The business intelligence firm, led by Bitcoin bull Michael Saylor, has been steadily accumulating Bitcoin as part of its corporate strategy since 2020. MicroStrategy's latest billion-dollar purchase was conducted at an average price of $60,408 per Bitcoin.

According to Saylor, the company has achieved a 17% Bitcoin yield year-to-date, capitalizing on BTC's appreciation as it continues borrowing fiat at low interest rates to expand its holdings.

At current prices, MicroStrategy's Bitcoin trove is worth over $15 billion, greatly benefiting shareholders. The company's stock price has surged in tandem with its Bitcoin accumulation.

Despite rough market conditions in 2024, MicroStrategy continues compounding its Bitcoin position for the long term. The firm treats Bitcoin as a superior treasury asset compared to cash that is subject to inflationary debasement.

MicroStrategy is executing the biggest speculative attack on fiat currency in history by acquiring the hardest money for its treasury. Other public companies are following MicroStrategy's lead by adopting Bitcoin treasury policies and acquiring Bitcoin exposure on their balance sheets. However, MicroStrategy remains the largest corporate holder of Bitcoin in the world.

By harnessing underutilized capital to capture Bitcoin's upside, MicroStrategy has moulded itself into an emerging Bitcoin development company that is powering the worldwide adoption of Bitcoin.

With over 45 million registered users, HTX is a leading Bitcoin and crypto platform in Asia and worldwide based on trading volume and Bitcoin custody. The exchange now plans to incorporate Lightning Network capabilities into its ecosystem.

Lightning Network is a second-layer payments protocol built on top of Bitcoin. It enables near-instant transactions with significantly lower fees. Exchanges have long sought to implement Lightning to boost speed and affordability.

"Through this strategic partnership, HTX and IBEX will jointly promote the application and popularization of Bitcoin and Lightning Network technology worldwide, providing users with more efficient, secure, and convenient digital asset trading services," said an HTX spokesperson.

By leveraging IBEX's Lightning Network solution, HTX users will soon enjoy faster payments and withdrawals along with reduced transaction costs.

Lightning is finally going mainstream with adoption by Coinbase and now HTX. The Bitcoin community has long awaited Lightning adoption by leading exchanges to boost functionality. Now, HTX is delivering by leading the next wave of Lightning integration.

This shows the gradual maturation of Lightning Network technology and its increasing viability for mainstream Bitcoin platforms. As more exchanges implement Lightning payments, Bitcoin strengthens its position as an efficient medium for global, instantaneous transactions with negligible fees. 

In the new report, Kendrick explained that while the outcome of the election will impact the Bitcoin industry, the risks of a Harris presidency may be overstated. “BTC will end 2024 at fresh all-time highs under either election outcome – [circa] $125,000 level under Trump or c.$75,000 level under Harris,” Kendrick wrote. While a Harris win could initially result in a price decline, he emphasized that "dips would be bought as the market recognizes that progress on the regulatory front will still be forthcoming."

Despite concerns within the industry that Harris may adopt a more hostile stance toward Bitcoin, Kendrick believes that her administration would be "much less negative" for digital assets than a second Biden administration. Furthermore, Standard Chartered maintains its bullish outlook, forecasting that Bitcoin will hit $200,000 by the end of 2025, regardless of who wins this year’s election.

The 2024 election has drawn attention to the differing approaches to Bitcoin regulation by the two candidates. Trump has become an ally to the Bitcoin industry, speaking at the Bitcoin 2024 conference in Nashville this summer, where he expressed support for Bitcoin. The Republican National Committee has also included Bitcoin in its platform, pledging to defend the right to mine Bitcoin and protect self-custody.

In contrast, Vice President Kamala Harris has remained silent on the issue, opting not to attend the Bitcoin conference. The Democratic Party’s platform makes no mention of Bitcoin or cryptocurrency, which has led to concerns within the industry about the potential regulatory environment under a Harris administration. Although Harris has not publicly shown hostility to crypto, some fear a continuation of the stricter regulatory policies seen during President Joe Biden’s term, notably shaped by figures like Senator Elizabeth Warren and SEC Chair Gary Gensler.

Three-phase power has emerged as a superior alternative to single-phase power in bitcoin mining. With more ASICs being designed for three-phase voltage input, future mining infrastructure should consider adopting a uniform 480v three-phase system, especially given its abundance and scalability across North America.

Understanding Single-Phase and Three-Phase Power

To comprehend the significance of three-phase power in bitcoin mining, it's essential first to understand the basics of single-phase and three-phase power systems.

Single-phase power is the most common type of power supply used in residential settings. It consists of two wires: one live wire and one neutral wire. The voltage in a single-phase system oscillates sinusoidally, providing power that reaches a peak and then drops to zero twice during each cycle.

Imagine you are pushing a person on a swing. With each push, the swing moves forward and then comes back, reaching a peak height and then descending back to the lowest point before you push again.

Just like the swing, a single-phase power system has periods of maximum and zero power delivery. This can lead to inefficiencies, especially when consistent power is required, although this inefficiency is negligible in residential applications. However, it becomes significant in high-demand, industrial-scale operations like bitcoin mining.

Three-phase power, on the other hand, is commonly used in industrial and commercial settings. It consists of three live wires, providing a more constant and reliable power flow.

In the same swing analogy, imagine you have three people pushing the swing, but each person is pushing at different intervals. One person pushes the swing just as it starts to slow down from the first push, another pushes it a third of the way through the cycle, and the third person pushes it two-thirds of the way through. The result is a swing that moves much more smoothly and consistently because it’s being pushed continuously from different angles, maintaining a constant motion.

Similarly, a three-phase power system ensures a constant and balanced power flow, resulting in higher efficiency and reliability, particularly beneficial for high-demand applications like bitcoin mining.

The Evolution of Bitcoin Mining Power Requirements

Bitcoin mining has come a long way since its inception, with significant changes in power requirements over the years.

Before 2013, miners relied on CPUs and GPUs to mine bitcoins. The real game-changer came with the development of ASIC (Application-Specific Integrated Circuit) miners as the bitcoin network grew and competition increased. These devices are specifically designed for the purpose of mining bitcoins, offering unparalleled efficiency and performance. However, the increased power requirements of these machines necessitated advancements in power supply systems.

In 2016, a top-of-the-line miner was capable of computing 13 TH/s with a power consumption of approximately 1,300 watts (W). While considered highly inefficient by today’s standards, mining with this rig was profitable due to the low network competition at that time. However, to generate meaningful profits in today’s competitive landscape, institutional miners now rely on rigs that demand around 3,510 W.

The limitations of single-phase power systems has come to the fore as the power requirements of ASIC and the efficiency demands of high-performance mining operations grows. The transition to three-phase power became a logical step to support the growing energy needs of the industry.

480v Three-Phase in Bitcoin Mining

Efficiency First

480v three-phase power has long been the standard in industrial settings across North America, South America, and other regions. This widespread adoption is due to its numerous benefits in terms of efficiency, cost savings, and scalability. The consistency and reliability of 480v three-phase power make it ideal for operations that demand greater operational uptime and fleet efficiency, especially in a post-halving world.

One of the primary benefits of three-phase power is its ability to deliver higher power density, which reduces energy losses and ensures that mining equipment operates at optimal performance levels.

Additionally, implementing a three-phase power system can lead to significant savings in electrical infrastructure costs. Fewer transformers, smaller wiring, and reduced need for voltage stabilization equipment contribute to lower installation and maintenance expenses.

For example, a load requiring 17.3 kilowatts of power at 208v three-phase would need a current of 48 amps. However, if the same load is supplied by a 480v source, the current requirement drops to just 24 amps. This halving of the current not only reduces power loss but also minimizes the need for thicker, more expensive wiring​​.

Scalability

As mining operations expand, the ability to easily add more capacity without major overhauls to the power infrastructure is crucial. The high availability of systems and components designed for 480v three-phase power makes it easier for miners to scale their operations efficiently​​.

As the bitcoin mining industry evolves, there is a clear trend towards the development of more three-phase compliant ASICs. Designing mining facilities with a 480v three-phase configuration not only addresses current inefficiencies but also future-proofs the infrastructure. This allows miners to seamlessly integrate newer technologies that are likely to be designed with three-phase power compatibility in mind​​.

As shown in the table below, the immersion-cooling and hydro-cooling techniques are superior methods in scaling up bitcoin mining operations in terms of reaching higher hashrate output. But to support such a much higher computation capacity, the configuration of three-phase power becomes necessary for maintaining a similar level of power efficiency. In short, this will lead to a higher operational profit with the same profit margin percentage.

Implementing Three-Phase Power in Bitcoin Mining Operations

Transitioning to a three-phase power system requires careful planning and execution. Here are the key steps involved in implementing three-phase power in bitcoin mining operations.

Assessing Power Requirements

The first step in implementing a three-phase power system is to assess the power requirements of the mining operation. This involves calculating the total power consumption of all mining equipment and determining the appropriate capacity for the power system.

Upgrading Electrical Infrastructure

Upgrading the electrical infrastructure to support a three-phase power system may involve installing new transformers, wiring, and circuit breakers. It's essential to work with qualified electrical engineers to ensure that the installation meets safety and regulatory standards.

Configuring ASIC Miners for Three-Phase Power

Many modern ASIC miners are designed to operate on three-phase power. However, older models may require modifications or the use of power conversion equipment. Configuring the miners to run on three-phase power is a critical step in maximizing efficiency.

Implementing Redundancy and Backup Systems

To ensure uninterrupted mining operations, it's essential to implement redundancy and backup systems. This includes installing backup generators, uninterruptible power supplies, and redundant power circuits to protect against power outages and equipment failures.

Monitoring and Maintenance

Once the three-phase power system is operational, continuous monitoring and maintenance are crucial to ensure optimal performance. Regular inspections, load balancing, and proactive maintenance can help identify and address potential issues before they impact operations.

Conclusion

The future of bitcoin mining lies in the efficient utilization of power resources. As advancements in chip processing technologies reach their limits, focusing on power setup becomes increasingly critical. Three-phase power, particularly a 480v system, offers numerous advantages that can revolutionize bitcoin mining operations.

By providing higher power density, improved efficiency, reduced infrastructure costs, and scalability, three-phase power systems can support the growing demands of the mining industry. Implementing such a system requires careful planning and execution, but the benefits far outweigh the challenges.

As the bitcoin mining industry continues to evolve, embracing three-phase power can pave the way for more sustainable and profitable operations. With the right infrastructure in place, miners can harness the full potential of their equipment and stay ahead in the competitive world of bitcoin mining.

This is a guest post by Christian Lucas, Strategy at Bitdeer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

While investing in Bitcoin is still considered a wild ride, the asset is quickly maturing. Financial institutions are closing in and creating hybrid vehicles to invest in cryptocurrency. The ecosystem reached a new milestone with the advent of Bitcoin ETFs, making people realize the immensity of Bitcoin’s potential in traditional markets and spurring new demand.

As more people and institutions invest in Bitcoin, Bitcoin vaults become more crucial. Here, we examine the features and importance of Bitcoin vaults and how they contribute to ensuring a reliable infrastructure that promotes sustained value and investability.

We explore their role in professionalized and institutional custody. Secure custodians are vital to protecting digital assets from theft and loss. This article also tracks the fast-advancing technology of Bitcoin vaults and how it relates to future developments in the custody space.

What are Bitcoin vaults, and how do they work?

Bitcoin vaults are offline digital asset storage solutions offering enhanced protection against online threats. This protection is created through multiple security layers.

As the Bitcoin investment sphere grows, new products are being created. Bitcoin vaults are a critical component of these new financial products. While hot wallets and exchange accounts offer easy transaction access, they are vulnerable to hacks.

Bitcoin vaults are fortified digital safes. They protect your Bitcoin by taking it offline and shielding it from the constant openness to online attacks. Their multiple layers of security include withdrawal delays, multi-signature or multisig authentication, and cold storage solutions.

One highly secure approach to Bitcoin or crypto vaults is called air-gapping. Air-gapped storage offers robust protection against malware attacks, phishing scams, and unauthorized access.

Many Bitcoin vaults integrate advanced encryption techniques. They typically require multiple authorizations for transactions to proceed. Advanced encryption and the need for layered authorization steps bolster security posture.

As a Bitcoin investor, ensuring that your coins are kept in air-gapped and layered security vaults protects your investment and helps you hold it long-term.

Vaults: Vital Components of Bitcoin Custody

Bitcoin vaults are a component of Bitcoin custody solutions. Bitcoin custody is the entire process of holding and securing BTC.

Because Bitcoin is a digital asset, it requires unique storage solutions to protect it from theft and loss. As BTC’s value rises, so does the interest from cybercriminals and hackers. Therefore, secure custody solutions are essential for protecting these digital assets.

The Advanced Technology Behind Bitcoin Vaults

The following advanced technologies combine to create the security behind Bitcoin vaults. Understanding them helps you understand, evaluate, and appreciate their robustness.

Cold Storage

Cold storage is a security method that keeps Bitcoin offline or away from internet-connected devices. Being offline reduces the risk of cyberattacks. Bitcoin cold storage is often used with multi-sig technology to provide maximum security.

Multi-Signature Technology

Multi-signature or multisig technology requires multiple private keys to authorize a Bitcoin transaction. This method implies that even as one key is compromised, the Bitcoin in the wallet cannot be transferred. The transaction still requires the other keys to be approved.

Multisig technology enhances security by distributing ownership and control over Bitcoin. It makes it very challenging for a single entity to access or steal the assets.

Hardware Security Modules (HSMs)

Hardware Security Modules (HSMs) are tamper-resistant and hardened devices that secure cryptographic processes. They generate, protect, and manage keys used for data encryption and decryption, as well as digital certificates and signatures.

These specialized devices, in other words, are designed to protect and manage your digital keys. They provide a secure environment for cryptographic key generation, storage, and usage, ensuring that the private keys are never exposed to potential threats. HSMs are often used in Bitcoin vaults to enhance the security of the stored assets.

HSMs are recommended for those with significant BTC holdings. They are also ideal for businesses handling Bitcoin and other crypto. While integration can be complex and require continued maintenance, the security benefits far outweigh the cost for those with high-value holdings.

Furthermore, HSMS are tested, validated, and certified to the highest standards. They enable organizations to meet and exceed emerging and established regulatory requirements for cybersecurity.

Companies Offering BTC Custody Solutions

As Bitcoin and its related financial products gain popularity, so does the need for reliable custody. Companies that offer this service are called Bitcoin or crypto custodians and are a critical component of the digital asset industry.

These companies or platforms offer secure BTC and crypto storage and provide services such as private key management, online security solutions, and transaction processing.

Crypto custodians are gaining prominence as the cryptocurrency market grows. They are essential in ensuring that assets are stored and managed securely. Moreover, they protect investors' funds by providing layers of security beyond what public wallets or exchanges offer.

However, it must be noted that exchanges, trading desks, and investment platforms run their own custody solutions. In addition, some exchanges are also the most noted custody providers. Examples of top custody providers, most of which offer investment access, include Swan Bitcoin, BitGo, Coinbase Custody, Anchorage, Gemini Custody, Bakkt, and Bitcoin Suisse.

How To Choose Among BTC Custody Providers

Several companies are competing in the crypto custody market. If you are a regular BTC trader or investor, you might be curious about how to choose what works for you.

Platforms should enable users to buy and store Bitcoin easily. While popular exchanges like Binance and Kraken offer a wide range of services, including retail buying and selling of crypto, they have downsides. They may not provide the best storage options for your crypto, and they may be more vulnerable and open to various hacks.

Long-term BTC investors usually shun day trading and prefer the buy-and-hold strategy. Swan Bitcoin is a low-fee platform specializing in BTC-specific investments. It offers a full suite of BTC financial services, including Swan Vault, simplifying BTC storage for users. If you're curious how it compares to large global exchanges, check out the Kraken review on Swan Bitcoin’s site.

The best Bitcoin vaults give you complete control over your coins, with user-friendly and straightforward features for setup, deposits, and withdrawals. They use the most reliable hardware to provide users with the most robust security. An example of such hardware is the Blockstream Jade signing device, a hardware wallet used by Swan Bitcoin to ensure BTC owners' full access to keys offline.

You need signing devices that store two private keys to unlock a Swan Vault. Swan manages a third key called the Cloud Key, which is recommended for use as a second key to prevent bringing both hardware signing devices to the same location.

Bitcoin vaults must have sound recovery strategies for BTC theft or loss, as 72-hour holds for Cloud Key withdrawals. Moreover, these vaults need to offer comprehensive support services, including secure storage of spare keys to assist you in moving funds and customer support manned by trained specialists.

When Investing in BTC, Choose a Reliable Custodian

Bitcoin vaults are becoming increasingly important as more people and institutions invest in Bitcoin. As digital assets gain legitimacy through legalized financial products, security custody solutions become increasingly vital to protect them from theft and loss.

By leveraging advanced technologies such as multi-signature authentication, cold storage, and Hardware Security Modules, Bitcoin vaults provide a robust security solution for digital assets. In addition, multi-layered features ensure secure storage of private keys and means of recovery in case keys are lost or stolen.

Bitcoin vaults are not just meant to store BTC securely. They form the bedrock of the asset's long-term viability as an investment vehicle.

It is not enough to leave the knowledge to technical experts or institutions. By understanding the importance of secure Bitcoin storage and the advancements in custody solutions, investors can make better-informed decisions about safeguarding their digital assets.

This is a guest post by Ivan Serrano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine. 

"It is essential that the law keeps pace with evolving technologies and this legislation will mean that the sector can maintain its position as a global leader in cryptoassets and bring clarity to complex property cases," said Justice Minister Heidi Alexander. "Our world-leading legal services form a vital part of our economy, helping to drive forward growth and keep Britain at the heart of the international legal industry."

This bill aims to address a long-standing legal gap, where digital assets were previously excluded from English and Welsh property law. As a result, owners of digital assets had little recourse if their holdings were interfered with, leaving them in a legal grey area.

Under the new bill, digital assets will be classified as a third category of property, allowing owners to benefit from stronger legal protections against fraud and theft. The legislation will also assist courts in resolving complex disputes, such as those arising in divorce settlements or business agreements involving digital assets.

"The Bill will also ensure Britain maintains its pole position in the emerging global crypto race by being one of the first countries to recognise these assets in law," stated the announcement.

The UK government further explained that with this new legislation, their legal sector will be better equipped to respond to these new technologies and attract more business and investment to the legal services industry.

"The UK has passed a new bill that will allow crypto and other digital assets to be recognised as personal property," stated the UK Ministry of Justice X account. "That means owners of digital assets will gain legal protection against fraud and scams."

Stacy Herbert, Director of the National Bitcoin Office (ONBTC) of the Office of the President of El Salvador, shared the above quote with me, while beaming with both pride and resolve, at the onset of my interview with her.

It’s clear that Herbert is on a mission, a mission that started in 2010 when she and her partner, Max Keiser, first discovered Bitcoin and became some of the earliest spokespeople for it soon after. This mission now includes the President of El Salvador, Nayib Bukele, as well as the bureaucracy and citizens of El Salvador, which has colloquially become known as “Bitcoin country” in Bitcoin circles.

By many metrics, The Bitcoin Office has already achieved much success since its founding in December 2022. It’s stockpiled 5,836 bitcoin on behalf of the country. It’s educated 80,000 Salvadoran civil servants on what Bitcoin is and why it’s important. It’s helped implement Bitcoin education from kindergarten to university levels through programs like Mi Primer Bitcoin and CUBO+. And it’s attracted entrepreneurs, investors and other bright minds to the country.

While Herbert is proud of these accomplishments, she’s not one to rest on her laurels, especially since she believes that El Salvador’s best days still lie ahead. She has a vision that further Bitcoin adoption in El Salvador will set the stage for a new renaissance, one that will uplift Salvadorans and continue to attract the world’s best to the country. Given the obstacles she’s overcome since first arriving in the country three years ago, it’s difficult to believe she won’t continue to do her part to make this new era for El Salvador happen.

Getting Started in El Salvador

Herbert arrived with Keiser in El Salvador toward the latter part of 2021, near the height of that same year’s bitcoin bull market. Euphoria gave way to despair into 2022, though, when bitcoin’s price tanked in part as a result of broader meltdown in the crypto space.

“When we first arrived three years ago, bitcoin hit $69,000 and then it proceeded to tumble down to something like $16,000,” Herbert told Bitcoin Magazine.

This left Herbert and Keiser tasked with the challenge of explaining to Salvadorans that the collapse of major crypto companies didn’t mean that Bitcoin was dead, nor that it was a mirage.

“FTX collapsed, BlockFi collapsed, and Celsius collapsed,” explained Herbert. “When they saw all those collapses, they thought that it was the same thing as Bitcoin — all these scams, all these frauds.”

Herbert recalled the importance of steering El Salvador in a bitcoin-not-crypto path at that time.

“There were two paths: You could be crypto country or you could be Bitcoin country,” said Herbert.

“With crypto country, you're competing with Vegas; you're competing with Macau. The house always wins in those situations. And that's the same thing if you have a crypto economy. You have some wealthy guys who run the house. The pre-mines, the chip owners, the chip dispensers, they always win,” she added, making the point that she didn’t want to see El Salvador exploited by the crypto industry.

“Or you could go down the route of what Switzerland was to gold, or New York became to US Treasuries. You could build capital markets. You could build an economy. You could build a Singapore 2.0, an Alexandria 2.0, a Florence 2.0. We pushed for this vision.”

Renaissance 2.0

In the vision that Herbert shares with President Bukele and Keiser, a senior advisor to Bukele, El Salvador is in the early stages of ushering in one of the greatest eras of human flourishing the world has ever seen.

Much like the Renaissance, which occurred in what is now northern Italy just over 500 years ago, El Salvador is setting the stage for its own explosion of entrepreneurship and creativity by adopting that hardest money ever known to man.

“Florence first didn't just didn't have DaVinci and Michelangelo and Botticelli and all of the architects, the discoverers, the explorers, the astronomers, and then find perfect money,” explained Herbert.

“They found the perfect money of the time — the Florin — and that led to a positive feedback loop of ever more wealth concentrating in Florence versus the other city states of what is now Italy and other regions across Europe,” she added, before sharing that great artists, businesspeople and thinkers flocked to Florence in the wake of its becoming a commercial center.

“We think that same sort of process could happen in El Salvador.”

Embracing Bukele’s Vision

Herbert shared repeatedly in our discussion how El Salvador’s transformation couldn’t have happened without the leadership of Bukele, whose approval rating amongst Salvadorans is still above 90%, making him one of the most popular presidents in the world.

A challenge for the ONBTC now, she claims, is getting the rest of the country to see and embrace his vision.

“You can't just have President Bukele [believing in Bitcoin],” explained Herbert.

“You need at least a portion of his 80,000 civil servants to understand what he is actually trying to achieve. Remember, as the keeper of the vision, we have to pull everybody along to understand President Bukele's vision for El Salvador,” she added.

In efforts to get the rest of the country on board, Herbert has hired well-known Bitcoin figures to educate and train Salvadoran Bitcoin developers as well as members of the Salvadoran government.

This work started with Bitcoin developer Jimmy Song coming to El Salvador in March 2022 (before the ONBTC was officially established) to teach developers how to work on Bitcoin Core.

“Jimmy Song taught his Bitcoin course to seven Salvadorans,” recalled Herbert. “One of them was a guy named Mario Flamenco, who ended up becoming my assistant, my number two at the Bitcoin office.”

Giacomo Zucco also came on board to not only teach developers, but also provided three days of Bitcoin education to El Salvador’s civil servants. Herbert explained that the educational efforts are not just to provide El Salvador’s bureaucrats with a deep technical knowledge of Bitcoin, but to reshape their mindset.

“They're the people that interact with the population,” said Herbert of El Salvador’s civil servants, “so, they need to understand why they are Bitcoin country in terms of the mindset.”

Herbert often referred to the importance of mindset during our discussion. She explained that the work the ONBTC does is about more than just helping people to understand what Bitcoin is, but it’s about mentally and emotionally prepping them to be great.

“In order to be extraordinary, [you have to have] people in the government and in the population who are ready to be extraordinary,” she said.

“We're training a population to have the mindset to be Florence 2.0, to be Singapore 2.0 — to be something extraordinary,” she added.

“You need everybody to be on the same page in terms of just how important they are. What we're doing here is extraordinary. What President Bukele has delivered to the country is quite extraordinary.”

Passport Programs

Through ONBTC, Bukele is prepping Salvadorans for great things, while through El Salvador’s passport programs, he’s looking to attract those who have a track record of doing great things.

On April 6, 2024, Bukele announced that El Salvador would issue 5,000 passports to the likes of scientists, doctors and even philosophers.

As Bukele shared in his tweet, these 5,000 passports are technically worth $5 billion. El Salvador now issues passports nearly instantly for those who make a $1 million investment in the country with either BTC or USDT.

While this program was designed to attract top talent from abroad, it also had positive effects on the psychology of the Salvadoran people, according to Herbert.

“What we did with the million dollar price tag worked,” said Herbert.

“If you go back, Salvadoran people started saying, ‘My God, some people were paying $10,000 to coyotes to take them over the border in the US, and my passport is worth $1 million.' Even if a thousand Salvadorans think that, it changes the mindset enough that it's a critical seed of change,” she added.

What’s Next for The Bitcoin Office?

Herbert said that ONBTC has some big announcements coming in the next three to four weeks. For now, though, the ONBTC is focused on unveiling the first Bitcoin banks, which she believes will help El Salvador build capital markets.

“Bitcoin banks will come here, and we'll start seriously building the capital markets that are needed — like we've laid the foundation for greatness over the past 21 months,” said Herbert.

Beyond Bitcoin banks, Herbert seems confident that the sky's the limit as far as what comes next for El Salvador. Thanks to the ONBTC, a foundation has been set for the revitalization of the country.

“We have the education, we have the mindset, we have the rebrand — the greatest rebrand in history — as I call it for El Salvador, and we have an increasing amount of popularity for President Bukele, because he keeps winning,” she said. “We’ve walked a thousand miles in the last 21 months, and we now have another thousand-mile journey to start.”

Editor’s note: We normally profile founders of startups for our Founders series, but, this week, we chose to profile the head of a government institution who's led that institutions since its inception.

Joining the project in July 2010, Garzik contributed to early software releases, entering notable pull requests including the first proposal to raise the block size limit, as well as the first proposal to eliminate subsidies for free transactions. Under Satoshi’s time as maintainer, Garzik had pull requests accepted, including for work separating the mining code from the Satoshi client.

Most notably, the new videos find Garzik sharing recollections about his time with Satoshi, including new commentary on whether Satoshi was indeed a singular individual or a group.

"Satoshi as a coder, he’s more the ‘A Beautiful Mind’ type lone genius,” Garzik recalls.

 “When I was a computer science major, we thought highly of ourselves as coders, and we would notice that some of the other disciplines, the chemists, the biologists, the physicists, they had to do it, but they didn’t approach it as a profession. Satoshi was the same way.”

In this way, Garzik says he believes Satoshi knew what problem he wanted to solve, but that lacked an understanding of “modularity,” “unit testing,” and other basics that “computer science majors learn.”

“He very wisely pulled cryptographic solutions off the shelf that were well known, well studied, and he put all those together in a new and interesting way,” Garzik said, adding:

Elsewhere, Garzik attested to his belief that Satoshi was a “self-taught” programmer, arguing Bitcoin’s founder was humble about his limitations. 

In other statements he spoke to Satoshi’s temperament and working methods, noting his strict focus on Bitcoin.

“Satoshi would never stray from that topic. He would never let slip any personal information whatsoever, never talk about his mood, the time of day,” he says in one clip. “It was always 100% all about Bitcoin.”

All told, the recollections cover a period of 6 months through Nakamoto’s resignation from the project in January 2011, at which point Garzik’s friend and collaborator Gavin Andresen took over as lead maintainer.

The videos come during a year in which other early Bitcoin contributors have gone public in releasing correspondence with Satoshi, with Martti ‘Sirius’ Malmi and Adam Back publishing hundreds of pages of never-before-seen emails in connection with a public trial in the U.K.

While Garzik has yet to release emails with Satoshi, the videos, produced by a new venture he founded, Hemi Network, represent the most public discussion the developer has had on the subject in some time.

Launched in July, the Hemi Network is advertised as “a modular Layer-2 protocol for superior scaling, security, and interoperability, powered by Bitcoin and Ethereum.”

The work follows a period after 2017 in which Garzik has become more interested in blockchain networks that are not tied to any specific base layer cryptocurrency, a path that includes Metronome, a project from 2017 that also sought compatibility with multiple blockchains.

Garzik left the Bitcoin project that year after serving as the lead maintainer for a hard fork of the Bitcoin protocol that despite early startup ecosystem support never formally launched. 

The full video playlist can be accessed below:

The Bitcoin difficulty chart plots the historical increases and decreases in mining difficulty over time. It measures how hard it is for miners to find a valid hash for the next block. Higher difficulty requires more computing power to mine new Bitcoin.

When combined with the Bitcoin price, difficulty helps determine miners' profitability and return on investment. The metric soared in 2024 amid massive growth in Bitcoin's overall hash rate and adoption.

The rising difficulty shows intensifying competition on the Bitcoin network as more miners fight for limited block rewards. This is generally constructive for network security and decentralization.

Despite rough market conditions this year, the difficulty increase displays the unprecedented demand for Bitcoin block rewards. It underlines the incredible security offered by the collective computing power of miners around the world.

The difficulty adjustment algorithm built into Bitcoin's code dictates the pace of change in mining competition. It is programmed to find blocks approximately every 10 minutes, maintaining a steady influx of new Bitcoin over time.

This predictable Bitcoin issuance schedule makes its inflation rate easy to model and appeals to investors compared to fiat currencies subject to central bank policies.

"The launch of our digital asset custody offering represents a pivotal moment not just for Standard Chartered, but for the financial services industry," said Bill Winters, Group Chief Executive of Standard Chartered. “We firmly believe that digital assets are not merely a passing trend, but a fundamental shift in the fabric of finance. With this new service, we are strategically positioning ourselves at the forefront of this next evolution in the custody business. Our robust infrastructure, coupled with our expertise in the field allows us to provide a bridge between the world of financial services and the emerging digital asset ecosystem."

The service aims to provide secure storage for digital assets, with an initial focus on supporting Bitcoin and Ethereum. The bank said it decided to launch its custody services in the UAE "due to its well-balanced approach to digital asset adoption and financial regulation."

Brevan Howard Digital, the crypto division of Brevan Howard, an investment management platform specializing in global macro and digital assets, has been named as the first client. According to Margaret Harwood-Jones, Global Head of Financing & Securities Services, this launch addresses the growing institutional interest in digital assets. 

"After a period of intensive work and close collaboration with regulators both regionally and globally, we are thrilled to welcome Brevan Howard Digital as the first client of our digital asset custody offering," said Harwood-Jones. "Our offering goes beyond simple wallet services – it is a comprehensive solution that addresses the unique challenges of digital asset custody from a regulatory, risk and prudential point of view. It is a game changer for institutional clients, as we can support them with our traditional expertise to navigate the complexities of the digital asset space, without compromising on the highest standards of security."

Standard Chartered further stated that it plans to expand its custody services to include more digital assets and is exploring more opportunities to launch its custody services in other global financial hubs.

Open conflict, Whales besting Bored-Apes, the social layer manifest.

Bitcoin leaders sent to prison, then freed by massive strike waves.

HODL’ers fighting in the streets, power cuts, three-day work weeks, Maxi's battling for Hashrates, governments brought down, Central Banks crying.

The Banksters powerless.

The Orange-Pilled class – loud, stacked and toxic.

L’ Provocateur don't stand downwind from sh%#tcoins.

Max Punk smells of victory not of FOMO.

An Orange sky at night traverses’ seas of fiat to El Salvador dreams, not NFT nightmares.

Un Bukele ami très explosif.

Promoting Bitcoin thru absurdist and provocative actions,

a means of enacting monetary change.

Proof of 'work[ers]' never strike.

God won't save the dollar, the regime.

Fiat makes you a moron, a potential Elon-bomb.

L’ Provocateur don't stand downwind from sh%#tcoins.

Max Punk smells of victory not of FOMO.

An Orange sky at night traverses’ seas of fiat to El Salvador dreams, not NFT nightmares.

Un Bukele ami très explosif.

Orange shoes and garb only taunts the volcanos.

Consuming sats, not the FUD.

And there ain't no future 'cept with Bitcoin.

...In your dreaming Laser eyes!

This is a guest post by Enza Coin. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This latest Bitcoin acquisition comes after Metaplanet announced in August that it would raise 10.08 billion yen to purchase more Bitcoin, part of its broader corporate strategy to allocate funds to Bitcoin.

Metaplanet first adopted a pro-bitcoin investment policy earlier this year and has steadily accumulated Bitcoin. The company now holds an aggregate of 398.8 bitcoins purchased for approximately 3.75 billion yen (approximately $27.6 million).

Metaplanet's ongoing Bitcoin treasury build mimics MicroStrategy's playbook, which has raised debt to buy Bitcoin. Public companies seem to have discovered a model for acquiring Bitcoin.

Other firms following this strategy include Marathon Digital Holdings, which recently raise a $250 million via convertible note offering to buy more Bitcoin, and Semler Scientific, which similarly announced plans to raise more money to buy more Bitcoin.

Companies can capitalize on Bitcoin's appreciation potential by borrowing fiat currency at low interest rates to purchase Bitcoin. This allows public companies to gain Bitcoin exposure without liquidating existing assets.

Disclaimer: Bitcoin Magazine is wholly owned by BTC Inc., which also operates UTXO Management, a regulated capital allocator focused on the digital assets industry and invested in Metaplanet. UTXO invests in a variety of Bitcoin businesses, and maintains significant holdings in digital assets. 

With the Fourth Halving in the rearview mirror, it seems a perfect time to provide some on-record analysis of Bitcoin from the perspective of Number and Time, aka Crypto-K, which is the name for a methodology my friend and I have developed over the years in pursuit of a technical analysis of synchronicity — the sense that our reality is arranged according to some as yet undefined acausal ordering principle. The K stands for Kubrick, as in Stanley Kubrick, director of 2001: A Space Odyssey and The Shining, whose life and mysterious works of cinematic art are powerful strange attractors for synchronicity and high strangeness. It is the Monolith around which our methodology — and seemingly everything else — was built.

Most reading this know that Bitcoin is an all-encompassing subject — a rabbit hole. Well, the same goes for Crypto-K, which in some respects is a study of everything, or how everything connects. And that everything includes Bitcoin. So you’re about to find out what happens when one rabbit hole intersects with another.

How is Bitcoin related to Crypto-K?

Both are about Time, or the problem with it. Crypto-K is about asking, “What is the meaning of Time’s Pace?” while Bitcoin is a new spin on the old saying “Time is Money”. How do we protect our MONEY from temporal entropy? On the other hand, how do we protect our TIME from monetary entropy?

All of these concerns fall under the astro-alchemical rubric of Saturn, the seventh classical planet. The planet of laws, boundaries, inheritance, burdens: “the labor of existence, the harvest of time” (Tarnas). Here’s astrologer John Hughes, writing about Saturn: “It is the planet of real worth, as apart from show and make-believe, and gives to all things their permanent and lasting qualities. Its action is slow, thorough and inevitable.” This sounds a lot like the BTC timechain: slow, thorough, and inevitable, defined by its permanence and lasting qualities. Real worth — the labor of existence, the harvest of time, or, in other words, proof of work.

Yes, Satoshi, Bitcoin is Saturnine, all right.

Saturn has a peculiar history when viewed through the lens of fringe theory. In 1980 David Talbott published a book called The Saturn Myth which posited the idea that long ago a previous solar system arrangement had Saturn as the Earth’s primary star, before some terrible calamity occurred that threw everything out of whack.

Maybe Talbott’s theory is whack, but there’s also Richard Hoagland (the “Face on Mars” guy), who has presented theories about Saturn, particularly its moon Iapetus, which he speculated might be an artificial body inhabited by extraterrestrials. It’s possible he regurgitated this from Arthur C. Clarke in the novelized version of 2001: A Space Odyssey, where in that book the climactic Monolith is found buried on Iapetus (not floating by Jupiter as in the film). But forget all that: Even the straight astronomers and scientists, for whom microbes in the dirt would be tremendously exciting, seem to think that Saturn (or rather, one of its moons) is the place to look when it comes to possible life within our solar system.

The point is that your reality tunnel doesn’t matter: Saturn tends to dominate the frame. As the seventh and slowest-moving classical planet, it came to represent the outer limits of material reality itself. As such it was the secret destination of Kubrick’s 2001: A Space Odyssey. The story goes that the special effects team had trouble creating a realistic Saturn, so they pivoted to Jupiter instead. It’s also the secret meaning of the title of Kubrick’s follow-up, A Clockwork Orange. The traditional read on that title is negative, meaning what a human being would become if he lost the ability to choose good over evil — something organic turned false and machine-like, a clockwork orange. It’s a hypothetical state of the human being denigrated under 21st-century pharmacracy. Bitcoin flips this script: What if something which began as a meaningless Saturnine process grew into a truth-affirming juggernaut imbued with analog richness but beyond the reach of any seething sovereign?

Forget “A”. Bitcoin is the clockwork orange.

But why orange?

Bitcoin became the “orange coin” when the logo was finalized by anonymous BTC-talk user “bitboy” on 11/1/10, or the day after the second anniversary of Satoshi Nakamoto’s Bitcoin white paper. He had taken Satoshi’s original idea and cleaned it up, added a 14% twist, and decided to make the whole thing orange. Everyone agreed it was a perfect choice and it has remained in place ever since. The perfect choice of logo met with a perfect release date too, because that date can be reduced to 11110, as in the 1963 executive order issued by President Kennedy to issue silver certificates from the Treasury (occasionally cited by anti-Fed types as the reason JFK was assassinated). Here’s what we call a good old-fashioned sync. It’s possible that bitboy (whoever he was) released the logo on this day intentionally because he recognized the historical pun it would make, but more likely it just kind of happened that way as a grand micro-expression of that general acausal ordering principle mentioned above. It has a pointed sense of humor at times.

Satoshi Nakamoto published the white paper on 10/31/2008 — in other words on Halloween. It’s possible that bitboy had Halloween on his mind when he decided on orange for the logo and released it two years later. Satoshi’s original logo was gold, but that crystallized into orange, perhaps as a way to give Bitcoin its own identity apart from the “shiny rock”. But it was an appropriate move to make from an alchemical perspective. In an essay from The Sync Book Vol. 2 called “Moon in the Middle”, writer Mark LeClair offers a gnostic interpretation of reality (and the color orange) based on a run of 7s: the 7 tones of the diatonic scale, the 7 days of the Gregorian week, and the 7 colors of the rainbow, which all come together to communicate the essential truth of Creation: The Moon is actually the center of everything, the crucified Christ holding reality together. According to LeClair, each day of the week and color correspond to a different planet and stage of the gnostic creation myth. The story begins with the color red and Venus on Friday, then continues to Saturday and Saturn, and of course, the next color on the spectrum, orange. “The color orange is associated with deceit and mistrust, pridefulness and passive assertiveness—a tiger, brimming with orange rage, striped and softly panting, glowering, lurking in the thickness of ferns, ready to pounce and consume the soul from the inside out. The color of gold is also a function of orange, and not of yellow as is the common misconception. Gold is the achievement of royalty and godhead through the act of alchemy, which is a process of Saturn.”

As Ideal Money, true digital gold, the “orange coin” is an achievement in alchemy. The crowning achievement, perhaps, of “Cronos, the designer of Time, the Clockwork Orange… he is tough and resourceful, smart, too dangerous to dismiss as a mere force of blunt or banal evil… Feed him. Give the devil his due. Milk and cookies on the counter should do the trick.”

This imposition to feed the beast might not be unlike the way Bitcoin must be “fed” with more and more electricity to power the global “macro-chip”. Not to compare Bitcoin to the devil or anything, but Satoshi did publish the white paper on All Hallow’s Eve — and wouldn’t you know it, the BTC timechain had been cranking away for exactly 666 days on Halloween 2010, aka the day before the famous orange logo was published.

But there’s another, more spectacular way of connecting Bitcoin to 666 with the calendar. Satoshi gave the public a birth date for himself when he registered with the P2P Foundation: 4/5/1975, also known as the 42nd anniversary of FDR’s EO6102 that unilaterally confiscated U.S. citizen’s private gold holdings. In the late 1980s, there was an issue of The Economist featuring the headline, “Get ready for a world currency” backed by a “Golden Eagle” atop a pile of flaming fiat money (an image much loved by conspiracy theorists over the years). The cover date for this issue was 1/9/1988.

This means that Satoshi Nakamoto was exactly 666 weeks old on the day of The Economist’s “world currency” issue. The magazine came well before Bitcoin ever existed. Did Satoshi know this when he “chose” his birth date?

Does it seem a little threatening to you? Consider the following facts. There are 7 days in one week. This means that in 6 weeks there are 42 days. This means that in 666 weeks there are 42×111 days. Now, 666 is supposed to be a bad number right? But 42 is kind of a funny, happy number, right? So don’t think of Satoshi being 666 weeks old on the day of The Economist’s world currency issue, but instead that he was 4,242 + 420 days old! See, The Book of Revelation designates 666 as the “number of the Beast”. But notice how something as ordinary as the clockface secretly communicates it right in front of you all the time: three overlapping hands — 60 seconds, 60 minutes, 24 (6) hours. The number of the Beast is the number of the Clock. 666 is the Fourth Seal of Crypto-K. The Beast is time, ruled by Saturn. Nothing to be afraid of, though, especially now that we have Bitcoin.

In pursuit of the analysis of synchronicity, we employ what we call the parent-thesis, a dialectical configuration where two points in time (“parents”) generate a third (the “child”) via the exact midpoint between them. Whether it be the midpoint of a person’s life’s or the midpoint between two deaths or two movie releases, it creates a static synchronicity that can be studied and, perhaps, classified. In the case of the birth of Satoshi Nakamoto and the cover date of The Economist world currency issue, the two dates 666 weeks apart generate a midpoint 333 weeks either way of 8/22/1981 — and this happens to be the day that NASA’s Voyager 2 probe made its approach to Iapetus, kicking off its encounter with Saturn. This fly-by first clued astronomers into the existence of the equatorial ridge on Iapetus, which now ranks as the third tallest mountain structure in the entire solar system.

In keeping with the theme, 8/22/1981 also saw the release of a horror B movie called Evilspeak in which Ron Howard’s brother Clint Howard plays a nerd named Stanley Coopersmith (= 237, standard gematria), who stumbles onto the laboratory of a sixteenth-century warlock in the basement of his military academy, then uses his computer skills to summon the Devil in order to enact revenge on the kids who bully him. The opening scene has the bullies calling him “Stanley Cooperdick”, making the Stanley Kubrick comparisons even more obvious. Here we have a Stanley using computer technology to interface with Satan (a kind of artificial intelligence), and commandeering it to do his bidding — in a film released on the day Voyager 2 begins its encounter with Saturn and photographs the moon Iapetus (we’re told) — and on the mid-point of the 666 weeks between Satoshi’s birthday and The Economist’s “get ready for a world currency” issue. As the “clockwork orange”, Bitcoin could be seen metaphorically as a new form of artificial life, a new element “conjured” with computers — a decentralized phoenix rising from the ashes of centralization: Satoshi Nakamoto.

It’s in Douglas Adams’ Hitchhiker’s Guide to the Galaxy that a powerful artificial intelligence in the future is built to answer the question of “life, the universe, and everything”, and comes back after millions of years of processing with the answer 42 — which we call the First Seal of Crypto-K. Satoshi loved 42 and originally wanted the total supply of Bitcoin to be 42 million, but cut it to 21 for economic reasons — then there’s the halving every 210,000 blocks (that’s two halvings per 420,000 blocks). Whether he meant to or not, Satoshi first announced his creation to the P2P Foundation forum on the 42nd day of 2009.

Then there’s also the difficulty adjustment — which some say is Satoshi’s stroke of genius — every 2,016 blocks. Satoshi could have made the adjustment every 2,100 blocks, mirroring the supply cap and halving schedule. Instead, he chose 2,016, a number that was 42 + 42 less than 2,100. There is a mundane explanation for this and then there are several more exciting explanations for this. Was it because 2016 is 6102 — the number of FDR’s gold confiscation order, issued 42 years before Satoshi’s birthday — backward? It could have been because 2016 reduces to 216 which is 6 x 6 x 6 and kabbalistically significant. Or it might simply have been because this made for a difficulty adjustment every 14 days instead of every 14.58333 days. It’s all of the above: Satoshi was carefully synchronizing his creation with the clock and the calendar, i.e., with the movement of the heavens. Thus it naturally fell into the prescribed order of time’s pace, which it is the purview of Crypto-K to analyze and unwind.

Of course, there’s always another sync, and always another opportunity to misinterpret the sync as evidence of conspiracy. Because events occurred in the year 2016 that are indelibly stitched into the timechain of history and retroactively make Satoshi’s choice somewhat conspicuous. Chiefly, it’s 11/9/2016, the election of Donald Trump — the orange man — for U.S. President. But on the inverse date, 9/11/2016, Hillary Clinton appeared to collapse and was tossed like a side of beef into a van that then sped away. It was interpreted by some at the time to have been the effects wrought by 4chan autists and meme-pirates unintentionally invoking an ancient Egyptian frog deity called “Kek”. This then sparked an influential online movement with a food-related name we won’t even mention that subsequently morphed into (or was co-opted by) the Q operation that officially began a year later. Did Satoshi have foreknowledge of the year in which The Plan™ was to begin and encode it into Bitcoin? Probably not, but it was encoded there nonetheless.

Another more salient example of “2016” encoding has to do with the late JFK Jr., who died in a plane crash with his wife on 7/16/1999 — the day on which Stanley Kubrick’s posthumous film Eyes Wide Shut was contractually obligated to be released. JFK Jr.’s death figures heavily into the lore of some Q-adjacent conspiracy merchants, who have lately deployed the narrative that, with his friend Donald Trump’s help, JFK Jr. actually faked his death in 1999 and is set to return when the time is right. Oh boy, where have we ever heard that one before? But that’s not to say there isn’t legit weirdness there, because here’s my point: John-John was born on 11/25/1960 and died on 7/16/1999, which means that his entire life lasted for exactly 2,016 weeks.

If you make John-John’s 2,016-week lifespan a parent-thesis and divide it to find the midpoint, exactly 1,008 weeks into his life was 3/21/1980, the day the TV show Dallas aired its season 3 finale, “A House Divided”, which featured the cliff-hanger death by gunshot of the show’s star J.R. Ewing — one of the most iconic moments in TV history. “Who shot JR on Dallas?” became the question on TV in 1980 in the way that “Who shot JFK in Dallas?” became the question of 1963 — and JFK Jr.’s death occurred such that this episode — a cheeky re-enactment of the Father’s death — aired on the midpoint of the life of the Son.

*If* JFK Jr. faked his death, he apparently did so in such a way that his official fake lifespan silently communicated the future year in which his friend would be elected president, and also pointed to a TV episode referencing his Father’s death. Why the hell would anyone do that, though? Forget the clickbait conspiracy slop. JFK Jr. is dead as a doornail, and more and more it feels like nobody is choosing to do any of this stuff consciously. Again, we are looking at the acausal ordering principle that Carl Gustav Jung discussed in his book Synchronicity — or something along the lines of VALIS, put forth by Philip K. Dick in the wake of his revelatory experiences/temporal lobe seizure which he codenamed 2-3-74. Apparently, different people and events are or can be products of the same underlying operating principle, i.e., VALIS, the salvific entity that is here transforming our world and using us as its implements in doing so.

Orange man, meet orange coin. Is it a match made in heaven? Not so far, though recently the man has softened his tune on the coin after basically denouncing it during his presidency. Here’s what you didn’t know: The orange man’s presidency was inaugurated on 1/20/2017, which was exactly 420 weeks after the orange coin was inaugurated in the Genesis block on 1/3/2009. It would seem that there might be something deeper connecting these two than just the color — after all, Trump isn’t really orange just like Bitcoin isn’t really orange either. In both cases, it’s the brand. Trump’s critics (and his fans) have often remarked how he could shoot someone in broad daylight and get away with it — a hyperbole to emphasize how he resists or repels criticism. In other words, he can survive anything, and can usually spin any negative energy sent his way into a positive outcome. It’s not unlike the way Bitcoiners often say that “everything is good for Bitcoin”. It’s that everlasting Saturnine quality behind both phenomena — or maybe it is just something about the color orange.

If you count the weeks instead from the Bitcoin white paper to Trump’s inauguration it’s 429, which is 666 - 237. This means that 237 weeks before the white paper was 666 weeks before the Trump inauguration, and likewise 666 weeks after the white paper was 237 weeks after Trump’s inauguration. Did Satoshi plan that? Perhaps he did, or perhaps that is only a side-effect of some deeper process unplanned by anyone, what you might call a decentralized signal hidden in the noise.

There are more calendar connections between orange man and orange coin. For instance, Satoshi’s “birthday” on 4/5/1975 was the day after 4/4/1975, when Donald Trump became 1,503 weeks old on the same day Bill Gates and Paul Allen founded their company Microsoft. 153 is the Second Seal of Crypto-K, and one of the most important and mysterious numbers in existence all on its own. Coincidentally or not, this particular span of time — 1,503 weeks — lines up closely with what’s known to astrologers as the Saturn Return, when the planet makes a full orbit and returns to where it was in the sky at birth. This will often coincide with a person’s coming into adulthood in one form or another (a phenomenon known to most people as turning 30). During this period of his life, Donald Trump was embroiled with his father in a lawsuit for civil rights violations.

Actor Heath Ledger who died on 1/22/2008, was born four years after Microsoft (on 4/4/1979), which means he was exactly 1,503 weeks old when he died.

For Trump it was the full legal weight of Uncle Sam that came down on his head — in Ledger’s case, Saturn came home to roost in the form of death by an accidental overdose (or so we are told). According to NASA the actual length of Saturn’s orbit in days is 10,756. The day on which Heath Ledger would have been 10,756 days old was 9/14/2008, aka the 237th day after he died! Let it be known then that this timespan we’re highlighting — 1,503 weeks — is actually 237 days shy of a full orbit of Saturn! 237 is the Third Seal of Crypto-K, spotlighted by Stanley Kubrick in The Shining and, together with 153, they solder the orange man’s Saturn Return to the birth of orange coin creator Satoshi Nakamoto.

So Satoshi Nakamoto was “born” the day after Donald Trump turned 1,503 weeks old (the same day Microsoft was “born”), 42 years after EO6102 — and the Bitcoin Genesis block was mined 420 weeks before Trump took the oath of office.

Then Satoshi registered the website for his incoming digital ledger on 8/18/2008, exactly 210 days after the death of Heath Ledger. This was precisely 1,053 weeks after Donald Trump turned 42.

Donald Trump’s first Monday in office as President — 1/23/2017 — was also what we call his K-Day, or the same age Stanley Kubrick was when he died. The Bitcoin white paper was published 3,006 or 1,503 + 1,503 days before Trump’s K-Day. What makes this truly remarkable is the midpoint: 12/12/2012, the day that someone using the name Nicholas von Saberhagen published the white paper for what would eventually become the privacy-focused cryptocurrency Monero. Some have speculated that there might be a connection between Satoshi and Saberhagen (SN/NS). This information was reported by “MoneroOutreach” in what appears to have been an April Fool’s joke on 4/1/2020. A fact is that Satoshi made his final forum post on 12/12/2010, meaning Saberhagen published the CryptoNote white paper on a two-year “delta” with Satoshi’s final message, not unlike how the orange logo was published only hours after the two-year “delta” of the Satoshi white paper.

Anyone who has read Infinite Jest knows that April Fool’s day can carry serious undertones (especially in spycraft). It would be a mistake to discount this report as totally worthless. The tone seems off somehow, like it’s a joke being told by someone who knows it’s not a joke, but needs it to seem like it is, while also communicating (with no hands) the underlying truth — that Satoshi and Saberhagen were one and the same.

This deliberately paced article mentions three specific dates — two we already know from the first paragraph, and then in the fourth paragraph, “August 13, 2010”, the day of a forum post by Satoshi first referencing the privacy tech that would eventually be implemented into Monero. The magic of this day becomes apparent when you check it against the BTC Genesis block — 42 + 42 weeks apart, meaning it’s also in a 42-week line-up with the Trump inauguration 336 weeks ahead (aka 77 months, 7 days!), which is a remarkable parallel with Bitcoin’s difficulty adjustment every 336 hours. In other words Satoshi’s first mention of ring signatures came 420 - 42 - 42 weeks before the Trump inauguration, similar to the difficulty adjustment every 2,100 - 42 - 42 blocks.

The report from MoneroOutreach on 4/1/2020 was published exactly 20 days, 3 months, and 7 years after the Saberhagen white paper — but further fuel for the conspiratorial fire is that it was also day 1,776 after the death of legendary mathematician John Forbes Nash Jr. and his wife Alicia in a car crash on the New Jersey turnpike on 5/23/2015. John Nash — who you might remember as being played by Russell Crowe in A Beautiful Mind — remains one of the more intriguing under-the-radar candidates for the true identity of Satoshi Nakamoto due to his singular genius in all the requisite fields. Forgetting the Oscar-winning cartoon for a moment, the real John Nash was a visionary-grade cryptologist, mathematician, and game theorist who harbored a lifelong interest in applied economics (not to mention programming and the internet). Late in his life (in the early 2000s) he lectured and wrote on the subject of Ideal Money, and was publicly concerned with countering the mounting effects of decades of inflationary Keynesian monetary policy. We can theoretically surmise that the people in charge of implementing Nash’s ideas from above wouldn’t have been too keen on the concept of ideal money (Bitcoin). In order for it to work it would anyway have had to be released “in a roundabout way” (as Hayek suggested). So was born Satoshi Nakamoto, an alter-ego for a man already haunted by voices — and so went he, out of the window of his taxi, once his managers finally realized what he had done. That’s if you buy the theory, at least.

It’s highly speculative conjecture backed mostly by synchronistic evidence, but hear it out anyway. In Clint Howard’s brother Ron Howard’s 2001 film A Beautiful Mind, John Nash was played by Russell Crowe, while his wife Alicia (in real life an honored native citizen of El Salvador, funnily enough) was played by Jennifer Connelly. In the film we see Connelly/Alicia as a devoted wife standing by her husband as he wrestles with his “demons” while carrying out work he believes he has been singled out to perform by a ‘higher authority’. That film released in December 2001 — but 13 years later the acausal ordering principle struck once more when Crowe and Connelly were cast as husband and wife again, this time in Darren Aronofsky’s 2014 Biblical epic Noah, where we again see Connelly as a devoted wife who stands by her whacko husband as he wrestles with his demons and carries out work he believes he has been singled out to perform by a higher authority. Noah and Nash are a lot alike, are they not?

What work was that again? Oh yes, building the Ark, an engineering project from God to allow humanity and the animals to endure the incoming deluge. Any Bitcoiner worth their salt has already understood the parallel. The orange coin has been referred to as a financial Noah’s Ark on more than one occasion, seemingly engineered (by God, of course) to help humanity stave off an inflationary financial apocalypse, and Nash has emerged (independently) as one candidate for the anonymous builder of that financial Ark. It’s a theory bolstered synchronistically by how the same actors that played Nash and his wife in a Hollywood film, later played Noah and his wife in a Hollywood film about building the Biblical Ark! Again the dichotomy presents itself: Does this represent intentional encoding of media by Hollywood filmmakers and producers, or is it an example of Jung’s acausal ordering principle, where humans can’t help but make certain decisions, telling on ourselves over and over? Good luck getting a consensus on that question.

So, again, the 4/1/2020 report on the Satoshi/Saberhagen matter was published 1,776 days after John Nash and his wife died on 5/23/2015. If there’s anything to compare this to it’s that likewise, Queen Elizabeth’s death on 9/8/2022 arrived 1,776 days after the inaugural Q drop. 1776 was spotlighted by the founding of the USA that year and is the Fifth Seal of Crypto-K, so these are syncs, to be sure, but it’s possible — if however infinitesimally — that all of these items are related on a material level. John Nash remains one of the most convincing candidates for the mantle of Satoshi (even without the Hollywood casting magic) and this April Fool’s dispatch was suspiciously well-timed against his death, which, at this point, might as well be deemed an assassination. It feels like the universe has a secret to tell us, and is using us as its implements to do so.

There’s another temporal tell tying Nash’s possible assassination on 5/23/2015 to Bitcoin: It happened exactly 333 weeks after the Genesis block. In other words, Nash died when the Bitcoin timechain was half of 666 weeks old. If Nash was assassinated for his secret work on Bitcoin, the people who did it would probably go about timing it perfectly according to their secret midnight rituals, and this might be evidence of that — they love their 3s. Or it could be evidence of something else.

Nash died 333 weeks after the Genesis block — so we ask what happened 333 weeks before the Genesis block, or 666 weeks before Nash died? That day is 8/17/2002, a Saturday. The synchronicity that must be remarked on here is how that weekend (Friday, or the beginning of that week, as Mark LeClair would have us believe) a movie was released starring Eddie Murphy called The Adventures of Pluto Nash. Taking place on the Moon in the year 2087, Murphy plays Pluto Nash, an ex-con trying to run a successful lunar nightclub all while evading the lunar mafia. Despite the decent cast, the film was a horrendous bomb, but the universe often uses bombs like these to conceal its deeper truths. Pluto represents Hades, or death itself, so the combination of Pluto and Nash in the title character of a film (in which Nash is being hunted by the “Mafia” who wish to kill him) released 666 weeks before the car crash that killed John Nash and his wife — with the BTC Genesis block at the midpoint. It more than bears mentioning. It’s downright freaky.

Another detail about John Nash that adheres to the architecture of Crypto-K is that he was born in the same year as Stanley Kubrick — 1928. In fact, Nash’s birthday 6/13/1928 and Kubrick’s birthday 7/26/1928 together bracket a span of only 42 days. The Shining received wide release on 6/13/1980, but it premiered three weeks earlier on 5/23/1980, which means that The Shining released on John Nash’s 52nd birthday, while Nash and his wife were car-crashed 35 years after The Shining premiered — 35 years being exactly 420 months, and 52 years being 666 - 42 months. In other words, when a person turns 52, they are one “reign of the Beast” (Rev 13:5) away from 666 months old.

The exact midpoint of John Nash’s life hit on 12/3/71. See it? The 237? Since we’re comparing Nash to Kubrick, we can provide the ready-made knowledge that Kubrick’s life midpoint arrived on 11/15/1963 — one week before the JFK assassination.

Do you want to guess how much time passed from Stanley Kubrick’s midpoint to John Nash’s midpoint?

Exactly 420 weeks. The same length of time as from the Genesis block to the inauguration of Donald Trump! What’s more, the day of Nash’s midpoint — 12/3/71 — was the same day the Polish composer Krzysztof Penderecki premiered his De Natura Sonoris No. 2, music which would later be incorporated by Stanley Kubrick into The Shining! Could this get any more convoluted? Of course, it’s that symmetry thing again, drawing what we call a parent-thesis: Nash’s midpoint arrived 420 weeks after Kubrick’s midpoint, so what happened 420 weeks before Kubrick’s midpoint? You’ll never guess, so it’s 10/28/1955, the birthday of Bill Gates, who has already been mentioned in connection with the founding of Microsoft the day before Satoshi Nakamoto’s “birthday!” Small world, hey?

In A Beautiful Mind, Jennifer Connelly plays a beleaguered wife who, in trying to protect her child, stumbles onto her crazy husband’s papers which prove that he’s schizophrenic. That’s a virtual mirror to The Shining where Shelley Duvall plays a beleaguered wife who, in trying to protect her child, stumbles onto her husband’s private papers which prove that he’s insane. According to Mark LeClair again, Jack Torrance represents Saturn, the demiurge, the “master of time”, an archetype Kubrick also applied to himself via the backstage documentary shot by his daughter Vivian Kubrick, where we see them dressing alike, dramatically typing away at a typewriter, and even hassling “Wendy” — aka Shelley Duvall. Kubrick wanted us to see him squarely equating himself with the character of Jack Torrance — i.e., Saturn. So it would seem that in the year 2001 the character of John Nash in A Beautiful Mind also was overlapped by the same Saturnine trope as Jack and Kubrick in The Shining — and then it happened again with Noah in Noah! It’s almost like the universe (or VALIS) was trying to tell us something, and this is how it speaks.

Nash’s birth brackets 42 days with Kubrick’s birth, and the midpoint of Nash’s life on 12/3/71 came 420 weeks after Kubrick’s life’s midpoint.

So what about the end of their lives?

If you go look it up, you’ll find that Nash died 846 weeks after Kubrick, a figure which amounts to 420 + 420 weeks, plus 42 days.

Who exactly is doing all this, and why?

One person who was verifiably involved in the beginnings of Bitcoin was of course Hal Finney, who was right there to help Satoshi along when the first BTC client launched on 1/9/09, and he was there to receive the first BTC transaction from Satoshi in block 170 on 1/11/09 — which, by the way, occurred exactly 153 + 153 + 153 weeks before the first post from another anonymous internet entity, Q (the 17th letter), on 10/28/2017.

Hal Finney’s birth on 5/4/1956 means that on the day of the Bitcoin Genesis block, he was 19,237 days old. Here we have the Third Seal, 237, combined with what we call the “Ruler” — 19. One property of 19 that remains relevant is how it alphanumerically translates to AI, the abbreviation for artificial intelligence, now positioned as the existential threat of our time. Some Bitcoiners have wildly claimed that BTC represents the counterbalancing force required by nature for humanity to resist AI’s eventual total liquid control of all centralized systems, though none of them have been clear on the specifics of how that might work. But in this regard — BTC vs. AI — the name “Hal Finney” carries certain connotations, because “Hal” is the name of Kubrick’s malevolent AI in 2001: A Space Odyssey: HAL 9000. “Finney” could be read as finis, for finished, as in “HAL finished” — AI finished.

What’s in a name? In this case, perhaps the sum total of a man’s mission on earth.

It was noticed early on that Stanley Kubrick’s death on 3/7/1999 occurred 666 days before 1/1/2001. It took some time for Crypto-K to come along and ask, What happened 666 days before Kubrick died? The answer turned out to be the day that chess grandmaster Gary Kasparov lost a match to the computer Deep Blue, making it the first time that the best human had lost to an artificial intelligence in match-play chess — much the same way that Frank Poole lost to HAL in the film. Compounding the sync is that the computer Deep Blue was built by IBM, and modeled after the Monolith from 2001!

The trope continues to express itself: Man vs. Machine, in a chess match for all the marbles, with history itself the board for the Game of All Time.

Is Bitcoin someone’s idea of checkmate?

Satoshi Nakamoto appeared in digital public for the last time 15 years to the day after Kubrick died — with a message that read “I am not Dorian Nakamoto” — and then exited the stage for good, much like Flight MH370 which disappeared along with Satoshi less than 24 hours later. Satoshi’s final message on 3/7/2014 meant that the total time elapsed from his first published word to his final published word was 279 or 42 + 237 weeks. Hal Finney would find his own end later that year, succumbing to ALS on 8/28/2014, 4,200 hours after Satoshi’s final post — and John and Alicia Nash would be taken less than nine months after that.

His death on 8/28/2014 meant that Hal Finney’s life’s midpoint occurred around 7/1/1985 — a scant 42 hours before the release of Back to the Future, a movie about a plan to use time-travel technology to stop a “terrorist” attack and break a temporal curse.

We know Bitcoin is the clockwork orange, but could it also be the flux capacitor?

Maybe what you’ve read here seems to you like the ravings of a man who has not been properly medicated. But hopefully some shards of this screed will stick in your temporal lobe anyway and in a few weeks or months you’ll be compelled for one reason or another to think about it again, and say, “Huh, maybe that number freak was onto something”. We’ll see.

The Fourth Halving took effect on 4/19/2024, when the BTC timechain was exactly 19 × 42 weeks old — the Ruler (AI) meets the First Seal and the orange coin, a showdown for life, the universe, and everything.

Perhaps Satoshi planned that one ahead of time as well, but even if not, he would have loved how perfectly it all worked out.

Why The Bitcoin Report?

Echoing Gordon Gekko's famous line from *Wall Street* (1987), “Tell me in 30 seconds why talking with you for 5 more minutes will make me more money.” We know that investors need actionable insights fast. With Bitcoin evolving as a maturing asset class and institutions seeking reliable sources of information, The Bitcoin Report aims to be the go-to resource for navigating this dynamic market.

Each edition of The Bitcoin Report provides a clear and concise industry overview, offering deep dives into key topics that matter most to investors. We’ve designed this digest to deliver insights in a familiar and professional format, so you can quickly assess market trends and make informed decisions.

What Makes The Bitcoin Report Unique?

What truly sets The Bitcoin Report apart is the expertise and depth of knowledge behind each edition. Every month, we feature contributions from some of the most respected professionals in the Bitcoin and financial industry. The debut issue is particularly special, featuring insights from a diverse range of subject matter experts. These include CEOs, investment managers, academics, senior economists, digital asset portfolio fund managers, family offices, and directors of Bitcoin strategy.

For the inaugural edition, we are proud to have insights from thought leaders such as Richard Byworth, Pascal Hügli, Lucas Betschart, Lukas Pfeiffer, Dr. Demelza Hays, Dr. Michael Tabone, Dylan LeClair, Philip Swift, and Thomas Zeltner. Their expertise spans the full spectrum of the financial world, providing readers with invaluable perspectives on how Bitcoin fits into the broader economic landscape.

We extend our gratitude to these contributors for being part of the first issue and for sharing their unique insights with our readers.

Key Features of The Bitcoin Report:

- On-chain Analysis: Get an insider's view of Bitcoin’s underlying network data to better understand market movements and trends.

- Bitcoin Mining Insights: A critical focus on mining activity and its influence on the Bitcoin ecosystem, shedding light on key operational developments.

- Bitcoin Stocks & Derivatives: Analysis of publicly traded companies involved in Bitcoin and their performance, as well as insights into Bitcoin derivative markets.

- Regulatory Updates: Keeping you informed of regulatory changes that could impact Bitcoin markets globally.

- Price Modeling Forecasts: Expert projections based on the latest data, helping you anticipate potential price movements.

- Macroeconomic Outlook: How global economic conditions might affect Bitcoin’s trajectory, with detailed discussions of interest rates, inflation, and other major factors.

Our Inaugural Edition: August 2024—Available Now for Free!

We are proud to offer the inaugural August edition of The Bitcoin Report for free. Unlike many other industry reports hidden behind paywalls or subscriptions, we are committed to reaching the widest possible audience. Our goal is to make The Bitcoin Report the most-read Bitcoin digest available online, offering unparalleled value to institutional and professional investors.

Download and Share the Report!

We invite you to download the August edition and see firsthand the wealth of insights included. Whether you're managing portfolios, seeking long-term exposure to Bitcoin, or simply staying informed, this report will provide you with the key highlights from the past month’s activity.

Feel free to share the report and its content—take screenshots, post snippets on social media, and join the conversation by using the hashtag #TheBitcoinReport. Tracking these posts will help us improve future editions and ensure that our content continues to provide value to the Bitcoin community.

A Comprehensive Resource for a Diverse Audience

Although The Bitcoin Report is tailored to professional investors, we recognize that the majority of individuals and businesses still do not own Bitcoin. As part of our mission to educate and inform, we’re including high-quality, easy-to-understand content to reach a broader audience. Each report features contributions from respected Bitcoin industry professionals, sharing exclusive insights based on their areas of expertise.

A Bridge Between Traditional Finance and Bitcoin

As institutional interest in Bitcoin grows, so too does the need for insightful, digestible analysis that bridges the gap between traditional finance and the Bitcoin world. The Bitcoin Report provides exactly that—a comprehensive monthly overview that helps investors navigate the complexities of this rapidly maturing asset class. From direct Bitcoin ownership to proxy exposure via publicly listed companies, the investment landscape is broadening, and we’re here to ensure you’re well-informed every step of the way.

A Commitment to Continuous Improvement

Our team at Bitcoin Magazine Pro is dedicated to evolving The Bitcoin Report with each monthly edition. We will continually expand on our content, add expert contributors, and refine the report based on feedback from readers. Our goal is to provide you with the most valuable, timely insights available, helping you stay ahead of the curve in this fast-paced market.

Opportunities for Sponsorship and Collaboration

If your organization is interested in sponsoring future editions of The Bitcoin Report or exploring joint-publication opportunities, we’d love to hear from you. Partnering with us offers a unique chance to reach a wide, engaged audience of investors, providing valuable exposure in the rapidly growing Bitcoin space.

Please reach out to Mark Mason at mark.mason@btcmedia.org to discuss how your brand can be part of this exciting initiative.

Conclusion and Call to Action

We invite you to explore the inaugural edition of The Bitcoin Report and see how it can enhance your understanding of Bitcoin and its investment potential. Download the report today, share it with your network, and don’t forget to use #TheBitcoinReport on social media to join the conversation.

Stay tuned for future editions as we continue to provide the Bitcoin market insights you need to succeed. Follow Bitcoin Magazine Pro for ongoing research, and together, let’s navigate the future of finance.

These systems were originally developed to function on Ethereum and other Turing complete systems, but as of late the focus has shifted to porting them to UTXO based blockchains such as Bitcoin. This article is not going to discuss the current state of things being implemented on Bitcoin currently, but going to discuss the function of an idealized rollup that people are aiming for in the long term depending on features Bitcoin currently does not support, namely the ability to verify Zero Knowledge Proofs (ZKPs) on Bitcoin directly.

The basic architecture of a roll is as follows: a single account (or in Bitcoin’s case UTXO), holds the balances of all users in the rollup. This UTXO contains a commitment in the form of a merkle root of a merkle tree that commits to all the current balances of existing accounts in the rollup. All of these accounts are authorized using public/private key pairs, so in order to propose an off-chain spend a user must still sign something with a key. This part of the structure allows users to leave without permission whenever they want, simply by crafting a transaction proving their account is part of the merkle tree, they can unilaterally exit the rollup without the operator's permission.

The operator of the rollup must include a ZKP in transactions that update the merkle root of account balances on-chain in the process of finalizing off-chain transactions, without this ZKP the transaction will be invalid and therefore not includable in the blockchain. This proof allows people to verify that all changes to off-chain accounts were properly authorized by the account holder(s), and that the operator has not conducted a malicious update of balances to steal money from users or reallocate it to other users dishonestly.

The problem is, if only the root of the merkle tree is posted on-chain where users can view and access it, how do they get their branch in the tree in order to be capable of exiting without permission when they want to?

Proper Rollups

In a proper rollup, the information is put directly into the blockchain everytime that new off-chain transactions are confirmed and the state of the rollup accounts change. Not the entire tree, that would be absurd, but the information necessary to reconstruct the tree. In a naive implementation, the summary of all existing accounts in the rollup would have balances and accounts simply added in the transaction updating the rollup.

In more advanced implementations, a balance diff is used. This is essentially a summary of what accounts have had money added to or subtracted from them during the course of an update. This allows each rollup update to only include the changes to account balances that occur. Users can then simply scan the chain and “do the math” from the beginning of the rollup to arrive at the current state of account balances, which allows them to reconstruct the merkle tree of current balances.

This saves a lot of overhead and blockspace (and therefore money) while still allowing users to guarantee access to the information needed for them to exit unilaterally. Including this data in a formal rollup that uses the blockchain to make it available to users is mandated by the rules of the rollup, i.e. a transaction that does not include the account summary or account diff is considered an invalid transaction.

Validiums

The other way to handle the problem of data availability for users to withdraw is to put the data somewhere else besides the blockchain. This introduces subtle issues, the rollup still needs to enforce that the data was made available somewhere else. Traditionally other blockchains are used for this purpose, specifically designed to function as data availability layers for systems like rollups.

This creates the dilemma of security guarantees being as strong. When the data is posted directly to the Bitcoin blockchain, consensus rules can guarantee it is correct with absolute certainty. However when it is posted to an external system, the best it can do is verify an SPV proof that the data was posted to another system.

This entails verifying an attestation that data exists on other chains, which is ultimately an oracle problem. Bitcoin’s blockchain cannot verify anything completely except what occurs on its own blockchain, the best it can do is verify a ZKP. A ZKP however cannot verify that a block containing rollup data was actually publicly broadcast after being produced. It cannot verify that external information is actually publicly available to everyone.

This opens the door to data withholding attacks, where a commitment to the data being published is created and used to advance the rollup, but the data is not actually made available. This renders users funds beyond their ability to withdraw. The only real solution to this is to depend entirely on the value and incentive structure of systems completely external to Bitcoin.

The Rock and Hard Place

This creates a dilemma in terms of rollups. When it comes to the data availability issue, there is essentially a binary choice between posting the data to the Bitcoin blockchain or somewhere else. This choice has massive implications for both rollup security and sovereignty, as well as their scalability.

On one hand, using the Bitcoin blockchain for the data availability layer introduces a hard ceiling on how much rollups can scale. There is only so much blockspace, and that puts an upper limit on how many rollups can exist at one time and how many transactions all rollups in aggregate can process off-chain. Every rollup update requires blockspace proportional to the amount of accounts that have had balance changes since the last update. Information theory only allows data to be compressed so much, and at that point there is no more potential for scaling gains.

On the other hand, using a different layer for data availability removes the hard ceiling on scalability gains, but it also introduces new security and sovereignty issues. In a rollup using Bitcoin for data availability it is literally not possible for the state of the rollup to change without the data needed by users to withdraw being atomically posted to the blockchain. With Validiums, that guarantee depends entirely on the ability of whatever external system is being used to resist gaming and data withholding.

Any block producer on the external data availability system is now capable of holding Bitcoin rollup users’ funds hostage by producing a block and not actually broadcasting it to make the data available.

So which will it be, if we ever do get to an ideal rollup implementation on Bitcoin that actually enables unilateral user withdrawal? The rock, or the hard place? 

The partnership's focus is on developing innovative strategies for including Bitcoin in salary options and incentive structures for public sector employees. By testing these strategies, the initiative aims to create a scalable model that can be adopted by government employers nationwide. This effort is in attempt to boost job satisfaction and offer financial protection for employees against inflation and other economic uncertainties.

“Integrating Bitcoin into public sector employment practices will not only attract and retain top talent but also promote financial literacy and inclusion, aligning with our mission to connect talented individuals with meaningful careers,” said Michael and Corey Hurwitz, founders of Careers In Government.

Alongside compensation integration, the collaboration will promote financial literacy among public sector workers by offering educational and professional development opportunities related to Bitcoin. Additionally, the partnership will implement tailored training programs and outreach campaigns to encourage the adoption of Bitcoin in the public sector.

“We are excited to partner with Careers In Government to advance Bitcoin adoption in the public sector. This collaboration represents a significant step forward in empowering government employers and employees to embrace the benefits of this innovative technology,” said Dom Bei, Founder of the Proof of Workforce Foundation.

This partnership extends POWF's ongoing efforts to integrate Bitcoin into government operations. Earlier this summer, POWF made headlines by collaborating with the City of Santa Monica to establish an official Bitcoin office, a historic move that incurred no costs for the city.

Launched earlier this year, the Monochrome Bitcoin ETF has seen steady inflows totalling 134 Bitcoin worth over AUD 11 million. The fund is now collaborating with Hoseki to provide daily proof-of-reserves for its Bitcoin holdings.

Hoseki's advanced verification process, Hoseki Verified, will enable Monochrome to deliver independently verified evidence that investor assets are fully accounted for. This ongoing auditing sets a higher standard for transparency in Australian Bitcoin ETFs.

"Proof of reserves is important for establishing full operational transparency of a Bitcoin ETF," said Jeff Yew, CEO at Monochrome Asset Management. "Our partnership with Hoseki highlights our commitment to setting the highest standards for integrity and reliability in Bitcoin ETFs, setting a precedent for the industry."

According to Monochrome, the Hoseki integration also aligns with its unique capability for direct Bitcoin applications and redemptions, ensuring privacy while maintaining transparency.

As a leading Bitcoin verification provider, Hoseki will conduct real-time validation that IBTC's Bitcoin reserves match its stated holdings. This provides clear proof of assets to investors. The initiative may prompt broader adoption of rigorous verification measures across the Bitcoin ETF landscape.

With over 27 million residential and business customers, TEPCO established Agile Energy in 2022, and now they are exploring Bitcoin mining powered by surplus renewable energy. The subsidiary has installed mining rigs next to solar farms in Japan's Gunma and Tochigi prefectures.

The initiative helps reduce wasted green energy from solar and wind farms that are forced to curtail production to avoid overloading Japan's grid. This energy is now being diverted to generate Bitcoin.

"Green energy producers have to operate their businesses on the assumption that part of the power they generate is wasted," said Agile Energy President Kenji Tateiwa. "If bitcoins were to provide a new source of income for similar power producers, who are being exposed to overinvestments, that would prompt more green energy to be introduced."

The project shows how Bitcoin mining can incentivize renewable energy growth by providing producers with additional revenue streams. Tateiwa said Bitcoin profits could encourage further investment in clean energy to power the mining.

Other countries are also tapping excess renewables for Bitcoin mining, like El Salvador, which uses its geothermal energy. This dispels the myth that Bitcoin is environmentally hazardous, as much mining uses energy that would otherwise be wasted. 

More and more companies and countries are figuring out how to turn waste and surplus energy into the hardest money on earth. As more renewables come online, Bitcoin mining will help reduce wasted power and emissions.

The political figures and crypto industry leaders present at this event, which took place at The Space in Las Vegas, included Sonny Vinuya, Outreach Director for Nevada Governor Joe Lombardo (R); Rudy Pamintuan, Nevada Lieutenant Governor Stavros S. Anthony’s Chief of Staff (R); Nevada State Treasurer Zach Conine (D) and Kate Rouch, Chief Marketing Officer (CMO) at Coinbase, amongst others. Rapper and singer 070 Shake and Las Vegas-based DJ 3LAU performed at the event.

The common threads in the rhetoric of the speakers and performers at the event were that crypto is here to stay, Nevada will be a home for the crypto industry and that the crypto vote matters deeply in Nevada, a swing state with a population of just over 3.1 million in which the 2024 Presidential election vote differential was only 33,516.

Ensuring Victory for Pro-Crypto Candidates in Nevada

“We need to ensure that our policymakers and the leaders we elect are those that embrace what we believe in,” Pamintuan, a crypto investor since 2015, told the audience.

“And so in this coming election cycle, especially here in Nevada, elections are going to be won or lost by 1 or 2 percentage points. That’s about 15,000 to 30,000 votes,” he added.

“When you add up how many people in our state are investors in crypto, that number is far greater than the margin of victory.”

Far greater is an understatement, as 385,000 Nevadans own crypto, according to the Stand With Crypto Alliance. This number was plastered across screens at the event for the entirety of the evening.

“In my business, we always say the market will decide,” began Conine.

“Well, guess what, folks? You're the market, and your vote matters. Elections in this state are always very close, and they're not close because everybody votes and both sides are even. They're close because some people vote, but a lot of people stay home,” he added, before urging those in the audience who weren’t registered to vote to do so while stressing that the crypto vote can sway the ballot in upcoming elections at both the state and federal levels.

Rouch, a resident of Nevada, also issued a call to action from the stage.

“We need you guys this election,” she said.

“It is critically important to figure out where the politicians in your district, in the state, stand on crypto — to really ask them the hard questions — and to tell your friends and family to get out there and vote.”

Nevada as a Home to the Bitcoin and Crypto Industry

“Las Vegas is a city of opportunity — above and beyond the casino floors,” shared Vinuya from the stage.

“Nevada is home to an emerging center of technology and financial innovation, entrepreneurship, and economic growth,” he added before citing that the Governor’s Office of Economic Development facilitated $5 billion in economic investment last year and that the state saw 4% job growth in the same time period.

Part of this trend was fueled by Nevada’s embrace of the crypto industry.

“Amidst all of these exciting achievements under the leadership of Governor Lombardo and Las Vegas Mayor Carolyn Goodman, Nevada has also become a home for innovators in blockchain technology and cryptocurrency,” he explained.

Vinuya then pointed out that next year’s Bitcoin conference will be based in Las Vegas.

“Here in our state, we have a good concept coined by Governor Lombardo called ‘the Nevada way,’ which means that as Nevadans, we never give up, we never give in, and we never stop dreaming,” he concluded. “The spirit of the Nevada Way is alive and well in the Bitcoin community, and we welcome your innovation and big dreams in Nevada.”

Capitalizing on Political Momentum

According to Rouch, we’ve hit the point of no return with crypto, and politicians can no longer afford to not take a stance on the issue, which is why Coinbase supports the Stand With Crypto Alliance.

“What we're really saying here is ‘pay attention,’” Rouch told Bitcoin Magazine. “This matters to a lot of voters.”

After citing that 52 million Americans of varied backgrounds, ethnicities and socioeconomic status now own crypto, Rouch explained that politicians, up the federal level, now see how big of an issue this is and are acting accordingly.

“We've seen undeniable change in Washington, DC over the last year from both parties,” she said.

“We had FIT21 pass in the House with a bipartisan vote. That was really unprecedented. We also have politicians making their statements on crypto known for the first time, and I feel very optimistic about that,” she added.

Rouch wasn’t the only speaker or performer at the event feeling optimistic.

Before beginning his DJ set, 3LAU told the story of how he met the Winklevoss twins, early bitcoin buyers and owners of the Gemini crypto exchange, at a gig a decade ago. He shared how they explained what Bitcoin was to him at that event, and that it gave him hope.

“Bitcoin changed my life, and it’s been that way for the past 10 years,” said 3LAU to the crowd before he started his DJ set.

“This election is probably the most important in my life. We have a choice — to make the future of the financial system or follow the legacy bullshit that we’ve had to put up with,” he added.

“And we’re all going to fucking vote for crypto.”

DXY

The Dollar Strength Index (DXY) measures the value of the U.S. dollar against a basket of other major global currencies. Historically, a declining DXY has often coincided with significant rallies in Bitcoin's price. Conversely, when the DXY is on the rise, Bitcoin tends to enter a bearish phase.

We have recently seen a significant decline in the DXY, which could be signaling a shift toward a more risk-on environment in financial markets. Typically, such a shift is favorable for assets like Bitcoin. Despite this downturn in the DXY, Bitcoin's price has remained relatively stagnant, raising questions about whether BTC might soon experience a catch-up rally.

Sentiment Shifting

Coinciding with the decrease in demand for the U.S. dollar, the high-yield credit data suggests increasing demand for higher-yielding corporate bonds. This indicates that investors are more eager to obtain outsized returns, and historically this appetite has resulted in more significant capital inflows and higher prices as a result for Bitcoin.

Lagging Behind?

In comparison, the S&P 500 has seen substantial growth in recent weeks, while Bitcoin has remained relatively stagnant. However, the increasing correlation between Bitcoin and the S&P500 suggests that Bitcoin might soon follow the upward trend we’ve seen in traditional equities.

Conclusion

In summary, while Bitcoin has been slow to react to the recent decline in the DXY, the broader market conditions suggest a potential for a bullish phase in our current cycle. We’ve seen a shift in sentiment amongst traditional market investors and, subsequently, a period of outperformance for the S&P500.

Whether the market is overestimating the impact of the dollar's decline remains to be seen, but the potential for a rally is there.

For a more in-depth look into this topic, check out a recent YouTube video here: The US Dollar Decline Will Be the BTC Bull Market Catalyst

The tour, organized by the Stand With Crypto Alliance, a non-profit on a mission to get America’s 52 million crypto owners out to the polls in November, will roll through five swing states in the coming weeks, bringing awareness to the importance of voting for candidates who support pro-crypto policies in the upcoming US elections.

On this evening in Arizona, politicians such as Senator Kyrsten Sinema (I-AZ) and Arizona House Speaker Pro Tempore Travis Grantham (R) spoke to the audience alongside crypto industry founders before making way for the psychedelic soul grooves of the Black Pumas.

The Mission and the Margin

“A huge priority for us is turning out the crypto vote,” Logan Dobson, Executive Director of Stand With Crypto, told Bitcoin Magazine.

“Our only cause is crypto. We’re not pushing for specific candidates. We’re not pushing for specific parties. We’re just getting the crypto vote out,” he added.

“And I can tell you that in multiple swing states already, there are more people who have signed up with Stand With Crypto than the margin of victory was in 2020.”

Dobson’s final point is particularly pronounced in Arizona, where, in the 2020 presidential election, President Biden beat former President Trump by about 10,500 votes. Stand With Crypto has signed up almost three times the amount of crypto advocates — 27,231 — than the amount of voters who accounted for Biden’s margin of victory in the previous election.

Encouragement from Politicians

Senator Sinema kicked off the event, urging audience members to fearlessly vote for candidates who support pro-crypto policies.

“You guys are a real force in Arizona and it’s important that we use this election cycle to ensure that the crypto community’s voice is heard,” said Senator Sinema.

“We’ve got to push for policies that fuel innovation so the financial system works for everyday people. We’ve got to make sure that candidates up and down the ballot — state legislatures as well as at the federal level — understand crypto and are working towards a great political climate for crypto rather than one that’s based on misinformation, fear and old-school regulations that hinder the industry,” she added.

Sinema concluded her brief speech with what seemed like a mild jab at the Democrats, the party she parted ways with in December 2022.

“Don’t be afraid to support a candidate or an elected official who takes risks,” she said.

“You all understand the value of taking risks. The crypto industry wouldn’t exist if it weren’t for risk taking,” Sinema added.

“We want to look for candidates who are reasonable but are willing to take risks and speak out against the party line rhetoric that’s trying to stop or slow the innovation of this industry.”

Following Sinema was Grantham, a proponent of the freedom with which bitcoin and crypto provides its users.

Grantham didn’t mince words from the stage. He discussed how politicians are abusing the US dollar by spending more of it than they have and printing it at will. He made the case that it’s up to Gen Z and Millennials especially to vote for pro-crypto politicians to allow for assets like bitcoin to compete against the dollar. He was even more explicit on this topic in an interview backstage with Bitcoin Magazine.

“There’s a large group of elected officials who think the government is the solution to our monetary problems, that this fiscal irresponsibility doesn’t matter and that the dollar is going to be the end-all-be-all forever — and that’s just a crazy way of thinking,” Grantham told Bitcoin Magazine.

“One of the reasons [crypto] is becoming so popular is because of what we’re doing to the dollar,” he argued.

For this reason, Grantham felt it’s essential for voters to support candidates who don’t believe in regulating crypto out of existence, and to vote for politicians who support freedom as opposed to those who seek control.

“It’s a freedom and control issue,” said Grantham.

“[Some politicians want] control by keeping everybody married to one currency and not allowing anything else to break through, which crypto is doing. Competition is a good thing, especially when the person who controls the only thing is abusing it so badly,” he concluded.

Founders Aren’t Asking For Much

Next, a panel of crypto founders based in Arizona took the stage. The panel featured Thor Abbasi, co-founder of DeFi protocol Zivoe; George Mekhail, VP of Operations for Bitcoin Magazine and co-organizer of the Arizona Bitcoin Network; and Shelton Beascochea, co-founder of DevilsDAO and Stand With Crypto Arizona Chapter President.

The industry leaders asked for little more than clear rules of the road from the US government, so that they could operate their businesses on-shore and compliantly. In an interview with Bitcoin Magazine, Abbasi discussed the anxiety that crypto founders have faced due to unfair treatment by federal regulatory agencies under the Biden administration.

“One of the toughest things for our project is [knowing] how the industry can interact with banks,” Abbasi told Bitcoin Magazine.

“We've all probably heard about Operation Chokepoint 2.0,” he added, referring to the government’s unconstitutional crackdown on the politically unfavorable, but not illegal crypto industry, which resulted in the debanking of many crypto companies.

“If we had regulation describing what crypto companies need to do in order to be banked, that would be hugely beneficial.”

Mekhail ended the spoken portion of the night’s programming on a high note, highlighting that the crypto industry has made notable progress, which will likely only gain steam moving forward.

“Think about where we were four years ago,” said Mekhail.

“We couldn’t have an event like this. The fact that 15% of Americans own some form of crypto is crazy, especially thinking about what it’s going to be four years from now,” he added.

“The momentum is behind us. It’s events like this and just showing up and demonstrating that we have a voice that is really important.”

The second date of the America Loves Crypto tour is scheduled for this evening, September 5, at The Space in Las Vegas, NV. You can RSVP to the event here.

Machado noted that under Chávez and Maduro, the bolívar has lost 14 zeros, with inflation skyrocketing to 1.7 million percent in 2018. She described the economic destruction, stating, “This financial repression rooted in state-sponsored looting, theft, and unchecked money printing” crippled the economy despite Venezuela's vast oil wealth.

During the interview, Gladstein emphasized how some Venezuelans turned to Bitcoin as a way to escape hyperinflation, protect their wealth, and fund their escape from the country. Machado echoed this, calling Bitcoin a "lifeline" for Venezuelans, a way to bypass government-controlled exchange rates. She proposed including Bitcoin in Venezuela’s future national reserves as the country seeks to recover its stolen wealth and rebuild from the dictatorship.

“Bitcoin bypasses government-imposed exchange rates and helps many of our people... It has evolved from a humanitarian tool to a vital means of resistance,” Machado stated.

Machado also spoke of the Venezuelan people’s determination to reclaim democracy, noting their historic efforts in confronting the regime. She hailed the use of technology like Bitcoin to ensure financial autonomy and help rebuild a new, free Venezuela.

Looking to the future, she envisions Bitcoin playing a key role in ensuring transparency, property rights, and economic freedom as part of Venezuela’s recovery plan, stating, “We envision Bitcoin as part of our national reserves, helping rebuild what the dictatorship stole.”

Those interested in supporting the Venezuelan opposition party's efforts for a peaceful transition and the recognition of their victory can do so via the HRF here.

This includes an overview of the latest advancements in cryptographic technologies, such as Schnorr signatures. In simple terms, we will examine these technologies that help to provide the necessary fortifications that act as the foundation behind Bitcoin’s security framework.

We will also consider some of the major security incidents in recent years and the lessons that were learned. The overall aim of this piece is to emphasize the importance of the Bitcoin community in developing new ways to secure Bitcoin infrastructure and strengthen blockchain technology - this need is further emphasized by the impending threat of quantum computing …

How Has Bitcoin Security Has Evolved Over The Years

Since Bitcoin’s launch in 2009, the world of finance and technology has been completely transformed, moving toward ultimate financial freedom as an ambitious yet noble goal. As a decentralized cryptocurrency, Bitcoin has surged in value and become the 13th major currency in the world. However, this value has also presented a range of security challenges.

To think that, just a decade and a half ago, the most we could do with Bitcoin was to buy a pizza, it’s not hard to see how we ended up with today’s wallet standards.

Bitcoin initially relied on rather basic security solutions such as digital wallets that stored cryptographic keys to facilitate transactions. These wallets, although effective in basic terms, lacked the necessary security to prevent malware threats and cybersecurity threats which quickly became more sophisticated as the years passed - requiring innovations to keep Bitcoin safe.

Software Wallets

Early digital wallets were basic software that sat on a person’s hard drive, storing private, cryptographic keys that allowed users to access and transfer their Bitcoin.

As Bitcoin’s value grew and cybercriminals became aware of its potential, the need for better security became paramount to prevent widespread hacking and theft. Initially, digital wallets were improved with better encryption and dedicated user interfaces but this did little to stem the tide of a growing number of cyber threats.

Improving and maintaining software wallets became a somewhat futile task for developers who were forced to constantly run API penetration tests, stress tests, and various other security exercises to ensure a high level of security. As a result, a new, more practical solution was created.

Hardware Wallets

These hardware devices stored private keys offline and negated a lot of the threats that were linked to software wallets that were connected to the internet. Hardware wallets came in the form of a small device that connected to a computer via USB — two popular hardware examples were Ledger and Trezor.

Although hardware wallets were offline and required a pin code to access, and if lost, recovering these pin codes was a multi-faceted process. This higher level of security led to these devices growing in popularity as they were not susceptible to malware attacks, private keys never left the device, and transactions were completed within the wallet before being confirmed on the blockchain.

Multi-signature Wallets

These advanced wallets required multiple signatures or approvals from multiple users before any transactions could be executed. This drastically reduced the chance of any unauthorized access and this method was favored by businesses and organizations who regularly made large-scale Bitcoin transactions.

To make a transaction, two or more private keys are required to authorize the activity, similar to written contracts that require multiple signatures. This way, even if one private key has been hacked, the Bitcoin within the wallet still cannot be accessed.

Advancements/ Taproot and Schnorr Signatures

Taproot was a significant upgrade to the Bitcoin network that was designed to improve scalability and brought about a series of enhancements. One such enhancement was Schnorr signatures which offered multiple benefits over the previous Elliptic Curve Digital Signature Algorithm (ECDSA) mechanism which facilitated the generation and verification of private keys.

The key benefits of Schnorr signatures were that they allowed for smaller signature sizes, offered quicker verification times, and provided better protection against certain cyberattacks. Key aggregation was the most significant enhancement of Schnorr signatures which reduced the size of multi-sig private keys so they take up less space in a block and incur the same transaction fees as a single-party transaction.

Another important upgrade was the non-malleability feature that prevents cybercriminals from modifying a valid signature to allow them to commit malicious activity. Schnorr signatures also improve the privacy of multi-sig wallets, increasing their complexity significantly when compared to single signatures.

Preparing For Future Threats To Bitcoin

The rise of quantum computing poses a significant threat to Bitcoin, as these machines can solve extremely complex problems that standard computers cannot. This can include deciphering cryptographic keys. Should this technology become more accessible and fall into the hands of cybercriminals, the risk of unauthorized access to all types of wallets becomes significant and could lead to the complete collapse of the cryptocurrency market if there is no solution.

The Bitcoin community has been busy conducting ongoing research to assist in the development of quantum-resistant cryptographic algorithms.

The hope is that the development of these advanced algorithms will provide sufficient protection against this impressive computational power but the key challenge is the successful implementation of them into the Bitcoin network. This process will be extremely complex, requiring a precise orchestration of all users, from developers to miners.

Creating algorithms that even a quantum computer cannot crack is a monumental task and is described as post-quantum cryptography. Although the development of these cutting-edge algorithms is still in its early stages, more and more developers are lending their hand to the cause and things are expected to accelerate in the next few years.

High-Profile Bitcoin Security Incidents

Let’s consider two recent Bitcoin security incidents that have caused major disruption and helped to change the way we think about securing cryptocurrency.

Ronin Network breach - In March 2022, the highest-value cryptocurrency attack was the breach of the Ronin Network which powered the extremely popular Axie Infinity blockchain gaming platform. By breaching this network, cybercriminals stole around $625m worth of cryptocurrency.

North Korean state-backed hackers, Lazarus Group are thought to be the culprits and It is believed they obtained five of the nine private keys held by transaction validators that were required to access Ronin Network's cross-chain bridge (a decentralized application that facilitates transactions).

Binance Exchange hack - Back in October 2022, one of the world’s biggest cryptocurrency exchanges, Binance was hacked, with $570m stolen. Hackers targeted the BSC Token Hub, a cross-chain bridge, and exploited a bug in a smart contract to extract Binance coins.

As well as high-profile cases such as this, the countless number of individuals that cybercriminals have targeted is an even bigger concern. Some people can become complacent when it comes to securing their Bitcoin keys, while various platforms can employ outdated processes or need to provide more security. For example, If a wallet, platform, or application has a QR code for registration, this can be a significant security flaw, especially given that hackers have already targeted features like this.

Conclusion - What Have We Learned?

These high-level cybercrime cases show that even the most advanced and high-profile cryptocurrency institutions struggle to keep up with the latest cybercrime techniques. In addition to vast and complex blockchain networks and secondary-level, third-party applications, the resources needed to secure Bitcoin and other cryptocurrencies are substantial.

Although multi-sig wallets provide impressive protection, they are not ironclad. This is why developing advanced algorithms, such as those created to fend off quantum computing attacks is the key focus to ensure the future of cryptocurrency. 

This is a guest post by Kiara Taylor. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The card enables European Bitcoin holders to spend from their self-hosted wallets at any of Mastercard's over 100 million merchants globally without needing to custody funds with an intermediary.

Mastercard is a payments titan serving nearly 3 billion customers in over 210 countries. This latest integration reflects the company's growing efforts to bridge Bitcoin with its sprawling traditional payments infrastructure.

"We are providing consumers who want to spend their digital assets with an easy, reliable, and secure way to do so, anywhere Mastercard is accepted," said Christian Rau, Senior Vice President of Mastercard's crypto unit.

The card allows spending Bitcoin and other crypto simply by connecting a non-custodial wallet. Users avoid selling Bitcoin and crypto on an exchange before spending, maintaining full ownership. However, Mastercard's card does have fees, including a €1.6 issuance fee, €1 monthly maintenance fee, and a 0.95% transaction fee. 

Nonetheless, by supporting non-custodial wallets, Mastercard addresses a major pain point and grants users the flexibility to directly control their Bitcoin and crypto. The move caters to a growing audience preferring self-hosted wallets over centralized exchanges.

The note will be available to eligible non-US investors and has been repriced from the series 1 and 2 rounds, which occurred on July 18. This round of the BMN2 is priced at $31,000 petahash per second (PH/s), or a hash price of $21.23. Investors who purchased the BMN2 in the series 1 and 2 rounds, during which the note sold at a higher price, will be awarded extra BMN2 to make up for the difference in price between the first two rounds and the third.

The issuance of the BMN2 comes on the heels of the success of the first Blockstream Mining Note, the BMN1, which provided a 32% return over BTC.

Details of the BMN2

The BMN2 will be a hashrate-backed security token offering (STO) issued on Blockstream’s Liquid Network by Luxembourg-based virtual asset service provider (VASP) Stokr. The note offers 1 PH/s at Blockstream’s North American mining operations for four years.

“Hashrate contracts are typically 30 days up to six months,” James Macedonio, Senior Vice President of Global Sales at Blockstream, told Bitcoin Magazine, highlighting how the duration of Blockstream’s note differs from other financial products like it. “Rarely do you see [contracts] even go to 12 months.”

Blockstream is offering the note in 1 PH/s increments because petahash has become the industry standard for measuring hash price, and the contract’s duration corresponds with the four-year Bitcoin halving cycle.

“We wanted to lock in a hash price for customers for four years, which will basically run until the next halving,” he said.

The minimum investment for professional investors is $10,000, while non-professional investors have a $115,000 minimum investment threshold. Shares of the STO will be fungible and will be available for trading, in both full and fractionalized form, on secondary markets including Bitfinex, SideSwap and Merj Exchange. Macedonio explained that Blockstream’s pricing is competitive, as the note will sell for a 50% discount to the current spot hash price.

“If you're looking to buy hashrate, this is going to be a lot cheaper than buying a hashrate contract on the open market,” he said.

The Success Of BMN1

The BMN1, which offered 2 PH/s over a 36-month term, mined 1,242 bitcoin, delivering up to 103% cash-on-cash returns and the aforementioned 32% return over BTC. Blockstream is aiming to provide similar returns to investors with the BMN2.

“We priced the BMN2 to a level at which we feel investors will get the same type of return,” said Macedonio.

“We sold BMN1 at about a 60% discount to what would have been the hash price at the time. With the BMN2, we're selling at about a 50% discount to the current spot hash price. Future series pricing will be dependent on what the hash price is at that time,” he added.

Blockstream will reward investors who roll over from BMN1 to BMN2 with a 3% bonus in additional BMN2 securities.

BMNs Stand Apart From Similar Products

Blockstream Mining Notes offer investors looking to gain exposure to bitcoin mining a unique value proposition.

“We get really cheap energy rates and we get good pricing on equipment, as well,” said Macedonio. “So, we can offer a hashrate at a really cheap price compared to other folks.”

Macedonio highlighted that the BMN2 is priced at the equivalent to hosting mining equipment at 4.5 cents per Kilowatt hour (kWh), whereas large customers currently pay upwards of 6.5 cents/kWh for hosting arrangements.

He also noted that, with BMNs, investors don’t have to buy machines, nor do they have to worry about machine failures or power curtailment. Plus, investors don’t experience a lag in putting the money down for their investment and machines going online when they purchase BMNs.

“I don’t think there’s another product out there that competes with it,” said Macedonio.

The statement was made during a conversation with Citigroup’s Director of Payments, Peter Christiansen, at the Citi 2024 Global TMT Conference in New York, in which Fortune reviewed a recording of the conversation.

“She is accepting crypto donations,” reportedly said Haas. “She’s using Coinbase Commerce now to accept crypto for her own campaign.”

However, pro-Harris advocacy group Crypto4Harris said that they were unaware of this move. Additionally, Harris's official fundraising site does not yet display crypto donation options. So far, Harris’s campaign and Coinbase were reached out to for comment, but Fortune has not heard back yet at the time of writing.

The "Crypto for Harris" initiative, launched last month, aims to garner support from crypto enthusiasts as Harris seeks to strengthen her presidential bid. 

“She has a huge opportunity, we’re cautiously optimistic,” Haas reportedly continued. “She has not rolled out the details yet, but she has made overtures that she would like to drive crypto legislation.”

Harris’ decision to accept cryptocurrency donations marks a strategic move to rival her opponent Donald Trump, who earlier this year embraced Bitcoin Lightning Network donations for his campaign. Trump's alignment with the Bitcoin community was further solidified when he spoke at The Bitcoin 2024 Conference in Nashville—an event Harris notably declined to attend.

Privacy is a fundamental issue in using a public blockchain system like Bitcoin. Numerous projects and proposals have been made over the years to either build privacy preserving tools on top of Bitcoin, or fundamentally add privacy at the protocol layer itself. Satoshi himself discussed briefly the idea of zero knowledge proofs being a mechanism to enable greater privacy before he left.

This is all the original whitepaper had to say on the topic of privacy:

10. Privacy

The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the "tape", is made public, but without telling who the parties were.

As an additional firewall, a new key pair should be used for each transaction to keep them from being linked to a common owner. Some linking is still unavoidable with multi-input transactions, which necessarily reveal that their inputs were owned by the same owner. The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner.

—----------------

That’s it. That is the only consideration Satoshi gave in releasing Bitcoin to the transactional privacy of its users. Don’t reuse addresses, and carefully think through when you spend a coin together with another one because it will create transparent ownership links on the blockchain. Fifteen years later we have a comprehensive enough body of knowledge and experience to know that this section in the whitepaper is woefully incomplete.

It was nothing more than an abstract description of the model within which private, or non-private, use of Bitcoin would evolve over the coming decade. His advice to avoid spending coins together is no more practical than someone advising you to never spend more than a single cash note when buying something for the rest of time. It was inevitable that in the course of using Bitcoin as a currency people would regularly have to spend multiple coins together, inextricably linking their funds together over the time in the course of successive transactions.

Basic heuristics such as spending coins together form the basis of blockchain analysis, and the unraveling of people’s transaction history. If multiple coins are spent together in a single transaction, it's a good assumption that all of those coins are owned by the same person. If an address is used to receive multiple coins from different people, those are all owned by the same person. When large groups of coins get spent together and connected over time, this forms a cluster. All of these, and other, basic heuristics are why Bitcoin’s blockchain are not private. You can watch transactions on-chain and apply these heuristics to them.

Now before I go any further, that was a critical point to make early on to ensure people could reason about it correctly, but it prescribed no reasonable or useful models for how to proactively maintain your privacy as a user. This is one of Bitcoin’s fundamental shortcomings. The protocol itself does not provide any tool or architecture to inherently protect the privacy of its users, that is left entirely up to them.

Choosing Privacy

Many protocols have been designed over the years to try to address this problem:

• Coinjoins: Protocols where users collaborate to spend their coins together, allowing them to send the same amount of coins to each of their addresses in the same transaction, confusing observers as to who’s coins went where.
• Coinswap: Protocols where users can privately perform a swap involving two transactions where they exchange their coins with each other. As long as both parties cooperate with each other, no connection is visible on the blockchain between the two transactions.
• Chaumian Ecash Mints: Protocols allowing a centralized issue to mint cryptographically blinded tokens structured in a way that they cannot tell which token is which when a user goes to redeem them. It facilitates centralized yet highly private transactions.
• Confidential Transactions: One of the components that is critical to Monero, it was originally developed by a developer working on Bitcoin. It obscures the amounts cryptographically blinding them, and providing a proof that the outputs to a transaction are equal to or less than the inputs without showing them. It was highly inefficient at the time it was proposed, and would have exacerbated Bitcoin’s scaling issues. It also allows a quantum attacker to secretly inflate the Bitcoin supply without being detected, or unravel everyone’s transaction history, if they can break the cryptographic assumptions Bitcoin depends on, depending on which types of cryptographic commitments it uses.
• Zerocoin: A scheme created to allow depositing coins into a single “escrow pool”, withdrawing later with no connected on-chain history to before verified by a zero knowledge proof. It was never implemented because the scheme was very computationally intensive to use at the time.

The first two of these proposals are application layer proposals, they are things that can be built on top of Bitcoin right now. No changes are necessary, and anyone can build software and tools allowing users to utilize either protocol. The second two are fundamental upgrades to Bitcoin at a protocol level. They cannot just be done now, and require convincing people to upgrade Bitcoin in a way that comes with non-negligible trade offs. In my opinion those upgrades will most likely never happen.

That leaves us with things we can build now. Many tools have already been built, and many more will have to be built, but our path forward is paved with privacy tools that people have to choose to use. If no one makes use of them, they are useless. No one can achieve privacy alone in a public system like Bitcoin, you need other people in order to achieve privacy on a blockchain, you need a crowd to hide in. This is very much an individual choice, yet at the same time each individual’s choice has a profound impact on the whole of everyone using Bitcoin.

It is one of the most important choices there is to make regarding Bitcoin.

If people do not value their privacy enough to act to preserve it, then privacy on Bitcoin will die. It will become verboten, something ostracized at first, then actively penalized and punished as time goes on. Governments will stigmatize it, regulate it away, and relegate it to an obscure minority on the fringes of society. At that point, privacy on Bitcoin will have failed.

Even Eric Hughes, the author of the Cypherpunk Manifesto, coiner of the phrase “cypherpunks write code,” realized later on that code alone was not enough:

“Perhaps the single most important lesson I've learned from cypherpunks is that code alone doesn't cut it. Not code alone, not code widely distributed, not even code widely used. Some measure of toleration in society for activities conducted in private is necessary for long term success. Not convenient, not easier, but necessary.” -Eric Hughes, Cypherpunk Mailing List Mar 14, 1996.

People must choose to value privacy at large. It must be a valuable thing to them, valuable enough that they will act even in the face of coercion and intimidation to achieve it. It must be widely tolerated in society, the same way that free speech is in America, or the right to bear arms. It must be something so widely supported that even in the face of fierce opposition from some segment of society, governments will not act to outright stifle it in the face of the size of its support.

People must disobey such attempts in such large numbers that it is socially and practically intractable to actually enforce them. This decision, and the actions that follow it, is very much a political decision. A political act.

People must act, or this battle is already lost.

Building Privacy

We are going to assume for now that people will act, and in sufficient numbers to be successful. So what exactly do they do? Without fundamental changes to the protocol people have to opt into specific tools in order to preserve their privacy. What tools? How do they work?

We went over a handful of tools above, but we did not really go into a deeper or holistic view of how they work. It’s important to understand how different tools can interact with each other. Seen in a vacuum, it's easy to walk away thinking that any individual privacy tool on Bitcoin can never be good enough on a technological level, but when you start to look at all of them interacting together it should be apparent that a very strong degree of privacy can be achieved. If users adopt all of these tools together.

Almost everything in Bitcoin is composable, none of the tools people have at their fingertips exist in a vacuum. Different things can be used in synergistic ways, whether that takes the form of being combined outright into single tools or multiple tools being used in tandem. Let’s go through the current state of things from top (upper layers) to bottom (the base layer).

Chaumian Ecash

Chaumian ecash mints are an old idea predating Bitcoin by decades. David Chaum came up with the concept in 1982. Chaumian ecash utilizes blind signatures to create a private payment mechanism. In the scheme, a central mint server acts as a token issuer, facilitating the creation of new tokens backed by deposits and redeeming tokens for new ones to process transactions. The private nature of the transactions it processes are powered by blind signatures.

Each token is essentially just a random value signed by the mint. In the naive case of such a scheme, the mint would be able to track the redemption of each token it signed, correlating the one being redeemed with the one being issued and viewing each token chain's transactional history. By blinding each token value before submitting to the mint for signing, the mint is unaware of the exact value it signed. After acquiring the mint’s signature, they can unblind it, resulting in a perfectly valid signature from the mint on the plaintext of the token value the user generated.

The mint would only see a plaintext token whenever it was redeemed to be issued a new one, and because the token was blinded when it signed it, it would have no idea when or for who it signed. This allows for centralized, but incredibly private, transactions. The mint will have no idea who is paying who when it redeems tokens for new ones.

For the cost of trusting the operator to custody funds, users can realize a level of almost perfect privacy. It also has no requirements for receiving liquidity or other shortcomings protocols like Lightning suffer from. Any user anywhere willing to trust a mint can receive money privately simply by receiving a token from another user and redeeming it for a new one from the mint.

The utility of ecash goes far beyond just private scalable payments as well, ecash tokens can be made programmable. When someone uses a Chaumian mint, they are trusting the operator to process payments honestly and not steal everyone’s money. There is no reason at that point why they can’t also do more than process payments. They can also enforce smart contracts.

The same way that Bitcoin script allows people to program conditions on when their bitcoin can be spent, mints could use script or other programming languages to allow users to program conditional spending requirements into ecash tokens. Rather than just generating a random value to blind for the mint to sign, users could generate a script program to blind. After the mint signs it, when someone comes to redeem that token they will see the script it is programmed with. The mint simply refuses to authorize a redemption unless the script is fulfilled.

There are a few different trust models possible now, with more surely to come as people think more about how they can be built. The simplest and most straightforward is a single operator. This is the same as any custodial system like Coinbase. The next is a federated operator, distributing the trust across multiple parties. This puts ecash on par with many other systems built in this space people consider decentralized. There are even suggested models that invert the entire risk relationship, where the chaumian mint issues tokens backed by its own money, lending them out to users and periodically calling in the debt.

So, even right now, we can achieve an enormous amount of privacy…but at the cost of a loss of sovereignty and control over our own funds. This is far, far from ideal, but it’s a path forward that is open to us now. We just need there to be enough people operating these, and a solution for people using different mints to interact with them.

Enter the Lightning Network. It allows seamless deposits and withdrawals by users interacting with a mint, and a quick settlement mechanism for a receiving user to cash in a mint from one token and transfer it to another mint they prefer using or trust more.

Lightning Network

Lightning is a network of bi-directional payment channels, allowing users to route payments off-chain across this network. Users collaborate with one another to lock funds in a two party multisig address, using pre-signed transactions to ensure each party can claim their funds back without any help if necessary. After being established, the balance of funds can be updated off-chain by signing a new set of transactions and exchanging “penalty keys” that would allow the other party to confiscate the entirety of a cheating user’s funds in the channel if they attempted to use any old transactions on-chain.

Lightning, while far from perfect, is a massive improvement in terms of privacy compared to on-chain bitcoin use purely by virtue of not recording every transaction that occurs on the blockchain. Rather than every transaction a user makes permanently recording the history of where coins came from and where they went, the only visible history on the blockchain is the creation of the payment channel. Nothing about payments made or received is visible to the general public, only the counterparty the channel was opened with.

As far as the off-chain footprint is concerned, things are a bit more nuanced. Receivers for instance currently reveal their Lightning node to anyone paying them. This could be addressed with BOLT 12, a proposal incorporating a scheme called blinded paths which obscures the receiver’s Lightning node from the sender by having them compute the last few hops in the payment route. Senders however currently have excellent privacy, with the receiver learning nothing about their Lightning node or funds.

Lightning has some rough edges for end users to deal with though. Namely the requirement to have liquidity allocated by their channel counterparty to receive money, and the inability to receive more money than their channel counterparties have available to route to them. It functions amazingly as a payment routing network, assuming users have addressed the liquidity issues.

Most users address these by making use of a Lightning Service Provider (LSP). They fill the role of providing liquidity for users to receive money, but the trade off of solving that problem comes with privacy trade offs. The LSP is a large entity serving many users, and in the process learns about a large number of users’ payment activity. In some cases, particularly LSPs that make use of Trampoline Routing (a scheme where the LSP calculates a payment route for you), they even learn the destination of all their users’ payments.

Some of these issues can be addressed by bolting Chaumian ecash mints on top of Lightning. By having many users “use” a single Lightning node operated by the mint, liquidity allocated so the mint can receive funds can be shared more efficiently by all users. The private nature of ecash also helps shield users from some of the privacy shortcomings of Lightning. Even if the mint, the Lightning node operator, knows where payments it makes across the network are going, it doesn’t know which user(s) made them.

Overall use of Lightning directly by a user is not as private as Chaumian ecash, and does come with the added issues of having to source receiving liquidity and interact with LSPs, but it does not require relinquishing control of your funds. It can’t scale as well as ecash, and is more complicated to use, but it has a far superior trust model.

One thing Lightning doesn’t do however, is completely obscure the ability to track coins moving on-chain. It might hide and obscure individual payments conducted off-chain, but it is still possible to track coins into a channel, and track where they go when that channel is closed.

Coinjoins

Coinjoins are a protocol that enables multiple users to collaborate together to craft a transaction structured in a way to make tracking their coins difficult or impossible. Heuristics like common input ownership and clustering are the basis of tracking people’s funds. Breaking these is how to protect your privacy. Coinjoins accomplish this by structuring the amounts going in and out of a transaction properly.

Assume you have five people who want to obscure their transaction history, by combining their coins together in a single transaction and all creating outputs of the same denomination they create a false positive for common ownership by spending their coins together and create a false cluster. Because the outputs are of the same denomination, no one can be sure when they are spent in the future whose coins they actually are.

Now consider a Lightning user again. Even if realizing the maximum privacy benefits possible with Lightning, they still need to consider the privacy implications of interacting with the blockchain. Imagine a user withdrew coins from a KYC exchange and opened a Lightning channel. He might be able to make thousands of transactions back and forth over Lightning, but when he closes that channel with less funds than he put into it, the exchange can see that he at least spent that much somewhere in his off-chain activity.

When he spends those coins with other coins known to be his, or opens a new Lightning channel associated with his node with them, the exchange can be even more confident they are still under his control. These connections need to be broken and obfuscated. That is the role coinjoins can play.

Coinjoin was the most widely deployed protocol for base layer privacy, the two largest examples being Wasabi by ZKSnacks and Whirlpool by Samourai. Samourai was recently shut down after the founders were arrested, and Wasabi voluntarily discontinued the operation of their coordinator shortly after. Both of these systems depended entirely on a centralized coordinator server to help users actually construct their coinjoin transactions.

Joinmarket is another option that is operational currently, using a decentralized model where “takers” (users) select from a market of “makers” (liquidity providers) to coordinate coinjoins. Joinmarket however is not as well developed or maintained as there is no company behind it. It is a purely open source project.

These are not the only options by any means. People can spin up a Wasabi or Whirlpool server again if they want, people can even design new coordination models for serverless coordination. The coinjoin transaction itself, and how it is coordinated, are very separate things despite being related. There are many different ways the goal of coordinating the creation of the coinjoin can be accomplished. And importantly, it is permissionless to try new ways.

The Holistic Stack

Now that we’ve gone through these pieces, think about how they all interrelate. How they form together to create a holistic synergy at every layer to maximize privacy. Users transacting with an ecash mint have a massive degree of privacy even from the mint operators, those mint operators in using Lightning can themselves achieve substantial privacy for themselves and their users interacting with other mints, and in reorganizing liquidity on the base layer coinjoins can keep even that activity done on a public blockchain obscured.

Even without radical changes to Bitcoin itself, there is a path forward from where we are now to a private and censorship resistant Bitcoin. It is not ideal, it does require either costs and complexity or compromising on the desired goal of trustlessness, but it is possible.

Going forward, it can be made even better with each improvement made to the Bitcoin protocol. Covenant schemes that improve scalability could address some of the issues with systems like Lightning. This would allow more users to be able to interact with Bitcoin in a private way self-custodially, rather than having to delegate control of their funds to a chaumian mint.

Some of these scaling improvements might even reduce the need for on-chain privacy schemes such as coinjoins. Having more people share custody of a single coin in a trustless manner would introduce natural ambiguity as to who is doing what when withdrawals are made from that coin.

We have a path forward even now, and that path will get brighter with each improvement made to the Bitcoin protocol. People just have to choose to actually walk down it.

A Future With Privacy, Or A Future Without

Privacy might seem to some like a thing not worth caring about, or not that important. “What do you have to hide anyway?” I think those people simply don’t appreciate the implications of having no privacy. Look around at the world today, look at how quick people are to ostracize and shame someone publicly for innocuous things. Holding the wrong opinion, saying the wrong thing, voting for the wrong politician.

More and more the lack of privacy in regards to personal life is causing disastrous and traumatizing consequences for people. It is vitally important that people actually have control over what information about themselves is or is not made available to the public. This is not just a matter of criminals wanting to hide nefarious or horrific things, it is about everyday people being able to protect themselves from the whims of the mob.

Going even further than that, people living under totalitarian or oppressive governments around the world have much more to lose than a job or social standing if they are not able to maintain privacy. They can literally lose their lives.

Privacy can be the difference between physical safety and danger even for people living in a safe and free jurisdiction. Imagine if in the course of transacting with someone you revealed that you own a sizable amount of bitcoin, you have now in a very real sense opened yourself up to the possibility of physical danger. There are numerous documented cases of kidnappings, physical assault, even torture by criminals attempting to steal bitcoin from individuals who have revealed themselves to be wealthy.

Even domestic violence is an example of a situation where privacy is of utmost importance. One of the biggest reasons people do not leave abusive relationships is the financial inability to. How can someone in that situation attempt to work their way towards financial independence to leave without privacy? Without the ability to save and earn money without their partner discovering it?

Privacy is important.

To come back to Bitcoin, one of the chief properties it is valued for is its censorship resistance. The ability to transact however and whenever you want, without permission, without someone else having the ability to stop you. Transactions have two parties though, a sender and a receiver. A buyer and a seller.

If governments, regulators, the mob of the public, all can track your payments and coins in public, how can you have censorship resistance? How can that exist when any government or mob can coerce and threaten people to not transact with you? How can Bitcoin be censorship resistant when everything you do can be followed, and when you become persona non grata, the weight of government and social pressure can prevent others from interacting with you? Remove that choice from the individual of whether to transact with you or not, and impose a decision on them? When a merchant has to worry that if they receive “the wrong coins” the government will track them down and seize them, resulting in them losing money? It can’t.

If coins can be distinguished from each other in any meaningful way, and tracked as they move around, Bitcoin starts breaking down and not even functioning properly as a money. Money has to be fungible, i.e. two coins must be indistinguishable from each other from a merchant’s point of view. To be fungible, it has to be private.

Privacy, fungibility, and censorship resistance are all facets of the same thing. They can only exist together.

People have to choose to value privacy, or Bitcoin will lose its censorship resistance. Most people won’t choose privacy over purely ideological grounds, or political grounds, they will need to be shown it is actually useful. They need to actually see and use something that lets them donate to a cause important to them without being shamed or attacked for it. They need to see that people in a totalitarian state can actually use it to accomplish something meaningful. They need to actually see the eerie and creepy omnipresent ads online disappear or become wildly inaccurate as they make purchases privately, out of sight of the big data fishing net.

This is the most important battle Bitcoin will ever face, and we are at an inflection point in that fight right now. The outcome of this fight will shape Bitcoin for the rest of its existence. Will it be a tool for sovereignty and freedom, or one for surveillance and oppression? That is up to us to decide.

I do not want to live in a world where I have no privacy of thought, of interaction, of transaction. Where every action I take, every thought I utter, or even think, is put under the scrutiny of the government and the mob of the public. Where the slightest misstep leads my life to ruin, with no room for dissent or dialogue or debate.

I choose privacy. I choose censorship resistance. I choose freedom. 

Fidelity's ETF led the withdrawals, selling $162 million worth of Bitcoin. Grayscale followed with $50 million in outflows, while Ark and Bitwise reported $34 million and $25 million, respectively. Despite these substantial outflows, these ETFs still collectively manage around $50 billion in assets.

Bitcoin saw a remarkable rise in price earlier this year due to the hype and interest surrounding these ETFs, starting 2024 at around $44,000 and reaching an all-time high of $73,770 on March 14. However, the price has since stagnated, hovering below its peak in the $55,000 to $65,000 range. It has been 174 days since Bitcoin hit its all-time high, according to Clark Moody Dashboard.

Despite the recent outflows, spot Bitcoin ETFs have generally maintained strong inflows, with only one month of outflows in the past eight months. This indicates ongoing investor interest in Bitcoin, even as its price stabilizes below its all-time high.

• Does Bitcoin even need Bridges?
• What are the differences between sidechains (BOB, Botanix, etc..) and rollups designs (Alpen, Citrea)?
• What are the strategies employed to convince Bitcoiners to bridge their BTC?
• What are the different BitVM implementations and how do they revolutionize Bitcoin Bridges?
• Can rollups compete with existing L2 designs such as Lightning?

Table of contents:

Questioning the Necessity of Bridges

The Current State of Bitcoin Bridges

Understanding the Friction Between Solving Technical Challenges and Growing a Sustainable User Base.

The Future State of Bitcoin Bridges (BitVM and others)

The Thesis for Bitcoin Rollups and Bridge Innovation

Key Takeaways:

• Delivering on the promises of Bitcoin Season 2 will require a lot more funding and research toward bridge design, blockspace dynamics, and interoperability.
• Sidechains exist on a spectrum and the Bitcoin “L2” category is a victim of ambitious marketing despite harboring a great deal of innovative new bridge systems that provide a valuable alternative to rollups.
• Rollups are going to be more impactful on Bitcoin than they’ll ever be on Ethereum and have the potential to reach over $133 billion in TVL over the next five years.
• BitVM and ZKP research is at the forefront of Bitcoin innovation and will become the most important topic of this cycle.
• Investment in companies capable of solving the upcoming problems related to Bitcoin rollups is paramount, including MEV research, data availability, decentralized sequencing, attestation chains, and of course, UX.

Questioning the Necessity of Bridges

When we talk about scaling Bitcoin, the same questions inevitably arise to remind us of the scale of the challenge. Among them, the question of whether the Bitcoin base layer should scale was answered long ago during the Blocksize Wars: Bitcoin will have to scale in layers.

Layers, however, are a heterogeneous bunch and many different mechanisms exist to build them.

One of the oldest and simplest ways of bringing scale to Bitcoin is sidechains. But sidechains are not technically a true “layer” of Bitcoin since they often lack the unilateral exit component that makes them trustless for users, i.e., with the same trust assumptions as the base layer. That is why, for the many years that followed the introduction of SegWit, the Bitcoin community focused a lot of energy on building the Lightning Network (a true L2 that depends on Bitcoin security to provide users with unilateral exit options) instead of sidechains.

In order for users to join a sidechain, they first have to execute what we call a “peg-in” transaction (or “peg-out” to exit) — basically sending their BTC to an address controlled by the operators of the sidechain. The mechanism securing this system is called a bridge.

The reason why bridges are so tricky is that they often rely on a multisignature wallet holding all the sidechain’s funds, and in order to execute withdrawals, users have to trust that a majority within the multisig will cooperate to accept it. For example, a group of 20 companies would set up a bridge contract together, requiring at least 12 (could be less or more) companies to confirm a withdrawal transaction. For obvious reasons, this never was an optimized security model and created great incentives for companies (or individuals) to potentially collude and steal user funds.

A few examples of interesting sidechain design emerged during that time, such as Liquid (federation of companies) and RSK (merged-mined sidechain), but they never truly succeeded at scale.

Before we go any further, let’s add some definitions from the researchers that have spent the most amount of time thinking about this — Bitcoin Layers.

Sidechain is an L1 that exists to add more functionality to BTC, the asset. L1s are sovereign in technical architecture but typically exist as subsets of the broader Bitcoin ecosystem. It’s common for sidechains to enshrine a BTC bridge into their consensus mechanisms or involve Bitcoin miners in consensus — through merge mining or fee sharing.

Rollup is a modular blockchain that uses a parent blockchain for data availability. The blockchain stores its state root and enough transaction data to reconstruct the state of the blockchain from genesis in the parent blockchain. Rollups are L2s.

Two-way pegs are systems that facilitate the minting and burning of BTC-backed tokens on a Bitcoin layer or alternative L1. These systems are also known as bridges.

So, if bridge designs have existed for a long time and they haven’t generated a lot of traction, why do we need them now?

While Lightining dominated the L2 space for a long time, 2023 saw the introduction of a new idea that would challenge that dominance: BitVM. In a nutshell BitVM can allow Bitcoin to be more programmable, which could lead to the introduction of new L2 designs such as rollups. These new designs all rely on an old friend on sidechains: the bridge mechanism that allows users to go from the base chain to the sidechain. However, the promise of BitVM relies on the idea that we could make bridges more decentralized than with traditional sidechains by introducing a challenge mechanism that could punish dishonest actors in a federation.

Therefore, rollups on Bitcoin would not be completely trustless but trust-minimized. You would still need to rely on an honest actor (we’ll dive into the specifics later in this report) to exit the chain (rollup) but this is a trade-off that many users could get comfortable with, given the potential scaling and programmability benefits.

BitVM (and Robin Linus) essentially revived the idea of Bitcoin bridges, and brought more legitimacy to them as a way to scale Bitcoin. Bridge design is now part of every scaling discussion, and several Bitcoin companies are now fully dedicated to researching innovative ways of improving them.

Now that we’ve seen why Bridge has made a comeback as a legitimate way of scaling Bitcoin, one could still argue that rollups enabled by BitVM will suffer the same fate as previously mentioned Liquid or RSK — a very limited user base. While this could be true, the success of rollups on Ethereum indicates a very strong demand from users and a lot of appetite from investors.

The screenshots below, taken from the leading ETH rollups analytics platform L2Beat, show that the top 10 rollups on ETH have managed to accumulate close to $40 billion in assets bridged. Arbitrum, Base (Coinbase), and Optimism together have over 71% market share. Furthermore, over the past year only, the amount of ETH locked in rollups went from $6.1 million to $13.1 million, a 114% increase.

In fact, rollups are going to be more impactful on Bitcoin than they’ll ever be on Ethereum. If we assume the same level of rollup utilization (10.4% for ETH) and take the size of both networks as of July 2024 — $383 billion for ETH vs $1.276 trillion for BTC — we could make the simple calculation that the total addressable market for Bitcoin rollups could be around $133 billion. While this number is impressive, one could even argue that Bitcoin will require even more scale than ETH as it is poised to become the settlement network for all economic applications, and therefore rollups would have the potential to become even larger still.

Seeing this potential, a ton of developer mindshare came back to Bitcoin and sparked a true renaissance for the space. Anticipating that Bitcoin users will be interested in bringing more utility (yield) to their holdings, sidechains came back in full force at the end of 2023 and the beginning of 2024. Over 70 projects launched with the promise of decentralizing their bridge design once the technology was available, while others created innovative bridge designs.

The no-bridge meta. Although not the focus of this research piece, it is important to mention that many projects in the L2 space are trying to scale Bitcoin without the need for complex bridge systems. These protocols will play an integral part in the race for scalability on Bitcoin as they provide a valuable alternative for users not willing to make certain trade-offs.

Arch: The Arch Network employs an innovative approach to state management on Bitcoin’s layer 1, utilizing ordinals through a unique “state chaining” process. State changes are committed in a single transaction, reducing fees and ensuring atomic execution. Built to add programmability without necessarily sacrificing self-custody, Arch makes it possible for Bitcoin users to develop and interact with decentralized applications without taking on additional trust assumptions. Its novel architecture consists of a two-piece execution platform: The Arch zkVM and the Arch Decentralized Verifier Network.

QED: QED solves the fundamental scaling problem of blockchains by using zk-PARTH, a novel state model which enables massively parallel transaction proving and block generation. This allows QED to scale to millions of transactions per second, while guaranteeing security via proof of math.

RGB++: RGB++ protocol is not BitVM even though it can provide native Turing-complete capability on Bitcoin layer 1. It neither relies on any new OP codes nor does it require hard forks or soft forks but rather directly provides programmability on layer 1. It also is not an EVM or a rollup, and it does not need a bridge. The RGB++ protocol attaches additional data as an extra program logic to the original Bitcoin UTXO. A single Bitcoin UTXO is linked with an off-chain data cell (or what is termed a Turing-complete UTXO). By connecting every on-chain UTXO with off-chain data and extra execution logic, the off-chain UTXO is transferred — despite being constrained by the script on the UTXO — whenever the original UTXO is transferred or spent. This allows the transfer of additional bits or assets from one UTXO to another, executing the script and effectively forging an off-chain transaction with off-chain state transfer from one state to another.

The Current State of Bitcoin Bridges

Now that we’ve established that new bridge designs can be of revolutionary value for Bitcoin as a settlement network, let’s dive into the current landscape of Bitcoin bridges, their architectures, optimizations, and different variants.

Let’s take a look at a few different L2/sidechain designs, and how teams are thinking about mitigating certain trade-offs associated with their bridging mechanism.

In a nutshell, we can identify four different types of bridge designs:

• Traditional Bridges: Normal bridges as described above.

• Reinforced Bridges: Reinforced bridges are bridge designs that have an additional layer of security added in order to mitigate some aspects of the protocol that could be too centralized. In the case of BOB (Built on Bitcoin) for example, phase 2 of the roadmap is planning to remove trust in (centralized) sequencers with Bitcoin miners running full nodes of BOB and thereby verifying that the sequencer is producing valid blocks. This offsets trust in the sequencer and thereby provides Bitcoin security through mining to a rollup. This will be achieved using an alternative version of merge-mining called Optimine.

• Optimized Bridges: Optimized bridges are bridge designs that innovate by distributing trust among the participants of the multisig. A great example of an optimized bridge design is Botanix. The bridge multisig is constantly distributed among different users; it can evolve and change between blocks. In the case of Botanix, the bridge is also reinforced with a proof-of-stake (POS) system that becomes complementary to the FROST-based architecture.

• Trust-Minimized Bridges: These bridges are currently being developed by rollup teams and will feature near trustless assumptions, with the possibility of users even outside of the multisig to participate in the protocol.

Understanding the Friction Between Solving Technical Challenges and Growing a Sustainable User Base.

1. The birth of an L2: choosing the best go-to-market strategy.

For Bitcoin builders in 2024, there are only two options that can make sense in the context of the Bitcoin L2 paradigm:

• Choosing to focus on the technical challenges of bridging architecture and rollup design to build a trust-minimized layer with complex zero-knowledge proofs and BitVM optimizations. This is the Technological approach.
• Choosing to focus on the fastest go-to-market strategy by making calculated trade-offs with bridging architectures and execution environment in the hope of decentralizing those once the technology is available. To differentiate from current competitors and protect themselves from future ones, companies have to bring additional incentives in the forms of points or tokens to acquire users. This is the Community Moat approach.

With the Community Moat approach specifically, the trade-off is simple: sacrifice decentralization in the medium term in order to gain TVL and a solid user base in the short term. While this approach may be criticized by hardcore Bitcoiners, it reflects a business-first mindset that is often lacking to many projects that end up failing despite being technologically superior. Execution is EVERYTHING.

Those different approaches are the reason why having an intellectual debate on Bitcoin L2s has been so difficult recently. People tend to conflate the goals of companies attempting to solve a Technological problem with companies attempting to solve a User Acquisition problem. These companies have fundamentally different go-to-market strategies and therefore will use fundamentally different methods to convince users that they are, indeed, the best Bitcoin L2 (or the first).

2. Sidechains vs rollups: being on the spectrum. That’s really what it comes down to. There’s going to be Bitcoin sidechains, Bitcoin rollups, and everything in between. Bitcoin L2s exist on a spectrum, where the extreme is dominated either by builders going for the Technological approach or the Community Moat approach. Let’s dive into the spectrum.

As Janusz from Bitcoin Layers would say, “Not every Bitcoin layer is made equal” and most people in the space have a tendency to discard companies choosing to focus on the faster go-to-market sidechains approach while admiring the complex work done by BitVM/ZKP researchers.
(Please refer to the definitions of sidechains and rollups at the beginning of this piece if you’re struggling to understand why their approach is different.)

While we can understand that point of view from a Bitcoin Maximalist perspective, I think it is a fundamental mistake from a free market perspective. While the technology approach might be more intellectually pleasing, and the perspective of having a truly decentralized L2 exciting, actual users tend to have different priorities.

While this spectrum can be a useful tool to understand the trade-offs that companies make, ultimately, users will decide on their own how to prioritize UX, cheap fees, fast settlement, and protocol security.

When you look at the current state of the crypto market, it isn’t clear that the technology-first approach can compete with the memetic power of a protocol like Solana. How many people in the world know of Solana compared to how many people have even heard the word rollup?

At UTXO, we believe that there is value to be captured by both rollups and sidechains, especially if sidechains can deliver on their promises to decentralize over time. While this hasn’t been the case with other chains historically, we believe that once the technology is reliable and available, Bitcoin users expect trust-minimized solutions to become a standard and not just a protocol preference.

3. Do you want to make money or do you want to be right? The incentive programs of new Bitcoin layers. Let’s dive into existing projects’ go-to-market strategies and understand the opportunity size for early users and liquidity providers. The strategies described below are not exclusive to each project but we chose to focus on the ones that are the most characteristic for them.

A) Point system (BOB): The BOB point system has been by far the most successful iteration of this strategy in the Bitcoin sphere. BOB Fusion is the official points program of BOB, where users can harvest BOB Spice (points) based on their on-chain activity on the BOB mainnet.

B) Ecosystem first (Botanix): Choosing not to release a token at launch for their sidechain, Botanix’s approach is one of the smartest we’ve seen so far. Botanix is choosing an Application first approach but letting project building on top of Botanix shine. By partnering with Botanix, ecosystem projects will be supported with TVL from day one, and speculators’ only way to get exposure to Botanix launch will be to invest in its ecosystem apps. As we know, having a real and sticky user base actually using the application is the only way for L2s to survive in the long run, and Botanix is taking a radical approach to ensure this.

C) Research (Bitlayer): With one of the most technically advanced teams in the space, one of the key differentiation points for Bitlayer has been their research-first approach, a rarity outside of rollup-only projects. Since the early days of BitVM, the Bitlayer team has been active in furthering our collective understanding of the idea and has released a number of extensive research papers on the subject. Furthermore, the team is actively exploring new ways to improve current BitVM designs and will likely be considered one of the most innovative L2 teams in the space once their research comes to fruition.

The Future State of Bitcoin Bridges (BitVM and others)

When we look at bridge designs it becomes apparent that the most decentralized ones will be developed with variations of BitVM. Indeed, BitVM is not a monolithic entity that one can just refer to in order to be understood in the context of Bitcoin rollups. A few teams are working on competing (and synergistic) adaptations of the initial proposal by Robin Linus.

The main differences to understand in these variations of BitVM come down to a few key parameters:

• Trust assumptions: What is the level of decentralization of the bridge when it comes to the ability of users to trustlessly exit the rollup? In the case of BitVM and optimistic rollups, who can challenge the state of the rollup? Assumptions range from anyone (best) to only a majority of actors in the multisig (worst).
• Challenge response: Once a challenge has been issued to the optimistic rollup, how much time and resources (number of transactions + size of transactions at a given fee rate) are necessary for “justice to be done”? Assumptions range from months with multiple on-chain interactions (worst) to hours with a single interaction (best).

From the Snarknado whitepaper:

“BitVM, is, however, not without overhead. Like optimistic rollup, the proof needs a withdrawal period to allow challengers to come in. Notice that a fully on-chain challenge-response can require tens of roundtrips between the prover (called Paul in BitVM) and the challenger (called Vicky), and since Bitcoin has a block time of 10 minutes, it can be quite a long time. It is also a little bit unsure what would happen if many challengers want to challenge at the same time and whether it would affect the latency and the finality.”

• Capital efficiency: What are the capital requirements for operators of the rollup? How much BTC do they have to ensure that all users can withdraw funds and make transactions without any constraints? There is no good metric to objectively measure this but we can imagine a combination of “cost of capital required to lock funds for X time” + “multiple of BTC deposited by users required to be locked by operators.” Assumptions range from “high cost of capital with high BTC multiple” (worst, i.e., the incentive of operating a rollup does not make sense) to “low cost of capital with a BTC multiple of 1” (rollups can outcompete Lightning and Ark).

“an operator will initially cover user withdrawal requests out of pocket then aggregate the necessary proofs into a single submission to the network. If other operators suspect foul play, they can challenge the submission. Successful challenges result in the dishonest operator losing their initial bond and being removed from the network. If the operator’s submission is not challenged, they can then reclaim the equivalent amount they disbursed from users’ original deposits.”

Despite all this innovation at the bridge level, one cannot separate the bridge from its foundation, and in the case of rollups, the foundation has to come from a few key choices in the very design of the rollup itself. For all the security and trust-minimization of BitVM bridges, in order to make a fair comparison between sidechains and rollups, we have to compare them “dans leur ensembles” (in their whole outfits).

One of the herculean choices that teams will have to grapple with is the one of data availability (DA):

“The publishing of transaction data which is required to verify transactions, satisfy proving schemes, or otherwise progress the chain. Specifically, a node will verify data availability when it receives a new block that is getting added to the chain. The node will attempt to download all the transaction data for the new block to verify availability. If the node can download all the transaction data, then it successfully verified data availability, proving that the block data was actually published to the network.”

There are only two ways of ensuring data availability: post it directly to Bitcoin or post it somewhere else. In the case of Bitcoin rollups, by definition, one would expect that DA would always be posted to Bitcoin. However, this is a costly choice to make that will have negative consequences for both user transaction costs and rollup teams’ ability to generate net margins. In response to this, some teams have chosen to trade very real gains in security for cheaper transactions and additional scalability.

The DA dilemma:

Once again, trading off security for user experience may be considered sinful by Bitcoiners, but we have seen that in the case of sidechains or certain ETH rollups, some users may prefer it.

In that sense, the DA dilemma is not so much a technical challenge as it is a social one. Yes, posting DA on Bitcoin in the only way to be considered a true Bitcoin L2, but will that matter if the only rollups with users are the ones with no Bitcoin DA?

Some more definitions before going further:

Optimium: Optimium is an optimistic rollup that stores transaction data on-chain. This ensures availability and security, but increases costs and reduces scalability versus off-chain options. However, users need not trust third-party data providers.

Validium: Validium is an optimistic rollup variant that stores transaction data off-chain. This enables high scalability and low costs, but risks potential data censorship or unavailability issues without on-chain backups. Users must trust data providers are honest and resilient.

An interesting investment opportunity that arises from the situation is the development of a potential DA layer with a strong relationship to Bitcoin — the Celestia of Bitcoin. While we’re not there yet, exploring different ways of mitigating consensus failures for rollups is a big area of focus for UTXO, and has in part informed our decision to invest in CHAR by Jeremy Rubin (Bitcoin Core developer, BIP-119 author).

• CHAR is based on attestation chains where nodes commit to signing a single unconflicted sequence to organize transactions.
• By acting as a layer 2 for scale and functionality, CHAR will bring new security to BitVM with L1 bonds while incentivizing operators by distributing rewards.
• This new way of thinking about protocol security (consensus orchestration) will make the on-chain resolution of challenges on BitVM more efficient and incentive-aligned.

While LN attempts to solve the scalability in a peer-to-peer fashion, resulting in liquidity problems, rollups take transaction execution off chain — but the current architectures make it costly to use Bitcoin as a DA layer. All systems will eventually leverage centralized solutions to improve user experience, and at this point it’s difficult to tell which trade-off is worse.

Looking ahead, Citrea plans to introduce volition, a hybrid model balancing on-chain security with off-chain cost efficiency. This allows applications to choose their data storage method based on their specific needs. This is something we haven’t seen before and that would deserve more attention when it comes to the DA dilemma for Bitcoin rollups.

“So depending on your usage, if you want to deploy now a gaming application, you can use off-chain data. It is very cheap, very fast, but still gets this Bitcoin interoperability. If you want to build a Bitcoin-backed stablecoin application, you can use on-chain data so your stablecoin is fully on-chain secured, fully Bitcoin secured. A bit expensive but you still get this interoperability between the gaming application and the stablecoin application.”

Other challenges with Bitcoin as a DA layer. The best way to learn about this is to read the latest Galaxy Research report on Bitcoin as a DA layer. However, one of the specific challenges where we would like to spend more time is the issue of blockspace demand and fee rate dynamics.

• Blockspace scarcity will/could lead to centralizing forces for rollups and ultimately for pools as well. Because of the large amount of data required to settle rollup activity on Bitcoin, rollup operators may be tempted to optimize their transaction flow by using the services of pools, such as Marathon, with slipstream. These kinds of OOB (out-of-bands) agreements with miners are a centralizing force as they provide additional revenue streams to pools that are not accessible transparently on-chain. On the other hand, it is perfectly normal in a free market for competing actors to find differentiation points and does not represent a fundamental threat to Bitcoin by altering the game theory of mining (i.e., only the most cost-effective miners survive in the long term).

• Fee rate dynamics will once again change with the introduction of another blockspace buyer of last resort, but this time will be different. Constant demand for blockspace no matter the fee rate, is not something that Bitcoin has witnessed in its recent history. In the case of ordinals, degens minting jpegs have an incentive to always make transactions as long as blocks are not full, acting as a natural buyer of last resort for blockspace. However, ordinals and Runes/BRC-20 are time-preference aware (they can choose to wait, paying low fees, or pay high fees for fast inclusion in a block) while rollup operators cannot be. Their proofs will be submitted, at a fixed rate in time, no matter the fee rate. This kind of agnostic demand is most reflexive on fees precisly because it competes not just to be included in a block (4MB x size of the mempool) but for the very next block (only 4MB available). As the utility for Bitcoin as the settlement chain for all economic activity continues to grow, we can expect these types of demand to increase, further impacting fees to the upside. In that case, the economic case for rollups may become less clear as their attractiveness compared to the Lightning Network in terms of costs starts to be less competitive.

In SOTB_2, the second part of this research series, we’ll dive deeper into how the activation of different opcodes could affect the efficiency and decentralization of Bitcoin rollups. In the meantime, we can just leave readers with the following idea:

Governance discussions are always difficult ones to have, but I do believe that more of them are warranted when it comes to Bitcoin rollups. The way I see it, it is a typical chicken-and-egg problem: We want to have rollups to scale and bring new functionality to Bitcoin. The only way to have them now is by reactivating OP_CAT, but OP_CAT enables other things that are not necessary for rollups while being inefficient at verifying zero-knowledge proofs.

Should we prove the demand for optimistic rollups without a new op_code first, then activate a dedicated op_code to optimize them? Or should we activate OP_CAT first to prove the demand for rollups at the risk of them being inefficient, which could turn users away from them? We do not have the answer to this question but we can only hope that rollup teams will come up with an answer by the end of the year. In the meantime, other covenant proposals such as LNHANCE (including CTV) or TX_HASH could help Bitcoin to scale outside or rollups.

The Thesis for Bitcoin Rollups and Bridge Innovation

In this new landscape of Bitcoin L2s, the competition between sidechains and rollups will be fierce. As we’ve outlined, a common misconception within the space is that sidechains are not interesting because they are more centralized than L2s and that rollups are just a new form of sidechains.

For sidechains, the bullish case is that bringing EVM compatibility to the Bitcoin ecosystem will spark the resurgence of defi activity for Bitcoiners in search of yield opportunities. As a reminder, over $9.3 billion is currently locked in WBTC according to DeFillama. Bringing this activity back to more Bitcoin-native solutions is imperative if Bitcoin is ever to succeed as a settlement chain for economic activity. Furthermore, we believe that the innovations brought by new sidechain designs can help to mitigate some of the centralizing issues plaguing previous designs. Both Optimized and Reinforced Bridge designs have interesting value propositions that could convince enough users and institutions to participate in these ecosystems.

When talking about Bitcoin sidechains, we have to remember that their primary goal remains disintermediated economic activity, not censorship resistance for peer-to-peer cash. As such, participants in those networks will have different priorities, with economic incentives being at the top of the list.

For rollups, the innovation of BitVM can bring them very close to actual Bitcoin L2s, with trust minimization at the core of their designs. Sure, rollups on Bitcoin will have a ton of challenges to overcome, but they are being built in the true spirit of Bitcoin cypherpunks. Teams leveraging zero-knowledge-proofs represent an invaluable opportunity for Bitcoin to increase its scalability while preserving privacy and cryptographic security.

The reason why it can be hard for critics to see value in these innovations is what we’re calling the “low fee rate bias.” For years now, bitcoin fees have been artificially low because its adoption has been slowed down by speculation and usage of off-chain exchanges to settle transactions. However, this bias will rapidly disappear once fees become unbearably high for most users. This is when the panic will hit, and when the limitations on the base chain will start to become obvious. When this moment happens, we expect sidechains and rollups to become immediate successes as users rush for the exits.

In his piece titled “The bridge race is on. Godspeed my friends,” Janusz from Bitcoin Layers correctly outlines that sidechains and rollups are now in a race — a race for dominance of all of the capturable capital either sitting in Bitcoin wallets or altcoin protocols.

“Thus, I’m at least concluding that, based on our research of sidechains and L2s, Bitcoin benefits from conversations related to improved bridging mechanisms. I believe that the most successful Bitcoin L2s, long-term, will either be supported by a variation of BitVM2, proposed opcode changes, or a combination of both. A takeaway I had from Nashville is that these systems may even be complimentary.”

The rise of sidechains is only a consequence of projects trying to front-run what is shaping up to be the biggest narrative for Bitcoin in the coming years. A new narrative that will be accompanied by billions of dollars in new capital is looking to find attractive opportunities within the most secured and largest digital asset — bitcoin.

Revolutions are messy, chaotic, and by definition, they tend to surprise the people who are the least expecting it. The L2 revolution on Bitcoin follows the same path. It might be hard to make sense of everything that has been happening, however, the direction of this revolution has never been clearer. We are heading for the next step in the journey toward hyperbitcoinization.

Sources:

1. https://bitcoinmagazine.com/technical/bitcoin-first-zk-rollup
2. https://www.alpenlabs.io/blog/snarknado-practical-round-efficient-snark-verifier-on-bitcoin
3. https://blog.bitlayer.org/BitVM_Bridge_Becomes_Practical/
4. https://www.bitcoinlayers.org/layers/bob
5. https://bitcointokens.wtf/
6. https://l2beat.com/scaling/summary?#layer2s
7. https://blog.velar.co/all-about-bitcoin-rollups
8. https://zerosync.org/#intro
9. https://zerosync.org/zerosync.pdf
10. https://app.gobob.xyz/fusion?tab=info
11. https://bitvm.org/bitvm_bridge.pdf

ZKB now allows clients to trade and hold Bitcoin and crypto through its mobile app, online banking, and traditional channels. The bank partnered with Deutsche Börse-owned Crypto Finance AG for brokerage services and developed its own custody solution.

The move reflects the country's openness to Bitcoin, and cements ZKB as one of the largest mainstream financial institutions to embrace Bitcoin. Switzerland has taken a relatively positive stance on Bitcoin and crypto, including the Swiss National Bank, revealing it held shares in MicroStrategy.

The launch comes as more major financial players adopt Bitcoin and crypto offerings amid Bitcoin's surge in legitimacy. In the U.S., the successful debut of Bitcoin ETFs has accelerated institutional adoption. ZKB's move may pressure other Swiss and European banks to provide Bitcoin services.

Banks worldwide, such as Hong Kong's Futu and Standard Chartered's Mox, have also recently launched Bitcoin and Bitcoin ETFs trading. This growing trend shows that traditional finance is increasingly embracing Bitcoin.

According to the FBI, the Democratic People's Republic of Korea (DPRK) has been conducting highly targeted social engineering attacks on employees within the decentralized finance (DeFi) and cryptocurrency industries. These attacks involve detailed pre-operational research and customized scenarios designed to exploit the victim's specific interests and connections.

"North Korean malicious cyber actors conducted research on a variety of targets connected to cryptocurrency exchange-traded funds (s) over the last several months," the FBI said. "This research included pre-operational preparations suggesting North Korean actors may attempt malicious cyber activities against companies associated with cryptocurrency ETFs or other cryptocurrency-related financial products."

The FBI emphasized that North Korean cyber actors are a persistent threat to organizations managing large quantities of cryptocurrency. Their tactics include impersonating trusted contacts, creating fake scenarios involving job offers or investments, and deploying malware through prolonged and convincing interactions with their targets.

The agency urged businesses in the cryptocurrency sector to adopt stringent security measures, including multi-factor authentication, limiting access to sensitive information, and verifying the identities of contacts through multiple channels. The FBI also recommended that companies with access to significant cryptocurrency holdings take extra precautions to safeguard their assets against these sophisticated cyber threats.

When Craig Raw talks, you listen.

His deep voice has a gravity to it, bolstering the urgency of the points he makes.

It’s like that voice in the back of your head that you hear when you’ve left too much bitcoin on an exchange for too long. Or that voice that persists when your bitcoin stash isn’t quite as secure as you know it could be.

It’s an uncompromised voice, constantly reminding you to follow best practices when it comes to storing and using your bitcoin.

Weeks after interviewing Raw — creator of let Sparrow Wallet, a free and open-source Bitcoin desktop wallet beloved by Bitcoin enthusiasts worldwide — for this piece, both the tone of his voice as well as what he shared with me in our interview are still fresh in my mind.

He’s concerned that the rhetoric around the importance of privacy and self-sovereignty as it pertains to Bitcoin is eroding and wants to remind you that both of these concepts are of the utmost importance as we move into an era where more and more bitcoin is KYC’d and/or held custodied within walled gardens (e.g., spot bitcoin ETFs).

So, if privacy and self-sovereignty mean something to you, please heed Raw’s words. Learn from the tips he shares, highlighted in this piece, as well from simply using and (carefully) experimenting with Sparrow Wallet.

If you choose not to, you may end up experiencing a certain pain, which, while it may be a good teacher, would otherwise have been avoidable.

PRIVACY

When it comes to storing and using your bitcoin privately, it’s important to start with the basics, according to Raw.

“The first thing is to try and understand what Bitcoin is — to try and understand the UTXO model,” Raw told Bitcoin Magazine.

“Try and understand the ways in which you can be more private without using any particular kinds of privacy tools,” he added.

He went on to provide two examples of how to do this:

Example 1: Don’t Reuse Addresses

“Address reuse is unnecessary and generally is [a] very, very poor [practice],” warned Raw. “It leads to transactions being correlated on-chain.”

Example 2: Don’t Use Rounded Amounts

“If you create a transaction and your amount is a round number, then there’s a change output and it’s very easy to see which is which,” he explained.

To expand on what Raw means in this second example, when you spend an uneven amount of bitcoin (e.g., 0.0010126 BTC), it’s more difficult for someone watching the blockchain to decipher which UTXO is the payment and which is the change. This makes it more challenging for the observer to follow your UTXO into the future.

The inverse is true if you spend an even amount of bitcoin (e.g., 0.001 BTC). The observer can more easily intuit which UTXO is the payment and which is the change.

Both reusing addresses and using rounded amounts are “common pitfalls that people don’t necessarily consider,” said Raw.

In addition to employing these two practices, you can use Sparrow Wallet to further increase their privacy.

“Sparrow offers two forms of transactions,” explained Raw. “You can either use the efficiency form, which minimizes fees, or you can use the privacy form, which constructs what we call a ‘fake two person coinjoin.’”

Raw on Sparrow Wallet’s privacy form transactions:

“The privacy form is a more complex transaction where it looks like you could have two people bringing funds into a transaction and then two outputs of the same amount. Anyone looking at that is looking at a transaction with more entropy, with more confusion in it. Even if you know that it's a fake two-person coinjoin, you still have to follow both of those two outputs if you're trying to follow a change of ownership flow in that transaction graph. So, that's more expensive, but it's a useful way to be able to create a more private transaction.”

But what about those who don’t want to bother with UTXO management? Isn’t it just easier to use hardware wallet interfaces like Ledger Live or Trezor Suite that handle UTXO management for you?

Raw seemed unaffected as I played the role of devil’s advocate in posing these two questions. He made the case in his gravelly voice that users sacrifice privacy, or their funds, when they neglect UTXO management.

“You can't really abstract yourself away from the complexity of what Bitcoin is,” posited Raw. “If you want to transact on Bitcoin, you’re going to need to, at some stage, be aware of what you're doing. Otherwise, you’re likely to lose your funds or destroy whatever privacy you have.”

He went on to share that wallets with simplistic interfaces that display your Bitcoin balance as if it were a bank account balance are doing a disservice to the user.

“The wallet is handling a lot of the detail for you underneath,” shared Raw. “And it simply doesn’t know — it cannot know — the right decisions to make.”

Raw then contextualized this statement, highlighting the fact that certain wallets don’t know the right decisions to make IF you’re looking to preserve privacy in your transactions.

“If you received some funds from somewhere and then you spent those funds somewhere else, you are creating a cryptographic link on the chain which anyone can see,” he explained. “If somebody knows the identity of either of those two sides, they can start to link things up. That is a dangerous thing that I don't think people are aware of.”

He likened this scenario to all of your text messages suddenly becoming public — with your name linked to them.

“It’s like if we all had our chat apps and everybody could see everything everyone said and associate an identity to it,” Raw explained. “What we're talking about is the same thing, but on a financial level.”

Raw doesn’t think most Bitcoin users are ready for this level of transparency.

He believes people should consider whether or not they’re comfortable with publicly broadcasting information that can lead others inferring what they earn or with whom they transact. If they’re not, then they might consider taking UTXO management more seriously with the help of Sparrow Wallet, which displays users’ UTXOs by default instead of hiding them.

“Sparrow is trying to give users an ability to understand what it is that they are doing, to be more safe in their transactions from a security and privacy point of view by giving them the information that they need in order to be able to manage that kind of thing.”

One of the most refreshing things about Raw is that he doesn’t underestimate Bitcoin users. He seems to think of them as both capable and willing to learn, which is, in part, driven by the fact that we all value our privacy — whether we’re conscious of it or not.

“Even those who say, ‘I don't need to be private’ [might change their mind] if they just spent a moment considering that they wouldn’t like their bank accounts or their email inbox and so forth to be open to everyone in the world. And that is effectively what we have with an open blockchain,” explained Raw.

“I don't think it is nearly well understood enough, even amongst Bitcoiners, exactly how open and transparent the blockchain is,” he added.

“They may not have privacy from their bank or their government today, but they certainly have privacy from other individuals.”

THE THREAT TO PRIVACY

While neglecting UTXO management is a threat to privacy, it’s not the threat to privacy, according to Raw. The threat, said Raw, is the ability — and desire — of Bitcoin users to self-custody their bitcoin.

To illustrate how dangerous giving up custody of your bitcoin is, Raw provided a theoretical example of what relinquishing self-custody would look like if taken to the extreme:

“Let’s say we have one bank in the world and that bank says, ‘Give me your bitcoin and I will give you an IOU.’ In that situation where everyone transfers their bitcoin over to that bank and the bank issues IOUs, the bank effectively has carte blanche to issue as many IOUs as they want. We’re effectively then back in the fiat world, even if we have bitcoin. I think that that's the biggest risk that Bitcoin faces today — the desire for people to self-custody the funds that they have.”

Does this mean that if you use a custodial bitcoin platform for even a second, you’ve betrayed a core Bitcoin tenet and should be excommunicated from the Church of Bitcoin Maximalism?

No.

At least not in Raw’s estimation.

“I think we just need to be very careful about relinquishing too many of those original ideals,” said Raw about ideals like oft-cited ‘not your keys, not your coins.’”

At the same time, Raw believes that “Bitcoin doesn’t exist in a vacuum” and that it’s the “product of the environment in which we live today.”

He shared that Wallet of Satoshi, a custodial Bitcoin Lightning wallet, has been a useful tool for the Bitcoin Ekasi project — a circular Bitcoin economy based in Raw’s home country of South Africa.

While Raw admitted that Wallet of Satoshi is “obviously not ideal from a self-custody point of view,” he also shared that “it does nevertheless get people used to [using bitcoin], and there’s something powerful about that.”

Raw seemed less concerned with the idea that people would use Wallet of Satoshi for small, everyday transactions and more concerned with the idea that many stop after downloading and using a custodial app like Wallet of Satoshi and don’t get around to learning about self-custody.

Like many of us who’ve tried to onboard friends and loved ones to Bitcoin, stressing to them the importance of holding one’s own keys, Raw gets that many unfortunately still don’t get it, partially because many have yet to feel the pronounced sting of currency debasement.

“We clearly get the pushback of ‘Why should I care? Why should this matter to me?,’” said Raw.

The idea of having to exit the traditional monetary or financial system in efforts to preserve your wealth “doesn't seem very real” to many around the world, he argued.

But for those who’ve lived in highly inflationary environments, learning how to properly use bitcoin isn’t a cognitive exercise — it’s something they resort to instinctively.

“If your currency gets devalued by 25% overnight, then it really does become quite material to you to think ‘How do I protect myself against this?,’ Raw added.

This is why Raw advises people to learn best practices when it comes to using Bitcoin before they’re thrown into a scenario in which they have to start using it. He makes this case despite the fact that he understands quite well that the greatest Bitcoin teacher is not a person or a certain class, but a feeling that we all often do our best to avoid: pain.

PAIN

“Maybe they start with the Wallet of Satoshi, and maybe, if the worst comes to worst, that particular service goes away,” theorized Raw.

“They lose their funds, they have a painful lesson, and then they look for something better in future. I'm sure you are familiar with that journey. [Author’s note: Of course I am.] Many of the people I'm sure you have spoken to have lost funds and have learned painful lessons along the way [Author’s note: Of course they are. Many have told me this directly.],” he added.

“What’s interesting, I find, is they often don't walk away for good. They come back; they try again. They try with those learnings that they've managed to gain.”

So, does Raw wish this pain on people? I didn’t get that impression.

He’s not cruel; he’s concerned.

He also comes off as more of a realist than an idealist.

And he thinks that pain will not only compel people to be more careful about how they store the private keys but about how private they keep their transactions, as well.

“We don't have nearly enough focus on public opinion behind privacy, and I think the only way we're going to get there is, as is often said in the space, from people touching the stove,” said Raw.

“We need that collective pain — unfortunately. I wish it weren't so, but unfortunately, I think it is necessary in order for people to take the idea of privacy seriously,” he added.

Raw went on to share that he believes that collective pain is coming and that it’s likely necessary for us as a society to truly recognize just how much we value privacy — a cornerstone of civil society.

“Without the ability to be private, we cannot have a free society. It is simply not possible,” deadpanned Raw. “So, if people want to be free, and I believe that, in general, that is true, then they will need to realize at some point that they need this concept of privacy and the ability to have it in their own lives in order to achieve that goal.”

The good news is that while this wave of collective pain may wash over society, you can do something to insulate yourself from it. You can download Sparrow Wallet after you finish reading this article and begin to work through some of the discomfort that comes with learning to use new technology — which will likely be less painful than having your financial information doxxed.

The Less Painful Path

Luckily for us, Raw designed Sparrow to be intuitive, leading more curious users down a path that educates them if they’re willing to spend some time tinkering with the software.

“Sparrow was always designed to be not just a Bitcoin wallet but an educator, as well,” explained Raw.

“That's why I've tried to put as much detail as I can into it. I designed it in a way, and I hope I've got this right, that gradually reveals information to people who want to dig deeper into things,” he added.

“You can use Sparrow in a fairly light way, and you should when you're just getting into it. But, as time goes on, there's no harm in clicking or hovering over things, reading the tool tips, and trying to understand more about what you're doing.”

What’s perhaps most remarkable about what Raw has built is that he’s created it and given it to the world for free. Raw doesn’t monetize Sparrow Wallet. As mentioned earlier, it’s free and open-source software that he continues to iterate upon for no reason other than he “believe[s] that it has some value.”

For someone who realizes just how much is at stake in a world where the powers that be are trying their best to trap us in a panopticon, Raw’s work keeps him optimistic.

“Ultimately it comes down to, for me, the simple idea that Bitcoin is hope,” Raw concluded, with his stern voice softened for just a moment.

“What is hope? Hope is the idea that tomorrow can be better than today, that one can look forward to something. Bitcoin represents that. That's why it’s the key driving force above everything else to me.”

Download Sparrow Wallet: https://sparrowwallet.com/download/

Questions From The Plebs:

The following questions were crowdsourced from X.

Will you ever create a Sparrow mobile app?

The desktop computer is the most capable device that many people have when they are looking to do self-custody of their funds. That's really what Sparrow is for.

When it comes to the real important self-custody operations, you want to use the most capable device that you own. It gives you the most screen real estate to display the full context of what you're trying to do.

There's a limitation on mobile devices, which is natural just due to the size of the screen. You can see the obvious difference if you are using a mobile app versus using something like Sparrow. There's a big difference in terms of the amount of information that you can show. So, for me, it was natural to want to focus on the desktop.

I think that there are pros and cons in terms of security on both. Personally, I believe that the desktop can be made a more secure device than the phone. Again, I recognize that there are certain times when that isn't true, but in general, I think it's true. That's the most important thing.

The decisions you make at the start of a project echo throughout its life. It's really important to make good architectural decisions at the very start because that will inform everything further down the road.

Is using ecash created from protocols like Cashu and Fedimint a good way to preserve transaction privacy?

It's too early to say. If you're talking about a project that hasn't really even reached a meaningful production level yet, it's just really too early to say. They haven't been put to the test.

They’re certainly interesting. I think really from a technological point of view, there's a lot of positive things to be said, but from an actual implementation and a regulatory point of view, they haven't been put to the test yet. We'll just have to see.

I will obviously keep an eye on all of those things, but I think people should treat any new technology with a great deal of caution before they trust any significant amount of funds to it.

Will you ever integrate Lightning into Sparrow Wallet?

The best I can say is not at this time. I'm really focused on the ideal of financial self-sovereignty and that's really, at this stage anyway, on the sort of on-chain level.

Now, there might be a time in the future where, for example, fees are too high and it's not practical to do that anymore. We simply don't know the way that things are going to play out.

Right now, Sparrow is a desktop app. It's a client app. It's not designed to be a server. It's not designed to be run all the time.

If you’re trying to design something for Lightning, you very quickly run into this idea of needing to be online to receive funds. As soon as you start to work with that requirement, you get into a lot of complexity around “Am I online? What happens if I’m not online? Do I then need a third party involved?”

As I said, the decisions you make at the start of a project echo through its life. Sparrow is good at what it does. It's an app that is designed for self-custody, for cold storage, and the important thing about cold storage is that it should be cold. You shouldn't be necessarily running your cold storage wallet open on Sparrow all the time. That wallet should be closed, and you should be able to close Sparrow, as well.

So, as soon as you start to move away from those key goals, you're trying to find some kind of compromise, and that needs to be treated with a lot of caution because it's a different thing than what I'm building today.

Founders: Julian Liniger and Adem Bilican

Date Founded: July 2020

Location of Headquarters: Zurich, Switzerland

Amount of Bitcoin Held in Treasury: One-third of Relai’s treasury

Number of Employees: 30

Website: https://relai.app/

Public or Private? Private

Julian Liniger is on a mission to give more Europeans exposure to Bitcoin — despite regulatory bodies making it more difficult for Bitcoin businesses like the company he co-founded, Relai, to operate on the continent.

Liniger, a clean-cut Swiss entrepreneur who was one of Forbes’ 30 Under 30 in 2022, believes that there is much work to be done in bringing bitcoin to Europeans, even if new regulatory regimes like Markets in Crypto-Assets Regulation (MiCA) create more red tape around serving EU and UK citizens.

“We are working to make Bitcoin more accessible, easier to use and easier to buy for normal people,” Liniger told Bitcoin Magazine.

“We're mainly targeting newcomers — the 90% of the people that don't have easy access to bitcoin yet or that just haven't tried yet because they were also not educated yet. In Europe, around 8% to 10% of people have bitcoin and 90% still don't,” he added.

To reach this 90%, Liniger and the team at Relai have had to obtain the proper licenses and follow certain regulatory procedures, like requiring that customers complete Know Your Customer (KYC) procedures in order to use the app. Keeping Relai compliant is a tedious process, but Liniger, Libertarian-minded yet pragmatic, sees it as a necessary evil.

“I try to build the best company and onboard as many people as possible to Bitcoin in the most Bitcoiner way possible, which is certainly self-custodial and Bitcoin only, but we also need to stay in the realm of what is legal,” Liniger explained.

“So, we adhere to these regulations, whether I as an individual like it or not. As a business person, I need to make these decisions,” he added.

Wise words from someone who’s no stranger to taking the hard road.

The Road To Relai

Liniger was first introduced to bitcoin and cryptocurrency in 2015 and quickly went down the broader crypto rabbit hole.

In his early 20s, he watched bitcoin’s price skyrocket from $1,000 to $20,000 and experienced the Ethereum ICO boom from up close as he spent a portion of 2017 in San Francisco, then a hotbed for crypto developer activity, on an exchange semester while pursuing his master’s degree in business administration (MBA).

Upon returning home to Switzerland in 2018, he turned down a well-paid consulting job in the world of traditional finance and instead founded Bravis, a crypto consulting firm. During this time, he helped banks prepare to offer Bitcoin services.

“[We] helped them to position strategically in this new world and also to conceptualize some products, like actually starting to offer Bitcoin custody, trading, etc., which was inconceivable back then,” said Liniger. “Now, a lot of Swiss banks are doing it.”

By 2019, Liniger’s entrepreneurial drive had kicked into a new gear. He wanted to build something bigger than a consulting firm. This urge coincided with his personally adopting a bitcoin-not-crypto investment thesis and realizing that no app in the Swiss or broader European market allowed users to buy, non-custodially hold, and use bitcoin (all of which Relai does).

That same year, Liniger and his soon-to-be co-founder at Relai, Adem Bilican, participated in a hackathon and made it into the finals with their concept for the company. By 2020, the two had built a prototype and had raised money from two angel investors. By summer of that year, the Relai app went live with the intention of first providing access to bitcoin and then offering other crypto assets.

The Bitcoin community didn’t like the latter notion, though.

Bitcoin Only

Liniger recalled introducing Relai’s promo phrase “easy crypto investing” and the instant backlash it drew from Bitcoiners.

“They were like ‘Why crypto? Just stick to Bitcoin and make it really great,’” said Liniger, adding that Relai’s users urged him and his partner to simply make the app as easy-to-use as possible and to incorporate then-new Bitcoin technology like Lightning, both of which Relai have done.

Liniger, who’d first conceptualized Relai as a Bitcoin-first crypto app, made the decision to make it a Bitcoin-only app.

“[I thought] it wouldn’t hurt to also have a couple other [cryptos],” recalled Liniger.

“But then I realized it actually would hurt. All the other [cryptos] don't make sense in the long run if you want to be a savings app. Bitcoin is a savings technology; it's digital gold,” he added, noting that other crypto assets neither purport to be or act as a store of value.

Liniger also noted that by 2020, both Bitcoin-only venture capital firms and more Bitcoin-only companies were beginning to arise, and he felt that Relai could be a part of this trend.

“We had River in the US, Bull Bitcoin in Canada, etc, and we were thinking we could be the leader of this category in Europe,” said Liniger.

Developing A European User Base

Based in Switzerland, Liniger and the Relai team had a leg up on the rest of Europe, as regulations in Switzerland are a bit more relaxed than those in the European Union. Liniger, however, did not want to just serve Swiss citizens for two reasons.

The first is that the percentage of Swiss citizens that own bitcoin is closer to 20%, according to Liniger, as compared to the 10% or so of Europeans from other countries. There’s less of a market for those who are new to Bitcoin to go after in Switzerland as compared to those living in the EU and UK.

The second reason is that Switzerland’s population is about 8.7 million, whereas the total population of the EU plus UK is over 500 million.

In the past four years, Relai has acquired 120,000 users across the continent and Liniger says the growth curve is accelerating even as the company faces certain regulatory impediments.

“We are not currently allowed to actively acquire users in the EU for regulatory reasons,” explained Liniger. “We can do active marketing tactics in Switzerland, but not in all the EU countries.”

Even in the absence of marketing, Relai continues to grow its user base, especially in Germany, Italy and France.

The number of Relai users in these countries will likely continue to grow rapidly as the company is in the process of obtaining licensing from France that will allow the company to advertise to EU customers.

“Probably by the end of this year, we will get the French license approval,” said Liniger. “Then, at the beginning of next year, there's going to be MiCA and this [French license] is going to transition into a MiCA license, which will then allow us to actively acquire customers in all the EU.”

Once this happens, Liniger believes that upwards of 90% of bitcoin purchases in the EU and UK will happen via Relai.

The Cost Of Compliance

While Liniger, notably calm and level-headed, talks about the process of overcoming regulatory hurdles, one can’t help but imagine how frustrating the process has been for him and his team.

He stated that regulatory bodies and requirements have become significantly more intrusive for not only startups like Relai, but established financial institutions, as well.

“I heard stories from our CFO who used to work at ING, a huge bank, four or five years ago,” shared Liniger. “He was in one of these risk management compliance departments, which, when he joined, was like three or four people and the team has 10x’d in the four or five years since.”

Liniger went on to explain that many of Relai’s peers have up to a third of their team focused on regulatory compliance.

While he’s hopeful that the likes of Coinbase and Kraken fighting the US Securities and Exchange Commission (SEC) in court will set some sort of precedent that will get regulators to back off, he doesn’t see the trend of regulatory overreach reversing just yet, which seems slightly worrisome to him.

“We don't have these resources at all,” said Liniger, comparing Relai’s funds to the type of money that Coinbase and Kraken have in their coffers to fight regulators in court.

This is part of the reason Relai didn’t fight back in court when regulators told them they had to KYC all of their customers.

KYC Required, But Do Not Despair

Relai recently announced that all users would have to provide their personal information by October 31, 2024 to continue using the app, after four years of being able to offer services without requiring users to do so.

“We were just basically forced to by the EU regulators and, increasingly, also from the Swiss regulators,” said Liniger in regard to having to make customers complete the KYC process. “The EU is pressuring Switzerland.”

While Liniger didn’t sound particularly happy about this, he also didn’t sound defeated. Instead, he seemed as focused as ever on his mission to bring bitcoin to the 90% of EU and UK citizens who still don’t have any.

“50% plus of the people will want some access to Bitcoin just because it’s a savings technology,” explained Liniger, which means he still has about 200 million customers (a 170x of Relai’s current users base) to reach in the broader jurisdiction Relai serves.

Admittedly, he knows some of these potential customers will opt to buy bitcoin or bitcoin ETFs that major financial institutions custody for them instead of using Relai, though he believes that the youth, who are more distrusting of established financial institutions, will opt to use Relai.

“The more progressive younger people will want to take custody themselves,” explained Liniger. “They will use something like Relai where they can buy directly into self custody and set up a savings plan, using it as a sovereign way of saving their money and their purchasing power into the future.”

It bothered me to see people associated with this company taking such a one-sided stand with the Republican Party, despite the reality that in fact many more Republican politicians support Bitcoin compared to Democrats. The Republican Party even formally integrated Bitcoin into their public policy platform at the convention. The Democrats have not.

That is not to say that no Democrats support Bitcoin. At the national level Representative Ro Khanna from California, Ritchie Torres from New York, and Senator Kirsten Gillibrand also from New York have been vocal supporters of Bitcoin in Congress. These politicians exist, they are vocal, but they do not seem to have the same resonance with the rest of the party or their voting base that exists in the Republican Party.

During the first day that I attended, Bitcoin was not mentioned a single time. It wasn’t a very prominent topic at the RNC, but it was mentioned. It was included in the party policy platform. No such inclusion took place at the DNC. The focus of the first day was on the coming election, Kamala versus Trump.

I do have to say that not much of the discussion centered around policy. It was mostly rhetorical, and focused on general issues concerning Democratic voters, interspersed with the type of rah-rah language one would expect at an event focused on candidate selection for the Democrat party this election cycle.

While no policies explicitly were touched on, many of the issues that Democrats find important were. Minority inclusion, women’s rights, well paying jobs and union security, healthcare (especially as it relates to Covid which is still circulating even though people don’t place the same focus on it), and the perceived attempt by Republicans to roll back progress from the point of view of Democrats on many of these issues.

A number of union leaders spoke either in person or with recorded messages during the convention’s first day, the Arizona Pipefitters and Pumbers Union, the Communications Workers of America Union (CWA), International Brotherhood of Electrical Workers (IBEW), the American Federation of State, County, and Munipical Employees (AFSCME). All of them had much to say on the topic of lost jobs during Covid, and the recovery of jobs that took place under the Biden Administration. Another big issue was union pension funds. Union jobs are generally sought, and coveted, due to the benefits and retirement security that comes along with them, not simply the good base pay.

Is anything standing out to you? Maybe the fact that Bitcoin actually can synergize and help advance these goals that Democrats seem to care about?

Bitcoin can absolutely help minorities suffering economically, at least over long time horizons. Ignoring the aberration of this current market cycle, people holding bitcoin over long time periods have absolutely benefited from increased purchasing power. While obviously it takes money to make money, and people starting with less will realize less in terms of appreciation, anyone with money to save has historically in the long term wound up with more purchasing power. This won’t help people in poverty as much as those with a large surplus of money to invest, but it will help.

Bitcoin can also assist women in maintaining access to healthcare that is increasingly being banned in parts of the US. Financial institutions have increasingly been censoring financial transactions deemed troublesome culturally, despite their legal status. There is no reason to assume that this activity will continue only affecting people on the right side of the political spectrum. Bitcoin is an alternative to traditional financial institutions. And I shouldn’t need to tell people that it can function even for services that are outright deemed illegal.

Pension funds for workers have also recently started taking conservative exposure to bitcoin, which again looking at historical long term performance can be a huge benefit to solvency issues in the long term facing pensions all over the country.

Bitcoin can even be a massive boon to renewable energy, something liberals care very deeply about as it relates to mitigating the consequences of global climate change and maintaining our natural environment. Bitcoin miners are in a very unique position, with AI operators only recently starting to fill a similar niche, to be buyers of stranded renewable energy before it becomes connected to the grid. This allows revenue the instant these projects are finished, rather than having to wait to be connected to retail energy consumers on the grid.

That is to say nothing about the general open access nature of Bitcoin, and how it can advance the philosophy of freedom and inclusion globally by providing people with an option in the face of fighting and resisting totalitarian regimes worldwide. Bitcoin is a natural fit for many of the proclaimed beliefs and principles of Democrats.

So why is there no attention from the Party at large? Why is there no mention or inclusion in their policy platform similar to Republicans?

It’s the base. The recent American Bitcoin Survey by the Nakamoto Project showed us that bitcoin ownership is a bipartisan thing, that it is not concentrated on the right as is generally perceived in the public. So why does that perception continue to exist? Narratives. Stories. Messaging. The reason the Democratic Party does not care as widely about Bitcoin as a policy issue isn’t because Democrats and liberals don’t use it or hold it, it is because of the wider narratives. The perception is that Bitcoin is a rightwing thing. The associations made between Bitcoin and important issues come across as rightwing.

Democratic politicians at large are not going to care about Bitcoin in terms of policy, and cater to Bitcoiners with positive policy, unless those narratives and associations change. This is the reality of politics, politicians cater to their voters. They do not generally take forward thinking initiatives on their own unless they see some benefit in terms of positive voter reaction and perception towards that initiative. This is politics.

Shouting at politicians won’t change that, demonizing them for apathetic or negative reactionary responses to the perception of it being rightwing in a polarized political climate won’t change that. You need to reach the voting base. That is the only thing that will cause a change in attitude and action on the part of Democratic politicians. People who are on the left need to be shown that Bitcoin is something that aligns with and can advance their political goals and agendas, the same way that wider perception has been propagated on the right.

It will definitely be an uphill battle given the baggage of past and existing perception, but this is the only way that the increasingly cemented perception of Bitcoin being a rightwing thing can be pushed back against. Without concerted effort to demonstrate and build narratives showing left leaning people that Bitcoin can, and does, align with their values, Bitcoin is doomed to be forced into a left/right partisan paradigm. 

A higher hash rate reflects more computational resources spent processing transactions and mining new Bitcoin. This is despite Bitcoin sliding over 10% this week, which highlights the disconnect between network fundamentals and short-term pricing.

Leading mining companies such as Whatsminer and MicroBT are launching advanced machines to take advantage of the surge in hash rate. Whatsminer has introduced four new mining rigs and a forthcoming solar-powered mining container system. Meanwhile, MicroBT has rolled out its M6XS+ miners, capable of processing between 190 and 450 terahash.

Riot Platforms also purchased Block Mining for $92.5 million to enhance its hash rate and broaden its market presence. Additionally, miners are looking into AI integration and potential acquisition opportunities to address persistent identity challenges in the industry.

Bitcoin's rising hash rate indicates strong confidence in its long-term sustainability. With significant advancements in mining technology and supportive political conditions enhancing profits, miners are rapidly expanding their infrastructure to handle transactions and secure the Bitcoin network.

While the hash rate doesn't directly influence Bitcoin's price, it reinforces the underlying network security. Hashrate milestones also tend to precede bullish market moves and Bitcoin's halving events.

All quotes are attributed to the book “Wobblies: A Graphic History of The Industrial Workers of the World (Buhle/Schulman.

Origins and Genesis

“No one can say exactly where the inspiration for the IWW came from. The origins are too numerous both in the U.S. and abroad…”

Similarly, the nickname of the Wobblies, has no clear origin. Naturally, some of the mythology around Bitcoin comes to mind, and while Bitcoin’s origins are clearly documented via white paper and email communications, its creator or creators is or are shrouded in mystery. As Bitcoin caught gained popularity, its growth was decentralized and organic. In another parallel, while the IWW and American Labor Movement had prior inspirations, it was a pioneer in the sense of organizing labor across ethnic, gender, religious and other demographic differences.

“After the Civil War, massive industry grew up faster than anyone could have imagined, with previously unthinkable wealth accruing to the bankers but with millions of desperately poor working people, employed at low wages or unemployed in the frequent economic recessions”

From the financial crisis, to post-covid wealth accumulation within the ranks of billionaires, to a current AI, robotics and self-automation boom underway, this story is all too familiar. However, recessions have been all but outlawed, replaced by government intervention, currently placing systems as large as Pensions and Social Security on the equivilant of government welfare and dependence.

Wobblies and Bitcoiners

“The Wobbly, male or female, Asian or Occidental, black, brown, red or white, was only an ordinary human being in physique”

We feel the same about Bitcoiners. We have all met some of the most inspiring people in our lives in this space. It is both the character, grit and determination that allows individuals to discover and understand Bitcoin, as well as the character building journey a Bitcoiner must take to fully grasp Bitcoin and share it with a world that rounds out what many of us believe is the most talented and motivated communities in the world.

“Their story was collaborative, collective, not reliant on any one hero or heroine-as heroic (or tragic) as individual Wobblies lives might be.”

Kill your heroes. Death to Ego. Bitcoin doesn't need any of us.

Solidarity: A movement greater than the individual

“The world of the Wobblies was one realized in its best moments by solidarity across race, ethnic, gender and nationality lines”

The beauty of Bitcoin is it requires no trust between those who transact with each other. And in doing such, Bitcoin allows humans to deconstruct the daily head to toe analysis we perform on each other daily; an analysis that instinctually calls out our differences, with roots in paranoia and fear. While blind solidarity amongst Bitcoiners is the antithesis of “dont trust, verify,” there is a strong natural bond between Bitcoiners. I believe the future of Bitcoin, when facing its largest tests ahead, will very much depend upon a deepened solidarity between those who subscribe to Bitcoin’s Genesis, core values, and blind commitment to being honest, true and trustless.

AFL vs. Knights of Labor

“The earliest mass movement for an eight hour workday during 1885-86, highlighted the different roles of two kinds of labor movements. The American Federation of Labor, founded in 1883, sought to organize skilled workers (almost entirely white and male) only…whereas the Knights of Labor, founded in 1869 as a secret society..extended its membership to almost all workers (except Chinese), including African-Americans and women.”

The AFL and its exclusive country club brand of membership outlasted the ultimate demise of the Knights of Labor and still exists today as the AFL-CIO. In reading about the different philosophies of the AFL and Knights of Labor it brings up parallels within the Bitcoin community, frequently heard criticisms of Bitcoin Maxi’s, as well as Bitcoin v. Crypto. I leave you the reader to draw your own thoughts here, as parallels are in their nature loose affiliations at best.

The Movement

“In the industrially advanced United States, the working class had been prepared ready to assume control of society and to replace “politics” and the “State” with a government of direct rule. As Marx had pointed out about the Paris Commune (and Lenin would repeat for the Soviets), the existing government apparatus could not be infiltrated and taken over piece-meal; it had to be dissolved and repalced by a truly democratic, modern form of government”

There are two camps of thought in Bitcoin, one that calls for a full collapse of the current financial system, and migration to a Bitcoin Standard, and another that insists Bitcoin can co-exist with and even surpass the current financial system without the latters' collapse. While money is not identical to government in this parallel, the amount in which money is entrenched in the legacy financial system, is prodigious, and this always sparks interesting debate between Bitcoiners.

“For the IWW..the familiar problem of the socialist movement being notoriously small in the US could be solved in a new way. ‘Educating’ workers into becoming socialists, through newspapers, speeches and election campaigns, was too passive and not very successful. Workers needed to educate themselves, in and through their own actions and self-organization.”

Some opposing parallels here. Immediately, I think of a core value of Bitcoiners, which is that, no one can walk this path for you. Proof of Work can not be sidestepped or bypassed. No individual or group can cheat the quest for knowledge, both about Bitcoin and the system it sits poised to replace. The Bitcoin journeys of individuals and membership-based orgs, absent continuous learning and education, often end up in loss or disappointment. Those who do the work, find that their knowledge of money blossoms, and few if any have ever turned back after coming to deeply understand Bitcoin.

Simultaneously, my mind shifts to the oligarchy’s attempts at no less than a 10 year negative media blitz on all things Bitcoin. It slowed the train but it did not work. The other day, I randomly asked people at the 3rd Street promenade in Santa Monica, to share their thoughts on Bitcoin. Overwhelmingly positive, and having some foundation in accuracy. The movement to dissuade people from finding Bitcoin was a delay of the inevitable at best. Because nothing can stop an idea whose time has come.

Conclusions

On this labor day, I gaze upon the deeply polarized two party political system of the dominant world power today. And as I see labor unions align with one party, at the expense of creating division within their ranks, I see a labor movement that has drifted from its original foundation. While the IWW rose and fell, its pinnacle represented an unwavering movement, a solidarity and commitment to the worker above everything else. And there is power in that. I see parallels today in Bitcoin.

The core principles of Bitcoin transcend our differences and are worth fighting for. At Proof of Workforce, our method of fighting for these values is through education-based Bitcoin adoption for workers, unions, pension funds and municipalities. And in doing so, we are sharing not just bitcoin the asset, or Bitcoin the Network, we are communicating the Genesis of Bitcoin and its values, so that they may not be lost in the progression of time.

Finally, Bitcoin is a natural evolution of the labor movement, sharing many similarities and parallels. However, unlike the labor movement, the worker can rely on Bitcoin, absent any allegiance to any political party, leader or oligarchy. And in this sense, Bitcoin and its system of values stands to be adopted by unions all over the world. And in doing so, unions around the world can become re-aligned to their Genesis Story. A story where solidarity comes above all, a story where workers come together to hold onto the very productive property dependent upon their labor. A story where, as many workers stand to be phased out of relevance due to automation and AI, the unions representing them look forward and claim ownership of the most accessible and promising productive property available to them today; Bitcoin.

This is a guest post by Dom Bei. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

First they ignore you, then they laugh at you, then they fight you, then you win.

The quote—commonly misattributed to Mahatma Gandhi—has been overused to the point of exhaustion in the Bitcoin space, typically invoking the suggestion that the laughing stage is over. In most of these cases, the insinuation that the fighting stage has begun was overblown, however; perhaps inspired by little more than a comment from some politician or finance professional.

But on April 24 of this year, the quote finally rang true.

On that day, the US Department of Justice (DoJ), via the District Court of the Southern District of New York, announced the indictment of Samourai Wallet co-founders Keonne Rodriguez and William Hill. Rodriguez, Samourai Wallet’s CEO who pseudonymously operated the @SamouraiWallet handle on Twitter/X, was arrested early that morning in his home state of Pennsylvania. Hill (AKA TDev, or @SamouraiDev on Twitter), meanwhile, was arrested in Lisbon, Portugal, where he resided; at the time of writing this article, the DoJ intends to extradite him to the US.

Both of them are accused of running an unlicensed money transmitter, and earning millions of dollars in fees doing so. For this, Rodriguez and Hill each face a maximum prison sentence of five years.

On top of that, the duo was charged with money laundering as well. According to the DoJ, Samourai Wallet was used to launder over $100 million dollars of crime proceeds from dark net markets, fraudulent schemes and other illicit activities. This could add a whopping maximum 20 years to their sentence.

Samourai Wallet’s web servers and domain (samourai.io) were also seized, rendering the wallet largely unusable. (Though users could still recover their bitcoin through other wallets, using their backup seeds.)

Around the same time as the Samourai Wallet developers’ arrests, the FBI issued a public warning to cryptocurrency users, stating that they may lose their funds due to criminal seizures if they don’t move their holdings to regulated entities. Although Samourai Wallet was not mentioned by the agency, the timing of the note suggests the warning was no coincidence.

Together, it seemed to represent a step change for Bitcoin and Bitcoin development.

Bitcoin Privacy

Bitcoin comes from a long tradition of privacy activism. In a world where money is increasingly going digital, Cypherpunks have since the 1990s attempted to create a form of electronic cash in order to prevent an Orwellian future where every transaction can be monitored and potentially censored. Similarly, Douglas Jackson around the turn of the millennium offered a gold-backed digital payment system with privacy features called eGold, which eventually had to shut down operations because Jackson did not register his company as a money transmitter.

eGold required a money transmitter license because it held gold in reserve on behalf of its users, but it has since then generally been assumed that creators of non-custodial wallet software did not qualify as money transmitters. As long as developers never took control of user funds themselves, they did not need to register with the United States Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), and therefore also wouldn’t need to apply anti-money laundering (AML) and Know Your Customer (KYC) checks on their users— or so it was thought.

Crucially, this assumption was in large part based on guidance from FinCEN itself, published in 2013.

By extension, many presumed that developers wouldn’t be held accountable for how their software is used. If non-custodial Bitcoin wallets are used to launder money, those engaged in the activity itself would be breaking the law, but it was generally not believed to be the responsibility of the creators of these wallets to prevent this from happening in the first place.

Samourai Wallet was, indeed, a non-custodial wallet. Users stored their own private keys in their wallet software, so Rodriguez or Hill at no point controlled these bitcoin. By default, the Samourai Wallet application did communicate with a central server to send and receive transactions, but even this could be sidestepped by connecting to the Samourai Dojo: a personal, internet-connected device that embedded a Bitcoin node.

Importantly, Samourai Wallet was marketed as a privacy wallet, and its main privacy feature—Whirlpool—did fully depend on the Samourai server. Specifically, Samourai Wallet users could, coordinated through this central server, collaborate to make CoinJoin transactions. In groups of five, users would contribute an equal amount of bitcoin (for example 0.01 BTC) to a transaction, which sent back the same amount to each of them.

Because there is no way to link specific transaction inputs to specific transaction outputs, this essentially “mixed” their coins. Blockchain analysts would be unable to trace back the history of these coins, except to the extent that they’d know they must have come from one of these five inputs. Furthermore, Whirlpool users could opt to automatically repeat such mixes, even further obfuscating their transaction history.

In addition, Samourai Wallet offered a service called Ricochet. This enabled users to send bitcoin to newly generated addresses they controlled themselves multiple times, somewhat frustrating blockchain analysis as well. (Although this is possible with any Bitcoin wallet, Samourai Wallet automated the process.)

The allegation, as put forth by the DoJ, is that these tools were, indeed, used to launder money. What’s more, the federal department argues that the Samourai Wallet co-founders intended this to be the case. This accusation is largely based on public as well as private communication about their service, including some statements by Rodriguez and Hill on Twitter and in their pitch decks intended for investors, which mentioned that individuals who engaged in “illicit activity” on “restricted” or “dark/grey” markets would be among their user base.

Whether these statements truly indicate that Rodriguez and Hill intended their software to be used for illicit purposes—as opposed to it just being “tough marketing talk” from developers who ultimately wanted to offer financial privacy tools—will have to be proven in court.

And perhaps more importantly, the Samourai Wallet arrests challenge the long-standing assumption that developers don’t have to register as money transmitters and perform the associated AML and KYC checks.

Though, this assumption had already been put to question in a different corner of the cryptocurrency space…

Tornado Cash

In August 2022, the US Treasury’s Office of Foreign Assets Control (OFAC) added Tornado Cash, a smart contract on the Ethereum blockchain, to its OFAC list. It made interacting with the smart contract illegal under US law.

Later that same month, Alexey Pertsev was arrested by the Dutch police. In the years prior, Pertsev had, along with Roman Storm and Roman Semenov, founded and operated software development company PepperSec. Key to their efforts had been the development of Tornado Cash as well as supporting infrastructure.

As a smart contract, Tornado Cash technically functions autonomously. Although Pertsev helped develop the tool, it exists across thousands of Ethereum nodes around the world. After it was released, Pertsev had no way to control how it was used, or who used it. Anyone could send an amount of ETH to the smart contract, which—utilizing a cryptographic trick called zero-knowledge proofs—enabled them to withdraw that same amount from the smart contract, but to a different account. Here, too, there was no way to link the ETH going into Tornado Cash to the ETH going out, thus the smart contract essentially functioned as a “mixing” service.

To make this feature effective, PepperSec also developed supporting infrastructure, which in part relied on relayers: basically, Ethereum users could be tasked with paying the Tornado Cash fee, for which they in turn were rewarded TORN tokens. This aspect of the design—the relayers and the TORN tokens—centered around a different smart contract on the Ethereum blockchain, which technically was implemented as a decentralized autonomous organization (DAO).

In addition to that, PepperSec operated a service that offered an easily accessible graphical user interface (GUI) for the smart contract and its surrounding infrastructure.

Importantly, Tornado Cash as well as the supporting infrastructure was all non-custodial software. Pertsev, Storm and Semenov developed code, but they at no point controlled any of the ETH going into the smart contract. Although they couldn’t control how Tornado Cash could be used, it’s less obvious to what extent the same was true for the supporting infrastructure. (Like many things Ethereum, claims of “decentralization” were at least in part grounded in marketing more so than in technical reality.)

In either case, for the Dutch prosecutor, the fact that Pertsev and his colleagues never took custody of any ETH did not make much of a difference. In her view, PepperSec was de facto ran as a business, which—albeit indirectly through the TORN token—earned an income from Tornado Cash and the supporting infrastructure. She argued this made Pertsev responsible for how Tornado Cash was used, and by whom.

In particular, she pointed out, Tornado Cash had been used to launder well over a billion US dollars, for example by North Korean state-funded hackers known as the Lazarus Group. Pertsev knowingly facilitated this kind of activity through the software he developed, she argued, and did nothing to prevent it. He had to be held accountable.

And as it would soon turn out, it wasn’t just the Dutch prosecutor who held this belief. About a year after Pertsev’s arrest in the Netherlands, his PepperSec co-founders Storm and Semenov were indicted in the United States, with the former (who resided in the US) arrested. (Semenov does not live in the United States; at the time of writing this article his whereabouts are unknown, but he is likely in a country without an extradition treaty with the US.)

Much like Pertsev, both of them are charged with money laundering, as well as running an unlicensed money transmitter business and sanctions violations. Storm will stand trial in New York this September.

Chilling Effect

The various arrests quickly appeared to have a chilling effect on other Bitcoin developers.

Even before Pertsev’s arrest, Bitcoin privacy wallet Wasabi Wallet—Samourai Wallet’s main competitor—in March of 2022 decided to implement AML checks in their mixing software, and reject coins that were suspected to have been used for illicit activity. (Although Wasabi Wallet, like Tornado Cash and Samourai Wallet, was fully non-custodial, the company behind the wallet—zkSNACKs—coordinated CoinJoin mixes through a central server.)

This new policy was harshly criticized by—among others—the Samourai Wallet team and other privacy focused bitcoiners. Rodriguez and Hill loudly and proudly proclaimed that their mixing service was open for business to anyone, and on social media adopted a much more adversarial attitude towards regulators and their KYC/AML regime. Indeed, it was exactly this attitude that may have gotten them in legal trouble.

More recently, the Samourai Wallet arrests moved other Bitcoin developers to take additional precautions as well. Just one day after the indictment, Sparrow Wallet, which had been compatible with Samourai Wallet’s Whirlpool, for example released a new version of its software that disabled this feature. Shortly after, development company ACINQ announced that its Phoenix Wallet (a Lightning wallet) would be removed from US app stores, citing on Twitter that “[r]ecent announcements from US authorities cast a doubt on whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be considered Money Services Businesses and be regulated as such.”

And in what was arguably the biggest setback for privacy in Bitcoin’s short history, Wasabi Wallet soon after announced to discontinue its mixing service altogether. With Whirlpool already down, the other major CoinJoin coordinator would seize operations per June 1st of this year.

The First Verdict

Just weeks after the Samourai Wallet developers’ arrest and the events that unfolded immediately after, on May 14th of this year, it was time for Pertsev’s sentencing.

In the courthouse of ’s Hertogenbosch, a small city about an hour south of Amsterdam, the Tornado Cash developer received the bad news. The panel of judges essentially agreed with the prosecutor on all counts, and in some ways went even further than the prosecutor was willing to go. The judges ruled that Pertsev was fully responsible for how the smart contract was used; the fact that some of the code that PepperSec produced was “unstoppable”, was not considered a valid excuse.

“Tornado Cash functions in the way the defendant and its co-founders developed Tornado Cash,” they stated. “So the operation is completely their responsibility.”

Pertsev was sentenced to 64 months in Dutch prison— though he did file for appeal, which at the time of writing is pending.

The next Tornado Cash court case will take place in New York, where Pertsev’s PepperSec co-founder Storm will stand trial. While the Dutch verdict should technically not affect the outcome of the American proceedings, the case and sentencing in the Netherlands might offer an indication of what can be expected: the Dutch prosecutors shared many of their files with their American colleagues.

Meanwhile, the first hearing for Samourai Wallet’s Rodriguez took place in New York last May as well. He will be awaiting the full trial on home arrest in Pennsylvania.

Still, despite these significant setbacks for Bitcoin privacy, the prospects of bitcoin mixing are not altogether dead. Most obviously, all American trials are yet to take place. (And even if Rodriguez, Hill and/or Storm are found guilty, they, too, can appeal to higher courts.) Meanwhile, JoinMarket—a tool that lets users create CoinJoin transactions without a central coordinator—continues operations uninterrupted. And while Wasabi Wallet has taken its central coordinator offline, the wallet itself will still be maintained.

What’s more, alternative Wasabi Wallet coordinators have already started offering their services: while not operated by zkSNACKs, this enables users of the wallet to create CoinJoin transactions between them in much the same way. Because such coordinators can even be operated anonymously over Tor, future prosecution of such services may be even harder as well— regardless of the outcome of the upcoming trials.

The fighting stage, indeed, has begun— and the fight is far from over. Whether the adage will ring true, and the winning stage follows next, remains to be seen.

Institutional Accumulation

Institutional participation in Bitcoin has significantly increased in recent years, marked by substantial purchases from large companies and the introduction of Bitcoin Exchange-Traded Funds (ETFs) earlier this year.

Leading this movement is MicroStrategy, which alone holds over 1% of the total Bitcoin supply. Following MicroStrategy, other prominent players include Marathon Digital, Galaxy Digital, and even Tesla, with significant holdings also found in Canadian firms such as Hut 8 and Hive, as well as international companies like Nexon in Japan and Phoenix Digital Assets in the UK; all of which can be tracked via the new Treasury data charts available on site.

In total, these companies hold over 340,000 bitcoin. However, the real game-changer has been the introduction of Bitcoin ETFs. Since their inception, these financial instruments have attracted billions of dollars in investments, resulting in the accumulation of over 91,000 bitcoin in just a few months. Together, private companies and ETFs control around 1.24 million bitcoin, representing about 6.29% of all circulating bitcoin.

A Look at Bitcoin's Recent Price Movements

To understand the potential future impact of institutional investment, we can look at recent Bitcoin price movements since the approval of Bitcoin ETFs in January. At the time, Bitcoin was trading at around $46,000. Although the price dipped shortly after, a classic "buy the rumor, sell the news" scenario, the market quickly recovered, and within two months, Bitcoin's price had surged by approximately 60%.

This increase correlates with institutional investors' accumulation of Bitcoin through ETFs. If this pattern continues and institutions keep buying at the current or increased pace, we could witness a sustained bullish momentum in Bitcoin prices. The key factor here is the assumption that these institutional players are long-term holders, unlikely to sell off their assets anytime soon. This ongoing accumulation would reduce the liquid supply of Bitcoin, requiring less capital inflow to drive prices even higher.

The Money Multiplier Effect: Amplifying the Impact

The accumulation of assets by institutional players is significant. Its potential impact on the market is even more profound when you consider the money multiplier effect. The principle is straightforward: when a large portion of an asset's supply is removed from active circulation, such as the nearly 75% of supply that hasn’t moved in at least six months as outlined by the HODL Waves, the price of the remaining circulating supply can be more volatile. Each dollar invested has a magnified impact on the overall market cap.

For Bitcoin, with roughly 25% of its supply being liquid and actively traded, the money multiplier effect can be particularly potent. If we assume this illiquidity results in a $1 market inflow increase in the market cap by $4 (4x money multiplier), institutional ownership of 6.29% of all bitcoin could effectively influence around 25% of the circulating supply.

If institutions were to begin offloading their holdings, the market would likely experience a significant downturn. Especially as this would likely trigger retail holders to begin offloading their bitcoin too. Conversely, if these institutions continue to buy, the BTC price could surge dramatically, particularly if they maintain their positions as long-term holders. This dynamic underscores the double-edged nature of institutional involvement in Bitcoin, as it slowly then suddenly possesses a greater influence on the asset.

Conclusion

Institutional investment in Bitcoin has both positive and negative aspects. It brings legitimacy and capital that could drive Bitcoin prices to new heights, especially if these entities are committed long term. However, the concentration of Bitcoin in the hands of a few institutions could lead to heightened volatility and significant downside risk if these players decide to exit their positions.

For a more in-depth look into this topic, check out a recent YouTube video here:

Prior to Thursday's $13.5 million outflow, the last time the fund saw withdrawals was May 1st when $37 million was pulled out. That coincided with Bitcoin hitting a local low of $56,000.

The outflow comes as spot Bitcoin ETFs recorded a third straight day of withdrawals totalling $71.8 million on Thursday. Competing Bitcoin ETFs from Grayscale, Fidelity, Valkyrie and Bitwise also posted outflows ranging from $8 million to $31 million.

Meanwhile, ARK's Bitcoin ETF saw an inflow of $5.3 million, bucking the negative trend. The mixed flows highlight diverse investor outlooks amid Bitcoin's stagnation under $60,000. BlackRock's IBIT seeing an outflow for the first time in months is a notable development. It might indicate that the bottom is in like the last time, or this might be the start of more outflows. 

Nonetheless, BlackRock's Bitcoin ETF has still attracted a staggering over $20 billion in net inflows over its lifetime. It remains the dominant spot Bitcoin fund with over 350,000 BTC under management, making it one of the largest institutional Bitcoin holders.

Bitcoin mining is the process through which new bitcoins are introduced into circulation. It typically involves using powerful computers to solve complex mathematical problems, which verify and add transactions to the blockchain. In return, miners are rewarded with newly minted bitcoins, known as the block subsidy, along with transaction fees paid by users.

The miner’s accomplishment is significant, given the increasingly competitive landscape of Bitcoin mining, where large mining pools usually dominate. Solo miners face the challenge of competing against large, resource-rich mining pools; however, although rare, the rewards can be substantial, as demonstrated by this and many previous solo miners' successes.

"Congratulations to miner 36AisvWi1UiwLTeTZxLzindAkorqeUc3tT for solving the 291st solo block on solo.ckpool.org!" said Solo CK administrator, Dr. Con Kolivas. "This hefty miner with 38PH would solve a block on average once every ~4 months."

The achievement by this solo miner also serves as a reminder of the decentralized nature of Bitcoin, where anyone with the right resources can contribute to and benefit from the network.

Bitcoin finds itself yet again at another crossroad. On one side, the easy road, paved with Number Go Up, highly regulated ETF products, and surveillance state-endorsed stablecoins as the scaling solution for the next billion users. The other path is objectively more difficult to traverse, a darker way forward, despite the illuminating words of Eric Hughes and other pioneers in the field of open source cryptographic tooling.

On March 3, 1993, Hughes published A Cypherpunk’s Manifesto, articulating the direction of the recently-formed Cypherpunks: a Bay Area group of hackers and activists composed of Hughes, Tim May, John Gilmore and others under the moniker created by St. Jude Milhon.

Bitcoin culture –– if such a homogenous thing still exists –– is wrapped up in another culture war distraction while the regulatory moat fills with legislation preventing self custody while penal system reptiles surface to toss those who dared to write code in the pen.

We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak.

How did we get here? How have we spent the last year arguing about what constitutes spam, and ethical use of Bitcoin, while completely ignoring the overflowing regulatory moat? There were more than enough signs. There were more than enough warnings. Congress is putting together drafted legislation for further internet regulation, stablecoin bills, social media application bans, while the state continues to redefine in real time what a cryptocurrency even is.

To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor's younger, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor.

Bitcoin is a database. Bitcoin is speech. Bitcoin is code. The compliance-driving hypnotists will tell you we must ask permission from our local governing offices for the embrace of bitcoin. So that we can pay our taxes in bitcoin and service our legal debts. Samourai, TornadoCash, Wasabi Wallet… they wrote code. Code that users across the globe, in myriad legal jurisdictions, utilized to exchange alphanumeric strings.

People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.

Writing code is not a crime. Code is speech. Distributing code is an expression between parties of bytes, reduced to bits, to ones and zeroes. Any precedent that establishes anything other than this is in direct violation of the First Amendment, and furthermore, against the natural code of freedom of expression. 

Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can't get privacy unless we all do, we're going to write it.

There are plenty of ways that Bitcoin the network can spread itself across the globe, and how bitcoin the asset can monetize to astronomical heights without bringing an ounce more freedom to the populace of the world. Bitcoin's definition has been gaslit by the hypnotists to be within the purview of the regulatory moat, and thus Bitcoin is in dire need of a redefinition. Bitcoin was never about dollar denominated value, it was never about perpetuating the UST market via Treasury-backed tokens utilized by captured, KYC-demanding on- and off-ramps. Bitcoin was never about embracing the state and the furthering of the reach and influence of the psychopathic criminals obsessed with changing the definition of speech and expression, of code and of numbers.

Bitcoin is a tool of empowerment and Bitcoin is for enemies. Well, now our enemy, the state, is empowered.

We know that software can't be destroyed and that a widely dispersed system can't be shut down.

Writing code is not a crime. We sat and argued over culture signaling with all the class of drunken sport rivals while watching the bookkeepers take their red felt pen to change the meaning of words, slowly bringing the frogs, and their dictionaries, to a boil.

Privacy only extends so far as the cooperation of one's fellows in society. We the Cypherpunks seek your questions and your concerns and hope we may engage you so that we do not deceive ourselves. We will not, however, be moved out of our course because some may disagree with our goals.

Bitcoin is just a ledger.

A database.

Let us proceed together apace.

Whispering numbers to a loved one cannot be redefined as a criminal act.

Onward.

The Editors

___________________________________________________________________________

#!/usr/local/bin/perl -- export-a-crypto-system sig, RSA in 5 lines of PERL:

($s,$k, $n)=@ARGV; $w=length$n; $k="O$k"if length($k)&1; $n="O$n", $w*+if$w&1; die

"$0 -d-e key mod

SW-=2;$_-unpack ('B*' , pack('#*', Sk)): s/~o*//g;s/0/d*ln%/g;s/1/d*In%lm*ln%/g;

Sc="1$ (_)p" ;while(read (STDIN, Sm, Sw/2))($m=unpack("H$w", Sm): chop($a=

echo 160161\Um \Esm\U$n\Esn$c|dc*):print pack('H*', '0'x($v-length$a).$a);}

___________________________________________________________________________

To test, just save it as file "rsa", then do:

% chmod 700 rsa

% echo "squeamish ossifrage" | rsa -e 11 ca1 > msg.rsa

% rsa -d ac1 cal < msg.rsa 

The wallet is great for those looking to send bitcoin on-chain with relative ease, but it leaves some to be desired for more advanced users or for those who want to make smaller payments quickly and cheaply.

Pros And Cons

Proton Wallet’s standout feature is that it allows you to send bitcoin using nothing more than a recipient’s email address, which doesn’t have to be a ProtonMail address. The non-custodial bitcoin-only wallet is also free to use and has an easy-to-navigate user interface (UI).

However, it lacks in that it only allows users to make transactions on the Bitcoin base chain — not over Lightning — which can take upwards of hours to settle, and it doesn't allow users to manage their UTXOs. Plus, it’s a software wallet and cannot be disconnected from the internet like a hardware wallet, which increases the risk of the wallet’s private keys being compromised.

Getting Started With Proton Wallet

To use the beta version of the product, you need an invitation either from the company or another user. The wallet is currently available via web browser, as an Android app and as a TestFlight version of an Apple app and takes 5 to 10 minutes to set up and begin using.

Once you’ve received an email invitation to use the wallet, you can click on the “Start using Proton Wallet” link in the invitation email to get started setting it up. (Email addresses have been blacked out below and throughout this review to preserve privacy.)

You’ll be taken to a “wallet setup” page where you’ll simply click a button to get started with Proton Wallet. You won’t be prompted to write down the 12-word seed phrase as you set up the wallet, which was a nice touch by Proton to help users to more simply get started using the wallet. You can write down the seed phrase later if you please, though.

As you set up the wallet, Proton makes it clear that your Proton Wallet is a non-custodial Bitcoin wallet, which means that managing the wallet is your responsibility and your responsibility alone.

The home screen of the wallet is straightforward and incredibly easy to navigate. It’s as pared down so as to include little more than the basics you need to send, receive and buy bitcoin.

Depositing Bitcoin In Proton Wallet

To begin using the wallet, you’ll first have to deposit some bitcoin. You can deposit bitcoin from another wallet you manage. To do so, you’ll need to copy the bitcoin address by clicking on the “Receive” button on the home screen and then clicking the “Copy Bitcoin address” button in the window that pops up on the right of the screen.

You’ll copy that address into the proper field from the wallet you're sending it from. It’s good practice to double check that the address you’ve pasted matches the address you’ve copied.

The bitcoin won’t appear in your Proton Wallet balance immediately. It usually takes at least a few minutes for the transactions to process, as this depends on how long it takes for block confirmations to occur. Some transactions can take much longer — upwards of hours.

You can see that the funds are on their way, though, in the “Transactions” section of the home screen. You’ll continue to see an “In progress” notification until the necessary amount of block confirmations has occurred.

Buying Bitcoin With Proton Wallet

If you don’t have any bitcoin to send to your Proton Wallet, you can also use the wallet to buy some. This process is relatively straightforward.

You can click the “Buy” button on the home screen and you’ll be taken to a page that serves as an interface for crypto asset service providers Ramp and Banxa.

Complete the fields for how much bitcoin you want to purchase, choose whether you want to use Banxa or Ramp and select your payment method.

Instructions from this point vary depending on the payment method you choose.

Sending Bitcoin With Proton Wallet

You can send bitcoin as simply as clicking the “Send” button on the home screen and then inputting either a bitcoin address or an email address. Note that your recipient doesn’t need a ProtonMail address.

I used an email address to send some bitcoin.

Next, you’ll be taken to an “Amount” page, where you’ll input the amount of bitcoin you’d like to send, denominated either in either a fiat currency or sats.

On the “Review” page, you can leave a message for the recipient. It’s optional to do so.

On this page, you’ll also be presented with the total amount of your transaction and be given the option to increase or decrease the priority of your transfer.

You won’t be presented with the option to select UTXOs to spend, an option that a desktop Bitcoin wallet like Sparrow provides you with.

If you’re comfortable with the amount you want to send and the fee, you can click the “Confirm and send” button.

If you'd like to increase or decrease the speed of your transaction, you can select a higher or lower network fee by clicking the arrow to the right in the "Network fee" section of the page.

When you do so, a new window will pop up, allowing you to select different network fees.

"High priority" transactions process fastest are the most expensive. Transactions via Proton Wallet default to "Median priority" if you do not select the level of priority you prefer.

You’ll be able to see whether or not your transaction has cleared by looking at the “Transactions” section.

In my case, the recipient was notified that the bitcoin was on the way before the transaction received the required number of confirmations on the blockchain.

I sent this transaction with "Median priority," and it took over an hour to complete.

Securing Your Proton Wallet

Proton Wallet lets you secure and back up your wallet in different ways.

The first level of security for the wallet is the password you use to log in to it, which you create when you set up the wallet.

Proton Wallet lets you add a second level of security by offering two-factor authentication (2FA).

To set this up, you can click on the “Secure your wallet” tab in the top right hand corner of the home screen. You’ll then be presented with the option to set up 2FA for your wallet.

If you want to add 2FA protection to your account, you can click the “Set up 2FA to secure your account” button. When you do so, you’ll be taken to a page on which you can toggle a switch to set up 2FA for the account. If you choose to do this, toggle the “Authenticator app” switch and follow the subsequent instructions.

Backing Up Your Proton Wallet

Proton Wallet allows you to back up your wallet’s seed phrase whenever you’d like. To do so, you can click on “Backup this wallet’s seed phrase” on the home screen.

You’ll then be taken to a screen that explains what a seed phrase is and why it’s important to safely back it up. Click the “View wallet seed phrase” button to view the seed phrase for your wallet.

It’s best practice to store your seed phrase offline (e.g., written on a piece of paper or imprinted on steel) so that it can’t be compromised.

Discover and Customer Service

Proton Wallet has a substantial “Discover” section in which you can learn more about everything from what Bitcoin is to Proton Wallet’s security model.

Proton also makes it relatively easy for you to get in touch with customer service staff, though, response times are currently unknown.

Conclusion

Proton Wallet is a good Bitcoin wallet for beginners, especially those looking to send bitcoin with relative ease, using nothing more than an email address.

The pros of this non-custodial wallet are that it’s free to use, easy to set up and secure. It’s also bitcoin only and open-source.

However, one notable con of the wallet is that it only allows you to transact on the bitcoin base chain, which means your transactions may incur high fees and take over an hour to fully process. For this reason, you wouldn’t want to use Proton Wallet if you're looking to make cheap, fast micropayments — the types of transactions you can make over Lightning.

Another drawback of the wallet is that it doesn’t permit you to manage UTXOs. And it’s a software wallet, which means it’s less secure than a hardware wallet in certain regards.

With that said, if you’re new to Bitcoin and already familiar with the interfaces for Proton products, then this wallet may be a good option for you.

Bitcoin Magazine was on the ground in Riga to explore how the evolution of the Nostr protocol could influence Bitcoin’s trajectory. While Nostr’s budding community has famously attracted prominent Bitcoin advocates, Nostriga—as this third NostrWorld conference was dubbed—offered a fresh lens on the growing synergies between these two technologies. Conversations with attendees and observations throughout the two-day event revealed a clear trend: Bitcoin’s path appears increasingly likely to intertwine with Nostr’s promising social network technology.

What’s Nostr?

Nostr is an open-source protocol designed to create a decentralized, censorship-resistant social network. Unlike traditional platforms that rely on centralized servers, Nostr operates on a network of relays where users can publish and receive messages. Nostr is quickly gaining traction as a social layer for Bitcoin, enabling features like micropayments and digital identity management. Beyond social media, Nostr presents an opportunity to build a new internet architecture that frees users from reliance on centralized platforms. This approach empowers individuals by removing the need for intermediaries that typically own user data, monetize attention, and control or censor access.

Micropayments Market Fit

A standout moment of the conference came when Strike CEO Jack Mallers shared a personal story about an acquaintance he had been trying to convince of Bitcoin’s potential for years. It wasn’t until she got onboarded onto Nostr and received Zaps to her account that the power of the technology finally clicked for her.

Zaps are small Bitcoin payments, often sent as tips or rewards on Nostr, allowing users to support content creators directly through the Lightning Network. This micro-payment feature has become a popular way to demonstrate Bitcoin's utility and value in a social context

The concept of micropayments predates even Bitcoin, but Nostr advocates believe Zaps represent the first successful large-scale implementation of the idea. On a panel alongside Primal CEO Miljan Braticevic, Jack Mallers emphasized the significance of this achievement:

"I think that's very underappreciated. Something that has been desired on the web for many decades. From anonymous cypherpunks to the most powerful people in the world, all have desired this use case and we seem to have achieved that.”

Micropayments through Nostr introduce a new bootstrapping mechanism that could reshape the traditional Bitcoin onboarding process. Individuals who might not be swayed by Bitcoin’s economic or political narrative might appreciate its unique value once exposed to casual internet tipping and microtransactions. This shift opens Bitcoin up to a broader audience by making it accessible in everyday social interactions already familiar to internet users.

Setting the stage for the Ecash economy

Ecash, one of Bitcoin’s up-and-coming technologies was a recurring theme throughout the event. Cashu protocol developer CalleBTC made a passionate argument for the central role Nostr could play in an ecash-driven economy.

Proposed as a system for private, scalable payments using blind signatures, ecash enables users to transact without revealing their identities, preserving financial privacy. However, this privacy comes with a tradeoff: ecash introduces trusted entities known as mints, which custody users' Bitcoin deposits in exchange for tokens, often referred to as notes. For ecash to function effectively, a robust market of mints is necessary to provide users with options for whom to trust. As the concept gains traction, this reliance on multiple mints introduces various coordination and discovery challenges—challenges developers believe are ideally suited to be addressed by Nostr’s social features.

Examples of this are bitcoinmints.com and cashumints.space, two Nostr-based websites that offer a Yelp-like interfaces for users to discover new mint providers and for mints to advertise their services and build a reputation. Although the initial implementations are fairly basic, the potential integration of Nostr’s social graph could enable users to make informed decisions about which mints to trust. By leveraging connections within their network and trusted reviews from friends, users could more confidently choose mints based on the relationships and experiences shared by those they know. Eventually, the expectation is that similar Nostr-based services will be integrated directly into Bitcoin ecash wallets, offering users a seamless onboarding experience that avoids imposing trusted defaults.

Similarly, Nostr’s infrastructure provides various methods to bolster the resilience of ecash mints, enabling future implementations to operate independently of the internet’s centralized DNS services. This would allow users to establish direct connections with mints, reducing their exposure to third-party interventions and enhancing the overall security and decentralization of the ecash system.

Another fascinating concept emerging from the convergence of ecash and Nostr communities is the idea known as “nutsack.” Introduced by Nostr developer PabloF7z, Nutsack, or NIP-60, allows users to store ecash notes on Nostr relays, effectively distributing them across the network and tying them to the user’s identity. In effect, the scheme allows universal access to a user's ecash balance across any Nostr client that supports the feature. This means that, in the future, users could log into any website or online service and have their ecash balance seamlessly follow them, enabling effortless spending across multiple platforms.

Communities and Web-Of-Trust

One of the biggest opportunities—and perhaps the most significant challenge—for Nostr is its ability to reach new internet communities beyond the Bitcoin-centric groups that currently dominate the platform. Announcements like developer Alex Gleason’s Ditto, made last week, have the potential to extend Nostr's reach into the broader landscape of existing internet communities, such as Mastodon, paving the way for wider adoption.

“With Ditto people find websites they want to join because of a community and then they discover Nostr as a side effect, which gives them the opportunity to learn what it is and why it matters,” explained Gleason in his presentation.

This amplification of Nostr’s network effect could have significant implications for Bitcoin adoption. With features like Zaps, Nostr offers a unique opportunity to introduce non-technical users to the power of an internet-native currency, making Bitcoin more accessible and relatable in everyday digital interactions.

“Bitcoin is revolutionary and I believe it is key to Nostr’s success but social media needs communities.”

Looking ahead, the formation of communities and the adoption of Nostr as an identity system could pave the way for digital economies rooted in the web-of-trust concept. By building social graphs based on cryptographically signed messages, users can carry their reputation across the internet, laying the groundwork for secure, decentralized commerce that operates independently of traditional laws, contracts, and enforcement mechanisms— with Bitcoin at the center of it all.

The crypto industry, while not yet accessible to everyone, has witnessed remarkable growth and evolution since Bitcoin's launch in 2009. In the following years, the industry became a dynamic and influential force, drawing the attention of investors and enthusiasts worldwide. In this article, I will share my opinion on why crypto will become a very stable market, potentially replacing current financial or banking methods. This discussion will touch on key topics such as safety, circular economy, and sustainability, which combined with current high potential businesses like Data Centers, will shape the new future.

Crypto Infrastructure and Energy Consumption

The servers supporting the cryptocurrency infrastructure are primarily used for cryptocurrency mining, transaction verification, smart contract execution, and decentralized applications (DApps) hosting. These servers typically possess the following specifications:

• High-performance CPUs and GPUs

• Large memory and storage capacity

• Advanced networking capabilities

• Robust security features

These characteristics translate into expensive, high-power consumption servers. Therefore, we need a robust and reliable space to store these servers and ensure they function as expected.

Energy Consumption

Data transmission currently consumes nearly 3% of the total electricity used worldwide. To ensure data is not only transmitted correctly but also stored and processed properly, we rely on physical spaces known as data centers. These data centers are considered mission-critical facilities. But why are data centers deemed mission-critical? Mission-critical facilities are broadly defined as operations that, if interrupted, would negatively impact business activities, ranging from revenue loss and legal non-compliance to, in extreme cases, loss of life. Data centers, hospitals, laboratories, and military installations are just a few examples of such facilities.

Data center facilities are highly regulated by various organizations and standards for both physical and data infrastructure. This stringent regulation is crucial because data loss can result in massive consequences for millions of people, given the sensitivity of the stored information. Gradually, the

blockchain industry along with emerging markets like AI (Artificial Intelligence) is playing an increasingly significant role in the modern world. The demand for distributed facilities to store nodes that validate crypto transactions and execute smart contracts is rising significantly.

Are current Data Centers ready for Blockchain technology?

Blockchain presents challenges not only for Mechanical, Electrical, and Plumbing (MEP) infrastructure but also for enterprise infrastructure. To accommodate the demanding workloads

associated with blockchain technology, facilities will need to enhance both infrastructure security and MEP capabilities. Currently, the average power density in a data center is around 10 kW per rack. For context, according to several reports, the average power consumed by a home in the United States that

uses electricity for heating and hot water is approximately 10,715 kWh per year. A single rack in a data center, by comparison, consumes nearly 9 times more power per year (8,760 kWh per year), with some facilities designed to provide peak power above 100 MW.

Constructing these facilities requires significant investment, and sometimes the efficiency of the facility is not as desired, leading to higher costs for data management. One issue with current data centers is partial loads, meaning that if the facility consumes determined amount of Watts, the original design was for 1.5 times those Watts. This results in lower performance and efficiency. The closer the facility's consumption is to its designed energy consumption, the easier it is to improve and control overall efficiency.

The key difference between blockchain and traditional data computation is decentralization. In a decentralized system, the failure of a single node does not impact the performance of the entire digital infrastructure, whereas in traditional systems, a node failure can cause significant and irreversible damage to many businesses. This necessity for high reliability and redundancy explains why data centers typically have high initial costs (CAPEX), with multiple layers of security to ensure continued operation even in the event of equipment failure.

However, the decentralization inherent in blockchain technology offers a distinct advantage: it reduces the need for expensive and redundant facilities to accommodate all crypto servers, as the failure of some nodes does not disrupt the entire system. This raises an important question: what is the solution to integrating traditional data transmission methods with new blockchain technology?

Combining current needs with new Crypto needs

In the data center industry, the terminology of "Tiers" as defined by the Uptime Institute is widely used and accepted globally. This classification system is similar to the levels of redundancy specified by TIA or BICSI standards. While those familiar with the data center market are well-versed in these Tiers, here is an explanation for crypto users who may be new to this terminology: There are four Tiers, each representing a different level of redundancy in a facility:

1. Tier I: No redundancy.

2. Tier II: Redundancy.

3. Tier III: Concurrently maintainable.

4. Tier IV: Fault-tolerant.

These Tiers also correlate with the initial investment required to create the facility. Moving from one Tier to the next typically involves doubling the capital expenditure (CAPEX). Most data centers are ranked as Tier III, indicating they are designed to be concurrently maintainable. This ensures the facility can be kept in optimal condition to prevent failures at any time. It is crucial to note that some IT equipment hosted in a data center is essential for the daily operations of our lives; even traffic lights rely on these services.

For blockchain infrastructure, there is no need to significantly increase CAPEX to ensure the proper operation of the equipment. It is essential to accommodate the servers in an environment where they function correctly with minimal downtime. Since the loss of individual servers does not affect the functionality of the entire blockchain, these operations do not require high availability. Although downtime can affect users earning revenue from transaction validation, it is crucial to evaluate whether the cost of reducing downtime justifies the increased CAPEX.

Therefore, the Tier level of these facilities can be reduced. In some areas of the data center that are not critical to powering the crypto nodes, the Tier can be lowered to Tier II or even Tier I. This approach optimizes resources without compromising the overall blockchain infrastructure.

Crypto Mining as a Single Business?

To support our previous discussions and to foster new ones, consider the following data: Following the Bitcoin halving on April 20, 2024, the return on investment (ROI) per miner has decreased by 50%, irrespective of variations in total hashrate or Bitcoin price. This reduction tightens the overall financial outlook. For instance, a miner costing $2,000, producing 120 TH/s, and requiring no additional capital expenditures (CAPEX) beyond the miner itself, now faces this ROI decrease.

For an installation comprising 100 miners, the total CAPEX investment for the entire facility (including land for one container, MEP infrastructure, and miners) is estimated at around $503,000. The following analysis illustrates the approximate ROI over the next four years (until the next halving) for a facility operating 100 miners, each consuming 3.3 kW and with a price per kilowatt hour equal to 0.08$. To try to make it more accurate, this analysis assumes the hashrate increases by 50% annually, and uses traditional air cooling solutions. The projected future Bitcoin price used in this analysis is $250,000, based on various studies and speculations.

The projected ROI over the next four years, considering a future Bitcoin price of $300,000, shows that crypto mining alone might not be a highly profitable business. This raises the question of why companies continue to invest in crypto mining. The answer is speculation. In bullish times, crypto facilities were highly profitable, but now these facilities need additional revenue streams.

Heat Reuse: A Disruptive Side Hustle

One innovative side hustle is converting these facilities into heating power facilities. Most power consumed by miners/servers is converted into heat. What if we could capture that heat and sell it as energy? For example, selling this energy to a nearby farm for greenhouses at $0.03/kWh makes the business model more viable. Considering a supposed extra investment of $750,000 (please bear in mind that the extra investment has to be calculated according to facility limitations and in this case a ball park number was taken into account for the exercise).

Upon initial analysis, the business model appears to be viable. The integration of a heat reuse side business has effectively doubled the return on investment (ROI). It is important to note that the ROI calculation is based on a four-year period, coinciding with the next Bitcoin halving event. While the facilities may no longer be optimal for the same cryptocurrency operations post-halving, the infrastructure will remain valuable for selling the generated heat.

Moreover, if we consider combining this model with the data center market, the ROI extends beyond the next four years. This represents a long-term investment where the efficient use of electricity could become increasingly significant.

Conclusion

The crypto industry is gaining more importance in our lives. Several companies are adding stablecoins to their portfolios as financial assets, and new technologies are emerging on the blockchain that will require specialized facilities like current data centers (like BlockDAG architecture, Ordinals/NFTs, BRC20 and, most importantly, Runes).

We are at the beginning of a market that will stay and change the current scenario. Combining legacy data centers with crypto-specific areas to facilitate additional businesses like heat reuse is likely just a matter of time, a run to become sustainable. Those who lead this transformation will be the ones to benefit the most.

This is a guest post by Jose Farrona. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The VanEck Bitcoin ETF debuted on the Australian Securities Exchange (ASX) on June 20th after receiving regulatory approval. It has attracted $40.72 million in assets under management (AUM).

Meanwhile, the Monochrome Bitcoin ETF (IBTC) began trading on the smaller CBOE Australia exchange on June 4th. Despite its lower AUM, IBTC continues to see small but steady inflows.

As of August 28th, IBTC holds around 123 Bitcoin worth $7.4 million. The fund has continually purchased BTC on dips, regardless of price action or sentiment.

This contrasts with U.S. spot Bitcoin ETFs, which have faced outflows amid Bitcoin's failure to convincingly break $60,000. Prominent products from Ark Invest and Grayscale saw major withdrawals this week.

While assets under management remain low, the Australian ETFs are growing steadily. The sustained inflows point to rising interest in Bitcoin in the region. The increasing demand for regulated investment vehicles can boost mainstream acceptance. If growth continues, Australia's spot Bitcoin ETFs could emerge as significant sources of BTC demand.

GDA's Rowdy Data Center in Vernon is currently operational at 60 MW, supported by the Oklaunion Substation. The site benefits from substantial local wind power and is located near Vernon city in Wilbarger County.

The data centre utilizes grid power with renewable energy sources for its operations. "GDA's business is a natural fit for the Oklaunion Power Station," said Tom Walker, Chairman of OPS Board. "This project clearly demonstrates that Bitcoin mining creates entirely new dynamics for the energy industry."

The Rowdy Data Center repurposes the retired Oklaunion Power Station, bringing back dozens of jobs lost when the plant closed in 2020. So far, GDA's operations have generated 12 permanent and 150 construction jobs.

"Texas has emerged as a leading hub for local support and renewable energy sources, and the Rowdy data centre is a particularly important location for our operations," said GDA CEO Andrey Kim.

The company aims to bolster the Bitcoin network's robustness and security by scaling and innovating mining infrastructure and utilizing renewable energy sources.

F%$K Bad Research: I spent over a month analyzing a bitcoin mining study and all I got was this trauma response.

“We must confess that our adversaries have a marked advantage over us in the discussion. In very few words they can announce a half-truth; and in order to demonstrate that it is incomplete, we are obliged to have recourse to long and dry dissertations.” — Frédéric Bastiat, Economic Sophisms, First Series (1845)

“The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.” — Williamson (2016) on Brandolini’s Law

For too long, the world has had to endure the fallout of subpar academic research on bitcoin mining’s energy use and environmental impact. The outcome of this bullshit research has been shocking news headlines that have turned some well-meaning people into angry politicians and deranged activists. So that you never have to endure the brutality of one of these sloppy papers, I’ve sacrificed my soul to the bitcoin mining gods and performed a full-scale analysis of a study from the United Nations University, published recently in the American Geophysical Union’s Earth’s Future. Only the bravest and hardest of all bitcoin autists may proceed to the following paragraphs, the rest of you can go back to watching the price chart.

Your soft baby ears might have screamed with shock at the strong proclamation in my lede that the biggest and squeakiest research on bitcoin mining is bullshit. If you’ve ever read Jonathan Koomey’s 2018 blog post on the Digiconomist–also known as Alex deVries, or his 2019 Coincenter report, or Lei et al. 2021, or Sai and Vranken 2023, or Masanet et al. 2021, or… Well, the point is that there’s thousands of words already written that have shown that bitcoin mining energy modeling is in a state of crisis and that this is not isolated to bitcoin! It’s a struggle that data center energy studies have faced for decades. People like Jonathan Koomey, Eric Masanet, Arman Shehabi, and those nice guys Sai and Vranken (sorry, we’re not yet on a first-name basis) have written enough pages that could probably cover the walls of at least one men’s bathroom at every bitcoin conference that’s happened last year, that show this to be true.

My holy altar, which I keep in my bedroom closet, is a hand-carved, elegant yet ascetic shrine to Koomey, Masanet, and Shehabi for the decades of work they’ve done to improve data center energy modeling. These sifus of computing have made it all very clear to me: if you don’t have bottom-up data and you rely on historical trends while ignoring IT device energy efficiency trends and what drives demand, then your research is bullshit. And so, with one broad yet very surgical stroke, I swipe left on Mora et al. (2018), deVries (2018, 2019, 2020, 2021, 2022, and 2023), Stoll et al. (2019), Gallersdorfer et al. (2020), Chamanara et al. (2023), and all the others that are mentioned in Sai and Vranken’s comprehensive review of the literature. World, let these burn in one violent yet metaphorically majestic mega-fire somewhere off the coast of the Pacific Northwest. Reporters, and policymakers, please, I implore you to stop listening to Earthjustice, Sierra Club, and Greenpeace for they know not what they do. Absolve them of their sins, for they are but sheep. Amen.

Now that I’ve set the mood for you, my pious reader, I will now tell you a story about a recent bitcoin energy study. I pray to the bitcoin gods that this will be the last one I ever write, and the last one you’ll ever need to read, but my feeling is that the gods are punishing gods and will not have mercy on my soul–even in a bull market. One deep breath (cue Heath Ledger’s Joker) and Here… We… Go.

On a somewhat bearish October afternoon, I got tagged on Twitter/X on a post about a new bitcoin energy use study from some authors affiliated with the United Nations University (Chamanara et al., 2023). Little did I know that this study would trigger my autism so hard that I would descend into my own kind of drug-induced-gonzo-fear-and-loathing-in-vegas state, and hyper-focus on this study for the next four weeks. While I am probably exaggerating about the heavy drug use, my recollection of this time is very much a techno-colored, toxic relationship-level fever dream. Do you remember Frank from the critically acclaimed 2001 film, Donnie Darko? Yeah, he was there, too.

As I started taking notes on the paper, I realized that Chamanara et al.’s study was really confusing. The paper was perplexing because it's a poorly designed study that bases its raison d’etre entirely on de Vries and Mora et al. It uses the Cambridge Center for Alternative Finance (CCAF) Cambridge Bitcoin Energy Consumption Index (CBECI) data without acknowledging the limitations of the model (see Lei et al. 2021 and Sai and Vranken 2023 for an in-depth analysis of the issues with CBECI’s modeling). It conflates its results from the 2020-2021 period with the state of bitcoin mining in 2022 and 2023. The authors also relied on some environmental footprint methodology that would make you think it was actually possible for you to shrink or grow a reservoir depending on how hard you Netflix and chill. Really, this is what Obringer et al. (2020) inferentially conclude is possible and the UN study cites Obringer as one of its methodological foundations. By the way, Koomey and Masanet did not like Obringer et al.’s methodology, either. I’ll light another soy-based candle at the altar in their honor.

Here’s a more clearly stated enumeration of the crux of the problem with Chamanara et al. (and by the way, their corresponding author never responded to my email asking for their data so I could, you know, verify, not trust. 🥴):

The authors conflated electricity use across multiple years, overreaching on what the results could reveal based on their methods.

The authors used historical trends to make present and future recommendations despite extensive peer-reviewed literature clearly showing that this leads to overestimates and exaggerated claims.

The paper promises an energy calculation that will reveal bitcoin’s true energy use and environmental impact. They use two sets of data from CBECI: i) total monthly energy consumption and ii) average hashrate share for the top ten countries where bitcoin mining is operated. Keep in mind that CBECI relies on IP addresses that are tracked at several mining pools. CBECI-affiliated mining pools represent an average of 34.8% of the total network hashrate. So, the data used likely have fairly wide uncertainty bars.

After about an hour or so of Troy Cross talking me off a rather impressive, art deco and weather-worn ledge that’s probably seen a few Great Gatsby flappers jump–a result of feeling an overwhelming sense of terror after my exasperated self realized that no amount of cognitive behavioral therapy would get me through this study–I determined the equation that the authors used to calculate the energy use shares for each of the top ten countries with the most share of hashrate (based on the IP address estimates) had to be the following:

Don’t let the math scare you. Here’s an example of how this equation works. Let’s say China has a shared share for January 2020 of 75%. Then, let’s also say that the total energy consumption for January 2020 was 10 TWh (these are made-up numbers for simplicity’s sake). Then, for one month, we’d find that China used 7.5 TWh of energy. Now, save that number in your memory palace and do the same operation for February 2020. Next, add the energy use for January to the energy use found for February. Do this for each subsequent month until you’ve added up all 12 months. You now have CBECI’s China’s annual energy consumption for 2020.

Before I show the table with my results, let me explain another caveat to the UN study. This study uses an older version of CBECI data. To be fair to the authors, they submitted their paper for review before CBECI updated their machine efficiency calculations. However, this means that Chamanara et al.’s results are not even close to realistic because we now believe that CBECI’s older model was overestimating energy use. Moreover, to do this comparison, I was limited to data through August 31, 2023, because CBECI switched to the new model for the rest of 2023. To get this older data, CCAF was generous and shared it with me upon request.

Another tricky thing about this study is that they combined the energy use for both 2020 and 2021 into one number. This was really tricky because if you look at their figures, you’ll notice that the biggest text states, “Total: 173.42 TWh”. It’s also slightly confusing because the figure caption states, “2020-2021”, which for many people would be interpreted as a period of 12 months, not 24 months. Well, whatever. I broke them up into their individual years so everyone could see the steps that were taken to get to these numbers.

Look at the far right column with the header, “Percent Change Between 2020 + 2021 Calculations (%)”. I calculated the percent change between my calculations and Chamanara et al.’s. This is rather curious, isn’t it? Based on my conversations with the researchers at CCAF, the numbers should be identical. Maybe the changelog doesn’t reflect a smaller change somewhere, but our numbers are slightly different nonetheless. China has a greater share and the United States has a smaller share in the data that CCAF shared with me compared to the UN study. Despite this, the totals are fairly close. So, let’s give the authors the benefit of the doubt and say that they did a reasonable job calculating the energy share, given the limitations of the CBECI model. Please bear in mind that noting that their calculation was reasonable doesn’t mean that it’s reasonable to use these historical estimates to make claims about the present and future and direct policy. It isn’t.

One evening while working by candlelight, I glanced to my left and saw Frank’s stabbing, black pupils (the Donnie Darko character I mentioned earlier) staring at me like two pieces of Stronghold waste coal, fixed in a quiet bed of pearly sand. He was reminding me that this report was still not finished and something about time travel. I grabbed my extra-soft curls (I switched to bar shampoo, it’s a godsend for frizz) and yanked as hard as I could. Willie Nelson’s 1974 Austin City Limits pilot episode blasting on my cheap-ass Chinese knock-off monitor’s mono speakers was moving through my ears like heroin through Lou Reed’s 4-lanes wide network of veins. Begrudgingly, I accepted my fate. I needed to go deeper down this rabbit hole. I needed to do a deeper analysis of the 2020 and 2021 CBECI data to show how important it is to do an annual analysis and not blur the years into one calculation. Realizing I was out of my hard liquor of choice, a splash of sherry in a Shirley Temple (shaken, not stirred), I grabbed a bottle of bootleg antiseptic that I got during the pandemic lockdown and chugged.

I flipped through my notes. I have lots of notes because I’m a serious person. What about the mining map issues? Can we do this through an analysis of the two separate years? What was happening for each of the ten countries? Does that tell us anything about where hashrate went after the China ban? What about the Kazakhstan crackdown? That’s post-2021, but the UN study acts like it never happened when they’re talking about the current mining distribution…

Not to the authors’ credit, they failed to mention to the peer-reviewers and to their readers that the mining map data only goes through January 2022. So, even though they talk about bitcoin mining’s energy mix as if it represents the present, they are completely wrong. Their analysis only captures historical trends, not the present and definitely not the future.

See this multi-colored plot of CBECI's estimated daily energy use (TWh) from January 2020 through August 31, 2023? At this macro scale, we see plenty of variability. But also it’s apparent just from inspection that each year is different from the next in terms of variability and energy use. There are a number of possible reasons for the cause of variability at this scale. Some possible influences on energy use could be bitcoin price, difficulty adjustment, and machine efficiency. More macroscale influences could be as a result of regulation, such as the Chinese bitcoin mining ban that occurred in 2021. Many of the Chinese miners fled the country for other parts of the world, Kazakhstan and the United States are two countries where hashrate found refuge. In fact, the power of the Texas mining scene really came to be at this unprecedented moment in hashrate history.

Look at the histograms for 2020 (top left), 2021 (top right), 2022 (bottom left), and 2023 (bottom right). It’s obvious that for each year, the estimated annualized energy consumption data shows different distributions. Even though we do see some possible distribution patterns, we have to be careful not to take this as a pattern that happens every four-year cycle. We need more data to be sure. For now, what we can say is that some years in our analysis show a bimodal distribution while other years show a kind of skewed distribution. The main point here is to show that the statistics for energy use for each of these four years are different, and distinctly so for the two years that were used in Chamanara et al.’s analysis.

In the UN study, the authors wrote that bitcoin mining exceeded 100 TWh per year in 2021 and 2022. However, if we look at the histograms of the daily estimated annualized energy consumption, we can see that daily estimates vary quite a bit, and even in 2022 there were many days where the estimated energy consumption was below 100 TWh. We’re not denying that the final estimates were over 100 TWh in the older estimated data for these years. Instead, we’re showing that because bitcoin mining’s energy use is not constant from day to day or even minute-to-minute, it’s worth doing a deeper analysis to understand the origin of this variability and how it might affect energy use over time. Lastly, it’s worth noting that the updated data now estimates the annual energy use to be 89 TWh for 2021 and 95.53 TWh for 2022.

One last comment, Miller et al. 2022 showed that operations (specifically buildings) with high variability in energy use over time are generally not suitable for emission studies that use averaged annual emission factors. Yet, that’s what Chamanara et al. chose to do, and what so many of these bullshit models tend to do. A good portion of bitcoin mining doesn’t operate like a constant load, Bitcoin mining can be highly flexible in response to many factors from grid stability to price to regulation. It’s about time that researchers started thinking about bitcoin mining from this understanding. Had the authors spent even a modest amount of time reading previously published literature, rather than operating in a silo like Sai and Vranken noted in their review paper, they might have at least addressed this limitation in their study.

—

So, I’ve never been to a honky tonk joint before. At least not until I found myself in a taxi cab with several other conferencegoers at the North American Blockchain Summit. Fort Worth, Texas, is exactly what you’d imagine. Cowboy boots, gallon-sized cowboy hats, Wrangler blue jeans, and cowboys, cowboys, cowboys everywhere you looked through the main drag. On a brisk Friday night, Fort Worth seemed frozen in time, people actually walked around at night. The stores looked like the kind of mom-and-pop shops you’d see on an episode of The Twilight Zone. I felt completely disoriented.

My companions convinced me that I should learn how to two-step. Me, your standard California girl, whose physics advisor once told her that while you can take the girl out of California, you can’t take California out of the girl, should two-step?! I didn’t know a two-step from an electric slide and the only country I remember experiencing was a Garth Brooks commercial I saw once on television when I was a child. He was really popular in the nineties. That’s about as much country as this bitcoin mining researcher gets. The place was filled with kitschy gift shops and bright lights everywhere radiating from neon signs. At the center of the main room, a bartender wearing a black diamond studded belt with a white leather gun holster and lined with evenly spaced silver bullets. Who the hell knows what kind of gun he was packing, but it did remind me of the guns in the 1986 film, Three Amigos.

It was here, against the backdrop of what sounded like a country band that wasn’t entirely sure that it was country, that I watched the Texas Blockchain Council’s Lee Bratcher address a ball with the kind of trigonometric grace that you could only find at the end of a cue and land that billiard in a tattered, leather pocket for what seemed like the hundredth time that night. The smooth clank of billiard against billiard awoke something inside me. I realized that I was not yet out of the rabbit hole that Frank sent me down. I remembered somewhere scribbled in my notes that I had not plotted the hashrate share over time for the countries mentioned in the UN study. So, at half past three in the morning, I threw my head back to take a swig of some club soda and bumped it against the wall of the photo booth where nuclear families could pose with a mechanical bull, and fell unconscious.

Three hours later, I was back in my hotel room. Thankfully, someone placed some worthless fiat in my hand, loaded me into a cab, and had the driver take me back to the non-smoking room I checked into at the very center of the decay of twenty-first-century business travel, the Marriott Hotel. Fuzzy-brained and bleary-eyed, I let the blinding, dangerously blue light from my computer screen wash over my tired face and increase my chances of developing macular degeneration. I continued my analysis.

What follows are a series of plots of CBECI mining map data from January 2020 through January 2022. Unsurprisingly, Chamanara et al. focus attention on China’s contribution to energy use, and subsequently to its associated environmental footprint. China’s monthly hashrate peaked at over 70 percent of the network’s total hashrate in 2020. In July 2021, that hashrate share crashed to zero until it recovered to about 20 percent of the share at the end of 2021. We don’t know where it stands today, but industry insiders tell me it’s likely still hovering around this number, which means that in absolute terms, the hashrate is still growing there despite the ban.

Russia, also unsurprisingly, gets discussed as well. Yet, based on the CBECI mining map data from January 2020 through January 2022, it’s hard to argue that Russia was an immediate off-taker of exiled hashrate. There’s certainly an immediate spike, but is this real or just miners using VPN to hide their mining operation? By the end of 2021, the Russian hashrate declined to below 5 percent of the hashrate and in absolute terms, declined from a brief peak of over 13 EH/s to a bit over 8 EH/s. When looking at the total year’s worth of CBECI estimated energy use for Russia, we do see that Russia did hold a significant portion of hashrate, it’s just not clear that when working with such a limited set of data, we can make any reasonable claims about the present contribution to hashrate and environment footprint for the network.

The most controversial discussion in Chamanara et al. deals with Kazakhstan’s share of energy use and environmental footprint. Obviously, the CBECI mining map data shows that there was a significant increase in hashrate share both in relative and absolute terms. It also appears that this trend started before the China ban was implemented, but certainly appears to rapidly increase just before and after the ban was implemented. However, we do see a sharp decline from December 2021 to January 2022. Was this an early signal that the government crackdown was coming in Kazakhstan?

In their analysis, Chamanara et al. ignored the recent Kazakhstan crackdown, where the government imposed an energy tax and mining licenses on the industry, effectively pushing hashrate out of the country. The authors overemphasized Kazakhstan as a current major contributor to bitcoin’s energy use and thus environmental footprint. If the authors had stayed within the limits of their methods and results, then noting the contribution of Kazakhstan’s hashrate share to the environmental footprint for the combined years of 2020 and 2021 would have been reasonable. Instead, not only do they ignore the government crackdown in 2022, but they also claim that Kazakhstan's hashrate share increased by 34% based on 2023 CBECI numbers. CBECI’s data has not been updated since January 2022 and CCAF researchers are currently waiting for data from the mining pools that will allow them to update the mining map.

I know I’ve shown you, my faithful reader, a lot of data, but go ahead and have another shot of the hardest liquor you have in your cabinet, and let’s take a look at one more figure. This one represents the United States hashrate share in the older CBECI mining map data. The trend we see for the United States is also similar for Canada, Singapore, and what CBECI Calls “Other countries”, which represent the countries that did not make the top ten list for hashrate share. There’s a clear signal that reflects what we know to be true. The United States took a significant portion of Chinese hashrate and this hashrate share grew rapidly in 2021. While we know that the CBECI mining map data is limited to less than a majority of the network hashrate, I do think that their share is at least somewhat representative of the network’s geographic distribution. Hashrate geographic distribution seems to be heavily shaped by macro trends. While electricity prices matter, government stability and friendly laws play an important role. Chamanara et al. should have done this kind of analysis to help inform their discussion. If they had, they might have realized that the network is responding to external pressures at varying times and geographic scales. We need more data before we can make strong policy recommendations when it comes to the effects of bitcoin’s energy use.

—

At this point, I was no longer sure if I was a bitcoin researcher or an NPC, lost in a game where the only points tallied were for the intensity of self-loathing I was feeling for agreeing to this undertaking. At the same time, I could smell the end of this analysis was near and that, with enough somatic therapy and EMDR, I might actually remember who I used to be before I got dragged into this mess. Just two days prior, Frank and I had a falling out over whether Courier New was still the best font for displaying mathematical equations. I was alone in this rabbit hole now. I dug my fingers into the dirt walls surrounding me and slowly clawed my way back to sanity.

Upon exiting the hole, I grabbed my laptop and decided it was time to address the study’s environmental footprint methodology, wrap up this puppy, and put a bow on it. Chamanara et al. claimed that they followed the methods used by Ristic et al. (2019) and Obringer et al. (2020). There are a few reasons why their environmental footprint approach is flawed. First, the footprint factors are typically used for assessing the environmental footprint of energy generation. In Ristic et al., the authors developed a metric called the Relative Aggregated Factor that incorporated these factors. This metric allowed them to evaluate the placement of new electricity generators like nuclear or offshore wind. The idea behind this approach was to be mindful that while carbon dioxide emissions from fossil fuels were the main driver for developing energy transition goals, we should also avoid replacing fossil fuel generation with generation that could create environmental problems in different ways.

Second, Obringer et al. used many of the factors listed in Ristic et al. and combined them with network transmission factors from Aslan et al. (2018). This was a bad move because Koomey is a co-author on this paper, so it shouldn’t be surprising that in 2021, Koomey co-authored a commentary alongside Masanet where they called out Obringer et al. In Koomey and Masanet, 2021, the authors chided the assumption that short-term changes in demand would lead to immediate and proportional changes in electricity use. This critique could also be applied to Chamanara et al., which looked at a period when bitcoin was experiencing a run-up to an all-time high in price during a unique economic environment (low interest rates, COVID stimulus checks, and lockdowns). Koomey and Masanet made it clear in their commentary that ignoring the non-proportionality between energy and data flows in network equipment can yield inflated environmental-impact results.

More importantly, we have yet to characterize what this relationship looks like for bitcoin mining. Demand for traditional data centers is defined by the number of compute instances needed. What is the equivalent for bitcoin mining when we know that the block size is unchanging and the block pace is adjusted every two weeks to keep an average 10-minute spacing between each block? This deserves more attention.

Either way, Chamanara et al. did not seem to be aware of the criticisms of Obringer et al.’s approach. This is really problematic because as mentioned at the start of this screed, Koomey and Masanet laid the groundwork for data center energy research. They should have known not to apply these methods to bitcoin mining because while the industry has differences from a traditional data center, it’s still a type of data center. There’s a lot that bitcoin mining researchers can take from the torrent of data center literature. It’s disappointing and exhausting to see papers published that ignore this reality.

What more can I say other than this shit has to stop. Brandolini’s Law is real. The bullshit asymmetry is real. I really want this new halving cycle to be the one where I no longer have to address bad research. While I was writing this report, Alex de Vries published a new bullshit paper on bitcoin mining’s “water footprint”. I haven’t read it yet. I’m not sure that I will. But if I do, I promise that I will not write over 10,000 words on it. I’ve stated my case and made my peace with this genre of academic publishing. It was a fun ride, but I think it’s time to practice some self-care, treat myself to several evenings of healthy binge-watching, and dream of the ineffable.

—

If you enjoyed this article, please visit btcpolicy.org where you can read the full 10,000-word technical analysis of the Chamanara et al. (2023) study.

This is a guest post by Margot Paez. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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The launch of Lightspark Extend signifies yet another step forward in making instant, low-cost Bitcoin payments more accessible to businesses and consumers across the U.S., expanding the reach and utility of the Bitcoin Lightning Network.

Just last week, Lightspark announced that Coinbase customers can now send Bitcoin transactions up to $10,000 instantly through the Lightning Network, thanks to their partnership. 

If, in 2021, the identity of Satoshi Nakamoto remains a mystery, so too does the two-year period from 2008 to 2010 when Bitcoin’s creator served as the project’s principal developer and leader.

Yet, far from a lifeless period of project development, during those years Nakamoto worked with dozens if not hundreds of Bitcoin users, all of whom contributed to the effort in different ways, establishing websites, engaging in commerce and evangelizing for his invention.

Still, some users naturally emerged as more distinguished contributors.

Whether it was by helping establish core elements of the Bitcoin philosophy or articulating its value propositions in new and novel ways, a meritocracy developed as quickly as the market, with some contributors earning outsized accolades from their peers.

With that in mind, this list aims to identify the contributors who most helped to define and shape Bitcoin and its early years, identifying their specific efforts and spotlighting their relevant work.

Martti Malmi (@Sirius)

Satoshi’s initial assistant, Martti Malmi, demonstrated a commitment to Bitcoin at a time when few were willing to see value in an internet currency that lacked even an exchange rate.

A university student in May 2009, Malmi contributed most directly to Bitcoin.org and the Bitcoin Wiki, where he helped make the websites look more comprehensive and professional. (He was less kind to euros he used at the time, writing “Bitcoin.org” on any bills he encountered.)

Malmi also added an early Austrian perspective to conversations around Bitcoin, dismissing complaints about gold as “old Keynesian arguments” and noting that the precious metal was “unmatched” by any paper money in the stability it offered over time.

In his entrepreneurial efforts, Malmi was less successful, his early bitcoin exchange service, BitcoinExchange.com, struggling to get off the ground in 2010.

Yet, he’d arguably make his biggest mark evangelizing for Bitcoin, creating a Facebook page (“Say no to central banking — use Bitcoin, the revolutionary P2P currency!” it read) and leading the first major effort to get Bitcoin publicity.

Theymos

One of Bitcoin’s most influential thinkers, Theymos never contributed code to the Bitcoin project directly but worked for years as a central moderator for its major forums.

A keen student of the codebase, his influence was apparent from the project’s earliest days when on the Bitcoin.org forums or IRC Theymos could be counted on to define how the protocol worked, his understanding sometimes even surpassing that of other avid coders.

What’s clear is that, after discovering Bitcoin in February 2010, Theymos went to work auditing the code, as his posts show an intricate understanding of not just the basic concepts, but even the more obscure commands Satoshi added to the codebase at launch.

However, it’s Theymos’ contributions to project philosophy that perhaps stand out the most. The first to point out directly that changes to the code could result in issues impacting the rights of users, it’s clear Theymos thought deeply about the implications of Bitcoin’s design.

For instance, he was at the forefront of arguing users could leverage their ability to fork the code if they ever disagreed with project leadership, an argument he’d push to its limits when he’d attempt to overturn a code change enacted by Satoshi.

The fact that, when looking back at this disagreement, many would side with Theymos’ view on the matter is all the more evidence that his early thinking has endured.

Hal Finney (@Hal)

A storied cypherpunk, Hal Finney tragically only contributed code briefly at the earliest days of Bitcoin and was absent for much of 2009 and 2010 as he struggled to regain his health.

Still, Finney’s influence today rings far and wide, most notably for the enduring optimism with which he approached the project.

Among his sparse blog posts are some of the most widely quoted moments from the project’s history, including his initial calculations on how, if successful, bitcoin could someday be worth millions should it grow to denominate global economic exchange.

Elsewhere, Finney has even been credited with his own branch of philosophy on how Bitcoin might scale, the term “Finnian view” coming to denote his belief that second-layer networks, as well as bitcoin banks, would help solve the technology’s struggles to accommodate demand.

Finney, who passed away in 2014 at 58, was also the recipient of the first-ever bitcoin transaction, and the only person known to have transacted directly with Satoshi Nakamoto.

NewLibertyStandard

What is bitcoin worth? If it’s a question many have asked, NewLibertyStandard was the first to provide a response.

Indeed, the first-ever quoted price for bitcoin was given by NewLibertyStandard on October 5, 2009, when they posted a daily exchange rate of 1,303 BTC per U.S. dollar. The calculation was made by factoring the cost of the electricity used to mine newly minted bitcoin and lauded by Satoshi as a helpful step in pricing the cryptocurrency.

Not just the creator of the earliest bitcoin exchange, NewLibertyStandard proposed using the Thai baht symbol to represent Bitcoin and suggested “BTC” as its three-letter currency code.

Despite his outsized contributions to the bitcoin economy, however, NewLibertyStandard could also wax philosophical. As an example, they were an early advocate for the idea that Bitcoin might enable individuals to peacefully exit their government currencies.

Gavin Andresen

Andresen may not have been the father of Bitcoin, but in many ways, he raised the kid.

An Australian-born Silicon Valley expat best known for creating a standard for 3D graphics in his younger days (VRML), Andresen had an established career in software prior to coding on Bitcoin, which included time spent at computer manufacturer Silicon Graphics.

His rise up the ranks of the Bitcoin meritocracy would be swift. Not only did he give away over 1,000 bitcoin free of charge to new users, but he quickly became Satoshi’s most active contributor, gaining access to update the code directly by late 2010.

Indeed, it would be Andresen who would “step up” in Satoshi’s absence, leading a charge to push new developers to get involved in the project and shouldering the weight of the press and media that descended during Bitcoin’s first rise to the fringes of the tech mainstream in 2011.

Often now critiqued for his role in stoking later frictions in the project, it’s easy to overlook the fact that Andresen was also one of Bitcoin’s most eloquent early spokespeople, his arguments for it as a “just plain better money” finding ears when bitcoin was a “drug currency” to most.

Laszlo Hanyecz (laszlo)

Best known as the man who spent thousands of bitcoin on pizza, Laszlo Hanyecz was a Florida-based coder who first translated Bitcoin (then available only for Windows) into MacOS.

Joining the project in April 2010, Hanyecz quickly announced an interest in running Bitcoin on his iPhone, but it would be his May 2010 decision to pay 10,000 BTC to anyone who would buy him pizza that would mark his most significant contribution.

At the time, Bitcoin had an established price (less than a penny), and bitcoin had been bought and sold, but no real-world product had ever been purchased with the fledgling currency.

Hanyecz’s time with the project would be brief, however. He stopped contributing in August 2010 but has resurfaced from time to time for interviews, most recently in 2009 for the news show “60 Minutes” where he discussed his bitcoin pizza purchase.

Artforz

A largely unknown figure, Artforz is nonetheless credited with notable engineering contributions, as they are thought to be the first Bitcoin user to mine with more powerful GPUs (in the process starting the global mining arms race that continues to this day).

Though Artforz denied making up 25% of the early network’s hash rate as accused, it was a rumor during his day, one they eventually had to address directly on the forums.

Still, if Artforz did mine an outsized number of early blocks, he showed himself to be an altruistic steward of the network, identifying a bug in one case that, if exploited, would have allowed him to spend bitcoin from other wallets he didn’t own, reporting it directly to Satoshi.

Artforz could also explain and defend Bitcoin with the best of them.

When presented with the idea users might never know the true identity of Satoshi Nakamoto, Artforz settled the conversation succinctly, stating simply: “Let the idea speak for itself.”

Jeff Garzik (jgarzik)

A seasoned Linux open-source contributor by the time he found Bitcoin in 2010, Garzik is known for helping shape project strategy under Andresen, the developer he mentored and encouraged to step up in the wake of Satoshi’s absence.

Yet, Garzik was an active contributor in the days of Satoshi as well, and he remains the author of some of the era’s more often-cited Bitcoin forum posts. Controversially, this includes the first proposal to raise the “block size limit,” first added by Nakamoto, as well as another, more influential proposal to remove subsidies for free transactions.

Later conflicts aside, a review of Garzik’s posts shows what made him such a strong advocate for Bitcoin, one who was revered for thoughtful articulations on how the early network worked.

In one memorable line, Garzik said: “The effort to raise the transaction rate limit is the same as the effort to change the fundamental nature of bitcoins: convince the vast majority to upgrade.”

Ironically, it would be his efforts to lead such a charge that would mark the end of his time with the Bitcoin project nearly a decade later.

Amir Taaki (genjix)

A former poker professional and open-source video game designer, Amir Taaki was little more than 20 years old when he stumbled on Bitcoin in late 2010.

Though it wouldn’t be until 2014 that he graced the pages of Forbes and Wired on the strength of his preference for Bitcoin as a way to fight the establishment, Taaki showed the flashes of what would make him such a polarizing (and popular) figure even in the days of Satoshi.

First and foremost, he’d attempt to get the organizations he most admired into Bitcoin — organizations like Anonymous and WikiLeaks.

As he went about coding what would be the first-ever alternative implementation (libbitcoin), Taaki would find time to build a coalition to convince WikiLeaks to accept bitcoin, a decision that would eventually put him at odds with Satoshi who protested the move.

“Sorry for trying to do something,” he would state in response to later criticism.

His early forum posts showcase how and why Taaki would emerge as such a lightning rod, his responses equal parts combative, illuminating and pulsing with intensity.

Kiba

Likely the least well-known name on this list, Kiba isn’t exactly an industry name.

That said, they are responsible for helping shape something that continues to this day, the legacy of Satoshi Nakamoto. As a string of Twitter, IRC and BitcoinTalk posts from 2010 to 2011 show, Kiba was the first to play around with the idea of Satoshi’s identity, or in his own words, to try “damn hard to make the mystery of Satoshi a meme.”

These efforts mostly took the form of sketches of Bitcoin’s creator, in which Kiba depicted him as everything from a Japanese warrior to a woman in a series he called “The Mysteries of Satoshi Nakamoto.” (His Bitcoin art, sadly, is lost to link rot.)

But while he could be playful, it’s clear Kiba knew Bitcoin users were in charge, dropping early quotes that would be sure to kill on Twitter even today. “Satoshi’s invention is useless without us using it,” he wrote in October 2010.

When Satoshi finally left the project, it was Kiba who declared what appears to be the first Bitcoin holiday, canonizing April 28, 2011, as “Satoshi Disappear Day,” writing:

“I propose we make a Bitcoin holiday in honor of our legendary anonymous founder and to observe the fact that the bitcoin community will be just fine after the inventor of bitcoin left.”

Today, Bitcoin Magazine carries on that tradition. 

It is also a trillion-dollar asset. BTC's market capitalization is at $1.13 trillion as of this writing. This value is outside the overall crypto market cap and excludes all other crypto coins. From a fledgling currency in 2008, its value has risen from nearly zero to over $73,000, reaching a historical all-time high in 2024.

Bitcoin has minted many new millionaires and several billionaires. Famous founders of multi-billion dollar corporations involved in crypto include Brian Armstrong of Coinbase, Changpeng Zhao (CZ) of Binance, and Michael Saylor of MicroStrategy.

With such a meteoric rise, it's hardly surprising that hackers keep trying to find ways to steal Bitcoin. As a Bitcoin owner, protecting your assets from cyber threats is critical. Here, we explore how BTC holders can protect their coins across platforms and activities.

The Current BTC Security Landscape

Hacks and losses in the crypto sphere are nothing new. In the second quarter of 2024 alone, the crypto ecosystem lost about $572.7 million due to fraudulent attacks and hacks. The figure is up 112 percent compared to the same period last year.

The year's most significant BTC hack so far is that of DMM Bitcoin, a Japanese crypto trading platform. On May 31, 2024, DMM Bitcoin lost around $305 million worth of BTC.

Moreover, the year-to-date (YTD) losses from crypto fraud and hacks have reached $920.9 million—up 24 percent from $720 million the previous year. May and June have seen exceptionally high losses, making up $358.5 million of total crypto incidents. Centralized finance (CeFi) platforms accounted for 70 percent of all losses.

Hacking vs. fraud analysis: Hacks cause 98.5 percent of losses

According to a report by Immunefi, a leading bug bounty platform, hacks are responsible for most crypto losses. As of the second quarter of 2024, hacks remain the predominant cause of losses versus fraud. Fraud accounts for only 1.5 percent of the overall crypto losses in Q2 2024. Hacks, on the other hand, account for 98.5 percent.

Hacks

In Q2 2024, the crypto ecosystem lost $564,238,811 to hacks spread across 53 incidents. This figure represents a 155 percent increase versus Q2 2023 when losses caused by hacks amounted to less than half: $220,522,129.

Fraud

Fraud-related loss in Q2 2024 was $8,450,050, spread across 19 specific incidents. These numbers represent a decrease of 81 percent compared to the same period last year.

Bitcoin hackings you should know about

Despite advancements in blockchain technology and security measures, Bitcoin and other cryptocurrencies remain vulnerable to hacking and security breaches.

To understand how Bitcoin hacks happen, you should understand their progression and history. Here, we examine some of the most significant Bitcoin hacks and analyze what went wrong.

The KuCoin hack

In September 2020, Singapore-based KuCoin, a major cryptocurrency exchange, suffered a security breach. The intrusion resulted in the theft of over $280 million worth of cryptocurrencies, including 1008 Bitcoin. The hackers gained access to the exchange's hot wallets by exploiting weaknesses in its security protocols. According to KuCoin's CEO, its cold wallets were unaffected.

In retrospect, enhanced security audits to identify vulnerabilities could have prevented the hack. It could also have been mitigated by using multi-signature or multisig wallets for the exchange's hot storage and storing the more significant portion of assets in cold storage to minimize the accessible amount.

This Kucoin hack is not the first of it’s kind and certainly not the last. Just in June 2024 Kraken’s chief security officer disclosed “extremely critical” zero-day flaw in Kraken’s platform to steal $3M dollars. Here is how it was described:

The ‘security researcher’ disclosed this bug to two other individuals who they work with who fraudulently generated much larger sums. They ultimately withdrew nearly $3 million from their Kraken accounts… They demanded a call with their business development team (i.e. their sales reps) and have not agreed to return any funds until we provide a speculated $ amount that this bug could have caused if they had not disclosed it. This is not white-hat hacking; it is extortion!

The Coinbase hacks of 2019 and 2021

Coinbase is one of the most trusted platforms in the Bitcoin and crypto ecosystem. It is particularly dominant in the USA. As of this writing, Coinbase handles billions of dollars in transactions and has a market cap of $55.24 billion.

The first significant breach that shook Coinbase and the crypto community occurred in 2019. The hack showed the ingenuity of the attackers. It was also a wake-up call for the whole cryptosphere, as it was more sophisticated than anyone expected.

The attackers accessed Coinbase's internal systems using a sophisticated phishing campaign. They targeted employees with spear-phishing emails carefully crafted to appear legitimate communications from a trusted source.

Over a dozen Coinbase employees initially received an email from Gregory Harris, supposedly a Research Grants Administrator at the University of Cambridge in the UK. The first email was dated May 30, 2019.

According to Coinbase, the email came from the legitimate Cambridge domain. It had no apparent malicious elements, passed spam detection, and appeared from a knowledgeable source, referencing the recipients' backgrounds. Over the two weeks, the address continued sending emails, and nothing seemed amiss.

The attacker sent a follow-up email on June 17. This time, the new email contained a malicious URL. If opened via a Firefox browser, it would install malware that could take over the target user's computer. According to Coinbase's security team, the emails were part of a "sophisticated, highly targeted, thought out" attack.

Upon entering the network, the hackers moved laterally to escalate their access privileges. They exploited a Firefox zero-day vulnerability—an issue that had not yet been patched. Moreover, the attacks used not one but two Firefox zero-days, according to Philip Martin, the company's chief information security officer, in 2019. Coinbase reported the attacks to Mozilla.

The vulnerability enabled the hackers to gain administrative access to the exchange’s backend network and critical systems, including databases for storing user information and private keys. In other words, a successful attack would allow a hacker to steal funds from the exchange. The tactic has been used numerous times and led to gigantic losses in crypto exchanges.

This particular hack was unique because the attackers demonstrated remarkable patience and precision. They chose a more calculated, insidious, and covert approach over a swift and noisy attack.

However, the breach was eventually detected. During a routine security audit, Coinbase's security team noticed unusual patterns of withdrawals. They launched an investigation and discovered the breach. They then acted swiftly to contain the damage. They secured the compromised systems, patched the exploited vulnerabilities, and enhanced their monitoring capabilities.

After the hack, Coinbase publicly disclosed its details and mechanics. They assured users and the broader crypto community that the company's insurance policy covered most of the stolen funds and that no customer funds would be lost.

Nonetheless, the incident had far-reaching implications. It highlighted the vulnerabilities inherent in even the most secure platforms and underscored the need to continuously improve cybersecurity practices.

The Coinbase security team walked back the entire attack, contained it, and reported the zero-day to Firefox.

The second breach that affected Coinbase was in late 2021. It involved the theft of approximately $100 million worth of cryptocurrencies, including BTC. Coinbase detected a platform vulnerability that enabled hackers to exploit a flaw in the crypto transfer process. The vulnerability led to unauthorized transactions and financial losses for some users on the platform.

The Bitfinex hack of 2016

Though it happened further back in the past, the Bitfinex hack is worth mentioning due to its magnitude. Hackers stole 119,756 BTC, valued at around $72 million. Today, based on the BTC price as of this writing, the same amount of BTC would be roughly $6.5 billion.

This particular hack occurred due to vulnerabilities in the multi-signature security system that Bitfinex employed in collaboration with BitGo. It could have been avoided by using advanced authentication protocols, user behavior monitoring, and segregated wallet structures to limit exposure.

BTC Security: Who should care?

Bitcoin security affects large coin holders and average ones alike. Bitcoin is used for different purposes, not just as a plain vanilla investment tool you buy and hold. It can be a payment vehicle or trading instrument.

It can be used as collateral and an underlying asset for various derivatives and derivative-like products. Its value and use cases are expanding as it is now used as the underlying for large-scale ETFs. Thus, you want to ensure your wallet is safe to protect your spending or day-trading money.

According to Chainalysis, the number of unique Bitcoin addresses has ballooned to 460 million. While it is impossible to determine how many people own Bitcoin accurately, we can estimate its popularity based on the number of generated addresses over the years.

We can also gauge active users through the number of wallets with active balances. According to BitInfoCharts, a blockchain analysis firm, over 67 million wallet addresses have a balance of $1 or more. Of these addresses, 40.5 million have a balance between $1 and $100, showing that most Bitcoin holders have a small amount of money invested.

Prominent American entrepreneur Tom Lee predicts that BTC could rally to $150,000 in the coming months. Lee claimed that the asset’s valuation has been negatively affected lately due to the issues related to the now-defunct crypto exchange Mt. Gox.

The Mt. Goz "overhang," as he calls it, brought down the price due to the long overdue payouts from its bankruptcy proceedings, paying back thousands of users up to almost $9 billion in assets. He expects the overhang to disappear sometime in July.

Your small investment could yield appreciable returns if you buy and hold. Because of its long-term potential, security should matter to all BTC holders.

The security of an individual also affects the ecosystem. KYC hacks and leaks affect an individual's privacy and identity, enabling malicious attackers to trace their activities. Such hacks can also be detrimental at the large investor or institutional level, leading to massive losses or draining the funds of individual investors signed up on a platform.

In addition, BTC and crypto losses negatively impact the markets. Therefore, security is a shared responsibility of BTC holders of all sizes.

The Importance of Using Secure Platforms

Given its high price and widespread appeal, BTC remains a target for hackers. If you are invested in Bitcoin, choosing a secure platform for buying and storing Bitcoin is crucial for protecting your investments.

Crypto custody solutions

Crypto custody solutions are businesses providing third-party crypto asset security and storage services. They mainly target accredited investors or institutions with significant Bitcoin or crypto holdings. Such clients include hedge funds, Bitcoin exchange-traded funds (ETFs), and exchanges.

These custody solutions generally combine hot and cold storage. Hot storage keeps you connected, but cold storage ensures your assets are safely offline.

Dealing with crypto custody solutions providers requires understanding various crypto security procedures, hot and cold wallets, multisig solutions, and other best practices to ensure your crypto is safe.

Which platform offers the best BTC storage and security?

The answer to this question depends on your needs as a Bitcoin investor or holder. If you wish to buy BTC, you have several reliable options.

According to investment strategist Lyn Alden, you can use Swan Bitcoin to buy BTC. Beyond a place to make one-time or recurring purchases for dollar-cost averaging (DCA), you should consider it as a Bitcoin accumulation platform. Swan provides Bitcoin IRA services for those investors who are serious about accumulating wealth long term.

Fees for all trades are 0.99 percent of each purchase. They do this without taking a spread on your purchase, too, and the first $10,000 worth of BTC has zero fees.

User-friendly security

Some notable security-related features include free auto-withdrawal to a self-custody address. Keeping your BTC with Swan's custodian is also free, and you can access it through them with the BTC held in your name.

One simple yet ingenious way to use these features is to dollar cost average DCA into Bitcoin utilizing a plan that automatically buys BTC at regular intervals. The platform can also send it to your hardware wallet or another secure custody solution.

According to their website, all Swan data is encrypted with military-grade AES-256 encryption, and traffic on the site is encrypted with industry-standard TLSv1.2 encryption. Moreover, Swan does not have access to nor store private keys for BTC that are stored with its custodial partners.

Currently, Bakkt and Fortress Trust are the custodians of record. BitGo is its cold storage custodian.

Some would consider Swan Bitcoin a Coinbase alternative for buying and storing BTC in the US. While Coinbase is the dominant player in the exchange business, Swan simplifies BTC investment for retail and institutional investors.

Essential Security Tips To Safeguard Your BTC

The persistent attempts to hack BTC are a stark reminder of the ever-present risks lurking in the digital world. For users, it underscores the importance of personal security measures. Among these are enabling two-factor authentication and using hardware wallets for long-term storage of cryptocurrencies.

The following are some concepts and tips that will help you protect your BTC holdings:

Enabling two-factor authentication (2FA)

Two-factor authentication (2FA) provides a second or additional layer of account security by requiring a second form of ownership verification outside your password. It is best defined as a process that increases the likelihood that a person is who they say they are.

Rather than simply using a username and password, the 2FA process requests users to provide two authentication factors before accessing a crypto-related wallet, app, or platform.

Organizations must use 2FA to protect their data and users in the face of a high-risk cybersecurity landscape, specifically in BTC and crypto, wherein you can expect a higher volume of increasingly sophisticated cyberattacks.

One helpful way to frame 2FA is as a process that encourages people and organizations to stop solely relying on passwords to enter applications and websites.

With 2FA, cybercriminals have more difficulty stealing users’ identities or accessing their devices. The measure also helps organizations fend off attackers, even when a password has been stolen from one or several users.

Companies and individuals are using 2FA to prevent common cyber threats. These include phishing attacks that use users' passwords and spoof targets' identities after gaining credentials.

Setting up 2FA for Bitcoin

To set up 2FA for your BTC wallet, download a trustworthy authenticator like Authy, Google Authenticator, or other comparable apps.

Access your BTC account and look for the 2FA section. Click "Enable 2FA". Link your account to the authenticator app by selecting "Scan QR Code" or "Add Account" on Google Authenticator. Afterward, scan the QR code shown on the BTC or crypto platform.

Some systems provide additional backup codes called recovery keys. These codes are vital for account retrieval. You must store these codes in a safe location. If you misplace or lose your device with the corresponding authenticator app, you can use the backup codes to recover your Bitcoin wallet or account access.

To complete your setup, you must enter the time-based one-time password (OTP) generated by the authenticator app when asked by your BTC or crypto platform.

Log out of your account and try to re-access it to test your 2FA setup. This time, the wallet, app, or platform should ask you for an OTP from your authenticator app.

Other 2FA techniques utilize SMS or email verification. While these are better than nothing, they are less safe and vulnerable to more attacks. SMS is susceptible to SIM-swapping attacks. Utilizing an authenticator app is deemed more secure.

Hardware-based 2FA is a more stringent security measure that involves physical devices like YubiKey for verification. However, authenticator apps will do very well for regular everyday use.

Ensure that your authenticator app is up to date and that your recovery keys are kept in a safe place, preferably offline.

Hot vs. cold wallets

As a BTC holder, you must understand the difference between hot and cold crypto wallets. Hot wallets are software that stores your BTC private keys on a device that's online or connected to the Internet. They are convenient and easily accessible via online devices like mobile phones, tablets, or laptops.

Hot wallets often have more activity—they usually handle smaller, more frequent BTC transactions—and are convenient for trading. However, because they are online, they are vulnerable to hacks.

On the other hand, cold wallets aren't connected to other devices or the Internet, making them less vulnerable to hacks and a more secure method of storing BTC private keys.

Cold wallets are usually hardware devices that resemble modified USB sticks or mini plastic cards with buttons and screens. They cost between $50 and about $300, although they could be more expensive. Popular brands include Ledger and Trezor.

Cold wallets like paper or metal wallets that record your private keys can be more straightforward. Their enhanced security is derived from their being offline. To trade funds from a cold wallet, you need to move them to a hot wallet that's connected to a crypto exchange.

When you set up your hardware wallet, remember to write down your recovery seed phrase on paper and store it offline in a highly secure location. Please do not share this information with anyone or store it digitally.

Stay updated with the latest security measures

The Bitcoin and crypto space are continually evolving, and so are the hacking methods that threaten them. Thus, it is crucial to stay abreast of the latest security measures.

Keep all your software updated to protect against newly discovered vulnerabilities. Read reputable sources for updates and security news.

Protecting Your BTC Requires a Proactive Approach

In a dynamic tech and crypto sphere, the only way to stay ahead of hackers is to be proactive about your security. Ensure you have all the basics covered: choosing a secure platform, enabling two-factor authentication, and using cold storage or hardware wallets to protect your BTC wealth.

However, as hacks and exploits become more sophisticated, you can only fully secure your BTC when constantly updated on the latest security news. Also, ensure that your platforms and apps are continually on top of threats. If you are a buy-and-hold investor, ensure that your BTC funds are in cold storage.

Security in BTC can be effectively summarized by the old and oft-quoted adage from the early days of Bitcoin: "Not your keys, not your coins." Make sure you have ultimate control over your private keys. And if you do choose a platform to hold them temporarily or entrust them with custody, understand the nuances of the agreement and infrastructure.

Bitcoin was meant to be decentralized, so the more autonomous you are about managing your keys, the better security you have.

This is a guest post by Ivan Serrano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.