The global hash rate of the Bitcoin network has returned to all-time high (ATH) levels just six months after it saw a major crash during the aftermath of the Chinese government’s mining ban.
The global hash rate of the Bitcoin network tanked as low as 84 EH/s at the start of June following the Chinese government’s crackdown on the crypto mining sector.
According to Blockchain.com, the global hash rate has increased by 108% since June, with the Bitcoin network performing at a rolling seven-day average of 175 exahashes per second (EH/s) as of Dec. 8.
The figure is roughly 3% shy of the peak levels of 180 EH/s seen at the height of the previous bull cycle in May. It is a commonly held belief that the trends in hash rate correspond with the price of Bitcoin, suggesting that there may be some positive price action on the horizon despite the overall gloomy sentiments present in the market at the moment.
Bitcoin’s total hashrate. Source: Blockchain.com
The actuality of the global hash rate ATH is hard to determine, however, as a lot of popular platforms differ in their estimates of the history and current performance of the Bitcoin network. According to data from BitInfoCharts, the ATH in May hit 197 EH/s before dropping to the 68 EH/s mark in June. As of Dec. 8, the platform had BTC’s hash rate at 191 EH/s, while YCharts has the current performance at 186 EH/s.
Prior to the ban, China-based Bitcoin miners accounted for a whopping 70% of the global hash rate. The landscape has shifted dramatically since then, with the United States becoming the nation that accounts for the majority of BTC’s hash rate at 42% as per estimates from the University of Cambridge’s Bitcoin Electricity Consumption index.
Decentralized autonomous organizations (DAOs) have long captured the public imagination as one of the primary use cases of blockchain technology. Defined as organizations and groups that do not operate in a centralized or hierarchical manner, DAOs represent another shift toward the decentralized world that the Bitcoin community has united over since its inception. Perhaps the best-known example of a DAO was The DAO, an organization which was built on the Ethereum blockchain and later became defunct following a vulnerability which resulted in the organization losing a third of its funds. Despite this incident, DAOs have regained popularity, with many new organizations such as the Maker DAO adopting the model in recent years. The definition of a DAO is constantly evolving, and projects often allege that they are a DAO to capture on its “hype” despite being fully centralized in operation. In this article, we will make the argument that the Bitcoin network was the first decentralized autonomous organization in existence and remains the most influential/successful among its peers. Bitcoin’s decentralization, community, and reach make it an example of what other DAOs should aspire to be, both from a technical and organizational perspective.
At its core, a DAO is a collection of individuals that make decisions based on majority consensus and are governed by rules encoded in a computer program. DAOs are run solely by computer programs, with minimal to no human control or interference. DAOs are gaining popularity due to their autonomous nature; the ability for organizations and groups to make decisions and improve without deferring to some centralized authority is invaluable in a borderless society. DAOs are very much the product of the same cultural movement that resulted in the formation of a peer-to-peer currency in the first place. In fact, Bitcoin’s advent in 2008 can very aptly be described as the creation of the first DAO. Bitcoin, since its inception, has possessed the essential characteristics of a DAO: decentralization and autonomy. To a certain extent, the creation of the Bitcoin network was the first successful implementation of a DAO, thus setting a framework for future projects to follow. We now move to a discussion of examples that further proof that Bitcoin and its associated blockchain network can be defined as a DAO.
Bitcoin’s original purpose was to facilitate a global payment network that ran based on a peer-to-peer network, thus eliminating centralization or the need for a trusted third-party. Satoshi Nakamoto specifically introduced the concept of a peer-to-peer network to solve the double-spending problem, which refers to a transaction party using the same coin in two or more separate transactions. While the peer-to-peer network was originally designed to solve the double-spending-problem for digital currencies without having to rely on an intermediary, it eventually expanded its use cases to become the defining aspect of the blockchain. Perhaps the most intriguing use-case of the peer-to-peer network have been Bitcoin Improvement Proposals (BIPs). BIPs are software-improvement proposals that have the potential to change the Bitcoin blockchain in a significant way. An example of a BIP is Segregated Witness (SegWit), which was proposed by Pieter Wuille in 2015. BIPs certainly have the potential to cause the Bitcoin blockchain to fork, and they have multiple times in the past. However, perhaps the most interesting aspect of BIPs is the way in which they are implemented. While a traditional incorporation model would have focused on approval from the development or managerial team, Bitcoin leaves it to the community. More specifically, the community engages in open discussion with the proposers and gives feedback before moving forward on any particular proposal. The most intriguing aspect is what happens after a particular proposal has been made public. The decision on what constitutes the current version of “Bitcoin” is actually dependent on the miners, who can indicate what particular version of Bitcoin they are running in their transaction blocks. The image below represents how a BIP is reviewed and implemented:
Source:River Financial
This approach signifies one of the first examples of recording votes and decisions for a non-transaction-related issue on a blockchain, thus setting a precedent for software improvements and changes through an open-source and decentralized protocol. BIPs are just one of many examples of the extent to which Bitcoin’s peer-to-peer network is decentralized. The fact that anyone who is a miner on the Bitcoin network can actively play a role in the protocol’s development is one of the few reasons as to why other DAOs should aspire to follow Bitcoin’s model.
While most can agree on the Bitcoin network’s innate decentralization, not everyone agrees that it is completely autonomous. To that extent, many have preferred to refer to the Bitcoin network as a DO (decentralized organization) instead. One of the largest criticisms that the Bitcoin network has faced is that the organization does not actively seek out new members or self-update based on computer logic. This has supported the notion that Bitcoin is semiautonomous instead of being fully autonomous. However, this criticism is a result of the variable definitions of autonomous when it comes to the blockchain community rather than a shortcoming of the Bitcoin network itself. The reality is that the network actively determines membership hierarchy and stake based on data encoded in a computer program, validates transactions and communication among participants automatically, and updates its history in an automatic fashion. While smart contract technology has evolved what it means for a blockchain technology to be autonomous, the innovation present in the Bitcoin network is what inspired these new inventions. Just as Isaac Newton once proclaimed that he stood “on the shoulders of giants,” new blockchain technologies and DAOs stand on the shoulders of Bitcoin’s success.
This is a guest post by Archie Chaudhury. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
A former lead developer for the Bitcoin network has postulated a possible future for the world’s most popular cryptocurrency which includes an epic price prediction.
Software developer Gavin Andresen published a recent blog post called “A Possible BTC Future” in which he predicts the demise of the Bitcoin network.
Before BTC meets its end, it will reach a price of $6 million per coin in 2061, Andresen predicts. Before you get too excited, he added that $1 million dollars today will be worth $6 million in the next forty years, due to massive inflation.
The former Bitcoin client programmer admitted that his predictions were a “little piece of science fiction,” but that the scenario was entirely possible. Transaction fees would cost around $7,500 but most transactions will not occur on the network itself, he added.
Instead they’d be on a mirrored chain using wrapped tokens to save on fees and improve speeds. The whales, which would control the entire thing, would continue to transact on the main chain. By 2100, these whales would recognize that the mining fee had dropped to near zero and so few transactions are occurring so they will shut it down, Andresen predicted.
“Eventually, there are zero new BTC being produced on the BTC network, and zero BTC circulating on the BTC network. There is nothing left to secure, and the chain stops.”
The silver lining is that there will still be 20 million or so BTC moving around on other blockchains which would retain their value through scarcity, he added. Mathematically, the last Bitcoin is due to be mined in 2140. Currently, just 2.17 million, or 10.5%, remain to be mined.
Related:5 Surprising Facts From Gavin Andresen’s Sworn Deposition
Andresen, who also founded the Bitcoin Foundation, stepped down from his lead role in 2014 and has receded from the spotlight in recent years. In 2016, he was ostracized from the Bitcoin community for supporting Craig Wright’s claims to be BTC creator Satoshi Nakamoto.
He later admitted that this was a mistake and testified that he had been “bamboozled” by Wright’s claims in June 2020.
The new Bitcoin users graph is a sight to behold. Even though Bitcoin’s price was horizontal for a while there, the network kept growing. And, with each new participant, the network expands infinitely. And, with that, the value of the network increases in the same magnitude. Such is the nature of the “network effect” phenomenon.
That is what this chart by on-chain analyst Will Clemente shows:
The number of new users coming on the Bitcoin network continues to reach new all time highs. pic.twitter.com/yttPlhJBPd
— Will Clemente (@WClementeIII) August 4, 2021
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As one of the hosts from the Alt-Coin Daily show said, “The traders control the short-term market.” However, if we’re talking long-term, this is one of the most bullish charts you’re going to see. And, luckily for us, Clemente himself explained the chart’s nuances on said YouTube show.
According toInvestopedia, the Gini coefficient is:
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The Gini index, or Gini coefficient, is a measure of the distribution of income across a population developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population.
Bitcoin’s Gini coefficient is getting healthier and healthier. According to William Clemente, when you filter out ATFs and Greyscale, on-chain analytics show that “over time whales are just distributing their coins.” According to him, entities with less than 10 BTC never stop buying. “Since May 19th, retails has been accumulating more heavily than the whales have.” Each day that passes, Bitcoin’s “healthy distribution of the network” gets better and better.
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New Bitcoin Users, A Very Appealing-Looking Chart
According to Clemente, his “very appealing looking chart” shows “the net users growth of the network.” Every day, he looks for “clusters of addresses that look like one person,” those are the entities. Then, he subtracts “the amount of new entities coming on-chain” from “the entities that look like they’re dormant.” The result is the daily new Bitcoin users.
As the chart clearly shows, we recently achieved an all-time high in new Bitcoin users per day. However, there’s more. According to Clemente, the story is in the “incremental increase between each mayor peak.” At the peak of 2011, 1050 new users came on the network per day. In the two 2013 peaks, the number went from 1500 to about 5000 a day. In 2017’s best moment, Bitcoin was bringing in 40000 new Bitcoin users a day.
Related Reading | Bitcoin Set To Outperform In Second Half Of 2021, Bloomberg Analyst
All of those peaks had a dramatic drop back down. If we look at 2021, in general, it’s a “slow grind higher.” So, “If this is the peak, we haven’t seen this drop-off in new user growth that we had each cycle.” On the contrary, “we just crossed the all-time high of 2017.” If Clemente is right, those new Bitcoin users mean we’re nowhere near the top.
BTC price chart for 08/06/2021 on Bitstamp | Source: BTC/USD on TradingView.com
What Do The Greats Say About Bitcoin’s Users?
Thelegend statesthat once upon a time legendary investor Paul Tudor Jones asked Stan Druckenmiller:
“Do you know that when Bitcoin went from $17,000 to $3000 that 86% of the people that owned it at $17,000, never sold it?” Druckenmiller replied: Well, this was huge in my mind. So here’s something w/ a finite supply & 86% of the owners are religious zealots.
Will the new Bitcoin users act the same way when the season of the bear arrives? Only time will tell.
Featured Images by History in HD on Unsplash - Charts by TradingView
You know the New Deal — a massive and unprecedented effort the United States federal government undertook in the 1930s to invest in infrastructure, build hope, and turn the course of a nation towards prosperity and justice. You’ve likely heard of the Green New Deal too — all that infrastructure business, but with a sustainable twist.
We propose an Orange New Deal.
Bitcoin is hope. And it can be an engine of prosperity and justice. But to do that work, it needs infrastructure. Not roads or power lines, but Lightning Network nodes and channels, education, wallets, and sustainable mining.
Image source
The time to build Bitcoin infrastructure is now. But who is to build? Recent events in El Salvador suggest a surprising answer: governments.
Many bitcoiners are libertarians, or even anarcho-capitalists. These tend to think that governments should be small, weak, or not exist at all. They don’t care for the New Deal. If you’re of that mind, you likely won’t agree with what we suggest here and should instead pass this essay on to your big government friends. But if you take a more capacious view about the proper role of the state, if your ambitions are somewhat more pragmatic than those of the libertarian dreamers, and if you rather like the New Deal or the Green New Deal, we hope to uncover a case for an intriguing thesis: national and local governments should invest in Bitcoin infrastructure.
The idea is simple. Bitcoin — like clean water, good roads, or a solid power grid — is for anyone. But for it to truly make good on this inclusive promise, it needs infrastructure. Governments can help accelerate construction of that infrastructure, and so create new opportunities for prosperity and financial inclusion.
Our argument has two steps: governments should invest in public goods, and Bitcoin is one such good.
Governments Should Invest In Public Goods
Focus on the idea of a public good, which has three parts: good, non-rivalrous, and non-excludable. Public goods are good; using them brings some benefit. Your use of a non-rivalrous good doesn’t reduce its usefulness to someone else; you can enjoy the wide, violin-like vibrato as heard in an Yngwie J. Malmsteen concert, for example, without diminishing the enjoyment of the metalhead next to you. A good is non-excludable to the extent that it is very costly to prevent non-paying consumers from accessing it. A flourishing mangrove forest has all sorts of benefits for nearby ecosystems, and it’d be hard to prevent those benefits from accruing, for example, to local fisheries.
Image source
Why should governments invest in public goods? Many point here to coordination problems. Clean air, for example, is good for everyone, and its benefits spill over even to those who didn’t pay for that clean air. But who will pay for it? What’s needed here is coordination; we all know this thing will benefit everyone, but the marginal benefits to individuals may be too small to motivate them to act on their own. Or perhaps they’d act, but not as much as one might like. The coercive might of the state can coordinate for optimal behavior, goes one standard argument, so governments invest in clean air. So also for a literate citizenry, or healthy networks of roads and power lines. Governments are supposed to wield their power to coordinate toward goods that would otherwise go underdeveloped.
The Bitcoin Network Is A Public Good
It’s useful to distinguish Bitcoin the network (capital “B”) from bitcoin (lowercase “b”), its native asset. We do not claim that bitcoin is a public good; it isn’t. When you have some bitcoin you diminish the use others might have from that quantity of bitcoin — Michael Saylor, for example. And you can easily keep others from capturing those benefits themselves; just keep your private keys private.
Bitcoin the network, by contrast, is a public good.
The Bitcoin network is good. Bitcoin the network is an open, censorship-resistant, inflation-resistant monetary network for all of humanity that cannot be controlled by any despot or corporate machine. It hosts, furthermore, a digital bearer asset that is readily auditable by anyone with an internet connection, and that offers remarkable settlement assurances. Detractors will disagree, of course — that is their business model — but we think that Bitcoin is net good for humanity.
Bitcoin is non-rivalrous. Our accessing the network — accepting payment in bitcoin, running a node, and so on — doesn’t diminish your access. Indeed, Bitcoin is anti-rivalrous. As with other network goods, its value increases the more people access it. The more people that speak Spanish, the more valuable it is to know that language yourself. As more people offer or accept bitcoin payments, its network grows in usefulness too.
There is a wrinkle here — blockspace is rivalrous and excludable. Not everyone can squeeze their transactions on-chain, and those who pay higher fees get priority. Luckily, though, this wrinkle is ironed out by Bitcoin’s Layer 2 manifestations (like the Lightning Network) that make it possible to transact with Bitcoin with minimal use of precious blockspace.
As for non-excludability, it is here that Bitcoin shines most of all. It is very cheap to access the network; a smartphone will do. And it is very expensive for anyone to stop you from doing so. States have tried, mostly without success. The software that keeps the machine running is free and open-source; anyone can take a look under its hood, make modifications or upgrades, and build new applications atop the network’s fundamental layer.
What makes this all possible, is, in a word, infrastructure: public Lightning Network nodes, a healthy swarm of full Bitcoin nodes validating new blocks, miners that gather transactions into blocks and secure the network, educators who show us all how to navigate the space safely, hardware wallet manufacturers who enable secure transaction signing, and Bitcoin Core developers who maintain the network’s main open source software. The most obvious way to promote the public good that is the Bitcoin network is to invest in infrastructure along these lines.
We could trust private actors to invest. But we might also want governments to contribute too, to accelerate access to Bitcoin, to provide healthy competition, and to coordinate towards optimal outcomes.
Let’s Get Building
With those two steps in place, the conclusion follows: governments should invest in Bitcoin infrastructure. Let’s make that proposal more concrete. What could governments actually do here? We know the New Deal: public works, roads, hospitals, airports, dams, and sweeping regulatory changes. What could an Orange New Deal look like?
Image source
A mighty host of building opportunities here await funding. For example:
Internet access: open WiFi networks, satellite access for remote regions, subsidized mobile data plans for those that need them.
Lightning Network nodes: lots of in-bound and out-bound liquidity, and with a steady network presence and low routing fees.
Developer support: Sponsor developers or projects with grants, and so promote innovation and better user experience across wallets, nodes, mining pools, and protocols built atop Bitcoin’s main layer.
Education: training in self-custody, spending and receiving bitcoin, paying employees in bitcoin.
Translation: bringing educational materials into every major language.
Accessibility: adapting Bitcoin educational materials, wallets, and hardware for use by members of, e.g., the Deaf or Blind communities.
Community wallets: These occupy the middle ground between full self-custody and fully centralized custody — think here of the Bitcoin Beach ecosystem.
Sustainable mining: new dams, wind farms, solar farms, and geothermal mining operations to keep the network secure in an environmentally friendly way.
Fair and consistent tax and accounting rules: National and local regulators have opportunities to coordinate here and thus save bitcoin users (aka citizens) from a host of headaches and pitfalls.
Direct bitcoin payments: Cash payments in a depreciating sovereign currency work well when immediate consumption is the goal. But for redistribution with a longer time horizon in mind (reparations, for example), governments should give away the ultimate anti-inflation asset: bitcoin. This needn’t involve new taxation or debt; many governments already have significant bitcoin holdings seized from criminals. Every payment of this kind would strengthen Bitcoin’s already formidable network effects, and stimulate further interest in the network.
Some of these tasks are more apt for national or state and provincial governments; others work better at the municipal level. Each will contribute to the Bitcoin network and its liberating use — not just for citizens, but for people across the globe.
Objections Answered
The New Deal was not without controversy. An Orange New Deal would inevitably find detractors also. The objections would come from two sides: Bitcoin skeptics, and Bitcoin advocates.
Bitcoin skeptics claim that Bitcoin struggles to scale, is available mostly for the educated and wealthy, or causes environmental harm. But note: the investments described above would cut against each one of these objections. Lightning Network infrastructure helps Bitcoin scale. Education and development expand access to the network. And investments in sustainable mining operations drive hydrocarbon-burning miners out of business. The investments we advocate, in short, don’t just make Bitcoin’s benefits more widely available; they also make Bitcoin better on balance. The argument of this essay supports measures that would help alleviate the very problems the skeptics raise.
Image source
Some of Bitcoin’s most ardent advocates will object that state sponsorship of Bitcoin infrastructure isn’t very cypherpunk. If states get involved, the story goes, they’ll mess up the network by attempting to censor transactions or extract rent. We reply: the Bitcoin network is already large and robust. And the software on which it runs is free and open-source. Any extra gadgets that connect to the network empower their users to access something that is itself beyond the control of any state or corporate despot. Note, too, that governments already invest in their own proprietary monetary networks and routinely censor transactions. Direction of any of those resources towards Bitcoin is net positive for the world. It’s better to achieve marginal gains in the real world than to pursue ideological purity.
Fans of nascent Central Bank Digital Currency schemes will ask why governments shouldn’t invest in their development instead. There are a few reasons. First, CBDCs inherit many of the problems of fiat currencies — their supply can be capriciously inflated, which makes them poor stores of value, and they lack the privacy and censorship-resistance of Bitcoin. Second, this will take some time, whereas Bitcoin already exists. Governments could invest in Bitcoin infrastructure now even as they plan for CBDCs. Finally, Bitcoin is for everyone. To build Bitcoin is to grow a network that benefits the whole world; it is to invest in humanity rather than just in the citizenry of one nation with access to some local monetary regime. Diehard nationalists who wish to benefit just a select group of people — their compatriots — won’t see much sense in this. But others will see the wisdom in benefitting all, we think. And Bitcoin does that.
Image source
We said up top that this wasn’t an article for libertarians. But some will still be reading, and they will object that governments are less efficient than other agents when it comes to the hard work of building. We reply: perhaps so. We encourage those of this mind to start investing, whether for charity or for profit, in Bitcoin developers, sustainable mining operations, educators, and so on. Prove — now, please — that voluntary efforts are superior to state-sponsored ones.
El Salvador is leading the way. It is time for other nations to follow and for each to launch their own Orange New Deal.
Let’s get building.
About the Authors: Andrew M. Bailey (@resistancemoney) teaches at Yale-NUS College; Bradley Rettler (@rettlerb) teaches at the University of Wyoming. Both work with the Resistance Money Bitcoin research collective. All images are from Wikimedia Commons: 1, 2, 3, 4, 5.
This is a guest post by Andrew Bailey and Bradley Rettler. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
It is important for the country to adopt bitcoin not only as a medium of exchange, but as a store of value on chain.
Recent news from El Salvador has sparked well deserved interest among Bitcoiners and in the mainstream media. The most pressing question is how ordinary Salvadorans will actually use bitcoin in everyday life. For example, will it be possible to adequately secure bitcoin in poorer communities?
The Lightning Onboarding
It’s clear that ordinary, non-technical people don’t have much time to research the ins and outs of Bitcoin. They just need the tools that work. So it’s understandable that so far, Salvadorans have mostly used accessible mobile apps like Strike and the Bitcoin Beach wallet.
While these are great tools for quick onboarding straight to Lightning and provide locals with much needed low-fee payments, such wallets make a trade-off of usability for privacy and security. And while keeping ten dollars in these wallets isn’t such a big deal, using them for family savings is asking for trouble.
Not Just Fintech
El Salvador’s population is 6.5 million. There has never been a coordinated push for bitcoin adoption on such a large scale. It would be disastrous if Salvadorans misunderstood bitcoin as merely a financial technology thing, i.e. something you download an app for and you’re set. There’s a pressing need to grasp Bitcoin (the upper case), at least in its basics. The best way to understand how Bitcoin works is to use it in its real form: handle the recovery seed, perform a few on chain transactions and so on.
Because if bitcoin becomes a part of everyday commerce, some people will inevitably start saving a portion of their earnings in sats. That’s when users will need to level up from hot wallet to cold storage.
Using Hardware Wallets In Poor Communities
As bitcoin spreads around the world and becomes universally recognised, it will also become the most sought-after thing to steal. Bitcoin is liquid, fungible, tradeable in a P2P fashion, and is a bearer asset (i.e. whoever owns the keys is the owner in a practical sense). That’s why self-possession without compromising on privacy and security is so critical. This is true no matter how much bitcoin is at stake. A small bitcoin stash can be life changing for a family of limited means if they’re able to hold on to it safely for several years.
In similar fashion to the Lightning wallets, people need easy to use, battle-tested solutions when taking possession of their own bitcoin. Open source hardware wallets check all the boxes.
The problem is that El Salvador is far from being a rich country. The annual GDP per capita is only $9,140; for comparison, the same number in the U.S. is $68,000. Popular hardware wallets start at $70 and can cost up to hundreds of dollars, which is more than most people can afford in a poor community. So it would be unrealistic to expect Salvadorans to buy hardware wallets en masse. If hardware wallets are to be used, we may see a different approach. It’s conceivable that one device will be shared in a circle of trust, such as a family. This may seem risky at first glance, but the potential privacy and security risks can be mitigated when the proper features are used.
Sharing a hardware wallet within a family is possible without compromising individual privacy and security. The magic trick is using passphrases. A passphrase derives a completely new wallet within the device, one that cannot be accessed or even viewed by anyone without the knowledge of the particular passphrase. So when family members each set up their own passphrase, they can enjoy complete privacy regarding their transaction history and holding amount, even though the physical device is shared. Once the user is done working with Trezor and unplugs the device, there is no way to view any details about their wallet unless the correct passphrase is entered again.
How should the recovery seed be handled in such a setting? Relying on a single guardian could be dangerous — even if trusted, an individual can lose the sheet of paper with the mnemonic seed or be mugged (although passphrases would still protect bitcoin from theft in such a case). Fortunately, wallet backups can also be handled within a circle of trust, using Shamir backups. A Shamir backup is a sharing scheme in which the recovery seed is split into multiple shares (up to 16) with a predefined threshold for recovering the wallets in the future. So for a family of ten, there could be ten Shamir shares with a threshold of six: six family members would have to come together to restore their wallets in case something happened to the device. Redundancy is also a great feature of Shamir backups — in the example above, four shares can be lost without compromising the integrity of the backup (due to the threshold being lower than the total amount of shares).
Sharing a hardware wallet in a circle of trust can be done in a way that doesn’t jeopardize the security or privacy of individual users. Ideally, each user should only use her own hardware wallet exclusively. However, in countries with lower purchasing power, individually owned hardware wallets may not be a viable option, at least initially. Perfect can be the enemy of better, and using a hardware wallet within a circle of trust is better than holding bitcoin on a custodial hot wallet, especially with proper understanding and usage of the technologies described above.
One of the big challenges of bitcoin adoption in poorer regions will be to do it right from the get-go. People need to understand how much there is at stake and how important it is to hold their own keys. They need to value their privacy so as not to become prey to thieves and scammers. This is why we’re currently looking into the most effective way to help with educational activities focused on cold storage, part of which will be a donation of the Trezor devices to local educational workgroups.
This is a guest post by Josef Tětek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Over the 12 years of its existence, Bitcoin has garnered praise and tremendous enthusiasm. It has also attracted a great deal of criticism and disdain. From economists and bankers to policy makers, those entrenched within the financial industry have disapproved of this cryptocurrency. Depicting it as a Ponzi scheme and “too volatile to be a store of value,” they have expressed their wish for Bitcoin to go away.
The latest criticism centers around Bitcoin’s high-energy consumption, i.e., the significant amount of electricity miners use to secure the ledger. Mainstream media is pushing the idea of “wasteful” mining, positioning Bitcoin as an agent of environmental pollution. Yet this is based on a misconception. A comprehensive analysis of carbon emissions created within the financial sector shows that Bitcoin mining has a far smaller harmful environmental impact than the impact of energy use within the legacy banking system.
The FUD (Fear, Uncertainty, Doubt) fostered by the media around the environmental “purity” of Bitcoin mining was recently amplified when Elon Musk, the CEO of Tesla, despite having embraced Bitcoin, recently made a 180-degree turn. In a May 12, 2021 tweet criticizing Bitcoin’s environmental impact, he backtracked on his earlier decision to accept Bitcoin for payment for his company’s vehicles. He then announced that he had met with leading North American miners to form the Bitcoin Mining Council, which would promote energy usage transparency to facilitate sustainability initiatives worldwide.
This billionaire’s dramatic move — along with his subsequent breakup meme tweet — caused a sharp decline in the bitcoin price. What is perceived as Musk’s social media attack on Bitcoin came about in today’s media narrative, converging Covid with climate change issues and in the decline of the fiat system with hyperinflation. Now, Bitcoin’s competition with the status quo heats up.
Match Against The Great Reset
Despite not yet being at the end of the pandemic, and amid mainstream media’s overblown Bitcoin “wasteful energy use” debate, world leaders are coming forward to fix problems that are now perceived to pose an existential threat to humanity. The Great Reset, initiated by the World Economic Forum (WEF) together with the United Nations and The International Monetary Fund (IMF), states its aim as re-engineering the world economy so that it emerges from the Covid crisis into a better world.
Using slogans depicting the creation of a more fair and greener future, a group behind the Davos agenda encourages business sectors and civil society to practice “stakeholder capitalism.” Working within UN Sustainable Development Goals to micromanage all of the resources of the planet, this agenda aims to create a world where people will own nothing and everything they need will be rented.
Bitcoin, the world’s first stateless currency that currency, that advocates self-ownership challenges their planned economy. By providing a viable alternative, Bitcoin presents itself as a fierce contender in a contest toward a “sustainable future.” This competition between two economic networks revolves around divergent visions of humanity, and its outcome will determine the fate of humanity.
Transhumanism Agenda
The central idea behind the Great Reset is transhumanism. Transhumanism, a loosely-defined movement that has developed over the last decades, aims to enhance human conditions through science based on a mechanistic understanding of nature. With a knowledge paradigm that aims to dominate and control nature, transhumanists try to chart an inorganic path of evolution. Their goals are to go beyond the biological limit of the human condition, and to attain far greater human capacities than displayed at present, by merging humans with the machine.
The foundation of transhumanism was laid within the ideology of Social Darwinism, which became prominent during the late 19th century. English philosopher Herbert Spencer, after reading Charles Darwin’s book “On the Origins of Species,” sought to apply Darwin’s idea of biological evolution to the social realm. By coining the term “survival of the fittest,” Spencer described processes that Darwin has called “natural selection” in mechanical terms.
Spencer’s interpretation, emphasizing superiority of physical forces, fostered Social Darwinists’ view that the strongest and most capable individuals in a population should be allowed to thrive without restriction, while the weak should not be prevented from dying out. This sociological theory cemented the idea of biological determinism and this was used to justify modern predatory capitalism, which allows the wealthy few to ruthlessly exploit and prosper.
Law Of Natural Selection
Through a centrally-planned monetary system (known as central banks), the rich and powerful control resources. They then create artificial scarcity and subject the entire population to their rigged game of Monopoly, making people compete against one another. As their “survival of the fittest” war economy dictates who should live or die, which countries to be bombed and sanctioned, Bitcoin, a breakthrough of computer science, has now intervened.
Contrary to the view of Social Darwinists, the theory of natural selection did not mean that only the strongest should survive. Darwin shared what he observed in the natural world – how organisms that learned to adapt to their environment have a greater likelihood of surviving and producing more offspring than ones that didn’t.
The mysterious creator of Bitcoin, Satoshi Nakamoto, designed a technology in accord with the laws of nature. Bitcoin is cryptographically secured, decentralized money. With its fixed monetary supply of 21 million, Bitcoin regulates itself through the algorithm. The mining market built around this currency restored the organic force of evolution, enabling fair competition and healthy price discovery.
The market that dynamically adjusts mining difficulty according to demand, with a tight feedback loop resetting every two weeks, does not give favor to anyone. The Bitcoin network rewards those who play by the rules while it ruthlessly wipes out those who are not fit to meet the demands of the market. Brutal mining competition drove rapid changes in mining equipment as hardwares were made to evolve into becoming more cost and energy efficient to keep up with increasing difficulty. Now that a global level of security has been achieved, this currency that is greener than the petrodollar provides great human rights protection in the face of oppressive military regimes.
Social Darwinism 2.0
As Bitcoin’s permissionless and open distributed network has now begun to free people from the kingdom of kleptocrats, the architects behind The Great Reset are about to launch Social Darwinism 2.0. Apparently, through advanced technology such as genetic engineering and nanobiotechnology, the Davos crowd — who have been manipulating the globe in their favor — now aim to alter human nature itself through “a fusion of our physical, digital and biological identity.” Their ultimate goal appears to be the creation of a post-human society where humanity is subjugated to the supremacy of cyborgs.
With the suggested implementations of the immunity passports that would be used to regulate cross-border travel and commerce, now a merger of digital and biological identity seems to be quietly taking place. Created by Silicon Valley tech giants, this is a centrally authorized global certification system that validates lab results and vaccination records based on their designated authorities. This could potentially lead to the beginning of tying digital medical records to digital identity.
As the global vaccination certificate infrastructure is being built, central banks are preparing to roll out their digital currency that has a capability to track and control everyone’s transactions. Researcher Alison McDowell – who has been investigating the agendas behind the Great Reset – describes their new economic system as a biosecurity state that creates a new level of behavioral control and surveillance, based on the intervention of health management.
In this technologically-governed system, instead of individuals being able to directly work with the inherent wisdom inside their bodies that nature endowed them, they are made to rely on Big Pharma and biotech industries as intermediaries to manage their health. As the global power consortium now tries to further steer humanity away from its natural course of evolution, Bitcoin began to defend humanity against this machine takeover of the life world.
Conscious Evolution
While Darwin’s theory provided an explanation of the origin of life and its exclusively biological evolution, there is another paradigm beyond a materialistic science that sees evolution in a context greater than mere physical existence. Epigenetics is a new field of science which studies biological mechanisms that turn genes on and off, and how cells read those genes. This now challenges the dogma of biological determinism, revealing the true potential of the human mind. Epigenetics shows us that genes do not control biology, but rather it is how we respond to our environment that changes the fate of cells and genetic expression.
With its foundation in scientific knowledge of evolutionary biology, Bitcoin now opens up an organic path of conscious evolution, in which human beings are empowered to participate in processes of evolution. Bitcoin, with its feature of “freedom to choose,” allows ordinary people to reject the emerging biosecurity state that denies the ability for each individual to pursue his or her own unique path to their well-being. By choosing the option to trust math rather than a third party, we can now trust our own senses and natural immune system and become the master of our own biology.
Claiming the power of conscious choice, people around the world are voluntarily coming together to hold nodes. They are misfits, unbanked, freedom lovers, those who are called deplorable by a politician, and who are victims of bank fraud and financial terrorism. Now, Bitcoiners all unite to maximize Darwinian fitness for the survival of their own species.
A decentralized network of sovereign individuals has now become like a large organism. Interacting with a new ecosystem, this network has begun to drive changes in society. Countries are starting to join the road toward hyperbitconization, learning to adapt to a new economy free from the dictates of the central banks. El Salvador has now become the first nation to declare Bitcoin as legal tender.
By aligning everyone’s self interests, Bitcoin helps those who are willing to look after themselves. Supercomputers around the globe channel energies from the armed race of weapons manufacturers that have been destroying life and the environment, redirecting them to build a peaceful world. Fierce competition for scarce money, rewarding honesty and truth, creates a flow of abundance. Now, if we choose to, humanity can rise above the struggle of existence and create a sustainable future that honors the sacredness of all living beings.
Acknowledgement:
Special thanks goes to La Fleur Productions for her editorial help.
This is a guest post by Nozomi Hayase. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
In order for Bitcoin to achieve hyperbitcoinization, it has to fulfill certain network and monetary needs. Without obtaining and, more importantly, maintaining these needs, Bitcoin can not succeed. If Bitcoin can obtain and maintain these needs, then there is nothing that can stop it.
This article is a play off of Maslow’s hierarchy of needs; the idea that people have to go through certain levels of life to eventually reach happiness and live to their full potential. This theory can be applied to Bitcoin.
Image via @Nikcantmine
This is the game plan; this is how Bitcoin achieves world reserve currency status.
Network Needs:
Base Layer: Fair Launch
No currency has a shot at mass adoption or a chance at being the global reserve currency if it’s been cheated from the start.
One of the many things that separates bitcoin from the thousands of other cryptocurrencies was the fair launch on January 3rd, 2009, over two months after Satoshi Nakamoto released the Bitcoin white paper on October 31, 2008. Not to mention the reason why Bitcoin was created in the first place, which was a direct result of the 2007 to 2008 financial crash, fiat currency and central banking. It was made as a solution to a problem. All other coins came after seeing bitcoin’s success, tried to copy it, and failed.
Satoshi didn’t create Bitcoin in the hopes of scamming others, he did it to provide anyone an inclusive monetary system that was fair. Not only was there no premine, where a founder allocates a large portion of the coins to themselves, Satoshi also made sure to give potential participants advanced warning before launch. It appears that it was important to Satoshi for Bitcoin to be perceived as not having been created for any one individual’s gain at the expense of others.
Satoshi programmed the first block to be locked in, resulting in the first block reward of 50 BTC being unattainable. Neither Satoshi, nor anyone else could grab those bitcoin, and now there are 50 fewer BTC out of the approximately 21 million total supply available. If the creator would have just taken the BTC, it would not have been fair. After that first block was in place, miners could then start hashing away and building the chain.
Minting new currency onto the blockchain must be fair, with no one entity having an advantage over others. This system needs to be inclusive, where anyone has the ability to run the numbers and verify for themselves that everything is correct, honest participants are rewarded and bad actors face consequences. Whatever system is used to create more currency must absolutely come at a cost to protect against any monopolies arising from gaming the system.
Bitcoin solved this with distributed proof of work (PoW).
Second Layer: Distributed Network
Since Bitcoin was fairly launched with no malicious intent, we can be confident in building and expanding the network. If Bitcoin really is going to succeed, then it cannot be centralized like gold, fiat and altcoins.
Bitcoin is robust because of two reasons. One, the creator vanished long ago, never to be seen again. There is no central authority to arrest or have them use their influence to destroy the project. Two, the global distribution of the developers, economic nodes and miners. These three sets of stakeholders provide a check and balance against each other so no single party has control.
Der Gigi makes a fantastic analogy when he says Bitcoin is like ants. You can step on ants and kill their hill in one area, but you’ll never ever be able to kill all of the ants in the world, because of their massive numbers and distribution.
Bitcoin developers are the ones who work day and night to advance Bitcoin forward. These developers must build things that are in demand by the users, or else no one will use their software. It is not in developers’ best interests to attack the network because everything is out in the open; there is no way to sneakily attack Bitcoin because of how long the process takes. If a developer does try to attack Bitcoin, his or her reputation flies out the window and no one will use their software anymore. Their proposals to change the network are intensively reviewed by other devs during the process of submitting Bitcoin Improvement Proposals (BIPs). Anyone can become a Bitcoin developer, and there are developers spread all around the world.
Neither the miners or nodes have complete control of the network. The miners slowly write transactions into the ledger and mint new currency. Nodes verify the transactions on the blockchain quickly and efficiently, but cannot issue new currency. Miners have to follow the rules that the nodes set forth which may only change if individual node operators choose to run new software.
Network participants must prioritize keeping Bitcoin decentralized. The more distributed it is, the more censorship resistant it is. The more censorship resistant it is, the better it can defend itself from nation states and others from controlling the network. Good news for Bitcoin, the network is growing strong. In January of this year, the amount of full nodes hit a new all time high of 11,558 according to bitnodes.io.
To whoever’s thinking “Bitcoin will fail when governments 51 percent attack the blockchain,” I could write about this, but for the sake of both my time and yours, here’s a quick two-minute video explaining it:
Monetary Needs:
Third Layer: Store of Value
Bitcoin’s distributed network needed to be in place before everyone could start safely and securely storing their wealth. At the time of writing, this is the point of the pyramid I believe we are in.
Bitcoin is currently thriving in this aspect after recently reaching a total market cap of over $1 trillion, with trillions more poised to enter the market. Today, the world has a store of value crisis. There is about $80 trillion in cash around the world just sitting there, waiting to be put into an actual store of value. There is about $100 trillion globally in stocks that are owned by people who would rather save than take on the risk of investing. There is over $281 trillion in real estate but this has many flaws, such as the fact that it’s easy to tax, not portable and not liquid. Gold is an approximately$11 trillion dollar market cap, and all it is is a shiny rock. About $253 trillion exists in global debt. Bitcoin is only going to continue eating most, if not all, of this.
Image via https://medium.com/@markharvey_52065/store-of-value-a-case-for-3-million-bitcoin-6809877f3c3e
Twelve-plus years ago, Bitcoin introduced itself as a new competitor on the market. Ever since then, Bitcoin has been going through price discovery to figure out where it fits on the monetary food chain. Bitcoin has proven to be a fantastic store of value not just because it embraces all of the qualities that good money typically has (durability, portability, divisibility, uniformity, scarcity, acceptability and verifiability) but because it is the most liquid money, and has amassed powerful network effects. That is what makes it dominant.
Retail investors have used bitcoin as a savings technology for a long time, but in the past year institutions have joined us as well. The flow of institutions truly started last summer when MicroStrategy bought 0.1 percent of the total supply of bitcoin. Since then, we’ve seen MassMutual buy $100 million worth of bitcoin this past december, Marathon Patent Group buy $150 million worth of bitcoin in January, and even Tesla buy $1.5 billion worth of bitcoin in February. Institutions are gobbling up more and more bitcoin as they understand the benefits of adopting a Bitcoin standard.
Every single person in the world needs to be able to store their value in something that won’t leak their monetary energy over time. People in developed countries are forced to invest their fiat earnings into investments in hopes to keep/increase their purchasing power. People in developing countries don’t have that privilege, and are forced to store their wealth in USD to escape their faster-collapsing home national currency.
Bitcoin makes saving possible again. People can actually save their wealth and let it grow, without risk of devaluation over time via inflation. The 21 million hard cap with growing user adoption cements this. Everyone can now build and correctly allocate wealth to improve their quality of life.
Image via https://bitcoin.zorinaq.com/price/
Fourth Layer: Medium of Exchange
After Bitcoin has sucked in trillions upon trillions of dollars, the next level for Bitcoin to conquer would be to become convenient enough to use and pay for goods and services in your everyday life.
It is important to realize that the Bitcoin blockchain should be considered a settlement layer rather than a payment layer itself. In comparison to how slow the legacy financial system is at processing payments, Bitcoin’s main layer is a significant improvement. Transactions involving fiat are unacceptably slow. ACH transfers take about two to three days. Checks, debit cards and credit cards take up to 30 days to clear. Remember, when transacting in fiat, final settlement cannot even be performed since it is always exposed to counterparty risk of the issuer. So, sending large amounts of BTC for it to reach final settlement in 30 minutes or less is a huge upgrade in comparison. But we can scale higher on Bitcoin through the use of additional payment layers
The good thing about Bitcoin is, since it’s an open-source protocol, we can build solutions on top of it. A similar comparison can be made to the base layer of the legacy financial system, which couldn’t scale globally, so they added layers on top such as Square, Visa and Mastercard to help facilitate transactions. This made the network scalable for quick and cheap transactions. A similar idea has been brought to Bitcoin with the Lightning Network.
“The point is, seven transactions a second is fine. Because what it’s gonna be is, is it’s going to be Square cash, moving $182 million worth of bitcoin once per day. And then they’re going to do that settlement and they’re going to provide 37 million people with a Square cash account, and they’re gonna do 187 million transactions a day on their network. They’re like a second-level solution. They’re gonna do 180 million transactions a day for 37 million people and settle it with one transaction against the blockchain, and it’s gonna scale just fine. Bitcoin wins, Square wins, the customers win.” – Michael Saylor
Image via https://www.nichanank.com/blog/2019/1/5/bitcoin-scaling-lightning-network-micropayments
A great analogy for this is when Saylor was discussing George Lucas’s superhero stories. A superhero can have many exciting powers such as shooting lasers out of their eyes, flying, teleporting, super speed and more. But they all have one downfall; they’re easy to kill.
Now imagine a superhero that has no fancy powers like lasers or teleporting, but is unkillable. Slow and boring, nothing flashy. The unkillable superhero could pick up a gun and kill all of the other fancy superheroes while fending off attacks with ease. The unkillable superhero that can pick up new weapons resembles Bitcoin, and the flashy superhero that dies resembles altcoins.
In this analogy, what is Bitcoin’s gun? The gun is the layered solutions being built on top of Bitcoin, such as the Lightning Network. This results in a decentralized and unbreakable foundation on top of which scaling solutions can be built, making Bitcoin the most unstoppable monetary force the world has ever seen.
Scaling solutions such as Lightning will be the tool that allows Bitcoin to surpass this level of becoming a means of exchange. One could argue that transactions on the Lightning Network are final settlement, though others would argue it technically is not until you’ve confirmed it on the main chain. But Bitcoiners who use and build on Lightning increasingly talk about it as a final settlement.
Top Layer: Unit Of Account — Hyperbitcoinization
Once more and more individuals use BTC to save their wealth, merchants accept bitcoin, and institutions adopt it as their treasury reserve asset, we’re in the end game.
This is when everything in the world has been repriced in bitcoin in replacement of the U.S. dollar. This is a long-term process completed via price discovery, which has started since day one of Bitcoin’s existence, as mentioned earlier. In complete hyperbitcoinization, I highly doubt we’ll be referring to everyday items in their BTC terms (example: 0.00345727 BTC). Instead, we’ll just use satoshis to price things.
As the bitcoin black hole continues to suck in more wealth and more merchants start to accept bitcoin as payments for their goods and services, hyperbitcoinization is just around the corner.
Humans tend to converge on monetary media to save, invest and perform economic calculation. There only needs to be one, as using multiple currencies complicates economic calculation and delays the development toward a unified monetary system. Bitcoin achieves the unit of account (UoA) status for everyone globally while simultaneously becoming the most desirable asset to own. Which only encourages more people to continue using it as their store of value (Sov) and medium of exchange (MoE).
All five levels of this pyramid create a positive feedback loop that strengthens Bitcoin in every aspect.
Image via https://bitcointalk.org/index.php?topic=144911.0
