Bitcoiners,

Recent events might leave you wondering, how could regulators "let this happen"? Isn't it their job to keep markets de-risked and safe? 

To understand what's going on, we need to unpack the banking business model. As Lyn Alden explains, "banks are basically highly-leveraged bond funds with payment services attached, and we treat it as normal to keep our savings in them." 

All banks follow this model: People deposit their money, and banks leverage it for profit. Although nothing is inherently wrong with this, it is not always, as recent events demonstrate – and the assumption that banks are always safe is flat out wrong, with occasional catastrophic consequences. 

Now, suppose a new bank came along seeking to hold deposits for customers in a way that is as de-risked for consumers as possible: Fully reserved, with accounts held at the Federal Reserve, which serves as the central bank of the United States. Since the Fed has access to infinite money (because it can print it), and it pays interest on deposits, this new bank could pass on some interest to customers. This sounds like a completely "de-risked" bank, right?

This model is called "narrow banking," and proposals have existed for many years. However, the Fed refuses to allow these banks to operate, forcing consumers to use an unstable system.

Amid the ongoing bank failures, regulators must not only answer for why they did not see them coming, but also why they blocked the free market for banking services from operating and forcing consumers into risky, esoteric financial constructs, when all they want to do is deposit their savings somewhere safe and go live life.

With that, let's dive in to the news. 👇

NEWS

💨 Fed balance sheet back to ballooning

In March, Jerome Powell approved a 25 bps interest rate hike, though the FOMC no longer expects rate hikes to continue.

About the banking crisis, Powell stated, "I think depositors should assume that their deposits are safe." To which a reporter asked, "Are you saying depositors will be bailed out?" 

Powell replied, "I'm not saying anything more than I'm saying." 🤔

Another key quote from Powell: "We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation."

Reading between the lines: Looking past Powell's Fedspeak, it's safe to assume the Fed's attempt to reduce inflation is over. Last week, the Fed added hundreds of billions of dollars to its balance sheet. It cannot stop this banking crisis without printing more money.

 😱 Bitcoin to $1 million in 90 days?!

Venture capitalist and author Balaji Srinivasan made headlines by betting the dollar price of bitcoin would reach $1,000,000 within 90 days. In a lengthy Twitter thread, Srinivasan justified his position with data from the financial disclosures of banks, claiming they indicate that banks are insolvent and that the monetary policy to save the banking sector will result in hyperinflation – driving a massive exit to bitcoin.

The takeaway: Balaji might be correct over the long term. However, we hate to sound bearish, but as Coinbits advisor Saifedean Ammous outlines:

• Bank insolvencies decrease the money supply.

• The resulting central bank money printing would cause inflation, but hyperinflation takes time. Historically, hyperinflationary events follow years of money printing.

• A $1,000,000 bitcoin requires hundreds of millions of dollars in demand, which, while possible, is unlikely.

On the other hand, bitcoin's superior qualities as money mean that the long-term trend favors its dominance. $1,000,000 bitcoin will come someday, just not this summer. Probably.

BITCOIN ADOPTION CONTINUES

Investor group launches The Bitcoin Opportunity Fund, seeking to raise $100 million to invest in bitcoin-only companies.

Fidelity Digital Assets makes bitcoin available to all clients, allowing retail clients to make commission-free purchases.

Strike CEO Jack Mallers commented "The Fed is blowing up our financial system" in an entertaining interview with CNBC.

Exchange startup Alex raised $2.5 million to build decentralized finance on bitcoin.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week: Bitcoin is too big to fail.  

The winds are shifting as fiat falters and bitcoin rises. 

The fiat system is barely holding up the weight of decades-long poor monetary policy.

At the same time, bitcoin is ticking along, 13 years strong, offering an alternative. Many are taking advantage of the opportunity to jump ship from fiat to bitcoin to preserve access to their wealth. 

Bitcoiners, as heterodox and contrarian thinkers, recognize the problem: The hardest money always wins, and bitcoin is much harder than fiat.

So far, the fight to denationalize money has been relatively peaceful. A few authoritarian countries have banned bitcoin, but the result has had little consequence for the network. Hash rate moves elsewhere.

Now, however, it feels different. How would the world's most powerful nation respond if its financial system collapses, and a massive capital flight to bitcoin begins? 

During the past few months, regulators shuttered Silvergate and Signature Bank, while the SEC, Attorney General, and the Biden Administration issued a litany of attacks on crypto and bitcoin.

The state's war on crypto and bitcoin, which once felt distant to most Americans, is becoming increasingly apparent.

Would bitcoin survive a U.S. government ban?

The answer (with apologies to the architects of the the 2008 global financial crisis): bitcoin is too big to fail.

If certain government agencies or offices issued decrees saying bitcoin is banned, the politicians who hold bitcoin would express political opposition. A public outcry would ensue, with voices across the political and class spectrum.

This would be followed by a cavalcade of legal challenges that would take years to resolve. Since private property, speech, privacy, and many other constitutional protections apply to bitcoin, any bitcoin ban would eventually fail on legal grounds alone.

Perhaps more importantly, a significant number of American bitcoin holders would simply refuse to comply with a bitcoin confiscation order,  because such an order would reinforce the need for money that is free from tyrannical control. And let's not forget the rest of the world, where bitcoin is used in various places as an inflation hedge, medium of exchange, and legal tender.

An unstoppable decentralized global network of nodes and miners supports the bitcoin network. If governments could stop bitcoin, they would have done so years ago, but they can't. 

Bitcoin has already surpassed the point of no return. For more on these ideas, we recommend this excellent 2-minute piece by Andreas Antonopoulos.

Bitcoin has already won. At the same time that more people understand that every fiat currency fails eventually, bitcoin will keep getting stronger.

Ready to get started with bitcoin? Coinbits is the best option. It's fast, safe, and free to create your account.

COIN CHECK

What is the name of the programming language used to write Bitcoin scripts?

1. Python

2. Script

3. C ++

4. Java

Check your answer at the end of the page.

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ANSWER

2. Script.

   Bitcoin's scripting language is called Script. All of the network's scripts are written in the language.

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