Bitcoin's first halving was 11 years ago.

What will this one bring?

BITCOIN BOX SCORE

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Bitcoin Dominance: 53.1%

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Bitcoiners,

This week marks the 11th anniversary of the first halving of the bitcoin block reward. In bitcoin’s history, halvings are important historical events that automatically shrink the supply of new bitcoin.

Let’s mark the occasion by taking a look at bitcoin’s halving history all the way to the upcoming halving, projected to take place in April of 2024.

Halvings occur automatically about every four years to reduce the block rewards that miners receive for constructing new blocks. The algorithm used for mining bitcoin has halvings built in.

Before the first halving, the miner who successfully constructed a block received 50 bitcoins. The first halving, which occurred on November 28, 2012, reduced the block reward to 25 BTC. At that time, one bitcoin cost $12, which is about 300,000% below the current price. 

The next halving occurred in 2016, and reduced the block reward to 12.5 bitcoins. Four years later, in 2020, the block reward became 6.25. In April, it will become 3.125.

If you look at the history of bitcoin’s price, it’s easy to notice that prices seem to correlate to these halving “epochs.” After each halving, bitcoin's price surged into a new range. This is not surprising since this dynamic is described by the most iron-clad law of economics: the law of supply and demand.

Halvings are how bitcoin’s scarcity is guaranteed. They are a reason for optimism about bitcoin’s price above and beyond the effects of the up and coming spot bitcoin ETF products.

Bitcoin's mining algorithm has 29 more halvings built in. The last one is expected to take place in 2140, when the maximum supply of (roughly) 21 million bitcoins is reached, and no new bitcoins will be minted ever again.

With that, let's dive into the news.

NEWS

Mainstream media’s latest directive: downplaying inflation ♟️

The Biden 2024 reelection campaign, led by former White House staffer Rob Flaherty, is intensifying efforts to combat “misinformation,” focusing on alleged "inflation-related falsehoods." The Washington Post, for example, released a video "debunking" a viral TikTok video depicting the rising cost of fast food and demonstrating that inflation "isn't that bad."

2023 2024 or 1984?

This incident follows the Missouri v. Biden case, which revealed White House collaboration with tech companies to suppress COVID-19 information. As we approach 2024, we can expect the government to dramatically intensify its propaganda campaigns.

Will Congress pass crypto legislation in 2023? 📄

House Financial Services Committee vice chairman and Digital Assets Subcommittee chair Rep. French Hill joined CNBC this week to discuss the outlook for cryptocurrency legislation this year. The congressman said he expects Congress to pass stablecoin legislation and a broader cryptocurrency framework in early 2024.

What's in the legislation? Does it have a chance?

The stablecoin bill, if similar to the current one proposed this summer, would mandate issuers to back stablecoins on at least a 1:1 basis. Stablecoins could only be issued with a permit, and issuers would be regulated like banks, which means they would be subject to the Bank Secrecy Act and other laws. 

Rep. Hill also stated that the crypto framework that Congress is currently considering would provide the SEC and CFTC with "what the rules of the road are.”

Both bills face opposition, and it is anyone's guess when the U.S. will catch up with the rest of the world on digital asset legislation.

China faces looming shadow banking crisis 🏦

Arrests, termed "criminal coercive measures," have been made of employees of Zhongzhi Enterprise, a major Chinese shadow lender. The lender is facing financial turmoil, which portends broader economic trouble. Zhongzhi is insolvent, with at least $31 billion of debt. The news comes amid other bad news for real estate and equities in China.

Problems keep piling up.

Onlookers speculate that the impact of Zhongzhi's failure could be larger than that of embattled property developer Evergrande.

Unchained releases bitcoin adoption report 📈

According to a new report by Unchained, a quarter of Americans and over half of surveyed investors own bitcoin. The survey, which included 402 U.S. investors, found that 95% of bitcoin owners plan to increase their holdings in 2024, citing regulatory clarity and potential ETF approval as influencing factors. Additionally, 79% of investors expect bitcoin’s price to surpass its all-time high, with 55% expecting a new high in 2024.

Are we bullish enough?

Learning about bitcoin is a one-way street. As more people grow their confidence in bitcoin, work for bitcoin companies, and own it, adoption and enthusiasm will ratchet up. Meanwhile, the supply of bitcoin will remain constant.

BITCOIN ADOPTION CONTINUES

Botanix Labs launches the first decentralized EVM equivalent Layer 2 on bitcoin, introducing Spiderchain for EVM compatibility and preparing to incubate a bitcoin-based DeFi ecosystem.

Mummolin, a bitcoin startup, raised $6.2 million led by Jack Dorsey to create OCEAN, a decentralized, non-custodial mining pool paying miners directly, countering the centralization and censorship issues associated with traditional mining pools.

MicroStrategy purchases an additional 16,130 BTC for $593 million, increasing its total holdings to 174,530 BTC, as part of its ongoing corporate bitcoin strategy.

HOW BITCOIN WORKS

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

Bitcoin is disinflationary.

"Bitcoin represents the discovery of absolute scarcity for money," writes Robert Breedlove. He is correct. Bitcoin's scarcity is absolute, and there can never be more than 21 million bitcoins. However, once all bitcoins have been mined, the network's monetary policy will shift from disinflationary to neutral or deflationary. 

This sets bitcoin apart from traditional assets like gold and has become a topic of discussion again due to the upcoming halving.

Bitcoin's disinflationary monetary policy is based on its fixed supply mechanism, which is central to its design. New bitcoins are introduced into the system through a process known as mining. However, a halving occurs automatically every 210,000 blocks, which reduces the new issuance rate by half. This deliberate reduction ensures a progressively slower inflation rate, making bitcoin increasingly scarce.

Bitcoin's disinflation contrasts with fiat currencies, whose issuance is subject to centralized control. The U.S. dollar has undergone a staggering 3000% inflation since the Federal Reserve was created.

Gold, which is often considered a hedge against inflation, also falls short of bitcoin's monetary policy. When gold’s price rises substantially, the amount of money and effort invested in finding new gold deposits can be increased. However, bitcoin's supply can never change in response to demand.

With every halving event, bitcoin becomes increasingly "hard," which is one of the reasons why it is the best form of money ever invented.

COIN CHECK

What will the block reward drop to following the upcoming halving?

  1. 6.25 BTC

  2. 21 million sats

  3. 3.125 BTC

  4. 10 BTC

Check your answer at the end of the page.

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ANSWER

3. 3.125 BTC

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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