ssaurel

bitcoin

It's pretty simple to understand.

**Bitcoin was designed to offer everyone a superior alternative to the fiat system, which is flawed and not fixable.**

For this alternative to be truly sustainable, we need to do everything we can to develop a circular economy centered on the Bitcoin system.

This means pushing more merchants to support Bitcoin as the MoE of everyday life. **It also means adopting the “Spend and Replace your Bitcoin” paradigm** rather than getting stuck in the “HODL Bitcoin no matter what” paradigm.

This latter paradigm is gradually trapping Bitcoin as a simple SoV integrated into the current system. This plays into the hands of BlackRock and the other financial giants who want to rob us of the deeper meaning of the Bitcoin revolution.

**So, if you don't spend your Bitcoin by not using it as an MoE, you're shorting the Bitcoin revolution.**

Don't make this mistake!

If you don't spend Bitcoin you're shorting the Bitcoin Revolution.

*Episode XXII. Block Height: 859500. Essential for growth and democracy within the Bitcoin Network, yet a dangerous task: Bitcoin Forks explained.*

Substack Article: https://carlbmenger.substack.com/p/bitcoin-forks

In the digital dawn where Bitcoin reigns, shadows of forks emerge, claiming new domains. They whisper of freedom, of better, brighter chains, yet often they mimic, caught in old refrains. Like echoes in a valley, they seek to break away, but end in hollow mimicry, repeating the same play. For in each split, a piece of truth might fake, not genuine divergence, but a mirrored quake. These forks, they promise realms anew, yet find themselves ensnared, in cycles they pursue.

![Bitcoin Forks](https://m.stacker.news/49711)

Bitcoin operates on a decentralized digital ledger known as the blockchain. As Bitcoin's popularity grows over time, so is the need to address various challenges and demands for improvement within its underlying technology and consensus mechanisms. These pressures occasionally led to what is termed a "fork" in the Bitcoin blockchain. Simply speaking, a Bitcoin fork occurs when there is a divergence in the blockchain, resulting in two separate chains that share a common history up to a certain point. This divergence is akin to a fork in the road, where the blockchain splits into two potential paths. Forks can be initiated for various reasons, such as implementing new features, correcting bugs, or addressing disagreements within the community regarding the direction of the network’s future.

### Bitcoin Nodes

The distributed fork decision center are Bitcoin Nodes, a fundamental components of the Bitcoin network, acting as the backbone that ensures its decentralized and secure nature. A Bitcoin node is a computer that runs the Bitcoin software, which enables it to participate in the network by validating transactions and blocks, relaying information to other nodes, and maintaining a copy of the entire blockchain. The decentralized nature of nodes, where no single entity controls the majority, helps ensure that any significant changes to the protocol require widespread agreement, thus protecting the network from contentious forks that could undermine Bitcoin's value and security. Run your own NODE! (https://stacker.news/items/100665)

### Soft vs Hard

Bitcoin forks are broadly categorized into two types: soft forks and hard forks. A soft fork is a backward-compatible upgrade to the blockchain, meaning the new rules introduced do not conflict with the old rules. Consequently, nodes that have not upgraded to the new software can still participate in the network. In contrast, a hard fork represents a radical change to the protocol that is not backward-compatible, as a result the blockchain splits in two different cryptocurrencies. Thus, the decision to use a hard fork or a soft fork in the Bitcoin network depends on the nature of the changes needed and the level of community consensus.

#### Soft Forks

A soft fork is used for backward-compatible upgrades, where the new rules do not conflict with the old ones. This allows nodes that have not upgraded to still participate in the network, ensuring a smoother transition. Soft forks are suitable for security enhancements and bug fixes, as they can improve the network without causing disruption. They are also appropriate for minor feature additions and incremental improvements that do not require a fundamental change to the protocol. Soft forks maintain network cohesion and minimize risks associated with blockchain splits, making them ideal for implementing necessary improvements and optimizations. The most prominent Bitcoin soft forks are:

**P2SH (Pay-to-Script-Hash)**

Pay-to-Script-Hash (P2SH), activated in April 2012, is a significant Bitcoin soft fork. P2SH allowed transactions to be sent to a script hash rather than directly to a public key hash. This enabled more complex transaction types, such as multi-signature transactions, where multiple signatures are required to authorize a transaction. P2SH made it easier to use and deploy complex Bitcoin scripts, enhancing the flexibility and security of the Bitcoin network.

**BIP 34 (Block Version Enforcement)**

Bitcoin Improvement Proposal 34, activated in March 2013, introduced block version enforcement. This soft fork required that each new block include its height (the block number) in the coinbase transaction. This change improved the consistency and traceability of the blockchain, making it easier to detect and prevent certain types of chain reorganizations and attacks.

**BIP 66 (Strict DER Signatures)**

Bitcoin Improvement Proposal 66, activated in July 2015, introduced stricter rules for the encoding of signatures. This soft fork aimed to improve security and interoperability by enforcing the use of DER (Distinguished Encoding Rules) for signatures. The stricter rules helped prevent certain types of attacks and ensured that all signatures on the network adhered to a consistent format, enhancing overall network reliability.

**Segregated Witness (SegWit)**

Segregated Witness (SegWit), activated in August 2017, is one of the most notable Bitcoin soft forks in recent history. It aimed to address scalability and transaction malleability issues. By separating transaction signatures (witness data) from the transaction data, SegWit effectively increased the block size limit, allowing more transactions to fit into each block. This improvement reduced transaction fees and enabled the development of second-layer solutions like the Lightning Network, which further enhanced Bitcoin's scalability and transaction speed.

**Taproot**

Activated in November 2021, Taproot is a major upgrade that enhances Bitcoin's scripting capabilities and privacy features. Taproot combines the Schnorr signature scheme with Merkelized Abstract Syntax Trees (MAST) to enable more complex and private transactions. With Taproot, all transactions look the same on the blockchain, whether they are simple payments or involve complex scripts, thereby improving privacy. Additionally, Schnorr signatures are more efficient and secure, reducing transaction sizes and improving overall network performance.

#### Hard Forks

A hard fork is not backward-compatible, thus nodes and miners must actively upgrade to the new version of the software to participate in the new network, effectively creating and running another cryptocurrency. Just keep in mind, if you do not agree to the hard fork and thus do not upgrade your node you will continue to use the original network. The most prominent hard forks are:

**Bitcoin Cash (BCH)**

Bitcoin Cash is one of the most well-known and significant Bitcoin forks. It was created in August 2017 in response to growing concerns about Bitcoin's scalability and high transaction fees. The primary change introduced by Bitcoin Cash was an increase in the block size limit from 1 MB to 8 MB (and later to 32 MB), allowing for more transactions to be processed per block. This fork aimed to provide a version of Bitcoin that could handle a higher transaction volume, making it more suitable for everyday transactions and positioning itself as a peer-to-peer electronic cash system.

**Bitcoin Gold (BTG)**

Bitcoin Gold was created in October 2017 with the aim of decentralizing mining. It introduced a new proof-of-work algorithm called Equihash, which is more resistant to ASIC (Application-Specific Integrated Circuit) mining hardware. By doing this, Bitcoin Gold sought to make mining more accessible to individual miners using general-purpose hardware (GPUs), thus promoting a more decentralized network and reducing the dominance of large mining farms.

**Bitcoin SV (BSV)**

Bitcoin SV (Satoshi Vision) is another notable fork that emerged from the Bitcoin Cash community in November 2018. This split occurred due to disagreements over technical and philosophical differences within the Bitcoin Cash community. Bitcoin SV increased the block size limit even further, initially to 128 MB and then to 2 GB, with the goal of restoring Bitcoin's original protocol as outlined in Satoshi Nakamoto's whitepaper. Bitcoin SV emphasizes scalability and aims to support large-scale enterprise applications and transactions.

### Pros and Cons

Bitcoin forks are essential for the Bitcoin network because they enable innovation and provide a mechanism for resolving disagreements within the community about the future direction of the protocol. By allowing developers to experiment with new features, upgrades, or changes to the consensus rules, forks foster the evolution of blockchain technology, helping to address scalability, security, and usability issues. Additionally, forks serve as a democratic process within the decentralized ecosystem, offering a way for different factions to pursue their vision without disrupting the original network. This ability to fork ensures that Bitcoin can adapt to new challenges and remain resilient, while also preserving the core principles of decentralization and user choice.

However, Bitcoin forks can be dangerous for the network because they create divisions within the community, potentially leading to fragmented development efforts, reduced security, and confusion among users and investors. When a hard fork occurs, it splits the network into separate chains, diluting the hash power (the computational effort securing the network) and making each chain more vulnerable to attacks. This fragmentation can also undermine trust in Bitcoin as a store of value, as the existence of multiple competing versions may cause uncertainty and volatility in the market. Furthermore, forks can lead to "replay attacks," where transactions on one chain are maliciously repeated on another, causing potential loss of funds.

### Scaling in Layers

Keeping the Bitcoin main chain simple is crucial for maintaining the network's security, decentralization, and accessibility. The main chain, or the base layer, is where all transactions are verified and stored on the blockchain. A simple and lean base layer allows for more participants to run full nodes, which are essential for verifying transactions and ensuring the network's trustlessness. By avoiding excessive complexity on the main chain, Bitcoin remains resilient against centralization pressures, as it ensures that running a node doesn't require extensive resources, thus allowing individuals and small entities to participate in the network. This simplicity also aids in reducing the likelihood of vulnerabilities and bugs, as a less complex codebase is easier to audit and maintain.

Bitcoin's scalability is achieved through layers built on top of this simple and secure base chain. The most prominent of these is the Lightning Network (https://stacker.news/items/261714), a second-layer protocol designed to facilitate faster and cheaper transactions by taking them off the main chain. Lightning enables near-instantaneous payments with minimal fees by allowing users to open payment channels that only require occasional settlement on the Bitcoin blockchain. This layered approach ensures that the Bitcoin network can handle a high volume of transactions without burdening the main chain, which remains focused on security and decentralization. By scaling in layers, Bitcoin can maintain its foundational properties while still being able to accommodate global demand for transactions. This is also the reason why all Bitcoin hard forks failed so far.

### Conclusion

Bitcoin forks are a testament to the dynamic and evolving nature of a living and breathing organism. Forks reflect the ongoing debates and experimentation within the Bitcoin community as it strives to create a robust, scalable, and secure digital base layer. Bitcoin soft forks are crucial for the network growth because they allow for backward-compatible upgrades, enabling new features and improvements without disrupting the existing system. Soft forks have facilitated the adoption of enhancements that improve scalability, reduce transaction fees, and increase the network's capacity. These upgrades are implemented in a way that does not require all participants to upgrade simultaneously, ensuring that the network remains cohesive and secure. This ability to evolve through soft forks has allowed Bitcoin to address its limitations while preserving the integrity and continuity of the blockchain, which is vital for maintaining user trust and the stability of the ecosystem.

In contrast, hard forks have often failed to gain widespread adoption because Bitcoin scales primarily through layers, not by altering the base protocol. Hard forks require all participants to upgrade, which can lead to contentious splits and the creation of rival chains, as seen with Bitcoin Cash. These splits dilute the network's security and community, potentially harming the value proposition of Bitcoin as a decentralized currency. Moreover, Bitcoin's layer-1 (the base protocol) is deliberately kept simple and secure, while scalability and functionality are achieved through layer-2 solutions like the Lightning Network. This layered approach preserves the core blockchain's security and decentralization, avoiding the risks associated with hard forks and ensuring that Bitcoin remains resilient as it continues to evolve.

### The End

That's it for this episode. I hope you got some valuable information from this one. Don’t forget: There is Bitcoin, and there are Shitcoins. Thanks for reading, and see you in the next one. ₿ critical, ₿ informed, ₿ prepared. Yours,

**₿ critical, ₿ informed, ₿ prepared. Yours,**

![Carl B Menger](https://i.postimg.cc/QxMq5Npk/5589d578-73d1-4077-9870-30af219effe0-808x163.png)

### Stay tuned
**Subscribe to my Newsletter:** https://carlbmenger.substack.com/publish/home
**Follow me on X**: https://mobile.twitter.com/CarlBMenger
**Follow me on NOSTR:** npub10wv37amdqnv8edw5yktgsxr62g8k4lqkk2u66fk6c6uwuakzssxsf4v22x

### Related Topics
[III] Don't trust, verify: https://stacker.news/items/100665
[XIII] The Lightning Network: https://stacker.news/items/261714

Bitcoin Forks explained

CarlBMenger

Bitcoin has a scaling issue. Many people are either unaware of this or in denial, if you are one of these people I hope this article can inform or convince you. And if you have already realised bitcoin isn't perfect, perhaps I can tell you about some of the potential solutions.

First we must understand the problem bitcoin faces, and game out the potential futures if we fail to improve. In it's current form, the bitcoin blockchain allows for around 260 million transactions per year. On average there are 144 blocks per day, and 52,560 blocks per year. Each block can, at most, fit about 5000 transactions inside. Most blocks actually contain significantly less than this however. This means 260 million people could make a single transaction per year, we could imagine this being a lightning channel open, or a transfer into cold storage. Clearly this isn't enough transactions for 8 billion people world wide to be able to either self custody or use the lightning network. It would take 30 years to onboard the world to self custodial lightning, and that is assuming you have 0 channel closes or any other types of transactions, which obviously won't be the case.

You may be thinking that this is okay, as we can use custodians or "bitcoin banks" as a way to make payments with bitcoin, however I will try to explain why this is not a solution to scaling. If too much bitcoin ends up being stuck inside closed custody systems, outside of the base chain, we could have a repeat of the gold standard, where promises to exchange the banks IOU for real bitcoin get broken. This could occur if the individual base layer fees are too high and no new self custodial scaling solutions are introduced to bitcoin, meaning people have to use custodians by necessity. Paper bitcoin can then be created, leading to a fractional reserve system with inflation all over again. While we may be able to audit a bitcoin bank's reserves, if they disclose the addresses, we won't be able to audit their liabilities without trusting what they say.

Another issue that comes with having too much supply not being self custodied, is centralising the consensus of the network and potentially allowing the network rules to be changed by a central entity. Consensus is determined by the economic majority of nodes. If not enough capital, in bitcoin terms, is held self custodially then the custodians with their own nodes may be able to alter the system against the will of the users. We need regular people to continue to run nodes and verify their transactions, if they end up needing to use a custodian it's likely they will stop running a node. Mining pool centralisation has similar issues, and bitcoin’s lack of scaling can also make this worse. As fees increase, fewer and fewer miners will be able to claim their payments from the pool due to not reaching the withdrawal thresh-holds.

So, what are some proposed ways for solving this issue? Lets first discuss what options currently exist, without any consensus changes to bitcoin.

Lightning Network. The lightning network is currently the only truly self custodial scaling solution for bitcoin. By using a 2 party multisig, called a channel, you can make many off chain transactions with only 2 on-chain transactions. While lightning is a great tool and will likely serve a crucial function for a very long time, it does have limitations and is not the final solution to scaling. In order for someone to use lightning they must make a layer 1 transaction to open a channel. And in order to be truly self sovereign, your money is not settled until it is put back on L1 with a channel close transaction. As we mentioned earlier there is a limit on how many transactions can be done on layer 1. I believe lightning will most likely end up as a settlement layer between businesses or other large entities.

Federations. A federation, in regards to bitcoin, is a group of individuals or entities that each hold a key to a multisig containing bitcoin. This bitcoin can then be 'pegged' to a system or network that is off chain, the liquid network is an example of a federation. While a federation may be an improvement for some people versus a traditional bank custodian, ultimately it is still custodial. A relatively small group of people can conspire together to take your money or limit how you can spend it, and the government could easily control this small group. You cannot take your bitcoin out of the liquid multisig without permission from a majority of the key holders.

E-Cash Mints. An E-cash mint is another form of custodian, where you send your bitcoin to the mint in exchange for a predetermined amount of their E-cash tokens. This mint could also be a federation multisig, or controlled by an individual. By using E-cash you don't have to create layer 1 bitcoin transactions every time you want to spend. E-cash transactions can also be very fast, cheap and private. Some examples of E-cash projects are Fedimint and Cashu. Once again though, this is still a custodial solution and doesn't solve the issues we described above. I do think there is one very interesting use case for E-cash mints, and this is community or family banking. The so called “Uncle Jim model”, where a family or small local community entrusts their bitcoin with a trusted and technical member. This could be used as a custody method and also a scaling solution, where the transactions in the local town just use the local E-cash token, to avoid L1 or lightning fees.

Merge Mined Sidechains. This is another blockchain that is secured by bitcoin miners, as it uses the same proof of work mechanism that bitcoin uses, double SHA-256. Rootstock is an example of a merge mined sidechain. However there are 2 issues with this approach, there is no way to trustlessly withdraw from the sidechain, and more blockchains don't actually scale the base layer. While there are small improvements over traditional custody, unfortunately, you essentially have another form of a custodial network, which inherits the scaling issues of the base chain.

Now lets talk about the proposals that aren't currently possible, and would need new OP codes for bitcoin script, requiring a soft fork.

Covenants. A covenant is a contract you can voluntarily choose to be a part of, some spending limits can be applied to an address, where if you choose to accept bitcoin to it, new rules are applied that must be met for coins in that address to be spent. Some types of covenants already exist in bitcoin, such as time-locks, you can choose to make your bitcoin un-spendable for a predetermined amount of time.

OP_CTV is the most basic covenant proposal, it stands for Check Template Verify. If you are using CTV your transaction must have a template that matches the previously set template, the spending conditions must be met. Once applied these contracts cannot be changed by anyone, they allow for provably trustless payment structures such as payment pools, where multiple people share a single UTXO. Lightning is essentially 2 people sharing a UTXO, with covenants we can increase that to many people, potentially thousands, sharing a UTXO. This also comes with privacy benefits, as many people will share a single footprint on L1. This function can also be used to create batched channels, where many lightning channels can be opened with a single UTXO. In fact, covenants can improve lightning in many ways.

Vaults are another important potential tool that could be created with many different covenants, allowing things like claw-backs of bitcoin if you get robbed, or putting limits on where your bitcoin can go. Another use case is having an automated inheritance setup, where if you die and don't respond to a notification for a period of time, your bitcoin is moved to a wallet controlled by your heirs. Some other covenant proposal examples are; OP_CAT, OP_TXHASH and OP_VAULT.

We may also be able to create trust minimised or even trustless sidechain two way pegs, allowing people to deposit to and withdraw from a sidechain without anyone's permission, one proposed method for achieving this are called spacechains.

Covenants are very powerful upgrades to bitcoin, although relative to the greater world of programming, they are still very limited. Many years have been put into testing, researching and debating these proposals, however we must still be very cautious when making any changes to bitcoin's consensus rules. Ultimately the new tools created with covenants would all be opt-in, voluntary. Just like how you could send you bitcoin to an address nobody controls and lose it, or time-locking your bitcoin for hundreds of years, with covenants you could send your bitcoin to an address that prevents you spending your bitcoin, so caution should be taken when first using them. But over time, just like the lightning network, these tools can be developed and improved, to become simple and secure for the average person.

I believe we should make small steps towards the end goal of giving self sovereign to everyone on the planet. We don't need to scale to 8 billion next week, we have time, however we can't become complacent and believe bitcoin never needs to change and adapt again. OP_CTV is a very safe first step, it has been around for several years, with lots of testing. It can also be upgraded with further OP codes in the future, to allow for greater flexibility and improved scaling.

I highly recommend reading BIP119, which you can find here:
https://github.com/bitcoin/bips/blob/master/bip-0119.mediawiki

And a follow on article I wrote for bitcoin magazine, which goes into the activation process and the current community efforts for CTV: 
https://bitcoinmagazine.com/culture/rubins-reubens-and-the-push-for-ctv

Some other useful websites to learn about covenants:
https://utxos.org/
https://covenants.info/

Bitcoin has a Scaling Issue

George203BTC

deleted by author

Eobard

privacy

### **What happens if the entire Internet became offline or gated?**
As a thought experiment, how prepared would you or I be for an internet with services completely inaccessible in many parts of the world? An **internet that could go offline for several days/weeks**. At a time that we are completely over-dependent on it worldwide for much of our cognitive thought, decisions, work & lifestyle.

![](https://i.giphy.com/l0HlGmbxkwkICKykM.webp)

Such scenarios have already been modelled/simulated by major governments and big tech in recent years and so it may actually be more likely than each of us give credit for. Before you respond with "couldn't happen", just stop and consider that [34% of cloud infrastructure](https://kinsta.com/aws-market-share/) depends on Amazon directly. Just ONE company. With another 30% using Cloudflare. Disruption is more likely than we might expect.

Furthermore, should the internet become an geopolitical attack vector, it's entirely possible that we'd see a counter-reaction (with political support) so that the internet when reinstated and redeployed has **Government identity enforced for every Western service that interacts with the internet**. With speech, searches & clicks linked to your ID and the complete criminalisation of encryption and privacy-preserving tech. All in the interests of public safety.

-------
### **Win 30k Sats 🥇**
To keep things uplifting, `the 'top' comment below will get 30,000 sats` on 27th December at 18:00 - because it'd be great to encourage more people to get involved with uncomfortable ~privacy discussions like these. Will likely run more bounties in future from this territory, for more articles & challenges to come.

-------

### **Inspired by Whitney Webb**
Over the weekend, I listened to a fantastic interview from [Whitney Webb on WBD](https://www.whatbitcoindid.com/podcast/the-end-of-the-world-as-we-know-it).  She's an extremely talented investigative journalist. If you care about your privacy the link takes you to Peter Mac's site rather than YouTube, where you can download the MP3 (a nice touch in today's world). It may not be the most uplifting content, especially not for this time of year. But it is an important conversation, given the trend.

I have already written about [Starlink's unique role](https://stacker.news/items/286873) in a future disrupted internet if we needed to need to switch to cellular connections, as well as the trend of [colonising humans via our data](https://stacker.news/items/352257) . In the interests of providing solutions, I have a **[directory of Stacker News privacy guides](https://stacker.news/items/342249)** , a write-up for those looking at a Plan B location in [Uruguay](https://stacker.news/items/326364), plus a pre-announcement [daily privacy challenge to come in January](https://stacker.news/items/350665). My hope is we can normalise ~privacy for us all, even for those who are fairly early in their journey and who may be desiring some moral support or be questioning the need.

Let me also say that if this happens tomorrow, I would be absolutely ducked 🦆 just like most of you stackers would. So this is also shaming me into making some changes in 2024. We should acknowledge how inconvenient things may become if a) conflict on the internet increases or b) if Big Government is serious about really screwing with the freedoms that we take for granted online. We should be considering from time to time how we can improve our sovereignty in a few areas. In privacy, independence and redundancy to name a few. Even just to regular power blackouts.

-------

### **Social STACKER Score**
If you wish, feel free to use the numbered list as a `Social Stacker Score`⚡. 1 point for each subjective item, meaning a total of `30 points` up for grabs. Score yourself or just get involved with the discussion below...

------

## `A. Files & Media`
1. **Backups** = When was the last time you created backups of personal computer files? Or backups of backups? Do they have solid local encryption enabled?
2. **Content & Videos** = Have you downloaded content onto hard-drives for future usage? Books, maps and utility videos like home-improvements, electrical repairs, food preservation, hobbie projects, entertainment and films for kids - especially if these become inaccessible or gated.
3. **Site Hosting** - Do you have your own website/code hosted on smaller service providers? Or are all using services with the popular corporations like Microsoft (GitHub), Atlassian (Bitbucket), Amazon, Google, DigitalOcean, Vercel, Cloudflare?
4. **Software Packages & Torrenting** = Do you have all the software you need downloaded and installed on drives already? Have you disabled automatic software updates from ALL services?
5. **Faraday cage** = Could all your electronics go kaput in an instant? Even if your main devices wouldn't, networks may themselves. How would you protect/utilise any expensive electronics?

## `B. Tech`
6. **Mobile Device** = Do you have GrapheneOS installed on your main device? Or at least have a 2nd Device / a 'Burner' dumb-phone ready to go?
7. **Laptop** = Do you have a part of your MacOS partitioned for open-source Linux? Have you gone all-in on Linux, QubesOS or TailsOS? Do you even have a laptop with a battery at all, if power were to drop?
8. **Ring Cameras / Siri Speakers / Google Nest** - Do you have this junk still plugged-in and connected to the internet at your house? Is it really that convenient having these enabled and feeding data back on yourself and neighbours?
9. **Security** = Do you have 90%+ funds in cold storage? Do you have cold storage hardware that does not require third parties injecting the right code before you can send your funds? Do you have offline 2FA that doesn't depend on a server? A stash of anonymous SIM cards should you need them? Or other privacy tech that will save your bacon?
10. **Analogue Systems** = Do you own products that do not depend on an internet connection? More and more critical infrastructure has been plugged-into the internet these days. Do you have an analogue radio in the house or other means of finding out what's happening in the world? Looked-into radio repeaters to enable Bitcoin transactions over radio signal? (would love to discuss this more!)

## `C. Home & Internet-Access`
11. **P2P Networking** - Could you be an Uncle Jim and share internet with loved ones or local people if they also didn't want to subject themselves to an identity-controlled internet? Be it Wifi extenders, mesh networking or sharing parallel cellular networks.
12. **Neighbours & Community** - do you know your neighbours names? When did you do something generous (share lifts/invites/babysit)? Are you building other local ties & groups? Do you have contacts in other places you know you can trust? People with skills such as electricians, plumbers? 
13. **Plan B** - Do you have somewhere to be in 3 Days (as Robert Kiwosaki says), away from chaotic major cities/towns? What if flights were grounded without internet? When would you know to go? Do you perhaps have a 2nd Citizenship, if civil unrest breaks out in your country or if it suddenly becomes unfavourable to stay for your family? If resources are restricted/rationed? 
14. **Transport** - Is boat, bike or car an option, rather than plane? Do you have your own method of transport that doesn't contain an internet connected kill-switch?
15. **Skin in the Game** - Will you be teaching self-sufficiency for yourself and those around you, when our ability to rebel against rushed regulations depends on maintaining self-sufficiency? Do you have a foot in the future, with a son/daughter/nephew/niece and a vision of the world you want them to live in?

## `D. Finance`
16. **Physical Cash or Value for 6+ Months** = If bank accounts & payment networks go offline. Do you have enough to sustain yourself if difficult to wire money or sell BTC? Inventories of goods or 'money' (be it dollars, coins or foods) to use in local markets?
17. **No Banks / Small Banks** - Do you bank with any smaller companies, who are less likely to be targeted or complicit in the event of inaccessible balances?
18. **Self-Custody & Coinjoins Outlawed** = Have you decided whether you will comply or not with rushed-through regulations? Have you thought about coinjoining non-KYC coins, and how about KYC if you were to gain a target on your back? 
19. **"F$@% you" Income Streams** = Do you have another income stream besides your main job? Are you able to make and sell goods/services locally?
20. **NGU Mindset** = Are you ready if everybody else became poor overnight? How would you and I react if Bitcoiners maintain purchasing power and everyone else suffers from wealth destruction? Is your security setup ready for the spotlight? When/if would you KYC or use the ETF, under intense social pressures? 

## `E. Redundancy`
21. **Energy Independence** = Do you have independent sources of energy to keep you connected for more than a few weeks or months? Thinking about energy generation as a form of tax-free dividend? Do you have fuels & perhaps a generator in supply? Batteries available in the event of outages?
22. **Mining** - Do you have a miner to keep ticking over and supply you with funds to sustain your living and prevent you dipping into your stack? Or to heat your house?
23. **Food** = Are you developing green fingers or gaining increasing access to land for parallel food systems? Storing surpluses in a pantry, growing foods or have independent water reservoirs around your community?
24. **Learning** = Are you learning a trade, particularly offline for 2024? Having something else to offer to communities, be it growing produce, teaching (even about privacy), woodwork, electrical, writing may help increase your resilience.
25. **Debt** - Have you freed yourself of any unnecessary debt burden? Debt creates a liability to others requiring you to service it and potentially make rash decisions.

## `F. Privacy`
26. **Psychological** = Are you ready to be labelled as a criminal for preserving privacy? How much are we all prepared to suffer, out of convenience, connectivity and criminalisation? Would you keep one foot in the CBDC world or remain outside? Contact with families, friends, your job may depend on this. How would you prevent yourself from poor decision-making to regret later?
27. **Social Media** - Have you deleted data from X / Facebook & unused services already? When would you consider doing it? Before the A.I. is trained on it and targeting messaging or your weaknesses with it? Or later?
28. **VPNs** / Tor / Proxy Locations = Do you already use anonymous VPNs / proxies with third parties possessing a proven track record zero logging? 
29. **Proxy identities**? - Would you consider obtaining or utilising a secondary government identity and operating under that rather than your own? And helping those around you to do the same.
30. **Future** = Have you done enough research into future trends like trans-humanism, Biotech and existing 'scientific' trials that have created some tragic results up until today? Have you properly considered the complete privacy and health implications, before a highly-censored world emerges? Are you becoming dependent upon AI to write code, write articles or feeding Microsoft with your day to day thoughts? Or using open source alternatives to meet your own goals?

-------
## How did you get on reading? 🎲
Do you think a **restricted internet will actually create a healthy counter culture and parallel systems**? How prepared and resilient might you be? None of us are perfect, but hoping this prompts us to make some small steps to get started this next year..






Have you thought about when the internet goes offline? 🌐

davidw

Triffin’s Dilemma is the fatal flaw in the Bretton Woods system- a paradox that eventually destroys every reserve currency.

But what if it could be solved?

![22de9603-4740-435b-af85-dea8e9647b95_890x890.jpg](https://m.stacker.news/4711)

The Bretton Woods system was established in 1944 as an international monetary system designed to provide stability to the global economy after the ravages of World War II. Under this system, the U.S. dollar was pegged to gold, and other major currencies were pegged to the U.S. dollar. The U.S. dollar became the world's primary reserve currency, and member countries agreed to maintain exchange rates within specified bands by intervening in the foreign exchange market. The International Monetary Fund (IMF) and the World Bank were also created as part of the Bretton Woods framework to facilitate international economic cooperation and development. 

The structure of the system was designed to directly benefit the United States- apart from the obvious instatement of the Dollar as the global reserve currency, the low pegged price of gold ($35/oz) meant that gold was severely undervalued. 

The emergence of a gold-dollar system was ostensibly driven by insufficient growth in the global gold supply to support expanding world trade and output- the choice of post-war currency parities, which kept the real price of gold low and limited gold production, contributed to this shortage. Additionally, the USSR and South Africa, major gold suppliers, were deemed unreliable. 

(In reality, there was no shortage of actual gold- there is always enough reserves to satisfy demand for trade, the question is a matter of price. At which price will gold have to be in order for global trade to be settled? The answer was and is certainly much higher than current prices.)

To bridge the gap between the demand and supply of global reserves, dollars became more and more prominent, generated through the accumulation of official short-term claims on the United States starting in the early 1950s. In practical terms, this meant that the US was consistently running balance of payments deficits in official settlements, accruing liabilities to foreign officials without a corresponding increase in assets like gold.

The United States was running current account deficits, which essentially means we were exporting more dollars than we were importing. These excess dollars were showing up in the global system in a multitude of ways- as Eurodollar bank deposits, in dollar swap and currency trade, and as excess dollar reserves at foreign central banks. Corporations and governments who accumulated these surpluses by trading with us now had cash on hand which they promptly reinvested back into the domestic financial system, mainly in the form of debt liabilities such as U.S. Treasuries.

The current account can be broken down into several subcategories which can be seen here:

![e2608654-5d7e-44eb-8324-544a41edfb0a_1390x500.webp](https://m.stacker.news/4712)

In 1960, a Belgian economist by the name of Robert Triffin gave a presentation in front of Congress on what he saw as a fatal flaw in the Bretton Woods global monetary system. The flaw he presented came to be known as the Triffin Dilemma or the Triffin Paradox, and it would, he asserted, destroy Bretton Woods in a long enough timeframe. He had also predicted this contraction in global reserves would lead to a worldwide deflationary crisis, which did not come to pass- instead manifesting as a wave of inflation that crashed over the U.S. and much of the world economies. 

The Dilemma can be easily summarized as follows. 

![3f95cbe7-9163-4385-b831-90011e7f9c3c_1274x906.webp](https://m.stacker.news/4713)

The Dollar was the world reserve currency. This meant it would be used in international trade, as central bank forex reserves, to settle financial transactions, and to borrow and lend dollar loans offshore (Eurodollar). However, the rest of the world lacked a crucial factor- the ability to generate dollars. 

Everyone needs to trade, borrow, and save in a currency THEY CANNOT PRINT.

America faces a dilemma- do we meet this demand or not? If we do not print, then an insufficiency of global reserves emerges. Trade begins to grind to a halt, central banks cannot defend their currency in the forex market, banks cannot service dollar loans. This can cause system-wide defaults and a deflationary crisis that spreads like a viral contagion from one nation to another.

To prevent this we take on the other side of the dilemma- the U.S. needs to run persistent current account deficits, sending out more dollars to the global system on net than it takes in, to fund all these needs. In the long run, however, this means the U.S. will print more dollars than is otherwise justified by our reserve ratio to gold. This ratio will go lower and lower, until there is such an overhang of dollars that a global run on the U.S. dollar itself commences. The excess surpluses of dollars all flow back for gold, until the gold runs out. 

That’s essentially what happened. 

![a055ea38-dee7-47a4-95e9-60dad0eabbca_1600x864.webp](https://m.stacker.news/4714)

As the world began to globalize, and nominal GDP growth outside the U.S. began to accelerate, more and more dollars built up outside the domestic financial system. In 1965, French President Charles de Gaulle did the math and realized that the U.S. had issued many more dollars than was justified by the $35/oz reserve ratio and began redeeming dollars for gold, as he was entitled to under Bretton Woods. He was not alone; other nations soon followed suit. A run on American gold reserves began as thousands of metric tons of gold began flowing out of the U.S. (see above).

"The German withdrawal from the Bretton Woods agreement sparked panic and a currency crisis. By the end of June 1971, $22 billion in assets had left the US. Later, in July 1971, Switzerland redeemed $50 million for gold and one month later in August, pulled its Swiss Franc from the Bretton Woods agreement. At the same time, France redeemed $191 million for gold by sending a French battleship to New York to take delivery of the gold from the Federal Reserve and to bring back to France".

-John Law

De Gaulle had hammered in the nail to the dollar coffin that was Triffin’s so-called Dilemma. He had called the Americans’ bluff, and forced the U.S. to engage in a massive drain in reserves- even calling for a reinstatement of the gold standard system that had functioned before. In doing so, he was removing what his finance minister Valéry Giscard d’Estaing had called “The Exorbitant Privilege”- the ability of the U.S. to run balance of payment deficits and fiscal deficits and force the global system to absorb the fallout. Other nations must stay fiscally and monetarily responsible, and keep their currency pegged to the dollar within the narrow exchange rate- but the U.S. had no need to do so. It received real goods for a currency it could print, feeding the hungry and growing U.S. imperial machine.

A New York Times article published in February of 1965 lays it out; 

“Perhaps never before had a chief of state launched such an open assault on the monetary power of a friendly nation. Nor had anyone of such stature made so sweeping a criticism of the international monetary system since its founding in 1944. There was Charles de Gaulle last week proclaiming that the primacy of the dollar in international dealings was finished, calling for an eventual return to the gold standard —which the world’s nations scrapped 50 years ago — and practically inviting other countries to follow France’s lead and cash in their dollars for gold. It was a particularly nettling irritant just as the U.S. was deeply involved in making some hard decisions about its monetary policy.”

The U.S. had started the system with a huge hoard of gold- approximately 50% of all above ground gold reserves were held by the Americans. However, this run on the dollar began draining this treasure chest until this figure had fallen by more than half. Most other countries in the Bretton Woods system began following France’s lead.

The crisis reached a head in August 1971 when Nixon famously decided to close the gold window, freezing the ability of foreign central banks and governments to redeem dollars for gold. In doing so, he cut the last link between the paper dollar and the underlying real money- the ability of citizens to demand gold for dollars had already been banned in 1933 under Roosevelt. Of course, Nixon had promised that this break from the gold standard was temporary, and once a solution was found we would return to sound money. However this never happened.

We have been on a fiat standard ever since, and things have only gotten worse.

It has been long debated whether we could get off this new (euro)dollar standard- if any single usurper could overtake the United States in global trade and political influence and be able to enforce a new global reserve currency. In general, any new global reserve currency must meet a laundry list of requirements, it must have structural advantages over the U.S. dollar, and most importantly- it must stand up to Triffin’s dilemma. At least for as long as the Dollar did (preferably longer).

![5d7db108-4339-44e6-8945-e9492e9e1254_1600x1263.webp](https://m.stacker.news/4715)

The current consensus among macroeconomists is the TINA doctrine- There Is No Alternative. Russia is a commodity exporter (current account surplus), which would need to be switched to be a reserve currency.. China has a closed capital account. India does not have a deep enough bond market. South Africa is politically unstable. None of the above have good enough rule of law. As Brent Johnson points out, the U.S. has deep and liquid bond markets, rule of law, a sophisticated financial and monetary system, and a gargantuan military to enforce the dollar system- basically everything one could want. This is the system we are stuck in. 

The list of requirements for a reserve currency are as follows: 
(a) stable 
(b) safe 
(c) store of value 
(d) medium of exchange 
(e) widely accepted
(f) trusted
(g) deep and liquid markets

Bitcoin is still in its nascent stage of growth as a currency. As of November 11th 2023, the market cap stands at approximately $720B, and BTC trades for $36,800. Volatility is still elevated, as the size of the market means that relatively small amounts of money can move price action disproportionately compared to to other markets. 

So it “fails” the stability test. For now.

Is Bitcoin safe? It is as safe as your own ability to hold your keys! If you hold Bitcoin non-custodially and maintain secure ownership over your seed phrase, then it certainly is safe. Arguably it is much safer than almost anything else- similar to physical gold, it is a bearer asset and a true digital commodity. It can’t be seized or censored. Dollar assets, as we saw with Russia’s ban from the SWIFT network, can be frozen or seized. Dollar transactions can be blacklisted by the Treasury’s OFAC (Office of Foreign Asset Control) division. You can be censored. You are only safe insofar as you are not in opposition to U.S. government interests. 

Bitcoin is the best store of value ever invented- even superior to gold. The yellow metal inflates its supply at approximately 2% per year, and no one knows the true quantity of gold that exists. BTC instead has an issuance schedule that is mathematically determined and enforced by the structure of the network (node and miner consensus), guaranteeing that 21M (or infinitely close to it) is the maximum amount of Bitcoin that can ever be mined. As for medium of exchange, it also fulfills this role as it is very easy to transfer and confirming transactions on the base layer takes around 30 minutes- but this is much faster on Lightning. The Lightning Network is the scaling solution that BTC so desperately needs to be a bona fide medium of exchange for daily life in a modern digital economy.

As for trust, Bitcoin succeeds here as well, as it uses military grade cryptography and miner energy expenditure to secure the blockchain. A form of reverse prisoner’s dilemma ensures that no single miner or node really has an incentive to lie about the validity of transactions, as creating false blocks and transactions requires one to get exponentially more lucky as time goes on, and spend energy (money) doing so,

Deep and liquid markets- again we are not here yet, but as BTC gains global adoption depth and liquidity will follow, dampening volatility and bringing more and more capital into the ecosystem. Similar to the flywheel effect with software companies, more and more users (and nation states) adopting Bitcoin means price moves up, volatility dampens, and adoption accelerates in positive feedback loops. 

Lastly, Bitcoin solves Triffin’s Dilemma. Not avoids, not mitigates- SOLVES. The paradox rests on several foundational points, the main one being a central issuer working in a global monetary system that has demand for its currency. However, Bitcoin is NOT centrally issued. There exists no borders to Bitcoin, no single node of issuance and orbiting nodes with demand. Any miner in the entire network can be chosen for the next block reward. 

Thus, it can’t even be applied here. A neutral reserve currency, non-centrally issued, free floating, fully reserved, was the standard for centuries prior to the fiat system. Triffin himself imagined a solution to the problem- however his idea was that of the SDR (Special Drawing Right), a unit of reserve issued by the IMF that was based on a basket of other currencies. SDRs do nothing to mitigate the problems of inflation and fiat debasement, and furthermore would be incredibly hard to manage. Imagine redeeming SDRs for the base currencies, and having to go individually to each country to collect the money. 

With a neutral reserve currency, individual nations’ current account deficits or surpluses balance out. If a country spends more than it earns from the global system on net, it eventually is forced to start earning (producing) again. And if the inverse occurs, a nation produces excessive amounts, it builds up surplus savings that can be used for consumption, sending these reserve balances back out into the system. The entire global economy would thus be self-balancing.

The rush from the current system into Bitcoin would solve all the other qualms that macroeconomists have about the orange coin as well- depth and liquid markets would develop, price would move exponentially higher, adoption would spread as dozens and then over a hundred nations adopt digital gold and begin using and demanding it in international trade and finance. 

Move aside, U.S. dollar- there’s a new reserve currency in town.



![29d93e19-34b4-4def-964d-ce3c26ddcb0f_890x890.webp](https://m.stacker.news/4716)

You can follow me on Nostr: npub1xwmyzp64xx03kw9ecd7fzsj3e9dgwah6an0rdng0cc6ux4dswwjs28pyyc

And on Twitter: peruvian_bull (https://twitter.com/peruvian_bull)

Bitcoin Solves Triffin's Dilemma

peruvian_bull

We can clearly see that the narrative regarding Bitcoin is slowly but surely changing within the mainstream media which is doing everything to prepare for the arrival of global financial giants like BlackRock or Fidelity in the world of Bitcoin.

Despite everything, there is still a lot of work to be done among the general public to make people understand everything that Bitcoin can bring to the world.

The work of the powerful at the head of the current system to propagate lies about Bitcoin for years still leaves traces among the general public where the dominant feeling still remains that Bitcoin is an ecological disaster or that Bitcoin is used only for criminal activities.

Hence my question: What do you think is the biggest myth about Bitcoin that continues to be widespread among the general public?