Welcome to issue 20 of the Bitcoin Breakdown newsletter where we explore Bitcoin's potential to propel humanity into becoming a Type II civilization.
📰 HEADLINES
IntoTheBlock, a blockchain analytics company, presumes that 29% of Bitcoin’s circulating supply might be lost forever, as it has remained stagnant for over five years. This is presumably due to bitcoiners forgetting or losing their private keys, resulting in the loss of their assets. It is suggested that early investors are more likely to have cashed out on the significant gains made by the price of BTC. [We however think it is more likely they are underestimating the willpower and dedication of Maxis].
Binance implements Lightning Network (LN) support for Bitcoin transactions. Users can now select "BTC-Lightning" as an option to withdraw or deposit BTC on the world's largest exchange, enabling off-chain transaction channels, making them faster and more cost-effective. This development follows the trend of LN integration into other exchange platforms, like Bitfinex and Kraken. The LN allows Bitcoin to scale without compromising any security or decentralization, unlike virtually all its imitations.
The US Securities and Exchange Commission (SEC) has accepted BlackRock's application for a spot Bitcoin exchange-traded fund (ETF), marking the beginning of the official review process. This acceptance comes after the approval of Bitwise's application just a day prior. Last week, the regulator revealed that it is currently considering applications for a number of funds, including those from Wise Origin Bitcoin Trust, WisdomTree, VanEck, and Invesco Galaxy.
🏆 TOP STORIES
Jacob Silverman, a freelance journalist that regularly writes about the politics of tech, privacy, surveillance, and media, wrote an article for The Baffler wherein he discusses the existence of a powerful cartel within the cryptocurrency industry, contradicting its claimed notion of decentralization. The cartel, composed of wealthy individuals, manipulates markets, engages in fraud and market manipulation, and breaks the law. Tether is a central focus of criticism and skepticism. Silverman highlights the interconnectedness and coordination among industry players like through group chats on messaging apps. The cartel relies on specialized banking services, such as private settlement platforms, to facilitate their operations. Evidence supporting the existence of the cartel comes from leaked documents and testimonies, including a transcript from the arrested former mogul of FTX. [Just stick to Bitcoin, pleb friends].
Bailey Jakob wrote an excellent piece on Bitcoin maximalism. Maxis essentially believe that Bitcoin is the only digital currency worth considering because everything else just dilutes the primary purpose of the crypto revolution by fragmenting the market and compromising security and decentralization. Maxis share the conviction that Bitcoin will inevitably become a universally adopted standard. They emphasize the political self-sovereignty and techno-utopian potential of Bitcoin. The potential of Bitcoin to breakdown traditional financial intermediaries and return financial power and privacy to individual users forms a crucial pillar of the maximalist thought. [Disclosure: This outlet follows a strong Maxi ethos].
David Waugh of Coinbits writes that proposed Bitcoin ETFs are no substitute for self custody. While the introduction of these ETFs would make it easier for financial advisors and institutions to allocate funds to Bitcoin, Waugh emphasizes that holding actual Bitcoin in self custody provides more comprehensive protection against market, government, and compliance risks. He argues that diversification should include a real Bitcoin allocation alongside any investment in a Bitcoin ETF, as owning Bitcoin directly allows individuals to access a digital bearer asset outside the control of governments and traditional financial institutions. The importance of diversifying outside the traditional financial system is highlighted, and the advantages of Bitcoin's liquidity and saleability are contrasted with the limitations of ETF shares.
Allen Farrington: Capital in the 21st century (20 min read)
On the announcement of AxiomBTC, Allen Farrington writes an introductory piece on the concept behind the project and what the true purpose and power of Bitcoin really is. He discusses how Bitcoin has led to a reevaluation of the nature of money, emphasizing the emergence of money as an order based on irreducible uncertainty, subjective value, and individual action. He views Bitcoin and its associated technologies as tools for capital accumulation and market transformation. All Bitcoin-associated developments (mining, the Lightning Network, Nostr, etc.) promise more accessible, cost-effective, and innovative solutions, counteracting the limitations of traditional fiat-based systems. All-in-all, Bitcoin's true killer app is its ability to fix the price of capital, thereby leading to potential universal economic rectification. Farrington concludes by emphasizing that Bitcoin, like all capital, is a tool for human flourishing and progress.
Tomer Strolight: The Substance of Bitcoin (12 min read)
Writing for Swan Bitcoin, Tomer Strolight investigates the idea of what unique properties Bitcoin would have it was an actual substance. He examines five core potential properties: teleportability, the ability to be transported over a communications channel; immovability, as only the rightful owner can move it using a secret key; recordability, as Bitcoin's blockchain records its entire transaction history; a known, finite, and verifiable supply, with only 21 million Bitcoins that can ever exist; and purity, as Bitcoin is uncontaminated (and uncontaminateable) and cannot be mixed or blended with other substances. These properties make Bitcoin a distinct and useful substance for storing and transmitting value. Strolight also mentions other "magical" properties of Bitcoin, such as having zero mass, being present in every Bitcoin node worldwide, and being perfectly divisible.
Grant Bartel dissects for Bitcoin News, Digiconomist's models in the Bitcoin and bitcoin mining spaces, and highlights five reasons why they should not be taken seriously. Firstly, Digiconomist uses fixed variables to model bitcoin mining’s highly volatile profit margins, instead of employing regression models that would be far more suitable. Secondly, Digiconomist heavily relies on a single data source, without considering other relevant sources or questioning the quality of the data. Thirdly, Digiconomist uses old data that is no longer relevant, which undermines the accuracy of the models. Fourthly, Digiconomist's use of regime-switching models are inadequate for capturing the dynamics of the market. Lastly, Digiconomist claims his models cannot be verified, which raises doubts about their accuracy and reliability. The gist; don’t blindly accept models that may be flawed and intended to push certain agendas.
📖 GUIDES & EXPLAINERS
UTXO Management 101 (2 min read)
Eric Podwojski wrote a short piece on the importance of understanding UTXO (Unspent Transaction Outputs) management for Bitcoin holders. He highlights the potential cost of accumulating numerous UTXOs in personal wallets and the high fees associated with spending them in the future. The larger the UTXO data set in a transaction, the more miners will charge in fees. The piece emphasizes the need to start managing UTXOs today, particularly in the current low-fee environment, to avoid significant costs in the future. It suggests using wallet software like Sparrow Wallet or third-party services like Unchained to consolidate UTXOs and minimize fees.
AgoraDesk Guide: Peer-To-Peer Bitcoin Marketplace (9 min read)
₿itcoin Q+A reviews AgoraDesk, an open-source peer-to-peer marketplace that upholds privacy and freedom principles. Bitcoin is a peer-to-peer electronic cash system that provides financial sovereignty without going through a financial institution. Sadly, for most people, the popular way to acquire sats is however through regulated exchanges which directly contradict the ethos of Bitcoin. AgoraDesk does not require personal information, offers various payment methods, and has a dispute resolution system. This piece provides a step-by-step guide on how to use AgoraDesk to buy and sell Bitcoin, including creating an account, finding trades, initiating transactions, and completing trades. It also includes FAQs and additional resources for further learning.
At the same time, Athena Alpha has reviewed Peach Bitcoin, a (closed source) peer-to-peer centralised exchange. The review highlights the key features and benefits of the exchange, such as its user-friendly interface, non-KYC policy, peer-to-peer trading, high privacy and security measures, and focus on Bitcoin only. The review also mentions some drawbacks, including moderately high fees, limited to only European users, lack of web and desktop support, and closed-source code. Overall, the review concludes that Peach Bitcoin is a great option for beginners.
Jameson Lopp, co-founder and CTO of Casa, wrote a user-friendly guide for how to generate seed phrases from your own entropy for secure key management in Bitcoin. He highlights the need for user-friendly methods and proposes COLDCARD, which is effectively a special purpose airgapped computer, as a solution. The process involves obtaining all the specific hardware, setting up the COLDCARD, rolling casino-quality dice multiple times, inputting the numbers into the device, and generating the seed phrase. He notes the verifiability of COLDCARD's dice roll functionality. Securely generating keys is only the beginning of the full life cycle of key management. In order to maintain the integrity of your keys, you must also store them securely, access them and sign transactions with them securely, and have secure recovery / inheritance protocols in place.
Until our next transmission,
Naiw
👽️
Low/High Time Preference.