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Why does "crypto" even exist?
Did anyone seriously think images of monkeys would make them rich?
Dave Birnbaum & David Waugh
June 08, 2023
BITCOIN BOX SCORE
Exchange Rate $26,480
Market Capitalization $513.6B
Hash Rate (90 days) 349.8 EH/s
Transactions (30 days) 14,061,150
Network Fees 28 sat/vB
Bitcoin Dominance 48.12%
Bitcoiners,
The SEC is suing Binance and Coinbase, the largest global crypto exchanges.
Digging deeper, why does "crypto" outside of bitcoin even exist in the first place?
To an extent, the answer lies with interest rate policy. Interest rates are the price of time, and for the last decade, the Federal Reserve artificially suppressed rates, lowering the cost of time (i.e., borrowing).
The story followed the typical boom and bust pattern. Investors looking to ride bitcoin's coattails pumped artificially cheap money into short-sighted, valueless crypto tokens and projects.
Then came the bust. Recent interest-rate hikes have made money expensive again, and crypto projects, alongside other bubbles, collapsed everywhere.
And now, regardless of the SEC's recent actions, venture capital "crypto" investments have plummeted. Some of this money is going toward AI, but it is also flowing to bitcoin companies creating valuable technologies and services, not vaporware and hype.
With that, let's dive into this week's news.
NEWS
The SEC v. Crypto
As anticipated, the SEC has unleashed a regulatory assault on Binance and Coinbase. The agency alleges that Coinbase operated as an unregistered security dealer, and Binance faces steeper allegations. SEC Chair Gensler clarified in statements on Tuesday:
"We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions."
"Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law."
Is it all just politics?
One thing to keep in mind is that the SEC is a political operation, like any government regulatory agency.
Thus this week's regulatory actions could be attributed to Gensler saving face for past inaction on FTX and facing a proposed Republican bill that would curtail the SEC's regulatory authority, delegating more power to the CFTC and establishing transparent rules for crypto startups.
Volcano Energy makes its debut
After tapping legendary economist and Coinbits advisor Saifedean Ammous to serve as a bitcoin advisor, El Salvador is now capitalizing on its rich natural resources to create "Volcano Energy," setting the stage for a significant leap into the global bitcoin mining industry.
The country plans to build a 241 MW renewable power park in the Metapán region, combining solar and wind projects, aiming to establish one of the world's largest bitcoin mining farms. The project, which has a $1 billion commitment, will be bootstrapped by key industry leaders, developers, manufacturers, and mining experts, with the government securing a 23% share of the revenue.
BITCOIN ADOPTION CONTINUES
ZEBEDEE, a Lightning-powered ecosystem company, introduced an alpha version of its Social app, a novel social media layer where content and engagement translate into monetary value, and creators retain 99% of their earnings.
Cathy Wood's technology investment firm Ark Invest purchased roughly $15 million worth of shares in Jack Dorsey's bitcoin-focused company, Block, Inc.
BTC Prague and Fedi are collaborating to debut the inaugural "Pop-Up Federation," offering BTC Prague conference attendees a unique chance to experiment with Fedi Alpha, the early version of the federated operating system.
Pouch.ph, a bitcoin payment firm launched in 2021, announced that it is enabling over 400 small businesses to accept and process bitcoin payments in the Philippines.
Zion, a Web5-based social network, launched an update allowing private, encrypted bitcoin transactions via the Lightning Network in direct messages, bolstering user privacy and freedom from censorship.
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is philosophical
To some, bitcoin might seem like just a tool. Yes, a powerful one, but still nothing more than an innovative new technology.
Given its digital nature, role as money, and incentive structure, it's no surprise that computer scientists and economists were among the first enthusiasts.
Yet, bitcoin and its broader community have become much greater today than technologists and economists merely tinkering and writing about a new digital currency. Bitcoin is a global movement – of dreamers, skeptics, and everything between – from diverse backgrounds and locales.
There's clearly something present that makes it attractive beyond its technical applications.
Under the surface, each component of bitcoin, from its cryptography to its reliance on peer-to-peer protocols, to proof-of-work, is not groundbreaking in isolation. These elements had been around for years before bitcoin was invented in 2008.
Bitcoin was a breakthrough because the combination of these parts created a dynamic, rock-solid financial network that has functioned flawlessly for over a decade.
Satoshi remains anonymous, but who ever he, she, or they were, they were a polymath. Designing a beautiful system like bitcoin required a strong grasp of economics, computer science, history, mathematics, and cryptography.
To understand bitcoin as a complete system, it’s beneficial to take a philosophical approach. Unlike other disciplines, philosophy is genuinely interdisciplinary and does not restrict itself to one dataset or framework.
Ready to get started with bitcoin? Coinbits is the best option. It's fast, safe, and free to create your account.
COIN CHECK
Approximately how many years does it take for a bitcoin halving event to occur, reducing the amount of bitcoin created and rewarded to miners by half?
Two years
21 years
Eight years
Four years
Check your answer at the end of the page.
ANSWER
4 – Four years
The bitcoin halving occurs every 210,000 blocks, which is roughly every four years. The next halving is expected in April 2024.
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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