BlackRock CEO Larry Fink recently called bitcoin an international asset, claiming it is "digitizing gold."
Fink's views are progressing – a few years ago, he denigrated bitcoin as no more than an "index of money laundering." Still, he and other Wall Street CEOs haven't yet grasped bitcoins implications for the future.
Bitcoin is so much more than digital gold. The protocol's adoption trajectory is more analogous to the Internet itself than simply replacing one asset class. As Jessie Meyers puts it,
The Internet is the digitization of information, while Bitcoin is the complementary digitization of value.
Another example is transportation. Though it might seem abstract, ships, railways, and airplane networks are essentially protocols for moving people and goods. These innovations opened up the world, generating explosive economic growth driven by increases in trade.
The Internet did the same for information. Now, bitcoin will continue this march on a new frontier, value – reshaping the world in new ways as companies and industries build around its foundation.
With that, let's dive into the news.
Bitcoin: the currency of Artificial Intelligence? 🦾
In 2016 prominent Venture Capitalist Balaji Srivanisen gave a lecture on the "Machine Payable Web" thesis, the idea that artificial intelligence (AI) will use digital currency to transact across the internet. At that time, the bitcoin network did not have a scalable Layer 2 solution for quickly processing large amounts of transactions, and AI was still a nascent industry.
Fast forward to today – AI is booming, and the lightning network is here. The CTO of Lightning Labs posted a video on Twitter this week demonstrating how to gate API calls with lightning payments.
Bitcoin is so much more than digital gold – its network and layers will revolutionize finance in ways previously unimaginable. All we can do is strap in and enjoy the ride.
Gold-backed BRICS currency announcement ⚱️
According to RT (Russian state-run media), the BRICS nations (Brazil, Russia, India, China, and South Africa) will announce a new gold-backed trading currency at the upcoming BRICS summit in Johannesburg. The development is another example of the global acceleration toward de-dollarization.
Is the challenge to USD real or just hype?
A gold-backed retail currency would directly compete with the BRICS nations' native fiat currencies, limiting the ability of their central banks to inflate and debase them. For this reason, one can expect any BRICS "gold" backed currency to be strictly limited for settling wholesale transactions.
The move might diminish demand for dollars and dollar-denominated assets. Still, the citizenry of BRICS countries won't see meaningful effects – a move toward a harder wholesale currency only satisfies the political machinations of their leaders.
Yield curve inversion signals recession ⤵️
The U.S. Treasury yield curve, which has accurately predicted most (if not all) U.S. recessions since the late 1960s, is currently inverted, signaling a likely recession to begin in 2024 and extend into 2025. The inversion is characterized by longer-term rates being lower than shorter-term rates.
Every recession has been preceded by a yield curve inversion, with the inversion's duration and depth often predicting the recession's length and severity.
What does the present inversion portend?
The present inversion suggests a prolonged, intense recession. Past performance doesn't guarantee future results, but the present inversion does not bode well for the short-term future of the American economy.
BITCOIN ADOPTION CONTINUES
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is motivating
There is a compelling financial case for learning about and owning bitcoin:
A monetary network’s utility is the inverse of its uncertainty.
Bitcoin’s decentralization makes it the least uncertain monetary network ever created.
Users who run their own node and hold their own keys minimize uncertainty to a previously impossible level.
Yet, a strong moral case also exists for getting involved in the ecosystem as an owner and an advocate.
The problem bitcoin solves cuts deep: there is something deeply flawed with the current state of money production, affecting nearly all aspects of economic life.
This is why countless individuals devote time and energy to furthering bitcoin’s development.
The money we use to transact does not need to be created and controlled by the government.
The state's monopoly on money production has no moral grounding –along with the host of laws, bailouts, deposit insurances, and bureaucratic apparatus that comes with it.
Instead, we should be free to choose the best form of money available. This choice seemed unthinkable after a century of central bank monopoly – until bitcoin came along.
Due to bitcoin's radical decentralization, the government can't stop us from opting out of its system into a new one.
Like other principled movements, the moral case for bitcoin brings people together, binding the community in ways the financial case cannot.
These intertwined moral and financial drivers will spur adoption for generations until bitcoin is so entrenched people will forget that there once was a system that preceded it.
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.