend a coin. It takes advan­tage of the nature of infor­ma­tion being easy to spread but hard to stifle.* *For details on how it works, see the design paper at* [*http://www.bitcoin.org/bitcoin.pdf*](http://www.bitcoin.org/bitcoin.pdf)*."* **-Satoshi Nakamoto** ### What Problems Does Bitcoin Solve? Let's break down some of Satoshi's posts to glean his motivations. *"I've devel­oped a new open-source P2P e‑cash system."* P2P stands for *peer-to-peer* and indicates a system where one can interact with another without anyone in the middle, as equal peers. You may recall P2P file-sharing technolo­gies like Napster, Kazaa, and BitTor­rent, which first enabled people to share music and movies without an inter­me­diary. Satoshi designed Bitcoin to allow people to exchange *e‑cash*, electronic cash, without going through an inter­me­diary in much the same way. The software is *open source*, meaning anyone can see how it works and contribute to it. We don't need to believe anything Satoshi wrote in his post about how the software works. We can look at the code and verify how it works for ourselves. Further­more, we can evolve the function­ality of the system by changing the code. *"It's completely decen­tral­ized, with no central server or trusted parties…"* Satoshi mentions that the system is *decen­tral­ized* to distin­guish it from systems with central control. Prior attempts to create digital cash, such as DigiCash by David Chaum, were backed by a *central server*, a computer, or a set of computers that was respon­sible for issuance and payment verifi­ca­tion under the control of one corporation.  Such centrally controlled private money schemes were doomed to failure; people can't rely on money that can disap­pear when the company goes out of business, gets hacked, suffers a server crash, or is shut down by the government. Bitcoin is maintained by a network of individ­uals and compa­nies worldwide. To shut Bitcoin down would require shutting down tens to hundreds of thousands of computers worldwide, many in undis­closed locations. It would be a hopeless game of wack-a-mole, as any attack of this nature would simply encourage the creation of new Bitcoin *nodes* or computers on the network. *"…every­thing is based on crypto proof instead of trust."* The Internet, and indeed most modern computer systems, are built on cryptog­raphy, a method of obscuring infor­ma­tion so that only the recip­ient of the infor­ma­tion can decode it. How does Bitcoin get rid of the require­ment of *trust?* Instead of trusting someone that says, *"I am Alice"* or *"I have $10 in my account,"* we can use crypto­graphic math to state the same facts in a way that is very easy to verify by the recip­ient of the proof but impos­sible to forge. Bitcoin uses crypto­graphic math throughout its design to allow partic­i­pants to check everyone else's behavior without trusting any central party. *"We have to trust [the banks] with our privacy, trust them not to let identity thieves drain our accounts."* Unlike using your bank account, digital payment system, or credit card, Bitcoin allows two parties to transact without giving up any person­ally identi­fying infor­ma­tion. Central­ized repos­i­to­ries of consumer data stored at banks, credit card compa­nies, payment proces­sors, and govern­ments are giant honey­pots for hackers. As if to prove Satoshi's point, Equifax was massively compro­mised in 2017, leaking the identi­ties and finan­cial data of more than 140 million people to hackers. Bitcoin decou­ples finan­cial trans­ac­tions from real-world identi­ties. After all, when we give physical cash to someone, they don't need to know who we are, nor do we need to worry that after our exchange, they can use some infor­ma­tion we gave them to steal more of our money. Why shouldn't we expect the same, or better, from digital money? *"The central bank must be trusted not to debase the currency, but the history of fiat curren­cies is full of breaches of that trust."* *Fiat*, Latin for *"let it be done,"* refers to govern­ment and central-bank-issued currency, which is decreed as legal tender by the govern­ment. Histor­i­cally, money emerged from things that were hard to produce, easy to verify, and easy to trans­port, such as seashells, glass beads, silver, and gold.  Any time something was used as money, there was a tempta­tion to create more of it. If someone came with superior technology for quickly making lots of something, that thing lost value. European settlers could strip the African conti­nent of its wealth by trading easy-to-produce glass beads for hard-to-produce human slaves. The same happened to the Native Ameri­cans when the colonists discov­ered the ability to quickly produce wampum shells, which were consid­ered previ­ously scarce by the natives. Over time and throughout the world, people realized that only gold was scarce enough to act as money without fear that someone else could create more. We slowly shifted from a world economy that used gold as money to one where banks issued paper certifi­cates as claims on that gold. Nixon ended the inter­na­tional convert­ibility of the US dollar to gold in 1971 with a tempo­rary order that quickly became permanent. The end of the gold standard allowed govern­ments and central banks full permis­sion to increase the money supply at will, diluting the value of each note in circu­la­tion, known as *debase­ment*. Although govern­ment-issued, redeemable for nothing, pure fiat currency is the money we all know and use daily, it's a relatively new exper­i­ment in the scope of world history. We must trust our govern­ments not to abuse their printing press, but we don't need to look far for examples of *breaches of that trust*. In autocratic and centrally planned regimes where the govern­ment has its finger directly on the money machine, such as Venezuela, the currency has become nearly worth­less. The Venezuelan Bolivar went from 2 Bolivars to the US dollar in 2009 to 250,000 Bolivars to the US dollar in 2019.  Satoshi wanted to offer an alter­na­tive to *fiat* currency, whose supply is always expanding unpre­dictably. To prevent *debase­ment*, Satoshi designed a system of money where the supply was fixed and issued at a predictable and unchange­able rate. There will only ever be 21 million Bitcoins. However, each Bitcoin can be divided into 100 million units, now called [satoshis](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/), producing a total of 2.1 quadrillion satoshis in circu­la­tion around the year 2140. Similarly, your bank controls your digital money. It is the bank's job to keep a record of how much money you have. If you transfer it to someone else, they autho­rize or deny such a transfer. Bitcoin is the first digital system that enforces scarcity without any middlemen and is the first asset known to humanity whose unchange­able supply and schedule of issuance is known entirely in advance. Not even precious metals like gold have this property since we can always mine more and more gold if it is profitable. Imagine discov­ering an asteroid containing ten times as much gold as we have on Earth. What would happen to the price of gold, given such an abundant supply? Bitcoin is immune to such discov­eries and supply manip­u­la­tions. It is simply impos­sible to produce more of it. *"Data could be secured in a way that was physi­cally impos­sible for others to access, no matter for what reason, no matter how good the excuse, no matter what. […] It's time we had the same thing for money."* Our current methods of securing money, putting it in a bank, rely on trusting someone else to do the job. Depending on such an inter­me­diary not only requires confi­dence that they won't do something malicious or foolish but also that the govern­ment won't seize or freeze your funds by exerting pressure on this middleman. However, we have seen time and time again that govern­ments can and do shut down access to money when they feel threat­ened. It might sound silly to someone living in the United States or another highly regulated economy to contem­plate waking up with your money gone, but it happens all the time. I've had my funds frozen by PayPal simply because I hadn't used my account in months. It took me over a week to get restored access to *"my"* money. I'm lucky to live in the United States, where at least I could hope to seek some legal relief if PayPal froze my funds, and where I have basic trust that my govern­ment and bank won't steal my money. Much worse things have happened and are currently happening in countries with less freedom. [Banks shut down during currency collapses](https://www.nbcnews.com/business/business-news/greece-crisis-banks-shut-week-restrictions-imposed-atms-n383606) in Greece. Banks in Cyprus used bail-ins to confis­cate funds from their customer. [The govern­ment declared certain banknotes worth­less](https://www.washingtonpost.com/world/asia_pacific/india-invalidates-large-bank-notes-in-crackdown-on-crime/2016/11/08/cc705ee2-a5c6-11e6-ba46-53db57f0e351_story.html?utm_term=.7951cf519c00) in India.  The former USSR, where I grew up, had a govern­ment-controlled economy leading to massive short­ages of goods. It was illegal to own foreign curren­cies such as the US dollar. When we wanted to leave, my family was allowed to exchange only a limited amount of money per person for US dollars under an official exchange rate vastly divorced from the true free market rate. Effec­tively, the govern­ment stripped us of what little wealth we had by keeping an iron grip on the economy and the movement of capital. Autocratic countries tend to imple­ment strict economic controls, preventing people from withdrawing their money from banks, carrying it out of the country, or exchanging it for not-yet-worth­less curren­cies like the U.S. dollar on the free market. This allows the govern­ment free reign to imple­ment insane economic exper­i­ments such as the socialist system of the USSR. Bitcoin does not rely on trust in a third party to secure your money. Instead, Bitcoin makes your coins *impos­sible for others to access* without a unique key that only you hold, *no matter for what reason, no matter how good the excuse, no matter what*. By holding Bitcoin, you hold the keys to your own finan­cial freedom. Bitcoin separates money and state. *"Bitcoin's solution is to use a peer-to-peer network to check for double-spending […] like a distrib­uted timestamp server, stamping the first trans­ac­tion to spend a coin."* A *network* refers to the idea that a bunch of computers are connected and can send messages to each other. The word *distrib­uted* means that there is not a central party in control, but rather that all the partic­i­pants coordi­nate to make the network successful. In a system without central control, it's essen­tial to know that nobody is cheating. Double-spending refers to the ability to spend the same money twice. Physical money leaves your hand when you spend it. Digital trans­ac­tions, however, can be copied just like music or movies. When you send money through a bank, they ensure you can't move the same money twice. In a system without central control, we need a way to prevent this kind of *double-spending*, which is effec­tively the same as forging money. Satoshi is describing that the partic­i­pants of the Bitcoin network work together to *timestamp* (put in order) trans­ac­tions so that we know what came first. There­fore we can reject any future attempts to spend the same money.  Satoshi tackled several inter­esting technical problems to address the issues of privacy, debase­ment, and central control in current monetary systems. Ultimately, he created a peer-to-peer network that anyone could join without revealing their identity or having to trust any other participant. ### How Has Bitcoin Evolved Over the Last Decade? When Bitcoin launched, only a handful of people used it. It ran the Bitcoin software on their computers to power the Bitcoin network. Most people at the time thought it was a joke or that the system would reveal serious design flaws that would make it unworkable. Over time, more people joined the network, using their computers to add security to the network. People started exchanging Bitcoins for goods and services, giving them real-world value. Currency exchanges emerged that swapped Bitcoin for almost every tradi­tional fiat currency globally. Ten years after its inven­tion, Bitcoin is used by millions of people with tens to hundreds of thousands of nodes running the free Bitcoin software, which is devel­oped by hundreds of volun­teers and compa­nies world­wide. The Bitcoin network has grown to secure more than a hundred billion dollars worth of value. Computers that partic­i­pate in securing the Bitcoin network are known as miners. They operate indus­trial opera­tions worldwide, investing millions of dollars into special­ized mining hardware that only does one thing: ensure that Bitcoin is the most secure network on the planet. [Miners expend electricity](https://www.swanbitcoin.com/education/how-much-does-it-cost-to-mine-a-bitcoin/) to make Bitcoin trans­ac­tions secure against modifi­ca­tion. Because miners compete with each other for the scarce number of Bitcoins produced daily, they must always find the cheapest energy sources on the planet to stay profitable. Miners operate in places ranging from hydro­elec­tric dams in the far reaches of China to wind farms in Texas to Canadian oilfields that produce gas that would other­wise be vented or flared into the atmosphere. Although Bitcoin is highly publi­cized and debated in the media, we estimate that only a few million people in the world have started saving Bitcoin regularly. For many people, especially those who have never lived under oppres­sive regimes, this inven­tion of a new form of digital money outside the control of the govern­ment can be very challenging to under­stand and appre­ciate. That's why we're here. We want to help you under­stand Bitcoin and own your future! ### Yan Pritzker Yan Pritzker is the cofounder and CTO of Swan Bitcoin and the author of [Inventing Bitcoin](https://www.swanbitcoin.com/inventing-bitcoin/). # Why Bitcoin is Not a Ponzi Scheme: Point by Point URL: https://www.swanbitcoin.com/investing/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/ Lyn Alden compares and contrasts Bitcoin to systems that have Ponzi-like characteristics, to see if the claim that Bitcin is a ponzi holds up. --- **Lyn Alden** · January 11, 2021 · Updated October 23, 2026 *Find more of Lyn’s work at* [*lynalden.com*](https://lynalden.com/) One of the concerns I’ve seen aimed at Bitcoin is the claim that it’s a Ponzi scheme. The argument suggests that because the Bitcoin network is contin­u­ally reliant on new people buying in, eventu­ally, it will collapse in price as new buyers are exhausted. So, this article takes a serious look at the concern by comparing and contrasting Bitcoin to systems with Ponzi-like charac­ter­is­tics to see if the claim holds up. The short version is that Bitcoin does not meet the defin­i­tion of a Ponzi scheme in either narrow or broad scope, but let’s dive in to see why that’s the case. ### Defining a Ponzi Scheme To start with tackling the topic of Bitcoin as a Ponzi scheme, we need a definition. Here is how the [US Securi­ties and Exchange Commis­sion defines one](https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme): ***“A Ponzi scheme is an invest­ment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraud­sters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves."*** *With little or no legit­i­mate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.* *Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp specu­la­tion scheme.”* They further go on to list red flags to look out for: *“Many Ponzi schemes share common charac­ter­is­tics. Look for these warning signs:* ***High returns with little or no risk.*** *Every invest­ment carries some degree of risk, and invest­ments yielding higher returns typically involve more risk. Be highly suspi­cious of any “guaran­teed” invest­ment opportunity.* ***Overly consis­tent returns.*** *Invest­ments tend to go up and down over time. Be skeptical about an invest­ment that regularly gener­ates positive returns regard­less of overall market conditions.* ***Unreg­is­tered invest­ments.*** *Ponzi schemes typically involve invest­ments that are not regis­tered with the SEC or state regula­tors. Regis­tra­tion is impor­tant because it provides investors with access to infor­ma­tion about the company’s manage­ment, products, services, and finances.* ***Unlicensed sellers.*** *Federal and state securi­ties laws require invest­ment profes­sionals and firms to be licensed or regis­tered. Most Ponzi schemes involve unlicensed individ­uals or unreg­is­tered firms.* ***Secre­tive, complex strate­gies.*** *Avoid invest­ments if you don’t under­stand them or can’t get complete infor­ma­tion about them.* ***Issues with paper­work.*** *Account state­ment errors may be a sign that funds are not being invested as promised.* ***Diffi­culty receiving payments.*** *Be suspi­cious if you don’t receive a payment or have diffi­culty cashing out. Ponzi scheme promoters sometimes try to prevent partic­i­pants from cashing out by* ***"offering even higher returns for staying put.”*** I think that’s a great set of infor­ma­tion to work with. We can see how many of those attrib­utes, if any, Bitcoin has. ### Bitcoin’s Launch Process Before we get into comparing Bitcoin point-by-point to the above list, we can start with a recap of how Bitcoin was launched. In August 2008, someone identi­fying himself as Satoshi Nakamoto created Bitcoin.org. Two months later, in October 2008, Satoshi released the [Bitcoin white paper](https://bitcoin.org/bitcoin.pdf). This document explained how the technology would work, including the solution to the double-spending problem. As you can see from the link, it was written in the format and style of an academic research paper since it presented a significant technical break­through that provided a solution for well-known computer science challenges related to digital scarcity. It contained no promises of enrich­ment or returns. Then, three months later, in January 2009, Satoshi published the initial Bitcoin software. In the custom genesis block of the blockchain, which contains no spend­able Bitcoin, he provided a time-stamped article headline about bank bailouts from The Times of London, likely to prove that there was no pre-mining and to set the tone for the project. From there, it took him six days to finish things, and mine block 1, which contained the first 50 spend­able bitcoins, and he released the Bitcoin source code that day on January 9th. By January 10th, Hal Finney publicly tweeted that he was running the Bitcoin software as well, and right from the begin­ning, Satoshi was testing the system by sending bitcoins to Hal. Inter­est­ingly, since Satoshi showed how to do it with the white paper more than two months before launching the open-source Bitcoin software himself, techni­cally someone could have used the newfound knowl­edge to launch a version before him.  It would have been unlikely due to Satoshi's big head start in figuring all of this out and under­standing it at a deep level, but it was techni­cally possible. He gave away the key techno­log­ical break­through before launching the project's first version. He answered questions between the publi­ca­tion of the white paper and the software launch. He explained his choices for his white paper to several other cryptog­ra­phers on an [email list](https://satoshi.nakamotoinstitute.org/emails/) in response to their critiques, almost like an academic thesis defense. If they were less skeptical, several of them could have been technical enough to "steal" the project from him. After launch, a set of equip­ment widely believed to belong to Satoshi remained a large Bitcoin miner throughout the first year. Mining is neces­sary to keep verifying trans­ac­tions for the network, and bitcoins had no quoted dollar price at that time. He gradu­ally reduced his mining over time as mining became more distrib­uted across the network. Nearly 1 million bitcoins are believed to belong to Satoshi that he mined through Bitcoin's early period, and he has never moved from their initial address. He could have cashed out at any point with billions of dollars in profit, but so far has not, over a decade into the project's life. It's not known if he is still alive, but other than some early coins for test trans­ac­tions, the bulk of his coins haven't moved. Not long after, he trans­ferred owner­ship of his website domains to others, and ever since, Bitcoin has been self-sustaining among a revolving devel­op­ment commu­nity with no input from Satoshi. Bitcoin is open source and is distrib­uted around the world. The blockchain is public, trans­parent, verifi­able, auditable, and analyz­able. Firms can do analytics of the entire blockchain and see which bitcoins are moving or remaining in place in various addresses. An open-source full node can be run on a basic home computer. It can audit Bitcoin's entire money supply and other metrics. With that in mind, we can then compare Bitcoin to the red flags of being a Ponzi scheme. ### Investment Returns: Not Promised Satoshi never promised any invest­ment returns, let alone high invest­ment returns or consis­tent invest­ment returns. In fact, Bitcoin was known for the first decade of its existence as being an extremely high-volatility specu­la­tion. For the first year and a half, Bitcoin had no quotable price, and after that it had a very volatile price. The online writings from Satoshi still exist, and he barely ever talked about finan­cial gain. He mostly wrote about technical aspects, about freedom, about the problems of the modern banking system, and so forth. Satoshi wrote mostly like a programmer, occasion­ally like an econo­mist, and never like a salesman. We have to search pretty deeply to find instances where he discussed Bitcoin poten­tially becoming valuable. When he did talk about the poten­tial value or price of a bitcoin, he spoke very matter-of-factly in regards to how to catego­rize it, whether it would be infla­tionary or defla­tionary, and admitted a ton of variance for how the project could turn out.  Digging around for Satoshi’s quotes on the price of the value of a Bitcoin, here’s what I found: ***“The fact that new coins are produced means the money supply increases by a planned amount, but this does not neces­sarily result in infla­tion. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be defla­tion, and early holders of money will see its value increase.”*** *___* ***“It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self-fulfilling prophecy. Once it gets bootstrapped, there are so many appli­ca­tions if you could effort­lessly pay a few cents to a website as easily as dropping coins in a vending machine.”*** *___* ***“In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is prede­ter­mined, and the value changes. As the number of users grows, the value per coin increases. It has the poten­tial for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advan­tage of the increasing value.”*** *___* ***“Maybe it could get an initial value circu­larly as you’ve suggested, by people foreseeing its poten­tial useful­ness for exchange. (I would definitely want some) Maybe collec­tors, any random reason could spark it. I think the tradi­tional quali­fi­ca­tions for money were written with the assump­tion that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something. (I’m using the word scarce here to only mean limited poten­tial supply).”*** *___* ***“A rational market price for something that is expected to increase in value will already reflect the present value of the expected future increases. In your head, you do a proba­bility estimate balancing the odds that it keeps increasing.”*** *___* ***“I’m sure that in 20 years, there will either be very large trans­ac­tion volume or no volume.”*** *___* ***“Bitcoins have no dividend or poten­tial future dividend, there­fore not like a stock. More like a collectible or commodity.”*** - [Quotes by Satoshi Nakamoto](https://satoshi.nakamotoinstitute.org/quotes/) Promising unusu­ally high or consis­tent invest­ment returns is a common red flag for being a Ponzi scheme, and with Satoshi’s original Bitcoin, there was none of that. Over time, Bitcoin investors have often predicted very high prices (so far, those predic­tions have been correct). Still, the project itself, from incep­tion, did not have those attributes. ### Open Source: The Opposite of Secrecy Most Ponzi schemes rely on secrecy. If the investors under­stood that an invest­ment they owned was actually a Ponzi scheme, they would try to pull their money out immedi­ately. This secrecy prevents the market from appro­pri­ately pricing the invest­ment until the secret is discovered. For example, investors in Bernie Madoff’s scheme thought they owned various assets. In reality, earlier investor outflows were just being paid back from new investor inflows rather than money being made from actual invest­ments. The invest­ments listed on their state­ments were fake, and for any of those clients, it would be nearly impos­sible to verify that they are fake. Bitcoin, however, works on precisely the opposite set of princi­ples. As a distrib­uted piece of open source software that requires majority consensus to change, every line of code is known, and no central authority can change it. A key tenet of Bitcoin is to verify rather than to trust. Software to run a full node can be freely downloaded and run on a normal PC and can audit the entire blockchain and the entire money supply. It relies on no website, critical data center, or corpo­rate structure. For this reason, there are no “issues with paper­work” or “diffi­culty receiving payments,” refer­encing some of the SEC red flags of a Ponzi. The entire point of Bitcoin is to not rely on any third parties; it is immutable and self-verifi­able. Bitcoin can only be moved with the private key associ­ated with a specific address, and if you use your private key to move your bitcoins, nobody can stop you from doing so. There are, of course, some bad actors in the surrounding ecosystem. People relying on others to hold their private keys (rather than doing so themselves) have sometimes lost their coins due to bad custo­dians, but not because the core Bitcoin software failed. Third-party exchanges can be fraud­u­lent or can be hacked. Phishing schemes or other frauds can trick people into revealing their private keys or account infor­ma­tion. But these are not associ­ated with Bitcoin itself, and as people use Bitcoin, they must ensure they under­stand how the system works to avoid falling for scams in the ecosystem. ### No Pre-Mine As previ­ously mentioned, Satoshi mined virtu­ally all of his coins when the software was public, and anybody else could mine them. He gave himself no unique advan­tage in acquiring coins faster or more efficiently than anyone else and had to expend compu­ta­tional power and electricity to acquire them, which was critical in the early period for keeping the network up and running. And as previ­ously mentioned, the white paper was released before any of it, which would be unusual or risky if the goal was mainly about personal monetary gain. In contrast to this unusu­ally open and fair way that Bitcoin was launched, many future cryptocur­ren­cies didn’t follow those same princi­ples. Specif­i­cally, many later tokens had a bunch of pre-mined concep­tions, meaning that the devel­opers would give themselves and their investors coins before the project became public. Ethereum’s devel­opers provided 72 million tokens to themselves and their investors before any being avail­able to own by the broader public, which is more than half of the current token supply of Ethereum. It was a crowd­sourced project. Ripple Labs pre-mined 100 billion XRP tokens with the majority being owned by Ripple Labs, and gradu­ally began selling the rest to the public while still holding the majority, and is currently being accused by the SEC of selling unreg­is­tered securities. Besides those two, count­less other smaller tokens were pre-mined and sold to the public. A case can be made in favor of pre-mining in certain instances, although some are very critical of the practice. In a similar way that a start-up company offers equity to its founders and early investors, a new protocol can offer tokens to its founders and early investors, and crowd­sourced financing is a well-accepted practice. I’ll leave that debate to others. Few would dispute that early devel­opers can be compen­sated for work if their project takes off, and funds are helpful for early devel­op­ment. As long as it’s fully trans­parent, it comes down to what the market thinks is reasonable. However, when defending against the notion of being a Ponzi scheme, Bitcoin is miles ahead of most other digital assets. Satoshi showed the world how to do it with a white paper months in advance and then put the project out there in an open source way on the first day of spend­able coins being gener­ated, with no pre-mine. A situa­tion where the founder gave himself virtu­ally no mining advan­tage over other early adaptors sure is the “cleanest” approach. Satoshi had to mine the first blocks of coins with his computer just like anyone else and then never spent them other than by sending some of his initial batches out for early testing. This approach improved the odds of becoming a viral movement based on economic or philo­soph­ical princi­ples rather than strictly about riches. Unlike many other blockchains over the years, Bitcoin devel­op­ment occurred organ­i­cally, by a revolving set of large stake­holders and volun­tary user donations, rather than via a pre-mined or pre-funded pool of capital. On the other hand, giving yourself and initial investors most of the initial tokens and then having later investors start mining from scratch or buy into it opens up more avenues for criti­cisms and skepti­cism and begins to look more like a Ponzi scheme, whether or not it actually is. ### Leaderless Growth One thing that makes Bitcoin really inter­esting is that it’s the one big digital asset that flour­ished without central­ized leader­ship. Satoshi created it as its anony­mous inventor, worked with others to guide it through the first two years with continued devel­op­ment on open forums, and then disap­peared. From there, other devel­opers took the mantle in terms of contin­uing to develop and promote Bitcoin. Some devel­opers have been extremely impor­tant, but none of them are critical for its ongoing devel­op­ment or opera­tion. In fact, even the second round of devel­opers after Satoshi largely went in other direc­tions. Hal Finney passed away in 2014. Some other super-early Bitcoiners became more inter­ested in Bitcoin Cash or other projects at various stages. As Bitcoin has devel­oped over time, it has taken on a life of its own. The distrib­uted devel­op­ment commu­nity and userbase (and the market, when it comes to pricing various paths after hard forks) have deter­mined what Bitcoin is and what it is useful for. The narra­tive has changed and expanded as time passed, and market forces rewarded or punished in various directions. For years, debates centered around whether Bitcoin should optimize for storing value or for frequent trans­ac­tions on the base layer, which led to multiple hard forks that all devalued compared to Bitcoin. The market clearly has preferred Bitcoin’s base layer to optimize for being a store of value and an extensive trans­ac­tion settle­ment network, to optimize for security and decen­tral­iza­tion, with an allowance for frequent smaller trans­ac­tions to be handled on secondary layers. Every other blockchain-based token, including hard forks and those associ­ated with totally new blockchain designs, comes on the coattails of Bitcoin, with Bitcoin being the most autonomous project of the industry. Most token projects are still founder-led, often with a big pre-mine, with an unclear future should the founder no longer be involved. Some of the sketchiest tokens have paid exchanges for being listed to try to jump-start a network effect. In contrast, Bitcoin has always had the most natural growth profile. ### Unregistered Investments and Unlicensed Sellers The only items on the red flag list that may apply to Bitcoin are the points that refer to invest­ments that are unreg­u­lated. This doesn’t inher­ently mean that something is a Ponzi; it just means that a red flag is present, and investors should be cautious. Especially in the early days of Bitcoin, buying some magical internet money would be a highly risky invest­ment for most people to make. Bitcoin is designed to be permis­sion-less, to operate outside of the estab­lished finan­cial system, with philo­soph­ical leanings towards liber­tarian crypto­graphic culture and sound money. For most of its life, it had a steeper learning curve than tradi­tional invest­ments since it rests on the inter­sec­tion of software, economics, and culture. Some SEC officials have said that Bitcoin and Ethereum are not securi­ties (and by logical exten­sion, have not committed securi­ties fraud). Many other cryptocur­ren­cies or digital assets have, however, been classi­fied as securi­ties, and some, like Ripple Labs, have been charged with selling unreg­is­tered securi­ties. The IRS treats Bitcoin and many other digital assets like commodi­ties for tax purposes. So, in the early days, Bitcoin may have indeed been an unreg­is­tered invest­ment, but at this point, it has a place in tax law and regula­tory frame­works around the world. Regula­tion changes over time, but the asset has reached the mainstream. It’s so mainstream that Fidelity and other custo­dians hold it for insti­tu­tional clients, and J.P. Morgan gives their [price targets](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/) for it. Many people who have not looked deeply into the industry lump all “cryptocur­ren­cies” together. However, it’s impor­tant for prospec­tive investors to look into the details and find impor­tant differ­ences. Lumping “cryptocur­ren­cies” together would be like lumping “stocks” together. Bitcoin is clearly not like the others in many attrib­utes and was launched and sustained in a way that looks more like a movement or a protocol than an invest­ment, but that over time became an invest­ment as well. From there, folks can look into the rabbit hole of thousands of other tokens that came in Bitcoin’s wake and make their own conclu­sions. There’s an extensive spectrum from well-inten­tioned projects on one side to outright scams on the other. It’s impor­tant to realize, however, that even if real innova­tion is happening somewhere, it doesn’t mean the tokens associ­ated with that project will neces­sarily have durable value. If a token solves some novel problem, its solution could end up being re-adapted to a layer on a larger protocol with a bigger network effect. Likewise, any invest­ment in those other tokens has an oppor­tu­nity cost of being able to purchase more Bitcoin instead. ### Section Summary: Clearly Not a Ponzi Scheme Bitcoin was launched in the fairest way possible. Satoshi first showed others how to do it with the white paper in an academic sense and then did it himself months later, and anyone could begin mining along­side him within the first days as some early adopters did. Satoshi then distrib­uted the devel­op­ment of the software to others and disap­peared, rather than continue to promote it as a charis­matic leader, and so far has never cashed out. From the begin­ning, Bitcoin has remained an open source and fully trans­parent project and has the most organic growth trajec­tory of the industry. Given avail­able infor­ma­tion, the market has priced it as it sees fit, out in the open. ### The Broader Definition of a Ponzi Because the narrow Ponzi scheme clearly doesn’t apply to Bitcoin, some folks have used a broader defin­i­tion of a Ponzi scheme to assert that Bitcoin is one. A Bitcoin is like a commodity in that it’s a scarce digital “object” that provides no cash flow but does have utility. They are limited to 21 million divis­ible units, of which over 18.5 million have already been mined according to the pre-programmed schedule. Every four years, the number of new Bitcoins gener­ated per ten-minute block will be cut in half, and the total number of Bitcoins in existence will asymp­tot­i­cally move towards 21 million. Like any commodity, it produces no cash flows or dividends and is only worth what someone else will pay you for or trade you for. And specif­i­cally, it is a monetary commodity, one whose utility is entirely about storing and trans­mit­ting value. This makes gold its closest comparison. ### Bitcoin vs Gold Market Some people assert that Bitcoin is a Ponzi scheme because it relies on an ever-larger pool of investors coming into the space to buy from earlier investors. To some extent, this reliance on new investors is correct; Bitcoin keeps growing its network effect, reaching more people and bigger pools of money, which keeps increasing its useful­ness and value. Bitcoin will only be successful in the long run if its market capital­iza­tion reaches and sustains a very high level, partly because its security (hash rate) is inher­ently connected to its price. If, for some reason, demand for it were to perma­nently flatline and turn down without reaching a high enough level, Bitcoin would remain a niche asset. Its value, security, and network effect could deteri­o­rate over time. This could begin a vicious cycle of attracting fewer devel­opers to keep building out its secondary layers and surrounding hardware/software ecosystem, poten­tially resulting in quality stagna­tion, price stagna­tion, and security stagnation. However, this doesn't make it a Ponzi scheme because, by similar logic, gold is a 5,000-year-old Ponzi scheme. The vast majority of gold's usage is not for industry; it's for storing and displaying wealth. It produces no cash flows and is only worth someone else's pay. If peoples' jewelry tastes change, and if people no longer view gold as an optimal store of value, its network effect could diminish. There are 60+ years of gold's annual produc­tion supply [estimated to be avail­able](https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold) in various forms around the world. And that's more like 500 years' worth of indus­trial-only supply, factoring out jewelry and store-of-value demand. There­fore, gold's supply/demand balance to support a high price requires the ongoing percep­tion of gold as an attrac­tive way to store and display wealth, which is somewhat subjec­tive. Based on the indus­trial-only demand, there is a ton of excess supply, and prices would be way lower. However, gold's monetary network effect has remained robust for such a long period because the collec­tion of unique proper­ties it has is what made it contin­u­ally regarded as being optimal for long-term wealth preser­va­tion and jewelry across gener­a­tions: it's scarce, pretty, malleable, fungible, divis­ible, and nearly chemi­cally indestruc­tible. As fiat curren­cies worldwide come and go and rapidly increase their per-unit number, gold's supply remains relatively scarce, only growing by about 1.5% per year.  According to industry estimates, there is about one ounce of above-ground gold per person globally. Similarly, Bitcoin relies on the network effect, meaning a suffi­ciently large number of people need to view it as a good holding to retain its value. But a network effect is not a Ponzi scheme in and of itself. Prospec­tive investors can analyze the metrics of Bitcoin's network effect and deter­mine for themselves the risk/reward of buying into it. ### Bitcoin vs Fiat Banking System By the broadest defin­i­tion of a Ponzi scheme, the entire global banking system is a Ponzi scheme. Firstly, fiat currency is an artifi­cial commodity, in a certain sense. A dollar, in and of itself, is just an object made out of paper or repre­sented on a digital bank ledger. Same for the euro, the yen, and other curren­cies. It pays no cash flows on its own, although insti­tu­tions that hold it for you might be willing to pay you a yield (or, in some cases, could charge you a negative yield). When we do work or sell something to acquire dollars, we do so only with the belief that its extensive network effect (including a legal/government network effect) will ensure that we can take these pieces of paper and give them to someone else for something of value. Secondly, when we organize these pieces of paper and their digital repre­sen­ta­tions in a fractional-reserve banking system, we add another compli­cated layer. If about 20% of people were to try to pull their money out of their bank simultaneously, the banking system would collapse. Or, more realis­ti­cally, the banks would just say “no” to your withdrawal because they don’t have the cash. This happened to some US banks in early 2020 during the pandemic shutdown and occurs regularly worldwide. That’s one of the SEC’s red flags of a Ponzi scheme: diffi­culty receiving payments. In the well-known musical chairs game, there is a set of chairs, someone plays music, and kids (of which there is one more than the number of chairs) start walking in circles around the chairs. When the music stops, the kids scramble to sit in one of the chairs. One slow or unlucky kid doesn’t get a seat and, there­fore has to leave the game. In the next round, one chair is removed, and the music resumes for the remaining kids. Eventu­ally after many rounds, there are two kids and one seat, and then there is a winner when that round ends. The banking system is a perma­nent round of musical chairs. There are more kids than chairs, so they can’t all get one. If the music were to stop, this would become clear. However, as long as the music keeps going (with occasional bailouts via printed money), it keeps moving along. Banks collect depos­itor cash and use their capital to make loans and buy securi­ties. Only a tiny fraction of depos­itor cash is avail­able for withdrawal. A bank’s assets consist of loans owed to them, securi­ties such as Treasuries, and cash reserves. Their liabil­i­ties consist of money owed to depos­i­tors, as well as any other liabil­i­ties they may have, like bonds issued to creditors. For the United States, banks collec­tively have about 20% of customer deposits held as cash reserves: ![](https://www.datocms-assets.com/56652/1689941694-fred-swan-1.png?auto=format) As the chart shows, this percentage reached below 5% prior to the global finan­cial crisis (which is why the crisis was so bad and marked the turning point in the long-term debt cycle), but with [quanti­ta­tive easing](https://www.lynalden.com/money-printing/), new regula­tions, and more self-regula­tion, banks now have about 20% of deposit balances as reserves. Similarly, the total amount of physical cash in circu­la­tion, which is exclu­sively printed by the US Treasury Depart­ment, is only about 13% as much as the amount of commer­cial bank deposits, and only a tiny fraction of that is actually held by banks as vault cash. There’s not nearly enough physical cash (by design) for a signif­i­cant percentage of people to pull their capital out of banks at once.  People run into “diffi­culty receiving payments” if enough do so around the same time. As constructed in the current way, the banking system can never end. If a suffi­ciently large number of banks were to liqui­date, the entire system would cease to function. If a single bank were to liqui­date without being acquired, it would hypothet­i­cally have to sell all of its loans and securi­ties to other banks, convert it all to cash, and pay that cash out to depos­i­tors. However, if a suffi­ciently large number of banks were to do that at once, the market value of the assets they are selling would sharply decrease. The market would turn illiquid because there are not enough avail­able buyers. Realis­ti­cally, if enough banks were to liqui­date at once, and the market froze up as debt/loan sellers overwhelmed buyers, the Federal Reserve would end up creating new dollars to buy assets to re-liquidity the market, which would radically increase the number of dollars in circu­la­tion. Other­wise, every­thing nominally collapses because there aren’t enough currency units in the system to support an unwinding of the banking systems’ assets. So, the monetary system functions as a perma­nent round of musical chairs on top of artifi­cial govern­ment-issued commodi­ties, where there are by far more claims on that money (kids) than money that is currently avail­able to them (chairs) if they were to all scramble for it at once. The number of kids and chairs both keeps growing, but there are always way more kids than chairs. Whenever the system partially breaks, a couple more chairs are added to the round to keep it going. We accept this as normal because we assume it will never end. The fractional reserve banking system has functioned worldwide for hundreds of years (first gold-backed, and then totally fiat-based), albeit with occasional infla­tionary events along the way to partially reset things. Each individual unit of fiat currency has degraded by about 99% in value or more over the multi-decade timeline. This means that investors either need to earn a rate of interest that exceeds the real infla­tion rate (which is not currently happening), or they need to buy invest­ments instead, which inflates the value of stocks and real estate compared to their cash flows and pushes up the prices of scarce objects like fine art. Over the past century, T‑bills and bank cash just kept up with infla­tion, providing no real return. However, this tends to be very lumpy. There were decades such as the 1940s, 1970s, and 2010s, where holders of T‑bills and bank cash persis­tently failed to keep up with infla­tion. This chart shows the T‑bill rate minus the official infla­tion rate over nine decades: ![](https://www.datocms-assets.com/56652/1689942894-fred-swan-2.png?auto=format) Chart Source: St. Louis Fed Bitcoin is an emergent defla­tionary savings and payments technology that is primarily used in an unlev­ered way, meaning that most people just buy it, hold it, and occasion­ally trade it. There are some Bitcoin banks and some folks that use leverage on exchanges. Still, overall debt in the system remains low relative to market value, and you can self-custody your own holdings. ### Frictional Costs Another varia­tion of the broader Ponzi scheme claim asserts that because Bitcoin has frictional costs, it’s a Ponzi scheme. The system requires constant work to keep it functioning. Again, however, Bitcoin is the same in this regard as any other commerce system. A healthy trans­ac­tion network inher­ently has frictional costs. With Bitcoin, miners invest in customized hardware, electricity, and personnel to support Bitcoin mining, which means verifying trans­ac­tions and earning bitcoins and trans­ac­tion fees for doing so.  Miners have plenty of risks and plenty of rewards, and they are neces­sary for the system to function. There are also market makers that supply liquidity between buyers and sellers or convert fiat currency to Bitcoin, making it easier to buy or sell Bitcoin, and they neces­sarily extract trans­ac­tion fees as well.  And some insti­tu­tions provide custody solutions: charging a small fee to hold Bitcoin. Similarly, gold miners put plenty of money into personnel, explo­ration, equip­ment, and energy to extract gold from the ground. From there, various compa­nies purify and mint it into bars and coins, secure and store it for investors, ship it to buyers, verify its purity, make it into jewelry, melt it back down for purifi­ca­tion and re-minting, etc.  Atoms of gold keep circu­lating in various forms due to the work of folks in the gold industry, ranging from the finest Swiss minters to the fancy jewelers to the bullion dealers to the “We Buy Gold!” pawn shops. Gold’s energy work is skewed towards creation rather than mainte­nance, but the industry has these ongoing frictional costs too. Likewise, the global fiat monetary system has frictional costs as well. Banks and fintech firms extract over $100 billion per year in trans­ac­tion fees associ­ated with payments, serving as custo­dians and managers for client assets and supplying liquidity as market makers between buyers and sellers. I recently analyzed DBS Group Holdings, for example, the largest bank in Singa­pore. They generate about S$900 million in fees per quarter or well over S$3 billion per year. Trans­lated into US dollars, that’s over $2.5 billion per year USD in fees. And that’s one bank with a $50 billion market capital­iza­tion. There are two other banks in Singa­pore of compa­rable size. J.P. Morgan Chase, the largest bank in the US, is more than 7x as big, and several banks in the US are nearly as large as J.P. Morgan Chase. Just between Visa and Master­card, they earn about $40 billion in annual revenue. The amount of fees gener­ated by banks and fintech compa­nies worldwide per year is over $100 billion. It requires work to verify trans­ac­tions and store value, so any monetary system has frictional costs. It only becomes a problem if the trans­ac­tion fees are too high of a percentage of payment volumes. Bitcoin’s frictional costs are fairly modest compared to the estab­lished monetary system, and secondary layers can continue to reduce fees further.  For example, the Strike App aims to become [arguably the cheapest global payments network](https://jimmymow.medium.com/announcing-strike-global-2392b908f611), running on the Bitcoin/Lightning network. This extends to non-monetary commodi­ties as well. Besides gold, wealthy investors store wealth in various items that do not produce cash flow, including fine art, fine wine, classic cars, and ultra-high-end beach­front property that they can’t realis­ti­cally rent out. There are certain stretches of beaches in Florida or California, for example, with nothing but $30 million homes that are mostly vacant at any given time. I like to go to those beaches because they are usually empty. These scarce items tend to appre­ciate in value over time, which is why people hold them. However, they have frictional costs when you buy, sell, and maintain them. As long as those frictional costs are lower than the average appre­ci­a­tion rate over time, they are decent invest­ments compared to holding fiat, rather than being Ponzi schemes. ### Section Summary: A Network Effect, Not a Ponzi The broadest defin­i­tion of a Ponzi scheme refers to any system that must contin­u­ally keep operating to remain functional or that has frictional costs. Bitcoin doesn’t really meet this broader defin­i­tion of a Ponzi scheme any more than the gold market, the global fiat banking system, or less liquid markets like fine art, fine wine, collec­table cars, or beach­front property. In other words, if your defin­i­tion of something is so broad that it includes every non-cashflow store of value, you need a better definition. All of these scarce items have some utility in addition to their store-of-value proper­ties. Gold and art let you enjoy and display visual beauty. Wine allows you to enjoy and show gusta­tory beauty. Collec­table cars and beach­front homes let you enjoy and display graphical and tactile beauty. Bitcoin enables you to make domestic and inter­na­tional settle­ment payments with no direct mecha­nism to be blocked by any third party, giving the user unrivaled finan­cial mobility. Those scarce objects hold their value or increase over time, and investors are fine with paying small frictional costs as a percentage of their invest­ment as an alter­na­tive to holding fiat cash that degrades in value over time. Yes, Bitcoin requires ongoing opera­tion and must reach a signif­i­cant market capital­iza­tion for the network to become sustain­able, but I think that’s best viewed as techno­log­ical disrup­tion, and investors should price it based on their view of the proba­bility of it succeeding or failing. It’s a network effect that competes with existing network effects, especially in the global banking system. And ironi­cally, the global banking system displays more Ponzi charac­ter­is­tics than the others on this list. ### Final Thoughts Any new technology comes with a period of assess­ment and either rejec­tion or accep­tance. The market can be irrational at first, either to the upside or downside, but over time, assets are weighed and measured. Bitcoin’s price has grown rapidly with each four-year supply halving cycle, as its network effect continues to compound while its supply remains limited. ![](https://www.datocms-assets.com/56652/1690026524-market-price-pre-programmed.png?auto=format) Chart source: Blockchain.com Every invest­ment has risks, and it of course remains to be seen what Bitcoin’s ultimate fate will be. If the market continues to recog­nize it as a useful savings and payment settle­ment technology, avail­able to most people in the world and backed up by decen­tral­ized consensus around an immutable public ledger, it can continue to take market share as a store of wealth and settle­ment network until it reaches some mature market capital­iza­tion of widespread adoption and lower volatility. Detrac­tors, on the other hand, often assert that Bitcoin has no intrinsic value and that one day everyone will realize what it is, and it’ll go to zero. Rather than using this argument, however, the more sophis­ti­cated bear argument should be that Bitcoin will fail in its goal to take persis­tent market share from the global banking system for one reason or another and to cite the reasons why they hold that view. The year 2020 was a story about insti­tu­tional accep­tance, where Bitcoin seemingly transcended the boundary between retail invest­ment and insti­tu­tional alloca­tions. MicroS­trategy and Square become the first publicly-traded compa­nies on major stock exchanges to allocate some or all of their reserves to Bitcoin instead of cash. MassMu­tual became the first sizeable insur­ance company to put a fraction of its assets into Bitcoin. Paul Tudor Jones, Stanley Druck­en­miller, Bill Miller, and other well-known investors expressed bullish views on it. Some insti­tu­tions like Fidelity were onboard the Bitcoin train for years with an eye towards insti­tu­tional custo­dian services, but 2020 saw a bunch more jump on, including the largest asset manager in the world, Black­Rock, showing strong interest. For utility, Bitcoin allows self-custody, mobility of funds, and permis­sion-less settle­ments. Although there are other inter­esting blockchain projects, no other cryptocur­rency offers a similar degree of security to prevent attacks against its ledger (both in terms of hash rate and node distri­b­u­tion) or has a wide enough network effect of having a high proba­bility of contin­u­ally being recog­nized by the market as a store of value in a persis­tent way. And impor­tantly, Bitcoin’s growth was the most organic of the industry, coming first and spreading quickly without central­ized leader­ship and promo­tion, which is what made it more of a founda­tional protocol rather than a finan­cial security or business project. ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. # Is Coinbase Safe in 2026? Security, Insurance & Risks Explained URL: https://www.swanbitcoin.com/industry/is-coinbase-safe/ Coinbase is legit and regulated, but Bitcoin there isn’t FDIC-insured, a 2025 breach exposed 69,461 customers and scams are common. Here’s how safe it is. --- **Matt Ruby** · July 1, 2024 · Updated October 23, 2026 **Yes, Coinbase is legitimate**, and it's one of the most regulated exchanges in the US. It's publicly traded, has been [in the S&P 500](https://thedefiant.io/news/markets/coinbase-to-enter-s-p-500-on-19-replacing-discover-financial-7b51cd7e) since May 2025, and holds an [EU license under the MiCA rules](https://www.theblock.co/post/359141/coinbase-mica-license-europe). **But "safe" depends on what you're worried about.** Coins you hold on Coinbase aren't [FDIC- or SIPC-insured](https://www.coinbase.com/legal/insurance). A May 2025 insider data breach exposed personal data for [69,461 customers](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/). And impersonation scams aimed at Coinbase users cost an [estimated $300 million or more a year](https://nobsbitcoin.com/coinbase-users-lose-over-300m-per-year-to-social-engineering-scams-zachxbt). For Coinbase's finances, losses and lawsuits, see [Is Coinbase in trouble?](https://www.swanbitcoin.com/industry/is-coinbase-in-trouble/) ### Coinbase safety scorecard How Coinbase does on each risk, and what it means for you: - **Company failure:** Large and regulated; nothing public points to insolvency. **For you:** Low, but it isn't zero. Coinbase lost money in the first half of 2026. - **Hack of Coinbase's own wallets:** Crime insurance covers a portion of the coins it holds against theft. **For you:** Low. - **Your account getting taken over:** Common; insurance does not cover stolen logins. **For you:** Your biggest risk. Use a hardware security key. - **Leak of your personal data:** The 2025 insider breach exposed ID images, addresses and phone numbers. **For you:** Medium. Leaked data makes scams more convincing. - **Account freezes and slow support:** A frequent complaint in reviews. **For you:** Medium. You could lose access when you need it. - **What happens to your coins in a bankruptcy:** The user agreement treats them as your property ("financial assets"). **For you:** Better than in 2022, but not tested in court. ### Is it safe to keep money on Coinbase? Coinbase is fine for money you're actively trading, but it isn't a bank account. **US dollars** held at partner banks can get [FDIC pass-through coverage up to $250,000](https://www.coinbase.com/legal/insurance) per depositor, though Coinbase may hold customer cash in US Treasuries or money-market funds instead. **Bitcoin and other coins** have no FDIC or SIPC protection, and Coinbase's crime insurance doesn't cover losses from someone getting into your account. The practical answer: keep only what you're actively trading on Coinbase, and move long-term savings to [a wallet you control](https://www.swanbitcoin.com/education/best-bitcoin-wallet/). ### Coinbase security timeline, 2024 to 2026 The key events behind Coinbase's safety record, in order: - **December 2024:** criminals start bribing overseas customer-support contractors to pull customer records ([The Register](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/)). - **May 11 and 15, 2025:** Coinbase finds the breach, then discloses it. 69,461 customers are affected. - **May 2025:** Coinbase joins the [S&P 500](https://thedefiant.io/news/markets/coinbase-to-enter-s-p-500-on-19-replacing-discover-financial-7b51cd7e). - **August 2025:** the breach class actions are [combined into one federal case in New York](https://harrismartin.com/publications/27/MDL/articles/69831/jpml-centralizes-coinbase-data-breach-actions-in-ny/). - **June 2026:** Coinbase [begins rolling out Transfer Protections](https://www.valuethemarkets.com/cryptocurrency/news/coinbase-introduces-transfer-protections-for-enhanced-security-in-cryptocurrency-transactions) (time delays, daily limits and trusted-contact approval for outgoing transfers). - **July 22, 2026:** Coinbase's [US user agreement](https://www.coinbase.com/legal/user_agreement/united_states) is updated; it treats your coins as a "financial asset" held for you. - **July 2026:** a ruling says the support contractor, TaskUs, [must face negligence claims](https://news.bloombergtax.com/financial-accounting/coinbase-contractor-cant-shake-all-claims-tied-to-data-breach). - **October 6–9, 2026:** Coinbase says it [identified more than 65 active scam victims](https://ministryofcyberaffairs.com/news/65-victims-415k-4-days-inside-coinbase-s-takedown-with-the-fbi-and-nca-9570ffe7-e5b8-4dd5-b9ae-c081c927c455) during a UK and US scam-disruption operation. ### Has Coinbase been hacked? The 2025 data breach No funds were taken directly from Coinbase in its biggest recent incident, but customer data was. Starting in December 2024, criminals bribed customer-support contractors overseas to pull customer records. Coinbase found the breach on May 11, 2025, and disclosed it on May 15 ([The Register](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/), May 21, 2025). - **Customers affected:** 69,461. - **What leaked:** names, dates of birth, addresses, phone numbers, email addresses, the last four digits of Social Security numbers, masked bank details, ID images and account data such as balances and transaction history ([BleepingComputer](https://www.bleepingcomputer.com/news/security/coinbase-says-recent-data-breach-impacts-69-461-customers/)). - **What didn't leak:** passwords, seed phrases and private keys. No funds were taken directly from Coinbase. - **Response:** Coinbase refused a $20 million ransom demand, offered a $20 million reward for information instead, and estimated its costs at $180 million to $400 million. - **Lawsuits:** the class actions were [combined into one federal case in New York](https://harrismartin.com/publications/27/MDL/articles/69831/jpml-centralizes-coinbase-data-breach-actions-in-ny/) before Judge Edgardo Ramos. In July 2026, a ruling said the support contractor, TaskUs, [must face negligence claims](https://news.bloombergtax.com/financial-accounting/coinbase-contractor-cant-shake-all-claims-tied-to-data-breach). No settlement has been reported as of October 19, 2026. ### Is my Bitcoin insured on Coinbase? - **Bitcoin and other coins: no FDIC or SIPC protection.** Coinbase has a crime insurance policy that [covers a portion of the coins](https://www.coinbase.com/legal/insurance) across its storage systems against theft. It doesn't cover losses from someone getting into *your* account. Coinbase says it "will endeavor to make you whole," but warns losses may exceed its insurance (as of October 19, 2026). - **US dollars:** cash held at partner banks can get [FDIC pass-through coverage up to $250,000](https://www.coinbase.com/legal/insurance) per depositor. But Coinbase may instead invest customer dollars in US Treasuries or money-market funds, and says you shouldn't assume your cash is held one way or the other. ### What happens to my Bitcoin if Coinbase goes bankrupt? Coinbase's [US user agreement](https://www.coinbase.com/legal/user_agreement/united_states) (updated July 22, 2026) says each supported coin in your Coinbase wallet is treated as a "financial asset" under Division 8 of the California Uniform Commercial Code. In plain terms, Coinbase holds it for you, and it should not be part of Coinbase's own estate. That's a big improvement on 2022, when Coinbase warned customers could be treated as unsecured creditors. It has not been tested in a Coinbase bankruptcy. ### Is Coinbase a scam? No. Coinbase itself is a legitimate company, but **scams that impersonate Coinbase are common**. On-chain investigator ZachXBT [estimated](https://nobsbitcoin.com/coinbase-users-lose-over-300m-per-year-to-social-engineering-scams-zachxbt) that Coinbase users lose more than $300 million a year to fake "Coinbase support" calls, texts and emails. Coinbase support will never ask you to move your coins to a "safe wallet", share a recovery phrase or install remote-access software. Coinbase does work with police on these scams. During an October 6–9, 2026 operation hosted by the UK's National Crime Agency with the US Justice Department, Coinbase said it [identified more than 65 active scam victims and stopped more than $415,000 in potential losses](https://ministryofcyberaffairs.com/news/65-victims-415k-4-days-inside-coinbase-s-takedown-with-the-fbi-and-nca-9570ffe7-e5b8-4dd5-b9ae-c081c927c455). ### What reviews say Coinbase rates [4.0 out of 5 on Trustpilot from 23,266 reviews](https://www.trustpilot.com/review/coinbase.com) (as of October 19, 2026). Reviews are split: 45% are 5-star and 43% are 1-star. Negative reviews mostly mention locked or frozen accounts, slow support and verification delays. ### How to use Coinbase more safely 1. Use a **hardware security key** (such as a YubiKey) or passkey instead of text-message two-factor codes. 2. Turn on **address allowlisting** so withdrawals can only go to addresses you approved. 3. Turn on **Transfer Protections** if your account has them. Coinbase [began rolling out](https://www.valuethemarkets.com/cryptocurrency/news/coinbase-introduces-transfer-protections-for-enhanced-security-in-cryptocurrency-transactions) time delays, daily limits and trusted-contact approval for outgoing transfers in June 2026; it may not be available to every user yet. 4. Never call a phone number from a text or email. Go to coinbase.com directly. 5. Keep only what you're actively trading on Coinbase. 6. Move long-term savings to a wallet you control, ideally [multisig](https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/) or [cold storage](https://www.swanbitcoin.com/education/bitcoin-cold-storage/). ### Coinbase alternatives If you'd rather not keep your savings on Coinbase, compare [Coinbase alternatives](https://www.swanbitcoin.com/industry/coinbase-alternative/), the [most trusted Bitcoin investment sites](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/), our [Kraken review](https://www.swanbitcoin.com/industry/kraken-review/) and the [best Bitcoin exchanges](https://www.swanbitcoin.com/education/bitcoin-exchanges/). If you've decided to leave, here's [how to delete your Coinbase account](https://www.swanbitcoin.com/education/delete-coinbase-in-3-easy-steps/). ### Swan's take Coinbase is a real, regulated business, and for most people an exchange hack isn't the biggest danger. The real risks are social: leaked data, impersonation scams and accounts that get frozen. Bitcoin in your own custody can't be frozen by an exchange. Swan is Bitcoin-only. With Swan Vault, its collaborative 2-of-3 multisig, you hold two keys offline and Swan manages the third for recovery, so you keep control without going it alone. ### Frequently Asked Questions #### Is Coinbase safe to use in 2026? Coinbase is legitimate and regulated. Your biggest risks are account takeovers and scams, not a hack of Coinbase itself. Coins held on Coinbase are not FDIC or SIPC insured. #### Is it safe to keep money on Coinbase? It's fine for money you're actively trading. US dollars at partner banks may get FDIC pass-through coverage up to $250,000, but Bitcoin and other coins have no FDIC or SIPC protection. Keep long-term savings in a wallet you control. #### Is Coinbase legit? Yes. It's a publicly traded US company in the S&P 500 and is licensed in the US and the EU (MiCA). #### Has Coinbase been hacked? In May 2025, bribed support contractors leaked personal data on 69,461 customers, including names, addresses, phone numbers and ID images. No passwords, seed phrases or private keys were taken. #### Is my money insured on Coinbase? US dollar balances held at partner banks may get FDIC pass-through coverage up to $250,000, but Coinbase may also hold customer dollars in Treasuries or money-market funds. Bitcoin and other coins are not FDIC or SIPC insured. #### How can I protect my Coinbase account? Use a hardware security key or passkey instead of text-message codes, turn on address allowlisting, and never call a phone number from a text or email. #### What is Coinbase's Trustpilot rating? 4.0 out of 5 ('Great') from 23,266 reviews as of October 19, 2026, with 45% 5-star and 43% 1-star reviews. #### What happens to my Bitcoin if Coinbase goes bankrupt? Coinbase's user agreement (updated July 22, 2026) treats each coin you hold as a financial asset held for you under Division 8 of the California Uniform Commercial Code. This hasn't been tested in a Coinbase bankruptcy. ### Sources - [Coinbase insurance and protections page (as of Oct 19, 2026)](https://www.coinbase.com/legal/insurance) - [Coinbase US user agreement (updated Jul 22, 2026)](https://www.coinbase.com/legal/user_agreement/united_states) - [Data breach details (The Register, May 21, 2025)](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/) - [Breach data types incl. phone numbers (BleepingComputer, May 21, 2025)](https://www.bleepingcomputer.com/news/security/coinbase-says-recent-data-breach-impacts-69-461-customers/) - [Breach lawsuits centralized in SDNY before Judge Ramos (HarrisMartin, Aug 7, 2025)](https://harrismartin.com/publications/27/MDL/articles/69831/jpml-centralizes-coinbase-data-breach-actions-in-ny/) - [TaskUs must face negligence claims (Bloomberg Tax/Law, Jul 29, 2026)](https://news.bloombergtax.com/financial-accounting/coinbase-contractor-cant-shake-all-claims-tied-to-data-breach) - [ZachXBT scam estimate (No Bullshit Bitcoin)](https://nobsbitcoin.com/coinbase-users-lose-over-300m-per-year-to-social-engineering-scams-zachxbt) - [Joint Disruption Week, Oct 6–9, 2026 (Ministry of Cyber Affairs, Oct 14, 2026)](https://ministryofcyberaffairs.com/news/65-victims-415k-4-days-inside-coinbase-s-takedown-with-the-fbi-and-nca-9570ffe7-e5b8-4dd5-b9ae-c081c927c455) - [Coinbase Transfer Protections (Value The Markets, Jun 16, 2026)](https://www.valuethemarkets.com/cryptocurrency/news/coinbase-introduces-transfer-protections-for-enhanced-security-in-cryptocurrency-transactions) - [Coinbase on Trustpilot (as of Oct 19, 2026)](https://www.trustpilot.com/review/coinbase.com) - [Coinbase status page incident history (as of Oct 19, 2026)](https://status.coinbase.com/) - [S&P 500 inclusion (The Defiant)](https://thedefiant.io/news/markets/coinbase-to-enter-s-p-500-on-19-replacing-discover-financial-7b51cd7e) - [MiCA license (The Block)](https://www.theblock.co/post/359141/coinbase-mica-license-europe) ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. # Tax-Free Billions: Step by Step How Peter Thiel Has $5B in His Roth IRA URL: https://www.swanbitcoin.com/investing/peter-thiel-ira/ Few stories have captivated the public’s imagination quite like that of Peter Thiel’s Roth IRA. Here is the journey from a modest contribution of $1,700 to +$5 billion, step by step. --- **Drew** · June 2, 2024 · Updated October 23, 2026 ### The Peter Thiel IRA Strategy: How $1,700 Became $5B  In 1999, before he became a billionaire, PayPal founder [Peter Thiel had a Roth IRA worth $1,700](https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank). Utilizing the proceeds from his substantial PayPal windfall and investment in Facebook startup shares, Thiel channeled millions into investments in other startups within Silicon Valley. He even directed funds into his own hedge fund, as [detailed in a memo](https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank) from his financial assistant into his Roth IRA. ##### Step 1: Initiate a Roth Account The process begins by opening a [Roth IRA account.](https://www.youtube.com/watch?v=IiKwKIABwX4) Even a relatively small amount is okay. ##### Step 2: Earn or Buy Shares in a Startup The next step is to seek out an opportunity to acquire an asset, or a stake in a startup company, that is expected to experience significant value growth in the future. This step is crucial because the goal is to invest in a company whose shares are valued at a very low cost at the time of acquisition. As with most startups, PayPal provided its key executives with modest initial salaries and substantial stock grants. Per Thiel's IRS records, his earnings for that particular year amounted to $73,263. Investors can use the money in their Roth IRA to buy low-value shares in a private company before it gets big ($0.00001). Some founders have used this strategy to buy shares in their own companies - with dirt-cheap prices set by the companies themselves.  **Why do this?**  Purchasing shares in a startup at a price per share that is extremely low, often just a fraction of a cent, allows them to acquire many shares with a relatively small investment for the greatest possible return on investment.  ##### Step 3: Sell Your Shares, Keep All Profits in the Roth IRA Account Sell your shares and keep all the profits tax-free in a Roth IRA account. The Peter Thiel IRA strategy acquired the ultimate edge any investor could have used but was a strategy that eluded almost all other investors:  ***Turning his personal investment bank into a Roth IRA, 100% shielded from taxation.***  This newfound advantage allowed him to utilize the funds within his [Roth IRA account](https://www.youtube.com/watch?v=iW8Rwf0x6ds) to buy and sell nearly any investment he desired.  ##### Step 4: Reinvest Profits Investors can use the profits and gains to invest in new assets or securities within the Roth IRA. **Example**: If you have stocks that have appreciated in value, you can sell them within the Roth IRA and use the proceeds to purchase new stocks or other eligible assets.  - This strategy takes advantage of the Roth IRA's unique tax treatment. - It opens up opportunities for individuals, including wealthy investors like hedge fund managers, industrialists, and heirs, to take advantage of the tax benefits offered by Roth IRAs. ##### Step 5: Wait Until Age 59 ½ As the startup grows in value over time, any profits generated from the appreciated stock within the Roth IRA remain shielded from taxes indefinitely.  ***** As long as a Roth IRA remains untouched until the investor reaches the age of 59 and a half (the age at which qualified withdrawals can be made without penalty), the earnings continue to grow tax-free.*** ### The Peter Thiel IRA Strategy vs. Warren Buffet Warren Buffet is universally recognized as one of the best investors ever. But, not even Buffet can't hold a candle to the Peter Thiel IRA strategy. ![](https://www.datocms-assets.com/56652/1693604072-pt-wb.jpeg?auto=format) ##### Warren Buffet’s Berkshire Hathaway Averaged a [20%](https://finance.yahoo.com/news/numbers-dive-warren-buffetts-performance-is-even-more-amazing-than-you-think-193533658.html) annual return over 55 years.  **Total Return****:** 5,828%  ### The Peter Thiel IRA Strategy Averaged an annual return of [97%](https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank) over 24 years. **Total Return****:** 294,117,600% The Peter Thiel IRA strategy seized the opportunity to acquire shares in startups at remarkably economical prices. Thiel's pivotal contribution of $500,000 marked the initial significant external cash infusion into Facebook. 1. **Thiel's Roth IRA is the largest account of its kind** 2. **Won't have to pay a single penny in tax on this account** 3. **Can start to collect** [**tax-free**](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) **only six years from now** Interestingly, these very Facebook shares found their way—***predictably***—into Thiel's Roth IRA, a fact later unveiled by a Facebook attorney through a letter submitted in a federal court.  This strategic move ensured the Peter Thiel IRA strategy wouldn't be liable for taxes on his early investment in the social media giant. At the time, Senator Roth [assured](https://www.finance.senate.gov/download/bentsen-roth-ira) that his novel IRA concept would, stating: *"Offer assistance to diligent, middle-class American workers."* How would Senator Roth feel about Peter Thiel’s IRA portfolio today?  ### Transforming the Traditional IRA: The Roth Conversion  About a decade after the creation of the Roth, changes introduced a [backdoor method for investors](https://www.cnbc.com/2021/12/20/backdoor-roth-401k-and-ira-rules-for-the-wealthy-survive-for-now.html) to convert a traditional retirement account into a Roth IRA by paying a one-time tax. This conversion option was introduced through the [Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA)](https://www.congress.gov/bill/109th-congress/house-bill/4297) and became effective in 2010.  ![](https://www.datocms-assets.com/56652/1693605814-congress.png?auto=format) The newfound flexibility significantly impacted retirement planning by allowing individuals to shift their retirement savings from a tax-deferred environment to a tax-free one. It allowed any American to take money in less favorable traditional retirement accounts and, after paying a one-time tax, to shift them to a Roth where their money could grow untaxed, similar to having your own Bermuda-style tax haven right here in the U.S. This process was a significant departure from previous restrictions that limited Roth conversions to individuals with lower income levels. Before the change: - Individuals were limited in converting their traditional IRAs to Roth IRAs. - It expanded retirement planning options and gave individuals more flexibility in managing their retirement savings. - It also changed the tax code and allowed individuals to convert their traditional IRAs into Roth IRAs.  - Removed the income limitation previously preventing high-income earners from converting their traditional IRAs into Roth IRAs. - Only individuals with a modified adjusted gross income (MAGI) of $100,000 or less were eligible to convert. Now, regardless of income, [anyone](https://help.swanbitcoin.com/hc/en-us/articles/13481965807511-Can-I-convert-my-Swan-Traditional-IRA-into-a-Swan-Roth-IRA-) could convert their traditional IRAs into a Roth. **NOTE*****:*** *When an individual converts a traditional IRA to a Roth IRA, they are required to pay income tax on the converted amount in the year of conversion. This is because the funds in the traditional IRA were contributed pre-tax, and the government wants to collect the tax revenue it would have received upon withdrawal.* The decision to convert to a Roth IRA depends on several factors:  - **Future tax rates** - **The individual's financial situation** - **Retirement goals**  So, what does this mean for you?  Read out recent article about Backdoor Roth IRAs [here](https://www.swanbitcoin.com/mega-backdoor-roth-2024/). ### Zero To One In his book *"Zero to One,"* Thiel argues that fortunes are built not by luck or unfair advantage but by discerning investors and founders who are more courageous than their peers, leaders who zig when the crowd zags.  ![](https://www.datocms-assets.com/56652/1693603268-zero-to-one.png?auto=format) Thiel devotes an entire chapter to the importance of keeping secrets, writing that *"every great business is built around a secret that's hidden from the outside."* By 2019, Thiel's holdings were so vast and diverse that his +$5 billion was spread across 96 sub-accounts inside his Roth. These retirement account strategies all relied on publicly traded investments and strategy available to all taxpayers…  You won’t make $5B dollars like Thiel, ***but could you make $5M***? Absolutely!  ### Compound Interest: Humanity's Greatest Shortcoming   Investing for retirement is a journey that requires careful planning, patience, and a good understanding of the dynamics of compound interest.  *"The greatest shortcoming of the human race is our inability to understand the exponential function."* - Albert Allen Bartlett ##### Understanding Compound Interest *One question often arises in investors' minds:* ***How often does money typically double in an IRA?***  **Simple Example****:** Would you rather have $5M all at once or a penny that doubles daily for a month?  ![](https://www.datocms-assets.com/56652/1693603455-day-1.png?auto=format) Unlike simple interest, which is calculated solely on the principal amount, compound interest also takes into account the accumulated interest. - As your interest earns interest, your account experiences exponential growth - This phenomenon can lead to significant financial gains over the long term ![](https://www.datocms-assets.com/56652/1693605666-one-dollar-doubling-20-times.jpeg?auto=format) https://www.insuranceandestates.com/compound-interest-growth/ ### Facebook Stock is For Insiders: A Roth Bitcoin IRA is For Everyone When shaping a robust retirement portfolio, including Bitcoin might initially raise eyebrows. Often linked to its fair share of volatility and perceived risk, Bitcoin presents an array of reasons why it should be considered a prudent long-term investment for your IRA. #### Tax-Advantaged Growth Diversifying your IRA with assets that promise substantial returns, like Bitcoin, can be a shrewd move. The inherent advantage lies in the potential for tax-deferred or even tax-free growth, depending on your IRA type – whether Traditional or Roth.  #### Be Like Thiel While you likely won't be able to turn your Roth IRA account into a $5B; a $5M Roth Bitcoin IRA account, perhaps. **Bitcoin can provide you financial security using the Peter Thiel IRA strategy.**  #### Run Your Numbers To see what may happen to your returns after adding Bitcoin to your retirement portfolio... Run your own numbers with our [open-source Bitcoin Retirement Calculator](https://nakamotoportfolio.com/apps/ira/ira_client_basic). This is part of a new initiative called [Swan Research](https://nakamotoportfolio.com/nakamoto/start). [![](https://www.datocms-assets.com/56652/1701235664-naka-port.png?auto=format)](https://nakamotoportfolio.com/) ### Expand Past 60/40 The conventional retirement portfolio often follows a [60/40 allocation](https://www.cnbc.com/select/how-to-build-60-40-portfolio/) between stocks and bonds, a strategy designed to balance risk and reward. Bitcoin, however, takes diversification to the next level.  Unlike traditional assets, Bitcoin exhibits a lower correlation, making it a valuable addition to your portfolio. This can ultimately enhance your overall risk-adjusted returns, offering an edge in unpredictable market conditions. ##### Hedge Against Inflation and the Legacy Banking System The insidious effects of inflation on the purchasing power of your hard-earned money over time are undeniable. Bitcoin is a potential safeguard against the erosion of value caused by [unrestrained monetary expansion](https://www.swanbitcoin.com/cantillon-effect/) from newly issued banking credit and government deficit spending into the total supply.  With a [fixed maximum supply](https://www.swanbitcoin.com/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/) of 21 million coins, Bitcoin's scarcity [sets it apart](https://www.swanbitcoin.com/goldbugs-dont-understand-money/) from fiat currencies susceptible to devaluation and even physical gold.  In June 2022, [authorities in Uganda revealed a significant](https://www.ntu.edu.sg/cas/news-events/news/details/major-gold-deposits-discovered-in-uganda#:~:text=In%20June%2C%20Ugandan%20officials%20announced,an%20estimated%20US%2412%20trillion.) find of around 31 million metric tonnes of gold ore within the nation. This discovery could yield up to 320,158 metric tonnes of purified gold, with an approximate valuation of $12 trillion. This single new discovery represents more than the entire amount of gold above ground and accounted for in total supply. As this gold is recovered, it will begin to significantly dilute the scarcity properties of the metal.  However, no one will ever find a single additional satoshi of new Bitcoin. New massive gold deposits like that recently discovered in Uganda will continue, though. Predictive models indicate that the final Bitcoin will be mined by 2140, over a century away. In contrast, NASA, the U.S. government's space research agency, has devised a [strategy to capture an asteroid](https://science.nasa.gov/solar-system/asteroids/16-psyche/) valued at $10 quintillion, primarily due to its abundant precious metals like gold. NASA's timeline suggests that the asteroid retrieval mission could occur in late 2029 or early 2030, assuming the mission is successful. ##### Amplified Expected Returns Contrast the conventional 7% expected annual returns of a standard 60/40 portfolio with the impressive track record of Bitcoin.  Above, we mentioned that the Peter Thiel IRA strategy has netted an average return of 97%. Since its inception in 2009, Bitcoin's average annual price increase has [exceeded](https://www.swanbitcoin.com/bitcoin-price-prediction/) 100%, showcasing its potential for monumental growth.  While it's prudent not to put all your eggs in one basket, even a small allocation into a Bitcoin IRA can significantly bolster your retirement prospects. ### How to Roll over Your Current IRA into a Swan Bitcoin Roth IRA A rollover is a movement from a 401k, 403b, or similar retirement account to a Roth IRA usually coordinated primarily by the customer and their existing retirement custodian. Typically funds are sent by wire transfer, which is the recommended method. Funds can also be sent via cheque. However, this is significantly slower than sending funds via wire transfer. Before [completing a rollover](https://help.swanbitcoin.com/hc/en-us/articles/11880665682455-How-do-Rollovers-into-the-Swan-IRA-work-), you must liquidate your other retirement account to cash. You can [initiate a Rollover](https://help.swanbitcoin.com/hc/en-us/articles/11880665682455-How-do-Rollovers-into-the-Swan-IRA-work-) via your current custodian. **Can I roll over part of my 401k, 403b, or similar retirement account into Swan Bitcoin IRA?** - To see your Swan Bitcoin IRA Rollover [instructions](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-), click on "*Rollovers*" on the Navigator bar of your [Swan IRA account](https://www.swanbitcoin.com/bitcoin-ira/). - While the IRS allows partial rollovers, some employer-sponsored plans may not permit them. - Contact your plan administrator to confirm whether your plan allows partial rollovers. **What is the pricing of the Swan Bitcoin IRA?** A 1% transaction [fee](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) taken out when the funds are moved over.  **Interested in speaking to an IRA expert?** A Swan Bitcoin IRA compares very well against other [Bitcoin investment sites](https://www.swanbitcoin.com/bitcoin-investment-sites/). If you are interested in a tax-free [Coinbase alternative](https://www.swanbitcoin.com/delete-coinbase-account-in-three-easy-steps/) or have any other questions, please email **IRA@swanbitcoin.com.** [Book a call](https://calendly.com/d/yvk-2sq-x59/swan-ira-consultation?utm_medium=blog&utm_source=blog&utm_campaign=ira_landing_page) with a rep today and get a personalized guide on how to maximize your retirement portfolio with Bitcoin. If you liked this content, check out the [Swan Signal blog](https://www.swanbitcoin.com/articles/). *For more information, please visit* [*swan.com*](http://swan.com/)*.* ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Is Coinbase in Trouble? 2026 Losses, Layoffs & Lawsuits Explained URL: https://www.swanbitcoin.com/industry/is-coinbase-in-trouble/ Coinbase lost $754M in the first half of 2026, cut 14% of staff and trades about 55% below its 2025 peak. What’s wrong, what isn’t, and what it means. --- **Matt Ruby and Drew** · June 21, 2024 · Updated October 23, 2026 **Short answer: Coinbase is under real pressure in 2026, but nothing public suggests it is at risk of collapse.** It reported net losses of $394.1 million in the first quarter and [$359.5 million in the second](https://www.sec.gov/Archives/edgar/data/0001679788/000167978826000087/q226earningsdeck_sec.htm) (as of the Q2 2026 report). Second-quarter revenue fell 19% from a year earlier. It [laid off about 14% of staff](https://www.coindesk.com/business/2026/05/05/coinbase-cuts-14-of-staff-as-ai-reshapes-how-crypto-companies-operate) in May 2026. Its stock [closed at $173.16 on October 16, 2026](https://www.marketbeat.com/stocks/NASDAQ/COIN/news/), about 55% below its [October 2025 peak of $387.27](https://www.tikr.com/de/blog/coinbase-has-lost-56-in-a-year-citizens-jmp-sees-63-upside). Even so, it still makes money from day-to-day operations, with [adjusted EBITDA of $207.8 million](https://www.sec.gov/Archives/edgar/data/0001679788/000167978826000087/q226earningsdeck_sec.htm) in the second quarter. Coinbase will [report third-quarter 2026 results on October 29, 2026](https://investingnews.com/coinbase-announces-date-of-third-quarter-2026-financial-results/), after the market closes. We will update this page when they are out. For customers, the bigger questions aren't about Coinbase's survival. They're about who holds your coins, how you'd get them out and what happens if something goes wrong. ### How much money is Coinbase losing? All figures from Coinbase's [Q2 2026 earnings deck](https://www.sec.gov/Archives/edgar/data/0001679788/000167978826000087/q226earningsdeck_sec.htm), as of June 30, 2026 (the latest reported quarter as of October 19, 2026). - **Revenue:** $1.22 billion, down 19% from Q2 2025 - **Net income:** −$359.5 million, a second straight loss (Q1: −$394.1 million) - **Trading (transaction) revenue:** $599 million. It falls when Bitcoin and altcoin prices and trading fall. - **Subscription and services revenue:** $555 million, 48% of revenue, with $292 million of it from stablecoins (USDC) - **Adjusted EBITDA:** $207.8 million, still positive - **Customer assets on the platform:** $246 billion, down from $294 billion the previous quarter - **Employees:** 4,321, after a 14% cut in May 2026 Much of the loss is on paper. Coinbase holds Bitcoin and other coins as an investment, and when prices fall it must report the drop: $209.5 million of the Q2 loss came from this. There was also a $52.4 million restructuring charge for the layoffs. #### Where the Q2 2026 loss came from Our breakdown, using the figures in Coinbase's Q2 2026 earnings deck: - **About 58% of the $359.5 million Q2 loss** ($209.5 million) came from write-downs on the coins Coinbase holds as an investment. - **About 15%** ($52.4 million) was the restructuring charge for the May 2026 layoffs. - **First-half 2026 net loss: about $753.6 million** ($394.1 million in Q1 plus $359.5 million in Q2). - **Customer assets fell about 16% in one quarter**, from $294 billion to $246 billion. ### What to watch on October 29 - **Did the losses continue?** Q3 covers July to September 2026. - **Subscription and services revenue.** Coinbase guided [$500 million to $580 million](https://www.sec.gov/Archives/edgar/data/0001679788/000167978826000087/q226earningsdeck_sec.htm) for Q3 (guidance given with Q2 results). This is the steadier part of the business. - **Customer assets and trading volume.** These show whether customers are staying active. ### Why is Coinbase struggling? 1. **The market downturn.** Bitcoin fell about 50%, from a [record of about $126,000 on October 6, 2025 to $63,000 on February 5, 2026](https://biz.liga.net/en/all/news/bitcoin-fell-to-63-000-the-lowest-level-in-a-year-the-global-market-lost-2-trillion). Less trading means less fee revenue, and fees are still Coinbase's biggest business. For where analysts think Bitcoin goes next, see our [Bitcoin price predictions](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/). 2. **Losses on its own holdings.** Coinbase holds Bitcoin and other coins on its balance sheet, so falling prices show up directly as losses. 3. **Its stock was priced for a boom.** COIN [hit $387.27 on October 8, 2025](https://www.tikr.com/de/blog/coinbase-has-lost-56-in-a-year-citizens-jmp-sees-63-upside) and [closed at $173.16 on October 16, 2026](https://www.marketbeat.com/stocks/NASDAQ/COIN/news/). Its 52-week range was [$139.11 to $373.25](https://finance.yahoo.com/quote/COIN/) as of October 19, 2026. 4. **Regulation stalled.** The CLARITY Act, a market-structure bill Coinbase lobbied hard for, [failed a Senate procedural vote 49–50 on September 15, 2026](https://www.coindesk.com/policy/2026/09/15/crypto-clarity-act-flames-out-in-failed-u-s-senate-vote). Sen. Thom Tillis then moved to reconsider the vote, which keeps it technically alive, but [no new vote has been scheduled](https://cryptonews.com/news/clarity-act-senate-revival/) and supporters call a revival before the new Congress a long shot (as of September 17, 2026). If it doesn't pass by January 2027, it would generally have to be [reintroduced in the next Congress](https://www.dlapiper.com/en/insights/publications/2026/09/senate-fails-to-advance-the-clarity-act) (as of September 22, 2026). ### What's going right for Coinbase - **The SEC dropped its lawsuit.** The SEC [dismissed its 2023 case against Coinbase with prejudice](https://www.theblock.co/post/343835/coinbase-case-officially-dropped-by-sec) in February 2025, so it can't be refiled. - **USDC income continues.** Its revenue-sharing deal with Circle, which issues the USDC stablecoin, [renewed automatically through 2029](https://en.coin-turk.com/circle-coinbase-extend-usdc-partnership-through-2029-after-automatic-renewal/) [under existing conditions](https://brokerchooser.com/news/coinbase-locks-in-usdc-terms-without-changes-to-circle-deal--c72caa61) (reported August 2026). - **It now does more than trading.** Coinbase [bought the derivatives exchange Deribit for about $2.9 billion](https://www.theblock.co/post/366957/coinbase-completes-2-9-billion-cash-and-stock-acquisition-of-deribit) in August 2025, [launched no-fee stock trading and prediction markets through Kalshi](https://fortune.com/2025/12/17/coinbase-announces-stock-trading-and-new-kalshi-based-prediction-markets) in December 2025, and runs the Base network. - **It is licensed in more places.** It has an [EU license under the MiCA rules](https://www.theblock.co/post/359141/coinbase-mica-license-europe) (June 2025), [conditional approval from the US bank regulator (OCC) for a national trust charter](https://www.theblock.co/post/396244/coinbase-receives-conditional-approval-national-trust-charter-occ) (April 2026), and has been [in the S&P 500](https://thedefiant.io/news/markets/coinbase-to-enter-s-p-500-on-19-replacing-discover-financial-7b51cd7e) since May 2025. ### Coinbase timeline: 2025 to 2026 The key events behind the numbers, in order (sources are linked in the sections above): - **February 2025:** The SEC dismisses its 2023 lawsuit with prejudice. - **May 2025:** Coinbase discloses an insider data breach affecting 69,461 customers and joins the S&P 500. - **June 2025:** Coinbase receives an EU license under MiCA. - **August 2025:** Coinbase completes its roughly $2.9 billion purchase of Deribit. - **October 2025:** Bitcoin hits a record of about $126,000 on October 6, and COIN peaks at $387.27 on October 8. - **December 2025:** No-fee stock trading and Kalshi prediction markets launch. - **February 2026:** Bitcoin falls to $63,000 on February 5. - **April 2026:** The OCC conditionally approves a national trust charter. - **May 2026:** Coinbase lays off about 14% of staff on May 5. - **July 2026:** A ruling says support contractor TaskUs must face negligence claims over the breach. - **August 2026:** The USDC revenue deal with Circle renews through 2029. - **September 2026:** The CLARITY Act fails a Senate procedural vote, 49–50, on September 15. - **October 2026:** COIN closes at $173.16 on October 16, a report says Taiwan blocked Coinbase's website, and Q3 results are due October 29. ### What lawsuits and security problems does Coinbase face? - **The May 2025 data breach.** Criminals bribed overseas customer-support contractors to steal data on [69,461 customers](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/). They got names, addresses, phone numbers, ID images, the last four digits of Social Security numbers and account balances, but no passwords or private keys. Coinbase refused a $20 million ransom demand and estimated the cost at $180 million to $400 million. The lawsuits were [combined into one federal case in New York](https://harrismartin.com/publications/27/MDL/articles/69831/jpml-centralizes-coinbase-data-breach-actions-in-ny/) before Judge Edgardo Ramos. In July 2026, a ruling said the support contractor, TaskUs, [must face negligence claims](https://news.bloombergtax.com/financial-accounting/coinbase-contractor-cant-shake-all-claims-tied-to-data-breach). No settlement has been reported as of October 19, 2026. - **Impersonation scams.** Blockchain investigator ZachXBT [estimated in early 2025](https://nobsbitcoin.com/coinbase-users-lose-over-300m-per-year-to-social-engineering-scams-zachxbt) that Coinbase users lose more than $300 million a year to scammers posing as Coinbase support. The leaked breach data made these scams easier. - **Oregon's lawsuit.** Oregon's attorney general sued in 2025, claiming Coinbase sold unregistered securities. Coinbase moved the case to federal court, and in September 2025 a federal magistrate judge [recommended sending it back to state court](https://www.cohenmilstein.com/oregon-says-judge-was-right-to-remand-coinbase-suit/). [UNVERIFIED: whether that recommendation was adopted and the case's current status; a docket listing shows the federal case as stayed, with a last filing on September 17, 2026, but entries are not public.] - **State staking orders.** In July 2023, [California, New Jersey, South Carolina and Wisconsin](https://www.theblock.co/post/239734/coinbase-users-in-four-states-will-no-longer-be-able-to-stake-additional-assets) ordered Coinbase to stop taking new staking deposits from residents. [UNVERIFIED: whether these restrictions are still in place in October 2026.] - **Taiwan.** On October 15, 2026, a [news report citing Bloomberg](https://www.marketscreener.com/news/coinbase-kalshi-sites-blocked-in-taiwan-over-suspected-election-betting-ce785dd3dc88f126) said Taiwan blocked the Coinbase and Kalshi websites over suspected election betting, under a court ruling. [UNVERIFIED: full details are paywalled; scope and duration not confirmed.] [![Coinbase status page in March 2024 showing two incidents: delayed Polygon (MATIC) sends and delayed transactions on Base](https://www.datocms-assets.com/56652/1711511281-coinbase-status.png?auto=format)](https://status.coinbase.com/?subscription_confirmed=true) Coinbase [![Coinbase's Trustpilot page in June 2024 showing a 1.8-star rating from 9,313 reviews, 82% of them one-star](https://www.datocms-assets.com/56652/1718144741-cb-ratings.png?auto=format)](https://www.trustpilot.com/review/coinbase.com) Trustpilot ### Is your Bitcoin safe on Coinbase? - **Your Bitcoin is not FDIC or SIPC insured.** Coinbase's [crime insurance covers a portion](https://www.coinbase.com/legal/insurance) of the coins across its storage systems against theft. It does not cover your losses if someone gets into your account (as of October 19, 2026). - **Your coins should stay yours in a bankruptcy.** In 2022 Coinbase warned that customers could be treated as unsecured creditors if it went bankrupt. Its [current user agreement](https://www.coinbase.com/legal/user_agreement/united_states) (updated July 22, 2026) says Bitcoin and other coins in your Coinbase account are treated as a "financial asset" under Division 8 of the California Uniform Commercial Code. That rule is meant to keep it separate from Coinbase's own assets. It's much better than 2022, but it hasn't been tested in a Coinbase bankruptcy. - **Coinbase holds most ETF Bitcoin.** CEO Brian Armstrong said in February 2026 that Coinbase has ["80% plus" of US Bitcoin ETF custody](https://bitcoinmagazine.com/news/coinbase-ceo-addresses-paper-bitcoin). The company says it will not publish wallet addresses it holds for clients. That's a lot of Bitcoin with one custodian. For a fuller look at Coinbase's security record and custody, read our guide to [whether Coinbase is safe](https://www.swanbitcoin.com/industry/is-coinbase-safe/). ### Swan's take Swan is Bitcoin-only, so we look at this differently from a multi-coin exchange. Coinbase is a large, regulated public company and isn't about to disappear. Its struggles still show the trade-off of leaving savings on any exchange: you depend on its finances, its security and its support staff. The surest protection is to [hold your own keys](https://www.swanbitcoin.com/education/bitcoin-cold-storage/). ### How do I move my Bitcoin off Coinbase? 1. Set up a [Bitcoin wallet you control](https://www.swanbitcoin.com/education/best-bitcoin-wallet/), such as a hardware wallet or a [multisig vault](https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/), and write down the recovery phrase offline. 2. In Coinbase, choose **Send**, paste your wallet's Bitcoin address and send a small test amount first. 3. Once the test arrives, send the rest. 4. If you keep an account open, turn on Coinbase's address allowlisting and use a hardware security key. If you're closing your account completely, follow our step-by-step guide to [deleting your Coinbase account](https://www.swanbitcoin.com/education/delete-coinbase-in-3-easy-steps/). ### What are the alternatives to Coinbase? If you want to keep buying Bitcoin somewhere else, compare fees, custody and IRA options in our guide to [trusted Bitcoin investment sites](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/) and see our roundup of [Coinbase alternatives](https://www.swanbitcoin.com/industry/coinbase-alternative/). ### Frequently Asked Questions #### Is Coinbase going bankrupt? No public evidence says so. Coinbase posted net losses in Q1 and Q2 2026 but stayed positive on adjusted EBITDA ($207.8 million in Q2 2026, per its Q2 earnings deck). #### When does Coinbase report Q3 2026 earnings? Thursday, October 29, 2026, after the US market closes, with a live Q&A at 2:00 p.m. PT (announced October 14, 2026). #### Why did Coinbase lay off employees in 2026? It cut about 14% of staff on May 5, 2026. CEO Brian Armstrong cited the down market and how AI has changed the way Coinbase works. #### Is my Bitcoin safe if Coinbase fails? Coinbase's user agreement (updated July 22, 2026) treats Bitcoin and other coins in your Coinbase account as financial assets held for you, separate from Coinbase's own assets. This hasn't been tested in a Coinbase bankruptcy. Coins held at Coinbase are not FDIC or SIPC insured. #### Why is Coinbase stock down? Lower Bitcoin and altcoin prices and trading cut revenue and caused paper losses on Coinbase's own coin holdings. COIN closed at $173.16 on October 16, 2026, about 55% below its October 8, 2025 peak of $387.27. #### How much did Coinbase lose in 2026? About $753.6 million in the first half of 2026: $394.1 million in Q1 and $359.5 million in Q2. About 58% of the Q2 loss came from write-downs on the coins it holds. #### Did the SEC drop its case against Coinbase? Yes. It was dismissed with prejudice in February 2025. #### How do I get my Bitcoin off Coinbase? Set up a wallet you control, send a small test amount from Coinbase with Send, then send the rest once it arrives. ### Sources - [Coinbase Q2 2026 earnings deck (SEC filing, data as of June 30, 2026)](https://www.sec.gov/Archives/edgar/data/0001679788/000167978826000087/q226earningsdeck_sec.htm) - [Coinbase announces date of Q3 2026 results (Investing News, Oct 14, 2026)](https://investingnews.com/coinbase-announces-date-of-third-quarter-2026-financial-results/) - [COIN close $173.16 on Oct 16, 2026 (MarketBeat)](https://www.marketbeat.com/stocks/NASDAQ/COIN/news/) - [COIN 52-week range $139.11–$373.25 (Yahoo Finance)](https://finance.yahoo.com/quote/COIN/) - [COIN peak $387.27 on Oct 8, 2025 (TIKR)](https://www.tikr.com/de/blog/coinbase-has-lost-56-in-a-year-citizens-jmp-sees-63-upside) - [Bitcoin fell to $63,000 from its $126,210 peak (LIGA.net, Feb 6, 2026)](https://biz.liga.net/en/all/news/bitcoin-fell-to-63-000-the-lowest-level-in-a-year-the-global-market-lost-2-trillion) - [14% layoffs (CoinDesk, May 5, 2026)](https://www.coindesk.com/business/2026/05/05/coinbase-cuts-14-of-staff-as-ai-reshapes-how-crypto-companies-operate) - [CLARITY Act fails Senate 49–50 (CoinDesk, Sep 15, 2026)](https://www.coindesk.com/policy/2026/09/15/crypto-clarity-act-flames-out-in-failed-u-s-senate-vote) - [CLARITY Act long-shot revival (Cryptonews, Sep 17, 2026)](https://cryptonews.com/news/clarity-act-senate-revival/) - [Senate fails to advance the CLARITY Act (DLA Piper, Sep 22, 2026)](https://www.dlapiper.com/en/insights/publications/2026/09/senate-fails-to-advance-the-clarity-act) - [SEC case dropped (The Block)](https://www.theblock.co/post/343835/coinbase-case-officially-dropped-by-sec) - [Circle–Coinbase USDC deal renewed through 2029 (CoinTurk, Aug 6, 2026)](https://en.coin-turk.com/circle-coinbase-extend-usdc-partnership-through-2029-after-automatic-renewal/) - [USDC deal renews under existing conditions (BrokerChooser, Aug 4, 2026)](https://brokerchooser.com/news/coinbase-locks-in-usdc-terms-without-changes-to-circle-deal--c72caa61) - [Deribit acquisition (The Block)](https://www.theblock.co/post/366957/coinbase-completes-2-9-billion-cash-and-stock-acquisition-of-deribit) - [Stock trading and Kalshi prediction markets (Fortune, Dec 17, 2025)](https://fortune.com/2025/12/17/coinbase-announces-stock-trading-and-new-kalshi-based-prediction-markets) - [MiCA license (The Block)](https://www.theblock.co/post/359141/coinbase-mica-license-europe) - [OCC conditional trust charter approval (The Block, Apr 2, 2026)](https://www.theblock.co/post/396244/coinbase-receives-conditional-approval-national-trust-charter-occ) - [S&P 500 inclusion (The Defiant)](https://thedefiant.io/news/markets/coinbase-to-enter-s-p-500-on-19-replacing-discover-financial-7b51cd7e) - [Data breach details (The Register, May 21, 2025)](https://www.theregister.com/2025/05/21/coinbase_confirms_insider_breach_affects/) - [Breach lawsuits centralized in SDNY before Judge Ramos (HarrisMartin, Aug 7, 2025)](https://harrismartin.com/publications/27/MDL/articles/69831/jpml-centralizes-coinbase-data-breach-actions-in-ny/) - [TaskUs must face negligence claims (Bloomberg Tax, Jul 29, 2026)](https://news.bloombergtax.com/financial-accounting/coinbase-contractor-cant-shake-all-claims-tied-to-data-breach) - [ZachXBT scam estimate (No Bullshit Bitcoin)](https://nobsbitcoin.com/coinbase-users-lose-over-300m-per-year-to-social-engineering-scams-zachxbt) - [Oregon remand recommendation (Cohen Milstein, Oct 2025)](https://www.cohenmilstein.com/oregon-says-judge-was-right-to-remand-coinbase-suit/) - [Oregon v. Coinbase federal docket listing (Docket Alarm)](https://www.docketalarm.com/cases/Oregon_District_Court/3--25-cv-00952/State_of_Oregon_et_al._v._Coinbase_Inc._et_al/) - [Four states halt new Coinbase staking (The Block, Jul 14, 2023)](https://www.theblock.co/post/239734/coinbase-users-in-four-states-will-no-longer-be-able-to-stake-additional-assets) - [Taiwan blocks Coinbase and Kalshi sites (MT Newswires via MarketScreener, Oct 15, 2026)](https://www.marketscreener.com/news/coinbase-kalshi-sites-blocked-in-taiwan-over-suspected-election-betting-ce785dd3dc88f126) - [Coinbase status page incident history](https://status.coinbase.com/) - [Coinbase insurance page](https://www.coinbase.com/legal/insurance) - [Coinbase US user agreement (updated Jul 22, 2026)](https://www.coinbase.com/legal/user_agreement/united_states) - [ETF custody concentration (Bitcoin Magazine, Feb 17, 2026)](https://bitcoinmagazine.com/news/coinbase-ceo-addresses-paper-bitcoin) ### Matt Ruby Matt Ruby is a seasoned content writer helping educate million worldwide about Bitcoin for Swan. Matt work with tech companies to create words, videos, and other content that makes them seem human. He specializes in taking boring/drab tech topics and making them interesting, educational, funny, and accessible to regular people. ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # Robinhood Fees 2026: Stock, Robinhood Crypto & Transfer Fees URL: https://www.swanbitcoin.com/industry/robinhood-fees/ Robinhood charges no commission, but Bitcoin trades carry a spread (about $0.95 per $100), transfers out cost $100 and instant withdrawals up to 1.75%. --- **Drew** · July 6, 2024 · Updated October 23, 2026 Robinhood doesn't charge commissions on stocks, ETFs, Bitcoin or other coins, but trading there isn't free. For Bitcoin and other coins, the cost is built into the price you see. Robinhood says that for every $100 of coins you trade through the app, it receives about [$0.95 (0.95%)](https://robinhood.com/support/articles/crypto-order-routing/) from the trading firm that fills the order (as of June 15, 2026). Other fees apply when you move money: [$100](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) to transfer your account to another broker, up to [1.75%](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) for instant withdrawals and [$25](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) for outgoing wires (as of October 19, 2026). Here's every Robinhood fee that matters in 2026, what they add up to on a real purchase, and how the cost of buying Bitcoin compares with a Bitcoin-only service. ### Robinhood fees at a glance - **Stock and ETF trades:** [$0 commission](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf). Small SEC and FINRA regulatory fees apply when you sell. - **Bitcoin and altcoin trades (default app orders):** no fee shown; [Robinhood receives about 0.95%](https://robinhood.com/support/articles/crypto-order-routing/), built into the price of every buy and sell. - **Bitcoin and altcoin trades (Legend, ladder and API orders):** [0.95% taker / 0.50% maker under $10K of monthly volume, falling to 0.03% / 0% at $25M+](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf), on orders routed to exchanges. - **Bitcoin withdrawal to your own wallet:** [no Robinhood fee; you pay the network fee](https://robinhood.com/us/en/support/articles/cryptocurrency-wallets) on each withdrawal. - **Robinhood Gold:** [$5/month or $50/year](https://robinhood.com/us/en/support/articles/gold-overview), an optional subscription (a 30-day free trial may be offered). - **Account transfer out (ACATS):** [$100](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) to move your account to another broker. - **Instant withdrawal to a bank or card:** [up to 1.75% (minimum $1, maximum $150)](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf), only if you choose instant. - **Outgoing wire:** [$25](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) per wire. - **Margin interest:** [5.25% on up to $50K, falling to 4.20% at $50M+](https://robinhood.com/us/en/support/articles/margin-rates/) when you borrow (Gold includes the first $1,000). - **Staking:** [Robinhood keeps 25% of rewards](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf) on staked coins (not Bitcoin). - **Account, maintenance and inactivity fees:** [$0](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf). Fees checked October 19, 2026 against Robinhood's [Robinhood Crypto fee schedule](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf) (document dated June 2026), its [brokerage fee schedule](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) (document dated September 29, 2026), its [Robinhood Crypto order routing page](https://robinhood.com/support/articles/crypto-order-routing/) (figure as of June 15, 2026) and its [margin rates page](https://robinhood.com/us/en/support/articles/margin-rates/) (rates as of September 17, 2026). ### How Robinhood Crypto fees work When you tap Buy in the Robinhood app, your order goes to a trading firm (a market maker) that sells you the coins at a price slightly above the market. That gap is the **spread**. [Robinhood's own example](https://robinhood.com/support/articles/crypto-order-routing/): on a $100 purchase with a 0.96% spread, Robinhood receives $0.95 (as of June 15, 2026). You don't see this cost as a separate line, so it's easy to miss. On a $1,000 Bitcoin purchase, about $9.50 goes to Robinhood, and you pay it again when you sell. In 2026 Robinhood added **fee tiers** for Bitcoin and altcoin orders sent straight to exchanges through Robinhood Legend, ladder orders and its API. Small traders pay a [0.95% fee](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf) to buy at the current price (taker) or 0.50% if they place an order that waits (maker). Heavy traders pay much less. Robinhood says these [maker/taker fees are rolling out gradually](https://robinhood.com/us/en/support/articles/crypto-fee-tiers) and may not be available to every customer yet (as of October 19, 2026). Default orders in the app still use the spread, and they don't count toward your tier. Exchange-routed fees by 30-day volume (taker / maker): - **$0–$10K:** 0.95% / 0.50% - **$10K–$50K:** 0.75% / 0.35% - **$50K–$250K:** 0.25% / 0.125% - **$250K–$500K:** 0.15% / 0.075% - **$500K–$1M:** 0.125% / 0.06% - **$1M–$5M:** 0.10% / 0.04% - **$5M–$10M:** 0.04% / 0.02% - **$10M–$25M:** 0.03% / 0.01% - **$25M+:** 0.03% / 0.00% Source: [Robinhood Crypto fee schedule](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf), as of October 19, 2026. ### What Robinhood fees cost on a real purchase Using the fees above (as of October 19, 2026), here's what buying $1,000 of Bitcoin in the Robinhood app adds up to: - **Buying $1,000:** about $9.50 goes to Robinhood through the spread (0.95%). The full spread you pay can be slightly larger: in Robinhood's example it was 0.96%. - **Selling it later:** about another $9.50, so a buy and a sell cost roughly $19 in total. - **Getting the cash fast:** an instant withdrawal of $1,000 to your bank costs up to $17.50 (1.75%). A standard bank transfer is free. - **Moving your account to another broker:** $100, flat. - **Withdrawing the Bitcoin to your own wallet:** no Robinhood fee, only the Bitcoin network fee. If you accumulate on a schedule instead ([dollar-cost averaging](https://www.swanbitcoin.com/investing/dollar-cost-average/)), say $100 a week for a year ($5,200 in total), about $49.40 goes to Robinhood through the spread. The same purchases at Swan cost $52.00 in fees (1%), or $49.50 for a new client, because there's no buy fee on a new client's first $250 ([Swan fees](https://www.swanbitcoin.com/fees/), checked October 22, 2026). ### Does Robinhood charge a fee to sell? There's no commission to sell, but selling isn't completely free. When you sell stocks or ETFs, [small SEC and FINRA regulatory fees apply](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf). When you sell Bitcoin or other coins in the app, you pay the spread again, about 0.95% ([Robinhood](https://robinhood.com/support/articles/crypto-order-routing/)). ### Can you withdraw Bitcoin from Robinhood? Yes. Since a [2024 settlement with the California Department of Justice](https://www.theblock.co/post/314828/robinhood-to-settle-3-9-million-penalty-with-california-doj-over-past-crypto-withdrawal-restrictions) over earlier withdrawal limits, Robinhood lets customers send Bitcoin and other coins to [their own wallets](https://www.swanbitcoin.com/education/best-bitcoin-wallet/). Per Robinhood's [wallet support page](https://robinhood.com/us/en/support/articles/cryptocurrency-wallets) (as of October 19, 2026): - No Robinhood fee, only the Bitcoin network fee. - You must pass a "verify it's you" check first, which can take up to five business days. - If you turn on address allowlisting, new addresses have a 48-hour wait. - Withdrawal limits are set by Robinhood and can't be raised on request. - Lightning and Taproot (bc1p) addresses aren't supported. ### Can you hold Bitcoin in a Robinhood IRA? No. Robinhood says [products from Robinhood Crypto aren't available in an IRA](https://robinhood.com/us/en/support/articles/retirement-investing/) (as of October 19, 2026). Self-directed Robinhood IRAs hold stocks and ETFs, plus options for qualified traders. Robinhood offers an [IRA match of 1%, or 3% with Gold](https://robinhood.com/us/en/support/articles/ira-overview/), on eligible contributions. ### Buying Bitcoin on Robinhood and at Swan - **Cost to buy $100 of Bitcoin:** Robinhood, [about $0.95 (spread)](https://robinhood.com/support/articles/crypto-order-routing/). Swan, [$1 (first $250 free for new clients)](https://www.swanbitcoin.com/fees/). - **Fee shown up front:** Robinhood, no, it's built into the price. Swan, yes, a [1% fee](https://www.swanbitcoin.com/fees/). - **What you can buy:** Robinhood, stocks, options and many coins. Swan, Bitcoin only. - **Withdrawals to your own wallet:** Robinhood, [allowed, with checks and limits](https://robinhood.com/us/en/support/articles/cryptocurrency-wallets). Swan, [free](https://www.swanbitcoin.com/fees/), and can be set to happen automatically. - **Retirement account:** Robinhood offers an IRA but cannot buy [Bitcoin in the IRA](https://robinhood.com/us/en/support/articles/retirement-investing/). Swan offers [Swan IRA](https://www.swanbitcoin.com/bitcoin-ira/) that holds real Bitcoin. **Self-custody help:** Robinhood doesn't allow clients to withdrawal Bitcoin to self custody. Swan allows clients to withdrawal their Bitcoin for free and also offers [Swan Vault](https://www.swanbitcoin.com/vault/) which is a 2-of-3 multisig cold storage, with a recovery kit that lets you access your Bitcoin without Swan. The headline cost to buy is similar. The difference is what you own afterward: Swan sells only Bitcoin, and it's built around getting your Bitcoin into your own custody. For more comparisons, see our [Kraken review](https://www.swanbitcoin.com/industry/kraken-review/), [is Coinbase safe?](https://www.swanbitcoin.com/industry/is-coinbase-safe/) and [the most trusted Bitcoin investment sites](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/). ### Tips to keep Robinhood fees down 1. Use limit orders through Legend if you trade often enough to reach a cheaper fee tier. 2. Avoid instant withdrawals; standard bank transfers are free. 3. If you're leaving, ask your new broker whether it covers the $100 transfer fee. 4. If you hold Bitcoin for the long term, move it to a wallet you control. ### Frequently Asked Questions #### Does Robinhood have fees? No commissions, but Bitcoin and altcoin trades include a spread (Robinhood receives about 0.95%), and there are fees for transfers out ($100), instant withdrawals (up to 1.75%) and wires ($25), as of October 2026. #### How much does Robinhood charge to buy Bitcoin? About $0.95 per $100 traded through the app as of June 15, 2026. Exchange-routed orders cost 0% to 0.95% depending on volume and order type. #### Does Robinhood charge a fee to sell stock? There's no commission, but small SEC and FINRA regulatory fees apply when you sell stocks or ETFs. #### What is Robinhood's instant withdrawal fee? Up to 1.75% of the amount, with a $1 minimum and a $150 maximum, as of October 2026. Standard bank transfers are free. #### Does Robinhood charge to withdraw Bitcoin? No Robinhood fee, just the network fee. #### How much is Robinhood Gold? $5 a month or $50 a year, as of October 2026. #### What does Robinhood charge to transfer out? $100 to transfer your account to another broker through ACATS, the standard system brokers use to move accounts. #### Can you buy Bitcoin in a Robinhood IRA? No. Robinhood says Robinhood Crypto products aren't available in an IRA. ### Sources - [Robinhood Crypto order routing ($0.95 per $100, as of June 15, 2026; checked Oct 19, 2026)](https://robinhood.com/support/articles/crypto-order-routing/) - [Robinhood Crypto fee schedule PDF (doc dated June 2026; checked Oct 19, 2026)](https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-schedule.pdf) - [Robinhood Crypto fee tiers (rollout note; checked Oct 19, 2026)](https://robinhood.com/us/en/support/articles/crypto-fee-tiers) - [Robinhood Financial fee schedule PDF (doc dated Sep 29, 2026; checked Oct 19, 2026)](https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf) - [Robinhood margin rates (as of Sep 17, 2026)](https://robinhood.com/us/en/support/articles/margin-rates/) - [Robinhood Gold overview (checked Oct 19, 2026)](https://robinhood.com/us/en/support/articles/gold-overview) - [Robinhood Crypto wallets and withdrawals (checked Oct 19, 2026)](https://robinhood.com/us/en/support/articles/cryptocurrency-wallets) - [Robinhood retirement investing (no Robinhood Crypto in IRA; checked Oct 19, 2026)](https://robinhood.com/us/en/support/articles/retirement-investing/) - [Robinhood IRA overview (match; checked Oct 19, 2026)](https://robinhood.com/us/en/support/articles/ira-overview/) - [California settlement, The Block (Sep 5, 2024)](https://www.theblock.co/post/314828/robinhood-to-settle-3-9-million-penalty-with-california-doj-over-past-crypto-withdrawal-restrictions) - [Swan fees (checked Oct 22, 2026)](https://www.swanbitcoin.com/fees/) - [Swan Vault (checked Oct 22, 2026)](https://www.swanbitcoin.com/vault/) - [Swan IRA (checked Oct 22, 2026)](https://www.swanbitcoin.com/bitcoin-ira/) ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # How Many Satoshis in 1 Bitcoin? 1 BTC = 100,000,000 Sats URL: https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/ There are 100 million satoshis (sats) in one Bitcoin. See how many sats $1 buys today, a sats-to-USD table, other Bitcoin units and the satoshi symbol. --- **Drew** · October 20, 2026 · Updated October 23, 2026 There are **100,000,000 satoshis (sats) in one Bitcoin**. A satoshi is the smallest unit of [Bitcoin](https://www.swanbitcoin.com/education/what-is-bitcoin/) recorded on the blockchain: 0.00000001 BTC. With Bitcoin at about [$82,900 on October 19, 2026](https://www.coindesk.com/price/bitcoin), one sat is worth about $0.00083, so **$1 buys about 1,206 sats**. ### How many sats is $1, $10 or $100? At [$82,918 per Bitcoin (CoinDesk, October 19, 2026)](https://www.coindesk.com/price/bitcoin): - **$1** ≈ 1,206 sats - **$10** ≈ 12,060 sats - **$100** ≈ 120,601 sats - **$1,000** ≈ 1,206,011 sats Sats per dollar = 100,000,000 ÷ Bitcoin price. ### Satoshis to Bitcoin conversion table Dollar values use [$82,918 per Bitcoin (CoinDesk, October 19, 2026)](https://www.coindesk.com/price/bitcoin). - **1 sat** = 0.00000001 BTC ≈ $0.00083 - **1,000 sats** = 0.00001 BTC ≈ $0.83 - **10,000 sats** = 0.0001 BTC ≈ $8.29 - **100,000 sats** = 0.001 BTC ≈ $82.92 - **1,000,000 sats** = 0.01 BTC ≈ $829.18 - **10,000,000 sats** = 0.1 BTC ≈ $8,291.81 - **100,000,000 sats** = 1 BTC ≈ $82,918 To convert at any price: 1 sat = Bitcoin price ÷ 100,000,000. Sats per dollar = 100,000,000 ÷ Bitcoin price. ### Sats, bits and mBTC: other Bitcoin units You'll sometimes see Bitcoin amounts written in units between a sat and a whole coin: - **1 bit** (μBTC) = 100 sats = 0.000001 BTC. [BIP-176](https://github.com/bitcoin/bips/blob/master/bip-0176.mediawiki), a 2017 Bitcoin proposal, defines 1 bit as 100 satoshis. - **1 mBTC** (millibitcoin) = 100,000 sats = 0.001 BTC - **1 BTC** = 1,000 mBTC = 1,000,000 bits = 100,000,000 sats ![Bitcoin units of measure: 1 satoshi = 0.00000001 BTC, 100 satoshis = 1 bit (μBTC), 100,000 satoshis = 1 mBTC, 1,000,000 satoshis = 1 cBTC, 100,000,000 satoshis = 1 BTC](https://www.datocms-assets.com/56652/1701710001-buom.png?auto=format) ### What is a satoshi? A satoshi is to Bitcoin what a cent is to a dollar, except much smaller. One Bitcoin divides into 100 million sats, and Bitcoin's software counts every balance and transaction in whole satoshis. When your wallet shows 0.005 BTC, the network records 500,000 sats. The unit is named after Satoshi Nakamoto, the pseudonymous creator of Bitcoin. The name came from the Bitcointalk forum. On November 15, 2010, user ribuck [suggested](https://bitcointalk.org/index.php?topic=369.msg22160#msg22160) that a hundredth of a Bitcoin could be called a "Satoshi." In February 2011, ribuck [proposed "satoshi"](https://bitcointalk.org/index.php?topic=3311.msg46648#msg46648) as a nickname for 1/100,000,000 of a Bitcoin, the meaning that stuck. ![Bitcointalk post by ribuck, November 15, 2010, suggesting a hundredth of a bitcoin could be called a Satoshi](https://www.datocms-assets.com/56652/1712669964-rick-1.png?auto=format) Bitcoin Talk Forum ![Bitcointalk post by ribuck, February 10, 2011, suggesting austrian and satoshi as nicknames for 1/100,000,000 of a bitcoin](https://www.datocms-assets.com/56652/1712670011-ribuck-2.png?auto=format) Bitcoin Talk Forum ### How many sats $1 bought at each halving Every [Bitcoin halving](https://www.swanbitcoin.com/education/bitcoin-halving-dates/) cuts the mining reward in half. Here is how many sats $1 bought on each halving day, using approximate halving-day prices: - **November 2012** (about $12 per BTC): about 8.3 million sats - **July 2016** (about $650): about 153,800 sats - **May 2020** (about $8,600): about 11,600 sats - **April 2024** (about $63,800): about 1,570 sats - **Today, October 19, 2026** ($82,918): about 1,206 sats In 2012, $1 bought roughly 6,900 times as many sats as it does today. ### Why sats matter - **You don't need to buy a whole Bitcoin.** Most people buy in dollars and collect sats. $50 a week buys about 60,300 sats at the October 19, 2026 price. - **They make small numbers readable.** "5,000 sats" is easier to read than "0.00005 BTC." - **There is a fixed supply of them.** Bitcoin's [21 million coin cap](https://www.swanbitcoin.com/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/) means there will only ever be about 2.1 quadrillion sats, shared among everyone on Earth. - **Some coins are gone for good.** In 2017 Chainalysis estimated that [about 2.8 to 3.8 million BTC were lost](https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever) (forgotten keys, discarded hard drives), so the sats in circulation are fewer still. Satoshi Nakamoto saw lost coins this way. In a [June 2010 forum reply](https://bitcointalk.org/index.php?topic=198.msg1647#msg1647), he wrote: "Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone." ![Satoshi Nakamoto's June 21, 2010 Bitcointalk reply: Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone.](https://www.datocms-assets.com/56652/1701709629-dying-coins-2.png?auto=format) Bitcoin Talk Forum [Video](https://www.youtube.com/watch?v=fO7sz0OFH68) [![Bitcoin rich list table from June 2024 showing the number of addresses and BTC held in each balance range](https://www.datocms-assets.com/56652/1717641614-rich-list-jun-5.png?auto=format)](https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html) Bitcoin Rich List ### Smaller than a satoshi: millisatoshis The [Lightning Network](https://www.swanbitcoin.com/analysis/a-look-at-the-lightning-network/), which makes fast, cheap Bitcoin payments, tracks balances in **millisatoshis**. [One sat equals 1,000 millisats](https://www.spark.money/glossary/millisatoshi). The main blockchain can only record whole sats, so when a Lightning channel closes, amounts are rounded down to whole sats. [Video](https://www.youtube.com/watch?v=2Klwuu7r41g&t=0s) ### Is there a satoshi symbol? There's no official Unicode symbol for a satoshi; [the symbol for a sat is "still up for debate"](https://blockworks.com/news/bitcoin-symbol-origin-unicode). Most people write "sats" or "sat". Bitcoiners have proposed several designs. One, from writer [Arman the Parman](https://armantheparman.com/sats/), is a reversed "S" with a vertical stroke through it, meant to suggest "21" for 21 million. The Bitcoin sign **₿** ([Unicode U+20BF, added in Unicode 10.0 in 2017](https://codepoints.net/U+20BF)) stands for whole Bitcoin. ![One proposed satoshi symbol: a vertical stroke crossed by three horizontal lines, inspired by a Japanese character meaning bountiful](https://www.datocms-assets.com/56652/1701710088-sign-symbol.png?auto=format) ### How to stack sats The simplest approach is to [buy a fixed dollar amount on a schedule](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/) (weekly or monthly), so you don't have to guess the price. Then move your sats to [a wallet you control](https://www.swanbitcoin.com/education/best-bitcoin-wallet/). [Video](https://www.youtube.com/watch?v=70z-k4wokos) ### Frequently Asked Questions #### How many satoshis are in 1 Bitcoin? 100,000,000. #### How much is 1 satoshi in US dollars? About $0.00083 with Bitcoin at $82,918 (October 19, 2026). For any price, divide the Bitcoin price by 100 million. #### How many sats can I get for $1? About 1,206 at $82,918 per Bitcoin (October 19, 2026). Divide 100 million by the Bitcoin price. #### How many sats is $100? About 120,601 at $82,918 per Bitcoin (October 19, 2026). #### What is a bit in Bitcoin? 100 sats, or 0.000001 BTC, as defined in BIP-176. #### How many satoshis will ever exist? About 2.1 quadrillion (2,100,000,000,000,000), because no more than 21 million Bitcoin will ever exist. #### What is a millisatoshi? One-thousandth of a sat, used to track balances on the Lightning Network. ### Sources - [Bitcoin price $82,918.10: CoinDesk BTC price](https://www.coindesk.com/price/bitcoin) - [Lost-coins estimate (Chainalysis): Cointelegraph](https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever) - [Millisatoshi definition: Spark glossary](https://www.spark.money/glossary/millisatoshi) - [Bitcoin sign U+20BF: Codepoints.net](https://codepoints.net/U+20BF) - [Satoshi symbol not standardized: Blockworks](https://blockworks.com/news/bitcoin-symbol-origin-unicode) - [Proposed sats symbol: Arman the Parman](https://armantheparman.com/sats/) - [Bit unit definition: BIP-176 (GitHub)](https://github.com/bitcoin/bips/blob/master/bip-0176.mediawiki) - [ribuck's 2010 "Satoshi" suggestion: Bitcointalk](https://bitcointalk.org/index.php?topic=369.msg22160#msg22160) - [ribuck's 2011 "satoshi" nickname proposal: Bitcointalk](https://bitcointalk.org/index.php?topic=3311.msg46648#msg46648) - [Satoshi Nakamoto on lost coins (2010): Bitcointalk](https://bitcointalk.org/index.php?topic=198.msg1647#msg1647) - [Halving-day prices: BIT halving history](https://www.bit.com/es/knowledge-hub/bitcoin-halving) ### Drew Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin. He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles. # How Much Does It Cost to Mine 1 Bitcoin? (2026 Costs, $75K–$80K Average) URL: https://www.swanbitcoin.com/education/how-much-does-it-cost-to-mine-a-bitcoin/ Public miners spent about $75,500 in cash costs per Bitcoin in Q2 2026. See what 1 BTC costs to mine at your power price and whether mining beats buying. --- **Mickey Koss** · June 1, 2024 · Updated October 23, 2026 It costs an average of about **$75,000 to $80,000** to mine one Bitcoin in 2026. Public mining companies reported a weighted average *cash* cost of about $75,500 per BTC in the second quarter of 2026, according to [CoinShares](https://coinshares.com/us/insights/research-data/bitcoin-mining-report-q2-2026/) (report published September 15, 2026). On-chain analyst Checkonchain put the network's average production cost at [$78,254 in August 2026](https://cointelegraph.com/markets/bitcoin-miners-earn-under-07-of-revenue-from-fees-in-new-10-year-low). Your own cost depends mostly on two numbers: what you pay for [electricity](https://www.swanbitcoin.com/canon/why-and-how-bitcoin-consumes-energy/) and how efficient your machine is. With a new machine and cheap industrial power ($0.05 per kWh), electricity alone runs about $25,000 to $43,000 per Bitcoin at October 2026 difficulty. At home electricity prices, with an older machine, the power bill alone can top the price of a Bitcoin, and that's before paying for the machine. ### Bitcoin mining cost at a glance (October 2026) - **Bitcoin price:** About $82,600 ([mempool.space](https://mempool.space/api/v1/prices), Oct 19, 2026) - **Network hashrate:** About 1,028 EH/s ([Hashrate Index](https://www.hashrateindex.com/), Oct 19, 2026). New to the term? See [what Bitcoin hashrate is](https://www.swanbitcoin.com/education/what-is-bitcoin-hashrate/). - **Difficulty:** About 140.6 trillion, up 5.92% on Oct 16, 2026 ([mempool.space](https://mempool.space/api/v1/mining/hashrate/1w), Oct 19, 2026) - **Hashprice (miner revenue per PH/s per day):** About $36.80 ([Hashrate Index](https://www.hashrateindex.com/), Oct 19, 2026) - **Average cash cost, public miners (Q2 2026):** About $75,500 per BTC ([CoinShares](https://coinshares.com/us/insights/research-data/bitcoin-mining-report-q2-2026/)) - **Average production cost (Aug 2026):** $78,254 per BTC ([Checkonchain via Cointelegraph](https://cointelegraph.com/markets/bitcoin-miners-earn-under-07-of-revenue-from-fees-in-new-10-year-low), Aug 12, 2026) ### Electricity cost to mine 1 Bitcoin These figures are **electricity only**. They leave out the machine, hosting, cooling and staff. They assume difficulty of 140.58 trillion, the level set on [October 16, 2026](https://news.bitcoin.com/mining/bitcoin-mining-difficulty-jumps-5-92-third-largest-hike-2026/). At that difficulty one PH/s earns about 0.000447 BTC a day from the 3.125 BTC block subsidy, so mining 1 BTC takes about 2,236 PH-days of work. Transaction fees add less than 1% to miner revenue (see below), so we leave them out. - **9.5 J/TH** ([Antminer S23 Hydro](https://forklog.com/en/bitmain-unveils-bitcoin-miner-with-9-5-j-th-energy-efficiency/)): $20,400 at $0.04/kWh · $25,500 at $0.05/kWh · $40,800 at $0.08/kWh · $61,200 at $0.12/kWh - **13.5 J/TH** ([Antminer S21 XP](https://hashrateindex.com/blog/hardware-overview-bitmains-antminer-s21-xp/), air-cooled): $29,000 at $0.04/kWh · $36,200 at $0.05/kWh · $58,000 at $0.08/kWh · $86,900 at $0.12/kWh - **16 J/TH** (older S21-class machine): $34,300 at $0.04/kWh · $42,900 at $0.05/kWh · $68,700 at $0.08/kWh · $103,000 at $0.12/kWh To work it out yourself: a machine rated at X J/TH (joules per [terahash](https://www.swanbitcoin.com/education/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/)) draws X kW for every PH/s of mining power, so it uses X × 24 kWh per PH-day. Multiply that by 2,236 PH-days per Bitcoin and by your price per kWh. For example, a 13.5 J/TH machine uses 324 kWh per PH-day, and 324 × 2,236 is about 724,500 kWh per Bitcoin. At $0.05 per kWh, that's about $36,200. The same math in one line: energy per BTC = (difficulty × 2^32 ÷ 10^12 TH per block) × J/TH ÷ 3.125 BTC. At 140.58T that's about 193.2 billion TH per Bitcoin. At 13.5 J/TH that comes to about 2.61 trillion joules, or about 724,500 kWh. Difficulty changes every 2,016 blocks, about every two weeks. The next change was estimated for about October 30, 2026, at roughly +0.7% ([mempool.space](https://mempool.space/api/v1/difficulty-adjustment), as of October 19, 2026). That would raise every number above by about 0.7%. ### What is the breakeven electricity price for Bitcoin mining? The breakeven power price is the most you can pay for electricity before the power bill alone uses up everything a machine earns. At October 2026 difficulty and a Bitcoin price of about $82,600, it works out to: - **9.5 J/TH** (Antminer S23 Hydro): about **16.2¢ per kWh** - **13.5 J/TH** (Antminer S21 XP): about **11.4¢ per kWh** - **16 J/TH** (older S21-class machine): about **9.6¢ per kWh** We get there two ways, and they agree. Dividing the Bitcoin price by each machine's energy use per coin (about 510,000, 724,500 and 859,000 kWh) gives the same result as dividing the [Hashrate Index](https://www.hashrateindex.com/) hashprice of about $36.80 per PH/s per day by each machine's daily energy use (228, 324 and 384 kWh per PH-day). This is electricity only. The machine still has to pay for itself, along with hosting and cooling, so real profit needs power well under these numbers. At $0.05 per kWh, electricity takes about 31% of an S23 Hydro's revenue, 44% of an S21 XP's and 52% of an older 16 J/TH machine's. The breakeven rises if the Bitcoin price does (see [what analysts forecast for 2026 to 2040](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/)) and falls each time difficulty climbs. ### Why the average is so much higher than the electricity bill The all-in cost includes machines (which lose value fast), buildings, staff, financing and hosting fees. [CoinShares' Q2 2026 data](https://coinshares.com/us/insights/research-data/bitcoin-mining-report-q2-2026/) shows a huge spread between companies, in all-in cost per BTC: - **American Bitcoin (ABTC):** $76,529 - **Bitdeer:** $89,737 - **Riot Platforms:** $113,499 - **HIVE:** $116,739 - **CleanSpark:** $135,691 - **IREN:** $141,593 - **MARA:** $163,866 Bitcoin [ended June 2026 at $58,400](https://letsdatascience.com/news/coinshares-finds-ai-compute-outearns-bitcoin-mining-0ebea82b), below the $75,500 average cash cost, so listed miners as a group were below cash breakeven in mid-2026. Hashprice hit a record daily low of [$27.74 per PH/s per day on June 6, 2026](https://hashrateindex.com/blog/luxor-hashrate-lookback-series-june-2026/). With Bitcoin near $82,600 in October 2026, the price is above the average cash cost, but still below the Q2 all-in cost of every company in the list above except American Bitcoin. Miners have been squeezed like this before: see [the great miner squeeze of 2022](https://www.swanbitcoin.com/analysis/the-great-miner-squeeze-of-2022/). ### How long does it take to mine 1 Bitcoin? On your own, a very long time. One Antminer S21 XP (270 TH/s, 3,645 W) earns about 0.00012 BTC, or about 12,000 [sats](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/), a day in a mining pool at October 2026 difficulty. That works out to roughly **23 years per Bitcoin**. The machine uses about 87.5 kWh a day, which is about $4.40 of electricity at $0.05 per kWh, to earn about $10 of Bitcoin at an $82,600 price. That's why almost all mining happens in pools. You earn a small, steady share of the rewards instead of waiting years to win a whole block. [Video](https://www.youtube.com/watch?v=1EdLj1IXZkI) ### Why does Bitcoin need to be mined? [Bitcoin](https://www.swanbitcoin.com/education/what-is-bitcoin/) has no central bank or company that issues coins. Instead, miners add a new block of transactions to the blockchain about every 10 minutes, and the network pays the winner in newly created Bitcoin (3.125 BTC per block since the 2024 halving) plus transaction fees. Winning takes real work: machines run trillions of hashes, and that costs electricity. The cost is what makes the ledger so expensive to attack, the idea at the heart of [Satoshi's white paper](https://www.swanbitcoin.com/education/satoshis-white-paper-explained/). This system is called [proof of work](https://www.swanbitcoin.com/education/proof-of-work-vs-proof-of-stake/), and it solves the [Byzantine Generals Problem](https://www.swanbitcoin.com/education/byzantine-generals-problem/): how strangers can agree on one history without trusting each other. [Video](https://www.youtube.com/watch?v=gVYSCA-pbBc) [![Yan Pritzker's March 14, 2019 thread explaining bitcoin mining as a lottery: miners burn electricity to buy tickets, each ticket is a run of a hashing algorithm, and the number of possible hashes is about 2^256](https://www.datocms-assets.com/56652/1705609617-yan-twitter-bitcoin-mining.png?auto=format)](https://twitter.com/skwp/status/1106380867071549440?s=20&t=Iz6nSBUpBouQdbrWdxsSkQ) ### What changed in mining since 2024 - **The 2024 halving** cut the block reward from 6.25 to 3.125 BTC, doubling the cost per coin overnight. The [next halving](https://www.swanbitcoin.com/education/bitcoin-halving-dates/), expected around April 2028, cuts it to 1.5625 BTC. Whether halvings still move the price is [debated](https://www.swanbitcoin.com/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/); see also [three myths about the halving](https://www.swanbitcoin.com/industry/bitcoin-halving/). - **Fees almost disappeared.** Transaction fees were [0.69% of miner revenue in August 2026](https://cointelegraph.com/markets/bitcoin-miners-earn-under-07-of-revenue-from-fees-in-new-10-year-low), near a 10-year low, after falling to 0.52% in April. As the subsidy keeps halving, miners will depend more on fees ([Lyn Alden on fee-based security](https://www.swanbitcoin.com/education/bitcoin-fee-based-security-modeling-lyn-alden/)). - **The move to AI.** Listed miners had announced [more than $70 billion in AI and high-performance computing contracts by March 2026](https://www.theblock.co/post/395259/bitcoin-miners-face-breakeven-pressure-as-ai-pivot-accelerates-coinshares-says). CoinShares said they could earn as much as 70% of their revenue from AI by the end of 2026. Its Q2 2026 report puts disclosed backlogs at [more than $100 billion](https://coinshares.com/us/insights/research-data/bitcoin-mining-report-q2-2026/). Core Scientific [paid about $41.9 million to cancel a mining-chip contract with Block](https://news.bitcoin.com/mining/core-scientific-pays-42m-to-exit-blocks-bitcoin-mining-deal-as-ai-revenue-surges/) (July 2026) as it moves into AI. - **More efficient machines.** New machines use about 9.5 J/TH, compared with 13.5 to 16 J/TH for the previous generation. ### Should you mine Bitcoin or buy it? For most people, buying is cheaper and simpler. - **Mining can make sense** if you have power under about $0.05 per kWh, a place to handle the noise and heat, or a way to use the waste heat (for example, heating a building). Lyn Alden explains why [Bitcoin's energy use is not a problem](https://www.swanbitcoin.com/industry/bitcoins-energy-usage-is-not-a-problem-heres-why-by-lyn-alden/). - **Buying makes sense** for almost everyone else. At home electricity prices ($0.12 per kWh or more), electricity alone runs about $61,000 to $103,000 per Bitcoin at October 2026 difficulty. Add the cost of the machine, which loses value fast and has to make back its price within a few years, and buying is usually cheaper. If you want to own Bitcoin, the simplest route is to [buy a little at a time](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/) (here's how that compares with [investing a lump sum](https://www.swanbitcoin.com/investing/dollar-cost-averaging-vs-lump-sum-investing/)) and move it into [a wallet you control](https://www.swanbitcoin.com/education/best-bitcoin-wallet/). [Video](https://www.youtube.com/watch?v=jqvJWl3LMUo) [Video](https://www.youtube.com/shorts/dgiGmZ_HCUw) [Video](https://www.youtube.com/watch?v=CQ6vXLJUu7Y) ### Frequently Asked Questions #### How much does it cost to mine 1 Bitcoin in 2026? About $75,000 to $80,000 on average across the industry. Electricity alone for an efficient miner on cheap power ($0.05 per kWh) is about $25,000 to $43,000 at October 2026 difficulty. #### What is the breakeven electricity price for mining Bitcoin? About 9.6¢ to 16.2¢ per kWh for electricity alone, depending on the machine (16 to 9.5 J/TH), at October 2026 difficulty and a Bitcoin price of about $82,600. #### How long does it take to mine 1 Bitcoin? With one top air-cooled machine (Antminer S21 XP) in a pool, about 23 years at October 2026 difficulty. #### Is Bitcoin mining still profitable? Only with cheap power and efficient machines. In Q2 2026, listed miners as a group were below cash breakeven, and all but one of the large public miners in CoinShares' table (American Bitcoin) had a Q2 all-in cost above the October 2026 Bitcoin price. #### How much electricity does it take to mine 1 Bitcoin? About 510,000 to 860,000 kWh at October 2026 difficulty, depending on the machine (9.5 to 16 J/TH). #### Why did it get more expensive to mine Bitcoin? The 2024 halving cut the reward to 3.125 BTC per block, and difficulty keeps rising (up 5.92% on October 16, 2026 alone). Fees, which could make up the difference, were under 1% of miner revenue in August 2026. ### Sources - [CoinShares Bitcoin Mining Report Q2 2026 (published Sep 15, 2026; accessed Oct 19, 2026)](https://coinshares.com/us/insights/research-data/bitcoin-mining-report-q2-2026/) - [CoinShares Q2 report coverage and June-end price (Let's Data Science) (Sep 16, 2026)](https://letsdatascience.com/news/coinshares-finds-ai-compute-outearns-bitcoin-mining-0ebea82b) - [Checkonchain production cost and fee share (Cointelegraph) (Aug 12, 2026)](https://cointelegraph.com/markets/bitcoin-miners-earn-under-07-of-revenue-from-fees-in-new-10-year-low) - [Difficulty +5.92% on Oct 16, 2026 (Bitcoin.com News)](https://news.bitcoin.com/mining/bitcoin-mining-difficulty-jumps-5-92-third-largest-hike-2026/) - [mempool.space: current difficulty and hashrate (as of Oct 19, 2026)](https://mempool.space/api/v1/mining/hashrate/1w) - [mempool.space: next difficulty adjustment (as of Oct 19, 2026)](https://mempool.space/api/v1/difficulty-adjustment) - [mempool.space: BTC price ($82,598, Oct 19, 2026)](https://mempool.space/api/v1/prices) - [Hashrate Index: hashprice and hashrate (accessed Oct 19, 2026)](https://www.hashrateindex.com/) - [Luxor June 2026 lookback: record-low hashprice (Jul 10, 2026)](https://hashrateindex.com/blog/luxor-hashrate-lookback-series-june-2026/) - [Luxor September 2026 lookback (Oct 9, 2026)](https://hashrateindex.com/blog/luxor-hashrate-lookback-series-september-2026/) - [Antminer S21 XP specs (Hashrate Index)](https://hashrateindex.com/blog/hardware-overview-bitmains-antminer-s21-xp/) - [S23 Hydro (ForkLog) (May 28, 2025)](https://forklog.com/en/bitmain-unveils-bitcoin-miner-with-9-5-j-th-energy-efficiency/) - [Miners pivot to AI (The Block) (Mar 26, 2026)](https://www.theblock.co/post/395259/bitcoin-miners-face-breakeven-pressure-as-ai-pivot-accelerates-coinshares-says) - [Core Scientific exits Block mining deal (Bitcoin.com News) (Jul 30, 2026)](https://news.bitcoin.com/mining/core-scientific-pays-42m-to-exit-blocks-bitcoin-mining-deal-as-ai-revenue-surges/) ### Mickey Koss Mickey Koss became a freelance writer in the Bitcoin space in an attempt to build a proof of work portfolio for when he left the Army. He graduated from West Point with a degree in Economics before serving in the Army for nearly a decade. He became orange pilled in graduate school and is now a regular contributor to Forbes, Bitcoin Magazine, and Bitcoin News. He’s been on popular podcasts such as BTC Sessions’ Why Are We Bullish, and is a regular on Café Bitcoin. # Bitcoin Wealth Management: How to Build and Protect Generational Bitcoin Wealth URL: https://www.swanbitcoin.com/investing/bitcoin-wealth-management/ Learn how Bitcoin wealth management works, from custody and security to inheritance planning and liquidity. Discover how families and businesses use Bitcoin to build and protect long-term wealth. --- **Conor Chepenik** · June 19, 2026 · Updated October 23, 2026 Bitcoin wealth management is the practice of accumulating, securing, and strategically deploying Bitcoin as the foundation of a long-term wealth strategy. Unlike traditional wealth management, which focuses on diversifying across stocks, bonds, and fiat-denominated assets, Bitcoin wealth management treats Bitcoin as scarce, durable property that can preserve purchasing power across generations. For families, entrepreneurs, executives, and business owners, buying Bitcoin is just the beginning. Once the sats have been accumulated, the real challenge becomes protecting them. As holdings grow, questions around custody, inheritance, tax strategy, institutional security, and liquidity become increasingly important. Bitcoin wealth management exists to solve those problems while preserving what makes Bitcoin valuable in the first place: direct ownership and control. ### Why Bitcoin Wealth Management Exists Traditional wealth management was built for a world where wealth is stored inside the legacy financial system. Advisors allocate capital across equities, bonds, mutual funds, private investments, and cash equivalents. Custodians, banks, and intermediaries sit between the owner and the underlying assets. Bitcoin changes that model. For most financial assets, ownership depends on a chain of intermediaries. Bitcoin is different. Individuals and businesses can hold it directly, verify it independently, and transfer it globally without requiring a bank, brokerage, or custodian to maintain possession on their behalf. That creates extraordinary opportunities, but it also creates new responsibilities. A Bitcoin wealth strategy must address five core areas: - **Accumulation** - **Custody** - **Security** - **Liquidity** - **Generational transfer** Ignoring any one of these can expose otherwise successful investors to unnecessary risk. ### The Five Pillars of Bitcoin Wealth Management #### 1. Accumulation Every Bitcoin strategy starts with accumulation. This includes recurring purchases, treasury allocation strategies, retirement account contributions, and long-term acquisition plans designed to steadily increase ownership over time. The objective is not to trade Bitcoin, it is to acquire a meaningful position in an asset with a fixed supply and hold it through multiple market cycles. #### 2. Custody Custody determines who ultimately controls your Bitcoin. Some investors prefer institutional custody through regulated trust companies. Others prefer collaborative custody models or full self-custody. Each approach involves tradeoffs between convenience, security, and personal responsibility. The larger the position becomes, the more important custody decisions become. #### 3. Security Security goes beyond passwords and two-factor authentication. It includes key management, account protection, withdrawal verification procedures, multi-signature arrangements, geographic redundancy, and contingency planning. Security failures are often irreversible, making proactive prevention a key part of a sound Bitcoin strategy. #### 4. Liquidity A common misconception is that every financial need requires selling Bitcoin. As Bitcoin matures, more solutions are emerging that allow holders to access liquidity while maintaining ownership of their long-term position. The appropriate strategy depends on personal circumstances, risk tolerance, and market conditions, but liquidity planning remains an important part of any comprehensive wealth strategy. #### 5. Generational Transfer The ultimate test of a wealth strategy is whether it survives a generation. Bitcoin creates unique inheritance challenges. Private keys must remain secure while also remaining recoverable by heirs. A successful estate plan balances security with accessibility so wealth is neither lost nor unintentionally exposed. Families increasingly use collaborative custody arrangements, multi-signature structures, trusts, and dedicated inheritance planning frameworks to reduce these risks and ensure Bitcoin can move smoothly to future generations. ### What You Actually Own When You Manage Bitcoin Wealth One of the most important questions in Bitcoin wealth management is understanding what you actually own. Many investors begin with exposure. They buy shares of a spot Bitcoin ETF, gain price appreciation, and become familiar with Bitcoin as an asset. For many people, this is a reasonable starting point. Eventually, however, a different question emerges.  Do you own Bitcoin, or do you own a financial product tied to Bitcoin? A spot Bitcoin ETF provides exposure to Bitcoin’s price, but it does not provide direct ownership of the underlying asset. You cannot withdraw it to a hardware wallet. In most cases, you cannot independently verify your holdings on-chain. You cannot transfer it directly to future generations outside the traditional financial system. Real ownership begins when you hold actual bitcoin. This is where many investors begin the transition from exposure to ownership. Swan helps investors [convert spot Bitcoin ETF positions into real, on-chain bitcoin](https://www.swanbitcoin.com/rbx/) that they own directly. Depending on individual circumstances, this can often be structured in a way that supports a tax-efficient transition without unnecessary liquidations. Once Bitcoin is owned directly, investors gain more flexibility in how they secure and manage their wealth. Bitcoin can be held in institutional-grade custody through regulated trust partners. It can be secured through collaborative custody using multi-signature technology. It can be moved into full self-custody. It can be incorporated into an inheritance plan. It can even support liquidity strategies that allow owners to access capital without immediately selling their holdings. Ownership creates options. ### The Three Stages of Bitcoin Ownership Most Bitcoin investors move through three distinct stages. #### Stage One: Exposure This includes products that track Bitcoin’s price without providing direct ownership. Examples include: - Spot Bitcoin ETFs - Public company exposure - Certain retirement products - Other indirect investment vehicles These products provide price exposure but not direct control. #### Stage Two: Custody At this stage, investors own actual Bitcoin but rely on professional custodians to secure it. Regulated custody solutions can provide institutional-grade security, operational simplicity, and peace of mind for investors who prefer professional infrastructure. #### Stage Three: Sovereignty This is where investors fully embrace Bitcoin ownership. Bitcoin may be secured through self-custody, multi-signature arrangements, collaborative custody frameworks, or family inheritance structures designed to preserve control across generations. Sovereignty does not require doing everything alone. It simply means maintaining meaningful control over the asset itself. Swan helps clients move from exposure to ownership and from ownership to sovereignty. ### What to Verify Before Choosing a Bitcoin Wealth Management Platform Not all [Bitcoin platforms](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/) are built with wealth preservation in mind. Before committing meaningful capital, investors should carefully evaluate the following areas. #### Custody Architecture Determine whether assets are pooled or fully segregated. Understand who holds the Bitcoin, how private keys are secured, and what protections exist in the event of operational failure. Strong custody architecture should include robust security controls, independent audits, and clearly defined ownership structures. #### Bitcoin Expertise Many financial advisors view Bitcoin through the lens of traditional portfolio construction. Bitcoin wealth management requires specialized knowledge. Custody, self-custody, inheritance planning, retirement structures, and Bitcoin-backed liquidity solutions involve considerations that differ significantly from traditional assets. #### Incentive Alignment A platform’s incentives matter. Investors should understand whether withdrawals are encouraged, discouraged, or restricted. A platform that genuinely respects Bitcoin ownership should support a client’s ability to take possession of their assets whenever they choose. #### Human Guidance Technology is powerful, but access alone does not create results. The greatest value often comes from understanding how to use the right tools at the right time. As Bitcoin holdings grow, investors face increasingly important decisions around custody, self-custody, retirement accounts, inheritance planning, treasury management, and long-term security. These decisions benefit from experience and thoughtful guidance. Swan combines technology with meaningful client relationships. Swan Private clients work directly with a dedicated Bitcoin specialist who understands their goals, helps them navigate the platform, and serves as a trusted point of contact throughout their Bitcoin journey. Swan operates as a Bitcoin brokerage and financial technology company. Custody services are provided through trusted third-party custodians, allowing clients to choose the custody model that best aligns with their goals, from institutional custody to collaborative custody to full self-custody. As Bitcoin positions grow, experienced guidance can become just as valuable as the technology itself. ### Do You Ever Need to Sell Bitcoin? Not necessarily. Historically, investors have often used appreciated assets as collateral rather than selling them outright. Similar approaches are increasingly emerging within the Bitcoin ecosystem. Bitcoin-backed lending can provide access to liquidity while allowing investors to maintain ownership of their long-term holdings. The suitability of any lending strategy depends on individual circumstances, market conditions, and risk tolerance. Investors should carefully evaluate the risks involved and consult qualified professionals before pursuing any borrowing strategy. The broader point remains important. A mature wealth strategy considers more than buying and selling. It considers how assets can support long-term financial objectives while preserving ownership whenever possible. ### Where Swan Fits Into a Bitcoin Wealth Strategy Most financial platforms focus on transactions. Wealth management focuses on stewardship. For investors building meaningful Bitcoin positions, the challenge is rarely placing a buy order. The challenge is designing an ownership structure capable of surviving market volatility, business transitions, family transitions, and generational transfer. Swan was built specifically to help solve those challenges. Whether someone needs help coordinating custody decisions, self-custody transitions, inheritance planning discussions, IRA structures, or Bitcoin-backed liquidity solutions, our team helps ensure clients are not navigating those decisions alone. Real wealth begins with real relationships. Swan’s custody solutions are designed to support investors at every stage of the ownership journey. Swan Safe provides regulated custody with fully segregated accounts held in the client’s own name. Swan Vault provides collaborative self-custody through a multi-signature framework that combines personal control with institutional support. Swan IRA allows investors to hold real Bitcoin within a tax-advantaged retirement account through Equity Trust Company, a self-directed custodian with a long operating history and significant assets under custody. Swan also supports businesses exploring Bitcoin treasury strategies through entity accounts, education, infrastructure, and operational guidance. Today, Swan serves more than 150,000 clients and secures over $1 billion in client assets.  ### Building a Bitcoin Legacy Buying Bitcoin is simple, but building a durable Bitcoin wealth strategy is something else entirely. As holdings grow, the questions become more sophisticated. How should assets be secured? How should heirs inherit them? How much should remain in institutional custody versus self-custody? What role should Bitcoin play on a family balance sheet or corporate treasury? Those are wealth management questions. Whether you’re transitioning from ETF exposure, securing a seven-figure position, planning for future generations, or evaluating Bitcoin’s role within a broader estate strategy, the goal remains the same: preserve ownership, reduce unnecessary risk, and protect purchasing power for decades to come. To learn more about Swan Private, visit [https://swan.com/private](https://swan.com/private). Interested in collaborative multi-signature custody? [Chat with our team about Swan Vault here.](https://tinyurl.com/54vvhtvj) Interested in holding Bitcoin in a tax-advantaged retirement account? [Chat with our IRA team here.](https://tinyurl.com/46nkm6y5)  Secure your keys, secure your wealth, and let Swan help you forge a financial legacy that outlasts empires. ### Frequently Asked Questions #### What is Bitcoin wealth management? Bitcoin wealth management is the practice of acquiring, securing, and managing Bitcoin as a long-term wealth preservation asset. It focuses on ownership, custody, security, liquidity, and inheritance planning. #### How do I get a dedicated Bitcoin advisor? Qualified clients can work with Swan Private, where each client is paired with a dedicated Bitcoin specialist who serves as a primary point of contact for strategy discussions, custody decisions, and Bitcoin-related planning. #### Is Bitcoin a good long-term wealth management strategy? Many investors view Bitcoin as a long-term store of value because of its fixed supply, decentralized design, and resistance to monetary debasement. Whether Bitcoin is appropriate for a specific investor depends on individual circumstances, objectives, and risk tolerance. #### How does Swan Private differ from a standard Bitcoin exchange? Most exchanges focus on transactions. Swan Private focuses on long-term Bitcoin ownership. Clients receive dedicated guidance around custody, self-custody, inheritance planning, retirement accounts, and Bitcoin-focused wealth strategies. #### Can I hold Bitcoin in an IRA for wealth management purposes? Yes. Swan IRA allows investors to hold real Bitcoin within eligible retirement account structures. Investors should consult tax professionals regarding the specific implications of any retirement account strategy. #### What is collaborative self-custody and how does it work for wealth management? Collaborative self-custody uses a multi-signature setup in which the client maintains meaningful control over their Bitcoin while benefiting from institutional support. This structure can reduce single points of failure while preserving ownership and flexibility. *Swan Bitcoin is not a financial adviser and does not provide investment, financial, tax, legal, or other professional advice. Consult qualified professional advisors before implementing any wealth management, tax, estate planning, borrowing, or investment strategy.* ### Conor Chepenik Client services expert. Helping people understand why money is a winner-take-all market. Passionate about explaining Bitcoin's potential to revolutionize global finance. Enjoying every day as I guide others on how to leverage Swan's platform. # Privacy Policy - Swan Bitcoin URL: https://www.swanbitcoin.com/privacy-policy/ How Swan Bitcoin collects, uses, protects, and discloses your personal information, including our biometric data practices and your privacy rights. --- ## Privacy Policy Last Updated: June 25, 2026 [Click here to view and edit your Privacy Settings](https://www.swanbitcoin.com/privacy-policy/#cookie-preferences) This Privacy Policy applies to your use of the website or mobile application (together, the “Site”) owned and operated by Electric Solidus, Inc. (“Swan”, “we”, or “us”). We respect your privacy and want to protect your non-public personal information. To learn more, please read this Privacy Policy. Accordingly, this Privacy Policy serves as Swan’s consumer privacy notice and covers the information collected through the Site, account onboarding processes, and related services (collectively, the “Services”) and explains how we may collect, use and, under certain conditions, disclose your non-public personal information in connection with financial products and services. This Privacy Policy also explains the steps we have taken to secure your non-public personal information. Finally, this Privacy Policy explains your options regarding the collection, use and disclosure of your non-public personal information. By visiting the Site, you accept the practices described in this Privacy Policy for the Site. This Privacy Policy applies only to the Site. This Privacy Policy does not necessarily apply to any offline collection of your non-public personal information. Please see below for details. Where this Policy conflicts with specific financial privacy notices or disclosures required by law, those notices shall govern. ### 1\. INFORMATION COLLECTION AND USE We collect information from you in several different ways on the Site. Collecting non-public personal information from you allows Swan to provide an efficient, meaningful, and customized experience. For example, we may use your personal information to: * provide you with the services we offer. * help make the Site easier for you to use by not having to enter information more than once. * help you quickly find information, products, and services. * help us create content on the Site that is most relevant to you. * alert you to new information, products, and services that we offer. Sensitive personal information is collected solely for compliance with legal obligations, fraud prevention, identity verification, and account security. Swan does not use sensitive personal information for advertising or profiling unrelated to service delivery. The types of information collected may include, but are not limited to: * Government-issued identification numbers and documents (including driver’s licenses and passports). * Biometric Identifiers and Biometric Information is collected for identity verification purposes (e.g., facial images, video recordings, and liveness detection data processed for Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance). * Transaction monitoring and behavioral risk signals used for fraud detection and compliance purposes. * Biometric Information is collected only for KYC/AML compliance, fraud prevention, and identity verification. Key protections: * Explicit consent required before collection * Retained for 3 years after last interaction or until purpose satisfied, whichever is longer * Never sold, leased, or used for advertising/profiling * Subject to enhanced security and state biometric privacy laws (Illinois BIPA, Texas CUBI, Washington, Colorado) **(a) Registration and Purchasing.** Before using certain parts of the Site or using our services, you may have to register. During registration, you will be prompted to provide to us certain personal information, which may include, but not be limited to, your name, mobile phone number, physical address, email address, social security number, date of birth and government-issued identification. These kinds of personal information are used to provide services to you in accordance with existing regulations, to assist third-party service providers to provide services to you, to communicate with you about our services and our Site, and for marketing purposes. If we encounter a problem when providing services, we use the personal information to contact you. **(b) Email Addresses.** Several locations of the Site may permit you to enter or for us to capture your email address for purposes including but not limited to: to register for promotions, referral programs or services; or to request us to notify you regarding particular promotions, referral programs or services. Your participation in a promotion or referral program is completely voluntary, so you have a choice whether to participate and disclose information to us. We use this information to notify promotion winners, pay referral fees and to award prizes. **(c) Cookies and Other Technology.** Like many websites, the Site employs cookies, location-based services and web beacons (also known as clear GIF technology or “action tags”) to speed your navigation of the Site, recognize you and your access privileges, and track your usage. * (i) The Site captures some information about you automatically utilizing background local storage and session storage technologies (“Cookies”) in order to improve the user experience. Cookies are small files or other pieces of data which are downloaded or stored on your computer or other device, that can be tied to information about your use of the Site (including certain third-party services and features offered as part of our website). Examples of information of this type are your IP address, the browser you are using, the operating system you are using, the pages on the website that you visit and details of your transaction activity, such as the amount, date and time for each transaction. When we use Cookies, we may use “session” Cookies that last until you close your browser or “persistent” cookies that last until you or your browser delete them. You may change your browser setting to decline the use of Cookies. Users may manage Cookie preferences through browser settings or Swan’s Cookie management tools where available. Tracking technologies are not used to profile customers for unrelated third-party advertising purposes. THE SITE’S COOKIES DO NOT AND CANNOT INFILTRATE A USER’S HARD DRIVE TO GATHER A USER’S CONFIDENTIAL INFORMATION. Our Cookies are not “spyware.” [Click here to view and edit your Privacy Settings](https://www.swanbitcoin.com/privacy-policy/#cookie-preferences) * (ii) Web beacons assist in delivering cookies and help us determine whether a web page on the Site has been viewed and, if so, how many times. For example, any electronic image on the Site, such as an ad banner, can function as a web beacon. We may also use web beacons to collect information about whether our electronic communications to our users have been delivered, viewed and opened. This data may impact the quantity and content of future communications from us to our users. * (iii) We may use third-party companies to help us tailor Site content to users or to serve ads or messages on our behalf. These companies may employ cookies and web beacons to measure advertising or messaging effectiveness (such as which web pages are visited, which messages are responded to, or what products are purchased and in what amount). Any information that these third parties collect via cookies and web beacons is not linked (by them) to any non-public personal information collected by us. Please see [Privacy Settings](https://www.swanbitcoin.com/privacy-policy/#cookie-preferences) for more information. **(d) Video Verification Data.** We may collect and store video recordings, which may include biometric data such as facial images, to verify your identity for account actions, such as withdrawals or service changes, across our services. These recordings are securely stored and used only for security, fraud prevention, and compliance purposes, in accordance with applicable laws. We retain video data only as necessary for these purposes or as required by law, after which it is securely deleted (see Section 4 for our general data security practices). You consent to this collection and storage when using services requiring video verification. **(e) Log Files.** As is true of most websites, the Site automatically recognizes the Internet URL or location from which you access the Site. We may also log your Internet protocol (“IP”) address, Internet service provider, and date/time stamp for system administration, order verification, marketing, and system troubleshooting purposes. An IP address may indicate the location of your computer on the Internet. **(f) Age Requirement.** Swan’s Services are not directed to children under the age of 18 and we do not knowingly collect information from users of the Site under the age of 18 and/or their Internet usage, and such persons are not authorized to use the Site. Any information about a minor that is provided by a parent or legal guardian is processed solely in the context of the adult-managed account and under the adult’s direction. If we obtain actual knowledge that a user is under the age of 18, then we will take steps to remove that user’s non-public personal information from our databases. By using the Site, you represent that you are at least 18 years old. You also represent, by accessing or using the Site, that you are of legal age to enter into legal agreements, or if you are not, that you have obtained your parent’s or legal guardian’s consent to accept the terms in this Privacy Policy. **(g) SMS Communications and Text Message Consent.** You have a choice about receiving text messages from Swan. When you register for a Swan account or provide your mobile phone number, you consent to receive transactional text (SMS) messages from Swan about your account and services. Transactional Messages You May Receive: * Two-factor authentication codes and security verification * Transaction confirmations and alerts * Account security notifications and fraud alerts * Recurring purchase reminders (if you have enabled recurring purchases) * Service announcements and critical system updates * Balance alerts and withdrawal confirmations * Other strictly transaction-related messages What Messages You May Receive (If You Consent): You may be presented the option to consent to additional informational or promotional messages from Swan. We will only send you such messages with your explicit consent. Your SMS Consent Rights: * Message Frequency: Message frequency varies based on your account activity. You may receive between 3-15 messages per month, with higher volume during periods of high activity. * Costs: Swan Bitcoin does not charge you for text messages. However, standard message and data rates may apply based on your mobile carrier's plan. Contact your carrier for details about your messaging plan and rates. * Supported Carriers: Messages are supported by all major U.S. carriers including AT&T, Verizon, T-Mobile, Sprint, and U.S. Cellular. Carrier fees may vary. * Opt-Out / STOP: You can opt out of text messages at any time by: * Replying STOP to any text message from Swan * Texting STOP to the number from which you received Swan messages * Updating your communication preferences in your account settings * Emailing [support@swanbitcoin.com](mailto:support@swanbitcoin.com) with "SMS Opt-Out" in the subject line After you opt out, you will receive one final confirmation message, and then no further messages unless you opt back in. * Help / HELP: Reply HELP to any message for assistance, or contact [support@swanbitcoin.com](mailto:support@swanbitcoin.com). * Opt Back In: If you opt out and later wish to resume text messages, you can opt back in through your account settings or by contacting [support@swanbitcoin.com](mailto:support@swanbitcoin.com). How We Obtain Your Consent: When you provide your mobile phone number during account registration, you consent to receiving transactional alerts such as security codes by providing your phone number. We will not use your phone number for marketing without your express consent. Text Message Service Terms: By consenting to receive text messages, you agree that: * You are the owner or authorized user of the mobile phone number you provide * You are at least 18 years of age * You will notify Swan if you change your mobile phone number * You understand that message delivery may be delayed or not delivered due to carrier issues, network congestion, or device compatibility Privacy: Your mobile phone number is used only for the purposes described in this Privacy Policy. We do not sell or rent your mobile phone number to third parties. Your mobile number may be shared with our SMS service provider (Twilio) solely to deliver text messages on our behalf. SMS Service Provider: Text messages are delivered through Twilio. Swan is not liable for Twilio's performance, including message delivery failures, delays, errors, or service interruptions Twilio's privacy practices are available at . For questions about Swan's text messaging program, email [support@swanbitcoin.com](mailto:support@swanbitcoin.com). ### 2\. INFORMATION USE AND DISCLOSURE. **(a) Internal Use.** We use your personal information to provide you with our services. We may internally use your personal information to improve the Site’s content and layout, to improve our outreach and for our own marketing efforts (including marketing our services to you), and to determine general marketplace information about visitors’ usage behavior to the Site. **(b) Communications with You.** We may use your personal information to communicate with you about the Site, your use of our services, and new information available on the Site. Also, we may send you a confirmation email when you register with us or when you have received a gift from another person. We may send you a service-related announcement on the rare occasions when it is necessary (for example, if we must temporarily suspend our service for maintenance.) Also, we will send you a notification email or text message when you request us to notify you when particular services, promotions or referral programs become available or change. We always permit you to unsubscribe from promotional notifications. Because we have to communicate with you about our services that you choose to use, you cannot opt out of receiving emails related to those services or your account with us. **(c) External Use.** * (i) We disclose information to our service providers to help enable them to perform services on your behalf. Specifically, any financial institutions or custodians (“Custodians”) providing you services require that we share certain personal information for the purpose of combating money laundering activities, in keeping with the relevant provisions of the USA PATRIOT ACT. Accordingly, in order to purchase and custody bitcoin (BTC) (“bitcoin”), we must share some information with Custodians and/or other third parties that assess identity and risk, such as your name, email address, physical address, social security number, date of birth, government-issued identification and the amount of bitcoin being purchased. Similarly, when we obtain bank account information for ACH transactions and credit card or debit card information, a third-party receives that information to process the payment in connection with the sale of bitcoin. We do not store any credit card data. We are committed to the protection and secure storage of your bank account information. Utilizing industry-standard encryption methods, updated regularly, we seek to ensure the ongoing security of your data, accessible solely to authorized personnel. In the event of a breach, we would promptly notify you and initiate immediate remedial actions. For the purpose of conducting risk assessments, your data may be shared with trusted vendors, bound by stringent confidentiality obligations and compliance with all relevant data protection laws. Otherwise, disclosure, sale, or transfer of your data to third parties will not occur without your explicit consent, barring legal obligations. Our commitment to your data privacy will remain in effect following any such time that you cease to use our services. * (ii) It is possible that we might merge with or be acquired by another company or that we might dispose of some or all of our assets. If that happens, then your personal information may be disclosed to another company, but that disclosure will be subject to the Privacy Policy in effect. * (iii) We may be required to disclose certain information in response to requests from law-enforcement officials conducting investigations; subpoenas; a court order; or if we are otherwise required to disclose such information by law. We also will release non-public personal information where disclosure is necessary to protect our legal rights, enforce other agreements, or to protect ourselves or others. For example, we may share information to reduce the risk of fraud or if someone uses or attempts to use the Site for illegal reasons or to commit fraud. * (iv) We may share non-personal information (such as the number of daily visitors to the Site or the size of an order placed on a certain date) with third parties. This information does not directly personally identify you or any user. For the avoidance of doubt, any IP addresses or a device or other identifier we collect may be shared with one or more third parties. * (v) Swan does not sell non-public personal information. We may share non-public personal information only with service providers under strict contractual controls, to provide service in the following categories. * Identity Verification and Compliance (KYC/AML verification, biometric identity verification, document validation) * Banking and Payments (bank account verification, ACH processing, payment processing) * Custody Services (bitcoin custody and transaction processing) * Technology Infrastructure (cloud hosting, database storage, authentication services) * Communications (email delivery, SMS messaging) * Customer Support (support ticketing and messaging) * Analytics (website usage and performance analysis) The following vendors process sensitive data such as Social Security numbers, government-issued IDs, or biometric information: * Persona - Biometric verification and facial recognition * Plaid - Bank account verification * Bakkt - Custodian * Equity Trust - Custodian * BitGo - Custodian For a current list of all service providers, including their names, services performed, and links to their privacy policies, email [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) with subject line "Service Provider List Request." All service providers are bound by written contracts requiring them to: use information only to perform services for Swan, maintain confidentiality and security, comply with data protection laws (CCPA, CPRA, GDPR), not use information for their own purposes, and not sell or share information with other parties. **(d) Other Uses.** We may also use non-public personal information to comply with the Bank Secrecy Act (BSA), AML obligations, and related regulatory requirements, operate identity verification, fraud detection, and risk monitoring programs, maintain an Identity Theft Prevention Program, fulfill legal, regulatory, and audit obligations, or to improve operational integrity, security controls, and service reliability. Use of non-public personal information for identity verification and regulatory compliance using biometric technologies are subject to explicit consent. ### 3\. YOUR RIGHTS, CHOICES AND DISCLOSURES **(a) General.** * (i) We provide herein certain specific disclosures on privacy rights set forth below. We are committed to facilitate the exercise of your rights granted by the laws of your jurisdiction, which may include the right to request the access, correction, modification or deletion, restrict or object to certain processing, or request portability of your non-public personal information and the right to opt out of the sale of your personal information (as applicable). Requests may be submitted to [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com). Swan may require identity verification prior to fulfilling requests. We will do our best to honor your requests subject to any legal and contractual obligations. Although we may do so in our discretion, we do not delete your information upon request, unless required to do so under applicable law. * (ii) You may opt out of receiving electronic marketing communications from us by clicking next to the “unsubscribe” link on the communication or contacting us at [support@swanbitcoin.com](mailto:support@swanbitcoin.com). Some non-marketing communications may not be subject to a general opt-out, such as fulfilling our obligations when services are requested and disclosures to comply with legal requirements, software updates and other support-related information. * (iii) Subject to local law, you may have additional rights under the laws of your jurisdiction regarding your personal data, such as the right to complain to your local data protection authority. * (iv) You may be able to disable Cookies through your browser settings, but if you delete or disable Cookies, you may experience interruptions or limited functionality in certain areas of the Services. **(b) California Disclosures.** * (i) Pursuant to the California “Shine the Light” information-sharing disclosure requirements, California residents may request a list of all third parties with respect to which we have disclosed any information about you for direct marketing purposes and the categories of information disclosed. If you are a California resident and want such a list, please send us a written request by email to [support@swanbitcoin.com](mailto:support@swanbitcoin.com) with “California Shine The Light Rights” in the subject line. * (ii) Pursuant to the California Do Not Track disclosure requirements, we do not currently respond to Do Not Track browser settings. * (iii) Pursuant to the California Consumer Privacy Act (“CCPA”) disclosure requirements, California residents have the right to request: * the categories of non-public personal information we have collected about you; * the categories of sources from which the non-public personal information is collected; * the business or commercial purpose of collecting or selling non-public personal information; * the categories of third parties with whom we share or sell non-public personal information; * the categories of non-public personal information about you that we have sold; and * the specific pieces of non-public personal information we have collected about you. **(c) Do Not Sell or Share My Personal Information.** Residents of California and other applicable jurisdictions may designate an authorized agent to submit requests on their behalf. Additionally, you have the right to request deletion of your non-public personal information, the right to opt out of the sale of your information (if applicable) and the right not to be discriminated against for exercising any of your CCPA rights. Our contact information, including a toll-free phone number, is listed at the bottom of this policy. ### 4\. DATA RETENTION; DATA SECURITY We retain the non-public personal information we collect for so long as reasonably necessary to fulfill the purposes described in this privacy Policy, unless a longer period is required by law. Typical retention practices include: | Data Type | Retention Standard | | ----------------------------- | -------------------------------------------------------------------------------------------------------------------- | | KYC / identity documents | 5–7 years after account closure | | Financial transaction records | 7 years | | Biometric data | 3 years from date of collection, or until purpose satisfied, whichever is longer (unless otherwise legally required) | | Customer communications | 3 years | | Marketing data | Until opt-out or withdrawal of consent | Where deletion conflicts with legal obligations, Swan will restrict processing while retaining required data. Biometric Data Retention Details: Facial images and video recordings collected for identity verification are retained for up to 3 years to (1) defend against fraud claims and identity theft reports, (2) comply with regulatory examination requirements, (3) support law enforcement investigations, and (4) maintain audit trails for AML/KYC compliance. You may request earlier deletion by emailing [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) with subject line "Biometric Data Deletion Request." We will honor deletion requests unless we have a legal obligation to retain the data (e.g., ongoing fraud investigation, regulatory hold, litigation hold). Swan maintains an information security program designed to safeguard personal data, including: * Encryption of sensitive data in transit and at rest * Access controls and role-based permissions * Multi-factor authentication for system access * Regular penetration testing and vulnerability assessments * Independent third-party security audits and compliance reviews Despite these measures, no system can be guaranteed as completely secure, and Swan does not make such a guarantee. As such, you assume the risk of security breaches and all consequences resulting from them. To that end, please safeguard your credentials. ### 5\. INCIDENT RESPONSE & BREACH NOTICE. In the event of a security incident involving non-public personal information, Swan will notify affected individuals and appropriate regulators in accordance with applicable law. Such notification may be provided via email, account messaging, or other legally permitted methods. Where appropriate, Swan may offer remediation services such as identity monitoring. ### 6\. JURISDICTION The Site is controlled, operated and hosted in the United States. Please be advised that through your continued use of the Site, which is governed by California law, this Privacy Policy, and our [Terms of Use](https://www.swanbitcoin.com/terms), your non-public personal information will be held in the United States and you expressly consent thereto and consent to be governed by California law for these purposes. Personal information may be processed in jurisdictions outside of your place of residence. Swan employs appropriate safeguards, including Standard Contractual Clauses and contractual controls, to ensure lawful transfer and protection of personal data. ### 7\. LINKS TO OTHER SITES The Site may contain links to other websites for your convenience or information. These websites may be operated by companies unaffiliated with the Company, and we are not responsible for the content or privacy practices of those websites. Linked websites may have their own terms of use and privacy policies, and we encourage you to review those policies whenever you visit the websites. ### 8\. PRIVACY POLICY CHANGES We may update this Privacy Policy from time to time and without prior notice to you to reflect changes in our information practices, and any such amendments shall apply to information already collected and to be collected. Your continued use of the Site after any changes to this Privacy Policy indicates your agreement with the terms of the revised Privacy Policy. Please review this Privacy Policy periodically and especially before you provide personal data to us. If we make material changes to this Privacy Policy, we will notify you here, by email or by means of a notice on the home page the Site. The date of the last update of the Privacy Policy is indicated at the top of this Privacy Policy. ### 9\. QUESTIONS AND CONTACT INFORMATION The Company is located at: 26565 Agoura Road, Suite 200 Calabasas, CA 91302, United States **How to Contact Us:** For different types of inquiries, please use the appropriate contact method: General Questions and Customer Support: * Email: [support@swanbitcoin.com](mailto:support@swanbitcoin.com) * Phone: (218) 379-7926 Biometric Information Inquiries: For questions about biometric data collection, use, retention, or your rights under BIPA/CUBI, contact [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) with subject "Biometric Information Inquiry." Privacy Rights Requests (access, deletion, correction, opt-out, data portability): * Email: [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) * Subject Line: Include "Privacy Rights Request" and specify the type of request (e.g., "Access Request," "Deletion Request," "CCPA Opt-Out") * Phone: (218) 379-7926 * Mail: Privacy Rights Request, Electric Solidus, Inc., 26565 Agoura Road, Suite 200, Calabasas, CA 91302 Security Incidents and Vulnerability Reports: * Email: [security@swanbitcoin.com](mailto:security@swanbitcoin.com) * For urgent security matters, also call (218) 379-7926 Response Times: * General inquiries: We aim to respond within 2 business days * Privacy rights requests: We will respond within 45 days as required by law (may be extended to 90 days for complex requests with notice to you) * Security reports: We will acknowledge receipt within 24 hours California Residents - Regulatory Contacts: If you have concerns about our privacy practices that we have not addressed satisfactorily, you may contact: * California Privacy Protection Agency (CPPA): * Website: * Address: California Privacy Protection Agency, 2101 Arena Boulevard, Sacramento, CA 95834 * California Department of Financial Protection and Innovation (DFPI): * Website: * Phone: (866) 275-2677 * Address: Department of Financial Protection and Innovation, Consumer Services, 2101 Arena Boulevard, Sacramento, CA 95834 --- ### Biometric Information Privacy Policy Last Updated: June 25, 2026 This Biometric Information Privacy Policy supplements Swan's main Privacy Policy (available at swanbitcoin.com/privacy-policy), and governs our collection, use, and protection of biometric identifiers and biometric information, in compliance with the laws of Illinois, Texas, Washington, Colorado, and other U.S. states that regulate biometric and sensitive personal data. In the event of any conflict between this Biometric Policy and Swan’s main Privacy Policy, this Biometric Policy shall control. #### (a) Definitions Biometric Identifier means a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry. Biometric Information means any information, regardless of how it is captured, converted, stored, or shared, that is based on an individual’s Biometric Identifier and is used to identify that individual. The term includes templates or measurements extracted from images or videos that can identify a person, but excludes photographs, video recordings, or data that cannot reasonably identify a specific individual without further processing. #### (b) Collection and Use Scope and Vendors: We may collect or receive Biometric Identifiers or Biometric Information indirectly through the following third-party identity verification and fraud-prevention vendors: * Persona - Facial recognition, liveness detection, facial geometry analysis * Privacy Policy: If we engage additional biometric service providers in the future, we will update this policy and notify you as described in Section (i). We select vendors based on their security certifications, compliance with biometric privacy laws, and contractual commitments to data protection; we do not make any other representation with respect to vendors’ compliance with their internal policies or applicable law. Purpose of Collection: We collect and use Biometric Information only for the following limited purposes: 1. To verify your identity as required for compliance with anti-money-laundering (AML) and know-your-customer (KYC) regulations and policies. 2. To detect and prevent fraud or unauthorized account access. 3. To comply with legal or regulatory obligations. 4. To improve the security and reliability of identity verification systems. Swan does not use Biometric Information as the sole basis for decisions that produce legal or similarly significant effects without meaningful human review. We do not use Biometric Information to create consumer profiles, behavioral analytics, or predictive scoring unrelated to identity verification or legal compliance, and we do not deploy such information for surveillance purposes. #### (c) Notice and Consent Before any Biometric Identifier or Biometric Information is collected, captured, or processed, we (or our vendor) will provide clear written notice describing: * The categories of Biometric Information collected. * The specific purpose(s) and duration for which the information will be used and retained. * The identity of the party responsible for collection and storage. We will obtain your explicit, written or electronic consent prior to collection, in accordance with Illinois BIPA, Texas CUBI, Washington’s biometric statute, and Colorado’s Biometric Data obligations under the CPA (effective July 1, 2025). If you decline to provide consent, certain services that rely on identity verification may not be available. You may withdraw your consent for biometric collection at any time by emailing [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) with subject "Withdraw Biometric Consent", calling (218) 379-7926, or updating your preferences in account settings (if available). #### (d) Disclosure to Third Parties We may disclose your Biometric Information only to: * Authorized service providers acting on our behalf for the stated purposes. * Law enforcement or regulators if required by applicable law, subpoena, or court order. * You or your authorized representative upon verified request. All biometric service providers are subject to written agreements requiring compliance with BIPA, state biometric statutes, and applicable data protection laws, including prohibitions on secondary use, retention beyond authorized purpose, and independent model training. #### (e) Retention and Destruction We will retain Biometric Information only as long as necessary to fulfill the initial purpose of collection or as required by law, whichever is longer. In no case will Biometric Information be retained longer than three years from the date of collection or after the initial purpose has been satisfied, unless a longer period is required for compliance with AML, KYC or other legal obligations. After this period, Biometric Information will be permanently deleted or destroyed using secure, unrecoverable methods. #### (f) Prohibition on Sale and Secondary Use We will not sell, lease, trade, or otherwise profit from Biometric Identifiers or Biometric Information. We will not use Biometric Information for advertising, marketing, or behavioral profiling. #### (g) Data Security We and our vendors will protect Biometric Information using at least the same or greater level of security as other sensitive personal data, including: * Encryption in transit and at rest. * Role-based access controls. * Audit logging and monitoring for unauthorized access. * Secure destruction protocols appropriate to the storage medium: * Cloud databases: Cryptographic key destruction and multi-pass database deletion * Backup systems: Automated purging from backup retention cycles * Physical media (if any): Sanitization per NIST SP 800-88 guidelines * Vendor systems: Contractually required deletion verification within 30 days. * Vendor risk assessments and contractual security obligations. #### (h) Individual Rights Residents of any state with biometric or comprehensive privacy laws may exercise the following rights: * Access: You may request confirmation whether we hold Biometric Information about you. * Deletion: You may request deletion of Biometric Information once its purpose has been fulfilled. * Restriction: You may request restriction or limitation of processing of your Biometric Information. * Complaint: You may contact your state attorney general or privacy authority if you believe your rights have been violated. Requests relating specifically to Biometric Information will be handled in accordance with applicable biometric privacy laws, and may require additional identity verification. To Submit Biometric Information Requests: Email: [privacy@swanbitcoin.com](mailto:privacy@swanbitcoin.com) Subject Line: "Biometric Information Request - \[Access/Deletion/Restriction\]" Mail: Privacy Rights Request - Biometric Information, Electric Solidus, Inc., 26565 Agoura Road, Suite 200, Calabasas, CA 91302 Include your full name, email address associated with your Swan account, and specific request (access confirmation, deletion, restriction of processing, or complaint). We will respond within 45 days of receiving a verifiable request. #### (i) Policy Updates We may update this policy to reflect changes in technology, vendors, or applicable law. Any material changes will be communicated through our website or direct notice where required. The current version will always display an effective date and last-modified date. # Swan Real Bitcoin Exchange (RBX) URL: https://www.swanbitcoin.com/rbx/ Convert your Bitcoin ETF into real Bitcoin you own, without selling. Swan RBX is a structured, in-kind exchange designed to support a tax-efficient outcome. --- Real Bitcoin Exchange ### From Exposure to Ownership Convert your spot Bitcoin ETF into real Bitcoin in a Swan account, structured to support a tax-efficient outcome. Featured in: The New York Times, Forbes, The Wall Street Journal, Coindesk, Bitcoin Magazine, Yahoo Finance, CoinTelegraph, Barron's, CNBC ### From a Bitcoin ETF to real Bitcoin you own If you hold a Bitcoin ETF, you know the tradeoff. The ETF can be a clean way in, but it's only price exposure, not ownership. You can't withdraw it, you can't self-custody it, and it charges a management fee every year you hold it. If you bought in early at a low cost basis, selling now means a large capital gain, so the position stays put, paying fees without delivering ownership. #### Own real Bitcoin, not a fund share Real, on-chain Bitcoin held in your name, in Swan’s institutional-grade custody, collaborative custody, or full self-custody. Not a fund share. #### Move without selling Convert your ETF shares in kind, without selling them on an exchange and realizing the capital gain. #### Stop paying ETF management fees Step out of the ETF expense ratio that compounds against your position every year, and stop paying ongoing ETF management fees. #### Seek tax-deferred exchange treatment Structured to support in-kind exchange treatment where your circumstances allow. Swan does not give tax advice, so confirm with your advisor. #### Built for Bitcoin-native use Once it's real Bitcoin, you can move it on-chain, give it directly, hold it in treasury, and borrow against it without selling. #### Guided by Swan Private Your dedicated Swan Private representative guides every step, from the first conversation through final settlement of your Bitcoin. > Bitcoin ETFs have helped many investors take their first step. But exposure is not the same as ownership. Swan RBX gives investors a path to move from ETF exposure to real, on-chain Bitcoin, structured to support a tax-efficient outcome. — Cory Klippsten, Founder and CEO of Swan Bitcoin ### Is RBX for you? RBX is built for holders of sizable, low-cost-basis positions in spot Bitcoin ETFs: high-net-worth individuals, family offices, founders, and trusts. If RBX fits your position, a Swan Private representative will walk you through what comes next. ### Ready to own real Bitcoin? ### Common questions #### What is RBX? RBX (Real Bitcoin Exchange) is a structured, in-kind exchange that converts your spot Bitcoin ETF shares into real Bitcoin delivered to a Swan account, without selling those shares on the open market. #### Who is it for? Holders of sizable, low-cost-basis spot Bitcoin ETF positions: high-net-worth individuals, family offices, founders, and trusts. #### Which Bitcoin ETFs are supported? RBX supports major spot Bitcoin ETFs. Your Swan Private representative will confirm your specific holding when you speak. #### How is it structured for tax efficiency? RBX is structured to support in-kind exchange treatment, where applicable to your individual circumstances, including the structure of the holding, cost basis, and the specifics of the transaction. Swan does not provide tax or legal advice. Consult your tax advisor before proceeding. #### How is this different from selling my ETF? Selling ETF shares on the open market is a taxable event that realizes any embedded gain. RBX is built for the specific case of moving from ETF exposure to direct Bitcoin ownership without that sale. #### What does it cost, and how does it work in practice? RBX is a Swan Private service. The specifics, including pricing and process, are walked through privately with your representative once you reach out. Pricing is quote-based, and you receive it in writing before anything proceeds. #### What happens once my Bitcoin is in a Swan account? It is held in your name in institutional-grade custody. From there you can keep it in Swan custody, move it into Swan Vault collaborative self-custody, hold it in a Swan IRA, or borrow against it. One dedicated Swan Private representative works with you across all of it. #### How do I start? Reach out through the form on this page or email rbx@swan.com. A Swan Private representative will take it from there. Swan Bitcoin is not a broker-dealer, funding portal, or financial adviser and does not provide investment, financial, tax, legal, or other professional advice. Tax treatment depends on individual circumstances. Consult your tax advisor before proceeding. # Swan Generations URL: https://www.swanbitcoin.com/generations/ Give real Bitcoin to the next generation with a dedicated wallet, family stewardship, and a clear path to taking control when they’re ready --- Swan Generations ### Real Bitcoin. Sound Foundation. Give real Bitcoin to the next generation with a dedicated wallet, family stewardship, and a clear path to taking control. ### Bitcoin for Long-term Family Wealth Planning Swan Generations provides a unique service for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin. We believe that real Bitcoin is the best store of wealth ever created and the most pristine asset for preserving the value of work over time. #### Administrator Stewardship Administrator controls and safeguards the wallet until ascension #### Flexible Ascension Age Flexible ascension age between 18 and 25, set by you #### Irrevocable Real Bitcoin Gifts Irrevocable gifts of real Bitcoin, not price exposure #### Tax Optimized Gifts carry the original cost basis, which may support tax-optimized strategies* #### Family Bitcoin Education Ongoing Bitcoin education for the whole family #### Swan Private Your dedicated Swan Private representative guides every step ### Common Questions #### What is Swan Generations? Swan Generations is a Bitcoin service that enables parents, legal guardians, and other family members to make irrevocable gifts of real Bitcoin to a child or young relative, with an administrator stewarding the wallet until a chosen ascension age. #### Who legally owns the Bitcoin in a Generations wallet? From the moment a gift is made into a Generations wallet, the Bitcoin is the legal property of the child or designated wallet owner. The administrator manages the wallet and must act solely for the benefit of that owner. #### What is the role of the administrator? The administrator manages the Swan Generations wallet and safeguards the assets until ascension. The administrator represents that they are the parent, legal guardian, or close family relative of the minor and accepts a core duty of care over the funds. #### What is the ascension age? Can I choose it? The ascension age is the age at which point the owner takes over control of the Swan Generations wallet. When you set up a Generations wallet, you choose an ascension age between 18 and 25. #### Are gifts to a Swan Generations wallet revocable? No. Every contribution is an irrevocable gift to the child. Once Bitcoin is gifted into a Swan Generations wallet, it cannot be reversed or reclaimed by the donor or administrator. #### How do taxes work for Bitcoin gifts? Swan does not provide tax or legal advice. Generally, gifts of Bitcoin carry the original cost basis to the recipient, similar to other property. This can be used in tax-optimized generational planning with your advisors. Swan does not provide tax or legal advice, and you should consult your professionals and resources such as [IRS Publication 551](https://www.irs.gov/publications/p551) for specifics. #### Can multiple family members contribute to the same Generations wallet? Yes. Parents, grandparents, and others can coordinate gifts into a single Swan Generations wallet, keeping in mind applicable gift tax rules. #### How does this fit with my overall Swan relationship? Swan Generations wallets sit alongside your existing Swan accounts — Swan Personal, Swan IRA, and Swan Vault — as a dedicated structure for children and heirs. Your Swan Private representative is always available to help answer further questions about Swan Generations. #### Where is the Swan Generations Bitcoin secured? All Swan accounts are secured by [Swan Guard](https://www.swanbitcoin.com/custody/), our suite of advanced security features and protocols that helps protect all Swan clients. Swan’s principled approach is to segregate duties between trading and custody, so we work with multiple regulated custodians for our services. To learn more about that approach, please see this [FAQ](https://help.swanbitcoin.com/hc/en-us/articles/360050513913-Which-custodians-does-Swan-work-with). For the Swan Generations wallet service specifically, the custodian partner is Bitgo Bank & Trust, a qualified custodian operating under the laws of the United States and authorized by the Office of the Comptroller of the Currency, and one of the oldest operating Bitcoin custodians. Learn more [here](https://www.bitgo.com/company/security/). # Swan’s Custody Options and Security Stack URL: https://www.swanbitcoin.com/custody/ Swan provides industry-leading options to safeguard your Bitcoin so you can live your life. --- ### Unwavering Security Swan provides industry-leading options to safeguard your Bitcoin so you can live your life. ### Swan Sovereign **Guided Self-Custody -** Swan Sovereign is for Bitcoin holders who want to maintain 100% key control while receiving expert guidance and ongoing education. Clients retain complete control of their Bitcoin, Swan never touches your keys or seed phrase, while gaining a dedicated Swan Private rep, an annual custody check-in, and exclusive education. [Learn more about Swan Sovereign](https://www.swanbitcoin.com/sovereign/) ### Swan Vault **Self-Custody -** Swan Vault empowers you with total control of your Bitcoin without having to go it alone. Your funds are safeguarded by a multisignature vault with two of three keys, stored safely in separate locations, required to move your Bitcoin. You hold the keys, but you're never on your own, every Vault client has a dedicated Swan Private rep. [Learn more about Swan Vault](https://www.swanbitcoin.com/vault/) ### Swan Safe **Segregated Custody -** Simple, secure, and designed to get you started with confidence. When you leave your Bitcoin with Swan, we securely store it using a segregated custody model. Your Bitcoin is held in an account in your name, not Swan’s, under a direct legal agreement between you and the regulated financial institution holding your funds. [Learn more about Swan Safe](https://www.swanbitcoin.com/custody/safe/) ### Secured by Swan Guard Swan Guard is our suite of advanced security features and protocols that protects all Swan accounts. We dedicate extensive time, resources, and engineering to securing our systems and your assets, resulting in industry-leading protection. #### Dynamic Risk Monitoring Continuous monitoring for high-risk activity and potential threats #### Dedicated US-Based Support Access to security agents for urgent situations #### Identity and Device Protection Advanced identity fraud detection and device risk signals #### On-Chain Scam Defense Withdrawal monitoring for known scam addresses and patterns #### Client-Initiated Lockdown Secure your account in two taps if you detect suspicious activity #### Enhanced Fraud Screening Dynamic screening for evolving fraud and risk situations #### Security Education Ongoing education on Bitcoin security and personal operational security #### SOC 2 Type 2 Compliant Our platform’s security is regularly and independently audited ### The Ultimate Goal: Financial Freedom Ultimately, our goal is to help you achieve financial freedom through Bitcoin. Self-custody, on your own or with Swan Vault, is the pinnacle, but we recognize the need for secure options along the way. Swan Safe and Swan Guard are our commitments to providing the security and support you need wherever you are on the path to owning your future with Bitcoin. ### Common Questions #### Should I self-custody my Bitcoin?

Yes — we strongly encourage it. Self-custody is the safest way to hold Bitcoin long term because you remove third-party risk and maintain full control of your money. That’s why Swan built Swan Vault, a guided multisig solution that gives you control without having to go it alone.


That said, self-custody may not be the right first step for everyone. Some clients prefer to start with Swan Safe (segregated custody in your name) while they learn. Many transition to self-custody later, once they’re comfortable managing keys.


Our team is here to help you move to self-custody at your own pace. Whether you want to set up a secure multisig vault with Swan or eventually take full responsibility yourself, we’ll provide education and support every step of the way.

#### Which custodians does Swan work with?

Swan partners with regulated financial institutions to help you establish direct accounts in your name, governed by individual agreements between you and the regulated institution. Our partners include BitGo Trust (regulated by the South Dakota Division of Banking), Equity Trust (a South Dakota regulated IRA custodian serving clients since 1984), and Bakkt (a public company regulated by the NYDFS and majority owned by ICE, the parent of NYSE).


Each custodian specializes in different services and geographies. By working with multiple custodians, Swan is able to offer a wide range of services to meet the needs of our clients.


When you open a Swan account, you will be presented with a terms of service agreement with a licensed and regulated financial institution ("custodian") appropriate for your account type and geographic location. Signing the agreement will establish a direct relationship between you and the custodian.

#### Do I need to personally open an account with your custodian? No. When you create your Swan account, you will be prompted to sign terms with the custodian, and we will automate the creation of your custodial account by passing your information to the custodian. #### What are the benefits of SOC 2 Type II security?

A SOC 2 Type II independent audit evaluates how a company safeguards customer data and ensures its controls operate effectively over time. It covers security, availability, processing integrity, confidentiality, and privacy.


For Swan clients, this means our systems and processes meet rigorous standards for protecting sensitive financial and personal information, giving you confidence in the security and reliability of our platform.

#### How is my personal data secured? All Swan data is stored encrypted with military-grade AES-256 encryption. All traffic is encrypted using industry-standard TLSv1.2 encryption. Swan does not store nor have access to the private keys for Bitcoin stored with our custodial partner. Swan follows the Center For Internet Security Benchmarks for security standards. #### What is "multisignature"?

A multisig (multiple-signature) Bitcoin wallet is a secure storage solution that requires multiple private keys to move Bitcoin (approve a transaction). This creates redundancy and enhances security compared to the traditional single-sig wallet. For this reason, multisig is widely considered one of the safest methods for long-term Bitcoin custody.


Swan Vault uses a 2-of-3 multisig set-up. This means two keys out of three total keys are required to move your Bitcoin. You hold two keys on hardware signing devices and manage the third through your Swan account.

#### Do you rehypothecate customers' Bitcoin? No. Neither Swan nor your custodian can loan, hypothecate, or rehypothecate any Bitcoin. Your Bitcoin is held in your own legal account until you decide to withdraw it. As always, we encourage you to withdraw Bitcoin to your own custody. Swan is here to help you get comfortable with self-custody. # Swan Business — Bitcoin for Your Balance Sheet URL: https://www.swanbitcoin.com/business/ Swan helps businesses accumulate, secure, and strategically hold Bitcoin --- Swan Business ### Bitcoin for Your Balance Sheet Swan helps businesses accumulate, secure, and strategically hold Bitcoin ### Bitcoin Built for Businesses #### Bitcoin Focus Bitcoin-only. No distractions. Deep treasury expertise. #### The Big Picture We manage onboarding, execution, and ongoing custody so your team stays focused #### Dedicated Experts Partner with a dedicated Swan Private representative who understands business complexity #### Institutional Custody Institutional-grade custody with human verification and collaborative self-custody options #### Audit-ready Reporting Transaction reporting and documentation built for your accounting and audit requirements #### Compliance-Forward Our partners include state-chartered trusts and public companies — regulated, audited, and accountable. #### Network on Bitcoin Join a network of principled business leaders building on Bitcoin. #### Education First From board decks to team education, we help you build internal conviction around Bitcoin. ### Swan Business is exclusively available for Swan Private clients. # Swan Safe — Segregated Custody To Secure Your Bitcoin URL: https://www.swanbitcoin.com/custody/safe/ Clients have a direct relationship with our custody partners, ensuring Bitcoin is held by a regulated custodian. --- Swan Safe ### Segregated Custody. Superior Security. ### Why Choose Swan Safe? Swan Safe is built on sound principles of segregated custody. Your account is a direct relationship between you and our custody partners, ensuring your Bitcoin is held by a regulated custodian. #### Modeled on Financial Best Practice Swan follows financial-industry best practices by separating brokerage and custody. Client Bitcoin is held with regulated custodians in individually named accounts, ensuring business activities are separate from client assets. #### Enhanced Regulatory Protection Our partners include state-chartered trust companies like BitGo and Equity Trust, and a public company, Bakkt, all of which operate under stringent regulatory frameworks designed to safeguard customer assets. #### Your Bitcoin, Never Lent or Traded Swan’s custody partners don’t lend or rehypothecate your Bitcoin. That means your holdings can’t be used for leverage or trading by anyone — a critical safeguard that ensures your Bitcoin stays untouched and secure. ### A Network of Trusted, Regulated Custodians We partner with a selection of industry-leading, regulated financial institutions to provide you with maximum security and flexibility. #### Bakkt A publicly traded and NYDFS regulated financial institution majority owned by ICE, the parent company of NYSE. #### BitGo A qualified custodian operating under the supervision of the South Dakota Division of Banking, and one of the oldest operating Bitcoin specific custodians. #### Equity Trust A regulated IRA custodian operating under the South Dakota Division of Banking since 1984. ### Secured by Swan Guard Every Swan Safe account is protected by the comprehensive security features of Swan Guard, our advanced protection against account takeovers, scams, and unauthorized activity, ensuring your assets have robust, modern defenses. [Learn How Swan Guard Protects You](https://www.swanbitcoin.com/custody/#swan-guard) ### Add Swan Safe Plus Add an extra layer of defense to your Swan account with double-verified withdrawals. Every Bitcoin and USD withdrawal is confirmed through a video call with Swan’s expert security professionals, ensuring no transaction moves without your explicit, human-confirmed approval. [Get Priority Access to Swan Safe Plus](https://www.swanbitcoin.com/swan-safe-plus/) # Swan Sovereign: Guided Self-Custody URL: https://www.swanbitcoin.com/sovereign/ Swan Sovereign is guided self-custody: you keep 100% control of your Bitcoin keys, with a dedicated Swan expert, annual custody check-ins, and ongoing security education. $25 / month. --- Swan Sovereign ### Your Keys. Our Expertise. Guided self-custody for Bitcoin holders who want to hold every key, with a Swan expert by your side. What's Included ### Self-custody, with an expert in your corner Swan Sovereign pairs self-custody with expert guidance, ongoing education, and the full benefits of Swan Private. Swan never touches your keys or seed phrase. #### Full Key Control You hold 100% of your keys, always. Swan never accesses, stores, or backs up your private keys or seed phrase. Sovereign is guidance, not custody. #### Dedicated Swan Private Rep Sovereign includes full Swan Private membership: a dedicated representative for ongoing one-on-one guidance, whenever you need it. #### Annual Custody Check-In A one-on-one call with a Swan self-custody expert to review your setup, security posture, and assess any changes in your situation. #### Monthly Newsletter Self-custody tips, operational security best practices, and phishing awareness delivered to your inbox every month. #### Quarterly Webinars Live deep-dives with Q&A on personal security, operational security, and self-custody best practices from Swan's experts. #### Knowledge Center An exclusive content library, Swan Private research, and member events. ### Every key in your hands, expert guidance at every step Self-custody is the pinnacle of owning Bitcoin, but going it alone can feel daunting. Swan Sovereign provides support: we educate, answer questions, and share best practices so you can make informed decisions. ### Swan Private, included An active Swan Sovereign subscription includes full Swan Private membership: a dedicated representative, exclusive Bitcoin and macro research, and access to Swan's online and in-person events. It's the high-touch service our best clients rely on, now paired with dedicated self-custody guidance. [Learn More About Swan Private](https://www.swanbitcoin.com/private/) Pricing ### Simple and transparent - **$25 / month** cancel anytime - **100%** of your keys, held by you - **Included** Swan Private membership Sovereign vs. Vault ### Two paths to owning your keys Both keep you in control. Choose the level of support that makes sense for you. | | Swan Sovereign: Guided self-custody. | Swan Vault: Collaborative self-custody with a 2-of-3 multisig. | | --- | --- | --- | | Who holds the keys | You hold every key, in the setup you choose, including multisig | You hold two keys in cold storage and manage the third from your Swan account | | What Swan provides | Expert guidance, education, and a dedicated rep | Recovery support if a key is lost, plus a dedicated rep and Swan Private benefits | ### Prefer collaborative custody? Advanced Bitcoin cold storage made simple. You hold two keys offline and manage the third, the Cloud Key, through your Swan account for recovery and transacting. [Learn more about Swan Vault](https://www.swanbitcoin.com/vault/) ### Common Questions #### What is Swan Sovereign? Swan Sovereign is guided self-custody. It's for Bitcoin holders who want to keep 100% key control while receiving expert guidance and ongoing education. You hold all the keys; Swan provides education, support, and a dedicated rep so you can self-custody on your own terms. #### How is Sovereign different from Swan Vault? Swan Vault is a 2-of-3 collaborative self-custody multisig product where Swan holds one of three keys (the Cloud Key) to help you recover access. Swan Sovereign is pure self-custody guidance: you hold every key across whatever setup you choose, and Swan provides guidance, education, and support. Your rep can walk you through the tradeoffs of each. #### Does Swan ever access my keys or Bitcoin? No. Swan does not hold, access, generate, store, or back up your private keys or seed phrase at any time. You are solely responsible for your keys and backups. No Swan representative will ever ask for your seed phrase, and you should never share it with anyone. #### What won't Swan do? Swan will never set up your hardware wallet, generate or hold your keys, or take custody of your Bitcoin. Sovereign is guidance and education; you place every key yourself. #### Is Swan Private included? Yes. An active Swan Sovereign subscription includes Swan Private membership: a dedicated representative, exclusive research, and access to online and in-person events. #### What does the annual custody check-in include? A one-on-one call with a Swan self-custody expert to review your current setup, discuss your security posture, and talk through what makes sense for your situation. It's educational guidance; Swan does not make personalized investment, legal, or tax recommendations. #### How much does it cost and can I cancel? Swan Sovereign is $25 / month, cancel anytime. If you cancel, your access continues through the end of your current billing period. #### Is this financial or legal advice? No. Swan Sovereign provides educational guidance and procedural support for self-custody. It is informational in nature and does not constitute financial, investment, legal, or tax advice. We encourage you to consult qualified professionals for decisions with tax, legal, or estate-planning implications. ### Take control of your Bitcoin. You don’t have to do it alone. Swan Sovereign provides educational guidance and procedural support for self-custody of Bitcoin. This service is informational in nature and does not constitute financial, investment, legal, or tax advice. Swan does not hold, access, generate, store, or back up your private keys or seed phrases at any time, and cannot recover self-custodied Bitcoin. We recommend consulting qualified financial, legal, and tax professionals for matters beyond the educational scope of the service. # Swan Bitcoin Fees: 1% Buys, $0 Withdrawals URL: https://www.swanbitcoin.com/fees/ 1% on Bitcoin buys and sells, $0 withdrawals, always. Compare Swan’s custody options and see exactly what you’d pay. --- Swan Bitcoin Fees ### Simple, Transparent Pricing 1% on buys, and no buy fee on a new client's first $250. $0 to withdraw, always. - **1%** on buys - **$0** withdrawals, always - **$0** to hold in self-custody Compare custody ### Where you store your Bitcoin Swan charges 1% on Bitcoin buys and 1% on sells. Bitcoin and cash withdrawals are always free. Ongoing custody starts at $0, depending on where you decide to keep your Bitcoin. | | Self-Custody: Your keys, on your own hardware. | Swan Sovereign: Guided self-custody with a dedicated expert. | Swan Vault: Collaborative multisig cold storage. | Swan Safe: Simple, Swan-secured storage. | | --- | --- | --- | --- | --- | | Custody fee | $0 | $25 / month | $30 / month flat to $150k, then 0.02% / month (max $500 / month) | 0.03% of balance / month; $0 with auto-withdrawals | | Who holds the keys | You | You (with dedicated expert) | You + Swan (multisig) | Regulated custodian | **No fee ladders. No tiers. No surprises.** One buy fee, free withdrawals, and a custody cost you choose. ### Secured by Swan Guard Swan Guard is our suite of advanced security features and protocols that protects all Swan accounts. We dedicate extensive time, resources, and engineering to securing our systems and your assets, resulting in industry-leading protection. #### Dynamic Risk Monitoring Continuous monitoring for high-risk activity and potential threats #### Dedicated US-Based Support Access to security agents for urgent situations #### Identity and Device Protection Advanced identity fraud detection and device risk signals #### On-Chain Scam Defense Withdrawal monitoring for known scam addresses and patterns #### Client-Initiated Lockdown Secure your account in two taps if you detect suspicious activity #### Enhanced Fraud Screening Dynamic screening for evolving fraud and risk situations #### Security Education Ongoing education on Bitcoin security and personal operational security #### SOC 2 Type 2 Compliant Our platform’s security is regularly and independently audited Add as you grow ### Build on your foundation #### Swan IRA More than a plan. A partnership. [Learn more](https://www.swanbitcoin.com/bitcoin-ira/) #### Swan Generations Real Bitcoin. Sound Foundation. [Learn more](https://www.swanbitcoin.com/generations/) #### Swan Private Your Partner for Generational Wealth. [Learn more](https://www.swanbitcoin.com/private/) ### Questions people actually ask #### Is the 1% buy fee really all I pay? On buys, yes. A flat 1%. Sells are 1%, and withdrawals are always free. Everything after that is an optional custody fee that depends on where you store your Bitcoin. #### How do I get to $0 in custody fees? Simply turn on Bitcoin auto-withdrawals from your Swan dashboard to waive the Swan Safe custody fee entirely. Swan auto-withdraws your Bitcoin to a wallet you specified, either once a week or when your balance crosses a threshold you set. #### Where can I read more details? Find out more in our [Swan FAQ](https://help.swanbitcoin.com/hc/en-us/articles/360045394134-What-are-Swan-Bitcoin-s-fees). ### Nothing hidden. Start buying. Open an account in minutes, or talk to a Bitcoin expert about the right custody for you. # Media - Swan Bitcoin URL: https://www.swanbitcoin.com/media/ Building Wealth, Together --- ### Swan Bitcoin Looking for media guests to cover Bitcoin related topics? Swan employs a wide range of thought leaders with extensive experience in the Bitcoin industry. Browse our team and reach out to book a guest. Founder and CEO ### Cory Klippsten Cory Klippsten is the founder of SwanBitcoin.com and GiveBitcoin.io. Before startups, he worked for Google, McKinsey, Microsoft, and Morgan Stanley. [More from Cory](https://www.swanbitcoin.com/media/cory-klippsten/) CTO and Cofounder ### Yan Pritzker Yan has been a leader at tech startups for almost 20 years, most recently at Reverb, and is the author of the book Inventing Bitcoin. [More from Yan](https://www.swanbitcoin.com/media/yan-pritzker/) Head of Education ### Brady Swenson Brady is a frequent guest on Bitcoin media and hosts two well-known Bitcoin podcasts, Citizen Bitcoin and Swan Signal Live. [More about Brady](https://www.swanbitcoin.com/media/brady-swenson/) # Swan Real Bitcoin Exchange (RBX) URL: https://www.swanbitcoin.com/rbx-gbtc/ Convert your Bitcoin ETF into real Bitcoin you own, without selling. Swan RBX is a structured, in-kind exchange designed to support a tax-efficient outcome. --- Swan Real Bitcoin Exchange ### From Exposure to Ownership Bitcoin ETFs charge fees without delivering ownership. GBTC, for example, charges a 1.50% annual management fee. RBX helps eligible clients move exposure into real, on-chain Bitcoin, with no annual fee if you take full self-custody. Featured in: The New York Times, Forbes, The Wall Street Journal, Coindesk, Bitcoin Magazine, Yahoo Finance, CoinTelegraph, Barron's, CNBC ### From a Bitcoin ETF to real Bitcoin you own If you hold a Bitcoin ETF, like GBTC, you know the tradeoff. Maybe it was a clean way in, but it's only price exposure, not ownership. You can't withdraw it, you can't self-custody it, and it charges a management fee every year you hold it. If you bought early at a low cost basis, selling now means a large capital gain, so you might feel stuck paying fees without actual ownership. #### Own real Bitcoin, not a fund share Real, on-chain Bitcoin held in your name, in Swan’s institutional-grade custody, collaborative custody, or full self-custody. Not a fund share. #### Move without selling Convert your shares in kind, without selling them on an exchange and realizing the capital gain. #### Stop paying ETF management fees Get rid of the expense ratio that compounds against your position every year, and stop paying ongoing ETF management fees. #### Seek tax-deferred exchange treatment Structured to support in-kind exchange treatment where your circumstances allow. Swan does not give tax advice, so confirm with your advisor. #### Built for Bitcoin-native use Once it's real Bitcoin, you can take full sef-custody, store it Swan Vault, add it to your Swan IRA, or gift it with Swan Generations. #### Guided by Swan Private Your dedicated Swan Private representative guides every step, from the first conversation through final settlement of your Bitcoin. > Bitcoin ETFs have helped many investors take their first step. But exposure is not the same as ownership. Swan RBX gives investors a path to move from ETF exposure to real, on-chain Bitcoin, structured to support a tax-efficient outcome. — Cory Klippsten, Founder and CEO of Swan Bitcoin ### Is RBX for you? RBX is built for holders of sizable, low-cost-basis positions in spot Bitcoin ETFs like GBTC: high-net-worth individuals, family offices, businesses, and trusts. It is available to Swan Private clients. If RBX fits your position, a Swan Private representative will walk you through what comes next. ### Ready to own real Bitcoin? ### Common questions #### What is RBX? RBX (Real Bitcoin Exchange) is a structured, in-kind exchange that converts your spot Bitcoin ETF shares into real Bitcoin delivered to a Swan account, without selling those shares on the open market. #### Who is it for? Holders of sizable, low-cost-basis spot Bitcoin ETF positions: high-net-worth individuals, family offices, founders, and trusts. RBX is available to Swan Private clients. #### How is it structured for tax efficiency? RBX is structured to support in-kind exchange treatment, where applicable to your individual circumstances, including the structure of the holding, cost basis, and the specifics of the transaction. Swan does not provide tax or legal advice. Consult your tax advisor before proceeding. #### How is this different from selling my ETF? Selling ETF shares on the open market is a taxable event that realizes any embedded gain. RBX is built for the specific case of moving from ETF exposure to direct Bitcoin ownership without that sale. #### What does it cost, and how does it work in practice? RBX is a Swan Private service. The specifics, including pricing and process, are walked through privately with your representative once you reach out. Pricing is quote-based, and you receive it in writing before anything proceeds. #### What happens once my Bitcoin is in a Swan account? It is held in your name in institutional-grade custody. From there you can keep it in Swan custody, move it into Swan Vault collaborative self-custody, take full self-custody, hold it in a Swan IRA, borrow against it, etc. One dedicated Swan Private representative works with you across all of it. #### How do I start? Reach out through the form on this page or email hello@swan.com. A Swan Private representative will take it from there. Swan Bitcoin is not a broker-dealer, funding portal, or financial adviser and does not provide investment, financial, tax, legal, or other professional advice. Tax treatment depends on individual circumstances. Consult your tax advisor before proceeding. # About Swan URL: https://www.swanbitcoin.com/about/ Swan is here to make your Bitcoin experience as safe and easy as possible. Our team has decades of experience building, marketing and educating. --- ### About Swan Swan is here to help you, your family, and your business build generational wealth with Bitcoin. Our team has decades of experience building, marketing, and educating. But we’re not just here to run a business. We spend all of our time and energy working for Bitcoin. We write [Bitcoin books](https://www.inventingbitcoin.com/), host Bitcoin [podcasts](https://swansignalpodcast.com) and [shows](https://youtube.com/@swan_bitcoin), and [invest in Bitcoin companies.](https://www.bitcoinerventures.com/) We are advocates. We are educators. We are Bitcoiners. ##### Why Is Bitcoin Important? The Swan team shares a common understanding. Through thousands of hours of study we have each arrived at the same conclusion: Bitcoin is on a path to become the world’s preferred money. Money is a critical foundation of human civilization. We have used countless objects as money throughout history but ultimately converged on gold as our preferred money. Gold's natural scarcity preserves its value over time. The U.S. dollar used to be backed by gold for this very reason. But in 1971 U.S. President Richard Nixon ended the dollar gold standard. No longer constrained by the natural scarcity of gold, the Federal Reserve Bank has created trillions of new dollars out of thin air. Massive money printing has driven extreme wealth inequality, stagnant incomes, and a drastic loss of the dollar’s purchasing power. Fiat money, or money created by decree, is an unstable foundation for society. Bitcoin is digital gold and even improves upon gold in many ways. Bitcoin is naturally scarce, no one can create more of it. The supply of new Bitcoin is perfectly predictable. Bitcoin is easy to transfer anywhere in the world, across the most secure computer network in history, at the click of a button. These properties make Bitcoin much better money than the dollar and a much more solid foundation for our future. This is why we believe a Bitcoin future is a brighter one. This is why we built Swan. ##### Swan’s Mission Swan Bitcoin exists to accelerate and democratize long-term Bitcoin adoption by lowering friction, building trust, and elevating understanding. The company serves as an adoption engine that helps people move from casual curiosity to confident ownership through education, access, and safe infrastructure that turns speculators and newcomers into true Bitcoiners. We are committed to providing the safest way to buy Bitcoin. But more than that, we view it as our duty to help educate our clients about this new money. In turn, we hope you help educate your friends and family about Bitcoin’s benefits. We want to see everyone have the right to store wealth in the way they choose. ##### How Can I Get Started with Swan Today? We would love to help yoy, your family, and your business build generational wealth with Bitcoin. Simply visit our home page to [open an account or talk with our team](https://swanbitcoin.com). If you have more questions about Swan, you’ll probably find the answers in our [FAQ](https://help.swanbitcoin.com) and, if not, our outstanding [client services team](https://www.swanbitcoin.com/support/) is ready to help in any way. # Essay - Swan Bitcoin URL: https://www.swanbitcoin.com/essay/ Swan Bitcoin articles about Essay: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Essay category, newest first. - [The Battle for Monetary Independence](https://www.swanbitcoin.com/essay/the-battle-for-monetary-independence/): A 50-day campaign to advance freedom and sovereignty through Bitcoin adoption # Product Updates - Swan Bitcoin URL: https://www.swanbitcoin.com/product-updates/ Swan Bitcoin articles about Product Updates: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Product Updates category, newest first. - [Why We Chose Blockstream Jade for Swan Vault](https://www.swanbitcoin.com/product-updates/why-we-chose-blockstream-jade-for-swan-vault/): After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan's CTO opens up the hardware behind Swan Vault and answers it. - [Swan Real Bitcoin Exchange (RBX): A Structured Path from Bitcoin ETFs to Real Bitcoin](https://www.swanbitcoin.com/product-updates/swan-real-bitcoin-exchange-rbx-a-structured-path-from-bitcoin-etfs-to-real-bitcoi/): RBX is designed for investors with significant Bitcoin ETF positions who want to own Bitcoin directly and seek a tax-efficient outcome. - [Best Place to Buy Bitcoin: A Decision Framework, Not a Ranking](https://www.swanbitcoin.com/product-updates/best-place-to-buy-bitcoin-a-decision-framework-not-a-ranking/): Coinbase, Kraken, River, or Swan? The best place to buy Bitcoin depends on what you're building — a trading position, or long-term wealth with real custody. - [Swan Vault Plus: Human-Verified Withdrawal Protection](https://www.swanbitcoin.com/product-updates/swan-vault-plus-human-verified-withdrawal-protection/): Live video verification, Jade Plus signing devices, and a purpose-built recovery assistant give families and businesses greater control over their Bitcoin. - [Cryptographic Proof Over Passwords: Passkeys are Live for All Swan Clients](https://www.swanbitcoin.com/product-updates/cryptographic-proof-over-passwords-passkeys-are-live-for-all-swan-clients/): Passkeys enable faster, more secure device-based logins (face/fingerprint) that reduce password risks and strengthen our Swan Guard security protections. - [Introducing Swan Generations, Empowering Families to Allocate Real Bitcoin to the Next Generation](https://www.swanbitcoin.com/product-updates/introducing-swan-generations-empowering-families-to-allocate-real-bitcoin/): Swan Generations provides a unique service for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin. - [Swan Safe Plus: Human-Verified Bitcoin Protection](https://www.swanbitcoin.com/product-updates/swan-safe-plus-next-level-security-for-your-bitcoin/): Live human verification for every Bitcoin and USD withdrawal, creating a final checkpoint that blocks SIM swaps, device theft, and social engineering. - [Swan Bitcoin is Live in New York, Bringing End-to-End Bitcoin Wealth Services to the World’s Financial Capital](https://www.swanbitcoin.com/product-updates/swan-bitcoin-is-live-in-new-york-bringing-end-to-end-bitcoin-wealth-services-to-t/): Swan Bitcoin is now live in New York, offering its full suite of services including purchases, secure custody, and retirement accounts. New Yorkers now have access to a Bitcoin-only company focused on real ownership. - [Building Swan Guard: Raising the Standard Across the Bitcoin Custody Spectrum](https://www.swanbitcoin.com/product-updates/building-swan-guard-raising-the-standard-across-the-bitcoin-custody-spectrum/): Swan Guard brings world-class Bitcoin security with advanced risk controls, scam defense, and expert support — vigilantly protecting your Swan account and safeguarding your Bitcoin. - [Introducing Swan Guard and Elevated Service Tiers for the Bitcoin-based Investor](https://www.swanbitcoin.com/product-updates/introducing-swan-guard-and-elevated-service-tiers-for-the-bitcoin-based-investor/): Today we announce a new suite of security enhancements and elevated service tiers, reflecting our commitment to serving the Bitcoin-based investor. - [Swan Bitcoin is Live in New York](https://www.swanbitcoin.com/product-updates/swan-bitcoin-is-live-in-new-york/): With its launch in the center of global finance, Swan Bitcoin empowers New Yorkers to build lasting wealth with Bitcoin financial services and expert guidance. - [New Personal Account, Swan Vault on Mobile App, and Withdrawals to Self-Custody](https://www.swanbitcoin.com/product-updates/new-personal-account-swan-vault-on-mobile-app-and-withdrawals-to-self-custody/): We are excited to share the latest improvements to the Swan Bitcoin mobile app, streamlining your Bitcoin buying and storage experience. # Opinion - Swan Bitcoin URL: https://www.swanbitcoin.com/opinion/ Swan Bitcoin articles about Opinion: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Opinion category, newest first. - [Is Bitcoin Safe for Generational Wealth?](https://www.swanbitcoin.com/opinion/is-bitcoin-safe-for-generational-wealth/): Is Bitcoin safe for generational wealth? Learn why custody, inheritance planning, and patience matter more than price when building lasting family wealth with Bitcoin. - [Why Every Gold Investor Should Seriously Consider Bitcoin](https://www.swanbitcoin.com/opinion/why-every-gold-investor-should-seriously-consider-bitcoin/): After managing a Swiss gold fund for 8 years, I realized Bitcoin surpasses gold as the ultimate store of value. Here's why every gold investor should study Bitcoin closely. - [The Ghosts of Glass-Steagall: SAB 122 and History’s Warning for Bitcoin’s Future ](https://www.swanbitcoin.com/opinion/the-ghosts-of-glass-steagall-sab-122-and-history-s-warning-for-bitcoin-s-future/): The SAB 121 repeal mirrors the end of Glass-Steagall in 1999, which played a major role in the 2008 financial crisis. Bitcoiners should listen to history and be more cautionary about SAB 122. - [The Scambling Age](https://www.swanbitcoin.com/opinion/the-age-of-scambling/): Trump Coin and the wild west of non-Bitcoin crypto - [From Fiat Family Home to Bitcoin Mining Trailer: Off-Grid Steve](https://www.swanbitcoin.com/opinion/from-fiat-family-home-to-bitcoin-mining-trailer-off-grid-steve/): The British Bitcoiner on a mission to understand whether Off-Grid, Bitcoin miner heat living is a viable and crucially, profitable venture. - [Why Bitcoin Needs To Change](https://www.swanbitcoin.com/opinion/why-bitcoin-needs-to-change/): When we save our life’s work in bitcoin, we want to be certain that the wealth generated by such work will still be around decades or even centuries from now. - [Germany's Bitcoin "Brown Bottom"](https://www.swanbitcoin.com/opinion/germany-s-bitcoin-brown-botom/): Germany's 50,000 BTC dump at the bull run start is baffling, especially since they can print fiat. This, along with poor energy policies and free speech disregard, shows why Bitcoin offers hope for a better world. - [Trump, Bitcoin, and the Swamp](https://www.swanbitcoin.com/opinion/trump-bitcoin-and-the-swamp/): What does the Trump assassination attempt mean for the 2024 election and Bitcoin policy? Also, the U.S. secret service shows itself to be as incompetent as the mainstream media is when it covers anything Trump. - [Bitcoin Wealth Distribution](https://www.swanbitcoin.com/opinion/bitcoin-wealth-distribution/): Bitcoin curbs government overreach through money printing and devaluation. It promotes saving and long-term investment over fiat's consumerism, empowering global citizens and potentially sparking a cultural renaissance. - [CFTC Coming For Bitcoin?](https://www.swanbitcoin.com/opinion/cftc-coming-for-bitcoin/): Competition exists between US government agencies like the SEC and CFTC to regulate Bitcoin. Senate Democrats propose giving the CFTC unprecedented control over BTC, beyond its traditional role. - [Bitcoin Miners Depilating Dogs?](https://www.swanbitcoin.com/opinion/bitcoin-miners-depilating-dogs/): Is Bitcoin mining is behind canine hair loss, old oak trees dying, and old people getting sick? No. But, the smear campaigns remain relentless. - [Is Bitcoin Controlled By Tether?](https://www.swanbitcoin.com/opinion/is-bitcoin-controlled-by-tether/): Questions about Bitcoin market and transactional value, and Tether's influence. Bitcoin isn't controlled by Tether, which is likely not a Ponzi scheme but a profitable business. - [Bitcoin: Too Volatile To Be Money?](https://www.swanbitcoin.com/opinion/bitcoin-too-volatile-to-be-money/): BTC's price volatility is due to its smaller market cap. Although its been decreasing over time, it could spike during a fiat currency collapse, similar to the unpredictability of gold prices during the Weimar Republic. - [Bitcoin HODL'ing vs. Spending](https://www.swanbitcoin.com/opinion/bitcoin-hodl-ing-vs-spending/): In this video, Matt discusses Bitcoin HODL'ing vs. Bitcoin spending. Most people should probably have at least 2 Bitcoin buckets: 1) Deep cold storage Bitcoin, 2) Spending wallet. - [Bitcoin's HODL Culture](https://www.swanbitcoin.com/opinion/bitcoin-s-hodl-culture/): Bitcoin's culture of hodling, and how important it is both for building strong individuals and families, as well as creating the precondition for a Bitcoin circular economy to develop. - [Bootstrapping Bitcoin](https://www.swanbitcoin.com/opinion/bootstrapping-bitcoin/): Launching a new cryptocurrency is challenging, needing miner compensation through new issuance (diluting holders) or transaction fees (requiring long-term demand). Bitcoin successfully navigated this quagmire. - [Is Kaspa The Next Bitcoin?](https://www.swanbitcoin.com/opinion/is-kaspa-the-next-bitcoin/): Kaspa's strengths (no premine, proof of work, capped supply) are undermined by its concentrated founding team and devs with outspoken political views, raising concerns about its neutrality and future forks. - [Highly Regarded Bitcoin Miner](https://www.swanbitcoin.com/opinion/highly-regarded-bitcoin-miner/): Matt discusses Marathon Digital Holdings (MARA), a US Bitcoin miner criticized for OFAC censorship, spamming the network and mining altcoins. With stock price and revenue down - survival is uncertain. - [How To Deprogram Yourself](https://www.swanbitcoin.com/opinion/how-to-deprogram-yourself/): Learn how to deprogram yourself, and get on the path to recovery from years of abuse and gaslighting by governments, schools, corporations, lobbying groups, and the media. - [The Magic of Dollar-Cost-Averaging (DCA’ing) Bitcoin](https://www.swanbitcoin.com/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/): Dollar cost averaging (DCA) imposes the discipline of buying fewer sats when the fiat price is higher and more sats when the fiat price is lower, thus giving you a lower fiat cost basis. - [Is Bitcoin A Giant PsyOp?](https://www.swanbitcoin.com/opinion/is-bitcoin-a-giant-psyop/): Fiat money, not Bitcoin is the true psyop, controlling money supply to fund bureaucrats. Opt out and choose Bitcoin, the freedom money. - [Mt. Gox Dump Coming?](https://www.swanbitcoin.com/opinion/mt-gox-dump-coming/): The market may overreact to the upcoming Mt. Gox BTC distribution - presenting a buying opportunity. Long-term HODLers should use lower prices to accumulate BTC. - [Crypto's Fatal Flaw Discovered?](https://www.swanbitcoin.com/opinion/crypto-s-fatal-flaw-discovered/): A critical flaw in cryptocurrency, based on a series of tweets by Miles Deutscher - highlighting a major fundamental issue that is beginning to surface in the crypto world. - [Will Bitcoin Kill All Stocks?](https://www.swanbitcoin.com/opinion/will-bitcoin-kill-all-stocks/): Sound money, free markets, and corporations can coordinate human activity and productivity effectively, but stocks, unlike Bitcoin, are paper assets subject to management, regulatory, and operational risks. - [The Sunshine Manifesto](https://www.swanbitcoin.com/opinion/the-sunshine-manifesto/): Rather than being something to be avoided, sunlight has many health benefits that most people are unaware of, from reducing chronic illnesses, to prolonging your life. - [Billionaires Boosting Bitcoin ](https://www.swanbitcoin.com/opinion/billionaires-boosting-bitcoin/): Larry Fink's CNBC interview, retweeted by Michael Saylor and Michael Dell, pitches Bitcoin as a legitimate hedge against monetary debasement with non-correlated returns. Bitcoin is HOPE! # Markets - Swan Bitcoin URL: https://www.swanbitcoin.com/markets/ Swan Bitcoin articles about Markets: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Markets category, newest first. - [Bitcoin ETFs Inflows Showing Robust Turnaround in July](https://www.swanbitcoin.com/markets/bitcoin-etfs-inflows-showing-robust-turnaround-in-july/): The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. - [The Race is On: 11 Bitcoin ETFs Launch](https://www.swanbitcoin.com/markets/the-race-is-on-eleven-bitcoin-etfs-launch/): These ETFs will act as a top-of-funnel and will become an initial touchpoint for many future Bitcoiners. - [A Fed Pivot Releases Animal Spirits](https://www.swanbitcoin.com/markets/a-fed-pivot-releases-animal-spirits/): It seems like things are all lining up for Bitcoin to have an explosive year in 2024. - [Bitcoin: A Buoy in the Waves of Inflation](https://www.swanbitcoin.com/markets/bitcoin-a-buoy-in-the-waves-of-inflation/): As uncertainty remains the status quo in the traditional financial system, Bitcoin’s system remains predictable and reliable. - [The Inflation/Deflation Tug-of-War](https://www.swanbitcoin.com/markets/the-inflation-deflation-tug-of-war/): Overall, the economy and central banks are in a tense tug-of-war. Inflation and disinflation are going back and forth. Which side will gain the upper hand? - [A Sticky Situation ](https://www.swanbitcoin.com/markets/a-sticky-situation/): Swan Private Market Update #27 - [Bitcoin and Crypto: A Simple Story vs. A Convoluted Yarn](https://www.swanbitcoin.com/markets/bitcoin-and-crypto-a-simple-story-vs-a-convoluted-yarn/): Bitcoin’s story is a simple one: it is money you can count on. Simply holding it until you need to spend it. The stories spun by the Crypto Industry are anything but simple, or even logical when examined closely. - [Bitcoin Misconception #1: “Bitcoin is a Bubble”](https://www.swanbitcoin.com/markets/is-bitcoin-a-bubble-2/): Bitcoin looks a lot more rational when you look at the long-term logarithimic chart, especially as it relates to Bitcoin's 4-year halving cycle. # Analysis - Swan Bitcoin URL: https://www.swanbitcoin.com/analysis/ Swan Bitcoin articles about Analysis: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Analysis category, newest first. - [Why some Coldcard seeds were compromised: false randomness](https://www.swanbitcoin.com/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/): Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. - [Bitcoin vs. Gold as a Store of Value: Which Asset Better Protects Your Wealth?](https://www.swanbitcoin.com/analysis/bitcoin-vs-gold-store-of-value/): Bitcoin vs. gold as a store of value in 2026: how they compare on scarcity, portability, and ownership & which better protects your wealth long term. - [Quantum Fear-Mongering and The Infinite Perils Trap](https://www.swanbitcoin.com/analysis/quantum-bitcoin-fear-mongering-and-the-infinite-perils-trap/): Quantum is a real research problem, not a license to break Bitcoin's deepest norms. Prepare seriously. Move slowly. Leave Satoshi's coins alone. - [Buy Real Bitcoin, Not a Bitcoin ETF: Why Ownership Still Matters](https://www.swanbitcoin.com/analysis/buy-real-bitcoin-not-a-bitcoin-etf-why-ownership-still-matters/): A spot Bitcoin ETF tracks the price of Bitcoin. Owning shares is not the same as owning Bitcoin. - [This Time is Different](https://www.swanbitcoin.com/analysis/this-time-is-different/): No longer a niche commodity, Bitcoin now finds itself a prime fixation of the US Executive Branch. - [Digital Asset Reserves: Bitcoin Stands Alone](https://www.swanbitcoin.com/analysis/digital-asset-reserves-bitcoin-stands-alone-in-long-term-value-preservation-and-s/): Bitcoin is the only digital asset that meets the necessary criteria for a sovereign reserve, given its decentralization, liquidity, security, and geopolitical significance. - [The Bitcoiner who Ran for French National Assembly](https://www.swanbitcoin.com/analysis/the-bitcoiner-who-ran-for-french-national-assembly/): Running on a Bitcoin-only platform is a significant milestone. - [If They Can Print Money, Why Do We Pay Taxes?](https://www.swanbitcoin.com/analysis/if-they-can-print-money-why-do-we-pay-taxes/): Bitcoin is a real solution to the issues surrounding the question of “If they can print money, why do we pay taxes?" - [IBIT vs. GBTC: Which is Best in July 2024?](https://www.swanbitcoin.com/analysis/ibit-vs-gbtc/): IBIT vs. GBTC. A review aiming to provide clear insights for both seasoned and novice investors. Which is better in July 2024! - [Bitcoin Isn’t Ossified, It’s in Equilibrium](https://www.swanbitcoin.com/analysis/bitcoin-isn-t-ossified-it-s-in-equilibrium/): Bitcoin is the world's first truly global grassroots revolution. - [Cherry Pickers](https://www.swanbitcoin.com/analysis/cherry-pickers/): While quick ‘drive-by’ analyses can be inflammatory and make it look like Bitcoin is failing, proper analysis requires ‘zooming out’ and understanding the reasoning at a deeper level... - [Epoch Five - Big League Bitcoin](https://www.swanbitcoin.com/analysis/epoch-five-big-league-bitcoin/): Block 840,000 has come and gone. With it, came Bitcoin's fourth halving, cutting the issuance of new coins to 3.125 per block. Welcome to Epoch V. What awaits us? - [Changing Bitcoin, Part III – The Future](https://www.swanbitcoin.com/analysis/changing-bitcoin-part-iii-the-future/): Bitcoin will change the lens of what it takes to succeed in pursuing change itself. It will change everything and the tactics people use to achieve change. Bitcoin will change how we "People with each other." - [The Eras of Bitcoin](https://www.swanbitcoin.com/analysis/the-eras-of-bitcoin/): SWAN SIGNAL MONTHLY NEWSLETTER VOL. 42 - [Changing Bitcoin, Part II – The Present](https://www.swanbitcoin.com/analysis/changing-bitcoin-part-ii-the-present/): Rule Changes Are Being Proposed. How Might They Change Bitcoin? How Might They Happen? - [Changing Bitcoin: The Past, The Present, and The Future (Part One)](https://www.swanbitcoin.com/analysis/changing-bitcoin-the-past-the-present-and-the-future-part-one/): For Bitcoin to achieve the lofty goals many have for it, its rules will need to change. This three-part series of articles will tackle what it takes to change Bitcoin. - [A Changed Bitcoin At $50k](https://www.swanbitcoin.com/analysis/a-changed-bitcoin-at-50k/): Although $50k was close to the cycle high in 2021, the current environment makes it easy to believe that this time, $50k marks the beginning, not the end, of an extraordinary bull run. - [5 Reasons to Be Bullish Heading into 2024](https://www.swanbitcoin.com/analysis/5-reasons-to-be-bullish-heading-into-2024/): While past performance is not a guaranteed indicator of future results, the combination of these catalysts suggests a heightened interest and investment in Bitcoin and another green candle year! - [Will a Record Flood to Cash Flow into Bitcoin Next?](https://www.swanbitcoin.com/analysis/cash-flow-into-bitcoin-next/): If the Fed decides to cut rates then expect the floodgates to open, and Bitcoin will be one beneficiary as it sucks up the liquidity, potentially driving its price to new heights in the coming year. - [I'm Bullish and Don't Care Who Knows](https://www.swanbitcoin.com/analysis/i-m-bullish-and-don-t-care-who-knows/): All-Time High Bullishness - Why Today Feels Different! - [Bitcoin: Demystifying Money](https://www.swanbitcoin.com/analysis/bitcoin-demystifying-money/): Only Bitcoin completely demystifies how money works and, even more importantly, will continue to work. - [How Bitcoin and Lightning Can Boost Productivity](https://www.swanbitcoin.com/analysis/running-the-numbers/): The emergence of Bitcoin and the Lightning Network offers promising solutions that could potentially reverse negative trends and revitalize US productivity. - [The Banking System vs. Bitcoin ](https://www.swanbitcoin.com/analysis/the-banking-system-vs-bitcoin/): It's agreed that there are problems in the banking system. The proposed solutions are wildly different. A look at the recent U.S. banking failures, the nature of banking crises, and how Bitcoin is different. - [The Implications of Open Monetary and Information Networks](https://www.swanbitcoin.com/analysis/the-implications-of-open-monetary-and-information-networks/): For proponents of privacy and open networks to win, the technology must be easy to use, too costly to stamp out, and well-understood by the public. - [Inscriptions: Just a Fad, or Real Threat to Bitcoin Becoming Decentralized Money?](https://www.swanbitcoin.com/analysis/inscriptions-just-a-fad-or-real-threat-to-bitcoin-becoming-decentralized-money/): Even if Ordianals are not a short-lived fad, what's the most likely outcome? Low-value inscriptions will likely be priced out by financial transactions over time as Bitcoin gets adopted by more people. Learn why below! - [Bitcoin: The Shipping Container of Money](https://www.swanbitcoin.com/analysis/bitcoin-the-shipping-container-of-money/): What the history of shipping containers can teach us about Bitcoin. - [10 Reasons to Be Bullish on Bitcoin in 2023](https://www.swanbitcoin.com/analysis/10-reasons-to-be-bullish-on-bitcoin-heading-into-2023/): 2023 is shaping up to be an exciting year where the industry builds to deliver even more value for Bitcoin users and investors around the world. - [Bitcoin is the Future of Money, Not Just Another Cryptocurrency](https://www.swanbitcoin.com/analysis/bitcoin-is-the-future-of-money-not-just-another-cryptocurrency/): We need an open, sound and scarce monetary system: Bitcoin. Accept no substitute. - [Debunking Bitcoin Misconceptions: It's Not Stored Time, Energy or Violence](https://www.swanbitcoin.com/analysis/debunking-bitcoin-misconceptions-it-s-not-stored-time-energy-or-violence/): Metaphors and analogies are critical for helping newbies understand Bitcoin, but they are dangerous when taken too far. - [GBTC was the Genesis of the Crypto Credit Contagion](https://www.swanbitcoin.com/analysis/gbtc-was-the-genesis-of-the-crypto-credit-contagion/): Learn how GBTC works, how it's associated with the recent crypto contagion, and why buying spot Bitcoin and taking self-custody helps you avoid all of these risks today. - [The FTX Fiasco and the Fallout to Come](https://www.swanbitcoin.com/analysis/the-ftx-fiasco-and-the-fallout-to-come/): Expect the fires from FTX to continue to burn and claim more victims along the way. If anything, this event has provided a tough lesson on why Bitcoin is different and why self-custody is vital. - [Why Selling Some Bitcoin at a Loss Can Maximize Your Hodling Potential](https://www.swanbitcoin.com/analysis/why-selling-some-bitcoin-at-a-loss-can-maximize-your-hodling-potential/): How to sell your bitcoin for tax advantages without interrupting your strategy to hold for the long term. - [The Great Miner Squeeze of 2022](https://www.swanbitcoin.com/analysis/the-great-miner-squeeze-of-2022/): Bitcoin mining is truly a game of survival of the fittest, and right now, the creme is being separated from the crop. By the end of this squeeze, Bitcoin’s security layer will be more efficient than ever before. - [You Can Believe the Maximalists: Bitcoin is Seperate From Crypto](https://www.swanbitcoin.com/analysis/you-can-believe-the-maximalists-bitcoin-is-seperate-from-crypto/): A recent column by the Financial Times’ Jemima Kelly demonstrated some misunderstandings about Bitcoin’s decentralization and singularity. - [4 Initial Takeaways from the 2022 Global Crypto Adoption Index](https://www.swanbitcoin.com/analysis/4-initial-takeaways-from-the-2022-global-crypto-adoption-index/): The highest adoption rates continue to take place in countries with high inflation, increased capital controls, and where economic instability is the norm. - [A Look At the Lightning Network](https://www.swanbitcoin.com/analysis/a-look-at-the-lightning-network/): Examining the scaling method of the Bitcoin network and its evolution from a store of value to a medium of exchange. - [The Blocksize War's Cyber-Solider Freedom-Fighters ](https://www.swanbitcoin.com/analysis/the-blocksize-war/): The Blocksize Wars were "fought"… but by whom? And what do we really mean by fighting? - [In Defense Of Bitcoin Full Reserve: Not Anti-Credit, But Anti-Fiduciary Media](https://www.swanbitcoin.com/analysis/in-defense-of-bitcoin-full-reserve-not-anti-credit-but-anti-fiduciary-media/): As we continue to debate the proper roles of crypto and lending, Bitcoin full reserve can be the future for credit and commerce. - [CPI Inflation Hit a 40-Year High, but the Dollar is Still King](https://www.swanbitcoin.com/analysis/cpi-inflation-hit-a-40-year-high-but-the-dollar-is-still-king/): Swan Private Market Update 7/15/22. Investors currently fear a coming recession as the Federal Reserve continues on its mission to tame CPI inflation. - [How We Should Really Think About Bitcoin Maximalism](https://www.swanbitcoin.com/analysis/how-we-should-really-think-about-bitcoin-maximalism/): There has been a lot of digital ink spilled about the concept of Bitcoin Maximalism, but there are things the critics don’t understand. - [Digital Assets are Useful Today Despite What the Naysayers Say](https://www.swanbitcoin.com/analysis/digital-assets-are-useful-today-despite-what-the-naysayers-say/): If Bitcoin protects even one family, one person, or one child from the ravages of hyperinflation, then it is worthy of our time, and a useful technology for the world. - [Bitcoin and the True Meaning of Inflation](https://www.swanbitcoin.com/analysis/bitcoin-and-the-true-meaning-of-inflation/): Bitcoin is often described as an inflation hedge, so why hasn't it worked? - [Re-Run the Numbers](https://www.swanbitcoin.com/analysis/re-run-the-numbers/): How Today’s Higher Rates and Lower Prices Impact the Case to Borrow to Buy Bitcoin - [Fact Check: DARPA Funded Report on Blockchain Centralization](https://www.swanbitcoin.com/analysis/fact-check-darpa-funded-report-on-blockchain-centralization/): In this analysis, we examine and fact check the claims in the recent DARPA blockchain report which claims that Bitcoin's blockchain is susceptible to centralized control. - [Dark Moon: The Inevitable Collapse of Luna](https://www.swanbitcoin.com/analysis/dark-moon-the-inevitable-collapse-of-luna/): Luna/UST went from a collective market capitalization of ~$50 billion to now down 99%. The collapse of the Luna/UST Ponzi scheme occurred even faster than anyone expected, but this implosion was perfectly predictable. - [Response to Cole South's ‘Why I Don't Own Bitcoin Anymore’](https://www.swanbitcoin.com/analysis/response-to-cole-south-s-why-i-don-t-own-bitcoin-anymore/): A recent blog post outlined an investor’s rationale for abandoning Bitcoin, and necessitated a Bitcoiner’s response. - [Bitcoin: An Empire For Us All](https://www.swanbitcoin.com/analysis/bitcoin-an-empire-for-us-all/): The rise and fall of an empire: It is a story that has repeated itself throughout human history. Where does Bitcoin fit in? - [Investigating the Dubious Investigations of Bitcoin](https://www.swanbitcoin.com/analysis/bitcoin-investigation/): Some challenging stories are begging to be properly investigated and told. The question is always which investigative journalists have the willingness, integrity and editorial freedom to take these on? - [Bitcoin and the Most Valuable Brand of the 21st Century](https://www.swanbitcoin.com/analysis/bitcoin-and-the-most-valuable-brand-of-the-21st-century/): Bitcoin provides value that surpasses the brand value of the U.S. dollar, as the code provides the utility of superior money. - [Goldbugs Don’t Understand Money](https://www.swanbitcoin.com/analysis/goldbugs-dont-understand-money/): One of the most persistent falsehoods prograted by goldbugs is the idea that monetary goods must have direct utility. - [Reflecting On the Year in Bitcoin: Our Progress and What We Take For Granted](https://www.swanbitcoin.com/analysis/reflecting-on-the-year-in-bitcoin-our-progress-and-what-we-take-for-granted/): The progress that the Bitcoin community made in 2021 reminds us to take nothing for granted, and to make the changes we want to see next year. - [Bitcoin is Generational Wealth](https://www.swanbitcoin.com/analysis/bitcoin-is-generational-wealth/): "Bitcoin is Generational Wealth" is a short film exploring Bitcoin's potential across generations. - [The Diminishing Influence of Halvings on Bitcoin’s Price](https://www.swanbitcoin.com/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/): The price of any asset is determined by its supply and demand. Bitcoin's programmed halving of supply has a diminishing effect its price. - [How Much of the World’s Population Owns Bitcoin Today?](https://www.swanbitcoin.com/analysis/how-much-of-the-world-s-population-owns-bitcoin-today/): One of the biggest blindspots investors have when they first come across Bitcoin is that they view it solely as an asset. Bitcoin is digital gold - you can send over the internet. - [Why Bitcoin's Rules Are Enforced By Physics ](https://www.swanbitcoin.com/analysis/why-bitcoin-s-rules-are-enforced-by-physics/): History shows that fiat systems collapse. The monetary units of these systems become worthless upon those collapses. Science shows that the laws of physics do not collapse. They are eternal. - [The Ultimate Safe Haven](https://www.swanbitcoin.com/analysis/the-ultimate-safe-haven-spencer-schiff/): Bitcoin will be considered the safest asset in human history, thanks to its resistance to debasement, censorship, and confiscation. - [Bitcoin’s Real Energy Expenditure: A Comparative Analysis](https://www.swanbitcoin.com/analysis/bitcoin-real-energy-expenditure-nick-payton/): We must compare Bitcoin's enivronmental and socio-economic impacts to the financical systems it aims to replace. - [On Bitcoin's UX](https://www.swanbitcoin.com/analysis/on-bitcoins-ux/): Why the internet doesn't feel as clumsy anymore is twofold: (1) we got used to the novel concepts the internet brought with it, and (2) countless layers of abstraction make interacting with the base layer easier. # Investing - Swan Bitcoin URL: https://www.swanbitcoin.com/investing/ Swan Bitcoin articles about Investing: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Investing category, newest first. - [Bitcoin Concierge Services for High-Net-Worth Families](https://www.swanbitcoin.com/investing/bitcoin-concierge-service-high-net-worth/): Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. - [Bitcoin Wealth Management: How to Build and Protect Generational Bitcoin Wealth](https://www.swanbitcoin.com/investing/bitcoin-wealth-management/): Learn how Bitcoin wealth management works, from custody and security to inheritance planning and liquidity. Discover how families and businesses use Bitcoin to build and protect long-term wealth. - [FBTC vs. GBTC: Which Bitcoin ETF Should You Buy In 2024?](https://www.swanbitcoin.com/investing/gbtc-vs-fbtc/): Since the start, FBTC (Fidelity Wise Origin Bitcoin Fund) and GBTC (Grayscale Bitcoin Trust) have held the #2 and #3 AUMs for spot Bitcoin ETFs since the jump. FBTC or GBTC? Which should you buy? - [Top 5 Benefits of Bitcoin Dollar-Cost Averaging](https://www.swanbitcoin.com/investing/dollar-cost-average/): Bitcoin offers a strategic approach to investing. Here are the top 5 benefits: it reduces volatility risk, simplifies investing, lowers emotional stress, fosters discipline, and enables long-term growth. - [BITO vs. GBTC Compared: Which is Best in July 2024?](https://www.swanbitcoin.com/investing/bito-vs-gbtc-compared/): BITO vs. GBTC... Which is best in July of 2024? Neither. Learn why! - [MSTR vs. GBTC Compared: Which is Best in July 2024? ](https://www.swanbitcoin.com/investing/mstr-vs-gbtc/): This article compares MSTR and GBTC, offering insights for investors by examining their features, benefits, performance, fees, and drawbacks, focusing on their role in Bitcoin investment strategies in July of 2024. - [Asset Performance in Times of Conflict](https://www.swanbitcoin.com/investing/asset-performance-in-times-of-conflict/): Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. - [Tax-Free Billions: Step by Step How Peter Thiel Has $5B in His Roth IRA ](https://www.swanbitcoin.com/investing/peter-thiel-ira/): Few stories have captivated the public's imagination quite like that of Peter Thiel's Roth IRA. Here is the journey from a modest contribution of $1,700 to +$5 billion, step by step. - [Schrödinger's Coin Model](https://www.swanbitcoin.com/investing/schrodingers-coin-model/): Valuing Bitcoin as a Store of Value - [Interview with an Orange-pilled Financial Advisor](https://www.swanbitcoin.com/investing/interview-with-an-orange-pilled-financial-advisor/): Is this the shape of things to come? - [Wall Street Bitcoin: What it Means For Bitcoin and You ](https://www.swanbitcoin.com/investing/wall-street-bitcoin-what-it-means-for-bitcoin-and-you/): With the successful launch of 10 Bitcoin ETFs, Wall Street has come into Bitcoin in a big way, and it will only get bigger. Is this good or bad for Bitcoin? Like many things in life, the answer is nuanced and uncertain. - [GBTC was the Genesis of the Crypto Credit Contagion (Part II)](https://www.swanbitcoin.com/investing/gbtc-credit-contagion-part-ii/): There are many reasons to criticize DCG and Genesis. Moreover, the drama highlights why holding Bitcoin is a superior option for investors. No fees or if your money benefits a company that doesn’t align with your values. - [5 Reasons to Focus on Bitcoin Only](https://www.swanbitcoin.com/investing/5-reasons-to-focus-on-bitcoin-only/): Unlike other cryptocurrencies, over the long term, Bitcoin has provided exceptional returns, peace of mind, and security for HODLers, their families, businesses, and employees. - [Why Bitcoin is the Ultimate Asset for Your IRA](https://www.swanbitcoin.com/investing/why-bitcoin-is-the-ultimate-asset-for-your-ira/): Adding Bitcoin to your IRA can provide asset diversification, as well as the potential for higher returns and a measure of protection against monetary debasement. - [Bitcoin Awakens from its Summer Slumber](https://www.swanbitcoin.com/investing/bitcoin-awakens-from-its-summer-slumber/): This drawn-out period of low volatility serves as a coiled spring. The only question is in which direction will the price eventually break. - [The Phoenix Trade](https://www.swanbitcoin.com/investing/the-phoenix-trade/): Bitcoin isn’t just “not going away,” it’s growing stronger every day. - [Bitcoin: The Bear Market King](https://www.swanbitcoin.com/investing/bitcoin-the-bear-market-king/): A new crop of altcoins emerges with each Bitcoin bull cycle. Yet, they inevitably meet the same fate. By illuminating this cyclical trend, we can steer the public away from the risky gamble of altcoins. - [What’s Driving Bitcoin’s Price in the Current Debt & Inflation Predicament](https://www.swanbitcoin.com/investing/tracking-bitcoin-rally-after-the-cash-injection-of-2020/): Fulfilling its destiny as a hedge against reckless fiscal and monetary policies, Bitcoin has proven its mettle in its first fourteen years of existence. Let's look at the current debt and inflation predicament. - [Recurring Buys vs. Lump-sum Investing](https://www.swanbitcoin.com/investing/dollar-cost-averaging-vs-lump-sum-investing/): The best strategy is the one that allows an investor to hold through Bitcoin’s volatility and sleep well at night, whether it's recurring buys or lump-sum. - [Plastic Money](https://www.swanbitcoin.com/investing/plastic-money/): What the History of Visa Can Teach Us About Bitcoin - [Easy Money](https://www.swanbitcoin.com/investing/easy-money/): Money has gotten way too complicated. Bitcoin makes it easy again. - [Capital Misallocation: Bitcoin Fixes This](https://www.swanbitcoin.com/investing/capital-misallocation-bitcoin-fixes-this/): Fix the money, fix the world. - [Traders Lose, Stackers Win](https://www.swanbitcoin.com/investing/traders-lose-stackers-win/): Instead of trying to become a trader where you are up against highly capitalized professionals, for most people it is more productive to set up a savings plan to acquire pristine assets with a good risk/reward ratio. - [Bitcoin Bear Markets: We've Been Here Before](https://www.swanbitcoin.com/investing/bitcoin-bear-markets-we-ve-been-here-before/): New Bitcoiners are likely upset with the Bitcoin price right now, but we’ve been here before and there are some silver linings. - [Why Bitcoin is the Path to Economic Stability](https://www.swanbitcoin.com/investing/why-bitcoin-is-the-path-to-economic-stability/): Bitcoin's reliability is leading the world on a path towards greater economic stability. - [Market Headwinds Continue to Blow as the Fed Stands Firm](https://www.swanbitcoin.com/investing/market-headwinds-continue-to-blow-as-the-fed-stands-firm/): Swan Private Market Update #9 - The markets continued to experience turbulence over the last two weeks as investors grapple with rising risks of inflation, hawkish Fed, economic conditions, and the Russian-Ukraine War. - [Bitcoin Is Not Your Typical Investment](https://www.swanbitcoin.com/investing/bitcoin-is-not-your-typical-investment/): Heads They Win, Tails You Lose. You’ve been told you should be investing in stocks & bonds – a game full of world-class professionals playing against you. Bitcoin is the fair game, and an easy one to play. - [Why Bitcoin is Different (Part 2)](https://www.swanbitcoin.com/investing/why-bitcoin-is-different-part-2/): Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where the beginners run into confusion is how Bitcoin differs from other cryptocurrencies. - [Is it Time For Bitcoiners to Get on 'Zero Fiat'? Not Yet](https://www.swanbitcoin.com/investing/is-it-time-for-bitcoiners-to-get-on-zero-fiat-not-yet/): We’ll all eventually transition to holding zero fiat money, but most people cannot afford to go full Bitcoin just yet. - [Saving with Bitcoin](https://www.swanbitcoin.com/investing/saving-with-bitcoin-sam-callahan/): You should be investing in Bitcoin for its volatility - able to wait out price dips, even to accumulate during them, and celebrate the dramatic price rises when they take place. - [Why I’m Driven to Build Swan Advisor Services](https://www.swanbitcoin.com/investing/why-im-driven-to-build-swan-advisor-services-andrewedstrom/): We will deliver the industry's best education team to advisors so that when clients are ready to withdraw Bitcoin to cold storage or engage in collaborative custody, they'll be armed with the knowledge to do it safely. - [The Bearish Case for Bonds](https://www.swanbitcoin.com/investing/the-bearish-case-for-bonds/): Bonds are not as safe today as they are marketed to be. It's time bond investors begin to protect themselves against the Fed policies that are leading to erosion of the real value of their bond holdings. - [Why Every Investor Should Have Bitcoin in Their Portfolio](https://www.swanbitcoin.com/investing/why-every-investor-should-have-bitcoin-in-their-portfolio/): It doesn't matter if you're a young person starting to invest, a parent saving for their kid's education or a retiree protecting your nest egg, Bitcoin has a place in everyone's portfolio. - [Is Bitcoin's Price Too High to Invest?](https://www.swanbitcoin.com/investing/is-bitcoins-price-too-high-to-invest-in/): Whenever someone discovers Bitcoin there are twom phases that typically occur, the first is that wish they could buy it cheaper, and the second is that in hindsight, they should have bought more. - [Am I Too Late For Bitcoin ](https://www.swanbitcoin.com/investing/am-i-too-late-for-bitcoin/): There are different levels of Bitcoin adoption. By segmenting BTC adoption, it becomes easier to see why the wide range of estimates exists but, more importantly, how early adoption of BTC as a preferred store of value. - [Why Bitcoin is Not a Ponzi Scheme: Point by Point](https://www.swanbitcoin.com/investing/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/): Lyn Alden compares and contrasts Bitcoin to systems that have Ponzi-like characteristics, to see if the claim that Bitcin is a ponzi holds up. - [Saving With Bitcoin Was Never So Cool As In 2020](https://www.swanbitcoin.com/investing/saving-with-bitcoin-was-never-so-cool-as-in-2020/): Through technical development, privacy initiatives, multisignature tools, a savings narrative and more, Bitcoin’s 2020 was super cool. - [Investing in Bitcoin Like a 401k](https://www.swanbitcoin.com/investing/investing-in-bitcoin-like-a-401k/): The best way to approach investing in Bitcoin is regular contributions over time like a 401k. - [Why You Should Hold Bitcoin as a Corporate Treasury Asset](https://www.swanbitcoin.com/investing/treasury/): When companies like Square and MicroStragegy start buying Bitcoin, it's time to pay attention. But, smaller private companies are also making this move. Here's why you should consider doing the same. # Politics - Swan Bitcoin URL: https://www.swanbitcoin.com/politics/ Swan Bitcoin articles about Politics: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Politics category, newest first. - [Bitcoin on the Ballot](https://www.swanbitcoin.com/politics/bitcoin-on-the-ballot/): Millions of Bitcoiners are single-issue voters. Jason evaluates how much influence will they have in November 2024! - [Biden's SAB121 Veto Stands: What This Means for Banks and Bitcoin Custody](https://www.swanbitcoin.com/politics/biden-s-sab121-veto-stands-what-this-means-for-banks-and-bitcoin-custody/): The House failed to overturn Biden's veto on a bill allowing banks to custody Bitcoin and crypto assets, addressing SEC's SAB 121, which imposes stringent accounting requirements on banks holding these assets. - [Bitcoin is the New Non-Aligned Movement](https://www.swanbitcoin.com/politics/bitcoin-is-the-new-non-aligned-movement/): In a bifurcated world, Bitcoin can be the solution representing a new Monetary Non-Aligned Movement. - [Are Recent Regulatory and Political Moves Good for Bitcoin?](https://www.swanbitcoin.com/politics/are-recent-regulatory-and-political-moves-good-for-bitcoin/): The answer is becoming clear: not only will they not ban it – they will embrace it. - [Privacy, Executive Order 6102 & Bitcoin](https://www.swanbitcoin.com/politics/privacy-executive-order-6102-bitcoin/): Let's keep pushing forward for the future we want to see, one in which both the price of Bitcoin and global freedom can go up together. - [Bitcoin Liberation: Yan Pritzker’s Personal Journey to Freedom](https://www.swanbitcoin.com/politics/bitcoin-liberation/): Bitcoin is about so much more than merely “number go up.” It’s a tool to reclaim individual economic freedom from those who seek to take that freedom away. And that is something to be optimistic about! - [The Government is Spending Like There’s No Tomorrow](https://www.swanbitcoin.com/politics/the-government-is-spending/): As the government spends frivolously to prevent a recession, the traditional monetary system seems to be growing more fragile as it fractures under the weight of enormous amounts of debt. - [Another Bank Fails As Bitcoiners Work DC ](https://www.swanbitcoin.com/politics/another-bank-fails-as-bitcoiners-work-dc/): Here’s the 32nd issue of Swan Private Market Update, our bi-weekly industry report exclusively for Swan Private clients. - [The United State of Bitcoin](https://www.swanbitcoin.com/politics/the-united-state-of-bitcoin/): Where the US constitution declared that we are all equal, Bitcoin, within its context of money, ensures we are all treated equally, under completely transparent rules. - [A New Peaceful Transition of Power](https://www.swanbitcoin.com/politics/a-new-peaceful-transition-of-power/): In democracies we rely on elections — Proof-of-Votes — and hope all goes well. In Bitcoin power transitions peacefully through Proof-of-Work. - [Why a CBDC Will NOT Promote Financial Inclusion](https://www.swanbitcoin.com/politics/why-a-cbdc-will-not-promote-financial-inclusion/): A CBDC would increase costs, reduce privacy, and create more barriers to financial inclusion, not less. - [A New Separation of Powers](https://www.swanbitcoin.com/politics/a-new-separation-of-powers/): We must realize that the original crafters of government separated powers because it was people who couldn’t be trusted. But in Bitcoin, we have separated power altogether from people! - [Can Bitcoin Survive Without a Leader?](https://www.swanbitcoin.com/politics/can-bitcoin-survive-without-a-leader/): Why Satoshi had to disappear. - [Finding Liberty in Parallel: Bitcoin and the Free Cities Movement](https://www.swanbitcoin.com/politics/finding-liberty-in-parallel-bitcoin-and-the-free-cities-movement/): Rising movements to establish free, autonomous jurisdictions around the world are working alongside Bitcoin to establish parallel liberty. - [Bitcoiners Must Fight the FATF and it's AML Regime](https://www.swanbitcoin.com/politics/bitcoiners-must-fight-the-fatf-and-it-s-aml-regime/): The Financial Action Task Force and its anti-money laundering policies are antithetical to Bitcoin and an attack on human rights everywhere. - [Why Libertarians Should Prioritize the Bitcoin Strategy Above All Others](https://www.swanbitcoin.com/politics/why-libertarians-should-prioritize-the-bitcoin-strategy-above-all-others/): Bitcoin offers libertarians the perfect vehicle for starving the state of its outsized control over personal freedoms. - [Why Bitcoin Will End the Worst Heist in History](https://www.swanbitcoin.com/politics/why-bitcoin-will-end-the-worst-heist-in-history/): The money stealing time machine is called "government decificts and debt." Each annual theft called the deficit, and the total amount stolen across history is called the debt. - [Can the Government Shut Down Bitcoin?](https://www.swanbitcoin.com/politics/can-the-government-shut-down-bitcoin/): At some point on everybody's Bitcoin journey, they begin to realize that Bitcoin may actually be a better form of money. # Economics - Swan Bitcoin URL: https://www.swanbitcoin.com/economics/ Swan Bitcoin articles about Economics: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Economics category, newest first. - [You Are Here: The $40 Trillion Debt Map](https://www.swanbitcoin.com/economics/you-are-here-the-40-trillion-debt-map/): Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. - [Why Gresham’s Law is Important For You (2024 Update)](https://www.swanbitcoin.com/economics/greshams-law/): Bitcoin's legal status as commodity money brings to light Gresham's Law, an economic principle stating "bad money drives out good." We explore how to apply Gresham's Law to the Bitcoin Standard. - [Bitcoin Price Prediction 2026, 2030 & 2040: Analyst Forecasts (Oct 2026)](https://www.swanbitcoin.com/economics/bitcoin-price-prediction/): Bitcoin price predictions for 2026, 2030 and 2040 from Citi, ARK, Standard Chartered, Bernstein and VanEck, plus a scorecard of past forecasts. - [What is Cantillon Effect? (Top Ways it Impacts You in 2024)](https://www.swanbitcoin.com/economics/cantillon-effect/): In this guide, we examine the Cantillon Effect, answering the question: 'How does Bitcoin act as a counter to uneven inflationary impacts?' - [Physical vs. Digital Gold: Which Reigns Supreme in 2024?](https://www.swanbitcoin.com/economics/physical-gold-vs-digital-gold/): In this guide, we delve into the key differences between Bitcoin & gold, exploring which is a better investment in terms of value, accessibility, security, liquidity. - [Trillion-Dollar Deficits are Keeping the Economy Afloat](https://www.swanbitcoin.com/economics/trillion-dollar-deficits-are-keeping-the-economy-afloat/): The reckless nature of government fiscal policies suggests a future where financial instability may hinge on the balance between innovation and traditional policy decisions. - [Will Bitcoin Follow Gold’s Monetary Rise and Fall? And a Look at Bitcoin’s Scaling Strategy](https://www.swanbitcoin.com/economics/will-bitcoin-follow-gold-s-monetary-rise-and-fall/): Bitcoin can achieve its ultimate goal – to be a neutral base layer of a new monetary system for billions of users worldwide - [Argentina: How Fiat Policies Ruined a Once Prosperous Nation ](https://www.swanbitcoin.com/economics/argentina-how-fiat-policies-ruined-a-once-prosperous-nation/): If Argentina embraces Bitcoin, perhaps it can start to resemble the prosperous nation it once was and its people can finally experience something they haven’t felt in a long time – hope. - [Feast or Famine? Breaking Down the State of the Economy](https://www.swanbitcoin.com/economics/feast-or-famine-breaking-down-the-state-of-the-economy/): As Americans continue to feel misled by their government and struggle with the cost of living, Bitcoin increasingly becomes a viable alternative. - [Preparing for an Inflationary Soft Landing](https://www.swanbitcoin.com/economics/preparing-for-an-inflationary-soft-landing/): Investors need to consider that we may be entering a period not seen in the developed world in decades, similar only to those experienced in emerging markets. - [Bitcoin: A Digital Benchmark For Tracking Fiat Debasement](https://www.swanbitcoin.com/economics/bitcoin-a-digital-benchmark-for-tracking-fiat-debasement/): As economies around the globe grapple with the fragility of their currencies, the rising adoption of Bitcoin signals a collective move towards the hardest money man has ever known. - [A Bond Bloodbath is Spiking Heart Rates](https://www.swanbitcoin.com/economics/bond-bloodbath-spiking-heart-rates/): Bond yields are rising as investors are beginning to question the sustainability of these policies as the budget deficit grows larger and inflation remains elevated. - [2023 is a Ripe Environment for Central Bank Failure](https://www.swanbitcoin.com/economics/2023-is-a-ripe-environment-for-central-bank-failure/): The history of the Bank of Amsterdam underscores the vital role trust plays within the monetary system today. As more individuals choose Bitcoin over traditional fiat currencies, its adoption and significance will grow. - [Accounting for Bitcoin in a World of Rising Oil Prices](https://www.swanbitcoin.com/economics/accounting-for-bitcoin-in-a-world-of-rising-oil-prices/): These are thin markets right now, so when major news hits, expect the volatility to continue. And remember... volatility works both ways! - [The Speed of Transactions vs. the Speed of Settlements](https://www.swanbitcoin.com/economics/broken-money-chapter-8/): This draws from chapter 8 of Lyn Alden’s new book, Broken Money, and focuses on a key reason why the world became more and more financialized. - [Bitcoin: More Relevant, More Urgent, More Ready](https://www.swanbitcoin.com/economics/bitcoin-more-relevant-more-urgent-more-ready/): In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many. - [Monetary Debasement vs. Supply Shocks](https://www.swanbitcoin.com/economics/monetary-debasement-vs-supply-shocks/): Price inflation, being a multi-faceted phenomenon, usually has multiple causes at once, and those individual causes become relevant over different time periods. - [Fixed Supply Money Does Not Lead to Economic Collapse](https://www.swanbitcoin.com/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/): And why it is in fact the only intellectually and ethically defensible monetary system. - [With Fiat Currencies Crumbling, It's Time to Denominate in Bitcoin Terms](https://www.swanbitcoin.com/economics/with-fiat-currencies-crumbling-it-s-time-to-denominate-in-bitcoin-terms/): As fiat currencies crash against the USD, it makes sense to start using Bitcoin denominations, even for day-to-day expenses. - [Bitcoin and the U.S. Growth Problem](https://www.swanbitcoin.com/economics/bitcoin-and-us-debt-problem/): Bitcoin and economic growth are the only reasonable ways out of this debt problem. - [The Euro: A Train That's Running Out of Track](https://www.swanbitcoin.com/economics/history-of-the-euro/): The Euro was a poorly designed political construct from the beginning, and now we are seeing its vulnerabilities reemerge in a time of crisis. Can it survive? - [The Turkish Lira's Freefall and the Bitcoin Parachute](https://www.swanbitcoin.com/economics/the-turkish-lira-s-freefall-and-the-bitcoin-parachute/): As the national currency of Turkey continues to plummet, Bitcoin represents an escape hatch for citizens looking to preserve wealth. - [The Biggest Misconception in the Markets? Thinking We’re Dealing With a Sound Currency](https://www.swanbitcoin.com/economics/the-biggest-misconception-in-the-markets-thinking-were-dealing-with-a-sound-currency/): Massive government intervention in markets is underway, but what happens to Bitcoin as a result? - [Rampant Inflation Is on the Way and Here’s What it Means for Bitcoin](https://www.swanbitcoin.com/economics/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/): Once people realize what's happening to their money, they will start buying Bitcoin. - [Bitcoin and the Technological Evolution of the Financial System](https://www.swanbitcoin.com/economics/evolution-of-money/): We are living in hyperbitcoinization, or the repricing of the world in Bitcoin. Bitcoin is a better store of value than gold. For the same reasons people hold gold, Bitcoin will be valued at least on par with gold. - [How Bitcoin Challenges Keynesian Economics](https://www.swanbitcoin.com/economics/how-bitcoin-challenges-keynesian-economics/): We’re in the midst of two great economic experiments. The Keynesian ideal of central control of money is being challenged by a novel money called Bitcoin. # Culture - Swan Bitcoin URL: https://www.swanbitcoin.com/culture/ Swan Bitcoin articles about Culture: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Culture category, newest first. - [Bitcoin – For All Ages, For The Ages](https://www.swanbitcoin.com/culture/bitcoin-for-all-ages-for-the-ages/): For the first time in our lifetimes, we have the opportunity to save reliably over the long-term! - [An Open Letter to Ann Barnhardt](https://www.swanbitcoin.com/culture/an-open-letter-to-ann-barnhardt/): I decided to write a letter, then made it an open letter, to Ann Barnhardt. - [Bitcoin: Reuniting a Deeply Divided World](https://www.swanbitcoin.com/culture/bitcoin-reuniting-a-deeply-divided-world/): Bitcoin’s unchangeability is the fix we have needed for money throughout history. - [Yours Truly, Bitcoin](https://www.swanbitcoin.com/culture/yours-truly-bitcoin/): I do hope this letter has helped to bridge the understanding between you and me. - [Bitcoin: An Endless Chain of Mysteries](https://www.swanbitcoin.com/culture/bitcoin-an-endless-chain-of-mysteries/): There are so many mysteries that draw us into Bitcoin. And there always will be. - [Bitcoin – The Natural Choice For Artificial Intelligence](https://www.swanbitcoin.com/culture/bitcoin-the-natural-choice-for-artificial-intelligence/): AI agents will need to use money and Bitcoin is the best money for the job. This results in Bitcoin both benefiting AI and benefiting from AI. - [The Bitcoin Breakthrough](https://www.swanbitcoin.com/culture/the-bitcoin-breakthrough/): The changes Bitcoin will bring about to society will be significant. - [The Charmed Life of a Baby Boomer Named James](https://www.swanbitcoin.com/culture/the-charmed-life-of-a-baby-boomer-named-james/): The baby boomers left us with a debt/GDP ratio of 120%, and grandkids that can't afford to buy a house. What is the current generation to do? Enter Bitcoin. - [The Substance of Bitcoin](https://www.swanbitcoin.com/culture/the-substance-of-bitcoin/): Bitcoin is a carefully and precisely engineered solution to a crucially important human need – the need for a reliable, universal medium to use as money. - [The Essence of Bitcoin](https://www.swanbitcoin.com/culture/essence-of-bitcoin/): Bitcoin’s essence is that it is a good idea, for the good of humanity, whose time has come, and which cannot be stopped. - [The Truth is on Our Side](https://www.swanbitcoin.com/culture/the-truth-is-on-our-side/): Bitcoin shines the truth on many lies. It is as much a movement as an investment... - [Bitcoin's Moment](https://www.swanbitcoin.com/culture/bitcoin-s-moment/): Born from the ashes of the 2008 financial crisis, Bitcoin was is an engineered solution to the inherent flaws and vulnerabilities within centralized banking structures. - [My Journey From Mount Stupid to Bitcoiner](https://www.swanbitcoin.com/culture/my-journey-from-stupid-to-bitcoiner/): This is my journey from altcoins to Bitcoin. - [Bitcoiners, It's Winning Time](https://www.swanbitcoin.com/culture/bitcoiners-its-winning-time/): We believe that a global, Nasdaq-listed, Bitcoin-only financial services company will play a key role in winning the race to avoid the war, so we’re building it. - [The Themes That Will Define Bitcoin in 2023](https://www.swanbitcoin.com/culture/the-themes-that-will-define-bitcoin-in-2023/): Some trends that emerged in 2022, from regulatory developments to technical and cultural innovations, will grow to define Bitcoin in 2023. - [Green Eggs and Ham](https://www.swanbitcoin.com/culture/green-eggs-and-ham/): Decentralized Finance: The Good, The Bad, And The Ugly - [The Race to Avoid the War](https://www.swanbitcoin.com/culture/the-race-to-avoid-the-war/): Let us proceed – together, united, yet decentralized – and win this race, for one and all, so that we may never have to fight the war. - [Parts 1-9 of The Timechain Codex Now Available in PDF Format](https://www.swanbitcoin.com/culture/the-timechain-codex/): A Graphic Novel by FractalEncrypt based on “Bitcoin Astronomy” by Dhruv Bansal. - [Bitcoin: From the Void](https://www.swanbitcoin.com/culture/bitcoin-from-the-void/): How Bitcoin Uses Both Nothing and Chaos to Create Something the Likes of Which We Have Never Seen Before. - [Bitcoin is a Monumental Event in Human History](https://www.swanbitcoin.com/culture/bitcoin-is-a-monumental-event-in-human-history/): Bitcoin has the possibility of ending the financialization of state war by ending fiat money and restoring natural law and money to our planet. - [We Are All In This Together](https://www.swanbitcoin.com/culture/we-are-all-in-this-together/): The state will come for all of us, low-hanging fruits first. Bitcoiners always knew this. - [Bitcoin, Bitcoiners, Truth, Beauty and Love](https://www.swanbitcoin.com/culture/bitcoin-bitcoiners-truth-beauty-and-love/): One truth Bitcoin shows us is that we are sovereign — not just over our monetary wealth, but also over our emotions, not just over where we spend our money, but also over where and how we spend our time. - [What Can You Do For Bitcoin? ](https://www.swanbitcoin.com/culture/what-can-you-do-for-bitcoin/): Bitcoin might seem inevitable, but you can still take an action hand in pushing it forward. - [A Chronic Case of Bitcoin (Part 2)](https://www.swanbitcoin.com/culture/a-chronic-case-of-bitcoin-part-2/): Bitcoin is here to stay. This is what it means. - [A Chronic Case of Bitcoin (Part 1)](https://www.swanbitcoin.com/culture/a-chronic-case-of-bitcoin/): Bitcoin Is Here To Stay. This Is What It Means. - [Bitcoins! Get Yer Bitcoins! Get ’em While You Can](https://www.swanbitcoin.com/culture/bitcoins-get-yer-bitcoins-get-em-while-you-can-tomer-strolight/): The 'Window of Oppurtunity' to buy Bitcoin closes a little more every single day. - [ Bitcoin and the Most Valuable Brands of The 21st Century](https://www.swanbitcoin.com/culture/bitcoin-and-the-most-valuable-brands-of-the-21st-century/): A topic even more mysterious than cryptography itself—brands. - [How to Get the Most From In-Person Bitcoin Events](https://www.swanbitcoin.com/culture/how-to-get-the-most-from-in-person-bitcoin-events/): Bitcoin events are great expressions of the Bitcoin ethos and critical touchpoints for newcomers and technology innovators alike. - [Why Bitcoin is What Millennials Are Looking For](https://www.swanbitcoin.com/culture/why-bitcoin-is-what-millennials-are-looking-for/): Bitcoin is the system that can make millennials' hopes and dreams come true, and this is becoming increasingly clear to more of them each day. - [Why Gen Z Needs Bitcoin](https://www.swanbitcoin.com/culture/why-gen-z-needs-bitcoin/): Growing up marked by a decaying financial system, we have the chance to change the narrative set before us and create a world grwoing up in for future gnerations. - [Bitcoin, Perfect Money For Humanity](https://www.swanbitcoin.com/culture/bitcoin-perfect-money-for-humanity-nozomi-hayase/): The Internet of Money transcends borders and protects people of all nations from resource wars, exploitation, and dictatorship. Bitcoin guards us against wealth confiscation, helping us steward our precious planet. - [Gifting Bitcoin - The Ultimate Orange Pill ](https://www.swanbitcoin.com/culture/gifting-bitcoin-the-ultimate-orange-pill/): As many people discover convincing a friend or family member to buy Bitcoin can be a challenging task. Swan Bitcoin makes it easier than ever with their gifting program. - [Sovereignism Part 1: Digital Creative Destruction](https://www.swanbitcoin.com/culture/sovereignism-part-i-digital-creative-destruction/): Exploring the digital disruption of the nation-state and the subsequent amplification of individual sovereignty during the digital age. - [The Rise of Bitcoin Nomadism: Is it Right For You?](https://www.swanbitcoin.com/culture/the-rise-of-bitcoin-nomadism-is-it-right-for-you/): The Bitcoin economy is enabling more people to choose their own adventures around the world and optimize their lifestyles. - [Bitcoin is Time](https://www.swanbitcoin.com/culture/bitcoin-is-time/): The relentess beating of this clock is what gives rise to all magical properties of Bitcoin. - [Bitcoin is Hope](https://www.swanbitcoin.com/culture/bitcoin-is-hope/): A fundamentally dishonest money, fiat currency ruins relationships with the intrinsic entropy of nature and our fellow humans. To rejuvenate hope, we must set sights upon honest money, entrepreneurship, and civilization. - [Bitcoin is For Everyone](https://www.swanbitcoin.com/culture/looking-out-for-the-little-guy/): We serve HNWI clients wishing to purchase Bitcoin. Even more importantly, we help great-grandmas, college students, veterans, and fast food workers buy their first Bitcoin and begin saving for their future. - [Our Most Brilliant Idea ](https://www.swanbitcoin.com/culture/our-most-brilliant-idea/): Ideation and wealth creation are mere expressions of life's central impluse: growth. - [Choose Bitcoin ](https://www.swanbitcoin.com/culture/choose-bitcoin/): I believe a line has been drawn in the sand between people, projects, and companies that support Bitcoin and those that do not, and in some cases, actively work against it. - [Accepting Scarcity: A Bitcoin Meditation](https://www.swanbitcoin.com/culture/accepting-scarcity-a-bitcoin-meditation/): This essay focuses solely on the conceptual world of logic, language, and concepts, excluding the mystical and non-conceptual realm, which is also deserving of exploration through meditation and mysticism. - [My Path Towards Bitcoin](https://www.swanbitcoin.com/culture/my-path-towards-bitcoin-stephanie-sprague/): Despite living in the Information Age, many people don't know enough to buy Bitcoin. With this kind of thinking, no one would've ever shared personal details on Facebook or banked electronically. - [Coronavirus, Financial Crisis, and the Epic Bitcoin Crash of March 2020](https://www.swanbitcoin.com/culture/swan-roundtable-market-crash-coronavirus-bitcoin-price/): A roundtable conversation about the current epidemic chaos and how it will impact Bitcoin, the global financial system, remote working, and more. - [Is Bitcoin the Myspace of Crypto?](https://www.swanbitcoin.com/culture/is-bitcoin-the-myspace-of-crypto/): Sound money requires a commitment to decentralization, and properties hard to change and attack. Altcoins are built by centralized teams with a profit motive, not a happy accident of a growing ecosystem by cypherpunks. - [Ten Million Bitcoiners: The Intransigent Minority](https://www.swanbitcoin.com/culture/ten-million-bitcoiners-the-intransigent-minority/): Not too many years from now, the number of Bitcoiners in the United States of America will cross ten million. When we hit that milestone, it’s game over: Bitcoin wins. # Industry - Swan Bitcoin URL: https://www.swanbitcoin.com/industry/ Swan Bitcoin articles about Industry: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Industry category, newest first. - [Swan Announces New Chief Investment Officer, Publishes Guide to Leveraged Bitcoin Equities](https://www.swanbitcoin.com/industry/swan-announces-new-chief-investment-officer-publishes-guide-to-leveraged-bitcoin/): Ben Werkman joins Swan as CIO. New LBE primer explains key concepts, implementation steps, risk management, and valuation approaches. - [Swan Bitcoin and Equity Trust Collaboration Unlocks New Retirement Account Features for Bitcoin Investors](https://www.swanbitcoin.com/industry/swan-bitcoin-and-equity-trust-collaboration-unlocks-new-retirement-account-featur/): Equity Trust and Swan collaborate to bring new IRA account types and features to Swan's IRA product. - [Swan Vault - Safe and Sound Self-Custody](https://www.swanbitcoin.com/industry/swan-vault-safe-and-sound-self-custody/): Swan Vault is advanced Bitcoin security made simple. You don’t need a bank, but you don’t have to go it alone. - [Craig Wright Referred for Perjury Prosecution, Receives Injunctions in COPA Case](https://www.swanbitcoin.com/industry/craig-wright-referred-for-perjury-prosecution-receives-injunctions-in-copa-case/): Final arguments in the the Crypto Open Patent Alliance (COPA) vs. Craig Wright's assertion that he is Bitcoin's creator, Satoshi Nakamoto, and to prevent him from continuing to make such claims. - [Germany's Sale of 50,000 Confiscated Bitcoins Demonstrates Bitcoin's Robust Liquidity](https://www.swanbitcoin.com/industry/germany-s-sale-of-50-000-confiscated-bitcoins-demonstrates-bitcoin-s-robust-liqui/): Germany sold 50,000 Bitcoin seized from an illegal music-sharing service. How the German government is valuing the BTC has sparked global interest and debate in the Bitcoin community. - [Top-Rated Bitcoin IRA (Trusted by 120K+ Investors)](https://www.swanbitcoin.com/industry/bitcoin-iras/): Bitcoin halving is done, it’s time to invest in Bitcoin IRAs. We share the top 3 Bitcoin-only IRAs TrustPilot ratings, customer reviews and fine print to consider as of July 26th, 2024. - [Kraken Review 2026: Fees, Safety, Pros & Cons](https://www.swanbitcoin.com/industry/kraken-review/): Is Kraken legit and safe in 2026? Honest review: 1% instant-buy fee plus spread, Kraken Pro from 0.40%/0.80%, regulation, the delayed IPO. - [Most Trusted Bitcoin Investment Sites 2026: Fees & Safety Compared](https://www.swanbitcoin.com/industry/bitcoin-investment-sites/): Swan, River, Strike, Cash App, Fidelity and Bitcoin ETFs compared on fees, custody and withdrawals (checked Oct 19, 2026), plus how to spot a trusted site. - [Best 5 Bitcoin & Crypto IRAs for 2026: Which Wins?](https://www.swanbitcoin.com/industry/crypto-iras/): Bitcoin and crypto IRAs have exploded in popularity. This guide breaks down the most popular options in 2026 and will help you pick the best one for your goals and situation. - [Robinhood Fees 2026: Stock, Robinhood Crypto & Transfer Fees](https://www.swanbitcoin.com/industry/robinhood-fees/): Robinhood charges no commission, but Bitcoin trades carry a spread (about $0.95 per $100), transfers out cost $100 and instant withdrawals up to 1.75%. - [Is Coinbase Safe in 2026? Security, Insurance & Risks Explained](https://www.swanbitcoin.com/industry/is-coinbase-safe/): Coinbase is legit and regulated, but Bitcoin there isn't FDIC-insured, a 2025 breach exposed 69,461 customers and scams are common. Here's how safe it is. - [Financial Advisors: It’s Time to Study Bitcoin](https://www.swanbitcoin.com/industry/financial-advisors-it-s-time-to-study-bitcoin/): This is an open letter to financial advisors and their firms about the dangers of ignoring Bitcoin and the opportunity of embracing it. - [Is Coinbase in Trouble? 2026 Losses, Layoffs & Lawsuits Explained](https://www.swanbitcoin.com/industry/is-coinbase-in-trouble/): Coinbase lost $754M in the first half of 2026, cut 14% of staff and trades about 55% below its 2025 peak. What's wrong, what isn't, and what it means. - [Compare the 3 Best Coinbase Alternatives (What You Need to Know in 2024)](https://www.swanbitcoin.com/industry/coinbase-alternative/): The uncertainty surrounding compliance and regulatory problems for Coinbase is intensifying. Bitcoin-only Swan is one of the most popular Coinbase alternatives for buying Bitcoin in July of 2024. Learn why! - [A Massive Opportunity to Spread Bitcoin Education](https://www.swanbitcoin.com/industry/a-massive-opportunity-to-spread-bitcoin-education/): Swan is sponsoring the Tucker Carlson Live Tour traveling to 15+ cities across America. - [BitcoinIRA Review 2026: What to Look Out For! ](https://www.swanbitcoin.com/industry/bitcoinira-review/): Investing in Bitcoin with a IRA is a smart move to preserve and grow your wealth. BitcoinIRA has the brand name but offers many altcoins with noticable red flags! Let's see how compares to Swan Bitcoin in 2026. - [Swan Support: Best Ways to Contact Swan Bitcoin Support](https://www.swanbitcoin.com/industry/swan-customer-support/): Swan Support is the best in the industry for Bitcoin customer service. We are here for all your inquiries and issues. Learn the best ways to contact Swan Support in July 2024! - [BitcoinIRA or Swan Bitcoin IRA? Top Things to Know in 2026](https://www.swanbitcoin.com/industry/bitcoin-ira-fees/): In this guide, we uncover BitcoinIRA fees and expose hidden costs and complex jargon. We’ll go over BitcoinIRA custodial, management, onboarding, trading, and security fees. - [Tech Giants' AI Energy Crisis Is Their Own Fault](https://www.swanbitcoin.com/industry/ai-energy-crisis/): We can either continue our current trajectory, or we can adopt energy freedom policies and become a world leader in both AI and electricity. - [Swan Announces Managed Bitcoin Mining Service](https://www.swanbitcoin.com/industry/swan-announces-managed-bitcoin-mining-service/): Swan Bitcoin launches Managed Mining service for institutional investors, announces strategic collaboration with Tether, targets 100 EH by 2026. - [Running the Numbers: How Fiat Pushed the American Dream Away from Millennials](https://www.swanbitcoin.com/industry/fiat-american-dream/): Bitcoin symbolizes hope for a generation who increasingly feel as though their futures have been stolen from them by the traditional fiat system. - [Swan Bitcoin Unveils Mining Unit](https://www.swanbitcoin.com/industry/swan-bitcoin-unveils-mining-unit/): Swan is proud to be hashing! - [Are “Ordinals” Worth Worrying About?](https://www.swanbitcoin.com/industry/are-ordinals-worth-worrying-about/): Ordinals and Inscriptions are not ideal for monetary users of Bitcoin, but they are not currently a systemic issue for Bitcoin. Learn why with Stephan Livera! - [What Bitcoin ETFs Mean for You](https://www.swanbitcoin.com/industry/what-bitcoin-etfs-mean-for-you/): Bitcoin ETFs are here! - [Swan Bitcoin 2023 Give Guide](https://www.swanbitcoin.com/industry/swan-bitcoin-2023-give-guide/): We can all agree there is nothing greater than the gift of Bitcoin. This holiday season, please join the Swan family in the joy of giving (with a Bitcoin-centric twist). - [A Recap of the 2023 Pacific Bitcoin Festival](https://www.swanbitcoin.com/industry/2023-pacific-bitcoin-festival-recap/): Pacific Bitcoin redefines the boundaries of what an event could be by seamlessly blending the best of Bitcoin education, entertainment, and social connections. It was more than just a conference. - [What’s New and Coming in Lightning](https://www.swanbitcoin.com/industry/what-s-new-and-coming-in-lightning/): As Lightning Network Usage Grows, Splicing, BOLT12, Offline Payments, and LSPs are Poised to Deliver Big Improvements for Users. - [Bitcoin Core's Development Priorities in 2023](https://www.swanbitcoin.com/industry/bitcoin-cores-development-priorities-in-2023/): Developers have been busy shoring up the Bitcoin Core node software. Here is what they are up to. - [IBEX Joins Forces with Pacific Bitcoin Conference](https://www.swanbitcoin.com/industry/ibex-pacific-bitcoin-conference/): Swan is thrilled to announce our partnership with IBEX at the 2023 Pacific Bitcoin Conference. - [Bitcoin: More Relevant, More Urgent, More Ready - Part 2](https://www.swanbitcoin.com/industry/bitcoin-more-relevant-more-urgent-more-ready-part-2/): Three more personas that inhibit Bitcoin adoption for themselves and others around them. - [Tether: The New Big Bitcoin Buyer in Town](https://www.swanbitcoin.com/industry/tether-the-new-big-bitcoin-buyer-in-town/): Tether has now become a significant, price-insensitive regular buyer of Bitcoin. - [Swan is Supporting the Mining Disrupt Conference](https://www.swanbitcoin.com/industry/swan-is-supporting-the-mining-disrupt-conference/): Join us on July 25-27, 2023 in Miami for the World’s Largest Bitcoin B2B & Bitcoin Mining Conference & Expo! - [Miami Bitcoin 2023 Conference Wrap-up](https://www.swanbitcoin.com/industry/miami-bitcoin-2023-conference-wrap-up/): The Bitcoin 2023 Conference took place in Miami from May 18th - 20th. Here are our top takeaways! - [The Great Institutional Bitcoin Capitulation](https://www.swanbitcoin.com/industry/are-institutions-feeling-the-fomo/): For once, the big financial institutions are late to the game, and it’s beautiful to see. - [Green Shoots and Lawsuits](https://www.swanbitcoin.com/industry/green-shoots-and-lawsuits/): As investors become more optimistic about the state of the economy and asset prices, we’ll see if Bitcoin can join in on the party as it overcomes the regulatory calamities ensnaring the broader cryptocurrency industry. - [Three Innovations Being Built on Bitcoin Today](https://www.swanbitcoin.com/industry/3-innovations-being-built-on-bitcoin-today/): The Bitcoin ecosystem is a hotbed of continuous developments, pushing the boundaries of what is possible with this transformative technology. - [My Top 3 Takeaways from the MicroStrategy World Conference](https://www.swanbitcoin.com/industry/my-top-3-takeaways-from-the-microstrategy-world-conference/): The crowd was buzzing all week with an electric energy that was a perfect blend of anticipation and curiosity. - [The Bullish Case For Bitcoin Custodians](https://www.swanbitcoin.com/industry/the-bullish-case-for-bitcoin-custodians/): By rallying around a nuanced yet challenging standard for assessing custodians, we can minimize risk and maximize the speed of Bitcoin adoption. - [The Right Questions to Ask to Avoid Bitcoin IRA Icebergs](https://www.swanbitcoin.com/industry/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/): The Swan IRA is uniquely designed and features a distinctive account setup that incorporates various levels of legal compliance, regulatory oversight, custodial services,and high-level institutional security measures. - [The Bullish Case for Stratum v2](https://www.swanbitcoin.com/industry/the-bullish-case-for-stratum/): Stratum v2 is the missing piece of the decentralization puzzle for Bitcoin. - [A New Age Dawns for Financial Advisors](https://www.swanbitcoin.com/industry/a-new-age-dawns-for-financial-advisors/): A Blockbuster Moment - [Specter Desktop Relaunches with New UI and Improved User Experience](https://www.swanbitcoin.com/industry/specter-desktop-relaunches-with-new-ui-and-improved-user-experience/): Secure your bitcoin. Verify your transactions. Protect your privacy. - [Swan Bitcoin IRA is Live!](https://www.swanbitcoin.com/industry/swan-announces-a-new-bitcoin-ira/): Secure your retirement with the Swan IRA by diversifying your savings with tax-advantaged Bitcoin in Traditional and Roth IRAs. - [Swan Announces Four New Senior Hires in January 2023](https://www.swanbitcoin.com/industry/swan-announces-four-new-hires-in-january-2023/): Sheetal Ray joins as COO, Raphael Zagury as CIO and Head of Research, Gaurav Gollerkeri as GM of Swan Personal, and Guilherme Gomes as CRO. - [A Recap of the 2022 Pacific Bitcoin Conference](https://www.swanbitcoin.com/industry/a-recap-of-the-2022-pacific-bitcoin-conference/): By focusing on learning, entertainment, and social experiences, Pacific Bitcoin blurred the line between a conference and a festival. - [Swan Launches Fundraiser With Bitcoin Policy Institute](https://www.swanbitcoin.com/industry/swan-donating-to-the-bitcoin-policy-institute/): Our goal is to support best-in-class policy and academic research that properly assesses Bitcoin’s benefits and risks. It's critical that the research on #Bitcoin is fair and accurate. - [5 Reasons Why All Bitcoiners Should Attend a Bitcoin Conference](https://www.swanbitcoin.com/industry/5-reasons-bitcoiners-should-attend-a-bitcoin-conference/): Meet your favorite Bitcoiners and make memories you’ll never forget. - [Swan Acquires Specter Solutions](https://www.swanbitcoin.com/industry/swan-acquires-specter-solutions/): Swan has launched Specter Labs division focusing on open source, privacy, and self-custody. - [Swan Product Principles and the Third Rail](https://www.swanbitcoin.com/industry/swan-product-principles-and-the-third-rail/): Swan products are where humans meet Bitcoin. - [How Legacy Finance Perceives Bitcoin](https://www.swanbitcoin.com/industry/how-legacy-finance-perceives-bitcoin/): Observations from a 13-year career at Goldman Sachs. - [The Problem with NFTs](https://www.swanbitcoin.com/industry/the-problem-with-nfts/): NFTs are marketed as ownership, usually of some digital artwork, secured using “blockchain technology” and “crypto.” Are they a scam? - [A Fed Hike for the Ages, But Can the Economy Handle it?](https://www.swanbitcoin.com/industry/a-fed-hike-for-the-ages-but-can-the-economy-handle-it/): Swan Private Market Update 6/17/22. There’s no need to mince words when describing the markets over the last two weeks, it’s been ugly. - [Beware of Ponzi Tokens: A Hex On You](https://www.swanbitcoin.com/industry/when-investing-in-crypto-beware-of-ponzi-tokens/): Of the 19,000 listed crypto projects, 99% of them are scams to enrich the person who created them. The Hex token, and Richard Heart, are no different. - [Riding the Lightning Network](https://www.swanbitcoin.com/industry/running-the-numbers-riding-the-lightning-network/): The Lightning Network: Cheap Global Payments for All - [The Why and How of Getting a Bitcoin Job](https://www.swanbitcoin.com/industry/the-why-and-how-of-getting-a-bitcoin-job/): If you’re dedicated to Bitcoin, getting a job in the industry can be incredibly rewarding as it fulfills the desire to advance the technology. - [Where Are My Bitcoins?](https://www.swanbitcoin.com/industry/where-are-my-bitcoins/): Bitcoin Basics: Easy Lessons About How Bitcoin Works - [Swan and Specter Integration Announcement](https://www.swanbitcoin.com/industry/swan-specter-integration-announcement/): Specter is an ideal desktop wallet for Swan users. The purpose is to give customers a seamless stacking experience into their Bitcoin wallets, especially into their multi-sig cold storage. - [Swan Bitcoin 2022 Gift Guide](https://www.swanbitcoin.com/industry/swan-bitcoin-gift-guide-kristin-thompson/): The HODLday season is a time for remembering the important things in life like family and friends and, of course, Bitcoin! Which is why we created the perfect gift guide for Bitcoiners. - [A Review: the Great Hash Rate Migration of 2021](https://www.swanbitcoin.com/industry/the-great-hash-rate-migration-of-2021-sam-callahan/): Bitcoin miners have relocated to safer pastures within the U.S. because the values and goals of America and Bitcoin are much more aligned compared to Communist China. - [The Bitcoin Platform for Financial Advisors](https://www.swanbitcoin.com/industry/the-bitcoin-platform-for-financial-advisors/): Swan Advisor Services Tailors Swan's best in purchase and custody platform to the needs of financial advisors and wealth managers. - [Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why.](https://www.swanbitcoin.com/industry/bitcoins-energy-usage-is-not-a-problem-heres-why-by-lyn-alden/): Whether Bitcoin continues to be successful or fails, there's no risk of the network using too much energy in the grand scheme of things. - [Swan Signal Monthly: March 2021 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthly-march-2021-newsletter/): Bitcoin hit a new all-time high of $62,000 this past month, pulled back to $48,000 and is now right back up to $52,000. Historically, in bull markets, this means Bitcoin is about ready to start another leg up. - [Is Tether a Treat to Bitcoin?](https://www.swanbitcoin.com/industry/is-tether-a-threat-to-bitcoin/): It's clear Tether is not the driver of Bitcoin's rallies. Instead, Tether's growth is evidence of the genuine demand for a digital dollar that arose naturally in the world's first 24/7 global financial marketplace. - [Swan Signal Monthly: December 2020 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthly-december-2020-newsletter/): Earlier this month Bitcoin broke through the all-time high price, and psychological barrier of $20,0000, driven by short-term retail trader speculation. - [Swan Signal Monthly: November 2020 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthy-november-2020-newsletter/): Bitcoin has undoubtedly made improvements since 2017: Better onramps, custody solutions, new-Bitcoin only companies, the Lightning Network, and more. However, a story in 2020 is how the world around Bitcoin has changed. - [Welcome to Bitcoin TV](https://www.swanbitcoin.com/industry/welcome-to-bitcoin-tv/): Bitcoin TV makes it easy to sit back and learn all about this revolutionary new money. - [Swan Signal Monthly: August 2020 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthly-august-newsletter/): Business intelligence software company MicroStrategy, a public company traded on NASDAQ, announced in August that it has adopted Bitcoin as its primary treasury reserve asset. - [Why I Joined Swan Bitcoin](https://www.swanbitcoin.com/industry/why-i-joined-swan-bitcoin/): A picture on my wall that says: “You literally ought to be asking yourself all the time what is the most impotant thing in the world I could be working on right now, and if you are not working on that why aren’t you?” - [Swan Signal Monthly: July 2020 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthly-july-2020-newsletter/): Our July 2020 monthly newsletter includes: Liftoff: A curated list of recent Bitcoin content from Swan and around the web Behind the scenes updates from the Swan team - [Exploding Three Myths About the Upcoming Bitcoin Halving](https://www.swanbitcoin.com/industry/bitcoin-halving/): The next Bitcoin halving is almost here. We explore whether the halving is priced in, if other coins are a model for Bitcoin, and fear of a mining death spiral. - [Is Bitcoin Like the Dutch Tulip Bubble?](https://www.swanbitcoin.com/industry/is-bitcoin-a-bubble/): Is Bitcoin's price in a bubble? Is this the Dutch Tulip Craze all over again? The answer might surprise you... - [The Three Futures of Digital Money](https://www.swanbitcoin.com/industry/future-of-digital-money/): As money rapidly turns digital, we must contemplate three possible futures of money: central bank-managed, corporate-issued, and decentralized. - [Swan Signal Monthly: January 2021 Newsletter](https://www.swanbitcoin.com/industry/swan-signal-monthly-january-2021-newsletter/): Bitcoin hit a new all-time high of $42,000 in early Janurary and has since pulled back to $33,000. Is this a buying opportunity? # Education - Swan Bitcoin URL: https://www.swanbitcoin.com/education/ Swan Bitcoin articles about Education: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Education category, newest first. - [How Many Satoshis in 1 Bitcoin? 1 BTC = 100,000,000 Sats](https://www.swanbitcoin.com/education/how-many-sats-in-a-bitcoin/): There are 100 million satoshis (sats) in one Bitcoin. See how many sats $1 buys today, a sats-to-USD table, other Bitcoin units and the satoshi symbol. - [How Bitcoin Actually Works: A First Principles Guide ](https://www.swanbitcoin.com/education/how-bitcoin-actually-works/): From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. - [A Brief History of Bitcoin Forks](https://www.swanbitcoin.com/education/a-brief-history-of-bitcoin-forks/): A history of every Bitcoin hard fork, from Bitcoin Cash and Bitcoin Gold to the 2026 BIP-110 split, and why each new coin collapsed against Bitcoin. - [Bitcoin Estate Planning: The Risks Most Holders Aren’t Addressing ](https://www.swanbitcoin.com/education/bitcoin-estate-planning/): Bitcoin estate planning is the most under-addressed risk in HNW portfolios. Why holders and their CPAs, attorneys, and trustees keep missing it, and how to close the gap. - [Bitcoin Custody: How to Store Bitcoin Safely Without Overcomplicating It](https://www.swanbitcoin.com/education/bitcoin-custody-easy-and-safe/): Bitcoin custody is not one-size-fits-all. Learn the tradeoffs between hot wallets, cold storage, single sig, multisig, collaborative custody, ETFs, inheritance planning, and long-term Bitcoin security. - [Rolling Over a 401(k) and Other Workplace Retirement Plans to a Swan Bitcoin IRA: The Complete Guide](https://www.swanbitcoin.com/education/rolling-over-a-401-k-and-other-workplace-retirement-plans-to-a-swan-bitcoin-ira-t/): Rolling your old 401(k) into a Swan Bitcoin IRA lets you move legacy retirement savings into real Bitcoin while preserving tax advantages and compliance protections. - [How to Set Up Swan Vault: Unlocking Safer Bitcoin Self-Custody](https://www.swanbitcoin.com/education/how-to-set-up-swan-vault/): Discover how Swan Vault puts you in full control of your Bitcoin with a simple, secure setup. See just how easy it is to safeguard your wealth and unlock your monetary autonomy. - [What Is BTC Hashrate? Why You Should Care (July 2024 Update)](https://www.swanbitcoin.com/education/what-is-bitcoin-hashrate/): Bitcoin hashrate? Sounds confusing, but its not. Learn the role Bitcoin's hashrate plays, why its important and what the current BTC hashrate is today: July 26th, 2024. - [Best Bitcoin ETF Fees: Lowest to Highest (July 2024)](https://www.swanbitcoin.com/education/bitcoin-etf-fees/): In this guide, we analyze and present the top 11 Bitcoin ETFs with the lowest fees for cost-effective investing as of July 26th, 2024. - [Best Bitcoin Exchanges for May 2025: Which Wins & What to Know](https://www.swanbitcoin.com/education/bitcoin-exchanges/): With so many Bitcoin exchanges to choose from, how do you know which is right one for you? We are here to help choose between three of the best Bitcoin exchanges in July of 2024: Swan Bitcoin, Coinbase and Binance. - [Bitcoin for Beginners in 2026: Top 5 Steps to Get Started](https://www.swanbitcoin.com/education/bitcoin-for-beginners/): This blog post aims to explain in simple terms exactly what Bitcoin is, how it works, and why it has become so popular. - [3 Easy Steps to Delete Your Coinbase Account (w/ Screenshots) July Update](https://www.swanbitcoin.com/education/delete-coinbase-in-3-easy-steps/): You may have wondered “How do I get my money out of Coinbase?” This guide will show you step-by-step how to transfer Bitcoin from Coinbase and then how to delete your account forever in July of 2024! - [Is Binance in Trouble? Yes, Here Is Why... (July 2024)](https://www.swanbitcoin.com/education/is-binance-in-trouble/): The uncertainity surrounding Binance hasn't become any clearer in July of 2024. How much trouble might Binance find itself in and what can we expect from the world's most popular exchange? Let's dive in! - [5 Top Safe Ways to Earn Free Bitcoin in 2024](https://www.swanbitcoin.com/education/earn-free-bitcoin/): What if I told you there are ways to earn extra Bitcoin or get off zero if you don’t own any? Whether you are just starting to stack sats or a Bitcoin veteran, here are 5 ways to add more BTC to your freedom stash. - [What Is Byzantine Generals Problem (2024 Solution)](https://www.swanbitcoin.com/education/byzantine-generals-problem/): In this definitive guide we analyze the question: 'How does Bitcoin solve the Byzantine Generals Problem?' - [Next Bitcoin Halving: April 2028 Date, Countdown & Halving History](https://www.swanbitcoin.com/education/bitcoin-halving-dates/): The next Bitcoin halving is expected around April 2028 at block 1,050,000, when the reward drops to 1.5625 BTC. See every halving date since 2012. - [5 Top Bitcoin Wallets Review in 2026 (Ranked & Rated)](https://www.swanbitcoin.com/education/best-bitcoin-wallet/): Not Your Keys, Not Your Bitcoin! Which Bitcoin wallet is right for you in July 2026! - [Multi-Sig Custody and Inheritance](https://www.swanbitcoin.com/education/multi-sig-custody-and-inheritance/): This essay is my attempt to answer all your questions about multi-sig custody and inheritance so you walk away with a better understanding of the options and can figure out what is best for your family. - [Can You Buy Bitcoin at Walmart With Cash? (October 2026 Update)](https://www.swanbitcoin.com/education/buy-bitcoin-with-cash/): Coinstar's Bitcoin kiosks end Nov 19 and Coinme exits by Jan 1, 2027. What still works to turn cash into Bitcoin, the costs, and scams to avoid. - [Alto Crypto IRA Review 2024: What +1.2k Trustpilot Reviews Tell Us](https://www.swanbitcoin.com/education/altoira-review/): Alto Crypto IRA is a well-know self-directed Bitcoin and crypto IRA platform. Alto lets investors trade altcoins in their retirement account. But how does it stack against Bitcoin-only Swan IRA in July 2024? - [Mega Backdoor Roth 2024: Is it the Best Option?](https://www.swanbitcoin.com/education/mega-backdoor-roth-2024/): Here's how high earners can benefit from a Roth IRA via "the backdoor" despite IRS income limits. Plus, a forecast on the future of these retirement plans. - [Bitcoin Cold Storage: How to Protect Your Assets in 2024](https://www.swanbitcoin.com/education/bitcoin-cold-storage/): Should you use Bitcoin cold storage wallet? Yes! In this guide we provide step by step process on how to setup and use your cold storage wallet to protects your assets in July 2024! - [How Much Does It Cost to Mine 1 Bitcoin? (2026 Costs, $75K–$80K Average)](https://www.swanbitcoin.com/education/how-much-does-it-cost-to-mine-a-bitcoin/): Public miners spent about $75,500 in cash costs per Bitcoin in Q2 2026. See what 1 BTC costs to mine at your power price and whether mining beats buying. - [Bitcoin Wallet UTXO Management](https://www.swanbitcoin.com/education/utxo/): Imagine UTXOs as distinct bills within your wallet, each holding a unique value, similar to how you use different denominations of cash for a purchase. Learn more about UTXO's below!... - [What Are Bitcoin Smart Contracts: A Beginner's Guide](https://www.swanbitcoin.com/education/bitcoin-smart-contracts/): Smart contracts are self-executing agreements powered by code... Learn how to make them work for you with Swan! - [Scaling Bitcoin: Lightning, Liquid & The Blockchain Trilemma](https://www.swanbitcoin.com/education/scaling-bitcoin/): These networks represent pivotal developments in the quest to enhance Bitcoin's capabilities and overcome its limitations. - [What Are Bitcoin Ordinals? (Why Inscript Your BTC)](https://www.swanbitcoin.com/education/what-are-bitcoin-ordinals/): Seen as an innovation in data storage and network security by some, while others view them as a passing Bitcoin fade and drift. Let's take a closer look at both perspectives! - [3 Easy Ways to Run Your Own Bitcoin Node ](https://www.swanbitcoin.com/education/3-easy-ways-to-run-your-own-bitcoin-node/): To further improve your Bitcoin self-sovereignty, it's essential to learn how to use operate a Bitcoin node. Learn how to best run your own Bitcoin node in 2024 with Swan Bitcoin below! - [Bitcoin: Solving the Fundamental Problem of Money](https://www.swanbitcoin.com/education/bitcoin-solving-the-fundamental-problem-of-money/): Bitcoin’s rate of supply discovery is slowing down, by half, every four years - a first for any commodity! Satoshi solved not just the double-spending problem but also the fiat imalleable supply cap problem! - [Assessing Risk in Bitcoin Custody](https://www.swanbitcoin.com/education/assessing-risk-in-bitcoin-custody/): Swan encourages our clients to withdraw their Bitcoin to self-custody by offering free and automatic withdrawals. - [What Bitcoiners Need to Know About Hashes (But Are Afraid to Ask)](https://www.swanbitcoin.com/education/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/): Bitcoin leans heavily on a process called hashing to achieve many of its unique properties... But what actually is hashing? - [Why Bitcoin Exists](https://www.swanbitcoin.com/education/why-bitcoin-exists/): Bitcoin was not created so that some people could “get rich quick.” It was created to preserve the integrity of money — to make the most of your precious time, your energy, and your life. - [What is an XPUB?](https://www.swanbitcoin.com/education/whats-in-an-xpub/): “What’s in a name? That which we call a rose. By any other name would smell as sweet.” - William Shakespeare - [History Happens Right Before Your Eyes](https://www.swanbitcoin.com/education/history-happens-right-before-your-eyes/): Technology has brought forth its champion to slay fiat money. And we all know who that champion is: Bitcoin. Bitcoin will be the resolver of a historic tug-of-war over control of the wealth of humankind. - [Proof-of-Work vs. Proof-of-Stake](https://www.swanbitcoin.com/education/proof-of-work-vs-proof-of-stake/): Proof of Work, at its heart, is the removal of trust from the system of money, and replacing it with something that can’t be faked: real work. - [Bitcoin Privacy: Best Practices](https://www.swanbitcoin.com/education/bitcoin-privacy-best-practices/): There is a sacred realm of privacy where essential rights and liberties into which the law, generally speaking, must not intrude. - [Bitcoin and the One-Hit Wonder Altcoins](https://www.swanbitcoin.com/education/bitcoin-and-the-one-hit-wonder-altcoins/): Don’t get stuck holding the bags of the one-hit wonders of each Bitcoin bull cycle. Instead, hold onto the asset that you know will be a top player in this cycle, the next cycle, and every single cycle to come: Bitcoin - [Stop Fooling Around in Crypto](https://www.swanbitcoin.com/education/stop-fooling-around-in-crypto/): The Opportunity You Fear You Missed Still Awaits - [Coinbase and the Insider Exchange Dump](https://www.swanbitcoin.com/education/bitcoin-vs-altcoins/): Bitcoin is very different from all other cryptocurrencies. In fact, it shouldn’t even be considered the same asset class. - [Satoshi’s White Paper - the Hard Part Explained](https://www.swanbitcoin.com/education/satoshis-white-paper-explained/): Dissecting some of Satoshi's Whitepaper to make it easier to understand. - [Why Bitcoin is Different (Part 1) ](https://www.swanbitcoin.com/education/why-bitcoin-only-part-1/): Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where beginners run into confusion is in how Bitcoin differs from other cryptocurrency. - [The Zen of Knowing Your Opinion on Bitcoin Doesn't Matter ](https://www.swanbitcoin.com/education/the-zen-of-knowing-your-opinion-on-bitcoin-doesn-t-matter/): At the end of the day, the fact that our opinion has no bearing on Bitcoin is a good thing. - [How Bitcoin is a New Form of Property (5 Minute Read)](https://www.swanbitcoin.com/education/bitcoin-is-a-new-form-of-property/): Read how Bitcoin is unique and powerful property, which comes with certain responsibilities. - [How Bitcoin Really Works (5 minute read)](https://www.swanbitcoin.com/education/5-minute-reads-how-bitcoin-really-works/): A quick and accurate explanation on how Bitcoin really works. Suitable for beginners and experts alike. - [What Happens to Bitcoin if the Internet Goes Down?](https://www.swanbitcoin.com/education/what-happens-to-bitcoin-if-the-internet-goes-down/): While the Internet is by far the most efficient system of communication for the Bitcoin network to use, it could continue on with the reduced speed and functionality on any communcations systems known to man. - [5 Ways To Earn Bitcoin](https://www.swanbitcoin.com/education/5-ways-to-earn-bitcoin/): What if I told you there are ways to earn extra Bitcoin or get off zero if you don't own any? Whether you are just starting to stack sats or a Bitcoin veteran, here are 5 ways to add more BTC to your freedom stash. - [Bitcoin: Fee-Based Security Modeling](https://www.swanbitcoin.com/education/bitcoin-fee-based-security-modeling-lyn-alden/): The ideal state for the Bitcoin network is to reach equilibrium in the free market where blocks are always full, mostly with large transactions. Fees are high in absolute terms, low in percentage-of-value terms. - [Op Ed: Pitching Bitcoin During the Holidays](https://www.swanbitcoin.com/education/op-ed-pitching-bitcoin-during-the-holidays/): The HODLdays are a time for friends and gift-giving, but as good Bitcoiners, we already know that the best gift of all is Bitcoin. - [Is Bitcoin for Criminals?](https://www.swanbitcoin.com/education/basic-bitcoin-questions-is-bitcoin-for-criminals/): Many people continue to associate Bitcoin with unlawful beahvior, but in reality, less than 1% of Bitcoin transactions are actually used for illegal activities. - [Tell Me About Bitcoin](https://www.swanbitcoin.com/education/tell-me-about-bitcoin/): Preston Pysh is a Swan Advisor. - [Does Bitcoin Have Any Intrinsic Value?](https://www.swanbitcoin.com/education/does-bitcoin-have-intrinsic-value/): Bitcoin represents economic liberty. If you own Bitcoin, you have portable wealth. You can walk away from a failing regime and not lose your life savings. - [What is a Bitcoin Fork?](https://www.swanbitcoin.com/education/what-is-a-bitcoin-fork/): Unlike a stock split, the new shares still refer to the original company; a Bitcoin fork creates new assets out of thin air at zero cost and grifts them to existing holders. A fork does not affect the 21M supply limit. - [What is Bitcoin?](https://www.swanbitcoin.com/education/what-is-bitcoin/): Find out why Satoshi Nakamoto invented Bitcoin to solve the problems of the modern financial system including lack of privacy and monetary debasement. # Technology - Swan Bitcoin URL: https://www.swanbitcoin.com/technology/ Swan Bitcoin articles about Technology: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Technology category, newest first. - [Swan's Agentic Software Factory: Cygnet Evolved](https://www.swanbitcoin.com/technology/swans-agentic-software-factory-cygnet-evolved/): How Swan built an agentic software factory that finds production bugs, reaches consensus on the fix, opens the PR, and proves it works before a human merges. # Mining - Swan Bitcoin URL: https://www.swanbitcoin.com/mining/ Swan Bitcoin articles about Mining: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Mining category, newest first. - [Will A.I. Go the Way of Bitcoin Mining](https://www.swanbitcoin.com/mining/will-a-i-go-the-way-of-bitcoin-mining/): Abstract: ASICs are coming to Artificial Intelligence. They may well become part of the AI mix. However, ASICs are unlikely to come to dominate AI as they have in Bitcoin Mining. # Finance - Swan Bitcoin URL: https://www.swanbitcoin.com/finance/ Swan Bitcoin articles about Finance: Bitcoin news, analysis and insights from the Swan team. --- Swan Bitcoin articles in the Finance category, newest first. - [Bitcoin, Ethereum, and the Fall of the Roman Republic](https://www.swanbitcoin.com/finance/bitcoin-ethereum-and-the-fall-of-the-roman-republic/): Bitcoin is unchanging, and in a complex world where everything changes all the time, this is what makes it a system the likes of which the world has never seen... # 21 Lessons, get your FREE copy - Swan Bitcoin URL: https://www.swanbitcoin.com/21lessons/ 21 Lessons: What I’ve Learned From Falling Down the Bitcoin Rabbit Hole is a joy of a read following author Gigi’s journey learning Bitcoin. --- ## 21 Lessons 21 Lessons: What I’ve Learned From Falling Down the Bitcoin Rabbit Hole is a joy of a read following author Gigi’s journey learning Bitcoin. Gigi sells his book on Amazon but he gives it away to the Swan community for free as part of Swan’s commitment to Bitcoin education! Get your FREE copy Or buy it on or ### Gigi Gigi launched various projects in the space such as [bitcoin-resources.com,](https://1500) [bitcoin-quotes.com](https://bitcoin-quotes.com), and others. Prior to taking the orange pill he was a researcher and software engineer leading multiple development teams that worked on critical large-scale apps. He is passionate about security, privacy, and of course, Bitcoin. Get your FREE copy Or buy it on or # Why Bitcoin? Get your FREE copy - Swan Bitcoin URL: https://www.swanbitcoin.com/whybitcoin/ The book Why Bitcoin is a collection of twenty-seven short yet insightful essays about Bitcoin. The original essays were published on medium.com in spring 2021. --- ## Why Bitcoin? The book “Why Bitcoin” is a collection of twenty-seven short yet insightful essays about Bitcoin. The original essays were published on medium.com in spring 2021. Tomer sells his book but he gives it away to the Swan community for free as part of Swan’s commitment to Bitcoin education! Get your FREE copy Order Tomer’s coffee table Bitcoin book in hardcopy [here](https://www.blurb.com/user/TomerStrolig?profile%5Fpreview=true) ### Tomer Strolight Tomer Strolight is Editor-in-Chief at [Swan Bitcoin](https://www.swanbitcoin.com/Tomer/). He completed bachelors and masters degrees at Toronto’s Schulich School of Business. Tomer spent 25 years operating businesses in digital media and private equity before turning his attention full time to Bitcoin. Tomer wrote and narrated the short film “[Bitcoin Is Generational Wealth](https://www.youtube.com/watch?v=3Rnqst5qCgA)”. He has appeared on many Bitcoin podcasts including What Bitcoin Did, The Stephan Livera Podcast, Bitcoin Rapid Fire, Twice Bitten, the Bitcoin Matrix and many more. Get your FREE copy Order Tomer’s coffee table Bitcoin book in hardcopy [here](https://www.blurb.com/user/TomerStrolig?profile%5Fpreview=true) # Bitcoin Treasury Company & Leveraged Bitcoin Equity Primer URL: https://www.swanbitcoin.com/bitcoin-treasury-company-leveraged-bitcoin-equity-lbe-strategy/ Key concepts, implementation steps, risk management, valuation approaches, and the strategy’s appeal to diverse investors. --- ## Leveraged Bitcoin Equity Strategy Discover how to become a leading Bitcoin Treasury Company and leverage Bitcoin holdings for strategic growth. This primer covers key concepts of corporate Bitcoin treasuries, implementation steps, risk management, and valuation strategies. Get your copy ### Swan Research Swan Research produces in-depth analysis and industry-leading education to empower investors with insights and confidence in navigating the Bitcoin landscape. Get your copy # Running the Numbers, get your FREE copy - Swan Bitcoin URL: https://www.swanbitcoin.com/running-the-numbers/ Swan Bitcoin analyst Sam Callahan’s report, Running the Numbers, is the most comprehensive read in the industry. --- ## GBTC was the Genesis of the Crypto Credit Contagion [Swan Bitcoin](https://swanbitcoin.com) analyst Sam Callahan’s report, Running the Numbers, is a comprehensive report about the most important topics in the Bitcoin industry. This report was originally sent to Swan Private clients. Swan Private guides corporations and high net worth individuals globally toward building generational wealth with Bitcoin. Get Your FREE Report Visit [swanprivate.com](https://swanprivate.com) for more info ### Sam Callahan Sam Callahan is a Bitcoin Analyst and educator at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular “Running the Numbers” section in the monthly Swan Private Insight Report. Sam’s analysis is frequently shared across social media, and he’s been a guest on popular podcasts such as The Investor’s Podcast and the Stephan Livera Podcast. Get Your FREE Report Visit [swanprivate.com](https://swanprivate.com) for more info # Inventemos Bitcoin, ¡libro de Bitcoin gratis! - Swan Bitcoin URL: https://www.swanbitcoin.com/inventemos-bitcoin/ El libro del cofundador y CTO de Swan Bitcoin, Yan Pritzker, Inventemos Bitcoin, es la mejor introducción a cómo funciona el sistema Bitcoin. --- ## Inventemos Bitcoin El libro del cofundador y CTO de [Swan Bitcoin](https://swan.com) Yan Pritzker, Inventemos Bitcoin, es la mejor introducción a cómo funciona el sistema Bitcoin. Descarga gratis [O cómpralo en ](https://www.amazon.com/Inventemos-Bitcoin-explicaci%C3%B3n-verdaderamente-descentralizado/dp/1089419600) ### Yan Pritzker Yan Pritzker es cofundador y CTO de [Swan Bitcoin](https://swan.com). Yan pasó los últimos veinte años como desarrollador de software y empresario centrándose en nuevas empresas tecnológicas. Su empresa más reciente, Reverb, fue adquirida por Etsy en 2019\. Yan da charlas sobre temas relacionados con Bitcoin que van desde la importancia de Bitcoin como herramienta para la libertad hasta los detalles técnicos de cómo funciona Bitcoin. Descarga gratis [O cómpralo en ](https://www.amazon.com/Inventemos-Bitcoin-explicaci%C3%B3n-verdaderamente-descentralizado/dp/1089419600) # Lyn Alden’s Broken Money - Swan Bitcoin URL: https://www.swanbitcoin.com/lyn-alden-broken-money/ Broken Money explores the history of money through the lens of technology. Swan Bitcoin has made Chapter 7 and 8 available for free download. --- ## Lyn Alden’s Broken Money _Broken Money_ explores the history of money through the lens of technology. Politics can affect things temporarily and locally, but technology is what drives things forward globally and permanently. **Swan Bitcoin has made Chapter 7 and 8 available for free download.** Download for FREE [Or buy it for $19.99](https://www.amazon.com/Broken-Money-Financial-System-Failing/dp/B0CG83QBJ6) ### Lyn Alden Lyn is an investment strategist at [Lyn Alden Investment Strategy](https://www.lynalden.com/). She holds bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. Lyn has been performing investment research for over fifteen years in various public and private capacities. Download for FREE [Or buy it for $19.99](https://www.amazon.com/Broken-Money-Financial-System-Failing/dp/B0CG83QBJ6) # Inventing Bitcoin, get your FREE copy - Swan Bitcoin URL: https://www.swanbitcoin.com/inventing-bitcoin/ Swan Bitcoin cofounder and CTO Yan Pritzker’s book Inventing Bitcoin, is the best introduction to how the Bitcoin system work. --- ## Inventing Bitcoin [Swan Bitcoin](https://swan.com) cofounder and CTO Yan Pritzker’s book, _Inventing Bitcoin_, is often cited as the best introduction to Bitcoin. Get your FREE copy Or buy it on or ### Yan Pritzker Yan Pritzker is the co-founder and CTO of [Swan Bitcoin](https://swan.com). Yan spent the last twenty years as a software developer and entrepreneur focusing on tech startups. His most recent company, Reverb, was acquired by Etsy in 2019\. Yan gives talks on Bitcoin related topics ranging from the importance of Bitcoin as a tool for freedom to the technical details of how Bitcoin works. Get your FREE copy Or buy it on or # The Swan IRA Bitcoin Allocation Guide — Download now! URL: https://www.swanbitcoin.com/bitcoin-allocation-guide/ Discover how Bitcoin fits into your retirement plan. This free guide walks you through everything you need to know to include Bitcoin in your wealth-building. --- ## Swan IRA Bitcoin Allocation Guide Discover how Bitcoin fits into your retirement plans. This guide is for you if you’re just starting out or nearing retirement. Get your copy! ### Swan Private Wealth Swan Private Wealth offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Get your copy! # FREE REPORT — The Current State of Bitcoin Mining April 2024 URL: https://www.swanbitcoin.com/the-current-state-of-bitcoin-mining-april-2024/ An explanation of key dynamics in the Bitcoin mining industry, along with possible implications for the rest of 2024 and beyond. --- ## The Current State of Bitcoin Mining April 2024 This FREE report provides an overview and explanation of key dynamics in the Bitcoin mining industry, along with some possible implications for the rest of 2024 and beyond. We explain the purpose, economics, and competitive forces of Bitcoin mining, focusing primarily on ASIC manufacturers, energy producers, and mining pools. Get your FREE copy ### Swan Mining The Swan Mining team provides hashrate to the Bitcoin network and services to manage mining operations. Get your FREE copy # Swan logo URL: https://www.swanbitcoin.com/media/cory-klippsten/ Founder and CEO, Swan Bitcoin --- [ Back](/media/) ## Cory Klippsten Cory is a frequent guest and contributor to tech, financial and Bitcoin media. Recent appearances include CNBC, Bloomberg, Barrons, The New York Times, and Yahoo! Finance. A former local NBC TV reporter, Klippsten is comfortable on camera and has taken the stage at hundreds of events. [Full Bio ](#biography)[Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Cory) ### The Race to Avoid the War [Read on Swan Bitcoin (opens in a new tab)](https://www.swanbitcoin.com/the-race-to-avoid-the-war/) ### Ten Million Bitcoiners: The Intransigent Minority [Read on Swan Bitcoin (opens in a new tab)](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/) ### Selected Media Appearances ### The Crypto Market Crashed. They’re Still Buying Bitcoin. [Read on The New York Times (opens in a new tab)](https://www.nytimes.com/2022/08/02/technology/crypto-bitcoin-maximalists.html) ### Crypto Took Wall Street on a Wild Ride. Now It’s Ending in Tears [Read on Barrons (opens in a new tab)](https://www.barrons.com/articles/bitcoin-crypto-crisis-51656620781?tesla=y) ### The Fight for Bitcoin with Cory Klippsten [Listen on What Bitcoin Did (opens in a new tab)](https://www.whatbitcoindid.com/podcast/the-fight-for-bitcoin) ### Swan Bitcoin CEO on Sam Bankman-Fried’s Downfall [Watch on Coindesk (opens in a new tab)](https://www.coindesk.com/videos/recent-videos/swan-bitcoin-ceo-on-sam-bankman-frieds-downfall/) ### Bitcoin is ‘the only real thing in the crypto space’, Swan Bitcoin CEO says [Watch on Yahoo Finance TV (opens in a new tab)](https://finance.yahoo.com/video/bitcoin-only-real-thing-crypto-170622148.html) ### Crypto crisis: FTX crash sparks calls for regulation [Watch on News Nation (opens in a new tab)](https://www.newsnationnow.com/video/crypto-crisis-ftx-crash-sparks-calls-for-regulation-on-balance/8158019/) I have dedicated my life to recruiting the other 99% of our intransigent Bitcoiner minority here in the United States. There are 100,000 of us already. We want to recruit the other 9.9 million. — Cory Klippsten Cory Klippsten * ## [Bitcoin, Not Crypto w/ Cory Klippsten](https://www.youtube.com/watch?v=PCtEDSeRoTs) YouTube * ## [Swan Bitcoin CEO against crypto lenders: Users are way under-compensated for the risk](https://www.youtube.com/watch?v=0jqhqzpMv-w) YouTube * ## [The Race to Avoid The War](https://www.youtube.com/watch?v=JoqVbeMqE9E) Stephan Livera Podcast * ## [Celebrating the Third Bitcoin Halving](https://www.youtube.com/watch?v=t2W-RMqyO%5FY) Bitcoin Magazine * ## [Bitcoin’s Intransigent Minority, Swan Bitcoin & Bitcoiner Ventures](https://podcasts.apple.com/us/podcast/slp163-cory-klippsten-bitcoins-intransigent-minority/id1415720320?i=1000470405155) Stephan Livera Podcast * ## [As Celsius accelerates the crypto sell-off, who pays the price?](https://techcrunch.com/2022/06/13/as-celsius-accelerates-the-crypto-sell-off-who-pays-the-price/) TechCrunch * ## [Bitcoin is a Hedge Against Crypto Scams](https://www.youtube.com/watch?v=bgqvdkQVb2s) Paul Barron Network * ## [Do Kwon’s Crypto Empire Fell in a $40 Billion Crash. He’s Got a New Coin for You.](https://www.wsj.com/articles/do-kwons-crypto-empire-fell-in-a-40-billion-crash-hes-got-a-new-coin-for-you-11655914487) The Wall Street Journal * ## [Economic Uncertainties Weigh On Crypto](https://www.usatoday.com/videos/news/nation/2022/06/14/economic-uncertainties-weigh-crypto/7628299001/) USA Today * ## [Bitcoin falls, PayPal adds crypto tools, and a new bipartisan regulation bill: CNBC Crypto World](https://www.cnbc.com/video/2022/06/07/bitcoin-falls-paypal-crypto-tools-new-bipartisan-regulation-crypto-world.html) CNBC Crypto World * ## [Stocks Bounce Higher, Retail Gets Hammered](https://www.bloomberg.com/news/videos/2022-05-23/stocks-bounce-higher-retail-gets-hammered-video) Bloomberg Quicktake * ## [These Skeptics Saw ‘Scam Bankman-Fraud’ Coming](https://nymag.com/intelligencer/2022/11/these-skeptics-predicted-sam-bankman-frieds-collapse.html) New York Magazine * ## [Crypto exchange Binance to buy rival FTX in apparent bailout](https://apnews.com/article/cryptocurrency-technology-business-eca5ca1c772333f2cde093c98cd26bed) The Associated Press * ## [Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet](https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/) CoinDesk * ## [The Real Reason Bitcoin Is Struggling Right Now](https://www.youtube.com/watch?v=whXd5xbhj%5Fc) Miles Franklin Media * ## [A New Crypto Winter Is Here, and Even the Biggest Bulls Are Worried](https://www.wsj.com/finance/currencies/a-new-crypto-winter-is-here-and-even-the-biggest-bulls-are-worried-82019de4) The Wall Street Journal * ## [Bitcoin Is Still Winning](https://www.youtube.com/watch?v=mYoEj-XFvy8) What Bitcoin Did * ## [Michelle Makori Hosts a Fireside Chat with Cory Klippsten](https://www.youtube.com/watch?v=II-HmBz9xqk) Pacific Bitcoin 2023 ### Biography Cory Klippsten is the CEO of Bitcoin financial services firm [Swan.com](https://www.swan.com/) He is a partner in Bitcoiner Ventures, El Zonte Capital, and The Bitcoin Opportunity Fund, and as an angel has funded more than 60 early stage tech companies. Before startups, Klippsten worked for Google, McKinsey, Microsoft and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in LA with his wife and daughters. His hobbies include basketball, history and travel (Istanbul and Barcelona are favorites). Cory is available to cover a broad spectrum of topics, including: * The future of Bitcoin, financial markets, and venture capital * Potential paths and pitfalls on Bitcoin’s journey to global adoption * Macroeconomics, geopolitics, currency wars, and trade wars * Early 1990s Seattle music scene and the Seattle Supersonics [Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Cory) # Yan Pritzker - Swan Bitcoin URL: https://www.swanbitcoin.com/media/yan-pritzker/ CTO and Cofounder, Swan --- ## Yan Pritzker Yan Pritzker makes frequent appearances in Bitcoin and financial media such as Forbes, Cheddar, the Stephan Livera Podcast, Bitcoin Magazine, and Market Disruptors and presented at many conferences. [Full Bio ](#biography)[Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Yan) ### Selected Media Appearances ### Can Bitcoin Survive an Economic Crash? [Watch on Cheddar (opens in a new tab)](https://cheddar.com/media/bitcoin-prices-crash-weakening-safe-haven-debate) ### Flow of Venture Capital Money into Bitcoin [Listen on Coindesk (opens in a new tab)](https://podcasts.apple.com/us/podcast/breakdown-starting-bitcoin-startup-during-covid-19/id1414384043?i=1000472556526) ### Introduction to Bitcoin Mining [Listen on Stephan Livera Podcast (opens in a new tab)](https://stephanlivera.com/episode/121/) We’re gonna get free slowly. Bitcoin is freedom money. — Yan Pritzker Yan Pritzker * ## [The Money Red Pill, Bitcoin Tech and Swan Bitcoin](https://citizenbitcoin.world/episodes/yan-pritzker-the-money-red-pill-bitcoin-tech-and-swan-bitcoin) Citizen Bitcoin * ## [How to escape Nuclear Fallout and Start a Bitcoin Company](https://anchor.fm/daniel-prince6/episodes/SKWP-Yan-Pritzker---How-To-Escape-A-Nuclear-Fallout-And-Build-A-Bitcoin-Company-ebf9jl) Once Bitten * ## [How Buying Bitcoin will save the world](https://podcasts.apple.com/us/podcast/the-author-of-the-book-inventing-bitcoin/id1463411709?i=1000448465688) Market Disruptors * ## [Inventing Bitcoin](https://www.youtube.com/watch?v=06vSN-2PDeM) Kestutis Rasimavicius * ## [Discussion about Inventing Bitcoin and Beginners](https://podcasts.apple.com/ca/podcast/yan-pritzker-inventing-bitcoin-book/id1476958861?i=1000451413618) Bitcoin Rapid-Fire * ## [Inventing Bitcoin with Yan Pritzker](https://podcasts.apple.com/us/podcast/totalbitcoin-16-interview-yan-pritzker-author-inventing/id1461487774?i=1000444700056) Total Connector * ## [How Bitcoin Works with Yan Pritzker](https://podcasts.apple.com/us/podcast/119-yan-pritzker/id1477843916?i=1000462302657) A Boy Named Pseu * ## [Erik Townsend and Yan Pritzker](https://www.youtube.com/watch?v=U6PwUXsJJ3Y) Swan Signal Live * ## [Etsy bought his startup for $275 million](https://mixergy.com/interviews/reverb-with-yan-pritzker/) Mixergy * ## [The Future of Bitcoin Education](https://anchor.fm/the-blockcode-podcast/episodes/EP--1---The-Future-of-Bitcoin-Education-with-Yan-Pritzker-e98ls8/a-a13bdi5) The BlockCode Podcast * ## [An easy way to continuously invest in Bitcoin](https://podcasts.apple.com/us/podcast/an-easy-way-to-continuously-invest-in-bitcoin/id1367833866?i=1000473490778) Crpyto Current Podcast * ## [Why Bitcoin is Freedom Money](https://nlwcrypto.libsyn.com/why-bitcoin-is-freedom-money-feat-yan-pritzker) The Breakdown * ## [Why Bitcoin is Revolutionary Technology](https://soundcloud.com/aroundthecoin/interview-with-yan-pritzker-the-author-of-inventing-bitcoin) Around the Coin * ## [Bitcoin as Freedom Money](https://endofthechain.com/freedom-money-yan-pritzker-swan-bitcoin/) End of the Chain * ## [Hablemos de Bitcoin](https://www.youtube.com/watch?v=d2hxFdQuQ2Y) Satoshi en Venezeuala * ## [Bitcoin Chicago: Yan Pritzker of Swan Bitcoin](https://www.youtube.com/watch?v=zdCIGqxiHfE) Salvi Chicago * ## [Yan Pritzker: Inventing Bitcoin, Building Swan & Leaving Russia](https://podcasts.apple.com/us/podcast/the-bitcoin-matrix/id1534519469?i=1000494190536) The Bitcoin Matrix ### Biography Yan Pritzker is the co-founder and CTO of [Swan Bitcoin](https://www.swanbitcoin.com/). Yan spent the last twenty years as a software developer and entrepreneur focusing on tech startups. His most recent company, Reverb, was acquired by Etsy in 2019\. Yan is the author of the book Inventing Bitcoin, the best technical book for beginners, and gives talks on Bitcoin related topics ranging from the importance of Bitcoin as a tool for freedom to the technical details of how Bitcoin works. [Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Yan) # Brady Swenson - Swan Bitcoin URL: https://www.swanbitcoin.com/media/brady-swenson/ Head of Education, Swan --- ## Brady Swenson Brady is a frequent guest on Bitcoin media such as Bitcoin Magazine, Bitcoin Rapid Fire, Bitcoin Audible, and Crypto Cousins. He also hosts two well-known Bitcoin podcasts, [Citizen Bitcoin](https://podcasts.apple.com/us/podcast/citizen-bitcoin/id1350483937) and [Swan Signal Live](youtube.com/swansignal). [Full Bio ](#biography)[Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Brady) ### Selected Media Appearances ### Journeying Towards a Bitcoin Future [Listen on Bitcoin Rapid Fire (opens in a new tab)](https://open.spotify.com/episode/4wb075eSosh35Ejoci6Ilv) ### The Bitcoin Economic Revolution [Watch on Swan Signal Live (opens in a new tab)](https://www.youtube.com/watch?v=ixLT9Ri9Kvg) ### We’re All Default Keynesians Now [Listen on Bitcoin Audible (opens in a new tab)](https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead%5F353---Were-All-Default-Keynesians-Now--Brady-Swenson-eaqrtl) To be a good citizen of bitcoin you need to take personal responsibility for your education. — Brady Swenson Brady Swenson * ## [Celebrating the Third Bitcoin Halving](https://www.youtube.com/watch?v=t2W-RMqyO%5FY) Bitcoin Magazine * ## [Erik Townsend and Yan Pritzker](https://www.youtube.com/watch?v=U6PwUXsJJ3Y) Swan Signal Live * ## [Declaration of Monetary Independence](https://www.youtube.com/watch?v=DM9PKo0EZ5c) Crypto Cousins * ## [The Cryptography and Macroeconomics of Bitcoin](https://www.youtube.com/watch?v=S6k1oThmuE4) Swan Signal Live * ## [Taleb and Bitcoin](https://open.spotify.com/episode/5DV4yRZtICWIoAAu7Yei12) Citizen Bitcoin * ## [Understanding Time, Money and Bitcoin from First Principles](https://citizenbitcoin.world/episodes/robert-breedlove-understanding-time-money-and-bitcoin-from-first-principles) Citizen Bitcoin * ## [Bitcoin Philosophy](https://www.youtube.com/watch?v=xfj83dE9CwE) Swan Signal Live * ## [Michael Saylor on Robert Breedlove](https://www.youtube.com/watch?v=JrCael7YC28) Swan Signal Live * ## [Robert Breedlove and Parker Lewis](https://www.youtube.com/watch?v=6Qds0V3OPPg) Swan Signal Live * ## [Preston Pysh and Andy Edstrom](https://www.youtube.com/watch?v=IiSQRv%5Fr5gY) Swan Signal Live ### Biography Brady Swenson is Head of Education at Swan. He is committed to helping people discover and learn Bitcoin to prepare for a new global monetary era. Swenson is also the creator and host of the Citizen Bitcoin podcast chronicling his Bitcoin journey. He has worked on the web for over 20 years with experience in every aspect of building and marketing products. Before beginning his web-based career Swenson taught English and reading as a Peace Corps volunteer in Guyana, South America. Upon his return he taught various subjects at the high school level. Brady is available as a guest to cover a broad spectrum of topics, including: * Origin and history of Bitcoin * The basics of how Bitcoin works * His experience learning Bitcoin * How a Bitcoin future could affect individuals and society [Book Now ](mailto:media@swanbitcoin.com?subject=Media%20request%20for%20Brady) # Create your Private account - Swan Bitcoin URL: https://www.swanbitcoin.com/private/isaiah/ An individual account with full access to our dedicated team --- Swan Private ## Create your Private account An individual account with full access to our dedicated team Open Account ### Swan Private Services As a Swan Private client, our team will guide you through the steps to establish and grow your Bitcoin position. * A dedicated Bitcoin expert to fully support you throughout your Bitcoin journey * All-in-one platform for your Bitcoin investment strategy * Full support for retirement, trust and corporate accounts * Dedicated advisory for a range of Bitcoin custody solutions * Access to the industry’s most exclusive events * Regular access to our proprietary Bitcoin and macro research # Create your Private account - Swan Bitcoin URL: https://www.swanbitcoin.com/private/zach/ An individual account with full access to our dedicated team --- Swan Private ## Create your Private account An individual account with full access to our dedicated team Open Account ### Swan Private Services As a Swan Private client, our team will guide you through the steps to establish and grow your Bitcoin position. * A dedicated Bitcoin expert to fully support you throughout your Bitcoin journey * All-in-one platform for your Bitcoin investment strategy * Full support for retirement, trust and corporate accounts * Dedicated advisory for a range of Bitcoin custody solutions * Access to the industry’s most exclusive events * Regular access to our proprietary Bitcoin and macro research # Create your Private account - Swan Bitcoin URL: https://www.swanbitcoin.com/private/brandon/ An individual account with full access to our dedicated team --- Swan Private ## Create your Private account An individual account with full access to our dedicated team Open Account ### Swan Private Services As a Swan Private client, our team will guide you through the steps to establish and grow your Bitcoin position. * A dedicated Bitcoin expert to fully support you throughout your Bitcoin journey * All-in-one platform for your Bitcoin investment strategy * Full support for retirement, trust and corporate accounts * Dedicated advisory for a range of Bitcoin custody solutions * Access to the industry’s most exclusive events * Regular access to our proprietary Bitcoin and macro research # Create your Private account - Swan Bitcoin URL: https://www.swanbitcoin.com/private/alec/ An individual account with full access to our dedicated team --- Swan Private ## Create your Private account An individual account with full access to our dedicated team Open Account ### Swan Private Services As a Swan Private client, our team will guide you through the steps to establish and grow your Bitcoin position. * A dedicated Bitcoin expert to fully support you throughout your Bitcoin journey * All-in-one platform for your Bitcoin investment strategy * Full support for retirement, trust and corporate accounts * Dedicated advisory for a range of Bitcoin custody solutions * Access to the industry’s most exclusive events * Regular access to our proprietary Bitcoin and macro research # Create your Private account - Swan Bitcoin URL: https://www.swanbitcoin.com/private/jason/ An individual account with full access to our dedicated team --- Swan Private ## Create your Private account An individual account with full access to our dedicated team Open Account ### Swan Private Services As a Swan Private client, our team will guide you through the steps to establish and grow your Bitcoin position. * A dedicated Bitcoin expert to fully support you throughout your Bitcoin journey * All-in-one platform for your Bitcoin investment strategy * Full support for retirement, trust and corporate accounts * Dedicated advisory for a range of Bitcoin custody solutions * Access to the industry’s most exclusive events * Regular access to our proprietary Bitcoin and macro research # Terms of Service - Swan Bitcoin URL: https://www.swanbitcoin.com/terms/ Terms of Service: the full legal text from Swan Bitcoin. --- ## Terms of Service **Last Updated: July 17 , 2026** The Terms of Service and any terms and conditions incorporated herein by reference (collectively, the “Terms”) govern your access to and use of the www.swanbitcoin.com website (the “Site”), any mobile device applications made available to you (the “App”) by Electric Solidus, Inc. (the “Company,” “we,” or “us”), and any other services made available to you by us, including but not limited to any software and/or hardware interface that enables you to (a) transact in bitcoin (BTC) (“bitcoin”) for yourself through one of our third-party partners that is licensed and regulated to provide trading and custody services, such as a qualified custodian or public company operating as a regulated financial institution (each a “Custodian”), (b) custody your bitcoin through our proprietary collaborative custody service, (c) withdraw your purchased bitcoin, and (d) additional features and services that may be provided by third-parties in collaboration with Swan (collectively with the Site and any other current or future features and/or applications, the “Services”). By accessing, browsing or otherwise using the Services, by creating an Account (as defined below) with us or by clicking “ Agree” when prompted to do so on the Site, you agree that you have read, understood and accepted all of the Terms and our Privacy Policy (the “Privacy Policy”), which is incorporated by reference into the Terms and made a part hereof. We may change, amend, or revise the Terms from time to time and at any time, at our sole discretion. For regulatory, legal, compliance and/or other reasons, due to your geographic location and/or residence, you may be limited in terms of the range of (i) Account types which you may be able to create, and/or the (ii) functionality that your Account(s) may have access to. When we make changes, we will make the updated Terms available on the Site and update the “Last Updated” date at the beginning of the Terms accordingly. Please check the Terms periodically for changes. 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The Services are only available to you, and you should only access the Services, if you agree completely with the Terms. BY USING OUR SERVICES OR CLICKING A BOX INDICATING YOUR ACCEPTANCE, YOU ARE CONFIRMING THAT YOU UNDERSTAND AND AGREE TO BE BOUND BY ALL OF THE TERMS AND ALL TERMS AND AGREEMENTS INCORPORATED HEREIN. If you accept the Terms on behalf of a legal entity, by accessing or using the Services or by clicking “Agree” below, or clicking a box indicating your acceptance, you represent that you have the legal authority to accept the Terms on that entity’s behalf, in which case “you” (except as used in this paragraph) will mean that entity. If you do not have such authority, or if you do not accept all of the Terms, then we are unwilling to make our Services available to you. If you do not agree to the Terms, neither you nor the entity on behalf of which you are acting should access or use our Services. ### 1\. ACCOUNT #### (a) Nature of Swan’s Role Swan is solely a technology provider. Through its websites, mobile applications, application‑programming interfaces, and related software (collectively, the “Platform”), Swan furnishes a user interface and underlying technical infrastructure that enable you to: * Transmit electronic instructions and data to, and * Receive electronic confirmations and data from, one or more unaffiliated, regulated financial institutions, trust companies, qualified custodians, money‑services businesses, or other licensed entities that you select or authorize (each a “Custodian”). #### (b) No Regulated Financial Services Swan does not: * **Custody Assets:** Hold, receive, safeguard, or otherwise take possession of fiat currency, Bitcoin, or any other digital asset on your behalf or on behalf of any Custodian; * **Transmit Money:** Provide money‑transmission or other money‑services‑business functions as those terms are defined under 31 C.F.R. § 1010.100(ff), comparable state statutes, or the EU Payment Services Directive (and as such terms may be amended from time to time); * **Broker or Dealer Securities or Commodities:** Act as a broker‑dealer under the Securities Exchange Act of 1934; or as a futures commission merchant, introducing broker, commodity trading advisor, or commodity pool operator under the Commodity Exchange Act; or as an introducing broker of securities or commodities under any state law; * **Provide Investment, Legal, or Tax Advice:** Offer personalized or situational investment recommendations, portfolio management, legal counsel, or tax advice; * **Act as Agent, Trustee, or Fiduciary:** Hold any discretionary authority over your assets, bind you or any Custodian in contract, or owe any fiduciary duty to you or to any Custodian; or * **Otherwise represent that it is licensed, regulated, or insured to provide financial services.** Any regulatory or insurance disclosures on the Platform apply solely to the applicable Custodian. #### (c) Absence of Custody, Control, or Direction When you open a Swan account (“Swan Account”) you will execute, by electronic signature or similar means, a separate custodial agreement directly with a qualified Custodian appropriate to your account type. All fiat funds and digital assets (jointly, “Funds”) flow solely between you and that Custodian, who holds your Funds in one or more accounts titled in your name, never in Swan’s name. Swan has no signatory authority, unilateral power to initiate transfers, right to rehypothecate, pledge, assign, encumber, or otherwise dispose of your assets in such custodial accounts, or exercise any other type of control of or direction over your Funds. Should Swan become unavailable or terminate its relationship with you for any reason, you will retain the ability to communicate with your Custodian directly regarding your Funds. #### (d) Independent Relationship with Custodians Your legal, regulatory, and contractual relationship is exclusively with each Custodian under the custodial agreement(s) you execute (each a “Custodial Agreement”). Swan is neither a party to, nor a third‑party beneficiary of, any Custodial Agreement and bears no responsibility for a Custodian’s creditworthiness, operational performance, security controls, fraud‑prevention measures, performance under any Custodial Agreement, or regulatory compliance. All execution quality, settlement finality, custody, safekeeping, and disbursement obligations rest solely with the Custodian, and Swan disclaims any liability for the Custodian’s acts or omissions (see also Section 15 (Limitation of Liability)). #### (e) No Warranty or Endorsement of Custodians The appearance of any Custodian on the Platform, or the forwarding of your instructions to a Custodian, does not constitute Swan’s endorsement, warranty, or guarantee of the services of the Custodian, its affiliates, nor any of their personnel, representatives or agents. You are solely responsible for conducting your own due diligence and for monitoring the ongoing performance, solvency, and regulatory status of each Custodian. Any claims, disputes, or inquiries regarding your Funds must be directed to the Custodian pursuant to the terms of the Custodial Agreement. #### (f) User Responsibility for Instructions and Data Swan transmits user‑submitted instructions to Custodians as received and does not independently authenticate, verify, or correct such instructions or any destination addresses. You bear sole responsibility for: * Reviewing each instruction for accuracy and completeness, * Maintaining the security of your authentication credentials, and * Promptly reviewing all confirmations, statements, and notices received from Custodians. #### (g) Limitation of Liability Consistent with Section 15 of these Terms, Swan shall not be liable for any loss, delay, failure, or error attributable to: * The acts or omissions of any Custodian, banking network, payment rail, or blockchain network, or * Your own failure to protect your credentials, verify transaction details, or comply with the terms of your agreements with Custodians. #### 1.1 Account Creation You must create an Account with us to use our Services. The Services are available only to individuals who are at least eighteen (18) years old. By opening an Account, you confirm you meet this age requirement. To create an Account, you will be required to submit certain Account information, which may include, but not be limited to: * Your name, * Email address, * Mobile phone number, * Street address, * Zip code, * Date of birth, * Social security number, and * Other government-issued identification documents. The first time you access your Account using a new device you may be required to authenticate your Account with additional information. If your Account cannot be authenticated, then you may not have access to the Account. By creating an Account, you agree to provide accurate, current and complete Account information about yourself, and to maintain and promptly update as necessary your Account information. #### 1.2 Contact Information When creating your Account, you will be required to provide an email address to access our Services. We will use the email address you provide as the primary method for communication about your Account and to provide you with any necessary technical support. You must keep your email address and other contact information current in your Account profile. #### 1.3 Identity Verification You hereby authorize us, directly or through third parties, to make any inquiries we consider necessary to validate information about you and your Account. This may include: * Asking you for further information and/or documentation about your Account usage or identity, * Requiring you to take steps to confirm ownership of your email address, mobile phone number or financial instruments, or * Verifying your information against third party databases or through other sources. #### 1.4 Account Rejection or Suspension We may reject your application to create your Account, suspend, or cancel an existing Account, for any reason, in our sole discretion, but you will continue to have all rights related to the assets held through one or more of our Services and/or a Custodian. #### 1.5 SMS Consent By providing us with a mobile phone number, you consent to receiving text (SMS) messages and/or phone calls from us. Standard text messaging rates and other charges may apply based on your plan with your mobile carrier. #### 1.6 Account Impersonation You must not: * Impersonate any other person or entity, * Access an Account with us or access anyone else’s Account without that person’s prior written and verified permission to add you as an access person that Swan approves in its sole discretion, * Create any Accounts by automated means or under false or fraudulent pretense. #### 1.7 Compliance with Laws You agree that you will use the Services only in a manner that complies with all applicable laws, and that you are solely responsible for any improper or unlawful activity in connection with the registration of or use of your Account, including but not limited to any misrepresentations made in connection with the creation of your Account. #### 1.8 Sharing Account Information We will share your Account information and desired transaction information with third-party service providers, including but not limited to Custodians who fulfill transaction requests, in accordance with our [Privacy Policy](https://www.swanbitcoin.com/privacy-policy/). Transaction information includes, but is not limited to: * Instructions to pull funds from your bank account via ACH or other electronic means, * Instructions to execute one-time, standing, or recurring orders, and * Other transactional information as may be necessary to execute the full suite of Services we may provide to you through our integration with the third party-service provider. In the event that our relationship with one such party ends, we may transmit prior instructions to another such party for the purposes of continuing to serve your account and executing your prior indicated instructions. #### 1.9 Account Security You agree that you bear sole and complete responsibility for maintaining the security of your Account, any associated email accounts, devices, networks, and any other means through which you access our Services. This includes but is not limited to: * Protecting your login credentials, * Implementing appropriate security measures, and * Maintaining secure systems. You acknowledge and agree that any breach, unauthorized access, or compromise of your Account or any associated components resulting from your failure to adequately secure them will be entirely your responsibility and that Swan shall have no liability to you or to any third party with respect thereto. Without limiting the generality of the paragraph above, you agree to implement and maintain industry-standard security practices including but not limited to: * Using unique, complex passwords on your email and other accounts; * Enabling all available security features such as multi-factor authentication, passkeys, or similar; * Regularly updating your devices, software, and applications; * Using secure networks; and * Avoiding public or shared devices for accessing your Account. You agree never to share your two-factor authentication codes for our service, or for your email (e.g. Google Authenticator codes) with any third party under any circumstances, whether intentionally or inadvertently, including in response to communications that appear to be from us or our affiliates. You agree that your failure to implement these or other reasonable security measures constitutes negligence for which we will not be held responsible. You agree that we make no guarantees regarding the security of our Services beyond what is explicitly stated in this Agreement, and that the security of your personal devices, networks, credentials, and accounts falls outside the scope of our responsibility. You understand that even if you follow all recommended security practices, security breaches may still occur, and in such cases, you assume all resulting risks and liabilities. You agree and understand that Bitcoin is not subject to the protections of any federal or state insurance programs, such as the FDIC. You explicitly acknowledge and agree that any transactions, transfers, or actions performed through your Account, whether authorized by you or not, shall be deemed valid and binding. You agree that we shall have no obligation to investigate, reverse, refund, or compensate you for any losses resulting from unauthorized access to your Account. You further acknowledge that we have no responsibility to monitor your Account for suspicious activity or to alert you of potential security concerns, although we reserve the sole and absolute discretion to provide or discontinue such services at any time without notice. Any such service, if offered, is offered ‘AS IS’, without warranty or guarantee of any kind, as further described in Section 14 (Disclaimers). If you become aware of any unauthorized use of your password, your Account, or the email account associated with your Account, then you agree to notify us immediately at support@swanbitcoin.com, or otherwise through any means made available through the Site, including but not limited to email, online chat, telephone, video calls, or web support forms (collectively, the “Support Channels”). You understand and agree that we will not be held liable for direct or indirect damages, expenses, costs, or losses of any kind arising from security incidents resulting from your failure to secure your account, regardless of circumstances (see also Section 15 (Limitation of Liability)). #### 1.10 Wireless Carrier Data You authorize your wireless carrier to use or disclose information about your Account and your wireless device, if available, to us, or our service providers for the duration of your business relationship, solely to help such service providers identify you or your wireless device and to prevent fraud. See our Privacy Policy for how we treat your data. #### 1.11 Preview Features We may offer certain features or services in a preview mode (‘Preview Features’) to select clients before general availability. Preview Features are experimental, may contain errors or limited functionality, and are provided ‘AS IS’ without warranty or guaranty of any kind, as further described in Section 14 (Disclaimers). By opting in to use Preview Features, you acknowledge their experimental nature and assume all risks associated with their use. Participation is voluntary and requires your explicit consent through the Site, App, or Support Channels. ### 2\. TRANSACTIONS AND FEES #### 2.1 Transaction Requirements For each transaction of bitcoin, you will be required to do one or more of the following: * Select the dollar value (or total amount) of bitcoin you would like to purchase or sell; * Select whether you will make a one-time transaction or multiple transactions on a recurring schedule; * If applicable, select the maximum or minimum price per bitcoin at which you would like a purchase to be made (for example on limit orders, to the extent available), and * Provide payment information, which may be assets available at a custodian, bank account information for ACH transactions or, if we make purchases by credit card or debit card available, then such card’s number and associated information. You will be required to create an Account and to agree to a Custodian’s corresponding self-directed custodial account agreement in order to complete a transaction of bitcoin. Bitcoin transactions confirmed on the Bitcoin network are irreversible. #### 2.2 Trade Execution Upon your instructions to execute a trade, submitted through the Site, App, or the Support Channels, we deliver the information provided in Section 2.1 to a Custodian, who will: * Execute your trade in the amount you requested (plus the Fee (as defined below)) using your payment information we provide to it; * Transfer the transacted bitcoin or dollars to an account or the digital wallet created to custody the purchased bitcoin for you at the Custodian; * Transfer a portion of the Fee to an account or digital wallet created to custody bitcoin for us; and * At your request, and following a holding period typically less than thirty (30) calendar days (with such period potentially being significantly shorter depending on the method of payment and our risk assessment of your transaction, or potentially up to sixty (60) calendar days when fraud or other account security issues are suspected, including without limitation due to insufficient funds), transfer the bitcoin to any other digital wallet identified by you. Swan may refuse, relay, or block instructions where it reasonably believes such action is required by law, subpoena, or court order. #### 2.3 Fees We charge a percentage (as displayed on the Site at the time of your use of our Services) of the transaction price of bitcoin and other charges (each a “Fee” and collectively “Fees”) for offering the Services and for purposes of compensating each Custodian. An on-chain withdrawal fee may be applied by the Custodian in connection with your request through the Site to transfer bitcoin to any other digital wallet identified by you. We may also charge a monthly account or service fee for some Services. Fees are shown on account or service pages when adding them and also in our FAQs at [https://swanbitcoin.com/fees](https://swanbitcoin.com/fees/). Fees may change at any time. By using any Account or Service with a Fee, you acknowledge and understand that Fees may be collected via any and all payment methods provided, including but not limited to: * Linked bank accounts, * Linked credit or debit accounts if available, and * Dollars or bitcoin held at Custodians through the Platform. You are responsible for paying all fees associated with your use of the Services, which may include monthly fees, custody fees, trading fees, or other service-specific fees, as displayed at [https://swanbitcoin.com/fees](https://swanbitcoin.com/fees/) at the time of your use (collectively, ‘Fees’). Fees may be charged monthly or based on assets on platform, and certain Fees may be waived as specified on the Site. You authorize us to charge Fees to your payment methods (including but not limited to ACH, wire transfer, credit/debit card, and Funds held with Custodians through the Platform). You agree to maintain sufficient funds or credit to cover such charges and to provide accurate and current payment information. If you do not provide accurate payment information or sufficient funds, we reserve the right to collect unpaid balances from any of your Funds and/or refer your account to a collections agency. If you initiate a chargeback or dispute with your credit/debit card issuer, you must notify us through our Support Channels to resolve the issue. Unauthorized or fraudulent chargebacks may result in Account suspension, as described in Section 7 (Conduct). We are not liable for issues caused by payment processors or your financial institution. Fee amounts and waivers are subject to change, and we will notify you of updates per Section 1. Where you have entered into a separate agreement with Swan that specifies different fee terms for your Account (for example, in connection with Swan Private, Swan Business, or another negotiated arrangement), the fee terms in that separate agreement will control for your Account, unless otherwise expressly stated in that agreement. Absent such a separate written agreement, the fees described in this Section 2.3 and displayed on the applicable account or service page will apply. #### 2.4 Transaction Execution by Custodian All bitcoin buy and sell transactions are executed between you and a Custodian, which may result in a different transaction price than displayed when using our Services. Swan assumes no responsibility or liability for Custodian’s execution of such transaction (see also Section 15 (Limitation of Liability)). The entire transaction of the bitcoin is executed between you and a Custodian, which may result in a different price for the bitcoin being transacted than the implied price displayed when using our Service. We will not honor any trade price differences for trades effected at a date or time later than originally intended by you or any other person, including without limitation due to failed trades, failed executions, delays, or any other errors on our part or on the part of a Custodian or any intermediary system such as an internet service provider or cloud service provider. #### 2.5 ACH Transactions If choosing to pay for your bitcoin transactions and/or any fees associated with services(s) through one or more ACH transactions, by using our Service, you expressly authorize the initiation of ACH transactions from your external bank account for the purposes specified in these Terms. Further, you agree to provide accurate and complete information about your bank account, including verification of your ownership of such bank account, and to maintain sufficient funds in your bank account to cover any authorized transactions. The name on your linked bank account and your wire transfer or ACH transaction must match the name verified on your Account. We reserve the absolute right to reject any transaction for any reason, including but not limited to suspicion of fraud, insufficient funds, or regulatory concerns. You can add funds to your Account from a valid bank account via ACH transfer or wire transfer. A debit of your linked bank account may occur as soon as you initiate a transaction through your Account. For the period immediately following the time when an ACH transaction is initiated, the corresponding U.S. dollar balance reflected in your Account is in a pending state and will not be formally credited to your Account until after the bank transfer has cleared, typically within five (5) business days. #### 2.6 Future Transactions From time to time, we offer certain products that allow you to make future transactions of bitcoin, whether on the basis of a predetermined recurring schedule, U.S. dollar amount, bitcoin price threshold, and/or other criteria available for your selection (collectively “Future Transactions”). If you have authorized one or more ACH transactions in connection with Future Transactions, such authorization will remain in full force and effect until such time as you modify or cancel the associated Future Transactions settings in your Account. For recurring Future Transactions, such transactions will occur in periodic installments and in accordance with your chosen settings, until such settings are canceled. Though your transaction times may vary, a recurring transaction will typically be executed within the twenty-four (24) hour day on the transaction date, absent any extraordinary circumstances. You may cancel or modify any Future Transactions at any time through your Account. Any cancellations or modifications of Future Transactions performed directly on your Account dashboard may take up to two business days to take effect. You may also cancel or modify your ACH authorization, including to cancel any such authorization relating to Future Transactions, through our Support Channels by providing written notice to us, with at least three (3) business days prior to the next scheduled transaction date if providing notification in connection with a recurring Future Transactions. Following cancellation of a recurring Future Transactions, such Future Transactions will not resume until such time that you provide your authorization to resume recurring ACH transactions by either changing the appropriate settings in your Account or by contacting us through our Support Channels. We will not be liable for any fees or charges associated with your cancellation or modification of such recurring ACH transactions in connection with Future Transactions. If you select a U.S. bank account as your payment method for a Future Transactions, and any such associated transaction falls on a weekend or holiday, or after bank business hours, the ACH credit or debit will be executed on the next business day. If your bank is unable to process any electronic ACH debit entry, we will notify you of cancellation of the transaction and may use any and all remedies available to use, including specific remedies as may be set forth in these Terms, to recover any amount owed to us. You agree to notify us of any changes in your linked bank account information prior to a recurring transaction. We may, at any time, suspend, delay, or terminate recurring transactions with or without notice. #### 2.7 Consumer Report Authorization As provided under the Fair Credit Reporting Act (FCRA), we may obtain a consumer report for the sole purpose of assessing whether your bank account has a history of negative transactions, including but not limited to: * Overdrafts, * Insufficient funds, or * Unauthorized use notifications. By choosing to transact in bitcoin through the Site with one or more ACH transactions and/or a wire, you expressly authorize us to obtain the consumer report for this specific purpose. You understand that the information obtained will be kept confidential and will only be used for this specific purpose. We may use one or more third-party vendors to obtain the consumer report. Any such consumer report will be a ‘soft inquiry’ that Swan understands does not affect your credit score. #### 2.8 ACH Returns, Reversals, Fraud, Default, and Offset Trades ##### (a) ACH Reversal Event and Funding Default By choosing to transact in bitcoin through one or more ACH transactions, which transactions are between you and the Custodian (not Swan), you expressly acknowledge and agree that any return, rejection, or reversal of an ACH debit, including, without limitation, a return for insufficient funds, constitutes an “ACH Reversal Event.” The ACH Reversal event, similarly to your original ACH funding, occurs between your source financial institution, such as a bank, and your Custodian. The Custodian thereupon transmits such reversal information to Swan. Upon the occurrence of an ACH Reversal Event you are in default of your funding obligations and remain liable for, without limitation: * The principal amount of the returned ACH, * Any banking or network charges, and * All fees set forth in these Terms. ##### (b) Suspension for Fraud or Risk Review An ACH Reversal Event, or any reversal you or your bank initiate, may place your Account under fraud or risk review. You consent to Swan’s exclusive right to suspend, restrict, or otherwise limit access to your Swan Account for up to sixty (60) days in Swan’s reasonable discretion, or longer where required by law or court order, to protect Swan and Custodians against further reversals, fraudulent activity, or any other harm. ##### (c) Funding Defaulted Trades and Deemed Offset Trade Instruction If any ACH Reversal Event occurs, Swan will promptly notify you. You hereby acknowledge that the ACH Reversal Event shall automatically be deemed an irrevocable instruction (“Irrevocable Instruction”) from you that Swan may, based on suspicion of fraud, in its sole discretion: * Permit you to deposit additional funds, for a period of time equal to one business day from Swan notifying you of the ACH Reversal Event (“Defaulted Trade Cure Window”), to cover the resulting deficit (“Defaulted Trade Deposit”); or * Without further notice to you, unwind the transaction (an “Offset Trade”) by either: * Transmitting to the Custodian your Irrevocable Instruction to sell the bitcoin acquired with the unfunded ACH at the then‑current market price and apply the proceeds to your outstanding liability, or * Accepting transfer of that bitcoin to Swan (or its designee) for consideration determined by Swan. You acknowledge that Swan’s decision to allow a Defaulted Trade Deposit or to execute an Offset Trade is entirely within Swan’s sole discretion, and you waive any right to contest the chosen remedy. If Swan chooses to permit a Defaulted Trade Deposit, then at the expiration of the Defaulted Trade Cure Window, Swan will execute your Irrevocable Instruction to execute the Offset Trade. ##### (d) Application of Proceeds from Offset Trade The gross proceeds of the Offset Trade (“Offset Proceeds”) shall be applied: * To reimburse any negative balance your account may have at the Custodian as a result of the dollars being returned to your account; * To cover any associated banking, network, Custodian, or administrative fees; * To satisfy any other amounts you owe under these Terms; and * Any remaining Offset Proceeds, whether in USD or bitcoin, shall become the sole property of Swan. You waive and disclaim any right, title, or interest in such residual value because you: * Defaulted on your funding of the transaction subject to the ACH Reversal Event, and * Regardless, have already received, or should receive (subject to terms with your financial institution), the returned USD from your financial institution that issued the ACH Reversal Event. ##### (e) Shortfall Liability and Additional Remedies If the Offset Proceeds are insufficient to cover the full purchase price of the ordered bitcoin subject of an ACH Reversal Event and all related costs and expenses (a “Shortfall”), you remain liable for the Shortfall. In such an event, Swan may, in its sole discretion: * Debit any other payment method or linked account, including your USD balance, in the amount necessary to cure the Shortfall, or * Invoice you for the unpaid amount. Interest accrues on any unpaid Shortfall at 1 percent per month (12 percent APR) or the maximum rate permitted by law, whichever is lower. Independently of an Offset Trade, Swan may at any time cancel, correct, claw back, or reverse any transaction, even after funds have been debited from your Account, if Swan reasonably believes the transaction is erroneous, involves fraud, money laundering, terrorist financing, or violates Section 7 (“Conduct”) of these Terms. Notwithstanding the foregoing, we may refer your account to a collections agency if you fail to pay any amounts owed. ##### (f) Irrevocability and No Reinstatement You cannot cancel, reverse, or amend any transaction once it is marked “complete” or “pending.” You cannot reinstate an order subject of an ACH Reversal Event. Should you later wish to reacquire bitcoin, you must submit a new order at then‑current prices and fees; Swan has no obligation to reinstate a prior order or pricing. ##### (g) Price-Movement Risk and Responsibility for Fees You bear all economic risk arising from bitcoin price fluctuations between the time of your original purchase order and the settlement of the Offset Trade. You are solely responsible for maintaining sufficient funds and credit limits to avoid overdraft or insufficient funds fees imposed by your bank or payment provider. ##### (h) No Custody or Agency Created Swan’s role in any Offset Trade is limited to transmitting your Irrevocable Instruction to the Custodian. Swan never holds, receives, or transmits fiat currency or bitcoin in connection with an Offset Trade, and nothing in this Section 2.8 shall be construed as creating a Fund control, custodial, fiduciary, or agency relationship between you and Swan. ##### (i) Taxable Events You are responsible for taxable events in your account. Any action in or relating to your Account including, without limitation, any Offset Trade or other trade reversal effected pursuant to this section may constitute a taxable event under U.S. federal, state, local, or foreign law. You are solely responsible for: * Determining the tax implications of all Account activity, * Reporting such activity to the appropriate taxing authorities, and * Timely remitting any resulting taxes, interest, or penalties. Swan does not provide tax, legal, or accounting advice and will have no liability for any tax obligations or consequences arising from your use of the Services. #### 2.9 ACH Transaction Fees You agree to pay any fees or charges associated with the ACH transactions, including any fees charged by your bank or by the ACH operator. We will give at least ten (10) days’ prior e‑mail notice before implementing any increase specifically associated with ACH debits. #### 2.10 Transaction Authorization When a transaction of any kind occurs through your Account, we will assume that you authorized any such transaction, unless you notify us otherwise. If you believe you did not authorize a particular transaction or that a transaction was incorrectly carried out, you must contact our Support Channels immediately. It is important that you regularly check your Account and related transaction history and ensure you notify us as soon as possible of any unauthorized or incorrect transactions. Reporting an unauthorized transaction does not guarantee we will be able to reverse the transaction or reimburse you for the transaction. In particular, you should note that transactions through the bitcoin network are irreversible. Swan assumes no responsibility or liability for any transaction effected through your Account but that you later claim you did not authorize. Notwithstanding the foregoing, if any transaction qualifies as an “electronic fund transfer” under Regulation E of the Electronic Fund Transfer Act (15 U.S.C. § 1693 et seq.), your liability for unauthorized transfers will be limited as provided by that regulation. #### 2.11 Account Balances and History You will be able to see your U.S. dollar and bitcoin balances by accessing your Account. You can also see your transaction history, which among other data includes: * The amount and type of each transaction; * A reference to the identity of the payer and/or payee (as appropriate); * Any Fees charged; * The U.S. dollar to bitcoin rate of exchange for each transaction; and * The date of each transaction. The balances and transaction history shown while using the Services, including the Site, App, or any statement or dashboard generated by Swan, are provided solely for your convenience and informational purposes. Such data are retrieved on a commercially reasonable, best‑efforts basis from the applicable Custodian’s systems and may be subject to latency, transmission errors, rounding error, or other discrepancies. In the event of a discrepancy between Swan and the Custodian’s books and records, the Custodian’s records constitute the exclusive, authoritative record of your assets, liabilities, and transaction history. You agree to review statements or confirmations issued directly by the Custodian and to promptly notify the Custodian and, if appropriate, Swan of any suspected errors. Swan disclaims any and all liability arising from or related to Platform‑displayed balances or histories (see Section 15, Limitation of Liability). ### 3\. SWAN VAULT #### 3.1 Overview “Swan Vault” is our premier bitcoin custody service that enables users (you) to establish bitcoin multi-signature storage systems, known here as “Swan Vault.” This service allows the use of compatible signing devices, commonly called hardware wallets, and referred to here as “Client Keys” and a co-signing key, termed “Cloud Key”, for establishing key quora and to authorize transactions. Swan Vault provides an interface for users to monitor their bitcoin balance, transaction history and to authorize transactions. #### 3.2 Transaction Authorization The Swan Vault online interface allows you to initiate bitcoin transactions from your Swan Vault. To move bitcoin from your Swan Vault, a combination of keys are required. You can authorize transactions using both the Client Keys or by authorizing Swan to use a combination of one of your Client Keys and your Cloud Key, which in either case is referred to herein as a Swan Transaction Authorization Request. Our possession of just the Cloud Key means that we have no capability to independently move bitcoin from your Swan Vault. After a bitcoin transaction is confirmed by the network, it cannot be reversed. #### 3.3 Key Update Procedures In case of loss, theft, malfunction, or compromise of any signing device linked to any of your Client Key units, you should promptly contact us via our support channels to initiate a transfer to a new Swan Vault (a “Key Update Request”). It is important that you move your funds from the affected Swan Vault to a newly created Swan Vault with newly created Client Keys. #### 3.4 Processing of Endorsement and Key Update Requests We verify the identity of users and the legitimacy of Swan Transaction Authorization Requests and Key Update Requests according to standardized procedures, which may be updated periodically for purposes of enhancing security. We reserve the right to decline any request that seems unauthorized or contravenes legal standards. You indemnify us against any ramifications of executing requests in line with our standardized procedures. #### 3.5 Fees Swan Vault Services are subject to variable fees. Visit (https://www.swanbitcoin.com/vault/) for current details. By utilizing Swan Vault, you agree to these fees and authorize billing via your chosen payment method. Maintaining up-to-date payment information is essential, and you must promptly notify us of any changes or security issues. Swan Vault Services may be withheld for unpaid fees. Withdrawing funds from your Swan Vault will result in on-chain fees which are paid to miners. #### 3.6 User Obligations and Representations You are responsible for: * Safeguarding your signing device(s) and associated data (like passwords or PINs), including their backup and management. * Securing each Swan Vault recovery kit to avert potential bitcoin loss. * Cooperating in case of unauthorized access or security breaches. The Company endorses certain signing devices; using unsupported signing devices is at your own risk. Users are accountable for their login credentials’ security and must cooperate in case of unauthorized access or security breaches. Additional verification, such as video authentication, may be required for Swan Transaction Authorization Requests or Key Update Requests. Non-compliance can delay or prevent request processing. By creating a Swan Vault or submitting a Swan transaction endorsement request or Swan Key update request, you confirm: * Your understanding of the associated risks, * Legal compliance in your jurisdiction, and * The authenticity and control over the transaction’s outputs, corresponding destination address and amounts. ### 4\. OUR RELATIONSHIP WITH THE CUSTODIANS #### 4.1 Custodial Account The Custodial Account – the account you hold with the Custodian – is created in your name, not our name, and is subject to the terms of service, custodial agreement, or any other agreement that you execute with the Custodian directly during the opening of your account. Please carefully read the terms of any such agreement to understand your relationship with your Custodian. We do not have any right to direct, and a Custodian will not take any direction from us regarding your assets held with a Custodian or any partner of a Custodian unless such direction from us is necessary for purposes of facilitating a transfer of your assets from one Custodian to another, such as in the case of a Custodian resigning its duties or terminating its services with you for any reason. Otherwise, a Custodian will never provide us with any control or decision-making right with respect to any of your assets that such Custodian holds in custody on your behalf. Swan will never direct a Custodian to commingle the assets that it holds on our behalf with any of the assets such Custodian holds in custody on your behalf. For the avoidance of doubt, we shall not be named an agent with respect to your custodial account with a Custodian. We are not responsible or liable for any transaction that occurs between you and a Custodian, nor for any other matters between you and the Custodian. For example, if a Custodian fails to complete a purchase on your behalf on time or in the correct amount, or any loss occurs for any other reason with respect to assets you hold with such Custodian, then we will not be liable for your related losses or damages of any kind (see also Section 15 (Limitation of Liability)). #### 4.2 Custodian Termination In the event that we reasonably anticipate a termination of service with a Custodian (“Terminating Custodian”), we will promptly notify you with a 30-day notice, and following this period, shall provide instructions to the Terminating Custodian on your behalf so that they may transmit your assets and any pertinent information to another Custodian for continuity of business. At all times, Swan shall make commercially reasonable efforts to allow you access to your account. In the event that such access is not feasible, Swan will relay information to you so that you may directly communicate with the Terminating Custodian regarding any assets or information that such party may hold. ### 5\. OUR RIGHTS We reserve the following rights, which do not constitute obligations of ours: * With or without notice to you, to modify, substitute, eliminate or add to any of our Services; * To suspend or terminate the Account of anyone who violates the Terms; * To review, modify, filter, disable, delete and remove any and all content and information from the Site; * To update and download automatically any software provided on or through the Site; * To cooperate with any law enforcement, court or government investigation or order or third party requesting or directing that we disclose information or content or information that you provide; * To display advertising and promotions, which may be targeted to certain users or portions of the Site based upon queries made or preferences indicated and may not be identified as paid advertisements or promotions. ### 6\. INTELLECTUAL PROPERTY OWNERSHIP #### 6.1 Company IP We retain all right, title and interest in all of our intellectual property, including, without limitation: * Inventions, * Ideas, * Concepts, * Code, * Discoveries, * Processes, * Marks, * Methods, * Software, * Visual interfaces, * Graphics, * Designs, * Systems, * Services, * “Look and feel,” * Organization, * Compositions, * Formulae, * Techniques, * Information and data (collectively, the “Company IP”). The Company IP is protected by copyright, trade dress, patent, and trademark laws, international conventions, or other relevant intellectual property and proprietary rights and applicable laws. You may not use any of the Company IP for any reason without the Company’s prior written consent. We reserve all rights in and to the Company IP not expressly granted to you in the Terms. #### 6.2 License We hereby grant you a limited, revocable, non-exclusive, non-sublicensable and non-transferable license to access the material on the Site for non-commercial use only, subject to and conditioned on your continued compliance with the Terms. This license is granted solely to allow you to visit the Site and to use our Services as permitted by the Terms, and you agree not to remove, alter or obscure any proprietary notices provided in or with the material on the Site or any other Company IP. You will not modify, alter, convert, adapt, clone, replicate, duplicate, copy, translate, reverse engineer or otherwise manipulate any portion of our Services or the Company IP. All rights not expressly granted in the Terms are reserved. #### 6.3 Feedback You may choose to submit comments, bug reports, ideas or other feedback about our Services, including without limitation about how to improve our Services (collectively, “Feedback”). By submitting any Feedback, you agree that we are free to use such Feedback at our discretion and without additional compensation to you, and to disclose such Feedback to third parties (whether on a non-confidential basis, or otherwise). If necessary under applicable law, then you hereby grant us a perpetual, irrevocable, non-exclusive, transferable, worldwide license under all rights necessary for us to incorporate and use your Feedback for any purpose. ### 7\. CONDUCT #### 7.1 Prohibited Activities By way of example, and not as a limitation, you may not, and may not allow any third party to: * Breach the Terms or any agreement incorporated by reference into the Terms; * Breach any law, statute, ordinance, or regulation; * Infringe any Company IP or any third party’s copyright, patent, trademark, trade secret or other intellectual property rights or rights of publicity or privacy; * Create or control more than one personal Account for yourself without our express authorization, through, among other methods, using a name that is not yours, using a temporary email address or phone number, or providing any other falsified personal information; * Act in any way that is unlawful, libelous, defamatory, harassing, abusive, fraudulent, obscene, or otherwise objectionable (including, without limitation, display any content on our Site, or using our Services to transmit content, that contains any hate-related or violent content); * Provide false, inaccurate or misleading information; * Send or receive what could reasonably be believed to be (by us or by others) potentially fraudulently acquired bitcoin; * Use our Services or the services of our partners in a manner that results in or may result in complaints; disputes, claims, reversals, or chargebacks; or fees, fines, penalties or losses to us or any of our partners; * Distribute or facilitate the distribution of viruses, worms, defects, Trojan horses, corrupted files, hoaxes, or any other items of a destructive or deceptive nature or otherwise interfere with, circumvent, disable or attempt to interfere with, circumvent or disable the Site or our Services, the proper working of the Site or our Services, security features of the Site or our Services, or the equipment connected to the Site or our Services; * Take any action that may cause us to lose any of the services from our Internet service providers, payment processors, or other suppliers or service providers; * Transmit or otherwise make available through our Services any unsolicited commercial messages (i.e., spam), junk mail, pyramid schemes, chain letters or similar materials or information; * Interfere with other users’ enjoyment of our Services; * Exploit our Services for any unauthorized commercial purpose; * Reformat or frame any portion of the Site; * Use any robot, spider, site search/retrieval application, or other device to retrieve or index any portion of our Site or content on other of our Services, or to collect information about our users for any unauthorized purpose; * Use any metatags or any other “hidden text” using any of our marks; * Access or use our Services for the purpose of creating a product or service that is competitive with any of our products or services, including, without limitation, our Services. #### 7.2 Consequences of Violations If you engage in any of the activities prohibited by Section 7.1, then we may, at our sole and absolute discretion, without notice to you and without limiting any of our other rights or remedies at law or in equity, immediately suspend or terminate your Account and/or prevent you from accessing our Services. #### 7.3 Liability for Suspension or Termination If we suspend or terminate your access to the Services, you remain responsible for any losses you incur as a result. In no event will Swan or its officers, directors, employees, representatives, or agents be liable for any direct, indirect, special, incidental, consequential or punitive damages, including without limitation emotional distress, loss of goodwill, lost profits, loss due to price volatility or market fluctuations, or any other damages arising from or in connection with your use of, or inability to use, the Services. You may only use the Services as expressly and unambiguously authorized by these Terms; any unauthorized use is strictly prohibited. ### 8\. THIRD-PARTY SERVICE PROVIDERS #### 8.1 Compliance with Third-Party Agreements Our Services operate through third-party service providers, which will require you to agree to separate agreements with them. You agree to comply with all applicable third-party terms of agreement when using our Services. We are not a party to those agreements, and we have no responsibility for the products and services provided by the third parties. Nothing in the Terms creates a contractual relationship between you and our service providers. You acknowledge and agree that we are solely responsible for our Services and for providing maintenance and support services for our Services. #### 8.2 No Warranty from Third Parties Our third-party service providers have no warranty obligations whatsoever with respect to our Services and any other claims, losses, liabilities, damages, costs or expenses attributable to any failure of our Services to conform to any warranty provided by us, if any, will be our sole responsibility. #### 8.3 Third-Party Claims Our third-party service providers are responsible for addressing any claims relating to the services they provide to you in connection with our Services, including, but not limited to: * Product liability claims; * Any claim that the Services fail to conform to any applicable legal or regulatory requirement; * Claims arising under consumer protection, privacy, or similar legislation; and * Intellectual property claims. ### 9\. TAXES You alone are responsible for complying with all applicable laws related to use of the Services, including, without limitation, any reporting obligations and payment of all applicable taxes. In addition, you are responsible for determining, remitting, withholding, filing, and reporting all taxes, duties, and other governmental assessments associated with your use of the Services. If you are a non-United States tax payer, then you should consult the laws of any jurisdiction applicable to you. Any actions in your account, including any trade reversals resulting from an ACH reversal or return (see Section 2.8), may result in taxable events in your account. You are responsible for reviewing any tax implications of such events. ### 10\. PROMOTIONS AND REFERRALS We may, from time to time, operate contests, promotions, sweepstakes or other activities or offer referral programs (“Promotions and Referrals”) that require you to submit material or information concerning yourself. Any Promotions and Referrals may be governed by separate rules that may contain certain eligibility requirements, such as restrictions as to age or geographic location. You are responsible for reading all rules relating to the Promotions and Referrals to determine whether or not you are eligible to participate. If you enter or participate in any Promotions and Referrals, then you agree to abide by and to comply with all rules of the Promotions and Referrals; all Promotions and Referrals will be optional so you should not enter or participate in such Promotions and Referrals if you do not agree to abide by and to comply with all such rules. From time to time, the Company, in its sole and absolute discretion, may also offer customers, referred by a Swan customer or otherwise, certain incentives, including without limitation a bonus (in USD or bitcoin) in exchange for opening an Account. In such circumstances, a customer who does not affirmatively claim the incentive within twelve (12) months from the date of opening an Account will forfeit such incentive in its entirety. ### 11\. YOUR REPRESENTATIONS AND WARRANTIES By using our Services, you represent and warrant to each of the Company Parties (as defined below) that: #### 11.1 Authority You have all requisite power and authority to execute and deliver the Terms, to purchase and use our Services, and to carry out and perform its obligations under the Terms. If an individual, then you are at least eighteen (18) years old and of sufficient legal age and capacity to purchase and use our Services. If an entity, then you are duly organized, validly existing and in good standing under the laws of its domiciliary jurisdiction and each jurisdiction where it conducts business. #### 11.2 No Conflict The execution, delivery and performance of the Terms will not result in any violation of, be in conflict with, or constitute a material default under, with or without the passage of time or the giving of notice: * Any provision of your governing documents, if applicable; * Any provision of any judgment, decree or order to which you are a party, by which it is bound, or to which any of its material assets are subject; * Any material agreement, obligation, duty or commitment to which you are a party or by which it is bound; or * Any laws, regulations or rules applicable to you. #### 11.3 No Consents or Approvals The execution and delivery of, and performance under, the Terms require no approval or other action from any governmental authority or person other than you. ### 12\. SANCTIONS We must comply with economic sanctions and trade restrictions, including those implemented by the Office of Foreign Assets Control (“OFAC”) of the United States Department of the Treasury. This means that we or anyone using our Services cannot take part in transactions that involve designated people or places, as determined by agencies like OFAC. Nobody using our Services, regardless of their location, may engage in transactions involving: * Certain geographic areas, such as Crimea, Cuba, Iran, North Korea, and Syria, or any individual or entity operating or residing in those places; * Individuals or entities identified on sanctions lists such as OFAC’s Specially Designated Nationals (SDN) List or Foreign Sanctions Evaders (FSE) List, including, without limitation, any digital currency addresses attributable to any individuals or entities; and * Nationals of Cuba, regardless of location, unless citizenship or permanent residency outside of Cuba has been established. To ensure compliance with sanctions programs, you are prohibited from using your Account while in certain geographic locations. If we have reason to believe you are operating your Account from a sanctioned location, such as any of the places listed above, or are otherwise in violation of any economic sanction or trade restriction, then we may suspend or terminate your use of our Services, including to cancel any purchases or withdrawals of bitcoin that are in progress at the time. You generally are not permitted to make available for sale products or services that originate from sanctioned areas. This includes items that pre-date sanctions, since we have no way to verify when they were actually removed from the restricted location. In addition to complying with OFAC and applicable local laws, other countries may have their own trade restrictions and certain items may not be allowed for export or import under international laws. You should consult the laws of any jurisdiction when a transaction involves international parties. Third-party payment processors and the Custodians may independently monitor transactions for sanctions compliance and may block transactions as part of their own compliance programs. We have no authority or control over the independent decision-making of these providers. The economic sanctions and trade restrictions that apply to your use of our Services are subject to change, so you should check sanctions resources regularly. For legal advice, please consult a qualified professional. ### 13\. TERMINATION Subject to your compliance with the Terms and all applicable laws, you may terminate the Terms at any time by canceling your Account with us and discontinuing your access to and use of our Services by sending us an email at support@swanbitcoin.com. #### Inactive Accounts or Accounts that do not Accept Updated Terms of Service An ‘Inactive Account’ is an Account with no login, transaction, or other activity for a period determined by us, typically twelve (12) months, or any Account that does not accept updated Terms of Service. We may, in our sole discretion, close Inactive Accounts with no bitcoin or U.S. dollar balances (‘Zero Assets’) held with Custodians after providing notice to the email address associated with your Account, as described in Section 1.2\. Inactive Accounts with assets (bitcoin or U.S. dollars) will not be closed but may be placed in withdrawal-only mode, restricting all Account functions except withdrawals to a bitcoin wallet or bank account you identify. You retain all rights to assets held with a Custodian, as described in Section 4.1\. Account closure or withdrawal-only mode does not relieve you of obligations under the Terms and we are not liable for any losses resulting from such actions (see also Section 15, Limitation of Liability). We, in our sole discretion and for any or no reason, may terminate the Terms and suspend and/or terminate your Account with us and all our Services. Any suspension or termination of your access or use of your Account and/or our Services may be without prior notice, and we will not be liable to you or to any third party for any such suspension or termination. If we terminate the Terms or suspend or terminate your access to or use of our Services due to your breach of the Terms or any suspected fraudulent, abusive, or illegal activity, then termination of the Terms will be in addition to any other remedies we may have at law or in equity. Upon any termination or expiration of the Terms, whether by you or us you may no longer have access to information that you have posted in connection with our Services or that is related to your Account, and you acknowledge that we will have no obligation to maintain any such information in our databases or to forward any such information to you or to any third party. You will continue to have all rights related to the bitcoin held with a Custodian upon termination of the Terms. Any section as reasonably necessary to effect the rights or obligations of either party under the Terms will survive the termination or expiration of the Terms for any reason. ### 14\. DISCLAIMERS #### 14.1 “AS IS” and “AS AVAILABLE” YOU EXPRESSLY UNDERSTAND AND AGREE THAT YOUR ACCESS TO AND USE OF OUR SERVICES IS AT YOUR SOLE RISK, AND THAT OUR SERVICES ARE PROVIDED “AS IS” AND “AS AVAILABLE” WITHOUT WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED. TO THE FULLEST EXTENT PERMISSIBLE PURSUANT TO APPLICABLE LAW, THE COMPANY, ITS AFFILIATES, AND EACH OF THEIR MEMBERS, MANAGERS, OFFICERS, EMPLOYEES, ADVISORS, REPRESENTATIVES, AFFILIATES AND AGENTS (THE “COMPANY PARTIES”) MAKE NO EXPRESS WARRANTIES AND HEREBY DISCLAIM ALL IMPLIED WARRANTIES REGARDING OUR SERVICES AND ANY PART OF ANY OF THEM (INCLUDING, WITHOUT LIMITATION, OUR SERVICES OR ANY EXTERNAL WEBSITES), INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, CORRECTNESS, ACCURACY, OR RELIABILITY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY PARTIES DO NOT REPRESENT OR WARRANT TO YOU THAT: * YOUR ACCESS TO OR USE OF OUR SERVICES WILL MEET YOUR REQUIREMENTS, * YOUR ACCESS TO OR USE OF OUR SERVICES WILL BE UNINTERRUPTED, TIMELY, SECURE OR FREE FROM ERROR, * USAGE DATA PROVIDED THROUGH OUR SERVICES WILL BE ACCURATE, * OUR SERVICES OR ANY CONTENT, SERVICES, OR FEATURES MADE AVAILABLE ON OR THROUGH OUR SERVICES ARE FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS, OR * THAT ANY DATA THAT YOU DISCLOSE WHEN YOU USE OUR SERVICES WILL BE SECURE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES IN CONTRACTS WITH CONSUMERS, SO SOME OR ALL OF THE ABOVE EXCLUSIONS MAY NOT APPLY TO YOU. #### 14.2 Personal Risks YOU ACCEPT THE INHERENT SECURITY RISKS OF PROVIDING INFORMATION AND DEALING ONLINE OVER THE INTERNET AND AGREE THAT WE HAVE NO LIABILITY OR RESPONSIBILITY FOR ANY BREACH OF SECURITY UNLESS IT IS DUE TO THE COMPANY’S GROSS NEGLIGENCE. YOU WILL IMPLEMENT REASONABLE AND APPROPRIATE MEASURES DESIGNED TO SECURE ACCESS TO: * ANY DEVICE ASSOCIATED WITH YOU AND UTILIZED IN CONNECTION WITH YOUR PURCHASE OR USE OF OUR SERVICES; AND * ANY OTHER USERNAME, PASSWORDS OR OTHER LOGIN OR IDENTIFYING CREDENTIALS. ### 15\. LIMITATION OF LIABILITY #### 15.1 No Liability for Indirect Damages YOU UNDERSTAND AND AGREE THAT NONE OF THE COMPANY PARTIES WILL BE LIABLE TO YOU OR TO ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES THAT YOU MAY INCUR, HOWSOEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY LOSS OF PROFITS (WHETHER INCURRED DIRECTLY OR INDIRECTLY), LOSS OF GOODWILL OR BUSINESS REPUTATION, LOSS OF DATA, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR ANY OTHER INTANGIBLE LOSS, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. #### 15.2 Force Majeure YOU UNDERSTAND AND AGREE THAT THE COMPANY PARTIES SHALL NOT BE LIABLE AND DISCLAIMS ALL LIABILITY TO YOU IN CONNECTION WITH ANY FORCE MAJEURE EVENT, INCLUDING: * Acts of God; * Labor disputes or other industrial disturbances; * Electrical, telecommunications, hardware, software or other utility failures; * Software or smart contract bugs or weaknesses; * Earthquakes, storms, or other nature-related events; * Pandemics; * Blockages; * Embargoes; * Riots; * Acts or orders of government; * Acts of terrorism or war; * Technological change; and * Changes in interest rates or other monetary conditions. #### 15.3 Liability Cap YOU AGREE THAT OUR TOTAL, AGGREGATE LIABILITY TO YOU FOR ANY AND ALL CLAIMS ARISING OUT OF OR RELATING TO THE TERMS OR YOUR ACCESS TO OR USE OF (OR YOUR INABILITY TO ACCESS OR USE) ANY PORTION OF OUR SERVICES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, IS LIMITED TO THE GREATER OF: * THE AMOUNT OF FEES YOU ACTUALLY PAID TO US UNDER THE TERMS IN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE THE CLAIM AROSE, OR * ONE HUNDRED DOLLARS ($100). #### 15.4 Basis of Bargain YOU ACKNOWLEDGE AND AGREE THAT WE HAVE MADE OUR SERVICES AVAILABLE TO YOU AND ENTERED INTO THE TERMS IN RELIANCE UPON THE WARRANTY DISCLAIMERS AND LIMITATIONS OF LIABILITY SET FORTH HEREIN, WHICH REFLECT A REASONABLE AND FAIR ALLOCATION OF RISK BETWEEN THE PARTIES AND FORM AN ESSENTIAL BASIS OF THE BARGAIN BETWEEN THE COMPANY AND YOU. #### 15.5 Exceptions THE LIMITATIONS SET FORTH IN THIS SECTION 15 DO NOT APPLY TO LIABILITY ARISING FROM SWAN’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD, TO THE EXTENT SUCH LIABILITY CANNOT BE DISCLAIMED BY LAW. #### 15.6 Jurisdictional Limitations SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND SOME JURISDICTIONS ALSO LIMIT DISCLAIMERS OR LIMITATIONS OF LIABILITY FOR PERSONAL INJURY FROM CONSUMER PRODUCTS. IF YOU ARE IN THESE JURISDICTIONS, LIMITATIONS IN THESE INSTANCES DO NOT APPLY TO YOU. ### 16\. INDEMNIFICATION To the fullest extent permitted by applicable law, you will indemnify, defend and hold harmless and reimburse the Company Parties from and against any and all actions, proceedings, claims, damages, demands and actions (including without limitation fees and expenses of counsel), incurred by a Company Party arising from or relating to: * Your use of the Site or our Services; * Your responsibilities or obligations under the Terms; * Your breach of or violation of the Terms; * Any inaccuracy in any of your representations or warranties; * Your violation of any rights of any other person or entity, including any proprietary or privacy rights; * Your violation of any law or regulation; and/or * Any of your acts or omissions that are negligent, unlawful or constitutes willful misconduct. The Company reserves the right to exercise sole control over the defense, at your expense, of any claim subject to indemnification under this Section 16\. This indemnity is in addition to, and not in lieu of, any other indemnities set forth in a written agreement between you and the Company. ### 17\. DISPUTE RESOLUTION Please read the following ARBITRATION AGREEMENT carefully because it requires you to arbitrate ALL disputes with US, and limits the manner in which you can seek relief. #### 17.1 Arbitration Agreement You and the Company agree to resolve any controversy, claim or dispute arising out of or relating to the subject matter of the Terms or to the Services through confidential, final and binding arbitration. #### 17.2 Arbitration Process The Federal Arbitration Act governs the interpretation and enforcement of this dispute resolution provision. Arbitration shall be initiated through JAMS. Any arbitration shall be conducted: * Confidentially, * In English, * By the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), * Before a single arbitrator with substantial experience in resolving commercial contract disputes, * In accordance with the JAMS Comprehensive Arbitration Rules & Procedures; and * In Los Angeles County, California. If a court finds venue in Los Angeles County unenforceable, arbitration shall occur in the county of your principal residence or another mutually agreed location. Payment of all filing, administration and arbitrator fees will be governed by the JAMS Rules. Any judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction. #### 17.3 Waiver of Court and Jury Trial TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HEREBY WAIVE THEIR CONSTITUTIONAL AND STATUTORY RIGHTS TO GO TO COURT AND HAVE A TRIAL IN FRONT OF A JUDGE OR A JURY, INSTEAD ELECTING THAT ALL CLAIMS AND DISPUTES SHALL BE RESOLVED BY ARBITRATION. Arbitration procedures are typically more limited, more efficient and less costly than rules applicable in court and are subject to very limited review by a court. In the event any litigation should arise between you and the Company in any state or federal court in a suit to vacate or enforce an arbitration award or otherwise, you and the Company, to the fullest extent permitted by law, waive all rights to a jury trial instead electing that the dispute be resolved by a judge. YOU ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED THAT YOU MAY CONSULT WITH AN ATTORNEY IN DECIDING TO ACCEPT THE TERMS TO ARBITRATE. #### 17.4 Governing Law The Terms are governed by and shall be construed in accordance with the laws of the state of California, without regard to its conflict of laws provisions. #### 17.5 No Class Actions You may only resolve disputes with us on an individual basis and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action. Class arbitrations, class actions, private attorney general actions, and consolidation with other arbitrations are not allowed. TO THE EXTENT PERMISSIBLE BY LAW, ALL CLAIMS AND DISPUTES MUST BE BROUGHT IN A PARTY’S INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE ACTION, OR REPRESENTATIVE PROCEEDING. A CLAIMANT OR THE ARBITRATOR MAY NOT CONSOLIDATE MORE THAN ONE PERSON’S CLAIMS OR ENGAGE IN ANY CLASS ARBITRATION OR JOINT LITIGATION. CLAIMS OF MORE THAN ONE CUSTOMER OR USER CANNOT BE ARBITRATED OR LITIGATED JOINTLY, ON A CLASS BASIS OR CONSOLIDATED WITH THOSE OF ANY OTHER CUSTOMER OR USER. YOU ACKNOWLEDGE AND AGREE THAT YOU AND WE ARE WAIVING ANY RIGHT TO PARTICIPATE AS A PLAINTIFF OR CLASS REPRESENTATIVE IN ANY PURPORTED CLASS ACTION OR REPRESENTATIVE PROCEEDING. ### 18\. EXTERNAL SITES The Site or our other Services may include hyperlinks or redirect you to other websites or resources (collectively, “External Sites”) that are provided solely as a convenience to you. We have no control over any External Sites. You acknowledge and agree that we are not responsible for the availability of any External Sites and that we do not endorse any advertising, products, services or other materials on or made available from any External Sites. Furthermore, you acknowledge and agree that we are not liable for any loss or damage which may be incurred as a result of the availability or unavailability of the External Sites, or as a result of any reliance placed by you upon the completeness, accuracy or existence of any advertising, products, services or other materials on, or made available from, any External Sites. ### 19\. ENTIRE AGREEMENT The Terms, including the [Privacy Policy](https://www.swanbitcoin.com/privacy-policy/), constitute the entire agreement between you and us with respect to the subject matter hereof, including the Services. The Terms, including the [Privacy Policy](https://www.swanbitcoin.com/privacy-policy/), supersede any and all prior or contemporaneous written and oral agreements, communications and other understandings relating to the subject matter of the Terms. The Terms do not alter any agreement you have with a Custodian. In the event of any conflict between the Terms and any agreement with a Custodian, the terms of that other agreement will control only if the Terms are specifically identified and declared to be overridden. Similarly, the Terms do not alter, and are not intended to supersede, any separate written agreement entered into by both you and Swan that expressly governs your Account (including any individually negotiated fee, pricing, or service agreement). In the event of a conflict between the Terms and such a separate agreement, the separate agreement will control with respect to the specific matters it expressly addresses, and the Terms will continue to govern all other matters. ### 20\. PRIVACY POLICY The [Privacy Policy](https://www.swanbitcoin.com/privacy-policy/) describes the ways we collect, use, store and disclose your personal information. You agree to the collection, use, storage, and disclosure of your data in accordance with the [Privacy Policy](https://www.swanbitcoin.com/privacy-policy/). ### 21\. STATE NOTICES In addition to reporting complaints or requesting information about your Account with us or our Services by emailing us at support@swanbitcoin.com, if you are a California resident, then you may report complaints to the California Department of Business Oversight: * By mail at Department of Business Oversight, Attn: Consumer Services, 1515 K Street, Suite 200, Sacramento, CA 95814, * Online through its website at , or * By phone at 866-275-2677. # Swan Security URL: https://www.swanbitcoin.com/security/ Swan Security: the full legal text from Swan Bitcoin. --- ## Swan Security ### Where is your Bitcoin stored? We always encourage clients to take custody of their own Bitcoin as soon as possible. We provide free and automated withdrawals and are always [here](http://swan.com/support) to answer any questions or concerns about making withdrawals. When you open a Swan account, you will be presented with a terms of service agreement with a licensed and regulated financial institution ("custodian") appropriate for your account type and geographic location. Signing the agreement will establish a direct relationship between you and the custodian. Swan facilitates your interactions with your custodian, but should Swan become unavailable for any reason, or terminate its relationship with you for any reason, you will be able to contact your custodian directly with regard to your assets. Please carefully read Swan's [Terms of Use ](https://www.swanbitcoin.com/terms/)and the custodial agreements that you sign when using our services for more information. When you purchase Bitcoin through Swan, your Bitcoin is held with your custodian until you withdraw it. Swan independently audits activity and ledger balances against ledger balances at your custodian, but does not have control of your funds. Each custodian may vary in its policies on Bitcoin storage, but in all cases, Bitcoin is held primarily in cold storage and with a regulated qualified custodian (trust company, or similar). When you use Swan Vault, you control two of three keys, and you alone have unilateral control to move your funds. Swan controls one key, and does not have unilateral control to move your funds. The Swan key is used to assist you to execute transactions on an optional basis, for additional security controls. ### Swan cannot move your Bitcoin or USD without your authorization. You must authorize your custodian via Swan to move your Bitcoin from your custodial account by passing instructions to Swan via its app and website interfaces or other communication channels. Swan cannot, by itself, authorize a custodian partner company to move your Bitcoin. Bitcoin and other assets held at your custodian are held in an account in your name, not Swan’s name. Your assets are never commingled with Swan’s assets, nor the assets of the custodian. Swan does not receive or transmit dollars or Bitcoin, nor does it at any time hold client funds. If you use Swan Vault, you must initiate a funds move from your own vault using your hardware key, and provide a second authorization by logging into our app and providing multiple security inputs including email login and additional OTP codes as appropriate. Alternatively, you can provide a second authorization by using your own second hardware key. Because of the design of the 2-of-3 authorization, Swan can never initiate a funds move on its own with the single backup key it holds. ### How does fiat money move from your bank account and turn into Bitcoin? When you supply your bank account information to Swan it is securely passed to and stored with your custodian and authorize the custodian to initiate withdrawals from your bank account. Based upon your instructions submitted through Swan, bank withdrawals via ACH are initiated directly by your custodian. At no time does your money pass through Swan or Swan titled accounts, or is otherwise controlled by Swan. When you wire funds, you do so directly from your bank to your custodian's bank, using instructions to credit to an account in your name. At no time do your wired funds land in accounts owned or controlled by Swan. Swan provides user interfaces, security systems, and other add-on features for managing your account at your custodian. Trades that convert dollars to Bitcoin are executed at the current market price at the custodian or its liquidity partners. After a wait period to allow the ACH transaction to clear, your Bitcoin becomes available for withdrawal. If you do not withdraw your Bitcoin, the Bitcoin will be moved to cold storage on a recurring basis based on the custodian's policies. Bitcoin withdrawals may take additional time to withdraw in the future due to the high security measures required by the cold storage withdrawal process and Swan's internal security reviews. ### What personal data does Swan store? Swan stores the minimal personal data required to be compliant with regulations. Currently, this is limited to your name, email, address, phone number, date of birth, and Tax ID number. This information is stored in encrypted fields inside of a separately encrypted database. Please review our [Privacy Policy](http://swan.com/privacy-policy) for more information. When our site collects social security numbers and identity documentation as required by law to open a custodial account, this information is relayed over an encrypted connection directly to your custodian and stored in encrypted fields inside of a separately encrypted database. ### How is your data secured? * All Swan data is stored encrypted with military-grade AES-256 encryption. * All traffic is encrypted using industry-standard TLSv1.2 and TLSv1.3 encryption. * Swan does not store nor have access to the private keys for Bitcoin stored with your custodian. * Swan follows the Center For Internet Security Benchmarks for security standards. ### What happens if Swan goes out of business? The entirety of your fiat and Bitcoin holdings are legally held in an account in your name at your custodian. In the unlikely event of Swan winding up operations, you still have legal control of funds stored within your custodian and can request disbursement by contacting your custodian. Please contact your custodian for more information. As always, we encourage you to withdraw your Bitcoin often to a secure wallet whose keys you control. ### Reporting security issues If you have found a security vulnerability within a Swan Bitcoin service, please practice responsible disclosure by reporting it to [security@swanbitcoin.com](mailto:security@swanbitcoin.com) or directly via our private [HackerOne Bug Bounty Program](https://hackerone.com/0b78da69-2dcc-4630-85bb-bfd022a2644b/embedded%5Fsubmissions/new) submission form. We will assess disclosures for validity and bounty payouts using our HackerOne policy. To review our policy and before doing any further testing on Swan Bitcoin products or services, we ask that you request an invite to our private HackerOne program by emailing [security@swanbitcoin.com](mailto:security@swanbitcoin.com) with your HackerOne username. This will ensure you are focused on the right assets and are not breaching our terms of service. # Swan Gifting Terms of Use URL: https://www.swanbitcoin.com/gifting-terms/ Swan Gifting Terms of Use: the full legal text from Swan Bitcoin. --- ## Swan Gifting Terms of Use Last Updated: Feb 4, 2023 The Terms of Use and any terms and conditions incorporated herein by reference (collectively, the “Terms”) govern your use of the [www.swanbitcoin.com](http://www.swanbitcoin.com/) website (the “Site”), any mobile device applications made available to you by Electric Solidus, Inc (the “Company,” “we,” or “us”), and any other services made available to you by us, including any software interface that enables you to (a) purchase bitcoin (BTC) (“bitcoin”) for yourself or on behalf of another person, in each case through one of our third-party service providers; (b) receive bitcoin from another person through one of our third-party service providers; and (c) learn about the Bitcoin network and bitcoin (collectively with the Site and any other current or future features and/or applications, the “Services”). By accessing, browsing or otherwise using the Services, by creating an account with us or by clicking “Agree” when prompted to do so on the Site, you agree that you have read, understood and accepted all of the Terms and ourPrivacy Policy(the “Privacy Policy”), which is incorporated by reference into the Terms. We may change, amend, or revise the Terms from time to time and at any time, in our sole discretion. When we make changes, we will make the updated Terms available on the Site and update the “Last Updated” date at the beginning of the Terms accordingly. Please check the Terms periodically for changes. Any changes to the Terms will apply on the date that they are made, and your continued access to or use of our Services after the Terms have been updated will constitute your binding acceptance of the updates. If you do not agree to any revised Terms, then you should not continue to access or use our Services. NOTICE: Please read the Terms and the Privacy Policy carefully as they govern your use of the Services. The Terms contain important information, including abinding arbitration provisionand aclass action waiver, both of which impact your rights as to how disputes are resolved. The Services are only available to you—and you should only access the Services—if you agree completely with the Terms. BY USING OUR SERVICES OR BY CLICKING “I ACCEPT” BELOW OR CLICKING A BOX INDICATING YOUR ACCEPTANCE, YOU ARE CONFIRMING THAT YOU UNDERSTAND AND AGREE TO BE BOUND BY ALL OF THE TERMS AND ALL TERMS AND AGREEMENTS INCORPORATED HEREIN. If you accept the Terms on behalf of a legal entity, by accessing or using the Services or by clicking “Agree” below or clicking a box indicating your acceptance, you represent that you have the legal authority to accept the Terms on that entity’s behalf, in which case “you” (except as used in this paragraph) will mean that entity. If you do not have such authority, or if you do not accept all of the Terms, then we are unwilling to make our Services available to you. If you do not agree to the Terms, neither you nor the entity on behalf of which you are acting should not access or use our Services. ### 1\. ACCOUNT 1.1\. You must create an account with us to use our Services (an “Account”). To create an Account, we will require that you submit certain Account information, which may include, but not be limited to, your name, email address, mobile phone number, street address, zip code, date of birth, and social security number to us. The first time you access your Account using a new device we may require you to authenticate your Account with additional information. If your Account cannot be authenticated, then you may not have access to the Account. By creating an Account, you agree to provide accurate, current and complete Account information about yourself, and to maintain and promptly update as necessary your Account information. 1.2\. When creating your Account, you will be required to select a username to identify yourself when using our Services. You may not select a username that misleads or deceives others as to your identity. We may require you to change your username or details of your Account information in our sole discretion, and we may reclaim or make unavailable your username without liability to you. You will have the option of hiding your username from any leaderboard we create or other public displays of information regarding top purchasers of bitcoin. 1.3\. By creating your Account, you represent and warrant that you (a) are at least 18 years of age or of legal age to form a binding contract under applicable law; (b) are an individual, legal person or other organization with full legal capacity and authority to enter into the Terms; and (c) have not previously been suspended or removed from using our Services. 1.4\. You hereby authorize us, directly or through third parties, to make any inquiries we consider necessary to validate information about you and your Account. This may include asking you for further information and/or documentation about your Account usage or identity, requiring you to take steps to confirm ownership of your email address, mobile phone number or financial instruments, or verifying your information against third party databases or through other sources. 1.5\. We may reject your application to create your Account, or cancel an existing Account, for any reason, in our sole discretion, but you will continue to have all rights related to the bitcoin custodied with the Custodian. 1.6\. We will use the email address you provide as the primary method for communication about your Account and to provide you with any necessary technical support. You must keep your email address and other contact information current in your Account profile. If you provide us with the email address of any other person or entity when purchasing bitcoin on another’s behalf, then you represent and warrant to us that the person or entity has consented to receive an email from us related to that purchase. 1.7\. By providing us with a mobile phone number, you consent to receiving text (SMS) messages from us. If you provide us with the mobile phone number of any other person or entity when purchasing bitcoin on another’s behalf, then you represent and warrant to us that the person or entity has consented to receive text messages from us related to that purchase. Standard text messaging rates may apply based on your plan with your mobile carrier. 1.8\. You must not impersonate any other person or entity to access an Account with us or access anyone else’s Account without that person’s prior permission. You must not create any Accounts by automated means or under false or fraudulent pretense. 1.9\. You agree that you will use the Services only in a manner that complies with all applicable laws, and that you are solely responsible for any improper or unlawful activity in connection with the registration of or use of your Account, including any misrepresentations made in connection with the creation of your Account. 1.10\. We will share your Account information and desired transaction information with third-party service providers who fulfill transaction requests in accordance with ourPrivacy Policy. 1.11\. You are responsible for the security of your Account. If you become aware of any unauthorized use of your password or of your Account, then you agree to notify us immediately at [support@swanbitcoin.com](mailto:support@swanbitcoin.com). ### 2\. GIVING BITCOIN GIFTS. 2.1\. For each purchase of bitcoin, you will be required to do the following: (a) select the dollar value of bitcoin you would like to purchase; (b) provide the email address of the person, if any, for whom you would like to purchase bitcoin; (c) provide payment information, which may be bank account information for ACH transactions or, if we make purchases by credit card or debit card available, then such card’s number and associated information; and (d) agree to the Custodian’s self-directed custodial account agreement. We may require you to create an Account at any time to complete a purchase of bitcoin. 2.2\. On a daily basis, we deliver the information provided in Section 2.1 to Prime Trust, LLC, a chartered Nevada trust company (the “Custodian”), who will in the case of a purchase of bitcoin gift credit on another’s behalf, after a recipient of bitcoin has agreed to receive any bitcoin you would like to purchase, (i) transfer the dollar amount you requested using your payment information into the recipient's custodial account at Prime Trust LLC (ii) sell to the recipient the bitcoin in the amount you requested within their custodial account, (iii) transfer the Fee amount to a digital wallet created to custody bitcoin for us; and (iv) upon the expiration of any lock applicable to the bitcoin in the recipient’s digital wallet, at the recipient’s request, transfer the bitcoin to any other digital wallet identified by the recipient. 2.3\. For use of our Services, we charge a percentage (as displayed on the Site at the time of your use of our Services) of the purchase price of bitcoin (the “Fee”) for offering the gifting service, providing the education and related information and materials to recipients of bitcoin, and as compensation to the Custodian. 2.4\. Although we provide information that indicates a price for the bitcoin being purchased, we do not sell the bitcoin or broker the sale of bitcoin. The entire purchase of the bitcoin is done between you and the Custodian, which may result in a different price for the bitcoin being purchased than the implied price displayed when using our Service. ### 3\. RECEIVING BITCOIN. 3.1\. To accept a gift of bitcoin purchased on your behalf, you will elect to accept the bitcoin and create an Account with us, at which time you also will have to agree to the Custodian’s self-directed custodial account agreement. After creating the Account, we will provide your Account information to the Custodian who will execute the purchase order for the bitcoin being gifted to you and deliver the bitcoin to your digital wallet hosted by the Custodian. 3.2\. After bitcoin has been delivered to your digital wallet, you will be able to view your balance using our Services. However, all transactions involving the bitcoin in that wallet will occur through the Custodian. ### 4\. OUR RELATIONSHIP WITH THE CUSTODIAN. We do not have any right to direct, and the Custodian will not take any direction from us regarding, bitcoin purchased through the Custodian or any of partner of the Custodian. The Custodian will never commingle the bitcoin that it custodies on our behalf with any of the bitcoin that you purchase or receive. The Custodian will never provide us with any control or decision-making right with respect to any bitcoin the Custodian custodies on your behalf. For the avoidance of doubt, we shall not be named an agent with respect to your custodial account with the Custodian. ### 5\. OUR RIGHTS. We reserve the following rights, which do not constitute obligations of ours: (a) with or without notice to you, to modify, substitute, eliminate or add to any of our Services; (b) to suspend or terminate the Account of anyone who violates the Terms; (c) to review, modify, filter, disable, delete and remove any and all content and information from the Site; (d) to update and download automatically any software provided on or through the Site; (e) to cooperate with any law enforcement, court or government investigation or order or third party requesting or directing that we disclose information or content or information that you provide; (f) to display advertising and promotions, which may be targeted to certain users or portions of the Site based upon queries made or preferences indicated and may not be identified as paid advertisements or promotions. ### 6\. INTELLECTUAL PROPERTY OWNERSHIP. 6.1\. We retain all right, title and interest in all of our intellectual property, including, without limitation, inventions, ideas, concepts, code, discoveries, processes, marks, methods, software, visual interfaces, graphics, designs, systems, services, “look and feel,” organization, compositions, formulae, techniques, information and data (collectively, the “Company IP”). The Company IP is protected by copyright, trade dress, patent, and trademark laws, international conventions, or other relevant intellectual property and proprietary rights and applicable laws. You may not use any of the Company IP for any reason without the Company’s prior written consent. We reserve all rights in and to the Company IP not expressly granted to you in the Terms. 6.2\. We hereby grant you a limited, revocable, non-exclusive, non-sublicensable and non-transferable license to access the material on the Site for non-commercial use only, subject to and conditioned on your continued compliance with the Terms. This license is granted solely to allow you to visit the Site and to use our Services as permitted by the Terms, and you agree not to remove, alter or obscure any proprietary notices provided in or with the material on the Site or any other Company IP. You will not modify, alter, convert, adapt, clone, replicate, duplicate, copy, translate, reverse engineer or otherwise manipulate any portion of our Services or the Company IP. All rights not expressly granted in the Terms are reserved. 6.3\. You may choose to submit comments, bug reports, ideas or other feedback about our Services, including without limitation about how to improve our Services (collectively, “Feedback”). By submitting any Feedback, you agree that we are free to use such Feedback at our discretion and without additional compensation to you, and to disclose such Feedback to third parties (whether on a non-confidential basis, or otherwise). If necessary under applicable law, then you hereby grant us a perpetual, irrevocable, non-exclusive, transferable, worldwide license under all rights necessary for us to incorporate and use your Feedback for any purpose. ### 7\. CONDUCT. 7.1\. By way of example, and not as a limitation, you may not, and may not allow any third party to: (a) breach the Terms or any agreement incorporated by referenced into the Terms; (b) breach any law, statute, ordinance, or regulation; (c) infringe any Company IP or any third party’s copyright, patent, trademark, trade secret or other intellectual property rights or rights of publicity or privacy; (d) create or control more than one personal Account for yourself without our express authorization, through, among other methods, using a name that is not yours, using a temporary email address or phone number, or providing any other falsified personal information; (e) act in any way that is unlawful, libelous, defamatory, harassing, abusive, fraudulent, obscene, or otherwise objectionable (including, without limitation, display any content on our Site, or using our Services to transmit content, that contains any hate-related or violent content); (f) provide false, inaccurate or misleading information; (g) send or receive what could reasonably be believed to be (by us or by others) potentially fraudulently acquired bitcoin; (h) use our Services or the services of our partners in a manner that results in or may result in complaints; disputes, claims, reversals, or chargebacks; or fees, fines, penalties or losses to us or any of our partners; (i) distribute or facilitate the distribution of viruses, worms, defects, Trojan horses, corrupted files, hoaxes, or any other items of a destructive or deceptive nature or otherwise interfere with, circumvent, disable or attempt to interfere with, circumvent or disable the Site or our Services, the proper working of the Site or our Services, security features of the Site or our Services, or the equipment connected to the Site or our Services; (j) take any action that may cause us to lose any of the services from our Internet service providers, payment processors, or other suppliers or service providers; (k) transmit or otherwise make available through our Services any unsolicited commercial messages (i.e., spam), junk mail, pyramid schemes, chain letters or similar materials or information; (l) interfere with other users’ enjoyment of our Services; (m) exploit our Services for any unauthorized commercial purpose; (n) reformat or frame any portion of the Site; (o) use any robot, spider, site search/retrieval application, or other device to retrieve or index any portion of our Site or content on other of our Services, or to collect information about our users for any unauthorized purpose; (p) use any metatags or any other “hidden text” using any of our marks; (q) access or use our Services for the purpose of creating a product or service that is competitive with any of our products or services, including, without limitation, our Services. 7.2\. If you engage in any of the activities prohibited by Section 7.1, then we may, at our sole and absolute discretion, without notice to you and without limiting any of our other rights or remedies at law or in equity, immediately suspend or terminate your Account and/or prevent you from accessing our Services. If we prevent you from accessing our Services, then you are responsible for all losses that result from that suspension or termination. You are further prohibited from using the Services in any manner that is not expressly and unambiguously authorized by the Terms. ### 8\. THIRD-PARTY SERVICE PROVIDERS. 8.1\. Our Services operate through third-party service providers, which will require you to agree to separate agreements with them. You agree to comply with all applicable third party terms of agreement when using our Services. We are not a party to those agreements, and we have no responsibility for the products and services provided by the third parties. Nothing in the Terms creates a contractual relationship between you and our service providers. You acknowledge and agree that we are solely responsible for our Services and for providing maintenance and support services for our Services. 8.2\. Our third-party service providers have no warranty obligations whatsoever with respect to our Services and any other claims, losses, liabilities, damages, costs or expenses attributable to any failure of our Services to conform to any warranty provided by us, if any, will be our sole responsibility. 8.3\. Our third-party service providers are responsible for addressing any claims relating to the services they provide to you in connection with our Services, including, but not limited to (a) product liability claims; (b) any claim that the Services fail to conform to any applicable legal or regulatory requirement; (c) claims arising under consumer protection, privacy, or similar legislation; and (d) intellectual property claims. ### 9\. TAXES. You alone are responsible for complying with all applicable laws related to use of the Services, including, without limitation, any reporting obligations and payment of all applicable taxes. In addition, you are responsible for determining, remitting, withholding, filing, and reporting all taxes, duties, and other governmental assessments associated with your use of the Services. If you are a non-United States tax payer, then you should consult the laws of any jurisdiction applicable to you. ### 10\. PROMOTIONS AND REFERRALS. We may, from time to time, operate contests, promotions, sweepstakes or other activities or offer referral programs (“Promotions and Referrals”) that require you to submit material or information concerning yourself. Any Promotions and Referrals may be governed by separate rules that may contain certain eligibility requirements, such as restrictions as to age or geographic location. You are responsible for reading all rules relating to the Promotions and Referrals to determine whether or not you are eligible to participate. If you enter or participate in any Promotions and Referrals, then you agree to abide by and to comply with all rules of the Promotions and Referrals; all Promotions and Referrals will be optional so you should not enter or participate in such Promotions and Referrals if you do not agree to abide by and to comply with all such rules. ### 11\. YOUR REPRESENTATIONS AND WARRANTIES. By purchasing or using our Services, you represent and warrant to each of the Company Parties (as defined below) that: 11.1\. Authority. You have all requisite power and authority to execute and deliver the Terms, to purchase and use our Services, and to carry out and perform its obligations under the Terms. If an individual, then you are at least eighteen (18) years old and of sufficient legal age and capacity to purchase and use our Services. If an entity, then you are duly organized, validly existing and in good standing under the laws of its domiciliary jurisdiction and each jurisdiction where it conducts business. 11.2\. No Conflict. The execution, delivery and performance of the Terms will not result in any violation of, be in conflict with, or constitute a material default under, with or without the passage of time or the giving of notice: (a) any provision of your governing documents, if applicable; (b) any provision of any judgment, decree or order to which you are a party, by which it is bound, or to which any of its material assets are subject; (c) any material agreement, obligation, duty or commitment to which you are a party or by which it is bound; or (d) any laws, regulations or rules applicable to you. 11.3\. No Consents or Approvals. The execution and delivery of, and performance under, the Terms require no approval or other action from any governmental authority or person other than you. ### 12\. SANCTIONS. 12.1\. We must comply with economic sanctions and trade restrictions, including those implemented by the Office of Foreign Assets Control (“OFAC”) of the United States Department of the Treasury. This means that we or anyone using our Services cannot take part in transactions that involve designated people or places, as determined by agencies like OFAC. 12.2\. Nobody using our Services, regardless of their location, may engage in transactions involving (a) certain geographic areas, such as Crimea, Cuba, Iran, North Korea, and Syria, or any individual or entity operating or residing in those places; (b) individuals or entities identified on sanctions lists such as OFAC’s Specially Designated Nationals (SDN) List or Foreign Sanctions Evaders (FSE) List, including, without limitation, any digital currency addresses attributable to any individuals or entities; and (c) nationals of Cuba, regardless of location, unless citizenship or permanent residency outside of Cuba has been established. 12.3\. To ensure compliance with sanctions programs, you are prohibited from using your Account while in certain geographic locations. If we have reason to believe you are operating your Account from a sanctioned location, such as any of the places listed above, or are otherwise in violation of any economic sanction or trade restriction, then we may suspend or terminate your use of our Services. You are generally not permitted to make available for sale products or services that originate from sanctioned areas. This includes items that pre-date sanctions, since we have no way to verify when they were actually removed from the restricted location. We reserve the right to request that brands provide additional information, disclose an item’s country of origin online, or take other steps to meet compliance obligations. We may disable listings or cancel transactions that present a risk of violating the Terms. 12.4\. In addition to complying with OFAC and applicable local laws, other countries may have their own trade restrictions and certain items may not be allowed for export or import under international laws. You should consult the laws of any jurisdiction when a transaction involves international parties. 12.5\. Third-party payment processors and custodians may independently monitor transactions for sanctions compliance and may block transactions as part of their own compliance programs. We have no authority or control over the independent decision-making of these providers. 12.6\. The economic sanctions and trade restrictions that apply to your use of our Services are subject to change, so you should check sanctions resources regularly. For legal advice, please consult a qualified professional. ### 13\. TERMINATION. Subject to your compliance with the Terms and all applicable laws, you may terminate the Terms at any time by canceling your Account with us and discontinuing your access to and use of our Services by sending us an email at [support@swanbitcoin.com](mailto:support@swanbitcoin.com). We, in our sole discretion and for any or no reason, may terminate the Terms and suspend and/or terminate your Account with us and all our Services. Any suspension or termination of your access or use of your Account and/or our Services may be without prior notice, and that we will not be liable to you or to any third party for any such suspension or termination. If we terminate the Terms or suspend or terminate your access to or use of our Services due to your breach of the Terms or any suspected fraudulent, abusive, or illegal activity, then termination of the Terms will be in addition to any other remedies we may have at law or in equity. Upon any termination or expiration of the Terms, whether by you or us you may no longer have access to information that you have posted in connection with our Services or that is related to your Account, and you acknowledge that we will have no obligation to maintain any such information in our databases or to forward any such information to you or to any third party. You will continue to have all rights related to the bitcoin custodied with the Custodian upon termination of the Terms. Sections 5 through 18 will survive the termination or expiration of the Terms for any reason. ### 14\. DISCLAIMERS. 14.1\. “AS IS” AND “AS AVAILABLE”. YOU EXPRESSLY UNDERSTAND AND AGREE THAT YOUR ACCESS TO AND USE OF OUR SERVICES IS AT YOUR SOLE RISK, AND THAT OUR SERVICES ARE PROVIDED “AS IS” AND “AS AVAILABLE” WITHOUT WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED. TO THE FULLEST EXTENT PERMISSIBLE PURSUANT TO APPLICABLE LAW, THE COMPANY AND ITS STOCKHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ADVISORS, REPRESENTATIVES, AFFILIATES AND AGENTS (THE “COMPANY PARTIES”) MAKE NO EXPRESS WARRANTIES AND HEREBY DISCLAIM ALL IMPLIED WARRANTIES REGARDING OUR SERVICES AND ANY PART OF ANY OF THEM (INCLUDING, WITHOUT LIMITATION, OUR SERVICES OR ANY EXTERNAL WEBSITES), INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON INFRINGEMENT, CORRECTNESS, ACCURACY, OR RELIABILITY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY PARTIES DO NOT REPRESENT OR WARRANT TO YOU THAT (A) YOUR ACCESS TO OR USE OF OUR SERVICES WILL MEET YOUR REQUIREMENTS, (B) YOUR ACCESS TO OR USE OF OUR SERVICES WILL BE UNINTERRUPTED, TIMELY, SECURE OR FREE FROM ERROR, (C) USAGE DATA PROVIDED THROUGH OUR SERVICES WILL BE ACCURATE, (D) OUR SERVICES OR ANY CONTENT, SERVICES, OR FEATURES MADE AVAILABLE ON OR THROUGH OUR SERVICES ARE FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS, OR (E) THAT ANY DATA THAT YOU DISCLOSE WHEN YOU USE OUR SERVICES WILL BE SECURE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES IN CONTRACTS WITH CONSUMERS, SO SOME OR ALL OF THE ABOVE EXCLUSIONS MAY NOT APPLY TO YOU. 14.2\. PERSONAL RISKS. YOU ACCEPT THE INHERENT SECURITY RISKS OF PROVIDING INFORMATION AND DEALING ONLINE OVER THE INTERNET AND AGREE THAT WE HAVE NO LIABILITY OR RESPONSIBILITY FOR ANY BREACH OF SECURITY UNLESS IT IS DUE TO THE COMPANY’S GROSS NEGLIGENCE. YOU WILL IMPLEMENT REASONABLE AND APPROPRIATE MEASURES DESIGNED TO SECURE ACCESS TO (A) ANY DEVICE ASSOCIATED WITH YOU AND UTILIZED IN CONNECTION WITH YOUR PURCHASE OR USE OF OUR SERVICES; AND (B) ANY OTHER USERNAME, PASSWORDS OR OTHER LOGIN OR IDENTIFYING CREDENTIALS. ### 15\. LIMITATION OF LIABILITY. 15.1\. YOU UNDERSTAND AND AGREE THAT NONE OF THE COMPANY PARTIES WILL BE LIABLE TO YOU OR TO ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES THAT YOU MAY INCUR, HOWSOEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY LOSS OF PROFITS (WHETHER INCURRED DIRECTLY OR INDIRECTLY), LOSS OF GOODWILL OR BUSINESS REPUTATION, LOSS OF DATA, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR ANY OTHER INTANGIBLE LOSS, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 15.2\. YOU UNDERSTAND AND AGREE THAT THE COMPANY SHALL NOT BE LIABLE AND DISCLAIMS ALL LIABILITY TO YOU IN CONNECTION WITH ANY FORCE MAJEURE EVENT, INCLUDING ACTS OF GOD, LABOUR DISPUTES OR OTHER INDUSTRIAL DISTURBANCES, ELECTRICAL, TELECOMMUNICATIONS, HARDWARE, SOFTWARE OR OTHER UTILITY FAILURES, SOFTWARE OR SMART CONTRACT BUGS OR WEAKNESSES, EARTHQUAKES, STORMS, OR OTHER NATURE-RELATED EVENTS, BLOCKAGES, EMBARGOES, RIOTS, ACTS OR ORDERS OF GOVERNMENT, ACTS OF TERRORISM OR WAR, TECHNOLOGICAL CHANGE, CHANGES IN INTEREST RATES OR OTHER MONETARY CONDITIONS. 15.3\. YOU AGREE THAT OUR TOTAL, AGGREGATE LIABILITY TO YOU FOR ANY AND ALL CLAIMS ARISING OUT OF OR RELATING TO THE TERMS OR YOUR ACCESS TO OR USE OF (OR YOUR INABILITY TO ACCESS OR USE) ANY PORTION OF OUR SERVICES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, IS LIMITED TO THE GREATER OF (A) THE AMOUNT OF FEES YOU ACTUALLY PAID TO US UNDER THE TERMS IN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE THE CLAIM AROSE, OR (B) ONE HUNDRED DOLLARS ($100). 15.4\. YOU ACKNOWLEDGE AND AGREE THAT WE HAVE MADE OUR SERVICES AVAILABLE TO YOU AND ENTERED INTO THE TERMS IN RELIANCE UPON THE WARRANTY DISCLAIMERS AND LIMITATIONS OF LIABILITY SET FORTH HEREIN, WHICH REFLECT A REASONABLE AND FAIR ALLOCATION OF RISK BETWEEN THE PARTIES AND FORM AN ESSENTIAL BASIS OF THE BARGAIN BETWEEN THE COMPANY AND YOU. 15.5\. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND SOME JURISDICTIONS ALSO LIMIT DISCLAIMERS OR LIMITATIONS OF LIABILITY FOR PERSONAL INJURY FROM CONSUMER PRODUCTS, SO THE ABOVE LIMITATIONS MAY NOT APPLY TO PERSONAL INJURY CLAIMS. ### 16\. NO RESPONSIBILITY FOR TRANSACTIONS WITH THE CUSTODIAN. We are not responsible for any transaction that occurs between you and the Custodian. If the Custodian fails to complete a purchase on your behalf on time or in the correct amount or any loss occurs with respect to bitcoin custodied with the Custodian, then we will not be liable for your losses or damages. ### 17\. INDEMNIFICATION. 17.1\. To the fullest extent permitted by applicable law, you will indemnify, defend and hold harmless and reimburse the Company Parties from and against any and all actions, proceedings, claims, damages, demands and actions (including without limitation fees and expenses of counsel), incurred by a Company Party arising from or relating to (a) your use of the Site or our Services; (b) your responsibilities or obligations under the Terms; (c) your breach of or violation of the Terms; (d) any inaccuracy in any of your representations or warranties; (e) your violation of any rights of any other person or entity, including any proprietary or privacy rights; (f) your violation of any law or regulation; and/or (g) any of your acts or omissions that are negligent, unlawful or constitutes willful misconduct. 17.2\. The Company reserves the right to exercise sole control over the defense, at your expense, of any claim subject to indemnification under this Section 17\. This indemnity is in addition to, and not in lieu of, any other indemnities set forth in a written agreement between you and the Company. ### 18\. DISPUTE RESOLUTION. PLEASE READ THE FOLLOWING ARBITRATION AGREEMENT CAREFULLY BECAUSE IT REQUIRES YOU TO ARBITRATE ALL DISPUTES WITH US AND LIMITS THE MANNER IN WHICH YOU CAN SEEK RELIEF. 18.1\. You and the Company agree to resolve any controversy, claim or dispute arising out of or relating to the subject matter of the Terms or to the Services through confidential, final and binding arbitration. 18.2\. The Federal Arbitration Act governs the interpretation and enforcement of this dispute resolution provision. Arbitration shall be initiated through JAMS. Any arbitration shall be conducted (a) confidentially, (b) in English, (c) by the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), (d) before a single arbitrator with substantial experience in resolving commercial contract disputes, (e) in accordance with the JAMS Comprehensive Arbitration Rules & Procedures; and (f) in Los Angeles County, California. Payment of all filing, administration and arbitrator fees will be governed by the JAMS Rules. Any judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction. 18.3\. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HEREBY WAIVE THEIR CONSTITUTIONAL AND STATUTORY RIGHTS TO GO TO COURT AND HAVE A TRIAL IN FRONT OF A JUDGE OR A JURY, INSTEAD ELECTING THAT ALL CLAIMS AND DISPUTES SHALL BE RESOLVED BY ARBITRATION. Arbitration procedures are typically more limited, more efficient and less costly than rules applicable in court and are subject to very limited review by a court. In the event any litigation should arise between you and the Company in any state or federal court in a suit to vacate or enforce an arbitration award or otherwise, you and the Company, to the fullest extent permitted by law, waive all rights to a jury trial instead electing that the dispute be resolved by a judge. YOU ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED THAT YOU MAY CONSULT WITH AN ATTORNEY IN DECIDING TO ACCEPT THE TERMS TO ARBITRATE. 18.4\. The Terms are governed by and shall be construed in accordance with the laws of the state of California, without regard to its conflict of laws provisions. 18.5\. You may only resolve disputes with us on an individual basis and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action. Class arbitrations, class actions, private attorney general actions, and consolidation with other arbitrations are not allowed. TO THE EXTENT PERMISSIBLE BY LAW, ALL CLAIMS AND DISPUTES MUST BE BROUGHT IN A PARTY’S INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE ACTION, OR REPRESENTATIVE PROCEEDING. A CLAIMANT OR THE ARBITRATOR MAY NOT CONSOLIDATE MORE THAN ONE PERSON’S CLAIMS OR ENGAGE IN ANY CLASS ARBITRATION OR JOINT LITIGATION. CLAIMS OF MORE THAN ONE CUSTOMER OR USER CANNOT BE ARBITRATED OR LITIGATED JOINTLY, ON A CLASS BASIS OR CONSOLIDATED WITH THOSE OF ANY OTHER CUSTOMER OR USER. YOU ACKNOWLEDGE AND AGREE THAT YOU AND WE ARE WAIVING ANY RIGHT TO PARTICIPATE AS A PLAINTIFF OR CLASS REPRESENTATIVE IN ANY PURPORTED CLASS ACTION OR REPRESENTATIVE PROCEEDING. ### 19\. EXTERNAL SITES. The Site or our other Services may include hyperlinks or redirect you to other websites or resources (collectively, “External Sites”) that are provided solely as a convenience to you. We have no control over any External Sites. You acknowledge and agree that we are not responsible for the availability of any External Sites and that we do not endorse any advertising, products, services or other materials on or made available from any External Sites. Furthermore, you acknowledge and agree that we are not liable for any loss or damage which may be incurred as a result of the availability or unavailability of the External Sites, or as a result of any reliance placed by you upon the completeness, accuracy or existence of any advertising, products, services or other materials on, or made available from, any External Sites. ### 20\. ENTIRE AGREEMENT. The Terms, including the Privacy Policy, constitute the entire agreement between you and us with respect to the subject matter hereof, including the Services. The Terms, including the Privacy Policy, supersede any and all prior or contemporaneous written and oral agreements, communications and other understandings relating to the subject matter of the Terms. The Terms do not alter any agreement you have with the Custodian. In the event of any conflict between the Terms and any agreement with the Custodian, the terms of that other agreement will control only if the Terms are specifically identified and declared to be overridden. ### 21\. PRIVACY POLICY. The Privacy Policy describes the ways we collect, use, store and disclose your personal information. You agree to the collection, use, storage, and disclosure of your data in accordance with thePrivacy Policy. ### 22\. STATE NOTICES. In addition to reporting complaints or requesting information about your Account with us or our Services by emailing us at [support@swanbitcoin.com](mailto:support@swanbitcoin.com), if you are a California resident, then you may report complaints to the California Department of Business Oversight (a) by mail at Department of Business Oversight, Attn: Consumer Services, 1515 K Street, Suite 200, Sacramento, CA 95814, (b) online through its website at [http://www.dbo.ca.gov/Consumers/consumer\_services.asp](https://www.dbo.ca.gov/Consumers/consumer%5Fservices.asp), or (c) by phone at 866-275-2677. # Terms of Service — Swan Safe Plus URL: https://www.swanbitcoin.com/terms-swan-safe-plus/ Terms of Service — Swan Safe Plus: the full legal text from Swan Bitcoin. --- ## Terms of Service — Swan Safe Plus **Last Updated: January 15, 2026** The Swan Safe Plus Service ("Safe Plus Service") is an optional security feature that requires an additional video verification step to access Bitcoin and USD withdrawals, as an enhancement to the verification processes outlined in the Swan Terms of Service. By accepting these Swan Safe Plus Terms of Service and using the Safe Plus Service, you acknowledge and agree to how the Safe Plus Service works. This is an addendum to the Swan Terms of Service and all terms therein also apply to the Safe Plus Service, including but not limited to sections on fees, disclaimers, limitation of liability, and dispute resolution. The Swan Terms of Service are incorporated by reference and made a part of these Swan Safe Plus Terms of Service. In the event of any conflict between these Swan Safe Plus Terms of Service and the Swan Terms of Service, these Swan Safe Plus Terms of Service will control solely with respect to the subject matter described herein. The Safe Plus Service requires an additional verification step via a video call to access certain account features, including but not limited to Bitcoin and USD withdrawals. These verification steps are completed by the client and serve to further secure and facilitate the client’s Bitcoin and USD withdrawals. Verification data, including video recordings, is handled in accordance with our Privacy Policy, incorporated herein by reference. The Safe Plus Service is not a guarantee, insurance product, warranty, or indemnity for the client’s Bitcoin, USD, withdrawal addresses, wallets, keys, or any other client-controlled information or device. It does not ensure or promise reimbursement or recovery in the event of a loss. The Safe Plus Service provides additional verification and does not modify the custody structure, key ownership, or risk allocation under the Swan Terms of Service. The Safe Plus Service is procedural in nature and does not prevent all unauthorized activity, eliminate the risk of loss, or protect against compromised devices, credentials, private keys, social engineering, or user error. You remain solely responsible for safeguarding your Client Keys, devices, and account access. The additional verification may take additional time, and as such, the time to withdraw Bitcoin or USD may extend beyond comparable withdrawal times. Swan may initiate a 30-day investigation for any activity reasonably deemed suspicious based on external security intelligence, user reports, or regulatory requirements, as determined solely by Swan, subject to applicable laws such as Regulation E for electronic fund transfers. Swan will make commercially reasonable efforts to resolve such issues promptly but will not be liable for delays resulting from fraud prevention, verification, or regulatory compliance procedures. The Safe Plus Service is a paid, optional service. Fees are calculated daily based on the average value of assets under custody with your custodian and charged monthly, as detailed at . By enrolling in Safe Plus Service, Client acknowledges and agrees to the applicable fees as displayed or confirmed during enrollment. The user may at any time end the Safe Plus Service via the Swan website, through their account settings, or by emailing support@swanbitcoin.com. Because termination removes an enhanced security control, Swan may require a final identity verification to confirm the request is authorized. Verification may include a video call or a reasonable alternative method consistent with applicable law and accessibility requirements. Termination will be completed promptly following successful verification. As a security measure, service termination is not complete until after the final verification step. Both the client and Swan shall at all times endeavor to act in a manner we reasonably deem prudent and commercially reasonable at the time. Swan Safe Plus is optional and available only to eligible clients per Section 1 of the Swan Terms of Service. Among other important terms, use is subject to sanctions compliance (per Section 12 of the Swan Terms of Service) and may not be available in all jurisdictions. The Safe Plus Service is provided on an “as is” and “as available” basis. Swan makes no warranty that the service will prevent unauthorized access or guarantee the safety of client’s Bitcoin, wallets, or private keys. To the fullest extent permitted by law, Swan disclaims all express or implied warranties, including merchantability, fitness for a particular purpose, and non-infringement. Swan’s total liability under these Swan Safe Plus Terms of Service shall not exceed the total Safe Plus Service fees paid by Client during the twelve (12) months preceding the event giving rise to the claim. Swan shall not be liable for any indirect, incidental, consequential, special, or punitive damages. Client acknowledges that Swan Safe Plus fees are for identity verification services only, not for the underlying value of the assets, and that the liability cap is a fundamental basis of the bargain. Swan may modify, suspend, or discontinue the Safe Plus Service at any time. Material changes will be communicated at least thirty (30) days in advance via email or in-app notice. Continued use of the Safe Plus Service after notice constitutes acceptance of the modified terms. For security-critical updates, we may implement changes immediately with subsequent notification. # Terms of Service — Swan Vault Plus URL: https://www.swanbitcoin.com/terms-swan-vault-plus/ Terms of Service — Swan Vault Plus: the full legal text from Swan Bitcoin. --- ## Terms of Service — Swan Vault Plus **Last Updated: January 15, 2026** The Swan Vault Plus Service ("Vault Plus Service") is an optional security feature that requires an additional video verification step to initiate Bitcoin transfers from your Swan Vault dashboard. This serves as an enhancement to the security processes for Swan Vault outlined in the Swan Terms of Service, including Section 3 (Swan Vault). By accepting these Swan Vault Plus Terms of Service and using the Vault Plus Service, you acknowledge and agree to how the Vault Plus Service works. This is an addendum to the Swan Terms of Service, and all terms therein also apply to the Vault Plus Service, including but not limited to sections on fees, disclaimers, limitation of liability, and dispute resolution. The Swan Terms of Service are incorporated by reference and made a part of these Swan Vault Plus Terms of Service. In the event of any conflict between these Swan Vault Plus Terms of Service and the Swan Terms of Service, these Swan Vault Plus Terms of Service will control solely with respect to the subject matter described herein. Swan Vault is a 2-of-3 multisignature Bitcoin storage system where you control two private keys (Client Keys, typically held on compatible hardware signing devices) and you hold a third co-signing key (Cloud Key) in your Swan account. This structure ensures you retain full control over your Bitcoin at all times—Swan cannot independently move Bitcoin from your Swan Vault. You can always sign and broadcast transactions using your two Client Keys via open-source software or compatible wallets, independent of your Swan account. The Swan Vault dashboard provides a convenient interface to monitor your Bitcoin balance, view transaction history, and initiate transfers (Swan Transaction Authorization Requests). Initiation options include using both of your Client Keys or one of your Client Keys paired with the Cloud Key. The Vault Plus Service adds an extra verification step via a video call specifically for initiating any Swan Transaction Authorization Request from the Swan dashboard, regardless of the key combination used. Swan Vault Plus verification only applies to your Cloud Key signature. At no time does Swan’s use of security procedures restrict your ability to move Bitcoin using your two Client Keys independently. These verification steps are completed by the client and serve to further secure dashboard-initiated transfers. Swan’s video verification is a procedural check for dashboard requests only. It is not an audit of your Client Keys or a guarantee that your local hardware devices have not been compromised. Verification data, including video recordings, is handled in accordance with our Privacy Policy, incorporated herein by reference. As noted in the Swan Terms of Service, additional verification such as video authentication may be required for certain requests, and the Vault Plus Service formalizes this enhanced process as an optional paid feature. The Vault Plus Service applies only to initiating transfers via the Swan dashboard and does not affect your ability to move Bitcoin off-dashboard using your two Client Keys. It is not a guarantee, insurance product, warranty, or indemnity for your Bitcoin, wallet, keys, or any other client-controlled information or device. It does not ensure or promise reimbursement or recovery in the event of a loss. The Vault Plus Service provides additional verification for dashboard-initiated transfers and does not modify the Swan Vault custody structure, key ownership, or risk allocation under the Swan Terms of Service. The Vault Plus Service is procedural in nature and does not prevent all unauthorized activity, eliminate the risk of loss, or protect against compromised devices, credentials, private keys, social engineering, or user error. You remain solely responsible for safeguarding your keys, devices, and account access. The additional verification may add time to the initiation and processing of Swan Transaction Authorization Requests. Swan processes requests according to standardized procedures, which may include delays for security verification. Swan may initiate a 30-day investigation for any activity reasonably deemed suspicious based on external security intelligence, user reports, or regulatory requirements, as determined solely by Swan, subject to applicable laws. Swan will make commercially reasonable efforts to resolve such issues promptly but will not be liable for delays resulting from fraud prevention, verification, or regulatory compliance procedures. The Vault Plus Service is a paid, optional service. Fees are calculated daily based on the average value of Bitcoin in your Swan Vault and charged monthly, as detailed at[ https://www.swanbitcoin.com/fees](https://www.swanbitcoin.com/fees?referrer=grok.com) (or the applicable Vault fees page). By enrolling in the Vault Plus Service, you acknowledge and agree to the applicable fees as displayed or confirmed during enrollment. You may at any time end the Vault Plus Service via the Swan website, through your account settings, or by emailing support@swanbitcoin.com. Because termination removes an enhanced security control, Swan may require a final identity verification to confirm the request is authorized. Verification may include a video call or a reasonable alternative method consistent with applicable law and accessibility requirements. Termination will be completed promptly following successful verification. Termination removes the enhanced video verification requirement but does not affect standard processing procedures for Swan Transaction Authorization Requests or other Vault features. Both you and Swan shall at all times endeavor to act in a manner we reasonably deem prudent and commercially reasonable at the time. Swan Vault Plus is optional and available only to eligible Swan Vault clients per the Swan Terms of Service. Among other important terms, use is subject to sanctions compliance and may not be available in all jurisdictions. The Vault Plus Service is provided on an “as is” and “as available” basis. Swan makes no warranty that the service will prevent unauthorized access or guarantee the safety of your Bitcoin, wallet, or private keys. To the fullest extent permitted by law, Swan disclaims all express or implied warranties, including merchantability, fitness for a particular purpose, and non-infringement. Swan’s total liability under these Swan Vault Plus Terms of Service shall not exceed the total Vault Plus Service fees paid by you during the twelve (12) months preceding the event giving rise to the claim. Swan shall not be liable for any indirect, incidental, consequential, special, or punitive damages. Client acknowledges that Swan Vault Plus fees are for identity verification services only, not for the underlying value of the assets, and that the liability cap is a fundamental basis of the bargain. Swan may modify, suspend, or discontinue the Vault Plus Service at any time. Material changes will be communicated at least thirty (30) days in advance via email or in-app notice. Continued use of the Vault Plus Service after notice constitutes acceptance of the modified terms. For security-critical updates, we may implement changes immediately with subsequent notification. # Swan Force Terms URL: https://www.swanbitcoin.com/swan-force-terms/ Swan Force Terms: the full legal text from Swan Bitcoin. --- ## Swan Force Terms **Swan Force Terms** Last Updated: July 5, 2024 The following terms and conditions (the “**Affiliate Terms**”) are entered into by and between you and Electric Solidus, Inc. d/b/a Swan Bitcoin (the “**Company**,” “**we**,” or “**us**”) and govern your participation in the “Swan Force” affiliate program (the “**Affiliate Program**” or “**Program**”). These Affiliate Terms supplement, and form part of, the Company’s [**Terms of Service\*\***](https://www.swanbitcoin.com/terms), its [**Privacy Policy**](https://www.swanbitcoin.com/privacy-policy), and all terms, conditions, and notices contained therein (collectively, the “**Terms**”). BY SUBMITTING AN APPLICATION TO JOIN THE AFFILIATE PROGRAM, BY ENTERING A REFERRAL LINK FOR THE PROGRAM, OR BY SENDING A REFERRAL LINK TO ANY PERSON WHEN YOU CREATE AN ACCOUNT FOR THE SWAN BITCOIN SITE, AVAILABLE AT [SWANBITCOIN.COM](http://swanbitcoin.com/) (THE “**SITE**”), YOU AGREE AND ACKNOWLEDGE THAT YOU HAVE READ, UNDERSTAND AND AGREE TO BE BOUND BY THESE AFFILIATE TERMS AND THE TERMS, INCLUDING WITHOUT LIMITATION YOUR AGREEMENT TO ARBITRATE ANY AND ALL CLAIMS AS AN INDIVIDUAL AND NOT AS A CLASS ACTION OR SIMILAR REPRESENTATIVE ON BEHALF OF OTHER PERSONS (SEE SECTION 18 (“DISPUTE RESOLUTION”) BELOW. YOUR PARTICIPATION IN THE PROGRAM IS ENTIRELY AT THE COMPANY’S DISCRETION. You can be removed from the Program at any time for any reason or no reason. If you violate any of these Affiliate Terms, you can be immediately removed from the Affiliate Program and any Commissions (as defined below) you may have received or been entitled to receive will be forfeited automatically by you. The Company, in its sole discretion, may revise, update or amend the Terms or these Affiliate Terms at any time and from time to time for any reason or no reason by posting revised Terms or Affiliate Terms and/or notifying you via your Account (as defined below). All changes are effective on the date the changes are posted. These changes may make your participation in the Affiliate Program more or less valuable to you and may result in you no longer being eligible to participate in the Affiliate Program. Continued participation in the Affiliate Program following any revision, update, amendment or other change to these Affiliate Terms will constitute your binding acceptance of the revised and amended Affiliate Terms. **1\. Eligibility** To participate in the Program, you must submit an application through the affiliate site, available at [https://www.swanBitcoin.com/enlist](https://www.swanbitcoin.com/enlist) (the “**Affiliate Site**”). The Company reserves the right, in its sole discretion, to accept or reject any application for membership in the Program for any reason or no reason. To be eligible to participate in the Program, you must (a) be at least 18 years of age or of the legal age to form a binding contract under applicable law or regulation; (b) be an individual, legal person or other organization with full legal capacity and authority to enter into these Affiliate Terms; (c) have previously created an Account; and (d) have not previously been prohibited from using the Program. The Company reserves the right to request documentation in order to approve your Account. These requests may be made during the Affiliate Program application process or at any time while you have an active Account in the Affiliate Program. If requests for documentation are not responded to in a timely manner, then the Company reserves the right to terminate, deactivate, or not approve your Account. **2\. Program Description** The Affiliate Program allows you to elect to participate in receiving revenue from users who purchase Bitcoin through the Site (“**Users**”) that you refer to the Site and who open an Account using a referral link (“**Referral Link**”) you provide, as set forth below. You can participate in the Affiliate Program either by referring Users to the Site (each person so referring Users, an “**Affiliate**”) or as a User. Participation in the Affiliate Program is entirely voluntary and is not required to use the Site. **3\. Referrals** “**Qualified Referral**” means Users referred by you to the Site who: (a) click on your unique Referral Link; and (b) within thirty (30) days of clicking on your unique Referral Link, successfully create an account on the Site (the “**Account**”). Affiliates who share the same personal information, including but not limited to, first and last name, email address, or government-issued identification, as a referred User may be deemed to have made a “**Self-Referral**.” The Company, in its sole discretion, will determine: 1/ the classification of any referral as a Self-Referral; and 2/ whether Commission will be paid for any Self-Referral. **4\. Commissions; Qualified Referral Compensation** Unless otherwise agreed to in writing by the Company, an Affiliate will receive 25% of the Company’s gross fees earned from a Qualified Referral for a period of up to one (1) year (the “**Commission**”). The Company may change the amount of the Commission at any time by revising these Affiliate Terms as provided herein, provided that if an Affiliate has Commissions pending at the time such changes are made, the pending Commissions will be paid in the amount under the Affiliate Terms that were valid at the time the referred User became a Qualified Referral. Commissions become payable sixty (60) days after the referred User becomes a Qualified Referral, but may be sooner in our sole discretion or later due to reasons beyond our reasonable control. Commissions will be paid in Bitcoin or USD, in our sole discretion, and will be deposited in an Affiliate’s Account with a qualified custodian (the “**Custodian**”). Creating an account with the Custodian shall be subject to the Terms and the Custodian’s Terms of Service (“**Custodian Terms**”). If, at the time you become an Affiliate, you have not yet established or created an Account with the Custodian, creating such an Account shall be a prerequisite (_i.e._, a requirement) for you to receive any Commission. If the Custodian refuses to open an Account for you for any reason or no reason at all, then you shall forego your rights to all Commissions you have earned and you shall have no recourse against the Company or the Custodian to obtain such Commissions. You are responsible for paying all applicable fees associated with accepting Commissions through the Custodian, pursuant to the Custodian Terms or otherwise. From to time, the Company in its sole discretion may offer Qualified Referrals certain incentives, including without limitation a bonus in USD or Bitcoin for opening an Account. In such circumstances, a Qualified Referral who does not affirmatively claim the incentive within twelve (12) months from the date of opening such Account will forfeit such incentive in its entirety. Qualified referrals must also reside in the United States to qualify for the USD or Bitcoin bonus for opening an account. **5\. Relationship of the Parties** Nothing in these Affiliate Terms shall be construed to create any partnership, joint venture, franchise, sales representation, or employment relationship between you and the Company. You are not permitted to speak for the Company or any of its Affiliates or bind the Company in any way, and you have no authority to do so. You must not make any claims, representations, or warranties in connection with the Company, including with respect to the Site or the Affiliate Program. The parties acknowledge that Affiliate is an independent contractor for the Company and shall not be treated as an employee for federal or state tax purposes or for any other purpose, and you shall not be entitled to receive any employee benefits from the Company or participate in any employee benefit plans. Where, by implication of mandatory law or otherwise, you may be deemed an agent or representative of the Company, you agree to indemnify, hold harmless and (at the Company’s option) defend the Company, its affiliates its affiliates and their officers, directors, employees, agents, successors, and assigns (together, “**Indemnitees**”) from and against any losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs, or expenses of whatever kind (“**Claims**”) by any person, entity, or government body arising from such implied agency or representative relationship. You are responsible for any and all tax liabilities, including, without limitation, income tax liabilities, that arise from or in any way relate to any payments made to you, including without limitation income taxes; sales; personal property; use; VAT; excise; withholding; Social Security and Medicare taxes; self-employment taxes and disability insurance. The Company shall have the right to withhold from any amounts payable to you such federal, state, local or foreign taxes as may be required to be withheld under any applicable law or regulation. As a resident of the United States or one of its territories, if you earn more than six hundred dollars ($600) of Commissions in a calendar year, then you will be required to complete and return to the Company a Form W-9, as instructed by the Company, and the Company will deliver to you a Form 1099-MISC. **6\. Responsibilities** * You acknowledge that the intention of the Affiliate Program is to encourage referrals of new Users to the Site. You agree to act reasonably and in good faith in accordance with this intention. * You must not refer any person who is a contractor or service provider of the Company. * In connection with your activities as an Affiliate, including when referring persons to the Site, you must comply with all applicable federal, state and local laws, regulations, administrative guidelines, orders and ordinances, including, without limitation, all privacy and data security laws and the terms and conditions of all applicable third-party web sites, platforms or applications, including by making disclosures in accordance with the FTC Endorsement and Testimonial Guidelines. * While we encourage referrals of friends and family members, if, e.g., you act in an intentionally fraudulent manner, we may, in our sole discretion, deem the following types of Accounts to NOT be Qualified Referrals: (i) an Account owned or controlled by you or a member of your immediate family or household, or (ii) an Account owned or controlled by a person who is already a User. * You are responsible for any costs or expenses associated with your activities as an Affiliate, and you incur any costs and expenses entirely at your own risk. * To the extent you make any statements in connection with referring people to the Site as an Affiliate, such statements must (i) be professional, accurate, and truthful; (ii) not be misleading or deceptive (for example, do not embellish the nature of your relationship with the Company); and (iii) not be offensive, illegal or obscene. We reserve the right to review and request changes to any materials that make reference to the Program in our sole discretion. In the event we request any changes, you will cooperate and fulfill any such requests in a prompt manner. You are prohibited from paying to advertise your Referral Link. * You agree not to engage in spam, any electronic messaging (including without limitation texts, video and audio messages, SMS, and direct messages) that is prohibited by applicable laws or regulations, illegal solicitation, or fraudulent or deceptive solicitation. You will not share or publish your Referral Link in a manner that would be in violation of applicable anti-spam laws or where there is no reasonable basis for believing that recipients of the Referral Link would be interested in using our services. You are prohibited from mass texting or messaging people you do not know or using automated systems or bots through any channel to distribute your Referral Link. **7\. Marketing** You may not engage in any of the following marketing activities and represent and warrant that your marketing practices do not and will not violate any of these restrictions: * Affiliates shall not make any false, deceptive or misleading statements with respect to the Affiliate Program, the Company or its employees, Users, the Site, or any Affiliate. * Affiliates shall not disclose any confidential information obtained regarding the Company, the Affiliate Program, Users, the Site or any Affiliate. * Affiliates shall not make any derogatory or defamatory statements regarding the Company, the Affiliate Program, Users, the Site, or any Affiliate, or any offensive statements or comments that have the purpose or effect of creating an intimidating or hostile environment in connection with the Affiliate Program. * Affiliates shall not make any statements that infringe upon the intellectual property, privacy, or publicity rights of others. * Affiliates shall not use ethnic slurs, personal insults, obscenity, or other offensive language in connection with the Affiliate Program, any Users, the Site or any Affiliate. * Affiliates shall not create websites or advertisements that copy, imitate, or resemble the Site or the look and feel of the Site. Affiliates shall not copy the Site or any portions thereof, including, without limitation, any of the Company’s trademarks or other intellectual property, and display them on their own site or subdomain or use them in any way without the Company’s prior express written consent. * Affiliates shall not engage in marketing the Site, the Affiliate Program, or any brand associated with the Company on any search engine, including but not limited to, Google. * Affiliates shall not offer cash back, coupons, rewards or other incentives, including running any sweepstakes or contests, as part of their marketing efforts for the Affiliate Program. * Affiliates shall not use traffic that is generated by, including, but not limited to, pay to click, pay to read, banner exchanges, click exchanges, cost-per-view advertising, pop-up/under, spam, purchased traffic, or similar methods. * Affiliates shall not use cookie stuffing techniques that set the tracking cookie without the potential customer actually clicking on the Affiliate’s Referral Link. * Affiliates shall not bid on or use any Company trademarks or misspelled keywords for the purpose of pay-per-click on internet search engines. * Affiliates shall not use redirected pages and links to send a potential customer to the Site. * Affiliates shall not engage in domain forwarding (_i.e._, purchasing a domain and setting it to forward directly to the Site using an affiliate link). * Affiliates shall not engage in any marketing activity that may harm the reputation or credibility of the Company, including using low-quality marketing materials, or advertising on any website that promotes violence, discrimination based on race, sex, religion, nationality, disability, sexual orientation or age, or any illegal activities, or violates the intellectual property or other rights of a third party. * Affiliates shall not engage in any marketing, promotional, or other activities that violate applicable laws or regulations, including without limitation the privacy laws or regulations in any state or territory where Affiliates collect any information from consumers. * Affiliates shall not use malware or spyware to market or promote the Company or the Site. When you post about the Company and/or the Site, you must disclose your connection with the Company as an Affiliate, including the fee that will be paid to you, in a manner that potential Users can easily find and understand and allows them to obtain sufficient information to make a judgment about the value of your endorsement. In addition, you must: * Ensure the disclosure is well-placed so it can be easily noticed and prominent, so it can be easily read. * Not include a disclosure in a bio, below the fold, in a hyperlink, or among a series of hashtags, other disclosures, or general copy. * Superimpose a material connection disclosure on images, including on Snapchat and Instagram Stories. The disclosure should be easy to notice and read in the time that followers have to look at the image and be well-contrasted against the image. * In video posts, place the disclosure both within the video itself, and in the description of the video, and display the disclosure long enough for a consumer to be able to read and understand it. * Only promote on Facebook, Twitter, and other social media platforms in accordance with each social media platforms’ applicable terms of use and the following general guidelines: * You are permitted to promote the Company, our services and the Program to your own contacts, and you may use your Referral Link on your own Facebook, Twitter, and other social media pages. * You are prohibited from posting your Referral Link on our Facebook, Twitter, Pinterest, and other social media pages or threads in an attempt to turn your Referral Link into Referral Commissions. * You are prohibited from creating a social media account that includes our trademarks in the page name, username and/or handle. * In Instagram posts, disclose a material connection before the “More” button. * For a live stream, repeat the disclosure as needed to ensure that potential buyers see it or keep it posted throughout the live stream. **viii.** If you intend to promote the Program via e-mail campaigns, you must adhere to the following: * E-mails must first be submitted to us for approval prior to being sent and we must be sent a copy of the e-mail. * E-mails must be sent by, or on behalf of, you and must not imply that the e-mail is being sent by, or on behalf of, us. * Abide by applicable laws and regulations, including without limitation anti-spam laws and regulations. * If the posts are part of an online chat or tweets, or a similar thread, make the disclosure clearly in the first entry into the conversation thread, and then add to subsequent entries at 3-10 entry intervals depending on the media and the length of the thread. * Disclose the material connection even when just tagging the product in a photo. * Follow any other requirements of the brands in a separate agreement or policy applicable to you. **8\. License** You grant to us a non-exclusive, non-transferable, non-sublicensable, revocable, worldwide license, during the term of your time as an Affiliate, to use your name and likeness on our website as a social media partner using our Site. You may revoke the forgoing license at any time by written request delivered to us at [support@swanBitcoin.com](mailto:support@swanbitcoin.com). Such revocation will take effect reasonably promptly after we receive such written request. **9\. Non-Exclusive; No Obligation** The Affiliate Program is not exclusive. Without limiting any separate agreement that you and the Company may choose to enter into regarding exclusivity, nothing in these Affiliate Terms will preclude either party from doing business separately with any other entity or person, including the performance of marketing, sales, or promotional services for such entities or persons. Your participation in the Affiliate Program does not grant you any additional right to use or continue to use the Site. **10\. Assumption of Risk** You are solely responsible for ensuring that your participation in the Affiliate Program complies with applicable laws and regulations, and does not violate the rights of any third party, including, without limitation, intellectual property rights. You assume all liability for any Claims filed against you or any Indemnitee pursuant to the Indemnification provisions in Section 14 below, including, but not limited to, all damages related to participation in the Affiliate Program. **11\. Proprietary Rights** You will not use, distribute or modify any of the Company’s intellectual property, including but not limited to, the Company’s trademarks, text, images, videos, or documents except as permitted in the Terms. The Company’s rights to the content or other materials you create or use in connection with the Affiliate Program are as set forth in the Terms. **12\. Disclaimer** THE AFFILIATE PROGRAM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE COMPANY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, INCLUDING IMPLIED WARRANTIES, IN CONNECTION WITH THE PROGRAM OR THESE AFFILIATE TERMS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT, AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE FOREGOING, THE COMPANY MAKES NO GUARANTEES THAT YOUR PARTICIPATION IN THE AFFILIATE PROGRAM WILL RESULT IN COMMISSIONS, CONTINUED OR FUTURE BUSINESS WITH THE COMPANY, OR OTHER BUSINESS OPPORTUNITIES FOR YOU. **13\. Limitation of Liability** IN ADDITION TO THE LIMITATION OF LIABILITY SET OUT IN THE [TERMS](https://www.swanbitcoin.com/terms), THE COMPANY ALSO ASSUMES NO LIABILITY OR RESPONSIBILITY FOR AND SHALL HAVE NO LIABILITY OR RESPONSIBILITY FOR ANY LOSSES (AS DEFINED BELOW) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO: * THESE AFFILIATE TERMS; * THE AFFILIATE PROGRAM OR YOUR PARTICIPATION IN IT; * ANY COMMUNICATIONS YOU HAVE WITH A USER OR OTHER PERSON REGARDING THE AFFILIATE PROGRAM; * ANY BREACH OF THESE AFFILIATE TERMS; * ANY FAILURE BY YOU TO COMPLY WITH APPLICABLE LAWS OR REGULATIONS (INCLUDING WITHOUT LIMITATION LAWS GOVERNING PRIVACY OR ELECTRONIC MESSAGING); * ANY ACTIONS OF THE CUSTODIAN, INCLUDING ITS REFUSAL TO OPEN AN ACCOUNT FOR YOU IN ORDER FOR YOU TO OBTAIN COMMISSIONS; AND * ANY NEGLIGENT OR INTENTIONAL ACTS OR OMISSIONS BY YOU. YOU HEREBY AGREE TO RELEASE THE COMPANY AND ITS SUCCESSORS, ASSIGNS, DIRECTORS, OFFICERS, AFFILIATES, EMPLOYEES, AND CONTRACTORS (THE “**COMPANY RELEASEES**”) FROM LIABILITY FOR ANY AND ALL LOSSES, DAMAGES, COSTS, OR FEES (THE “**LOSSES**”), AND YOU SHALL INDEMNIFY AND SAVE AND HOLD THE COMPANY RELEASEES HARMLESS FROM AND AGAINST ALL LOSSES ARISING OR RELATED TO THE FOREGOING. THE FOREGOING LIMITATIONS OF LIABILITY SHALL APPLY WHETHER THE ALLEGED LIABILITY OR LOSSES ARE BASED ON CONTRACT, NEGLIGENCE, TORT, UNJUST ENRICHMENT, STRICT LIABILITY, VIOLATION OF LAW OR REGULATION, OR ANY OTHER BASIS, EVEN IF YOU HAVE BEEN ADVISED OF OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH LOSSES AND DAMAGES, AND WITHOUT REGARD TO THE SUCCESS OR EFFECTIVENESS OF ANY OTHER REMEDIES. IF THIS CLAUSE IS UNENFORCEABLE IN WHOLE OR IN PART IN ANY JURISDICTION DUE TO APPLICABLE LAW OR REGULATION, THEN IN NO EVENT SHALL THE TOTAL LIABILITY TO YOU OF THE COMPANY RELEASEES FOR ALL LOSSES (WHETHER IN CONTRACT, TORT (INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE), OR OTHERWISE) EXCEED THE AMOUNT PAID BY YOU, IF ANY, DIRECTLY TO COMPANY FOR ANY CORRESPONDING PRODUCTS, GOODS, AND/OR SERVICES. **14\. Indemnification** In addition to the Indemnification requirements set forth in the [Terms](https://www.swanbitcoin.com/terms), you agree to indemnify, defend, and hold harmless each and all Indemnitees from and against all Claims resulting from any violation of these Affiliate Terms by you or arising from or related to your participation in the Affiliate Program. **15\. Term; Termination** Your participation in the Affiliate Program, and the application of these Affiliate Terms commence when a User enters your Referral Link for the Affiliate Program in setting up an Account, or when you generate a Referral Link, or send a Referral Link to any person or take other steps to engage a person to become a User and participate in the Affiliate Program. These Affiliate Terms will apply until your participation in the Affiliate Program ends. If your participation in the Affiliate Program ends, all payment of Commissions that have not already accrued will end on the same date. These Affiliate Terms will continue to apply after your participation in the Affiliate Program ends. You agree that the Company, in its sole discretion, may suspend or terminate your participation in the Program if the Company believes that you have violated or acted inconsistently with the letter or spirit of these Affiliate Terms. In addition, any suspected fraudulent, abusive or illegal activity may be grounds for termination of your participation in the Program and forfeiture of any Commissions obtained through or in conjunction with such activity. You agree that you will participate in the Program only in a manner that complies with all applicable laws and regulations, and that you are solely responsible for any improper or unlawful activity in connection with your participation in the Program. Either you or the Company may terminate your participation in the Program for any or for no reason with prior written notice. Your participation will also automatically terminate with or without notice if the Company terminates the Program in its sole discretion. **16\. Unlawful Activity; Termination of Access** The Company reserves the right to investigate complaints or reported violations of these Affiliate Terms and to take any action it deems appropriate, including but not limited to, reporting any suspected unlawful activity to law enforcement officials, regulators, or other third parties, and disclosing any information necessary or appropriate to such persons or entities. The Company may discontinue your participation in the Affiliate Program at any time for any reason or no reason. Without limiting the foregoing, we have the right to cooperate fully with any law enforcement authorities or court order requesting or directing us to disclose the identity or other information of anyone participating in the Affiliate Program. YOU WAIVE AND HOLD HARMLESS INDEMNITEES FROM ANY CLAIMS RESULTING FROM ANY ACTION TAKEN BY ANY OF THE FOREGOING PARTIES DURING, OR AS A RESULT OF, ITS INVESTIGATIONS AND FROM ANY ACTIONS TAKEN AS A CONSEQUENCE OF INVESTIGATIONS BY EITHER SUCH PARTIES OR LAW ENFORCEMENT AUTHORITIES. **17\. Entire Agreement; Severability; No Waiver; Modification** These Affiliate Terms, along with the Terms and any Custodian Terms, constitute the entire agreement with respect to participation in the Affiliate Program. If any provision of these Affiliate Terms is deemed unlawful, void, or unenforceable by a court of law exercising proper jurisdiction, that provision shall be deemed severed from the remaining provisions and shall not affect their validity and enforceability. No waiver of any provision hereof shall be valid unless in writing signed by the parties. Any failure to enforce any right or remedy hereunder shall not operate as a waiver of the right to enforce such right or remedy in the future or of any other right or remedy. **18\. Dispute Resolution** Please read the following ARBITRATION AGREEMENT carefully because it requires you to arbitrate ALL disputes with US and limits the manner in which you can seek relief. You and the Company agree to resolve any controversy, claim or dispute arising out of or relating to the subject matter of these Affiliate Terms or to the Affiliate Program through confidential, final and binding arbitration. The Federal Arbitration Act governs the interpretation and enforcement of this dispute resolution provision. Arbitration shall be initiated through JAMS. Any arbitration shall be conducted (a) confidentially, (b) in English, (c) by the Judicial Arbitration and Mediation Services, Inc. (“**JAMS**”), (d) before a single arbitrator with substantial experience in resolving commercial contract disputes, (e) in accordance with the JAMS Comprehensive Arbitration Rules & Procedures; and (f) in Los Angeles County, California. Payment of all filing, administration and arbitrator fees will be governed by the JAMS Rules. Any judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HEREBY WAIVE THEIR CONSTITUTIONAL AND STATUTORY RIGHTS TO GO TO COURT AND HAVE A TRIAL IN FRONT OF A JUDGE OR A JURY, INSTEAD ELECTING THAT ALL CLAIMS AND DISPUTES SHALL BE RESOLVED BY ARBITRATION. Arbitration procedures are typically more limited, more efficient and less costly than rules applicable in court and are subject to very limited review by a court. In the event any litigation should arise between you and the Company in any state or federal court in a suit to vacate or enforce an arbitration award or otherwise, you and the Company, to the fullest extent permitted by law, waive all rights to a jury trial instead electing that the dispute be resolved by a judge. YOU ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED THAT YOU MAY CONSULT WITH AN ATTORNEY IN DECIDING TO ACCEPT THE TERMS TO ARBITRATE. These Affiliate Terms are governed by and shall be construed in accordance with the laws of the state of California, without regard to its conflict of laws provisions. You may only resolve disputes with us on an individual basis and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action. Class arbitrations, class actions, private attorney general actions, and consolidation with other arbitrations are not allowed. TO THE EXTENT PERMISSIBLE BY LAW, ALL CLAIMS AND DISPUTES MUST BE BROUGHT IN A PARTY’S INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE ACTION, OR REPRESENTATIVE PROCEEDING. A CLAIMANT OR THE ARBITRATOR MAY NOT CONSOLIDATE MORE THAN ONE PERSON’S CLAIMS OR ENGAGE IN ANY CLASS ARBITRATION OR JOINT LITIGATION. CLAIMS OF MORE THAN ONE CUSTOMER OR USER CANNOT BE ARBITRATED OR LITIGATED JOINTLY, ON A CLASS BASIS OR CONSOLIDATED WITH THOSE OF ANY OTHER CUSTOMER OR USER. YOU ACKNOWLEDGE AND AGREE THAT YOU AND WE ARE WAIVING ANY RIGHT TO PARTICIPATE AS A PLAINTIFF OR CLASS REPRESENTATIVE IN ANY PURPORTED CLASS ACTION OR REPRESENTATIVE PROCEEDING. # Win a Bitcoin Promotion Official Rules - Swan Bitcoin URL: https://www.swanbitcoin.com/win-a-bitcoin-promotion-official-rules/ Win a Bitcoin Promotion Official Rules: the full legal text from Swan Bitcoin. --- ## Win a Bitcoin Promotion Official Rules **WIN A BITCOIN** **OFFICIAL RULES** * **NO PURCHASE NECESSARY TO ENTER OR WIN**. * HOW TO ENTER: Beginning on June 10th, 2024 at 8am EST through the day after the end of _The Tucker Carlson Live Tour_, but not later than Nov 1, 2024, submit your email address at [swanbitcoin.com/win-a-bitcoin](swanbitcoin.com/win-a-bitcoinswan.com/win-a-bitcoin), download the Swan App from the iOS App Store or the Android Play Store, create a Swan Account, and add a bank account. If you are an existing Swan client with the Swan app installed and a bank account added, you may enter by submitting your email address using the form at [swanbitcoin.com/win-a-bitcoin](swanbitcoin.com/win-a-bitcoinswan.com/win-a-bitcoin). You may enter only once. Use of any robotic, automatic, programmed, or similar entry method or entering more than the number of times permitted will void all entries and result in disqualification. You may not enter more times than indicated by using multiple email addresses, identities, or devices in an attempt to circumvent the rules. * ELIGIBILITY: Open to residents of the 50 United States and D.C., 18 years of age and older as of June 10th, 2024, except for employees of Swan Bitcoin ("**Sponsor**" and "**Administrator**"), and TCN, their affiliates, subsidiaries, and agencies (collectively "**Promotion Parties**"), and members of their immediate family or persons living in the same household. Void where prohibited. * DRAWING: A random drawing will be conducted on or about several days after the end of _The Tucker Carlson Live Tour_, as noted in Section 2, by Administrator to select the winner\[s\] from among all eligible entries received. Odds of winning depend on the number of entries received. Potential winner\[s\] will be notified by the email used to create a Swan Bitcoin account, and must sign and return any required Affidavit of Eligibility and Release within 7 days of the date notice is sent or such other date set by Sponsor. Failure to respond within the applicable time period will result in forfeiture of prize and Sponsor shall have the option to award the prize to an alternate winner. The return of any prize notification or prize as undeliverable may result in disqualification and an alternate winner may be selected. All income taxes resulting from acceptance of prize are the responsibility of winner. By entering this sweepstakes, entrant accepts and agrees to these Official Rules and the decisions of the Administrator, which shall be final in all matters. Acceptance of a prize also constitutes permission to the Promotion Parties to use winner's name and likeness, and biographical information for marketing purposes without further compensation or right of approval, unless prohibited by law. All federal and state laws apply. * LIMITATION OF LIABILITY: By entering this sweepstakes, entrants waive all right to, and hold the Promotion Parties harmless from, any claim, liability, loss, damage (including punitive, incidental, and consequential damages), or expense (including attorneys' fees) arising out of or in connection with participation in this sweepstakes or the acceptance, use, or misuse of any prize. Promotion Parties will not be responsible for: late, incomplete, or incorrect entries; an entrant's failure to receive prize notices due to entrant's spam, junk e-mail, or other security settings or for entrants' provision of incorrect or otherwise non-functioning contact information; technical, hardware, or software malfunctions, lost or unavailable network connections, or failed, incorrect, inaccurate, incomplete, garbled, or delayed electronic communications whether caused by the sender or by any of the equipment or programming associated with or used in this sweepstakes; by any human error which may occur in the processing of the entries in this sweepstakes; or any typographical, technological, or other error in the publishing of the offer, administration of the sweepstakes, or announcement of the prize\[s\]. If, in the Administrator's opinion, there is such an error, or there is any suspected evidence of tampering with any portion of the sweepstakes, or if technical difficulties (including viruses and bugs) compromise the integrity of the sweepstakes, Sponsor reserves the right to request that the Administrator, in its sole discretion, cancel or modify this sweepstakes in a manner deemed appropriate by the Administrator. In the event of termination, winners will be selected from among all eligible entries received as of date of termination. In the event a dispute arises as to the identity of a potentially winning entrant, entries will be declared made by the name on the online entry form. * PRIZE: One Bitcoin. Total prize value: the USD amount of the prize changes with market activity. The current dollar value of the prize is displayed on the sweepstakes page at swan.com/tucker. Prize consists of only those items specifically listed as part of the prize. Limit one prize per family or household. No substitution or transfer of prize permitted by winner. Sponsor reserves the right to substitute a prize of equal or greater value. All prizes will be awarded. If a potential winner is disqualified for any reason, Sponsor will award the applicable prize to an alternate winner by random drawing from among all remaining eligible entries. Only three (3) alternate drawings will be held, after which the prize will remain un-awarded. * CHOICE OF LAW AND FORUM: Entrant agrees that all matters arising out of or relating to this sweepstakes and these Official Rules are governed by, and construed in accordance with, the laws of California, without giving effect to any of its conflict of laws provisions thereof. Entrant further agrees that any legal suit, action, or proceeding arising out of or relating to this sweepstakes and these Official Rules shall be brought exclusively in the applicable federal or state courts located in the county of Los Angeles, California. * PRIVACY: Information submitted with an entry is subject to the Privacy Policy stated on the Swan Bitcoin website. To read the Privacy Policy, [_click here_](https://www.swanbitcoin.com/privacy-policy/). * WINNERS LIST: For the name of the prize winner, available after November 1, 2024, send a self-addressed, stamped #10 envelope to: Electric Solidus LLC (DBA Swan Bitcoin) 26565 W. Agoura Rd Suite 200 Calabasas, CA 91302\. * SPONSOR: Swan Bitcoin 26565 W. Agoura Rd Suite 200 Calabasas, CA 91302. # Brady Swenson — VP Product Marketing - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/brady-swenson/ I’m still amazed at how I didn’t know anything about money until Bitcoin. --- VP Product Marketing ## Brady Swenson > I’m still amazed at how I didn’t know anything about money until Bitcoin. Contact Swan Private ### My Life Leading Up To Co-Founding Swan I spent much of my time growing up playing and working on computers and the internet. I worked on the web all through college and then took a break to join the Peace Corps. I worked as a middle school teacher on a small island off the coast of Guyana, South America. It was a transformative experience for me personally. Upon my return, I dove back into tech and have spent over 20 years working in every facet of the industry, from design and development to marketing and content. I helped co-found Swan in 2019 and plan to be here for the rest of my career. ### My Bitcoin Journey I found Bitcoin in early 2017 and immediately consumed every Andreas Antonopoulos video and book I could find. The Block Size War was coming to a head throughout that time. Studying both sides of that debate helped me realize that Bitcoin was the right approach and the only real project in the space. In 2018 I launched Citizen Bitcoin, a podcast on which I interviewed over 100 of the brightest minds in Bitcoin. In late 2019 I happened upon the greatest opportunity of my career in Swan. Bitcoin has become a core mission of my life. ### Interests * Hiking * Swimming * Learning * Playing with the kiddos Get in Touch [Twitter](https://twitter.com/citizenbitcoin)[LinkedIn](https://www.linkedin.com/in/brady-swenson-9336051a0/) Selected Media Appearances [Bitcoin Smashes Through $10,000 As Bull Run Suddenly Accelerates—Here’s Why](https://www.forbes.com/sites/billybambrough/2020/02/08/bitcoin-smashes-through-10000-as-bull-run-suddenly-acceleratesheres-why/?sh=229fbcea36de)Forbes [Wealth Manager Makes Massive $8 Trillion Bitcoin Bet—But Adds A Serious Warning](https://www.forbes.com/sites/billybambrough/2020/02/04/wealth-manager-makes-massive-8-trillion-bitcoin-betbut-adds-a-serious-warning/?sh=3568274b31aa)Forbes [Brady, Citizen Bitcoin: Journeying Towards a Bitcoin Future](https://podcasts.apple.com/ca/podcast/brady-citizen-bitcoin-journeying-towards-a-bitcoin-future/id1476958861?i=1000455482065)Bitcoin Rapid-Fire [Bitcoin may emerge unscathed as traditional financial markets run for cover](https://eng.ambcrypto.com/bitcoin-may-come-out-unscathed-as-traditional-financial-markets-run-for-cover/)AMB Crypto [The Bitcoin Podcast #311 — Swan — Brady Swenson](https://the-bitcoin-podcast-network.simplecast.com/episodes/the-bitcoin-podcast-311-swan-brady-swenson)The Bitcoin Podcast Network [Report: Bitcoin’s Dominance in Crypto Market is Dramatically Understated](https://blockonomi.com/bitcoins-dominance-dramatically-understated/)Blockonomi Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer # Jeremy Showalter — Chief Business Officer - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/jeremy-showalter/ Bitcoin is freedom money. It challenges us to learn about the world. I want Swan products to be where humans meet Bitcoin. --- Chief Business Officer ## Jeremy Showalter > Bitcoin is freedom money. It challenges us to learn about the world. I want Swan products to be where humans meet Bitcoin. Contact Swan Private ### My Back Story I have always enjoyed building. From helping the family renovate a 100-year-old barn into a home, to studying engineering, to tinkering with Bitcoin miner heaters, building has been part of my life. That love of building has moved into other functions and locations over time – establishing and growing teams in marketing and sales and across geographies and cultures. Before Swan, I was building Weave Savings, a social impact fintech to encourage regular savings and savings groups to build relational capital. I also served as CEO / Co-founder / Investor in Pique, that provided AI/ML personalized product and content recommendations. Pique was 2021 by MoMo, one of Vietnam’s largest fintechs and unicorns. Prior to startups, I had a 13 year career at Microsoft, across Corporate, Ireland and Vietnam. I served as Global Director of Small, Medium, & Corporate and Scale Growth at Microsoft Tech for Social Impact, Microsoft Philanthropies, where I was responsible for revenue and P&L, sales teams, sales engines, and product offers for the nonprofit industry. And previous roles at Microsoft included 5 years as COO and CMO of Microsoft Vietnam, and product leadership in Microsoft Ireland and product management and finance in Corporate. ### My Bitcoin Story Sent: Friday, January 31, 2014 7:00:54 AM To: Jeremy Showalter Subject: bitcoin Hey, You invested in bitcoin? Should I be? Dad \---------- This was my ‘first touch’ with Bitcoin. I probably suggested he buy QQQ at the time. My ‘second touch’ was in 2017 when I saw colleagues post on Facebook about buying things with Bitcoin. I FOMOed in 2018, roughly at the same part of the cycle my Dad asked me about it. I finally did the work to read and learn more about it starting in 2020, via a good friend, The Bitcoin Standard, Thank God for Bitcoin, and many many hours of podcasts. I later wrote back to my Dad in the summer of 2021\. “Follow your gut. And be ready for gut wrenching movements, meaning don’t try to time the market. Just buy and hold. Jan 2014 was a high of $800 it would then fall by half. It’s now $35000 after falling from $68000\. So yeah 44x in 7 years is great if you hadn’t sold!” And that is why our work at Swan is so important — to educate, to buy over time with dollar cost averaging, and to hold for the long term. ### Interests * Hiking * Home renovations * Pickleball * Family games * Tinkering in all sorts of projects Get in Touch [Twitter](https://twitter.com/jeremyshowalter)[LinkedIn](https://www.linkedin.com/in/jeremyshowalter/) Selected Media Appearances [Swan Product Principles and the Third Rail](https://www.swanbitcoin.com/swan-product-principles-and-the-third-rail/)Swan Bitcoin [Swan Bitcoin IRA is Live!](https://www.swanbitcoin.com/swan-announces-a-new-bitcoin-ira/)Swan Bitcoin [The Right Questions to Ask to Avoid Bitcoin IRA Icebergs](https://www.swanbitcoin.com/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/)Swan Bitcoin Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # Cory Klippsten — Founder and Chief Executive Officer URL: https://www.swanbitcoin.com/private/team/cory-klippsten/ Recruiting Bitcoin’s intransigent minority. --- Founder and Chief Executive Officer ## Cory Klippsten > Recruiting Bitcoin’s intransigent minority. Contact Swan Private ### About Cory Cory Klippsten is the CEO of Bitcoin financial services firm Swan.com. He is a partner in Bitcoiner Ventures, El Zonte Capital, and The Bitcoin Opportunity Fund, and as an angel has funded more than 60 early stage tech companies. Before startups, Klippsten worked for Google, McKinsey, Microsoft, and Morgan Stanley, and earned an MBA from the University of Chicago. He grew up in Seattle, split 15 years between NYC and Chicago, and now lives in LA with his wife and daughters. His hobbies include basketball, history and travel (Istanbul and Barcelona are favorites). ### Cory’s Bitcoin Journey Class of 2017\. Learned and watched and talked and listened. Started Swan Bitcoin in 2019 and Bitcoiner Jobs in 2021. ### Interests * Family * Building companies * Basketball * Geopolitics Get in Touch [Twitter](https://twitter.com/coryklippsten)[LinkedIn](https://www.linkedin.com/in/coryklippsten/)[Substack](https://dailybitcoiner.substack.com/) Selected Media Appearances [Ten Million Bitcoiners: The Intransigent Minority](https://www.swanbitcoin.com/ten-million-bitcoiners-the-intransigent-minority/)Swan Bitcoin [The Race to Avoid the War](https://www.swanbitcoin.com/the-race-to-avoid-the-war/)Swan Bitcoin [Swan Bitcoin CEO on Sam Bankman-Fried’s Downfall](https://www.coindesk.com/videos/recent-videos/swan-bitcoin-ceo-on-sam-bankman-frieds-downfall/)Coindesk [The Crypto Market Crashed. They’re Still Buying Bitcoin. The Crypto Market Crashed. They’re Still Buying Bitcoin.](https://www.nytimes.com/2022/08/02/technology/crypto-bitcoin-maximalists.html)The New York Times [Crypto Took Wall Street on a Wild Ride. Now It’s Ending in Tears](https://www.barrons.com/articles/bitcoin-crypto-crisis-51656620781?tesla=y)Barrons [As Celsius accelerates the crypto sell-off, who pays the price?](https://techcrunch.com/2022/06/13/as-celsius-accelerates-the-crypto-sell-off-who-pays-the-price/)TechCrunch [The Fight for Bitcoin with Cory Klippsten](https://www.whatbitcoindid.com/podcast/the-fight-for-bitcoin)What Bitcoin Did [Crypto crisis: FTX crash sparks calls for regulation](https://www.newsnationnow.com/video/crypto-crisis-ftx-crash-sparks-calls-for-regulation-on-balance/8158019/)News Nation Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # Isaiah Douglass — Managing Director - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/isaiah-douglass/ Bitcoin adoption is the story of this decade. Humans finally have a tool that provides clarity and respects their time and energy. The magnitude of change that… --- Managing Director ## Isaiah Douglass > Bitcoin adoption is the story of this decade. Humans finally have a tool that provides clarity and respects their time and energy. The magnitude of change that bitcoin brings is widely-misunderstood — my mission is to help close that gap. Meet Isaiah ### Backstory Growing up on a hog farm in rural Indiana helped me learn the value of hard work. Seeing the impacts of finances on family life at an early age made me interested in learning about finance, money, and investing. I promised myself I’d learn to help ease the burdens I saw my parents endure. I took the college, MBA, and finance route to work at a big brand name brokerage firm. It became very clear that it wasn’t for me long-term. I became a CERTIFIED FINANCIAL PLANNER™ and launched a financial planning business. While I was able to talk about bitcoin and educate clients — it was clear it was time to make a move to work in bitcoin full-time. The knowledge gained helped me understand personal finance and the opportunity bitcoin plays to allow life to become easier when saving in a superior asset. ### Bitcoin story I was working at a big brand name brokerage firm in 2017 during the FOMO period and had lots of wealth management clients calling our team asking about this thing called bitcoin. The party line was to tell them it was “fake” “a bubble” “tulips” and not to waste their hard-earned money. Fast forward as the price corrected hard — we could trout out how we “protected” them and that’s why we were the experts. When I saw bitcoin did not die, I became intrigued and tried to learn a bit. In 2019, I read Saifedean Ammous' The Bitcoin Standard and it opened my eyes to for the first time understanding a simple, yet profound question. What is money? Why it’s embedded in the fabric of society. Why as it currently stands is broken. How bitcoin solves and improve things. Entering 2020 and the madness that ensued — I’ve not stopped learning about bitcoin since. ### Interests I’m married and a father to two young boys. I’ve been a long-standing University of Florida fan and since my honeymoon in 2017 AS Roma. I enjoy cooking and baking high-quality foods and pair that with working out to ensure I’m around a long time to see bitcoin adoption. Get in Touch [Email](mailto:isaiah@swanbitcoin.com)[Twitter](https://twitter.com/IDFinancial)[LinkedIn](https://www.linkedin.com/in/isaiah-douglass-29255462/) Selected Media Appearances [Contributions on CoinDesk](https://www.coindesk.com/author/isaiah-douglass/)CoinDesk [How Advisors Are Advising On, and Coping With, Cryptocurrencies](https://www.barrons.com/articles/how-advisors-are-advising-on-and-coping-with-bitcoin-51618008555)Barron’s [2021 Crypto Investing Tips From Financial Advisors](https://www.yahoo.com/now/2021-crypto-investing-tips-financial-202940240.html?guccounter=1)Yahoo [Morgen Rochard & Isaiah Douglass](https://www.youtube.com/watch?v=GSw9hqASWCM&ab%5Fchannel=SwanBitcoin)Swan Signal [Vincere Wealth Exec.: ‘The Story of the Decade Is Bitcoin Adoption’](https://ca.finance.yahoo.com/finance/video/vincere-wealth-exec-story-decade-194400965.html)Yahoo Finance Meet our team ### Best-in-class service [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # Zach Wischler — Managing Director - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/zach-wischler/ I can’t believe you like money too. We should hang out. (Frito Pendejo) --- Managing Director ## Zach Wischler > I can’t believe you like money too. We should hang out. (Frito Pendejo) Meet Zach ### Backstory I’m from New Orleans. I grew up building computers and getting interested in markets in an unusual way: the digital gold economy in World of Warcraft. It’s how I first started thinking seriously about supply, demand, and how markets assess value. That curiosity is what sent me into economics at LSU and then into investing as a career. I started as a financial advisor at Merrill Lynch and later continued that work at Personal Capital in Denver. Those jobs taught me how households actually make financial decisions, and it also made the limits of the industry hard to ignore. I could help someone organize a plan, but I couldn’t change the fact that most of the tools I was expected to use sat on top of a monetary system I no longer trusted. I left traditional finance because I wanted to spend my time on a financial future I believed in. ### Bitcoin story Before Swan, I spent more than five years at Casa advising thousands of clients on high-stakes Bitcoin security, which meant sitting with the unglamorous part of Bitcoin: keys, inheritance, recovery, and the difference between owning an asset and merely having exposure to it. Someone can understand bitcoin as an idea and still not know how to hold it, how to pass it on, or how to keep a family from being locked out of it. That is where a lot of the real journeys happen, and it is the expertise I bring to Swan Private. The rest of my time in bitcoin has been in public. I organized Denver BitDevs for 2 years so the technical side of bitcoin could be learned in person and not just online. I cofounded The Space and served as its first chairman so Denver would have a hub that outlasts a bull market. I hosted 48 episodes of the Value Stack Podcast to sit and talk with people living through the same shift I had made. And I wrote The Bitcoin Tao, 81 short verses in the shape of the Tao Te Ching on sovereignty, patience, and what it means to live with bitcoin as money. In our conversations, I’ll focus on aligning with your current understanding and reasons for adopting bitcoin in your life. We’ll talk through your security posture and privacy goals, and in doing so, establish a roadmap for your own self-sovereignty journey. If legacy is a priority, we’ll work together with your family on inheritance planning and educational strategies so your generational wealth can be passed down securely and successfully to your loved ones. ### Interests I work in Bitcoin, but my life is built on my family, faith, and commitment to learning. Cooking at home, being in nature, and running my own computer infrastructure are some of my hobbies. I try to live my life the same way I think about Bitcoin: with intentionality, curiosity, and independence. Get in Touch [Email](mailto:zach.wischler@swanbitcoin.com)[Twitter](https://x.com/btcbap)[LinkedIn](https://www.linkedin.com/in/zach-wischler/) Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # Alec Bakhouche — Account Executive - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/alec/ Remember that wherever your heart is, there you will find your treasure.” ― Paulo Coelho, The Alchemist --- Account Executive ## Alec Bakhouche > Remember that wherever your heart is, there you will find your treasure.” ― Paulo Coelho, The Alchemist Meet Alec ### My Story Born and raised in the Salt Lake Valley in Utah. I grew up with a variety of interests and always had a curious mind. My curiosity drove me to always be tinkering. Taking things apart, putting them back together, and seeking to understand the way things work. To this day, I prefer to do my own maintenance on vehicles and at home, even if it’s something I’ve never done before. I soon found the same desire with computers and technology, on a constant pursuit of learning and building. Fitness has become a large portion of my life in the past few years. I have developed an obsession for CrossFit and Olympic Weightlifting. You’ll find me in the gym almost any day of the week. I even started coaching CrossFit classes at a local gym a couple days a week because I can’t get enough and want to share my passion with others. Professionally, I have found a passion for problem-solving, mainly in client-facing roles. I love working directly with clients to understand their problems and how I can best serve them. I’ve worked with various tech start-ups and helped build and scale multiple successful teams. ### My Bitcoin Journey Like most, when I first encountered Bitcoin, I also encountered alt-coins. After a 4 year journey of sleepless nights and loss of funds, the bull run of 2021, I finally woke up. I picked up the Bitcoin Standard and immediately dove down the Bitcoin rabbit hole. Bitcoin books, podcasts, YouTube videos, and any other content quickly consume every second of my free time. I became obsessed. I started creating Bitcoin content and posting it on TikTok and Instagram. I later started a Bitcoin podcast with a close friend and now co-worker to both educate others and further my own understanding of Bitcoin. There is always more to learn. This rabbit hole is endless! ### Interests * Bitcoin (Obviously) * CrossFit & Olympic Weightlifting + Coaching * Cooking (Plant based eating) * Dogs (I have a German Shepherd) * Cars & mechanics * Videos Games (Mostly RPG style games) Get in Touch [Email](mailto:alec@swanbitcoin.com)[Twitter](https://x.com/Alec%5FBitcoin)[LinkedIn](https://www.linkedin.com/in/alec-bakhouche-495201133/) Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # Jason Bassett — Account Executive - Swan Bitcoin URL: https://www.swanbitcoin.com/private/team/jason-bassett/ For real freedom to exist, it must be held above any specific interest, rather than something that is easy to take away from groups that we may not like. — Lyn… --- Account Executive ## Jason Bassett > For real freedom to exist, it must be held above any specific interest, rather than something that is easy to take away from groups that we may not like. — Lyn Alden Meet Jason ### My Story Originally a California transplant, I’ve spent the better part of my life growing up in the gorgeous mountains of Utah, where I currently live with my wonderful fiancé. As a kid, I took an interest in a variety of odd subjects, such as the solar system, reptiles, and psychology. I’d spend hours reading on these topics and absorbing as much information as possible. In adulthood, my fascination with the incentives that drive human behavior started to take shape. This, in tandem with various sales-oriented roles across various industries, including food and beverage, SaaS, and Teledentistry, led me to pursue a degree in Marketing — a field that I viewed as a combination of psychology, sales, and human behavior/action. ### My Bitcoin Story My Bitcoin story starts like that of many before me — with a Coinbase account in 2017, a little money to (effectively) gamble with, and a great deal of curiosity about the emergence of crypto. After several years of playing around with and trading various cryptocurrencies (and a few hard lessons along the way), I started to look at Bitcoin specifically. My goal was to understand how and why it maintained such strong dominance over the (now thousands) of cryptocurrencies in the market. I’ve always been the type to ask a lot of questions and challenge the things we unquestioningly live with every day, such as our inflationary monetary system, which tends to do more harm than good to most of the global population. Once I fell down the Bitcoin rabbit hole, I began to study the broader economic environment in which we operate and the debt-based fiat monetary system that runs the show. It became increasingly apparent that Bitcoin was not here to merely be an investment but was created to solve a problem that exists on a global scale. What began as an investing strategy with the simple goal of making more dollars became an ongoing study that continues to shape my views on time preference, relationships, economics, politics, and societal behavior. One of the most enlightening aspects of Bitcoin is that you never stop learning and growing, and taking a career step into the space by joining the Swan team was a natural extension of that. ### Interests * Hiking * Camping * Fitness * Weightlifting Get in Touch [Email](mailto:jason@swanbitcoin.com)[Twitter](https://x.com/fitcoiner/)[LinkedIn](https://www.linkedin.com/in/jason-bassett-26373a11b/) Meet our team ### Best-in-class service [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/real-bitcoin/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## Swan Bitcoin IRA — The Ultimate Asset for Your Retirement Open your AccountTalk to the Team [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/pacific-bitcoin/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## Swan Bitcoin IRA — The Ultimate Asset for Your Retirement Open your AccountTalk to the Team [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/swan-media/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## Swan Bitcoin IRA — The Ultimate Asset for Your Retirement Open your AccountTalk to the Team [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/swan-app/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- ### Why Bitcoin is the Ultimate Asset for your IRA ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/booked-call/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## Swan Bitcoin IRA — Appointment Confirmed! ### Check your email for details about your upcoming call with one of our retirement specialists. Open your AccountTalk to the Team [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/ira-unsubscribe/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## Swan Bitcoin IRA — You have been unsubscribed ### Thank you! You have been unsubscribed from future Swan IRA email communications. If this was done in error, please email hello@swan.com. Open your AccountTalk to the Team [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open a Swan Bitcoin IRA in 60 seconds, and hold real Bitcoin, not proxies. Open your AccountTalk to the Team Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # Ready to claim your gift? - Swan Bitcoin URL: https://www.swanbitcoin.com/accept-your-gift/ Delight your friends and family with the future of money. --- ## Ready to claim your gift? One time codes are used during the sign-up and login process. Enter your email down below to receive one right away. Get New Code Must be 18 or older, and [meet the requirements](https://help.swanbitcoin.com/hc/en-us/articles/360049193113-What-are-the-requirements-to-open-a-Swan-account-) to open a Swan account.[Log in with existing account.](https://app.swanbitcoin.com/login) #### Accept your gift Using the gift code you receive by email, sign up or sign into your account and accept the gift. If your code expires, request a new one above. #### Unwrap your gift Once you’re signed in, you’ll see a notification in your dashboard with details of the gift you received. ### Ready to give? Create a gift and send it to your friends and family. [Give Bitcoin](https://app.swanbitcoin.com/gifts) # The Bitcoin Platform for Financial Advisors - Swan Bitcoin URL: https://www.swanbitcoin.com/advisor/ Swan Bitcoin is building a solution for you: Swan Advisor Services. Sign up to get priority access to our new platform and help your clients start their bitcoin journey. --- Advisor Services ## The Bitcoin Platform for **Financial Advisors** Confidently advise your clients on Bitcoin Talk to the Team ### Bitcoin Only Bitcoin is an asset class unto itself and demands its own place in the portfolio. We help you deeply understand Bitcoin such that you can intelligently advise your clients on the hard monetary asset for the 21st century. [Tell me why](https://www.swanbitcoin.com/interview-with-an-orange-pilled-financial-advisor/) ### Qualified Custodian Provide your clients direct ownership of real Bitcoin securely held in a legal trust account by a qualified custodian under your client’s name. Customizable self and collaborative custody models can be established based on the advisor/client relationship. [Learn more about Swan custody](https://www.swanbitcoin.com/assessing-risk-in-bitcoin-custody/) ### Your Bitcoin Partner We set the industry standard for Bitcoin educational content and research. Our client service is unmatched. Lean on Swan’s expertise including portfolio analysis tools like Nakamoto Portfolio to bolster your firm’s Bitcoin coverage and client account management. [Run the numbers](https://nakamotoportfolio.com/apps/portfolio%5Fexplorer ) ### Talk to the Team Enter your details below to schedule a meeting with a Swan Advisor Services representative. Meet With Us # SwanBitcoin | #1 Bitcoin IRA Trusted by 120K+ (4.6/5 Stars) URL: https://www.swanbitcoin.com/bitcoin-ira/ Swan Bitcoin IRA is the only trusted & verified Bitcoin IRA retirement platform on the market. Leverage Bitcoin’s Asymmetric Growth Tax-Free. --- Swan IRA ## More than a Plan. A Partnership. Open your AccountTalk to the Team If you are planning to transfer or roll over more than $50,000, our Swan Private team will assist you. [Get started here ](#) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) [Trustpilot](https://www.trustpilot.com/review/swanbitcoin.com) ### Why Choose Swan Bitcoin IRA? #### Real Bitcoin What’s better than buying Bitcoin? Enjoying the benefits of Bitcoin’s long-term potential in a tax-advantaged account. Hold real Bitcoin, not proxies. #### Enterprise-grade Custody Swan has partnered with Equity Trust, a leading self-directed IRA custodian with over $65 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. #### Traditional and Roth IRAs Your retirement, your choice. You can move funds from SEP IRA, SIMPLE IRA, or an old 401(k)/IRA into a Traditional and Roth Swan IRAs. #### Easy Onboarding Opening a new Swan Bitcoin IRA is a breeze. You can do it in less than 60 seconds! Initiate a transfer or rollover and soon you’ll be holding real Bitcoin in your new IRA. #### Simple and Transparent Fees The fees are 0.02% of assets on platform (AOP), with a $20 minimum. Bitcoin buys and sells are charged a 1% fee. #### Swan Private Included Your IRA account qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. #### Available to all US ResidentsNew We are live in 50 states, including New York and Texas. Open your AccountTalk to the Team If you are planning to transfer or roll over more than $50,000, our Swan Private team will assist you. [Get started here ](#) ### Why Bitcoin is the Ultimate Asset for your IRA Featured on Here’s what Swan IRA clients are saying > Swan was super helpful. They made it possible for me to set up an IRA transfer in cash. > > — Rachel ### Secure your financial future Open your AccountTalk to the Team If you are planning to transfer or roll over more than $50,000, our Swan Private team will assist you. [Get started here ](#) Funding your account is easy ### 3 Ways to Fund Your Swan Bitcoin IRA[\*](#disclaimer) #### Transfer Transfer funds from your existing Traditional, Roth, SEP or SIMPLE IRA. No penalties or taxes apply to like-for-like transfers\*. #### Rollover Initiate a rollover from an old 401(k) and 403(b) into your Bitcoin IRA with no taxes or penalties\*. #### Contribute Contribute to your Bitcoin IRA via wire transfer. ### Do you want to work with our experts? Swan Private offers a dedicated team of Bitcoin experts to support you throughout your Bitcoin journey. If you are planning to create a Swan Bitcoin IRA and transfer or rollover more than $50,000, one of our Swan Private experts will personally guide you through every step of the process and beyond. Talk to the Team ### Common Questions #### Who is eligible to open a Swan Bitcoin IRA? Swan IRA is available to all United States residents (including New York and Texas) who are 18 years or older. #### What are the benefits of a Bitcoin IRA account? Both Traditional IRAs and Roth IRAs have tax advantages: * Traditional IRAs typically have pre-tax contributions that grow tax-deferred until disbursement. * Roth IRAs typically have post-tax contributions that grow completely tax-free. Swan IRA is a great way to capture Bitcoin’s long-term potential in a tax-advantaged way without the tracking error that many proxies have. On top of that, unlike when you trade Bitcoin outside a tax-advantaged account, doing so within an IRA allows you to avoid the often-tedious process of reporting trades on your taxes each year. #### Where is my Bitcoin IRA custodied? Equity Trust is a leading self-directed IRA custodian with over $52 Billion in assets under custody. They have an impressive 50-year legacy offering innovative retirement solutions. We’ll be launching new accounts types in 2025 including SEP IRA, Solo 401(k)s, and HSAs. #### Can I self-custody Bitcoin with Swan IRA? Swan has supported many clients through this process. There are a few important considerations when thinking about IRAs and self-custody, such as the McNulty tax case from 2021. If you would like to learn more, one of our experts is happy to help you achieve your retirement goals and self-custody needs. Please reach out to [ira@swan.com](mailto:ira@swan.com) for more information. #### What are the fees for Swan Bitcoin IRA? Swan IRA has simple and transparent fees. There are no hidden fees, account minimums, or surprise charges. You know exactly how much you pay for Swan IRA. Below is our fee schedule: | Setup Fee | $0 | | ----------------------------- | -------------------------------------- | | Monthly Fee | 0.02% Assets on Platform / $20 minimum | | Bitcoin Trading Fee | 1.00% | | Transfer, Rollover, Wire Fees | $0 | | Account Closure Fee | $0 | | Hidden Fees | None | The transaction fee is 1.00% funded from IRA funds. All administration fees will be charged monthly from external funds and not your IRA balance, per IRS regulations. #### Do I have to transfer my entire IRA balance to my Swan Bitcoin IRA? No, you can select a partial transfer and only move a portion of your IRA balance. #### Will I pay taxes on a transfer or rollover into my Bitcoin IRA? No. As long as you are transferring like-for-like, there are no taxes due to a transfer or rollover. A like-for-like transfer means transferring funds from an existing Traditional IRA to a Swan Bitcoin Traditional IRA or from an existing Roth IRA to a Swan Bitcoin Roth IRA. #### What should you know about your Swan Bitcoin IRA? The Swan Bitcoin IRA is one of the highest rated services in the industry. Our fees are also competitive with every other provider. What truly sets us apart is our award-winning customer service and the ease of getting on a phone call with an expert representative. [To learn more, check our FAQs (opens in a new tab)](https://help.swanbitcoin.com/hc/en-us/articles/7574438119319-What-is-the-Swan-IRA-How-does-it-work-) #### Want to stay updated on Swan Bitcoin IRA? Join our mailing list to receive the latest news and updates about Swan IRA Sign up ### Swan IRA News & Publications #### [Why Bitcoin is the Ultimate Asset for your IRA](/why-bitcoin-is-the-ultimate-asset-for-your-ira/) Adding Bitcoin to your IRA can provide asset diversification, as well as the potential for higher returns and a measure of protection against monetary debasement. #### [Best 5 Bitcoin & Crypto IRAs for July 2024: Which Wins?](/crypto-iras/) This guide breaks down the top Bitcoin IRAs and Crypto IRAs of 2023 and shows you how to pick the best one for your goals and situation. #### [Secure Your Retirement With Swan IRA](/secure-your-retirement-with-swan-ira/) … and advance Bitcoin adoption while doing it. \* Taxes might apply for Traditional (pre-tax) and Roth (post-tax) IRAs. Please speak with your Swan representative for details & consult your CPA # Bitcoin Is for Everyone - Swan Bitcoin URL: https://www.swanbitcoin.com/bitcoin-is-for-everyone/ It doesn’t matter where you’re from, Bitcoin is for everyone. Meet Bitcoiners from every country on the planet. --- 195 See the country listWhy this map? Let’s show the world that **Bitcoin is for everyone**. Every Bitcoiner is important and has a story to tell that might help educate and inspire others. This is where you come in. We’re using Twitter to meet Bitcoiners around the world. It’s simple. **Take a selfie** that showcases your country and **tweet it out** with the name of **#yourCountry** and the hashtag **#BitcoinIsForEveryone**. Share Your Story [#Uruguay@\_Patternn\_](https://twitter.com/twitter/status/1435312518767972361)[#Sudan@SudanHODL](https://twitter.com/twitter/status/1435325948707094534)[#UnitedStates@SpencerKansas](https://twitter.com/twitter/status/1435336287368716298)[#Spain@Boolean01](https://twitter.com/twitter/status/1435344183091515401)[#UnitedKingdom@Bashamaniac](https://twitter.com/twitter/status/1435316086333923331)[#Sweden@Jibbixx](https://twitter.com/twitter/status/1435353077725474820)[#Ethiopia@KalKassa](https://twitter.com/twitter/status/1435358677091954691) [#Mexico@bitcoin\_bojo](https://twitter.com/twitter/status/1435312896247058443)[#UnitedStates@SiLVa\_HODL](https://twitter.com/twitter/status/1435327146080276482)[#Portugal@LuffyDeeMonkey](https://twitter.com/twitter/status/1435335580842344448)[#Switzerland@buladude1](https://twitter.com/twitter/status/1435344103915544584)[#Spain@elainesxm](https://twitter.com/twitter/status/1435313959985418250)[#Venezuela@criptobastardo](https://twitter.com/twitter/status/1435353200702406657) [#Turkey@BTCSTREETART](https://twitter.com/twitter/status/1434547211833167876)[#Netherlands@MichaelRoerade](https://twitter.com/twitter/status/1435326726729576450)[#Norway@tee21m](https://twitter.com/twitter/status/1435337527620161540)[#UnitedStates@BecauseYrBored](https://twitter.com/twitter/status/1435343836797149193)[#Greece@enafrydi](https://twitter.com/twitter/status/1435346818750205962)[#Mexico@1EastSideTony](https://twitter.com/twitter/status/1435351642950406153) [#France@PrinceySOV](https://twitter.com/twitter/status/1435321653152595970)[#Jamaica@PoleVaultDream](https://twitter.com/twitter/status/1435334606849548288)[#UnitedKingdom@AEHW1](https://twitter.com/twitter/status/1435342033300885506)[#UnitedKingdom@skyediver1](https://twitter.com/twitter/status/1435334870876803079)[#Australia@LeeWallisUK](https://twitter.com/twitter/status/1435352602099662849)[#Nigeria@SatsHodl](https://twitter.com/twitter/status/1435356272761655298) ### Bitcoin is Lighting a Beacon of Hope **Take a selfie** that showcases your country and **tweet it out** including a hashtag of **your country** and the hashtag **#BitcoinIsForEveryone**. Share Your Story [#UnitedStates@madelyn\_ash](https://twitter.com/twitter/status/1435358562713284608)[#Brazil@lucasdcf](https://twitter.com/twitter/status/1435361097985445891)[#Japan@TerukoNeriki](https://twitter.com/twitter/status/1435371205834338305)[#UnitedStates@ComeAtMeBroHG](https://twitter.com/twitter/status/1435386414615564291)[#Thailand@Sven\_E](https://twitter.com/twitter/status/1435594117317230598)[#Slovakia@jozef\_tucny](https://twitter.com/twitter/status/1435513952780292099)[#UnitedStates@mmacsurak](https://twitter.com/twitter/status/1435460033903357953)[#Bulgaria@redryler](https://twitter.com/twitter/status/1435517205366648834)[#Pakistan@FarooqAhmedX](https://twitter.com/twitter/status/1435615056344010756)[#Ireland@geekboyireland](https://twitter.com/twitter/status/1435374357086359554)[#Switzerland@Niuran78](https://twitter.com/twitter/status/1435343441781792768)[#UnitedStates@maison\_d\_ami](https://twitter.com/twitter/status/1435655272832327683)[#Belgium@obraibant](https://twitter.com/twitter/status/1435685299640745992)[#Australia@narcissus792000](https://twitter.com/twitter/status/1435708530560954369)[#UnitedStates@djames970](https://twitter.com/twitter/status/1435709743801122816)[#DominicanRepublic@FranciscoSuero](https://twitter.com/twitter/status/1435713406158393345)[#UnitedStates@meandthecamera](https://twitter.com/twitter/status/1435715292898881537)[#Greece@bitocrates](https://twitter.com/twitter/status/1435715025713385472)[#Russia@TonyCrusoe](https://twitter.com/twitter/status/1435904934860439555)[#CaymanIslands@Marcxllus](https://twitter.com/twitter/status/1435705039734116355)[#Mexico@vmduartec](https://twitter.com/twitter/status/1435623813455269890)[#Turkey@efecini](https://twitter.com/twitter/status/1435896190428663815)[#Ecuador@AdrianNaranjoP](https://twitter.com/twitter/status/1435715926519910402)[#Argentina@imdebugging](https://twitter.com/twitter/status/1435955587662110724)[#Malaysia@gin\_mah](https://twitter.com/twitter/status/1436010760354754561)[#Colombia@camilacampton](https://twitter.com/twitter/status/1435990697740435461)[#CostaRica@pablof7z](https://twitter.com/twitter/status/1436111599975206912)[#Isleof Man@CoinCorner](https://twitter.com/twitter/status/1436330632930549765)[#SriLanka@SL\_BTC](https://twitter.com/twitter/status/1436156215130722310)[#UnitedStates@MonicaAugusta1](https://twitter.com/twitter/status/1435971211352109056)[#Malaysia@NagyptH](https://twitter.com/twitter/status/1436667918213730309)[#Panama@AbelitoPanama](https://twitter.com/twitter/status/1438247423047053318)[#Mexico@FernandoRVM](https://twitter.com/twitter/status/1440019413441265666)[#UnitedStates of America @RVA\_HODL](https://twitter.com/twitter/status/1438601079529295874)[#RDCongo@Josh\_ideal1](https://twitter.com/twitter/status/1440603224361164806)[#Kenya@dennocrypto](https://twitter.com/twitter/status/1450698983253368833)[#Guyana@aggreydmarsh](https://twitter.com/twitter/status/1455543891973885963)[#Paraguay@djSTICKYBUDS](https://twitter.com/twitter/status/1486380895321927685) 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Get priority access now. --- The Swan Card The Swan Card ## Live your life, build your legacy The Bitcoin rewards credit card Get Priority AccessGet Priority AccessGet Priority Access Issued by sponsorship partner bank Get Priority AccessGet Priority AccessGet Priority Access # Give the gift of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/gifts/ Delight your friends and family with the future of money. --- ## Give the gift of Bitcoin to your loved ones Delight your friends and family with the future of money. Swan delivers your Bitcoin gift along with our world-class Bitcoin education and client service. 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Bitcoin is better money to build a brighter future. * **Decentralization** Enables a financial system with no central authority * **Store-of-value** Provides a hedge against fiat inflation * **Peer-to-peer** Facilitates global transactions without intermediaries * **Financial sovereignty** Empowers people outside traditional systems * **Transparency** Transactions are publicly verifiable Invest in Bitcoin Read, Watch, Listen ### Learn About Bitcoin Media to keep you updated about Bitcoin and the financial world. #### Welcome to Bitcoin Bitcoin can feel intimidating. We created this free 1-hour course to welcome you to Bitcoin in a simple and friendly way. 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Learn about the history of money and why some common… #### [Why Bitcoin Exists](/education/why-bitcoin-exists/) By Tomer Strolight Bitcoin was not created so that some people could “get rich quick.” It was created to preserve the integrity of money — to make the most of your precious time, your energy, and your life. #### [Why and How Bitcoin Consumes Energy](/canon/why-and-how-bitcoin-consumes-energy/) By Lyn Alden Bitcoin uses a proof-of-work protocol to operate the network, which means that miners expend real-world resources (electricity) in order to validate transactions and secure the blockchain. Rather than being a bug, this… #### [The Eras of Bitcoin](/analysis/the-eras-of-bitcoin/) By Swan Bitcoin and Drew SWAN SIGNAL MONTHLY NEWSLETTER VOL. 42 [Read more from Swan Signal blog ](/articles/) [See all Rabbit Holes ](/canon/) See More Here’s what Swan clients are saying Rob **World Class Customer Service lives!** I had truly thought the idea of 'World Class Customer Service ' was abandoned and dead. Swan customer service has dispelled that myth! Astonishingly fast trouble ticket responses, consistent updates and final follow through. Perfection!! MM Michael As a loyal customer of Swan since its inception, I cannot speak highly enough about the level of trust, reliability, and exceptional service they have consistently delivered over the years. From the very beginning, they have stood out as a beacon of integrity and dependability in the cryptocurrency space, a rare quality in an industry that often feels like the Wild West. Stephen **I love Swan!** I feel secure, never had issues with any orders, and when I have questions customer service is great. JT JT **The follow up is super** The follow up is super, great, I have text Alec twice, and he followed up in 10 minutes. I have bought crypto on probably 8 other exchanges and the service and follow up was terrible. Swan and Alec are people you can depend on. BP Brad **Terrific Company** I’ve been with Swan for 3+ yrs, so plenty of BTC ups and downs. Swan has always provided EXCELLENT customer service in addition to normal operations which are always completed correctly. The website allowing instant and/or recurring purchases and then withdrawals has been flawless. Their efforts to educate (Watch youtube) are genuine and much appreciated! Through difficult times in the mkt or whatever arises, they always come through and perform admirably. Thankyou Swan!! JN Jeremy I had received an e-mail from another company telling me to set up a wallet before a certain date. I strongly suspected it to be a scam but I wasn’t 100% sure that the company wasn’t working in conjunction with Swan and so I was unsure about deleting it. I reached out to Swan’s customer support and they assured me that it was a scam e-mail and that I should delete it. Took a weight off of my shoulders. They even followed up by sending me a great article about how to spot scams. TR Troy Customer service worked diligently through an accounting/banking issue that was frustrating. They kept at it and ended up resolving all of the issues quickly. I appreciated their professionalism in resolving this issue. MC Mick Swan has excellent customer service. They are interested in every user having a smooth and pleasant experience. I received the right support I needed. SJ Shawn **Great Company** I’ve been using Swan for a few months now. Customer service is excellent. The education materials they provide are superior. MA Matthew Exceptional service, especially as compared with the competition. Resolved an issue and opened my account right away, within an hour or two of contacting customer service. FE Ferrari Thank you for the support and quick response. You guys are so helpful and make stacking bitcoin so simple and safe. Building my portfolio and acquiring wealth with experienced people who truly care and understand the industry unlike many other companies. Financial rockstars and high class service at swan! Thank you swan Bitcoin only 🤘 Christopher **Great customer service over at Swan!** Jason Bassett helped me get my BTC IRA going and he was incredibly helpful. He was always quick to respond to emails, made sure all my questions were answered, and went the extra mile to ensure the process went smoothly. Can’t thank you enough Jason! ST Steven Using Swan is like using a professional. Everything I have done with them has been great and they have supported me in every way. I have been using Swan for a couple years. They are AWESOME. ML Michael I have been thoroughly impressed with the level of service received by Swan through my journey with them. Initially I started with purchasing Bitcoin, then rolled over a portion of an old IRA and tried out the multisig product. I have been pleased with all functions and look forward to being a long time customer. Their Bitcoin only focus was CRITICAL to working with them, but I stay because of the exceptional level of service. Well done! MC Mike I lost all confidence in Coinbase and was surprised that Swan’s customer service was available to help with prompt responses repeatedly. SA Sunny Great company! I’ve been with them two years and the experience has been really good. They’ve offered webinars and other educational tools to familiarize customers with how to reach their financial goals. I also had very good support from customer service when conducting financial transactions. I received regular updates and was quite satisfied with the responsiveness of the staff. Thank you. EC Eric Had a great experience opening an account with Swan IRA recently. Its very reassuring dealing with knowledgeable professionals. Quick replies from the customer service and onboarding teams to ensure that everything is taken care of. VE Veraveida Swan really listens to their customer base. They know how to make money the right way: by providing valuable, honest service. JT Jeffrey The Swan team is very knowledgeable and extremely responsive. You will be pleased with the level of customer service with this Company! RE Reza I absolutely love Swan Bitcoin, and everything they stand for within the bitcoin community. They are authentic, and driven in their pursuit of spreading the good word about the virtues of Bitcoin, and have been a steadfast champion in the community with respect to education. JA Jai I’ve been a Swan customer for a little over a year, and they are by far the best place to buy bitcoin. Almost every single exchange these days lacks direct and personal support, but we’re Swan shines is the availability of support staff through Telegram, email, or private concierge service for private account members. They are light years beyond other exchanges. Will Great learning resources and super helpful staff. I’m very happy with my experience so far. CH Chris My experience with Swan has been 10X better than the giant Crypto exchange I started out using. Swan is geared toward one thing, BTC. It is straightforward, and simple to use. I was able to set up a quick transfer to get stacked, then set up recurring DCA, and auto-withdrawals to my cold wallet with ease. Their YouTube and other educational content is excellent as well. Swan has a new lifetime customer here! ML Michael I continue to be impressed with their products and the user interface has really improved. The user interface is simple to understand and interact with and the customer service is top notch. Overally I am very impressed with Swan and plan to be a customer for the long term. DB Duncan **Great company, great products** Swan is an honest and transparent company with reasonable fees and great customer service. The user interface online is top notch and pays attention to security. Great job Swan. JA Jacob Great company with outstanding customer service. I’ve never waited more than a few hours for an inquiry to be answered. Company has gone over and above multiple times in the few years I’ve been a customer. JH Jamie I am so pleased with the customer service I received at Swan!! I had an issue with a purchase and the Swan team was able to diagnose the problem and back date my purchase to the price at the time. I couldn’t be more grateful for the honesty and transparency. I will continue to recommend Swan to everyone I know! BC Ben Easy to use, transparent. Love that they encourage self custody with the auto withdrawal feature! Customer service is also great and very responsive. Join our mailing list… Subscribe # Swan Institutional URL: https://www.swanbitcoin.com/institutional/ Bitcoin services for miners, governments, corporations, financial advisors, and family offices. --- ## Swan Institutional * Treasury Strategy * Capital Markets * Private Equity * Asset Management * Execution * Custody * Mining Contact Us # Swan International — Building Wealth, Together URL: https://www.swanbitcoin.com/international/ Concierge Bitcoin services for leaders of families and businesses across a growing list of countries. Invite your family and friends abroad to join early. --- Swan International Swan International ## Building Wealth, Together For leaders of families and businesses in select countries Get Priority AccessGet Priority AccessGet Priority Access Get Priority AccessGet Priority AccessGet Priority Access # Own Your Future - Swan Bitcoin URL: https://www.swanbitcoin.com/moon/ Swan is dedicated to educating people about the value of sound money for their future. --- ## Our mission is to walk alongside you into the future of money Join Us ### Elevate your Bitcoin knowledge Swan is dedicated to educating people about the value of sound money for their future. Swan produces world-class Bitcoin educational content for everyone. Brady Swenson — Swan Signal Podcast A client enjoys Inventing Bitcoin by Swan cofounder and CTO, Yan Pritzker > With nothing but a high school level math background, we will walk through inventing bitcoin, step by step. 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Be a hero, save lives with Octapharma and Swan Bitcoin. --- Save lives Must be 18 or older, and [meet the requirements](https://help.swanbitcoin.com/hc/en-us/articles/360049193113-What-are-the-requirements-to-open-a-Swan-account-) to open a Swan account.[Log in with existing account.](https://app.swanbitcoin.com/login) ### [How to Create a Bitcoin Account?](#open) [Watch the video tutorial](#open) # Pacific Bitcoin Conference 2022 - Swan Bitcoin URL: https://www.swanbitcoin.com/pbc-opt-out-confirmation/ You will no longer receive communications about the Pacific Bitcoin conference. --- **Confirmed! You will no longer receive communications about the [Pacific Bitcoin conference](https://www.pacificbitcoin.com/).** If you change your mind, email [brandon@swan.com](mailto:brandon@swan.com?subject=Pacific%20Bitcoin%20conference) to be added back to the Pacific Bitcoin conference list. # Swan Bitcoin Newsletter URL: https://www.swanbitcoin.com/sad-to-see-you-go/ Swan Bitcoin provides savings plans, instant buys, Private Client for businesses and HNWI, Advisor Services for financial advisors, and world-class Bitcoin education. --- Swan Bitcoin Newsletter ### Sad to see you go **You’ve successfully unsubscribed.** Miss us already? The feeling’s mutual. [Follow this link to rejoin](https://www.swanbitcoin.com/newsletter/). # Sign up to start saving Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/signup/ Swan Bitcoin provides Bitcoin buys and sells, recurring buys, limit orders, Bitcoin IRAs, institutional custody, collaborative self-custody, dedicated relationships through Swan Private Client Services, and world-class Bitcoin education. --- ## Sign up to start buying Bitcoin Swan Bitcoin provides Bitcoin buys and sells, recurring buys, limit orders, Bitcoin IRAs, institutional custody, collaborative self-custody, dedicated relationships through Swan Private Client Services, and world-class Bitcoin education. Invest in Bitcoin ### Strong Relationships Bitcoin experts deliver personalized service to help you navigate Bitcoin with confidence. ### Ironclad Security With SOC 2 Type 2 compliance at its core, Swan Guard protects your assets so you can focus on growing wealth. ### Exclusive Events Virtual and in-person events give you direct access to the most knowledgeable people in Bitcoin. ### Insightful Research Swan Research keeps you educated and up-to-date about Bitcoin and the broader financial world. # Swan API URL: https://www.swanbitcoin.com/swan-api/ The Swan API enables partners to quickly integrate Swan’s Bitcoin services. --- ## Swan API The Swan API enables partners to quickly integrate Swan’s Bitcoin services. [Learn more](https://developers.swanbitcoin.com/) ### Specter Desktop Specter Desktop is Bitcoin wallet software that connects to your Bitcoin Core node. Specter now also connects to Swan for native Bitcoin purchasing services. [Discover Specter (opens in a new tab)](https://specter.solutions/) ### Trezor Swan has partnered with Trezor to save in Bitcoin with scheduled buys direct to your wallet. Set a fixed amount to buy every week, fortnight or month and build your bitcoin savings gradually without worrying about the price. [Discover Trezor (opens in a new tab)](https://www.swanbitcoin.com/swan-bitcoin-and-trezor-integration/) ### CrowdHealth The monetary system and the healthcare industry have both been corrupted by perverse incentives that put the financial stability of the United States, and its citizens, at risk. Two firms, each leading revolutions to change their respective industries, have joined forces to develop an alternative way for Americans to pay for their health care. [Discover CrowdHealth (opens in a new tab)](https://www.joincrowdhealth.com/bitcoin) ### Hexa Wallet Hexa, a leading Bitcoin wallet, is the first Powered By Swan partner. Hexa users are able to open a Swan account, view balances, purchase history, and set a threshold for automatic withdrawals straight to their Hexa wallet. [Discover Hexa (opens in a new tab)](https://hexawallet.io/) #### Our mission Swan’s mission is to create 10 million new Bitcoiners through fast, easy onboarding and world-class education and client service. We’re proud to work with our partners toward reaching this goal. #### Bitcoin-only We believe that only Bitcoin has serious long-term viability. Our laser focus on Bitcoin allows us to deliver exceptional products, education, and service for our clients. #### Monetize When you power your Bitcoin purchasing with Swan you’ll earn 25% of Swan’s fees on all buys your users make. # Swan Safe Plus URL: https://www.swanbitcoin.com/swan-safe-plus/ Superior Bitcoin security with video verification for withdrawals --- Swan Safe Plus Swan Safe Plus ## Human-Verified Bitcoin Protection Every withdrawal video-verified by our team Get Priority AccessGet Priority AccessGet Priority Access Get Priority AccessGet Priority AccessGet Priority Access # Dive down the rabbit hole of Max Keiser’s mind URL: https://www.swanbitcoin.com/the-book-of-max/ Take a high-dose orange pill and gain insights from Max’s life and Bitcoin journey. --- ## Dive down the rabbit hole of Max Keiser’s mind Take a high-dose orange pill and gain insights from Max’s life and Bitcoin journey. Unleash your own relentless optimism with top quotes, memes, artwork and predictions for the future. This is a book unlike anything you’ve seen before! [Dive Into the Book of Max](https://www.amazon.com/Book-Max-Keiser/dp/B09Q851CWH/) ### Invest in Bitcoin Building Wealth, Together Max Keiser welcomes you to Swan! You will get $10 of Bitcoin when you sign up (offer available for US residents only). Get started * Bitcoin specialists * Friendly expert service * Full suite of Bitcoin financial services * World-class Bitcoin education * Rated 4.8/5 on the App Store ### Max Keiser Max Keiser is an American broadcaster and filmmaker. He hosts Keiser Report, a financial program, and has used his platform to educate people about the dangers and corruption of central banking. He is a longtime Bitcoin advocate and educator, having advised people to buy Bitcoin since the price was $1. Max recommends Swan as the best way to [buy Bitcoin](https://www.swanbitcoin.com/keiser/?gc=book-of-max&utm%5Fcampaign=book-of-max). ### Dive down the rabbit hole of Max Keiser’s mind Take a high-dose orange pill and gain insights from Max’s life and Bitcoin journey. [Buy the Book](https://www.amazon.com/Book-Max-Keiser/dp/B09Q851CWH/) # Swan Vault: Safe and Sound URL: https://www.swanbitcoin.com/vault/ Advanced Bitcoin security made simple --- Swan Vault ## Safe and Sound Advanced Bitcoin cold storage made simple Open a Swan VaultTalk to the Team If you are planning to secure more than $250,000, our Swan Private Wealth team will assist you. [Get started here ](#) ### Full Control of Your Bitcoin #### Total Control of Your Money Experience the power of complete control over your money. With Bitcoin you don’t need banks or institutions standing between you and what’s yours. It is yours, after all. #### Security and Peace of Mind Rest easy knowing that your funds are protected by keys stored offline in cold hardware devices. Two of three keys are required to access your Bitcoin in what’s called a multisignature wallet, the most secure way to hold Bitcoin. #### Optimized for Ease-of-Use It just works. From set up to deposits and withdrawals, Swan Vault is designed to be used by anyone. All its powerful features are simple and straightforward to access. #### Full Control, But You’re Not Alone You don’t need a bank, but you don’t have to go it alone. With Swan Vault, our industry leading support is always here to help you. Your Swan Vault also qualifies you for Swan Private so you can enjoy our personalized services, Bitcoin and macro research, and exclusive events. ### Cold Storage with Blockstream Jade Plus Swan Vault seamlessly combines easy to use software with hardware that delivers the strongest available security. Blockstream Jade Plus signing devices, also known as hardware wallets, store your private keys securely offline, isolated from the internet. ### The Swan Vault Welcome Package — $319 2 Jade Plus signing devices 2 USB-C cables ### Seamless Setup, Steadfast Security Create your Vault in minutes From your initial Vault creation to your first deposit, Swan ensures a straightforward experience. Our friendly support team and comprehensive help center are here for you every step of the way. For additional guidance, you can book an optional one-on-one onboarding with a Swan Vault specialist to walk you through the setup and answer all your questions. [Get Started (opens in a new tab)](https://app.swanbitcoin.com/vault/subscribe) ### How Swan Vault Protects You Two keys are required to unlock the Bitcoin in your Swan Vault. Your signing devices keep two keys secure in cold storage. You manage your third key, a cloud key, through Swan. We recommend using it as the second key to authorize transactions so you don’t bring both your signing devices to the same location for maximum security. If one of your keys is lost or stolen, you can use your cloud key and your remaining key to move your Bitcoin. Any withdrawals made using the cloud key have a 72-hour hold for additional security. Your First KeyBlockstream Jade Your Cloud KeyManaged by You Your Second KeyBlockstream Jade 72-hour security hold72-hour hold Select one key to begin your transaction ### Pricing Vault up to $150k $30/month Vault above $150k 0.02%/month Up to a maximums of $500/month * Unlimited support for Swan Vault and Bitcoin‑related issues * Annual Swan Vault check-up upon request * Practice transactions with the Swan Vault team * Swan Vault qualifies you for [Swan Private membership](https://www.swanbitcoin.com/private/) ### Help Center If you don’t find the answers you’re looking for here, or if you require additional help, please don’t hesitate to contact us. [Contact Us](https://help.swanbitcoin.com/hc/en-us/requests/new) #### What is the Swan Vault? Swan Vault makes Bitcoin self-custody and advanced cold storage convenient and accessible to all users, including newcomers and non-experts. Swan Vault combines the 2-of-3 multisig security model with an intuitive interface, removing the technical barriers that make self-custody intimidating or overly difficult. You also receive dedicated support from Swan’s team of experts. This guidance ensures that you fully understand the Vault while retaining sole authority over your bitcoin. #### What is Multisig? A multisig (multiple-signatures) Bitcoin wallet is a secure storage solution that requires multiple private keys to move bitcoin (approve a transaction). This creates redundancy and enhances security compared to the traditional single-sig wallet. For this reason, multisig is widely considered one of the safest methods for long-term Bitcoin custody. Swan Vault uses a 2-of-3 multisig set-up. This means two keys out of three total keys are required to move your bitcoin. You hold two keys in cold storage on hardware devices and manage the third key, the Cloud Key, through your Swan account. #### Can Swan access my bitcoin without my permission? No, it is impossible for Swan to move bitcoin from your Vault without your participation because Swan has access to only one key and two are required to move your coins. The Vault utilizes a 2-of-3 multisig structure. This means at least two keys are required to move your bitcoin. You hold two keys in cold storage on signing devices and you manage the third one, your Cloud Key, through your Swan account. Since you hold two keys in cold storage, Swan can never prevent you from accessing your bitcoin. You retain full control. #### What are the benefits of having a cloud Key? Having your third key acessible through your Swan account provides increased security and convenience when moving funds. In a traditional multisig setup, you would need to keep your two hardware devices nearby to approve transactions. With the Swan Vault, you can move funds using your cloud key and one of the keys you hold locally in cold storage. Your second signing device can remain safe as a backup in a distant location. This setup provides convenience and helps to reduce security risks and localized disasters from impacting you. There is also a 72-hour security hold before any transactions involving your Cloud Key are broadcast to the Bitcoin network. This acts as an additional safeguard. #### Who can use the Swan Vault? Swan Vault is designed for anyone who wants full ownership and control of their bitcoin. The intuitive interface makes self-custody accessible to everyone, regardless of their level of experience with Bitcoin. Users can also receive dedicated support from Swan’s team of experts throughout the setup and management process. This guidance helps you fully understand each step, giving you added confidence while putting you in full control over your bitcoin. In summary, Swan Vault pairs an easy-to-use platform with knowledgeable assistance to make self custody welcoming for first-timers and experienced users alike. #### Are Swan Vaults insured? No, Swan Vault does not carry insurance coverage. With its 2-of-3 multisig structure, you maintain direct ownership of your coins through your private keys held locally in cold storage. Coins in Swan Vaults are not custodied by Swan. Swan Vault eliminates counterparty risk, as Swan cannot unilaterally move your coins without your participation. You enjoy the convenience benefits of your Cloud Key assistance while retaining maximum control. #### Do I need a signing device to use Swan Vault? Yes. A signing device, also called a hardware wallet, is a physical device designed to secure the keys required to send coins from your Vault. It’s built for cold storage, keeping your keys offline and away from internet-connected devices for maximum security. Swan Vault is designed for use with Jade devices manufactured by Blockstream, an industry leader in Bitcoin technology. #### Can I access my Vault without Swan? Yes, you can independently access your Vault without relying on Swan through the following process 1. Download your Swan Vault Recovery Kit from the Vault dashboard. 2. Open your recovery kit and follow the instructions to import your Vault into Specter Desktop, a free open-source (FOSS) Bitcoin wallet. You can download and install Specter Desktop [here](https://specter.solutions/downloads/) 3. Once your Vault is loaded into Specter, you can use your two Jade devices to move your bitcoin. Advanced users can also import their Vault into Bitcoin Core. # Featured Articles, Analysis, Opinion - Swan Bitcoin URL: https://www.swanbitcoin.com/articles/ This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. --- ## Featured Articles, Analysis, Opinion ### Latest Articles [More Recent articles ](/articles/latest/) September 16, 2026 #### [Swan’s Agentic Software Factory: Cygnet Evolved](/technology/swans-agentic-software-factory-cygnet-evolved/) By Yan Pritzker How Swan built an agentic software factory that finds production bugs, reaches consensus on the fix, opens the PR, and proves it works before a human merges. #### [Swan’s Agentic Software Factory: Cygnet Evolved](/technology/swans-agentic-software-factory-cygnet-evolved/) By Yan Pritzker How Swan built an agentic software factory that finds production bugs, reaches consensus on the fix, opens the PR, and proves it works before a human merges. #### [You Are Here: The $40 Trillion Debt Map](/economics/you-are-here-the-40-trillion-debt-map/) By Jeremy Showalter Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. #### [How Bitcoin Actually Works: A First Principles Guide](/education/how-bitcoin-actually-works/) By Conor Chepenik From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. #### [A Brief History of Bitcoin Forks](/education/a-brief-history-of-bitcoin-forks/) By Yan Pritzker A history of every Bitcoin hard fork, from Bitcoin Cash and Bitcoin Gold to the 2026 BIP-110 split, and why each new coin collapsed against Bitcoin. #### [Bitcoin Concierge Services for High-Net-Worth Families](/investing/bitcoin-concierge-service-high-net-worth/) By Conor Chepenik Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. #### [Why We Chose Blockstream Jade for Swan Vault](/product-updates/why-we-chose-blockstream-jade-for-swan-vault/) By Yan Pritzker After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan’s CTO opens up the hardware behind Swan Vault and answers it. #### [Why some Coldcard seeds were compromised: false randomness](/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/) By Yan Pritzker Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. #### [The Battle for Monetary Independence](/essay/the-battle-for-monetary-independence/) By Cory Klippsten A 50-day campaign to advance freedom and sovereignty through Bitcoin adoption [More Recent articles ](/articles/latest/) ### Economics [More Economics articles ](/economics/) August 26, 2026 #### [You Are Here: The $40 Trillion Debt Map](/economics/you-are-here-the-40-trillion-debt-map/) By Jeremy Showalter Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. #### [You Are Here: The $40 Trillion Debt Map](/economics/you-are-here-the-40-trillion-debt-map/) By Jeremy Showalter Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. #### [Trillion-Dollar Deficits are Keeping the Economy Afloat](/economics/trillion-dollar-deficits-are-keeping-the-economy-afloat/) By Sam Callahan The reckless nature of government fiscal policies suggests a future where financial instability may hinge on the balance between innovation and traditional policy decisions. #### [Will Bitcoin Follow Gold’s Monetary Rise and Fall? And a Look at Bitcoin’s Scaling Strategy](/economics/will-bitcoin-follow-gold-s-monetary-rise-and-fall/) By John Haar Bitcoin can achieve its ultimate goal — to be a neutral base layer of a new monetary system for billions of users worldwide #### [Argentina: How Fiat Policies Ruined a Once Prosperous Nation](/economics/argentina-how-fiat-policies-ruined-a-once-prosperous-nation/) By Sam Callahan If Argentina embraces Bitcoin, perhaps it can start to resemble the prosperous nation it once was and its people can finally experience something they haven’t felt in a long time — hope. #### [Feast or Famine? Breaking Down the State of the Economy](/economics/feast-or-famine-breaking-down-the-state-of-the-economy/) By Sam Callahan As Americans continue to feel misled by their government and struggle with the cost of living, Bitcoin increasingly becomes a viable alternative. [More Economics articles ](/economics/) ### Analysis [More Analysis articles ](/analysis/) July 31, 2026 #### [Why some Coldcard seeds were compromised: false randomness](/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/) By Yan Pritzker Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. #### [Why some Coldcard seeds were compromised: false randomness](/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/) By Yan Pritzker Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. #### [Bitcoin vs. Gold as a Store of Value: Which Asset Better Protects Your Wealth?](/analysis/bitcoin-vs-gold-store-of-value/) By Conor Chepenik Bitcoin vs. gold as a store of value in 2026: how they compare on scarcity, portability, and ownership & which better protects your wealth long term. #### [Quantum Fear-Mongering and The Infinite Perils Trap](/analysis/quantum-bitcoin-fear-mongering-and-the-infinite-perils-trap/) By Cory Klippsten Quantum is a real research problem, not a license to break Bitcoin’s deepest norms. Prepare seriously. Move slowly. Leave Satoshi’s coins alone. #### [Buy Real Bitcoin, Not a Bitcoin ETF: Why Ownership Still Matters](/analysis/buy-real-bitcoin-not-a-bitcoin-etf-why-ownership-still-matters/) By Brady Swenson A spot Bitcoin ETF tracks the price of Bitcoin. Owning shares is not the same as owning Bitcoin. #### [This Time is Different](/analysis/this-time-is-different/) By Jason Bassett No longer a niche commodity, Bitcoin now finds itself a prime fixation of the US Executive Branch. [More Analysis articles ](/analysis/) ### Investing [More Investing articles ](/investing/) August 14, 2026 #### [Bitcoin Concierge Services for High-Net-Worth Families](/investing/bitcoin-concierge-service-high-net-worth/) By Conor Chepenik Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. #### [Bitcoin Concierge Services for High-Net-Worth Families](/investing/bitcoin-concierge-service-high-net-worth/) By Conor Chepenik Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. #### [Bitcoin Wealth Management: How to Build and Protect Generational Bitcoin Wealth](/investing/bitcoin-wealth-management/) By Conor Chepenik Learn how Bitcoin wealth management works, from custody and security to inheritance planning and liquidity. Discover how families and businesses use Bitcoin to build and protect long-term wealth. #### [Asset Performance in Times of Conflict](/investing/asset-performance-in-times-of-conflict/) By Sam Callahan Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. #### [Schrödinger’s Coin Model](/investing/schrodingers-coin-model/) By Rapha Zagury Valuing Bitcoin as a Store of Value #### [Interview with an Orange-pilled Financial Advisor](/investing/interview-with-an-orange-pilled-financial-advisor/) By Ryan Flynn Is this the shape of things to come? [More Investing articles ](/investing/) ### Education [More Education articles ](/education/) August 19, 2026 #### [How Bitcoin Actually Works: A First Principles Guide](/education/how-bitcoin-actually-works/) By Conor Chepenik From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. #### [How Bitcoin Actually Works: A First Principles Guide](/education/how-bitcoin-actually-works/) By Conor Chepenik From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. #### [A Brief History of Bitcoin Forks](/education/a-brief-history-of-bitcoin-forks/) By Yan Pritzker A history of every Bitcoin hard fork, from Bitcoin Cash and Bitcoin Gold to the 2026 BIP-110 split, and why each new coin collapsed against Bitcoin. #### [Bitcoin Estate Planning: The Risks Most Holders Aren’t Addressing](/education/bitcoin-estate-planning/) By Alec Bakouche Bitcoin estate planning is the most under-addressed risk in HNW portfolios. Why holders and their CPAs, attorneys, and trustees keep missing it, and how to close the gap. #### [Bitcoin Custody: How to Store Bitcoin Safely Without Overcomplicating It](/education/bitcoin-custody-easy-and-safe/) By Conor Chepenik Bitcoin custody is not one-size-fits-all. Learn the tradeoffs between hot wallets, cold storage, single sig, multisig, collaborative custody, ETFs, inheritance planning, and long-term Bitcoin security. #### [Rolling Over a 401(k) and Other Workplace Retirement Plans to a Swan Bitcoin IRA: The Complete Guide](/education/rolling-over-a-401-k-and-other-workplace-retirement-plans-to-a-swan-bitcoin-ira-t/) By Alec Bakouche Rolling your old 401(k) into a Swan Bitcoin IRA lets you move legacy retirement savings into real Bitcoin while preserving tax advantages and compliance protections. [More Education articles ](/education/) ### Industry [More Industry articles ](/industry/) April 23, 2025 #### [Swan Announces New Chief Investment Officer, Publishes Guide to Leveraged Bitcoin Equities](/industry/swan-announces-new-chief-investment-officer-publishes-guide-to-leveraged-bitcoin/) By Swan Bitcoin Ben Werkman joins Swan as CIO. New LBE primer explains key concepts, implementation steps, risk management, and valuation approaches. #### [Swan Announces New Chief Investment Officer, Publishes Guide to Leveraged Bitcoin Equities](/industry/swan-announces-new-chief-investment-officer-publishes-guide-to-leveraged-bitcoin/) By Swan Bitcoin Ben Werkman joins Swan as CIO. New LBE primer explains key concepts, implementation steps, risk management, and valuation approaches. #### [Swan Bitcoin and Equity Trust Collaboration Unlocks New Retirement Account Features for Bitcoin Investors](/industry/swan-bitcoin-and-equity-trust-collaboration-unlocks-new-retirement-account-featur/) By Brady Swenson Equity Trust and Swan collaborate to bring new IRA account types and features to Swan’s IRA product. #### [Swan Vault — Safe and Sound Self-Custody](/industry/swan-vault-safe-and-sound-self-custody/) By Brady Swenson and Brandon Black Swan Vault is advanced Bitcoin security made simple. You don’t need a bank, but you don’t have to go it alone. #### [Craig Wright Referred for Perjury Prosecution, Receives Injunctions in COPA Case](/industry/craig-wright-referred-for-perjury-prosecution-receives-injunctions-in-copa-case/) By Swan Bitcoin Final arguments in the the Crypto Open Patent Alliance (COPA) vs. Craig Wright’s assertion that he is Bitcoin’s creator, Satoshi Nakamoto, and to prevent him from continuing to make such claims. #### [Germany’s Sale of 50,000 Confiscated Bitcoins Demonstrates Bitcoin’s Robust Liquidity](/industry/germany-s-sale-of-50-000-confiscated-bitcoins-demonstrates-bitcoin-s-robust-liqui/) By Swan Bitcoin Germany sold 50,000 Bitcoin seized from an illegal music-sharing service. How the German government is valuing the BTC has sparked global interest and debate in the Bitcoin community. [More Industry articles ](/industry/) ### Politics [More Politics articles ](/politics/) July 16, 2024 #### [Bitcoin on the Ballot](/politics/bitcoin-on-the-ballot/) By Jason Bassett Millions of Bitcoiners are single-issue voters. Jason evaluates how much influence will they have in November 2024! #### [Bitcoin on the Ballot](/politics/bitcoin-on-the-ballot/) By Jason Bassett Millions of Bitcoiners are single-issue voters. Jason evaluates how much influence will they have in November 2024! #### [Biden’s SAB121 Veto Stands: What This Means for Banks and Bitcoin Custody](/politics/biden-s-sab121-veto-stands-what-this-means-for-banks-and-bitcoin-custody/) By Swan Bitcoin The House failed to overturn Biden’s veto on a bill allowing banks to custody Bitcoin and crypto assets, addressing SEC’s SAB 121, which imposes stringent accounting requirements on banks holding these assets. #### [Bitcoin is the New Non-Aligned Movement](/politics/bitcoin-is-the-new-non-aligned-movement/) By Enza Coin In a bifurcated world, Bitcoin can be the solution representing a new Monetary Non-Aligned Movement. #### [Are Recent Regulatory and Political Moves Good for Bitcoin?](/politics/are-recent-regulatory-and-political-moves-good-for-bitcoin/) By Rapha Zagury The answer is becoming clear: not only will they not ban it — they will embrace it. #### [Privacy, Executive Order 6102 & Bitcoin](/politics/privacy-executive-order-6102-bitcoin/) By Steven Lubka Let’s keep pushing forward for the future we want to see, one in which both the price of Bitcoin and global freedom can go up together. [More Politics articles ](/politics/) ### Opinion [More Opinion articles ](/opinion/) June 27, 2026 #### [Is Bitcoin Safe for Generational Wealth?](/opinion/is-bitcoin-safe-for-generational-wealth/) By Conor Chepenik Is Bitcoin safe for generational wealth? Learn why custody, inheritance planning, and patience matter more than price when building lasting family wealth with Bitcoin. #### [Is Bitcoin Safe for Generational Wealth?](/opinion/is-bitcoin-safe-for-generational-wealth/) By Conor Chepenik Is Bitcoin safe for generational wealth? Learn why custody, inheritance planning, and patience matter more than price when building lasting family wealth with Bitcoin. #### [Why Every Gold Investor Should Seriously Consider Bitcoin](/opinion/why-every-gold-investor-should-seriously-consider-bitcoin/) By Alex Stanczyk After managing a Swiss gold fund for 8 years, I realized Bitcoin surpasses gold as the ultimate store of value. Here’s why every gold investor should study Bitcoin closely. #### [The Ghosts of Glass-Steagall: SAB 122 and History’s Warning for Bitcoin’s Future](/opinion/the-ghosts-of-glass-steagall-sab-122-and-history-s-warning-for-bitcoin-s-future/) By Brett D. Guiley The SAB 121 repeal mirrors the end of Glass-Steagall in 1999, which played a major role in the 2008 financial crisis. Bitcoiners should listen to history and be more cautionary about SAB 122. #### [The Scambling Age](/opinion/the-age-of-scambling/) By Cory Klippsten Trump Coin and the wild west of non-Bitcoin crypto #### [From Fiat Family Home to Bitcoin Mining Trailer: Off-Grid Steve](/opinion/from-fiat-family-home-to-bitcoin-mining-trailer-off-grid-steve/) By Joe Nakamoto The British Bitcoiner on a mission to understand whether Off-Grid, Bitcoin miner heat living is a viable and crucially, profitable venture. [More Opinion articles ](/opinion/) ### Markets [More Markets articles ](/markets/) July 17, 2024 #### [Bitcoin ETFs Inflows Showing Robust Turnaround in July](/markets/bitcoin-etfs-inflows-showing-robust-turnaround-in-july/) By Swan Bitcoin The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. #### [Bitcoin ETFs Inflows Showing Robust Turnaround in July](/markets/bitcoin-etfs-inflows-showing-robust-turnaround-in-july/) By Swan Bitcoin The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. #### [The Race is On: 11 Bitcoin ETFs Launch](/markets/the-race-is-on-eleven-bitcoin-etfs-launch/) By Sam Callahan These ETFs will act as a top-of-funnel and will become an initial touchpoint for many future Bitcoiners. #### [A Fed Pivot Releases Animal Spirits](/markets/a-fed-pivot-releases-animal-spirits/) By Sam Callahan It seems like things are all lining up for Bitcoin to have an explosive year in 2024. #### [Bitcoin: A Buoy in the Waves of Inflation](/markets/bitcoin-a-buoy-in-the-waves-of-inflation/) By Sam Callahan As uncertainty remains the status quo in the traditional financial system, Bitcoin’s system remains predictable and reliable. #### [The Inflation/Deflation Tug-of-War](/markets/the-inflation-deflation-tug-of-war/) By Sam Callahan Overall, the economy and central banks are in a tense tug-of-war. Inflation and disinflation are going back and forth. Which side will gain the upper hand? [More Markets articles ](/markets/) ### Product Updates [More Product Updates articles ](/product-updates/) August 7, 2026 #### [Why We Chose Blockstream Jade for Swan Vault](/product-updates/why-we-chose-blockstream-jade-for-swan-vault/) By Yan Pritzker After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan’s CTO opens up the hardware behind Swan Vault and answers it. #### [Why We Chose Blockstream Jade for Swan Vault](/product-updates/why-we-chose-blockstream-jade-for-swan-vault/) By Yan Pritzker After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan’s CTO opens up the hardware behind Swan Vault and answers it. #### [Swan Real Bitcoin Exchange (RBX): A Structured Path from Bitcoin ETFs to Real Bitcoin](/product-updates/swan-real-bitcoin-exchange-rbx-a-structured-path-from-bitcoin-etfs-to-real-bitcoi/) By Brady Swenson RBX is designed for investors with significant Bitcoin ETF positions who want to own Bitcoin directly and seek a tax-efficient outcome. #### [Best Place to Buy Bitcoin: A Decision Framework, Not a Ranking](/product-updates/best-place-to-buy-bitcoin-a-decision-framework-not-a-ranking/) By Brady Swenson Coinbase, Kraken, River, or Swan? The best place to buy Bitcoin depends on what you’re building — a trading position, or long-term wealth with real custody. #### [Swan Vault Plus: Human-Verified Withdrawal Protection](/product-updates/swan-vault-plus-human-verified-withdrawal-protection/) By Brady Swenson Live video verification, Jade Plus signing devices, and a purpose-built recovery assistant give families and businesses greater control over their Bitcoin. #### [Cryptographic Proof Over Passwords: Passkeys are Live for All Swan Clients](/product-updates/cryptographic-proof-over-passwords-passkeys-are-live-for-all-swan-clients/) By Yan Pritzker Passkeys enable faster, more secure device-based logins (face/fingerprint) that reduce password risks and strengthen our Swan Guard security protections. [More Product Updates articles ](/product-updates/) ### Culture [More Culture articles ](/culture/) June 21, 2024 #### [Bitcoin — For All Ages, For The Ages](/culture/bitcoin-for-all-ages-for-the-ages/) By Tomer Strolight For the first time in our lifetimes, we have the opportunity to save reliably over the long-term! #### [Bitcoin — For All Ages, For The Ages](/culture/bitcoin-for-all-ages-for-the-ages/) By Tomer Strolight For the first time in our lifetimes, we have the opportunity to save reliably over the long-term! #### [An Open Letter to Ann Barnhardt](/culture/an-open-letter-to-ann-barnhardt/) By Arman the Parman I decided to write a letter, then made it an open letter, to Ann Barnhardt. #### [Bitcoin: Reuniting a Deeply Divided World](/culture/bitcoin-reuniting-a-deeply-divided-world/) By Tomer Strolight Bitcoin’s unchangeability is the fix we have needed for money throughout history. #### [Yours Truly, Bitcoin](/culture/yours-truly-bitcoin/) By Tomer Strolight I do hope this letter has helped to bridge the understanding between you and me. #### [Bitcoin: An Endless Chain of Mysteries](/culture/bitcoin-an-endless-chain-of-mysteries/) By Tomer Strolight There are so many mysteries that draw us into Bitcoin. And there always will be. [More Culture articles ](/culture/) # Latest Articles - Swan Bitcoin URL: https://www.swanbitcoin.com/articles/latest/ Swan Bitcoin provides savings plans, instant buys, Private Client for businesses and HNWI, Advisor Services for financial advisors, and world-class Bitcoin education. --- [ All articles](/articles/) ## Latest Articles ### [Swan’s Agentic Software Factory: Cygnet Evolved](/technology/swans-agentic-software-factory-cygnet-evolved/) By Yan Pritzker How Swan built an agentic software factory that finds production bugs, reaches consensus on the fix, opens the PR, and proves it works before a human merges. ### [You Are Here: The $40 Trillion Debt Map](/economics/you-are-here-the-40-trillion-debt-map/) By Jeremy Showalter Total federal debt crossed $40 trillion last week. Jeremy Showalter maps how we got here, where four institutional projections take it by 2050, and why the honest total is already about $55 trillion. ### [How Bitcoin Actually Works: A First Principles Guide](/education/how-bitcoin-actually-works/) By Conor Chepenik From entropy and SHA-256 to proof of work and the 21 million cap: a first principles guide to how Bitcoin works, and what you can verify yourself. ### [A Brief History of Bitcoin Forks](/education/a-brief-history-of-bitcoin-forks/) By Yan Pritzker A history of every Bitcoin hard fork, from Bitcoin Cash and Bitcoin Gold to the 2026 BIP-110 split, and why each new coin collapsed against Bitcoin. ### [Bitcoin Concierge Services for High-Net-Worth Families](/investing/bitcoin-concierge-service-high-net-worth/) By Conor Chepenik Managing a substantial Bitcoin position across custody, trusts, retirement accounts, inheritance, and decades of family change is hard. Here is what a serious Bitcoin concierge relationship should solve. ### [Why We Chose Blockstream Jade for Swan Vault](/product-updates/why-we-chose-blockstream-jade-for-swan-vault/) By Yan Pritzker After the Coldcard exploit, everyone is asking the same question: is my Bitcoin custody setup safe? Swan’s CTO opens up the hardware behind Swan Vault and answers it. ### [Why some Coldcard seeds were compromised: false randomness](/analysis/why-some-coldcard-seeds-were-compromised-false-randomness/) By Yan Pritzker Some Coldcard hardware wallets were compromised due to false randomess. Learn which type of Coldcard users were affected and what custody alternatives exist. ### [The Battle for Monetary Independence](/essay/the-battle-for-monetary-independence/) By Cory Klippsten A 50-day campaign to advance freedom and sovereignty through Bitcoin adoption ### [Is Bitcoin Safe for Generational Wealth?](/opinion/is-bitcoin-safe-for-generational-wealth/) By Conor Chepenik Is Bitcoin safe for generational wealth? Learn why custody, inheritance planning, and patience matter more than price when building lasting family wealth with Bitcoin. ### [Bitcoin Estate Planning: The Risks Most Holders Aren’t Addressing](/education/bitcoin-estate-planning/) By Alec Bakouche Bitcoin estate planning is the most under-addressed risk in HNW portfolios. Why holders and their CPAs, attorneys, and trustees keep missing it, and how to close the gap. ### [Bitcoin Wealth Management: How to Build and Protect Generational Bitcoin Wealth](/investing/bitcoin-wealth-management/) By Conor Chepenik Learn how Bitcoin wealth management works, from custody and security to inheritance planning and liquidity. Discover how families and businesses use Bitcoin to build and protect long-term wealth. ### [Bitcoin vs. Gold as a Store of Value: Which Asset Better Protects Your Wealth?](/analysis/bitcoin-vs-gold-store-of-value/) By Conor Chepenik Bitcoin vs. gold as a store of value in 2026: how they compare on scarcity, portability, and ownership & which better protects your wealth long term. ### [Swan Real Bitcoin Exchange (RBX): A Structured Path from Bitcoin ETFs to Real Bitcoin](/product-updates/swan-real-bitcoin-exchange-rbx-a-structured-path-from-bitcoin-etfs-to-real-bitcoi/) By Brady Swenson RBX is designed for investors with significant Bitcoin ETF positions who want to own Bitcoin directly and seek a tax-efficient outcome. ### [Bitcoin Custody: How to Store Bitcoin Safely Without Overcomplicating It](/education/bitcoin-custody-easy-and-safe/) By Conor Chepenik Bitcoin custody is not one-size-fits-all. Learn the tradeoffs between hot wallets, cold storage, single sig, multisig, collaborative custody, ETFs, inheritance planning, and long-term Bitcoin security. ### [Best Place to Buy Bitcoin: A Decision Framework, Not a Ranking](/product-updates/best-place-to-buy-bitcoin-a-decision-framework-not-a-ranking/) By Brady Swenson Coinbase, Kraken, River, or Swan? The best place to buy Bitcoin depends on what you’re building — a trading position, or long-term wealth with real custody. ### [Quantum Fear-Mongering and The Infinite Perils Trap](/analysis/quantum-bitcoin-fear-mongering-and-the-infinite-perils-trap/) By Cory Klippsten Quantum is a real research problem, not a license to break Bitcoin’s deepest norms. Prepare seriously. Move slowly. Leave Satoshi’s coins alone. ### [Buy Real Bitcoin, Not a Bitcoin ETF: Why Ownership Still Matters](/analysis/buy-real-bitcoin-not-a-bitcoin-etf-why-ownership-still-matters/) By Brady Swenson A spot Bitcoin ETF tracks the price of Bitcoin. Owning shares is not the same as owning Bitcoin. ### [Swan Vault Plus: Human-Verified Withdrawal Protection](/product-updates/swan-vault-plus-human-verified-withdrawal-protection/) By Brady Swenson Live video verification, Jade Plus signing devices, and a purpose-built recovery assistant give families and businesses greater control over their Bitcoin. ### [Cryptographic Proof Over Passwords: Passkeys are Live for All Swan Clients](/product-updates/cryptographic-proof-over-passwords-passkeys-are-live-for-all-swan-clients/) By Yan Pritzker Passkeys enable faster, more secure device-based logins (face/fingerprint) that reduce password risks and strengthen our Swan Guard security protections. ### [Introducing Swan Generations, Empowering Families to Allocate Real Bitcoin to the Next Generation](/product-updates/introducing-swan-generations-empowering-families-to-allocate-real-bitcoin/) By Jeremy Showalter Swan Generations provides a unique service for parents, legal guardians, and others to make irrevocable gifts of real Bitcoin. ### [Rolling Over a 401(k) and Other Workplace Retirement Plans to a Swan Bitcoin IRA: The Complete Guide](/education/rolling-over-a-401-k-and-other-workplace-retirement-plans-to-a-swan-bitcoin-ira-t/) By Alec Bakouche Rolling your old 401(k) into a Swan Bitcoin IRA lets you move legacy retirement savings into real Bitcoin while preserving tax advantages and compliance protections. ### [Swan Safe Plus: Human-Verified Bitcoin Protection](/product-updates/swan-safe-plus-next-level-security-for-your-bitcoin/) By Brady Swenson Live human verification for every Bitcoin and USD withdrawal, creating a final checkpoint that blocks SIM swaps, device theft, and social engineering. ### [Swan Bitcoin is Live in New York, Bringing End-to-End Bitcoin Wealth Services to the World’s Financial Capital](/product-updates/swan-bitcoin-is-live-in-new-york-bringing-end-to-end-bitcoin-wealth-services-to-t/) By Brady Swenson Swan Bitcoin is now live in New York, offering its full suite of services including purchases, secure custody, and retirement accounts. New Yorkers now have access to a Bitcoin-only company focused on real ownership. ### [Building Swan Guard: Raising the Standard Across the Bitcoin Custody Spectrum](/product-updates/building-swan-guard-raising-the-standard-across-the-bitcoin-custody-spectrum/) By Yan Pritzker Swan Guard brings world-class Bitcoin security with advanced risk controls, scam defense, and expert support — vigilantly protecting your Swan account and safeguarding your Bitcoin. ### [Why Every Gold Investor Should Seriously Consider Bitcoin](/opinion/why-every-gold-investor-should-seriously-consider-bitcoin/) By Alex Stanczyk After managing a Swiss gold fund for 8 years, I realized Bitcoin surpasses gold as the ultimate store of value. Here’s why every gold investor should study Bitcoin closely. ### [Swan Announces New Chief Investment Officer, Publishes Guide to Leveraged Bitcoin Equities](/industry/swan-announces-new-chief-investment-officer-publishes-guide-to-leveraged-bitcoin/) By Swan Bitcoin Ben Werkman joins Swan as CIO. New LBE primer explains key concepts, implementation steps, risk management, and valuation approaches. ### [Introducing Swan Guard and Elevated Service Tiers for the Bitcoin-based Investor](/product-updates/introducing-swan-guard-and-elevated-service-tiers-for-the-bitcoin-based-investor/) By Cory Klippsten Today we announce a new suite of security enhancements and elevated service tiers, reflecting our commitment to serving the Bitcoin-based investor. ### [This Time is Different](/analysis/this-time-is-different/) By Jason Bassett No longer a niche commodity, Bitcoin now finds itself a prime fixation of the US Executive Branch. ### [The Ghosts of Glass-Steagall: SAB 122 and History’s Warning for Bitcoin’s Future](/opinion/the-ghosts-of-glass-steagall-sab-122-and-history-s-warning-for-bitcoin-s-future/) By Brett D. Guiley The SAB 121 repeal mirrors the end of Glass-Steagall in 1999, which played a major role in the 2008 financial crisis. Bitcoiners should listen to history and be more cautionary about SAB 122. ### [Digital Asset Reserves: Bitcoin Stands Alone](/analysis/digital-asset-reserves-bitcoin-stands-alone-in-long-term-value-preservation-and-s/) By Ben Werkman and Lyn Alden Bitcoin is the only digital asset that meets the necessary criteria for a sovereign reserve, given its decentralization, liquidity, security, and geopolitical significance. ### [The Scambling Age](/opinion/the-age-of-scambling/) By Cory Klippsten Trump Coin and the wild west of non-Bitcoin crypto ### [Swan Bitcoin is Live in New York](/product-updates/swan-bitcoin-is-live-in-new-york/) By Brady Swenson With its launch in the center of global finance, Swan Bitcoin empowers New Yorkers to build lasting wealth with Bitcoin financial services and expert guidance. ### [New Personal Account, Swan Vault on Mobile App, and Withdrawals to Self-Custody](/product-updates/new-personal-account-swan-vault-on-mobile-app-and-withdrawals-to-self-custody/) By Matt Carvalho We are excited to share the latest improvements to the Swan Bitcoin mobile app, streamlining your Bitcoin buying and storage experience. ### [How to Set Up Swan Vault: Unlocking Safer Bitcoin Self-Custody](/education/how-to-set-up-swan-vault/) By Matt Carvalho Discover how Swan Vault puts you in full control of your Bitcoin with a simple, secure setup. See just how easy it is to safeguard your wealth and unlock your monetary autonomy. ### [Swan Bitcoin and Equity Trust Collaboration Unlocks New Retirement Account Features for Bitcoin Investors](/industry/swan-bitcoin-and-equity-trust-collaboration-unlocks-new-retirement-account-featur/) By Brady Swenson Equity Trust and Swan collaborate to bring new IRA account types and features to Swan’s IRA product. ### [The Bitcoiner who Ran for French National Assembly](/analysis/the-bitcoiner-who-ran-for-french-national-assembly/) By Joe Nakamoto Running on a Bitcoin-only platform is a significant milestone. ### [Swan Vault — Safe and Sound Self-Custody](/industry/swan-vault-safe-and-sound-self-custody/) By Brady Swenson and Brandon Black Swan Vault is advanced Bitcoin security made simple. You don’t need a bank, but you don’t have to go it alone. ### [From Fiat Family Home to Bitcoin Mining Trailer: Off-Grid Steve](/opinion/from-fiat-family-home-to-bitcoin-mining-trailer-off-grid-steve/) By Joe Nakamoto The British Bitcoiner on a mission to understand whether Off-Grid, Bitcoin miner heat living is a viable and crucially, profitable venture. ### [If They Can Print Money, Why Do We Pay Taxes?](/analysis/if-they-can-print-money-why-do-we-pay-taxes/) By Stephan Livera Bitcoin is a real solution to the issues surrounding the question of “If they can print money, why do we pay taxes?” ### [Why Bitcoin Needs To Change](/opinion/why-bitcoin-needs-to-change/) By Chris Guida When we save our life’s work in bitcoin, we want to be certain that the wealth generated by such work will still be around decades or even centuries from now. ### [Germany’s Bitcoin “Brown Bottom”](/opinion/germany-s-bitcoin-brown-botom/) By Matthew Kratter Germany’s 50,000 BTC dump at the bull run start is baffling, especially since they can print fiat. This, along with poor energy policies and free speech disregard, shows why Bitcoin offers hope for a better world. ### [Bitcoin ETFs Inflows Showing Robust Turnaround in July](/markets/bitcoin-etfs-inflows-showing-robust-turnaround-in-july/) By Swan Bitcoin The inflows on these two days alone underscore the growing interest and confidence in Bitcoin ETFs. ### [Trump, Bitcoin, and the Swamp](/opinion/trump-bitcoin-and-the-swamp/) By Matthew Kratter What does the Trump assassination attempt mean for the 2024 election and Bitcoin policy? Also, the U.S. secret service shows itself to be as incompetent as the mainstream media is when it covers anything Trump. ### [Craig Wright Referred for Perjury Prosecution, Receives Injunctions in COPA Case](/industry/craig-wright-referred-for-perjury-prosecution-receives-injunctions-in-copa-case/) By Swan Bitcoin Final arguments in the the Crypto Open Patent Alliance (COPA) vs. Craig Wright’s assertion that he is Bitcoin’s creator, Satoshi Nakamoto, and to prevent him from continuing to make such claims. ### [Bitcoin on the Ballot](/politics/bitcoin-on-the-ballot/) By Jason Bassett Millions of Bitcoiners are single-issue voters. Jason evaluates how much influence will they have in November 2024! ### [Bitcoin Wealth Distribution](/opinion/bitcoin-wealth-distribution/) By Matthew Kratter Bitcoin curbs government overreach through money printing and devaluation. It promotes saving and long-term investment over fiat’s consumerism, empowering global citizens and potentially sparking a cultural renaissance. ### [CFTC Coming For Bitcoin?](/opinion/cftc-coming-for-bitcoin/) By Matthew Kratter Competition exists between US government agencies like the SEC and CFTC to regulate Bitcoin. Senate Democrats propose giving the CFTC unprecedented control over BTC, beyond its traditional role. ### [Bitcoin Miners Depilating Dogs?](/opinion/bitcoin-miners-depilating-dogs/) By Matthew Kratter Is Bitcoin mining is behind canine hair loss, old oak trees dying, and old people getting sick? No. But, the smear campaigns remain relentless. ### [Biden’s SAB121 Veto Stands: What This Means for Banks and Bitcoin Custody](/politics/biden-s-sab121-veto-stands-what-this-means-for-banks-and-bitcoin-custody/) By Swan Bitcoin The House failed to overturn Biden’s veto on a bill allowing banks to custody Bitcoin and crypto assets, addressing SEC’s SAB 121, which imposes stringent accounting requirements on banks holding these assets. ### [Germany’s Sale of 50,000 Confiscated Bitcoins Demonstrates Bitcoin’s Robust Liquidity](/industry/germany-s-sale-of-50-000-confiscated-bitcoins-demonstrates-bitcoin-s-robust-liqui/) By Swan Bitcoin Germany sold 50,000 Bitcoin seized from an illegal music-sharing service. How the German government is valuing the BTC has sparked global interest and debate in the Bitcoin community. ### [Is Bitcoin Controlled By Tether?](/opinion/is-bitcoin-controlled-by-tether/) By Matthew Kratter Questions about Bitcoin market and transactional value, and Tether’s influence. Bitcoin isn’t controlled by Tether, which is likely not a Ponzi scheme but a profitable business. ### [Will A.I. Go the Way of Bitcoin Mining](/mining/will-a-i-go-the-way-of-bitcoin-mining/) By Adrian Morris Abstract: ASICs are coming to Artificial Intelligence. They may well become part of the AI mix. However, ASICs are unlikely to come to dominate AI as they have in Bitcoin Mining. ### [Bitcoin: Too Volatile To Be Money?](/opinion/bitcoin-too-volatile-to-be-money/) By Matthew Kratter BTC’s price volatility is due to its smaller market cap. Although its been decreasing over time, it could spike during a fiat currency collapse, similar to the unpredictability of gold prices during the Weimar Republic. ### [Bitcoin HODL’ing vs. Spending](/opinion/bitcoin-hodl-ing-vs-spending/) By Matthew Kratter In this video, Matt discusses Bitcoin HODL’ing vs. Bitcoin spending. Most people should probably have at least 2 Bitcoin buckets: 1) Deep cold storage Bitcoin, 2) Spending wallet. ### [Bitcoin’s HODL Culture](/opinion/bitcoin-s-hodl-culture/) By Matthew Kratter Bitcoin’s culture of hodling, and how important it is both for building strong individuals and families, as well as creating the precondition for a Bitcoin circular economy to develop. ### [Bootstrapping Bitcoin](/opinion/bootstrapping-bitcoin/) By Matthew Kratter Launching a new cryptocurrency is challenging, needing miner compensation through new issuance (diluting holders) or transaction fees (requiring long-term demand). Bitcoin successfully navigated this quagmire. ### [3 Easy Steps to Delete Your Coinbase Account (w/ Screenshots) July Update](/education/delete-coinbase-in-3-easy-steps/) By Cory Klippsten You may have wondered “How do I get my money out of Coinbase?” This guide will show you step-by-step how to transfer Bitcoin from Coinbase and then how to delete your account forever in July of 2024! ### [Highly Regarded Bitcoin Miner](/opinion/highly-regarded-bitcoin-miner/) By Matthew Kratter Matt discusses Marathon Digital Holdings (MARA), a US Bitcoin miner criticized for OFAC censorship, spamming the network and mining altcoins. With stock price and revenue down — survival is uncertain. ### [How To Deprogram Yourself](/opinion/how-to-deprogram-yourself/) By Matthew Kratter Learn how to deprogram yourself, and get on the path to recovery from years of abuse and gaslighting by governments, schools, corporations, lobbying groups, and the media. ### [Multi-Sig Custody and Inheritance](/education/multi-sig-custody-and-inheritance/) By Matthew Gillette This essay is my attempt to answer all your questions about multi-sig custody and inheritance so you walk away with a better understanding of the options and can figure out what is best for your family. ### [The Magic of Dollar-Cost-Averaging (DCA’ing) Bitcoin](/opinion/the-magic-of-dollar-cost-averaging-dca-ing-bitcoin/) By Matthew Kratter Dollar cost averaging (DCA) imposes the discipline of buying fewer sats when the fiat price is higher and more sats when the fiat price is lower, thus giving you a lower fiat cost basis. ### [Is Bitcoin A Giant PsyOp?](/opinion/is-bitcoin-a-giant-psyop/) By Matthew Kratter Fiat money, not Bitcoin is the true psyop, controlling money supply to fund bureaucrats. Opt out and choose Bitcoin, the freedom money. ### [Mt. Gox Dump Coming?](/opinion/mt-gox-dump-coming/) By Matthew Kratter The market may overreact to the upcoming Mt. Gox BTC distribution — presenting a buying opportunity. Long-term HODLers should use lower prices to accumulate BTC. ### [Financial Advisors: It’s Time to Study Bitcoin](/industry/financial-advisors-it-s-time-to-study-bitcoin/) By Matt Golliher This is an open letter to financial advisors and their firms about the dangers of ignoring Bitcoin and the opportunity of embracing it. ### [Bitcoin — For All Ages, For The Ages](/culture/bitcoin-for-all-ages-for-the-ages/) By Tomer Strolight For the first time in our lifetimes, we have the opportunity to save reliably over the long-term! ### [Will Bitcoin Kill All Stocks?](/opinion/will-bitcoin-kill-all-stocks/) By Matthew Kratter Sound money, free markets, and corporations can coordinate human activity and productivity effectively, but stocks, unlike Bitcoin, are paper assets subject to management, regulatory, and operational risks. ### [Bitcoin Isn’t Ossified, It’s in Equilibrium](/analysis/bitcoin-isn-t-ossified-it-s-in-equilibrium/) By Rapha Zagury Bitcoin is the world’s first truly global grassroots revolution. ### [Bitcoin, Ethereum, and the Fall of the Roman Republic](/finance/bitcoin-ethereum-and-the-fall-of-the-roman-republic/) By Sam Callahan Bitcoin is unchanging, and in a complex world where everything changes all the time, this is what makes it a system the likes of which the world has never seen… ### [The Sunshine Manifesto](/opinion/the-sunshine-manifesto/) By Steven Lubka Rather than being something to be avoided, sunlight has many health benefits that most people are unaware of, from reducing chronic illnesses, to prolonging your life. ### [A Massive Opportunity to Spread Bitcoin Education](/industry/a-massive-opportunity-to-spread-bitcoin-education/) Swan is sponsoring the Tucker Carlson Live Tour traveling to 15+ cities across America. ### [Bitcoin is the New Non-Aligned Movement](/politics/bitcoin-is-the-new-non-aligned-movement/) By Enza Coin In a bifurcated world, Bitcoin can be the solution representing a new Monetary Non-Aligned Movement. ### [Asset Performance in Times of Conflict](/investing/asset-performance-in-times-of-conflict/) By Sam Callahan Given the inflationary consequences of war, history advises caution regarding traditional safe-haven assets such as cash and bonds. ### [Billionaires Boosting Bitcoin](/opinion/billionaires-boosting-bitcoin/) By Matthew Kratter Larry Fink’s CNBC interview, retweeted by Michael Saylor and Michael Dell, pitches Bitcoin as a legitimate hedge against monetary debasement with non-correlated returns. Bitcoin is HOPE! ### [Are Recent Regulatory and Political Moves Good for Bitcoin?](/politics/are-recent-regulatory-and-political-moves-good-for-bitcoin/) By Rapha Zagury The answer is becoming clear: not only will they not ban it — they will embrace it. ### [Tech Giants' AI Energy Crisis Is Their Own Fault](/industry/ai-energy-crisis/) By Alex Epstein We can either continue our current trajectory, or we can adopt energy freedom policies and become a world leader in both AI and electricity. ### [Scaling Bitcoin: Lightning, Liquid & The Blockchain Trilemma](/education/scaling-bitcoin/) By Adrian Morris These networks represent pivotal developments in the quest to enhance Bitcoin’s capabilities and overcome its limitations. ### [Cherry Pickers](/analysis/cherry-pickers/) By Stephan Livera While quick ‘drive-by’ analyses can be inflammatory and make it look like Bitcoin is failing, proper analysis requires ‘zooming out’ and understanding the reasoning at a deeper level… ### [Epoch Five — Big League Bitcoin](/analysis/epoch-five-big-league-bitcoin/) By Tomer Strolight Block 840,000 has come and gone. With it, came Bitcoin’s fourth halving, cutting the issuance of new coins to 3.125 per block. Welcome to Epoch V. What awaits us? ### [An Open Letter to Ann Barnhardt](/culture/an-open-letter-to-ann-barnhardt/) By Arman the Parman I decided to write a letter, then made it an open letter, to Ann Barnhardt. ### [Swan Announces Managed Bitcoin Mining Service](/industry/swan-announces-managed-bitcoin-mining-service/) By Swan Bitcoin Swan Bitcoin launches Managed Mining service for institutional investors, announces strategic collaboration with Tether, targets 100 EH by 2026. ### [What Are Bitcoin Ordinals? (Why Inscript Your BTC)](/education/what-are-bitcoin-ordinals/) By Drew Seen as an innovation in data storage and network security by some, while others view them as a passing Bitcoin fade and drift. Let’s take a closer look at both perspectives! ### [Running the Numbers: How Fiat Pushed the American Dream Away from Millennials](/industry/fiat-american-dream/) By Sam Callahan Bitcoin symbolizes hope for a generation who increasingly feel as though their futures have been stolen from them by the traditional fiat system. ### [Privacy, Executive Order 6102 & Bitcoin](/politics/privacy-executive-order-6102-bitcoin/) By Steven Lubka Let’s keep pushing forward for the future we want to see, one in which both the price of Bitcoin and global freedom can go up together. ### [Changing Bitcoin, Part III — The Future](/analysis/changing-bitcoin-part-iii-the-future/) By Tomer Strolight Bitcoin will change the lens of what it takes to succeed in pursuing change itself. It will change everything and the tactics people use to achieve change. Bitcoin will change how we “People with each other.” ### [Schrödinger’s Coin Model](/investing/schrodingers-coin-model/) By Rapha Zagury Valuing Bitcoin as a Store of Value ### [The Eras of Bitcoin](/analysis/the-eras-of-bitcoin/) By Swan Bitcoin and Drew SWAN SIGNAL MONTHLY NEWSLETTER VOL. 42 ### [Interview with an Orange-pilled Financial Advisor](/investing/interview-with-an-orange-pilled-financial-advisor/) By Ryan Flynn Is this the shape of things to come? ### [Changing Bitcoin, Part II — The Present](/analysis/changing-bitcoin-part-ii-the-present/) By Tomer Strolight Rule Changes Are Being Proposed. How Might They Change Bitcoin? How Might They Happen? ### [Wall Street Bitcoin: What it Means For Bitcoin and You](/investing/wall-street-bitcoin-what-it-means-for-bitcoin-and-you/) By Terrence Yang With the successful launch of 10 Bitcoin ETFs, Wall Street has come into Bitcoin in a big way, and it will only get bigger. Is this good or bad for Bitcoin? Like many things in life, the answer is nuanced and uncertain. ### [Changing Bitcoin: The Past, The Present, and The Future (Part One)](/analysis/changing-bitcoin-the-past-the-present-and-the-future-part-one/) By Tomer Strolight For Bitcoin to achieve the lofty goals many have for it, its rules will need to change. This three-part series of articles will tackle what it takes to change Bitcoin. ### [A Changed Bitcoin At $50k](/analysis/a-changed-bitcoin-at-50k/) By Sam Callahan Although $50k was close to the cycle high in 2021, the current environment makes it easy to believe that this time, $50k marks the beginning, not the end, of an extraordinary bull run. ### [GBTC was the Genesis of the Crypto Credit Contagion (Part II)](/investing/gbtc-credit-contagion-part-ii/) By Sam Callahan There are many reasons to criticize DCG and Genesis. Moreover, the drama highlights why holding Bitcoin is a superior option for investors. No fees or if your money benefits a company that doesn’t align with your values. ### [Trillion-Dollar Deficits are Keeping the Economy Afloat](/economics/trillion-dollar-deficits-are-keeping-the-economy-afloat/) By Sam Callahan The reckless nature of government fiscal policies suggests a future where financial instability may hinge on the balance between innovation and traditional policy decisions. ### [Swan Bitcoin Unveils Mining Unit](/industry/swan-bitcoin-unveils-mining-unit/) By Swan Bitcoin Swan is proud to be hashing! ### [Bitcoin Liberation: Yan Pritzker’s Personal Journey to Freedom](/politics/bitcoin-liberation/) By Yan Pritzker Bitcoin is about so much more than merely “number go up.” It’s a tool to reclaim individual economic freedom from those who seek to take that freedom away. And that is something to be optimistic about! ### [Are “Ordinals” Worth Worrying About?](/industry/are-ordinals-worth-worrying-about/) By Stephan Livera Ordinals and Inscriptions are not ideal for monetary users of Bitcoin, but they are not currently a systemic issue for Bitcoin. Learn why with Stephan Livera! ### [Bitcoin: Solving the Fundamental Problem of Money](/education/bitcoin-solving-the-fundamental-problem-of-money/) By Tomer Strolight Bitcoin’s rate of supply discovery is slowing down, by half, every four years — a first for any commodity! Satoshi solved not just the double-spending problem but also the fiat imalleable supply cap problem! ### [5 Reasons to Be Bullish Heading into 2024](/analysis/5-reasons-to-be-bullish-heading-into-2024/) By Sam Callahan While past performance is not a guaranteed indicator of future results, the combination of these catalysts suggests a heightened interest and investment in Bitcoin and another green candle year! ### [The Race is On: 11 Bitcoin ETFs Launch](/markets/the-race-is-on-eleven-bitcoin-etfs-launch/) By Sam Callahan These ETFs will act as a top-of-funnel and will become an initial touchpoint for many future Bitcoiners. ### [What Bitcoin ETFs Mean for You](/industry/what-bitcoin-etfs-mean-for-you/) By Swan Bitcoin Bitcoin ETFs are here! ### [Assessing Risk in Bitcoin Custody](/education/assessing-risk-in-bitcoin-custody/) By Yan Pritzker Swan encourages our clients to withdraw their Bitcoin to self-custody by offering free and automatic withdrawals. ### [Will a Record Flood to Cash Flow into Bitcoin Next?](/analysis/cash-flow-into-bitcoin-next/) By Sam Callahan If the Fed decides to cut rates then expect the floodgates to open, and Bitcoin will be one beneficiary as it sucks up the liquidity, potentially driving its price to new heights in the coming year. ### [Will Bitcoin Follow Gold’s Monetary Rise and Fall? And a Look at Bitcoin’s Scaling Strategy](/economics/will-bitcoin-follow-gold-s-monetary-rise-and-fall/) By John Haar Bitcoin can achieve its ultimate goal — to be a neutral base layer of a new monetary system for billions of users worldwide ### [Bitcoin: Reuniting a Deeply Divided World](/culture/bitcoin-reuniting-a-deeply-divided-world/) By Tomer Strolight Bitcoin’s unchangeability is the fix we have needed for money throughout history. ### [A Fed Pivot Releases Animal Spirits](/markets/a-fed-pivot-releases-animal-spirits/) By Sam Callahan It seems like things are all lining up for Bitcoin to have an explosive year in 2024. ### [Swan Bitcoin 2023 Give Guide](/industry/swan-bitcoin-2023-give-guide/) By Alex Davani We can all agree there is nothing greater than the gift of Bitcoin. This holiday season, please join the Swan family in the joy of giving (with a Bitcoin-centric twist). ### [Argentina: How Fiat Policies Ruined a Once Prosperous Nation](/economics/argentina-how-fiat-policies-ruined-a-once-prosperous-nation/) By Sam Callahan If Argentina embraces Bitcoin, perhaps it can start to resemble the prosperous nation it once was and its people can finally experience something they haven’t felt in a long time — hope. ### [I’m Bullish and Don’t Care Who Knows](/analysis/i-m-bullish-and-don-t-care-who-knows/) By Isaiah Douglass All-Time High Bullishness — Why Today Feels Different! ### [A Recap of the 2023 Pacific Bitcoin Festival](/industry/2023-pacific-bitcoin-festival-recap/) By Nick Payton Pacific Bitcoin redefines the boundaries of what an event could be by seamlessly blending the best of Bitcoin education, entertainment, and social connections. It was more than just a conference. ### [5 Reasons to Focus on Bitcoin Only](/investing/5-reasons-to-focus-on-bitcoin-only/) By Brandon Quittem Unlike other cryptocurrencies, over the long term, Bitcoin has provided exceptional returns, peace of mind, and security for HODLers, their families, businesses, and employees. ### [Feast or Famine? Breaking Down the State of the Economy](/economics/feast-or-famine-breaking-down-the-state-of-the-economy/) By Sam Callahan As Americans continue to feel misled by their government and struggle with the cost of living, Bitcoin increasingly becomes a viable alternative. ### [What Bitcoiners Need to Know About Hashes (But Are Afraid to Ask)](/education/what-bitcoiners-need-to-know-about-hashes-but-are-afraid-to-ask/) By Tomer Strolight Bitcoin leans heavily on a process called hashing to achieve many of its unique properties… But what actually is hashing? ### [Why Bitcoin is the Ultimate Asset for Your IRA](/investing/why-bitcoin-is-the-ultimate-asset-for-your-ira/) By Brandon Quittem Adding Bitcoin to your IRA can provide asset diversification, as well as the potential for higher returns and a measure of protection against monetary debasement. ### [Preparing for an Inflationary Soft Landing](/economics/preparing-for-an-inflationary-soft-landing/) By Sam Callahan Investors need to consider that we may be entering a period not seen in the developed world in decades, similar only to those experienced in emerging markets. ### [Bitcoin: A Digital Benchmark For Tracking Fiat Debasement](/economics/bitcoin-a-digital-benchmark-for-tracking-fiat-debasement/) By Sam Callahan As economies around the globe grapple with the fragility of their currencies, the rising adoption of Bitcoin signals a collective move towards the hardest money man has ever known. ### [What’s New and Coming in Lightning](/industry/what-s-new-and-coming-in-lightning/) By Stephan Livera As Lightning Network Usage Grows, Splicing, BOLT12, Offline Payments, and LSPs are Poised to Deliver Big Improvements for Users. ### [A Bond Bloodbath is Spiking Heart Rates](/economics/bond-bloodbath-spiking-heart-rates/) By Sam Callahan Bond yields are rising as investors are beginning to question the sustainability of these policies as the budget deficit grows larger and inflation remains elevated. ### [Yours Truly, Bitcoin](/culture/yours-truly-bitcoin/) By Tomer Strolight I do hope this letter has helped to bridge the understanding between you and me. ### [Bitcoin Core’s Development Priorities in 2023](/industry/bitcoin-cores-development-priorities-in-2023/) By Evan Developers have been busy shoring up the Bitcoin Core node software. Here is what they are up to. ### [The Government is Spending Like There’s No Tomorrow](/politics/the-government-is-spending/) By Sam Callahan As the government spends frivolously to prevent a recession, the traditional monetary system seems to be growing more fragile as it fractures under the weight of enormous amounts of debt. ### [Bitcoin: Demystifying Money](/analysis/bitcoin-demystifying-money/) By Tomer Strolight Only Bitcoin completely demystifies how money works and, even more importantly, will continue to work. ### [Bitcoin: A Buoy in the Waves of Inflation](/markets/bitcoin-a-buoy-in-the-waves-of-inflation/) By Sam Callahan As uncertainty remains the status quo in the traditional financial system, Bitcoin’s system remains predictable and reliable. ### [2023 is a Ripe Environment for Central Bank Failure](/economics/2023-is-a-ripe-environment-for-central-bank-failure/) By Sam Callahan The history of the Bank of Amsterdam underscores the vital role trust plays within the monetary system today. As more individuals choose Bitcoin over traditional fiat currencies, its adoption and significance will grow. ### [Accounting for Bitcoin in a World of Rising Oil Prices](/economics/accounting-for-bitcoin-in-a-world-of-rising-oil-prices/) By Sam Callahan These are thin markets right now, so when major news hits, expect the volatility to continue. And remember… volatility works both ways! ### [IBEX Joins Forces with Pacific Bitcoin Conference](/industry/ibex-pacific-bitcoin-conference/) By Swan Bitcoin Swan is thrilled to announce our partnership with IBEX at the 2023 Pacific Bitcoin Conference. ### [Bitcoin: More Relevant, More Urgent, More Ready — Part 2](/industry/bitcoin-more-relevant-more-urgent-more-ready-part-2/) By Ulric Pattillo Three more personas that inhibit Bitcoin adoption for themselves and others around them. ### [Bitcoin Awakens from its Summer Slumber](/investing/bitcoin-awakens-from-its-summer-slumber/) By Sam Callahan This drawn-out period of low volatility serves as a coiled spring. The only question is in which direction will the price eventually break. ### [The Speed of Transactions vs. the Speed of Settlements](/economics/broken-money-chapter-8/) By Lyn Alden This draws from chapter 8 of Lyn Alden’s new book, Broken Money, and focuses on a key reason why the world became more and more financialized. ### [Bitcoin: An Endless Chain of Mysteries](/culture/bitcoin-an-endless-chain-of-mysteries/) By Tomer Strolight There are so many mysteries that draw us into Bitcoin. And there always will be. ### [Tether: The New Big Bitcoin Buyer in Town](/industry/tether-the-new-big-bitcoin-buyer-in-town/) By Sam Callahan Tether has now become a significant, price-insensitive regular buyer of Bitcoin. ### [Bitcoin — The Natural Choice For Artificial Intelligence](/culture/bitcoin-the-natural-choice-for-artificial-intelligence/) By Tomer Strolight AI agents will need to use money and Bitcoin is the best money for the job. This results in Bitcoin both benefiting AI and benefiting from AI. ### [The Phoenix Trade](/investing/the-phoenix-trade/) By Sam Callahan Bitcoin isn’t just “not going away, ” it’s growing stronger every day. ### [Bitcoin: The Bear Market King](/investing/bitcoin-the-bear-market-king/) A new crop of altcoins emerges with each Bitcoin bull cycle. Yet, they inevitably meet the same fate. By illuminating this cyclical trend, we can steer the public away from the risky gamble of altcoins. ### [The Bitcoin Breakthrough](/culture/the-bitcoin-breakthrough/) By Tomer Strolight The changes Bitcoin will bring about to society will be significant. ### [Swan is Supporting the Mining Disrupt Conference](/industry/swan-is-supporting-the-mining-disrupt-conference/) Join us on July 25-27, 2023 in Miami for the World’s Largest Bitcoin B2B & Bitcoin Mining Conference & Expo! ### [What’s Driving Bitcoin’s Price in the Current Debt & Inflation Predicament](/investing/tracking-bitcoin-rally-after-the-cash-injection-of-2020/) By Sam Callahan Fulfilling its destiny as a hedge against reckless fiscal and monetary policies, Bitcoin has proven its mettle in its first fourteen years of existence. Let’s look at the current debt and inflation predicament. ### [Miami Bitcoin 2023 Conference Wrap-up](/industry/miami-bitcoin-2023-conference-wrap-up/) By Drew The Bitcoin 2023 Conference took place in Miami from May 18th — 20th. Here are our top takeaways! ### [The Charmed Life of a Baby Boomer Named James](/culture/the-charmed-life-of-a-baby-boomer-named-james/) By Mark Harvey The baby boomers left us with a debt/GDP ratio of 120%, and grandkids that can’t afford to buy a house. What is the current generation to do? Enter Bitcoin. ### [The Inflation/Deflation Tug-of-War](/markets/the-inflation-deflation-tug-of-war/) By Sam Callahan Overall, the economy and central banks are in a tense tug-of-war. Inflation and disinflation are going back and forth. Which side will gain the upper hand? ### [The Substance of Bitcoin](/culture/the-substance-of-bitcoin/) By Tomer Strolight Bitcoin is a carefully and precisely engineered solution to a crucially important human need — the need for a reliable, universal medium to use as money. ### [The Great Institutional Bitcoin Capitulation](/industry/are-institutions-feeling-the-fomo/) By Sam Callahan For once, the big financial institutions are late to the game, and it’s beautiful to see. ### [The Essence of Bitcoin](/culture/essence-of-bitcoin/) By Tomer Strolight Bitcoin’s essence is that it is a good idea, for the good of humanity, whose time has come, and which cannot be stopped. ### [Green Shoots and Lawsuits](/industry/green-shoots-and-lawsuits/) By Sam Callahan As investors become more optimistic about the state of the economy and asset prices, we’ll see if Bitcoin can join in on the party as it overcomes the regulatory calamities ensnaring the broader cryptocurrency industry. ### [Three Innovations Being Built on Bitcoin Today](/industry/3-innovations-being-built-on-bitcoin-today/) By Sam Callahan The Bitcoin ecosystem is a hotbed of continuous developments, pushing the boundaries of what is possible with this transformative technology. ### [How Bitcoin and Lightning Can Boost Productivity](/analysis/running-the-numbers/) By Sam Callahan The emergence of Bitcoin and the Lightning Network offers promising solutions that could potentially reverse negative trends and revitalize US productivity. ### [My Top 3 Takeaways from the MicroStrategy World Conference](/industry/my-top-3-takeaways-from-the-microstrategy-world-conference/) By Dante Cook The crowd was buzzing all week with an electric energy that was a perfect blend of anticipation and curiosity. ### [The Bullish Case For Bitcoin Custodians](/industry/the-bullish-case-for-bitcoin-custodians/) By Andrew Mahowald and Pretyflaco By rallying around a nuanced yet challenging standard for assessing custodians, we can minimize risk and maximize the speed of Bitcoin adoption. ### [Another Bank Fails As Bitcoiners Work DC](/politics/another-bank-fails-as-bitcoiners-work-dc/) By Sam Callahan Here’s the 32nd issue of Swan Private Market Update, our bi-weekly industry report exclusively for Swan Private clients. ### [The Right Questions to Ask to Avoid Bitcoin IRA Icebergs](/industry/the-right-questions-to-ask-to-avoid-bitcoin-ira-icebergs/) By Terrence Yang and Jeremy Showalter The Swan IRA is uniquely designed and features a distinctive account setup that incorporates various levels of legal compliance, regulatory oversight, custodial services, and high-level institutional security measures. ### [The Truth is on Our Side](/culture/the-truth-is-on-our-side/) By Drew Bitcoin shines the truth on many lies. It is as much a movement as an investment… ### [The Banking System vs. Bitcoin](/analysis/the-banking-system-vs-bitcoin/) By John Haar It’s agreed that there are problems in the banking system. The proposed solutions are wildly different. A look at the recent U.S. banking failures, the nature of banking crises, and how Bitcoin is different. ### [Bitcoin: More Relevant, More Urgent, More Ready](/economics/bitcoin-more-relevant-more-urgent-more-ready/) By Ulric Pattillo In March of 2023, a banking crisis arose as an active threat to depositors of two banks and a potential threat to many. ### [The United State of Bitcoin](/politics/the-united-state-of-bitcoin/) By Tomer Strolight Where the US constitution declared that we are all equal, Bitcoin, within its context of money, ensures we are all treated equally, under completely transparent rules. ### [Bitcoin’s Moment](/culture/bitcoin-s-moment/) By Drew Born from the ashes of the 2008 financial crisis, Bitcoin was is an engineered solution to the inherent flaws and vulnerabilities within centralized banking structures. ### [My Journey From Mount Stupid to Bitcoiner](/culture/my-journey-from-stupid-to-bitcoiner/) By Ben Wehrman This is my journey from altcoins to Bitcoin. ### [A New Peaceful Transition of Power](/politics/a-new-peaceful-transition-of-power/) By Tomer Strolight In democracies we rely on elections — Proof-of-Votes — and hope all goes well. In Bitcoin power transitions peacefully through Proof-of-Work. ### [The Bullish Case for Stratum v2](/industry/the-bullish-case-for-stratum/) By Pavlenex Stratum v2 is the missing piece of the decentralization puzzle for Bitcoin. ### [A New Age Dawns for Financial Advisors](/industry/a-new-age-dawns-for-financial-advisors/) By Ryan Flynn A Blockbuster Moment ### [Recurring Buys vs. Lump-sum Investing](/investing/dollar-cost-averaging-vs-lump-sum-investing/) By Sam Callahan The best strategy is the one that allows an investor to hold through Bitcoin’s volatility and sleep well at night, whether it’s recurring buys or lump-sum. ### [Monetary Debasement vs. Supply Shocks](/economics/monetary-debasement-vs-supply-shocks/) By Lyn Alden Price inflation, being a multi-faceted phenomenon, usually has multiple causes at once, and those individual causes become relevant over different time periods. ### [Specter Desktop Relaunches with New UI and Improved User Experience](/industry/specter-desktop-relaunches-with-new-ui-and-improved-user-experience/) By Moritz Wietersheim Secure your bitcoin. Verify your transactions. Protect your privacy. ### [The Implications of Open Monetary and Information Networks](/analysis/the-implications-of-open-monetary-and-information-networks/) By Lyn Alden For proponents of privacy and open networks to win, the technology must be easy to use, too costly to stamp out, and well-understood by the public. ### [A Sticky Situation](/markets/a-sticky-situation/) By Sam Callahan Swan Private Market Update #27 ### [Swan Bitcoin IRA is Live!](/industry/swan-announces-a-new-bitcoin-ira/) By Jeremy Showalter and Zane Pocock Secure your retirement with the Swan IRA by diversifying your savings with tax-advantaged Bitcoin in Traditional and Roth IRAs. ### [Why a CBDC Will NOT Promote Financial Inclusion](/politics/why-a-cbdc-will-not-promote-financial-inclusion/) By Sam Callahan A CBDC would increase costs, reduce privacy, and create more barriers to financial inclusion, not less. ### [Inscriptions: Just a Fad, or Real Threat to Bitcoin Becoming Decentralized Money?](/analysis/inscriptions-just-a-fad-or-real-threat-to-bitcoin-becoming-decentralized-money/) By Stephan Livera Even if Ordianals are not a short-lived fad, what’s the most likely outcome? Low-value inscriptions will likely be priced out by financial transactions over time as Bitcoin gets adopted by more people. Learn why below! ### [A New Separation of Powers](/politics/a-new-separation-of-powers/) By Tomer Strolight We must realize that the original crafters of government separated powers because it was people who couldn’t be trusted. But in Bitcoin, we have separated power altogether from people! ### [Bitcoin: The Shipping Container of Money](/analysis/bitcoin-the-shipping-container-of-money/) By Dante Cook What the history of shipping containers can teach us about Bitcoin. ### [Why Bitcoin Exists](/education/why-bitcoin-exists/) By Tomer Strolight Bitcoin was not created so that some people could “get rich quick.” It was created to preserve the integrity of money — to make the most of your precious time, your energy, and your life. ### [Bitcoiners, It’s Winning Time](/culture/bitcoiners-its-winning-time/) By Cory Klippsten We believe that a global, Nasdaq-listed, Bitcoin-only financial services company will play a key role in winning the race to avoid the war, so we’re building it. ### [10 Reasons to Be Bullish on Bitcoin in 2023](/analysis/10-reasons-to-be-bullish-on-bitcoin-heading-into-2023/) By Sam Callahan 2023 is shaping up to be an exciting year where the industry builds to deliver even more value for Bitcoin users and investors around the world. ### [Swan Announces Four New Senior Hires in January 2023](/industry/swan-announces-four-new-hires-in-january-2023/) By Cory Klippsten Sheetal Ray joins as COO, Raphael Zagury as CIO and Head of Research, Gaurav Gollerkeri as GM of Swan Personal, and Guilherme Gomes as CRO. ### [Fixed Supply Money Does Not Lead to Economic Collapse](/economics/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/) By John Haar And why it is in fact the only intellectually and ethically defensible monetary system. ### [Bitcoin is the Future of Money, Not Just Another Cryptocurrency](/analysis/bitcoin-is-the-future-of-money-not-just-another-cryptocurrency/) By Stephan Livera We need an open, sound and scarce monetary system: Bitcoin. Accept no substitute. ### [The Themes That Will Define Bitcoin in 2023](/culture/the-themes-that-will-define-bitcoin-in-2023/) By Stephan Livera Some trends that emerged in 2022, from regulatory developments to technical and cultural innovations, will grow to define Bitcoin in 2023. ### [Debunking Bitcoin Misconceptions: It’s Not Stored Time, Energy or Violence](/analysis/debunking-bitcoin-misconceptions-it-s-not-stored-time-energy-or-violence/) By Stephan Livera Metaphors and analogies are critical for helping newbies understand Bitcoin, but they are dangerous when taken too far. ### [Bitcoin and Crypto: A Simple Story vs. A Convoluted Yarn](/markets/bitcoin-and-crypto-a-simple-story-vs-a-convoluted-yarn/) By Tomer Strolight Bitcoin’s story is a simple one: it is money you can count on. Simply holding it until you need to spend it. The stories spun by the Crypto Industry are anything but simple, or even logical when examined closely. ### [GBTC was the Genesis of the Crypto Credit Contagion](/analysis/gbtc-was-the-genesis-of-the-crypto-credit-contagion/) By Sam Callahan Learn how GBTC works, how it’s associated with the recent crypto contagion, and why buying spot Bitcoin and taking self-custody helps you avoid all of these risks today. ### [A Recap of the 2022 Pacific Bitcoin Conference](/industry/a-recap-of-the-2022-pacific-bitcoin-conference/) By Nick Payton By focusing on learning, entertainment, and social experiences, Pacific Bitcoin blurred the line between a conference and a festival. ### [Can Bitcoin Survive Without a Leader?](/politics/can-bitcoin-survive-without-a-leader/) By Jonathan Leger Why Satoshi had to disappear. ### [Green Eggs and Ham](/culture/green-eggs-and-ham/) By Allen Farrington and Anders Larson Decentralized Finance: The Good, The Bad, And The Ugly ### [What is an XPUB?](/education/whats-in-an-xpub/) By Gigi “What’s in a name? That which we call a rose. By any other name would smell as sweet.” — William Shakespeare ### [The Race to Avoid the War](/culture/the-race-to-avoid-the-war/) By Cory Klippsten Let us proceed — together, united, yet decentralized — and win this race, for one and all, so that we may never have to fight the war. ### [The FTX Fiasco and the Fallout to Come](/analysis/the-ftx-fiasco-and-the-fallout-to-come/) By Sam Callahan Expect the fires from FTX to continue to burn and claim more victims along the way. If anything, this event has provided a tough lesson on why Bitcoin is different and why self-custody is vital. ### [Why Selling Some Bitcoin at a Loss Can Maximize Your Hodling Potential](/analysis/why-selling-some-bitcoin-at-a-loss-can-maximize-your-hodling-potential/) By Steven Lubka How to sell your bitcoin for tax advantages without interrupting your strategy to hold for the long term. ### [History Happens Right Before Your Eyes](/education/history-happens-right-before-your-eyes/) By Tomer Strolight Technology has brought forth its champion to slay fiat money. And we all know who that champion is: Bitcoin. Bitcoin will be the resolver of a historic tug-of-war over control of the wealth of humankind. ### [Proof-of-Work vs. Proof-of-Stake](/education/proof-of-work-vs-proof-of-stake/) By Tomer Strolight Proof of Work, at its heart, is the removal of trust from the system of money, and replacing it with something that can’t be faked: real work. ### [Finding Liberty in Parallel: Bitcoin and the Free Cities Movement](/politics/finding-liberty-in-parallel-bitcoin-and-the-free-cities-movement/) By Stephan Livera Rising movements to establish free, autonomous jurisdictions around the world are working alongside Bitcoin to establish parallel liberty. ### [The Great Miner Squeeze of 2022](/analysis/the-great-miner-squeeze-of-2022/) By Sam Callahan Bitcoin mining is truly a game of survival of the fittest, and right now, the creme is being separated from the crop. By the end of this squeeze, Bitcoin’s security layer will be more efficient than ever before. ### [Plastic Money](/investing/plastic-money/) By Dante Cook What the History of Visa Can Teach Us About Bitcoin ### [Easy Money](/investing/easy-money/) By Tomer Strolight Money has gotten way too complicated. Bitcoin makes it easy again. ### [Bitcoiners Must Fight the FATF and it’s AML Regime](/politics/bitcoiners-must-fight-the-fatf-and-it-s-aml-regime/) By Stephan Livera The Financial Action Task Force and its anti-money laundering policies are antithetical to Bitcoin and an attack on human rights everywhere. ### [Swan Launches Fundraiser With Bitcoin Policy Institute](/industry/swan-donating-to-the-bitcoin-policy-institute/) By Steven Lubka Our goal is to support best-in-class policy and academic research that properly assesses Bitcoin’s benefits and risks. It’s critical that the research on #Bitcoin is fair and accurate. ### [Parts 1-9 of The Timechain Codex Now Available in PDF Format](/culture/the-timechain-codex/) By FractalEncrypt A Graphic Novel by FractalEncrypt based on “Bitcoin Astronomy” by Dhruv Bansal. ### [5 Reasons Why All Bitcoiners Should Attend a Bitcoin Conference](/industry/5-reasons-bitcoiners-should-attend-a-bitcoin-conference/) By Nick Payton Meet your favorite Bitcoiners and make memories you’ll never forget. ### [Capital Misallocation: Bitcoin Fixes This](/investing/capital-misallocation-bitcoin-fixes-this/) By Steven Lubka Fix the money, fix the world. ### [Bitcoin Privacy: Best Practices](/education/bitcoin-privacy-best-practices/) By Gigi There is a sacred realm of privacy where essential rights and liberties into which the law, generally speaking, must not intrude. ### [With Fiat Currencies Crumbling, It’s Time to Denominate in Bitcoin Terms](/economics/with-fiat-currencies-crumbling-it-s-time-to-denominate-in-bitcoin-terms/) By Stephan Livera As fiat currencies crash against the USD, it makes sense to start using Bitcoin denominations, even for day-to-day expenses. ### [Swan Acquires Specter Solutions](/industry/swan-acquires-specter-solutions/) By Cory Klippsten Swan has launched Specter Labs division focusing on open source, privacy, and self-custody. ### [Swan Product Principles and the Third Rail](/industry/swan-product-principles-and-the-third-rail/) By Jeremy Showalter Swan products are where humans meet Bitcoin. ### [You Can Believe the Maximalists: Bitcoin is Seperate From Crypto](/analysis/you-can-believe-the-maximalists-bitcoin-is-seperate-from-crypto/) By Stephan Livera A recent column by the Financial Times’ Jemima Kelly demonstrated some misunderstandings about Bitcoin’s decentralization and singularity. ### [Bitcoin and the U.S. Growth Problem](/economics/bitcoin-and-us-debt-problem/) By Sam Callahan Bitcoin and economic growth are the only reasonable ways out of this debt problem. ### [4 Initial Takeaways from the 2022 Global Crypto Adoption Index](/analysis/4-initial-takeaways-from-the-2022-global-crypto-adoption-index/) By Sam Callahan The highest adoption rates continue to take place in countries with high inflation, increased capital controls, and where economic instability is the norm. ### [Bitcoin: From the Void](/culture/bitcoin-from-the-void/) By Tomer Strolight How Bitcoin Uses Both Nothing and Chaos to Create Something the Likes of Which We Have Never Seen Before. ### [The Euro: A Train That’s Running Out of Track](/economics/history-of-the-euro/) By Sam Callahan The Euro was a poorly designed political construct from the beginning, and now we are seeing its vulnerabilities reemerge in a time of crisis. Can it survive? ### [Traders Lose, Stackers Win](/investing/traders-lose-stackers-win/) By Stephan Livera Instead of trying to become a trader where you are up against highly capitalized professionals, for most people it is more productive to set up a savings plan to acquire pristine assets with a good risk/reward ratio. ### [Bitcoin is a Monumental Event in Human History](/culture/bitcoin-is-a-monumental-event-in-human-history/) By Erik Cason Bitcoin has the possibility of ending the financialization of state war by ending fiat money and restoring natural law and money to our planet. ### [We Are All In This Together](/culture/we-are-all-in-this-together/) By Gigi The state will come for all of us, low-hanging fruits first. Bitcoiners always knew this. ### [How Legacy Finance Perceives Bitcoin](/industry/how-legacy-finance-perceives-bitcoin/) By John Haar Observations from a 13-year career at Goldman Sachs. ### [Bitcoin, Bitcoiners, Truth, Beauty and Love](/culture/bitcoin-bitcoiners-truth-beauty-and-love/) By Tomer Strolight One truth Bitcoin shows us is that we are sovereign — not just over our monetary wealth, but also over our emotions, not just over where we spend our money, but also over where and how we spend our time. ### [A Look At the Lightning Network](/analysis/a-look-at-the-lightning-network/) By Lyn Alden Examining the scaling method of the Bitcoin network and its evolution from a store of value to a medium of exchange. ### [The Problem with NFTs](/industry/the-problem-with-nfts/) By Nick Payton NFTs are marketed as ownership, usually of some digital artwork, secured using “blockchain technology” and “crypto.” Are they a scam? ### [The Blocksize War’s Cyber-Solider Freedom-Fighters](/analysis/the-blocksize-war/) By Tomer Strolight The Blocksize Wars were “fought”… but by whom? And what do we really mean by fighting? ### [What Can You Do For Bitcoin?](/culture/what-can-you-do-for-bitcoin/) By Stephan Livera Bitcoin might seem inevitable, but you can still take an action hand in pushing it forward. ### [In Defense Of Bitcoin Full Reserve: Not Anti-Credit, But Anti-Fiduciary Media](/analysis/in-defense-of-bitcoin-full-reserve-not-anti-credit-but-anti-fiduciary-media/) By Stephan Livera As we continue to debate the proper roles of crypto and lending, Bitcoin full reserve can be the future for credit and commerce. ### [CPI Inflation Hit a 40-Year High, but the Dollar is Still King](/analysis/cpi-inflation-hit-a-40-year-high-but-the-dollar-is-still-king/) By Sam Callahan Swan Private Market Update 7/15/22\. Investors currently fear a coming recession as the Federal Reserve continues on its mission to tame CPI inflation. ### [How We Should Really Think About Bitcoin Maximalism](/analysis/how-we-should-really-think-about-bitcoin-maximalism/) By Stephan Livera There has been a lot of digital ink spilled about the concept of Bitcoin Maximalism, but there are things the critics don’t understand. ### [Digital Assets are Useful Today Despite What the Naysayers Say](/analysis/digital-assets-are-useful-today-despite-what-the-naysayers-say/) By Sam Callahan If Bitcoin protects even one family, one person, or one child from the ravages of hyperinflation, then it is worthy of our time, and a useful technology for the world. ### [Bitcoin and the True Meaning of Inflation](/analysis/bitcoin-and-the-true-meaning-of-inflation/) By Steven Lubka Bitcoin is often described as an inflation hedge, so why hasn’t it worked? ### [Re-Run the Numbers](/analysis/re-run-the-numbers/) By Cory Klippsten and Wicked Smart Bitcoin How Today’s Higher Rates and Lower Prices Impact the Case to Borrow to Buy Bitcoin ### [Bitcoin Bear Markets: We’ve Been Here Before](/investing/bitcoin-bear-markets-we-ve-been-here-before/) By Stephan Livera New Bitcoiners are likely upset with the Bitcoin price right now, but we’ve been here before and there are some silver linings. ### [A Fed Hike for the Ages, But Can the Economy Handle it?](/industry/a-fed-hike-for-the-ages-but-can-the-economy-handle-it/) By Sam Callahan Swan Private Market Update 6/17/22\. There’s no need to mince words when describing the markets over the last two weeks, it’s been ugly. ### [Fact Check: DARPA Funded Report on Blockchain Centralization](/analysis/fact-check-darpa-funded-report-on-blockchain-centralization/) By Yan Pritzker and Tomer Strolight In this analysis, we examine and fact check the claims in the recent DARPA blockchain report which claims that Bitcoin’s blockchain is susceptible to centralized control. ### [Why Bitcoin is the Path to Economic Stability](/investing/why-bitcoin-is-the-path-to-economic-stability/) By Tomer Strolight Bitcoin’s reliability is leading the world on a path towards greater economic stability. ### [Bitcoin and the One-Hit Wonder Altcoins](/education/bitcoin-and-the-one-hit-wonder-altcoins/) By Sam Callahan and Cory Klippsten Don’t get stuck holding the bags of the one-hit wonders of each Bitcoin bull cycle. Instead, hold onto the asset that you know will be a top player in this cycle, the next cycle, and every single cycle to come: Bitcoin ### [Beware of Ponzi Tokens: A Hex On You](/industry/when-investing-in-crypto-beware-of-ponzi-tokens/) By Ryan Maestro Of the 19,000 listed crypto projects, 99% of them are scams to enrich the person who created them. The Hex token, and Richard Heart, are no different. ### [Dark Moon: The Inevitable Collapse of Luna](/analysis/dark-moon-the-inevitable-collapse-of-luna/) By Cory Klippsten and Sam Callahan Luna/UST went from a collective market capitalization of \~$50 billion to now down 99%. The collapse of the Luna/UST Ponzi scheme occurred even faster than anyone expected, but this implosion was perfectly predictable. ### [Market Headwinds Continue to Blow as the Fed Stands Firm](/investing/market-headwinds-continue-to-blow-as-the-fed-stands-firm/) By Sam Callahan Swan Private Market Update #9 — The markets continued to experience turbulence over the last two weeks as investors grapple with rising risks of inflation, hawkish Fed, economic conditions, and the Russian-Ukraine War. ### [Stop Fooling Around in Crypto](/education/stop-fooling-around-in-crypto/) By Tomer Strolight The Opportunity You Fear You Missed Still Awaits ### [Response to Cole South’s ‘Why I Don’t Own Bitcoin Anymore’](/analysis/response-to-cole-south-s-why-i-don-t-own-bitcoin-anymore/) By Stephan Livera A recent blog post outlined an investor’s rationale for abandoning Bitcoin, and necessitated a Bitcoiner’s response. ### [Coinbase and the Insider Exchange Dump](/education/bitcoin-vs-altcoins/) By Sam Callahan Bitcoin is very different from all other cryptocurrencies. In fact, it shouldn’t even be considered the same asset class. ### [Bitcoin: An Empire For Us All](/analysis/bitcoin-an-empire-for-us-all/) By Tomer Strolight The rise and fall of an empire: It is a story that has repeated itself throughout human history. Where does Bitcoin fit in? ### [Riding the Lightning Network](/industry/running-the-numbers-riding-the-lightning-network/) By Sam Callahan The Lightning Network: Cheap Global Payments for All ### [Satoshi’s White Paper — the Hard Part Explained](/education/satoshis-white-paper-explained/) By Tomer Strolight Dissecting some of Satoshi’s Whitepaper to make it easier to understand. ### [The Why and How of Getting a Bitcoin Job](/industry/the-why-and-how-of-getting-a-bitcoin-job/) By Stephan Livera If you’re dedicated to Bitcoin, getting a job in the industry can be incredibly rewarding as it fulfills the desire to advance the technology. ### [Investigating the Dubious Investigations of Bitcoin](/analysis/bitcoin-investigation/) By Scott Wolfe Some challenging stories are begging to be properly investigated and told. The question is always which investigative journalists have the willingness, integrity and editorial freedom to take these on? ### [Where Are My Bitcoins?](/industry/where-are-my-bitcoins/) By Tomer Strolight Bitcoin Basics: Easy Lessons About How Bitcoin Works ### [Bitcoin Is Not Your Typical Investment](/investing/bitcoin-is-not-your-typical-investment/) By Tomer Strolight Heads They Win, Tails You Lose. You’ve been told you should be investing in stocks & bonds — a game full of world-class professionals playing against you. Bitcoin is the fair game, and an easy one to play. ### [The Turkish Lira’s Freefall and the Bitcoin Parachute](/economics/the-turkish-lira-s-freefall-and-the-bitcoin-parachute/) By Sam Callahan As the national currency of Turkey continues to plummet, Bitcoin represents an escape hatch for citizens looking to preserve wealth. ### [A Chronic Case of Bitcoin (Part 2)](/culture/a-chronic-case-of-bitcoin-part-2/) By Tomer Strolight Bitcoin is here to stay. This is what it means. ### [Why Bitcoin is Different (Part 2)](/investing/why-bitcoin-is-different-part-2/) By Sam Callahan Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where the beginners run into confusion is how Bitcoin differs from other cryptocurrencies. ### [A Chronic Case of Bitcoin (Part 1)](/culture/a-chronic-case-of-bitcoin/) By Tomer Strolight Bitcoin Is Here To Stay. This Is What It Means. ### [Swan and Specter Integration Announcement](/industry/swan-specter-integration-announcement/) By Nick Payton Specter is an ideal desktop wallet for Swan users. The purpose is to give customers a seamless stacking experience into their Bitcoin wallets, especially into their multi-sig cold storage. ### [Bitcoins! Get Yer Bitcoins! Get ’em While You Can](/culture/bitcoins-get-yer-bitcoins-get-em-while-you-can-tomer-strolight/) By Tomer Strolight The 'Window of Oppurtunity' to buy Bitcoin closes a little more every single day. ### [Why Bitcoin is Different (Part 1)](/education/why-bitcoin-only-part-1/) By Sam Callahan Bitcoin is a brand new technology that differs from anything else that has come before or after it. But where beginners run into confusion is in how Bitcoin differs from other cryptocurrency. ### [Bitcoin and the Most Valuable Brands of The 21st Century](/culture/bitcoin-and-the-most-valuable-brands-of-the-21st-century/) By Tomer Strolight A topic even more mysterious than cryptography itself—brands. ### [Bitcoin and the Most Valuable Brand of the 21st Century](/analysis/bitcoin-and-the-most-valuable-brand-of-the-21st-century/) By Tomer Strolight Bitcoin provides value that surpasses the brand value of the U.S. dollar, as the code provides the utility of superior money. ### [Goldbugs Don’t Understand Money](/analysis/goldbugs-dont-understand-money/) By Spencer Schiff One of the most persistent falsehoods prograted by goldbugs is the idea that monetary goods must have direct utility. ### [How to Get the Most From In-Person Bitcoin Events](/culture/how-to-get-the-most-from-in-person-bitcoin-events/) By Stephan Livera Bitcoin events are great expressions of the Bitcoin ethos and critical touchpoints for newcomers and technology innovators alike. ### [The Zen of Knowing Your Opinion on Bitcoin Doesn’t Matter](/education/the-zen-of-knowing-your-opinion-on-bitcoin-doesn-t-matter/) By Tomer Strolight At the end of the day, the fact that our opinion has no bearing on Bitcoin is a good thing. ### [Why Bitcoin is What Millennials Are Looking For](/culture/why-bitcoin-is-what-millennials-are-looking-for/) By Tomer Strolight Bitcoin is the system that can make millennials' hopes and dreams come true, and this is becoming increasingly clear to more of them each day. ### [Why Gen Z Needs Bitcoin](/culture/why-gen-z-needs-bitcoin/) By Sophie Tobert Growing up marked by a decaying financial system, we have the chance to change the narrative set before us and create a world grwoing up in for future gnerations. ### [How Bitcoin is a New Form of Property (5 Minute Read)](/education/bitcoin-is-a-new-form-of-property/) By Tomer Strolight Read how Bitcoin is unique and powerful property, which comes with certain responsibilities. ### [Reflecting On the Year in Bitcoin: Our Progress and What We Take For Granted](/analysis/reflecting-on-the-year-in-bitcoin-our-progress-and-what-we-take-for-granted/) By Stephan Livera The progress that the Bitcoin community made in 2021 reminds us to take nothing for granted, and to make the changes we want to see next year. ### [Is it Time For Bitcoiners to Get on 'Zero Fiat'? Not Yet](/investing/is-it-time-for-bitcoiners-to-get-on-zero-fiat-not-yet/) By Stephan Livera We’ll all eventually transition to holding zero fiat money, but most people cannot afford to go full Bitcoin just yet. ### [How Bitcoin Really Works (5 minute read)](/education/5-minute-reads-how-bitcoin-really-works/) By Tomer Strolight A quick and accurate explanation on how Bitcoin really works. Suitable for beginners and experts alike. ### [Swan Bitcoin 2022 Gift Guide](/industry/swan-bitcoin-gift-guide-kristin-thompson/) By Kristin Thompson The HODLday season is a time for remembering the important things in life like family and friends and, of course, Bitcoin! Which is why we created the perfect gift guide for Bitcoiners. ### [Saving with Bitcoin](/investing/saving-with-bitcoin-sam-callahan/) By Sam Callahan You should be investing in Bitcoin for its volatility — able to wait out price dips, even to accumulate during them, and celebrate the dramatic price rises when they take place. ### [Why Libertarians Should Prioritize the Bitcoin Strategy Above All Others](/politics/why-libertarians-should-prioritize-the-bitcoin-strategy-above-all-others/) By Stephan Livera Bitcoin offers libertarians the perfect vehicle for starving the state of its outsized control over personal freedoms. ### [A Review: the Great Hash Rate Migration of 2021](/industry/the-great-hash-rate-migration-of-2021-sam-callahan/) By Sam Callahan Bitcoin miners have relocated to safer pastures within the U.S. because the values and goals of America and Bitcoin are much more aligned compared to Communist China. ### [What Happens to Bitcoin if the Internet Goes Down?](/education/what-happens-to-bitcoin-if-the-internet-goes-down/) By Rigel Walshe While the Internet is by far the most efficient system of communication for the Bitcoin network to use, it could continue on with the reduced speed and functionality on any communcations systems known to man. ### [Why I’m Driven to Build Swan Advisor Services](/investing/why-im-driven-to-build-swan-advisor-services-andrewedstrom/) By Andy Edstrom CFA, CFP We will deliver the industry’s best education team to advisors so that when clients are ready to withdraw Bitcoin to cold storage or engage in collaborative custody, they’ll be armed with the knowledge to do it safely. ### [Bitcoin is Generational Wealth](/analysis/bitcoin-is-generational-wealth/) By Tomer Strolight “Bitcoin is Generational Wealth” is a short film exploring Bitcoin’s potential across generations. ### [The Bitcoin Platform for Financial Advisors](/industry/the-bitcoin-platform-for-financial-advisors/) By Cory Klippsten Swan Advisor Services Tailors Swan’s best in purchase and custody platform to the needs of financial advisors and wealth managers. ### [The Bearish Case for Bonds](/investing/the-bearish-case-for-bonds/) By Sam Callahan Bonds are not as safe today as they are marketed to be. It’s time bond investors begin to protect themselves against the Fed policies that are leading to erosion of the real value of their bond holdings. ### [Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why.](/industry/bitcoins-energy-usage-is-not-a-problem-heres-why-by-lyn-alden/) By Lyn Alden Whether Bitcoin continues to be successful or fails, there’s no risk of the network using too much energy in the grand scheme of things. ### [5 Ways To Earn Bitcoin](/education/5-ways-to-earn-bitcoin/) By Camila Campton What if I told you there are ways to earn extra Bitcoin or get off zero if you don’t own any? Whether you are just starting to stack sats or a Bitcoin veteran, here are 5 ways to add more BTC to your freedom stash. ### [Bitcoin, Perfect Money For Humanity](/culture/bitcoin-perfect-money-for-humanity-nozomi-hayase/) By Nozomi Hayase The Internet of Money transcends borders and protects people of all nations from resource wars, exploitation, and dictatorship. Bitcoin guards us against wealth confiscation, helping us steward our precious planet. ### [The Diminishing Influence of Halvings on Bitcoin’s Price](/analysis/the-diminishing-influence-of-halvings-on-bitcoins-price-geertjancap/) By GeertJanCap The price of any asset is determined by its supply and demand. Bitcoin’s programmed halving of supply has a diminishing effect its price. ### [How Much of the World’s Population Owns Bitcoin Today?](/analysis/how-much-of-the-world-s-population-owns-bitcoin-today/) By Sam Callahan One of the biggest blindspots investors have when they first come across Bitcoin is that they view it solely as an asset. Bitcoin is digital gold — you can send over the internet. ### [Why Every Investor Should Have Bitcoin in Their Portfolio](/investing/why-every-investor-should-have-bitcoin-in-their-portfolio/) By Sam Callahan It doesn’t matter if you’re a young person starting to invest, a parent saving for their kid’s education or a retiree protecting your nest egg, Bitcoin has a place in everyone’s portfolio. ### [Is Bitcoin’s Price Too High to Invest?](/investing/is-bitcoins-price-too-high-to-invest-in/) By Sam Callahan Whenever someone discovers Bitcoin there are twom phases that typically occur, the first is that wish they could buy it cheaper, and the second is that in hindsight, they should have bought more. ### [Why Bitcoin Will End the Worst Heist in History](/politics/why-bitcoin-will-end-the-worst-heist-in-history/) By Tomer Strolight The money stealing time machine is called “government decificts and debt.” Each annual theft called the deficit, and the total amount stolen across history is called the debt. ### [Why Bitcoin’s Rules Are Enforced By Physics](/analysis/why-bitcoin-s-rules-are-enforced-by-physics/) By Tomer Strolight History shows that fiat systems collapse. The monetary units of these systems become worthless upon those collapses. Science shows that the laws of physics do not collapse. They are eternal. ### [Swan Signal Monthly: March 2021 Newsletter](/industry/swan-signal-monthly-march-2021-newsletter/) Bitcoin hit a new all-time high of $62,000 this past month, pulled back to $48,000 and is now right back up to $52,000\. Historically, in bull markets, this means Bitcoin is about ready to start another leg up. ### [Bitcoin: Fee-Based Security Modeling](/education/bitcoin-fee-based-security-modeling-lyn-alden/) By Lyn Alden The ideal state for the Bitcoin network is to reach equilibrium in the free market where blocks are always full, mostly with large transactions. Fees are high in absolute terms, low in percentage-of-value terms. ### [Gifting Bitcoin — The Ultimate Orange Pill](/culture/gifting-bitcoin-the-ultimate-orange-pill/) By Sam Callahan As many people discover convincing a friend or family member to buy Bitcoin can be a challenging task. Swan Bitcoin makes it easier than ever with their gifting program. ### [The Ultimate Safe Haven](/analysis/the-ultimate-safe-haven-spencer-schiff/) By Spencer Schiff Bitcoin will be considered the safest asset in human history, thanks to its resistance to debasement, censorship, and confiscation. ### [Bitcoin’s Real Energy Expenditure: A Comparative Analysis](/analysis/bitcoin-real-energy-expenditure-nick-payton/) By Nick Payton We must compare Bitcoin’s enivronmental and socio-economic impacts to the financical systems it aims to replace. ### [Is Tether a Treat to Bitcoin?](/industry/is-tether-a-threat-to-bitcoin/) By Daniel Matuszewski It’s clear Tether is not the driver of Bitcoin’s rallies. Instead, Tether’s growth is evidence of the genuine demand for a digital dollar that arose naturally in the world’s first 24/7 global financial marketplace. ### [Sovereignism Part 1: Digital Creative Destruction](/culture/sovereignism-part-i-digital-creative-destruction/) By Robert Breedlove Exploring the digital disruption of the nation-state and the subsequent amplification of individual sovereignty during the digital age. ### [The Rise of Bitcoin Nomadism: Is it Right For You?](/culture/the-rise-of-bitcoin-nomadism-is-it-right-for-you/) By Stephan Livera The Bitcoin economy is enabling more people to choose their own adventures around the world and optimize their lifestyles. ### [Am I Too Late For Bitcoin](/investing/am-i-too-late-for-bitcoin/) By Swan Bitcoin There are different levels of Bitcoin adoption. By segmenting BTC adoption, it becomes easier to see why the wide range of estimates exists but, more importantly, how early adoption of BTC as a preferred store of value. ### [Bitcoin is Time](/culture/bitcoin-is-time/) By Gigi The relentess beating of this clock is what gives rise to all magical properties of Bitcoin. ### [Why Bitcoin is Not a Ponzi Scheme: Point by Point](/investing/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/) By Lyn Alden Lyn Alden compares and contrasts Bitcoin to systems that have Ponzi-like characteristics, to see if the claim that Bitcin is a ponzi holds up. ### [Bitcoin Misconception #1: “Bitcoin is a Bubble”](/markets/is-bitcoin-a-bubble-2/) By Lyn Alden Bitcoin looks a lot more rational when you look at the long-term logarithimic chart, especially as it relates to Bitcoin’s 4-year halving cycle. ### [Swan Signal Monthly: December 2020 Newsletter](/industry/swan-signal-monthly-december-2020-newsletter/) By Brandon Quittem Earlier this month Bitcoin broke through the all-time high price, and psychological barrier of $20,0000, driven by short-term retail trader speculation. ### [Op Ed: Pitching Bitcoin During the Holidays](/education/op-ed-pitching-bitcoin-during-the-holidays/) By Brekkie von Bitcoin The HODLdays are a time for friends and gift-giving, but as good Bitcoiners, we already know that the best gift of all is Bitcoin. ### [Swan Signal Monthly: November 2020 Newsletter](/industry/swan-signal-monthy-november-2020-newsletter/) By Brady Swenson Bitcoin has undoubtedly made improvements since 2017: Better onramps, custody solutions, new-Bitcoin only companies, the Lightning Network, and more. However, a story in 2020 is how the world around Bitcoin has changed. ### [Saving With Bitcoin Was Never So Cool As In 2020](/investing/saving-with-bitcoin-was-never-so-cool-as-in-2020/) By Stephan Livera Through technical development, privacy initiatives, multisignature tools, a savings narrative and more, Bitcoin’s 2020 was super cool. ### [Bitcoin is Hope](/culture/bitcoin-is-hope/) By Robert Breedlove A fundamentally dishonest money, fiat currency ruins relationships with the intrinsic entropy of nature and our fellow humans. To rejuvenate hope, we must set sights upon honest money, entrepreneurship, and civilization. ### [Welcome to Bitcoin TV](/industry/welcome-to-bitcoin-tv/) By Cory Klippsten Bitcoin TV makes it easy to sit back and learn all about this revolutionary new money. ### [Bitcoin is For Everyone](/culture/looking-out-for-the-little-guy/) By Reed Wommack We serve HNWI clients wishing to purchase Bitcoin. Even more importantly, we help great-grandmas, college students, veterans, and fast food workers buy their first Bitcoin and begin saving for their future. ### [Our Most Brilliant Idea](/culture/our-most-brilliant-idea/) By Robert Breedlove Ideation and wealth creation are mere expressions of life’s central impluse: growth. ### [Can the Government Shut Down Bitcoin?](/politics/can-the-government-shut-down-bitcoin/) By Reed Wommack At some point on everybody’s Bitcoin journey, they begin to realize that Bitcoin may actually be a better form of money. ### [Investing in Bitcoin Like a 401k](/investing/investing-in-bitcoin-like-a-401k/) By Brady Swenson The best way to approach investing in Bitcoin is regular contributions over time like a 401k. ### [Why You Should Hold Bitcoin as a Corporate Treasury Asset](/investing/treasury/) By Brady Swenson When companies like Square and MicroStragegy start buying Bitcoin, it’s time to pay attention. But, smaller private companies are also making this move. Here’s why you should consider doing the same. ### [Choose Bitcoin](/culture/choose-bitcoin/) By Brekkie von Bitcoin I believe a line has been drawn in the sand between people, projects, and companies that support Bitcoin and those that do not, and in some cases, actively work against it. ### [Swan Signal Monthly: August 2020 Newsletter](/industry/swan-signal-monthly-august-newsletter/) By Brady Swenson Business intelligence software company MicroStrategy, a public company traded on NASDAQ, announced in August that it has adopted Bitcoin as its primary treasury reserve asset. ### [On Bitcoin’s UX](/analysis/on-bitcoins-ux/) By Gigi Why the internet doesn’t feel as clumsy anymore is twofold: (1) we got used to the novel concepts the internet brought with it, and (2) countless layers of abstraction make interacting with the base layer easier. ### [Is Bitcoin for Criminals?](/education/basic-bitcoin-questions-is-bitcoin-for-criminals/) By Reed Wommack Many people continue to associate Bitcoin with unlawful beahvior, but in reality, less than 1% of Bitcoin transactions are actually used for illegal activities. ### [Tell Me About Bitcoin](/education/tell-me-about-bitcoin/) By Preston Pysh Preston Pysh is a Swan Advisor. ### [Why I Joined Swan Bitcoin](/industry/why-i-joined-swan-bitcoin/) By Gigi A picture on my wall that says: “You literally ought to be asking yourself all the time what is the most impotant thing in the world I could be working on right now, and if you are not working on that why aren’t you?” ### [Swan Signal Monthly: July 2020 Newsletter](/industry/swan-signal-monthly-july-2020-newsletter/) By Brady Swenson Our July 2020 monthly newsletter includes: Liftoff: A curated list of recent Bitcoin content from Swan and around the web Behind the scenes updates from the Swan team ### [Accepting Scarcity: A Bitcoin Meditation](/culture/accepting-scarcity-a-bitcoin-meditation/) By Reed Wommack This essay focuses solely on the conceptual world of logic, language, and concepts, excluding the mystical and non-conceptual realm, which is also deserving of exploration through meditation and mysticism. ### [My Path Towards Bitcoin](/culture/my-path-towards-bitcoin-stephanie-sprague/) By Stephanie Sprague Despite living in the Information Age, many people don’t know enough to buy Bitcoin. With this kind of thinking, no one would’ve ever shared personal details on Facebook or banked electronically. ### [The Biggest Misconception in the Markets? Thinking We’re Dealing With a Sound Currency](/economics/the-biggest-misconception-in-the-markets-thinking-were-dealing-with-a-sound-currency/) Massive government intervention in markets is underway, but what happens to Bitcoin as a result? ### [Rampant Inflation Is on the Way and Here’s What it Means for Bitcoin](/economics/rampant-inflation-is-on-the-way-and-heres-what-it-means-for-bitcoin/) By Yan Pritzker Once people realize what’s happening to their money, they will start buying Bitcoin. ### [Coronavirus, Financial Crisis, and the Epic Bitcoin Crash of March 2020](/culture/swan-roundtable-market-crash-coronavirus-bitcoin-price/) By Brady Swenson A roundtable conversation about the current epidemic chaos and how it will impact Bitcoin, the global financial system, remote working, and more. ### [Bitcoin and the Technological Evolution of the Financial System](/economics/evolution-of-money/) By Bitcoin Tina We are living in hyperbitcoinization, or the repricing of the world in Bitcoin. Bitcoin is a better store of value than gold. For the same reasons people hold gold, Bitcoin will be valued at least on par with gold. ### [Exploding Three Myths About the Upcoming Bitcoin Halving](/industry/bitcoin-halving/) By Yan Pritzker The next Bitcoin halving is almost here. We explore whether the halving is priced in, if other coins are a model for Bitcoin, and fear of a mining death spiral. ### [Is Bitcoin the Myspace of Crypto?](/culture/is-bitcoin-the-myspace-of-crypto/) By Yan Pritzker Sound money requires a commitment to decentralization, and properties hard to change and attack. Altcoins are built by centralized teams with a profit motive, not a happy accident of a growing ecosystem by cypherpunks. ### [Is Bitcoin Like the Dutch Tulip Bubble?](/industry/is-bitcoin-a-bubble/) By Yan Pritzker Is Bitcoin’s price in a bubble? Is this the Dutch Tulip Craze all over again? The answer might surprise you… ### [Does Bitcoin Have Any Intrinsic Value?](/education/does-bitcoin-have-intrinsic-value/) By Yan Pritzker Bitcoin represents economic liberty. If you own Bitcoin, you have portable wealth. You can walk away from a failing regime and not lose your life savings. ### [The Three Futures of Digital Money](/industry/future-of-digital-money/) By Yan Pritzker As money rapidly turns digital, we must contemplate three possible futures of money: central bank-managed, corporate-issued, and decentralized. ### [What is a Bitcoin Fork?](/education/what-is-a-bitcoin-fork/) By Yan Pritzker Unlike a stock split, the new shares still refer to the original company; a Bitcoin fork creates new assets out of thin air at zero cost and grifts them to existing holders. A fork does not affect the 21M supply limit. ### [What is Bitcoin?](/education/what-is-bitcoin/) By Yan Pritzker Find out why Satoshi Nakamoto invented Bitcoin to solve the problems of the modern financial system including lack of privacy and monetary debasement. ### [How Bitcoin Challenges Keynesian Economics](/economics/how-bitcoin-challenges-keynesian-economics/) By Brady Swenson We’re in the midst of two great economic experiments. The Keynesian ideal of central control of money is being challenged by a novel money called Bitcoin. ### [Ten Million Bitcoiners: The Intransigent Minority](/culture/ten-million-bitcoiners-the-intransigent-minority/) By Cory Klippsten Not too many years from now, the number of Bitcoiners in the United States of America will cross ten million. When we hit that milestone, it’s game over: Bitcoin wins. ### [Swan Signal Monthly: January 2021 Newsletter](/industry/swan-signal-monthly-january-2021-newsletter/) By Brandon Quittem Bitcoin hit a new all-time high of $42,000 in early Janurary and has since pulled back to $33,000\. Is this a buying opportunity? # Learn from the Best of Bitcoin - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/about/ Our mission at Swan is to create 10 million new Bitcoiners. Not just people who are stacking sats, but people who truly understand the importance of Bitcoin. We… --- ## Learn from the Best of Bitcoin Our mission at Swan is to create 10 million new Bitcoiners. Not just people who are stacking sats, but people who truly understand the importance of Bitcoin. We believe education is the key to accomplishing this mission. Over the years, we have seen the educational resources in the Bitcoin space grow in both quality and quantity. As contributions continue to come in every day from Bitcoiners all over the world, it can be difficult for individuals to separate the signal from the noise. The goal with the Bitcoin Canon is to collect and organize the best bitcoin content on the web in one place so it’s more easily accessible and sharable. There are a lot of Bitcoin content lists out there. The Bitcoin Canon is unique for its thematic collections, or Rabbit Holes, curated by Bitcoiners, that address specific questions and topics about Bitcoin. This is just the beginning. We have big plans for the Canon. The next iteration will open up our curated database of over 1,000 of the best pieces of Bitcoin educational content in the world. It will be searchable by keywords and topics. Eventually, anyone will be able to create as many Rabbit Holes as they like for their own educational efforts. Bitcoin grows through recommendations from trusted friends and family. We hope that the Bitcoin Canon becomes the most recommendable resource to share Bitcoin education and further drive the world’s understanding of this revolutionary technology. Please [reach out](https://swanbitcoin.com/bitcoin-canon/contribute/) if you are interested in creating a Rabbit Hole for consideration to be included in the Bitcoin Canon. ### Ready to contribute to the Bitcoin Canon? [Submit your idea](/canon/contribute/) ### Recommended Rabbit Holes You might want to dive down one of these Rabbit Holes #### [Bitcoin 101](/canon/bitcoin-101/) Cory Klippsten #### [Why and How Bitcoin Consumes Energy](/canon/why-and-how-bitcoin-consumes-energy/) Lyn Alden #### [What the Hell Even is Bitcoin?](/canon/what-the-hell-even-is-bitcoin/) Guy Swann #### [Bitcoin Security](/canon/bitcoin-security/) Jameson Lopp #### [Stephan Livera Rabbit Hole](/canon/stephan-livera-rabbit-hole/) Stephan Livera #### [Bitcoin is a Living Organism 🍄](/canon/bitcoin-is-a-living-organism/) Brandon Quittem #### [The Political Economy of Decentralization](/canon/the-political-economy-of-decentralization/) Allen Farrington #### [Bitcoin Gaming](/canon/bitcoin-gaming/) Desiree Dickerson #### [The World of Bitcoin Art](/canon/the-world-of-bitcoin-art/) Brekkie von Bitcoin #### [Bitcoin’s Prehistory](/canon/bitcoin-s-prehistory/) Sam Callahan #### [Politicos Portal](/canon/politicos-portal/) Trystine Payfer #### [The Best of Parker Lewis](/canon/best-of-parker-lewis/) Sam Callahan [See all the Rabbit Holes](/canon/) # Ready to contribute to the Bitcoin Canon? - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/contribute/ Thank you for your interest in submitting a Rabbit Hole to the Bitcoin Canon. Please fill out the form below and we will contact you if chosen to submit your Rabbit Hole. --- ## Ready to contribute to the Bitcoin Canon? Thank you for your interest in submitting a Rabbit Hole to the Bitcoin Canon. Please fill out the form below and we will contact you if chosen to submit your Rabbit Hole. Name\* Email\* Twitter Handle\* Description of Rabbit Hole\* Submit your idea # Bitcoin Canon - Swan Bitcoin URL: https://www.swanbitcoin.com/canon/ The Bitcoin Canon presents curated collections of the best Bitcoin content. Got an idea for a new Rabbit Hole? Email us here. --- ## Bitcoin Canon The Bitcoin Canon presents curated collections of the best Bitcoin content. Got an idea for a new Rabbit Hole? [**Email us here**](mailto:canon@swanbitcoin.com?subject=Bitcoin%20Canon%20Rabbit%20Hole%20Idea). ### [Bitcoin 101](/canon/bitcoin-101/) [ Cory Klippsten](/canon/bitcoin-101/) [@CorySwan](/canon/bitcoin-101/) If you are new to Bitcoin, this is the perfect rabbit hole for you! Learn the Bitcoin basics including what Bitcoin is, how it works, and why it’s important. Learn about the history of money and why some common misconceptions around Bitcoin are incorrect. This rabbit hole will help demystify Bitcoin and serve as a great foundation to begin your Bitcoin journey. **8** resources 7 hours 40 minutes [Go Down the Rabbit Hole](/canon/bitcoin-101/) ### [Why and How Bitcoin Consumes Energy](/canon/why-and-how-bitcoin-consumes-energy/) [ Lyn Alden](/canon/why-and-how-bitcoin-consumes-energy/) [@lynaldencontact](/canon/why-and-how-bitcoin-consumes-energy/) Bitcoin uses a proof-of-work protocol to operate the network, which means that miners expend real-world resources (electricity) in order to validate transactions and secure the blockchain. Rather than being a bug, this is a feature because it is what keeps the protocol decentralized. Other consensus protocols such as proof-of-stake may have their use-cases, but they make numerous trade-offs compared to proof-of-work. They are far more complex, with more attack surfaces, and are prone to centralization over time. In addition, Bitcoin miners use energy in a very unique and useful way. Specifically, unlike data centers or other types of electricity consumers, individual Bitcoin miners don’t require very high uptime or a lot of internet bandwidth, which means they can go to areas of stranded energy production or can be co-located with power generation facilities as load balancers. **4** resources 2 hours 40 minutes [Go Down the Rabbit Hole](/canon/why-and-how-bitcoin-consumes-energy/) ### [What the Hell Even is Bitcoin?](/canon/what-the-hell-even-is-bitcoin/) [ Guy Swann](/canon/what-the-hell-even-is-bitcoin/) [@TheGuySwann](/canon/what-the-hell-even-is-bitcoin/) The biggest hurdles to understanding Bitcoin, in my experience, have been understanding how a completely virtual thing could have such immense value, tied to a general ignorance about what money is. Below is a selection of episodes and article from my show, Bitcoin Audible, that will lay the framework for understanding Bitcoin in a different way. In my life I have never encountered anything as multifaceted and endlessly fascinating as Bitcoin. I hope you find value in what I’ve put together below. **7** resources 8 hours 27 minutes [Go Down the Rabbit Hole](/canon/what-the-hell-even-is-bitcoin/) ### [Bitcoin Security](/canon/bitcoin-security/) [ Jameson Lopp](/canon/bitcoin-security/) [@Lopp](/canon/bitcoin-security/) The Bitcoin whitepaper promised a way for us to transact without the need for trusted third parties. Unfortunately, many bitcoin users fail to take advantage of this feature and still keep their funds with custodians. Those who do take custody of their funds find the journey fraught with peril and footguns. Conservative estimates suggest that millions of bitcoin have been lost over the years by holders who did not take proper care of their keys, while millions more have been stolen due to security weaknesses. It’s important that Bitcoin users are confidently able to be their own banks, both to increase the security posture of each user and to increase the robustness of the entire ecosystem so that it does not evolve into another network of custodians who hold all of the money and power. **6** resources 4 hours 55 minutes [Go Down the Rabbit Hole](/canon/bitcoin-security/) ### [Stephan Livera Rabbit Hole](/canon/stephan-livera-rabbit-hole/) [ Stephan Livera](/canon/stephan-livera-rabbit-hole/) [@stephanlivera](/canon/stephan-livera-rabbit-hole/) My rabbit hole is a mix of curated concepts and ideas gathered across almost 9 years studying Bitcoin. I believe to really learn about Bitcoin, you have to know enough across various disciplines to understand the how, what, and importantly, the why. This includes austrian economics, cryptography, history, networking, politics, energy and distributed systems. [+12](/canon/stephan-livera-rabbit-hole/) **21** resources 25 hours 29 minutes [Go Down the Rabbit Hole](/canon/stephan-livera-rabbit-hole/) ### [Bitcoin is a Living Organism 🍄](/canon/bitcoin-is-a-living-organism/) [ Brandon Quittem](/canon/bitcoin-is-a-living-organism/) [@bquittem](/canon/bitcoin-is-a-living-organism/) “Bitcoin is the first example of a new form of life. It lives and breathes on the internet. It lives because it can pay people to keep it alive. It lives because it performs a useful service that people will pay it to perform. It lives because anyone, anywhere, can run a copy of its code. It lives because all the running copies are constantly talking to each other. It lives because if any one copy is corrupted it is discarded, quickly and without any fuss or muss. It lives because it is radically transparent: anyone can see its code and see exactly what it does.” — Ralph Merkle Attempting to answer the question “what is Bitcoin, ” I found exploring parallels to the natural world to be particularly illuminating. From this vantage point, Bitcoin appears to be a living system constantly evolving based on environmental stimuli. [+1](/canon/bitcoin-is-a-living-organism/) **10** resources 7 hours 3 minutes [Go Down the Rabbit Hole](/canon/bitcoin-is-a-living-organism/) ### [The Political Economy of Decentralization](/canon/the-political-economy-of-decentralization/) [ Allen Farrington](/canon/the-political-economy-of-decentralization/) [@allenf32](/canon/the-political-economy-of-decentralization/) It goes without saying that Bitcoin has several entirely novel technical characteristics, some of which represent brilliant academic breakthroughs. However, I have always been wary of associating Bitcoin too strongly with advances in information technology, or indeed with “newness” at all. This is in part because these very same advances are argubaly insufficient yet necessary drivers of an increasingly politically and economically centralized world. They have contributed to many problems Bitcoin, and Bitcoiners, aspire to fix: the erosion of privacy, financial repression, monolithic power over dissemination of information, etc. Bitcoin provides a means to (re)decentralize, and I think it fits nicely and naturally in a canon of academic philosophy, politics, and economics analyzing this ideal. But, crucially, this analysis is without reference to Bitcoin itself, or, in most cases, even the internet or software design. It is not techno-utopinaism, but humanism. It is not new. **7** resources 18 hours 30 minutes [Go Down the Rabbit Hole](/canon/the-political-economy-of-decentralization/) ### [Bitcoin Gaming](/canon/bitcoin-gaming/) [ Desiree Dickerson](/canon/bitcoin-gaming/) [@dickerson\_des](/canon/bitcoin-gaming/) Games have played an important part of social interaction since the dawn of civilization. While some sources date the earliest recorded game play to the Paleolithic era, the introduction of value into games emerged around 3,000 BC. As history progressed and games took on digital form, value in games quickly became regulated, outlawed, and deemed gambling. In parallel, in-game currencies quickly arose, stripping video games of real-world value. As we spend more time online and creating virtual content, re-integrating meaningful value is essential to paving the way for equitable virtual interactions and economies. Rather than minting new, and likely flawed, virtual currencies specific to a game, Bitcoin’s sound money principles along with the speed of the Lightning Network provide a highly divisible, interoperable asset, perfect for video games. Bitcoin gaming is quickly getting the attention it deserves. Companies like THNDR Games, ZEBEDEE, and Satoshi’s Games are building the foundation for the future of gaming on Bitcoin. [+11](/canon/bitcoin-gaming/) **20** resources 4 hours 13 minutes [Go Down the Rabbit Hole](/canon/bitcoin-gaming/) ### [The World of Bitcoin Art](/canon/the-world-of-bitcoin-art/) [ Brekkie von Bitcoin](/canon/the-world-of-bitcoin-art/) [@BVBTC](/canon/the-world-of-bitcoin-art/) Throughout history, artists have played a major role in spreading ideas and furthering movements. Since the earliest days of Bitcoin, there have been artists inspired by Bitcoin and what it represents. The artwork and mediums in Bitcoin are as varied as Bitcoiners themselves, but I believe that all Bitcoin artists share a common passion to help spread the Bitcoin message and make the world a better place. “Bitcoin Art” means different things to different people, and that’s part of the beauty of this decentralized movement. [+3](/canon/the-world-of-bitcoin-art/) **12** resources 4 hours 3 minutes [Go Down the Rabbit Hole](/canon/the-world-of-bitcoin-art/) ### [Bitcoin’s Prehistory](/canon/bitcoin-s-prehistory/) [ Sam Callahan](/canon/bitcoin-s-prehistory/) [@samcallah](/canon/bitcoin-s-prehistory/) The story of Bitcoin begins long before Satoshi sent his white paper to the Cryptography Mailing List in 2008\. The fight for privacy and freedom in the digital age started with the Cryptographers, and then the mantle was taken up by the Cypherpunks, and now, the torch has been passed to the Bitcoiners. Satoshi was no doubt a genius, but he didn’t invent something new from scratch. Rather Satoshi cleverly combined existing technologies to create something new and groundbreaking, Bitcoin. [+12](/canon/bitcoin-s-prehistory/) **21** resources 4 hours 55 minutes [Go Down the Rabbit Hole](/canon/bitcoin-s-prehistory/) ### [Politicos Portal](/canon/politicos-portal/) [ Trystine Payfer](/canon/politicos-portal/) [@TrystineAnn](/canon/politicos-portal/) The majority of people who go into public service do so with a big heart and a goal of giving back or fixing something that affected them or someone close to them. Pain points in public service typically stem from a lack of funding or transparency and accountability with appropriated funds. Other times, pain points come from manipulating monetary policies to avoid what would be a “catastrophic” outcome (i.e., one a representative or appointee wouldn’t survive reelection or reappointment from.) This rabbit hole aims to show how Bitcoin can address these problems and many more. The resources below are not an exhaustive list of propositions or arguments to listen to or read, but it is a start, and I hope it encourages a continuance of a journey down the Bitcoin rabbit hole. See you down there! **5** resources 3 hours 43 minutes [Go Down the Rabbit Hole](/canon/politicos-portal/) ### [The Best of Parker Lewis](/canon/best-of-parker-lewis/) [ Sam Callahan](/canon/best-of-parker-lewis/) [@samcallah](/canon/best-of-parker-lewis/) Parker Lewis is the Head of Business Development at Unchained Capital and a prolific educator and writer in the Bitcoin space. His series “Gradually, Then Suddenly” has helped orange pill many Bitcoiners over the years. In that series, he debunks a lot of the common FUD while also providing a great framework of how Bitcoin will impact the world. Parker has a talent for distilling complex subjects in a way everyone can understand which makes him a great asset for the Bitcoin community. [+2](/canon/best-of-parker-lewis/) **11** resources 8 hours 57 minutes [Go Down the Rabbit Hole](/canon/best-of-parker-lewis/) ### [Introducción a Bitcoin en Español ✴️](/canon/introduccion-a-bitcoin-en-espanol/) [ Camila Campton](/canon/introduccion-a-bitcoin-en-espanol/) [@camilacampton](/canon/introduccion-a-bitcoin-en-espanol/) ¿Qué es mejor que aprender sobre Bitcoin? Cuando realmente puedes aprender sobre ello en tu idioma natal. Bienvenidos a mi “madriguera” de Bitcoin, completamente en español. Los libros y artículos que encontrarás en esta página son increíbles introducciones sobre Bitcoin paras las personas que apenas estan empezando a aprender sobre esta technología. Estos recurzos detallan qué es el dinero, qué es Bitcoin, por qué lo necesitamos tan urgentemente, como funciona, y las caracteristicas que lo hacen completamente único. **8** resources 18 hours 56 minutes [Go Down the Rabbit Hole](/canon/introduccion-a-bitcoin-en-espanol/) ### [Bitcoin & Quantum Computing](/canon/bitcoin-and-quantum-computing/) [ Sam Callahan](/canon/bitcoin-and-quantum-computing/) [@samcallah](/canon/bitcoin-and-quantum-computing/) One piece of FUD that is very common to hear is advancements in quantum computing will eventually be able to break the underlying cryptography of Bitcoin. Because both quantum computing and Bitcoin are extremely complex topics, most people who believe this actually have no idea what they’re talking about. To fix this problem, I compiled a list of resources here coming from people who actually do understand quantum computing and its impact (or lack thereof) on Bitcoin. **9** resources 2 hours 20 minutes [Go Down the Rabbit Hole](/canon/bitcoin-and-quantum-computing/) ### [The Best of Jimmy Song](/canon/the-best-of-jimmy-song/) [ Sam Callahan](/canon/the-best-of-jimmy-song/) [@samcallah](/canon/the-best-of-jimmy-song/) Jimmy Song has been a prominent Bitcoin educator, developer, and writer for many years now. He has the rare skills to explain Bitcoin at a complex, technical level as well as simplify it for beginners to understand. This is a sign of someone who has truly mastered the subject matter at hand. Jimmy has authored several Bitcoin books including “The Little Bitcoin Book”, “Thank God for Bitcoin, ‘Programming Bitcoin’, and ‘Bitcoin and the American Dream’. He also pens the popular newsletter Bitcoin Tech Talk. **8** resources 2 hours 23 minutes [Go Down the Rabbit Hole](/canon/the-best-of-jimmy-song/) ### [The Best of Robert Breedlove](/canon/the-best-of-robert-breedlove/) [ Robert Breedlove](/canon/the-best-of-robert-breedlove/) [@Breedlove22](/canon/the-best-of-robert-breedlove/) Robert Breedlove explores Bitcoin through philosophy, history, and economics, revealing how sound money restores freedom and human flourishing in a world corrupted by fiat. Robert Breedlove is a philosopher, writer, and podcast host who explores Bitcoin through the lenses of ethics, metaphysics, and monetary history. His essays and conversations combine conceptual thinking with clear explanations to show why sound money matters for individual freedom and human flourishing. Notable works such as “The Number Zero” series and “Masters and Slaves of Money” trace how corrupt monetary systems concentrate power and steal human time while arguing that Bitcoin offers an incorruptible alternative. Breedlove excels at connecting big ideas: philosophy, psychology, history, and economics, to practical questions about money and meaning. This rabbit hole suits readers who want deep, principled frameworks for understanding Bitcoin and its broader implications for liberty and society. **7** resources 9 hours 44 minutes [Go Down the Rabbit Hole](/canon/the-best-of-robert-breedlove/) Share the Bitcoin Canon # Swan Private: Your Partner for Generational Wealth URL: https://www.swanbitcoin.com/private/ Real wealth begins with real relationships. --- Swan Private ## Your Partner for Generational Wealth Meet With Us ### Expert Service, Strong Relationships Our dedicated Bitcoin experts work tirelessly to build strong relationships with clients and understand the nuances of managing your wealth in a world transformed by Bitcoin. HNW Individuals Family Offices Businesses Trusts [About our team ](/private/team/) Isaiah Douglass Managing Director > Overall, I would highly recommend Isaiah to anyone in need of a top-notch personal service experience in Bitcoin. His level of **expertise, dedication, and passion** for his work **is truly unparalleled**, and I cannot thank him enough for the exceptional service he provides. > > — David Featured in ### The Comprehensive Bitcoin Wealth Platform #### Concierge Service Experience elite service from your dedicated Bitcoin expert providing strategic guidance, domain expertise, and personalized solutions. #### Institutional-level Liquidity We can facilitate orders of nearly any size, at any time. Working with us is simple, secure, and convenient. #### Retirement Accounts Secure your financial future with tax-advantaged Bitcoin in Traditional or Roth IRAs. [Learn More ](https://www.swanbitcoin.com/bitcoin-ira/) #### Bitcoin Treasury Add Bitcoin to your corporate balance sheet with expert strategy and custody guidance every step of the way. #### Tax-loss Harvesting Easily and accurately document the execution of sales and repurchases of Bitcoin to optimize your taxes. #### Inheritance and Estate Planning Securely integrate Bitcoin into estate, trust, and inheritance plans with our industry-leading onboarding times. $4.5 Billion+ Bitcoin purchased into cold storage 5,000+ Swan Private clients ### Ironclad Bitcoin Security and Custody #### Swan Guard With SOC 2 Type 2 compliance at its core, Swan Guard protects your assets so you can focus on growing wealth. #### Swan Safe Bitcoin and dollars are custodied with you as the sole legal owner. Your Bitcoin is stored using best-in-class security practices and technologies. #### Swan Vault Store your keys on cold storage hardware devices with assistance from Swan. Two of three keys are required to access your Bitcoin in a multisignature wallet. ### Insights from Bitcoin’s Brightest Minds Swan Private produces content to keep you updated and educated about Bitcoin and the broader financial world. ### Ready to talk? Let’s get the conversation started. We’re excited to learn more about how we can work together. Meet With Us ### Exclusive Events Swan hosts many in-person events that give you direct access to the most influential and knowledgeable people in Bitcoin. #### Swan Salons Hosted in major cities around the U.S., these gatherings are a great way to relax, connect with Swan and other Bitcoiners on a deeper level, and get answers to your top questions. #### Swan Private Parties Swan Private hosts exclusive events for our clients around the globe. Network, enjoy, and celebrate with fellow Swan Private clients. #### VIP Dinners Intimate gatherings for Swan Private clients to break bread with one another and the Swan Private team. #### Exclusive Online Events Enjoy access to exclusive online sessions that bring you the latest information and education to advance your path toward generational wealth. ### Real wealth begins with real relationships Meet With Us # Swan Private Insight: No Noise — Just Insight URL: https://www.swanbitcoin.com/private/insight-reports/ Sign up to receive Swan Private Insight — a beautiful monthly Bitcoin report full of valuable insights from the Swan team. --- Swan Private ## Just Insight — No Noise. Sign up to receive Swan Private Insight — a beautiful monthly Bitcoin report full of valuable insights from the Swan team. Subscribe # Swan Private: Your Partner for Generational Wealth URL: https://www.swanbitcoin.com/private/talk-to-the-team/ Real wealth begins with real relationships. --- Swan Private ## Your Partner for Generational Wealth Meet With Us ### Expert Service, Strong Relationships Our dedicated Bitcoin experts work tirelessly to build strong relationships with clients and understand the nuances of managing your wealth in a world transformed by Bitcoin. HNW Individuals Family Offices Businesses Trusts [About our team ](/private/team/) Isaiah Douglass Managing Director > Overall, I would highly recommend Isaiah to anyone in need of a top-notch personal service experience in Bitcoin. His level of **expertise, dedication, and passion** for his work **is truly unparalleled**, and I cannot thank him enough for the exceptional service he provides. > > — David Featured in ### The Comprehensive Bitcoin Wealth Platform #### Concierge Service Experience elite service from your dedicated Bitcoin expert providing strategic guidance, domain expertise, and personalized solutions. #### Institutional-level Liquidity We can facilitate orders of nearly any size, at any time. Working with us is simple, secure, and convenient. #### Retirement Accounts Secure your financial future with tax-advantaged Bitcoin in Traditional or Roth IRAs. [Learn More ](https://www.swanbitcoin.com/bitcoin-ira/) #### Bitcoin Treasury Add Bitcoin to your corporate balance sheet with expert strategy and custody guidance every step of the way. #### Tax-loss Harvesting Easily and accurately document the execution of sales and repurchases of Bitcoin to optimize your taxes. #### Inheritance and Estate Planning Securely integrate Bitcoin into estate, trust, and inheritance plans with our industry-leading onboarding times. $4.5 Billion+ Bitcoin purchased into cold storage 5,000+ Swan Private clients ### Ironclad Bitcoin Security and Custody #### Swan Guard With SOC 2 Type 2 compliance at its core, Swan Guard protects your assets so you can focus on growing wealth. #### Swan Safe Bitcoin and dollars are custodied with you as the sole legal owner. Your Bitcoin is stored using best-in-class security practices and technologies. #### Swan Vault Store your keys on cold storage hardware devices with assistance from Swan. Two of three keys are required to access your Bitcoin in a multisignature wallet. ### Insights from Bitcoin’s Brightest Minds Swan Private produces content to keep you updated and educated about Bitcoin and the broader financial world. ### Ready to talk? Let’s get the conversation started. We’re excited to learn more about how we can work together. Meet With Us ### Exclusive Events Swan hosts many in-person events that give you direct access to the most influential and knowledgeable people in Bitcoin. #### Swan Salons Hosted in major cities around the U.S., these gatherings are a great way to relax, connect with Swan and other Bitcoiners on a deeper level, and get answers to your top questions. #### Swan Private Parties Swan Private hosts exclusive events for our clients around the globe. Network, enjoy, and celebrate with fellow Swan Private clients. #### VIP Dinners Intimate gatherings for Swan Private clients to break bread with one another and the Swan Private team. #### Exclusive Online Events Enjoy access to exclusive online sessions that bring you the latest information and education to advance your path toward generational wealth. ### Real wealth begins with real relationships Meet With Us # Swan Private Team URL: https://www.swanbitcoin.com/private/team/ Swan Private has built the best team of experts across bitcoin, finance, tech and more to partner with you on your bitcoin journey. --- Our Swan Private Team ## Expert Service, Strong Relationships Swan Private has built the best team of experts across bitcoin, finance, tech and more to partner with you on your bitcoin journey. Meet With Us [Isaiah Douglass](/private/team/isaiah-douglass/) Managing Director [Zach Wischler](/private/team/zach-wischler/) Managing Director [Jason Bassett](/private/team/jason-bassett/) Account Executive [Alec Bakhouche](/private/team/alec/) Account Executive [Cory Klippsten](/private/team/cory-klippsten/) Founder and Chief Executive Officer [Jeremy Showalter](/private/team/jeremy-showalter/) Chief Business Officer [Brady Swenson](/private/team/brady-swenson/) VP Product Marketing ### Real wealth begins with real relationships Meet With Us