Bitcoin gaining on Fedwire 👀

Bitcoin's network processed more than Fedwire last year.

TOGETHER WITH

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BITCOIN BOX SCORE

Exchange Rate: $70,870
Market Capitalization: $1.39T
Hash Rate (90 days): 597.2 EH/s
Transactions (30 days): 10,962,091
Network Fees (day): 8 sat/vB
Bitcoin Dominance: 54.02%

At the time of this writing, bitcoin's dollar exchange rate sits above $70,000, positioning it as the seventh largest base money in the world. This milestone reflects bitcoin's growing role as a foundational monetary network. Yet, some still argue that bitcoin is not "scaling" fast enough because you can’t walk into most stores and pay with it.

This argument, led by those who think the definition of a useful asset is tied closely to its role as a medium of exchange, misunderstands that bitcoin’s utility as sound money is being recognized the world over.

It also flies in the face of reality – bitcoin is scaling rapidly.

On a recent TFTC podcast, guest Matthew Mežinskis showcased bitcoin's substantial annual transaction volume growth. In 2023, bitcoin processed nearly double the number of payments as Fedwire.

There is still a gap in total volume transferred – Fedwire moved $1.083 quadrillion compared to bitcoin's $1.36 trillion – but the ratio between the two is narrowing.

The debate around scaling bitcoin and incorporating new features should consider the network's current achievements, trajectory, stability, and security principles. This approach emphasizes enhancing bitcoin's utility without rushing changes to its core protocol.

Bitcoin has achieved remarkable scale. 

Bitcoin's is well on its way down the path to a universal monetary system, and the way forward is clearer than ever.

NEWS

💸 Federal debt rollovers exacerbate fiscal crisis

The U.S. is experiencing a rapid escalation in federal debt interest, significantly outpacing initial projections, with the Treasury borrowing at a rate nearly double the Biden administration's forecast. This acceleration is exacerbated by the practice of rolling over debt without repayment, leading to an impending debt crisis as interest rates rise and the government faces the daunting task of rolling over approximately $8 trillion in debt this year alone.

The debt spiral… is spiraling.

The implications of this trend are dire. Interest payments on the national debt are consuming an increasing portion of the federal budget and taxpayer revenue, crowding out public spending and pushing the economy toward a precarious fiscal position.

💲BlackRock tokenizes more fiat assets

BlackRock's Ethereum-based tokenized fund, BUIDL, attracted $245 million in deposits in its first week, indicating strong demand for the product and making it a significant player in the burgeoning tokenized U.S. Treasury market. Supported by Ondo Finance's transfer of $95 million, BUIDL's success highlights the growing interest in tokenizing traditional financial assets like U.S. Treasuries, aiming for faster settlements and greater efficiency.

Lipstick on a pig.

This development may portend the death of "private blockchains,” which were expected to play an important role in the tokenization of traditional finance. Instead, BlackRock is using Ethereum, a public blockchain. While interesting, there is nothing revolutionary about Blackrock making use of Ethereum to sell debt-based financial instruments.

States abuse federal pandemic aid

A study by the American Enterprise Institute (AEI) reveals that many states diverted federal pandemic aid from intended uses like healthcare and education to general funds and public pensions, which serves as yet another example of COVID fund misuse and over-dependence of states on federal money.

Perverse incentives.

With states increasing their revenues and spending in proportion to federal funds received, particularly in pension contributions, and the federal prohibition against using these funds for pensions largely ignored, this story is a testament to what happens when incentives are misaligned. Noticing a trend?

🏢 Commercial real estate crisis soon?

The commercial real estate crisis has been looming for months, yet no major disruptions have yet occurred. This is because lenders and sellers are staving off refinancing and selling, a practice known as “extend and pretend.” At some point, they won’t be able to play this game any longer. The Wall Street Journal describes the situation thusly: "America's Office Fire Sale Has Barely Begun." 

Will there be ripple effects?

When it happens, commercial real estate loan defaults could cause hundreds of U.S. banks to fail, potentially leaving taxpayers responsible for trillions in losses. The crisis stems from the Federal Reserve's rapid interest rate hikes in response to inflation after the ZIRP (Zero Interest Rate Policy) era. Interest hikes have placed immense pressure on the commercial real estate sector, and by extension, the regional banks that serves it. This situation is exacerbated by the debt maturing soon, with an estimated 385 American banks at risk.

BITCOIN ADOPTION CONTINUES

Giga Energy expanded bitcoin mining operations to Argentina, utilizing wasted energy from natural gas flaring on oil fields.

Neutronpay secured $1.5 million in funding to expand its Lightning Network payment solutions in Southeast Asia, aiming for instant, cost-effective transactions.

The Bitcoin Company introduced a Remittances API for instant payments to Mexico and Brazil, planning to expand globally, offering a low-cost, fast alternative to traditional remittance services.

Goldman Sachs saw a resurgence in client interest in bitcoin driven by the approval of spot ETFs in the US, signaling a broader acceptance in traditional markets.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Bitcoin is a response.

In the chaotic aftermath of the 2008 financial crisis, marked by failing banks, government bailouts, and a crumbling economy, bitcoin emerged as a beacon of hope and an alternative to the flawed fiat system.

The crisis highlights the perils of central banks' excessive control over the money supply, characterized by the bailout of Wall Street's mismanaged risks through programs like the Troubled Asset Relief Program (TARP) and the initiation of quantitative easing. This period of monetary expansion and artificially low-interest rates led to significant misallocations of capital and inflated asset prices, further entrenching the world in a cycle of debt and instability.

The creation of bitcoin in this environment was no coincidence. It offers a peer-to-peer electronic cash system devoid of central authority, contra the traditional financial systems' reliance on central banks and their penchant for bailouts and endless money printing. The decentralized nature of bitcoin makes it immune to the manipulative policies that led to the financial crisis, allowing individuals to opt out of a system that had shown itself to be fundamentally broken.

As Satoshi Nakamoto articulated, bitcoin's goal is to provide an alternative to the fiat system, which is on a path of monetary ruin. The lessons learned from the crisis and the subsequent actions taken by governments and central banks serve as a powerful reminder of the need for a monetary system not subject to the whims of policymakers or the failures of financial institutions. With its hard-capped supply and decentralized governance, bitcoin represents a return to sound money principles, offering a solution to the problems highlighted by the crisis and a way forward for those disillusioned with the status quo.

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COIN CHECK

What is a coinbase transaction?

  1. The final transaction before the halving

  2. Any transaction on Coinbase.com

  3. The first transaction in each block

  4. A multi-party transaction where addresses are mixed

Check your answer at the end of the page.

FROM THE MEME POOL

ANSWER

  1. The coinbase transaction is the first transaction in each block. This transaction distributes the block subsidy and collects the transaction fees in the block. The website Coinbase takes its name from this term from the bitcoin protocol.

That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.

Until next week!

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