BITCOIN BOX SCORE
Exchange Rate: $26,000
Market Capitalization: $506.3B
Hash Rate (90 days): 378.3 EH/s
Transactions (30 days): 13,858,152
Network Fees (day): 6 sat/vB
Bitcoin Dominance: 49.25%
The allure of ease and convenience – it's what financial giants like BlackRock are betting on as they angle for SEC approval of spot bitcoin ETFs.
These ETFs may lure you with promises of "simplifying" your bitcoin allocation, but make no mistake – they are rooted in the same antiquated system that bitcoin disrupts.
When you use “financial instruments” to expose your portfolio to the price of bitcoin, you get all of the volatility of bitcoin’s price with none of the offsetting benefits of bitcoin like decentralization, censorship resistance, and ownership without counterparty risk.
Why settle for half-measures that enrich Wall Street when you can hold physical bitcoin and truly live in financial freedom?
Don't fall for the illusion of safety and convenience that spot ETFs offer. Stick to what's real — bitcoin itself. And bitcoin companies worldwide are working hard to make it easy for anyone to acquire real bitcoin to protect themselves from an ever-increasingly uncertain future.
Bitcoin > Wall Street financial engineering.
With that, let's dive into the news.
The Fed sticks taxpayers with a new bill 🏦
Since its inception, the Federal Reserve has been profitable and remitted profits to the Treasury. As of this year, however, the Fed faces unprecedented financial losses, accumulating nearly $93 billion in operating deficits and shifting this burden onto taxpayers by raising federal debt.
Amid this crisis, Federal Reserve member banks, which are legally obliged to cover such losses, have not been transparent about this liability, posing risks to the financial system and public trust.
The Fed should get member banks to foot this bill, not taxpayers – but it is constrained from doing by recent increases in interest rates. Still, the least member banks could do is disclose the risk that they could be called upon to cover the Fed’s tab.
Their hesitance to do so, and the fact that they might be forced to do so anyway, increases uncertainty and risk in an already fragile banking system.
Grayscale beats the SEC
A federal appeals court has ruled that the SEC must reconsider Grayscale Investments' application for a bitcoin ETF, dealing a blow to SEC Chair Gary Gensler's approach of "enforcement via regulation" toward the cryptocurrency industry. The decision led to a temporary surge in bitcoin's price.
It’s satisfying to hear a judge tell the SEC that its decision fell "short of the standard for reasoned decisionmaking." The ruling makes it more challenging for the SEC to deny the bitcoin ETF applications already submitted by numerous firms.
Bloomberg analysts raised predictions of approval to "75% of spot bitcoin ETFs launching this yr (95% by end of '24)."
That said, the SEC can continue to delay responding to the applications, which it did today again when it delayed six spot ETF apps for another 45 days.
Treasury unveils new “crypto” tax proposal
The U.S. Treasury and IRS have proposed new regulations requiring digital asset brokers to report certain sales and exchanges of cryptocurrencies, aimed at closing the "tax gap" and focusing on wealthy taxpayers.
The rules, expected to be implemented by 2026, would also mandate reporting for using digital assets in real estate transactions and could purportedly generate $28 billion in government revenues over a decade.
Nothing has been written into law yet, and there is still a period for public comments on the proposal. That said, the main result of these new rules would be more consumer tax forms, especially for those who make purchases across multiple exchanges and platforms.
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is a new ledger.
In her excellent new book, Broken Money (which we recommend readers acquire posthaste!), Lyn Alden writes:
At its core, money is a ledger. Commodity money serves as a ledger governed by nature. Bank money serves as a ledger governed by nation-states. Open-source money serves as a ledger governed by users.
Bitcoin's consensus mechanism changes the way we understand and use money. Unlike bank money, which central bankers and governments control, bitcoin operates on a decentralized, open-source ledger.
This is more than a technological advancement; it shifts power dynamics. The decentralization of bitcoin's ledger means it isn't susceptible to the same vulnerabilities plaguing today's centralized money systems.
There's no single point of failure, no corruptible institution, and no unilateral decisions that can be imposed on people. Instead, transactions are verified by a global network of nodes – ensuring bitcoin is transparent and fraud resistant.
Unlike the capricious regulations of central banks, the ledger's rules can't be altered to serve the interests of a select few.
The beauty of such a ledger lies in its simplicity and universality. Regardless of location or social standing, anyone can participate, empowering ordinary people in places where banks have failed or are nonexistent.
An open-source, decentralized ledger is a groundbreaking innovation. It returns the control of financial transactions to the individual and guarantees the integrity of the money we all use.
Bitcoin is not just a new ledger – it's a new paradigm for economic freedom.
4. Difficulty Adjustment Algorithm
Bitcoin’s difficulty adjustment and reward halvings are the foundation of Bitcoin’s programmatic supply system. On average, the Bitcoin network is designed to create one block every ten minutes. Satoshi specifically chose this feature as a tradeoff between fast confirmation time and the amount of work wasted due to chain splits and invalid blocks. This is handled through difficulty adjustments, periodically adjusting the hash target value for blocks. As more miners join, the rate of block creation will go up. As the rate of block creation goes up, the mining difficulty rises to compensate, pushing the block creation rate back down to its designed 10-minute average.
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.