The debate that wasn't

Bitcoin and national debt absent from the discussion.

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BITCOIN BOX SCORE

Exchange Rate: $57,680
Market Capitalization: $1.14T
Hash Rate (90 days): 618.4 EH/s
Transactions (30 days): 19,664,152
Network Fees (economy): 3 sat/vB
Bitcoin Dominance: 57.33%

Western critics often malign bitcoin and crypto more broadly because it has yet to take off as a medium of exchange across the West. They think that “money” must be used to buy coffee, or it’s not money – ignoring that we use assets like real estate, securities, and even artwork as a store of value all the time.

Part of what makes bitcoin more powerful than other stores of value is that individuals and institutions can send it anywhere in the world without permission from governments or other institutions. Nobody can turn off the network or block transfers as can be done with traditional financial institutions.

On the other hand, governments can impose rules and laws governing how individuals and institutions may transact using bitcoin. The people then choose to comply with those rules or face the consequences of noncompliance.

This is a key distinction overlooked by many. Bitcoin makes transactions similar to speech and other natural rights: the individual is free to choose whether to honor their part of the social contract. With fiat currency, this is not the case. Instead, individuals are literally powerless in the face of a monolithic state possessing the supreme power to print, move, and confiscate money within its monetary network.

Citizens' predisposition to follow the rules and regulations in the United States and other Western nations, therefore, allows governments to stymie the adoption of bitcoin and other cryptocurrencies like stablecoins. They do so by taxing these monetary alternatives as property, thus requiring taxpayers to compute their capital gain or loss for each transaction and pay taxes accordingly. The financial burden and time commitment this imposes are significant reasons Westerners are not paying for more things using bitcoin.

An interesting proposal, however, was posted this week by Clemson University Economics Professor Gerald Dwyer:

Transactions using foreign currencies, in contrast, do not require paying capital gains tax for gains under $200. There is no reason not to treat cryptocurrencies the same way. Indeed, there have been several proposals to do exactly that.

For example, Robert F. Kennedy, Jr. proposes eliminating capital gains taxes on de minimis transactions in cryptocurrencies. “De minimis” is a legal term from Latin that means “sufficiently unimportant that it can be ignored.” A $200 gain is regarded as de minimis for foreign currencies. Why not for cryptocurrencies?

Today, bitcoin and other cryptocurrencies are only used as a medium of exchange in nations with exceptionally poor government currencies or forward-thinking countries like El Salvador that have established bitcoin as legal tender. Such debasement seems far away in the West, but our unprecedented debt load and inability to stop spending makes it inevitable. In the meantime, a move to treat bitcoin and other cryptocurrencies as foreign currencies makes intuitive sense and would likely increase their adoption.

Whether politicians decide to make those changes and allow their largely compliant citizenry to benefit from greater monetary freedom remains to be seen.

Regardless, adoption as a medium of exchange will continue outside the West – or until fiat monies like the dollar inflate so much that citizens have no choice but to ditch them, along with their good faith compliance with unfair laws and regulations.

NEWS

📉 Year-over-year job growth turns negative

The jobs data has been challenging to parse as pundits and the Biden administration have focused on the household survey instead of the establishment survey when presenting analysis to the public.

Many think the household survey is more accurate, and it reveals that the U.S. labor market is weakening, with fewer employed workers than a year ago, despite reported job growth driven by part-time positions. Full-time jobs have fallen by over 1 million, while part-time roles have increased, pointing to a growing imbalance. Other warning signs include rising underemployment, declining temporary jobs, and slowdowns in the manufacturing sector, all signaling a possible recession.

If that is the case, expect the Fed to loosen monetary conditions. If that happens, this attempt at a “soft landing” will have led undeniably to 1970s-style stagflation. Watch the Mises Institute's Ryan McMaken explain what is going on in detail:

⛏️ Bitcoin mining increasingly competitive

Marty Bent nicely summarized the current bitcoin mining landscape this week, writing an article titled Bitcoin Mining Mayhem. Bent writes:

There is no industry in the world that is more ruthlessly competitive than the bitcoin mining industry.

The industry is becoming increasingly competitive as hash price hits near all-time lows and energy resources become harder to secure, especially with the rise of AI data centers. High hardware costs and tight margins make it difficult for miners to stay profitable, leading to a rise in M&A activities.

Companies with access to cheap energy or advanced technology may survive, while others will likely consolidate or face bankruptcy. The trend toward vertical integration, where energy producers mine bitcoin themselves using surplus power, further intensifies competition.

Bitcoin goes unmentioned during Presidential debate

During the presidential debate between President Trump and Vice President Harris, bitcoin was notably absent from the conversation, despite Trump's previous support for the industry, including in his landmark speech at Bitcoin 2024.

Instead, the debate focused on criticisms regarding each candidate's handling of broader social and economic issues, such as inflation, with little to no mention of new technologies or the regulatory challenges standing in the way of the re-industrialization of the United States.

National debt wasn’t important enough to mention either. 🤷

The absence of bitcoin discussion could suggest that Trump did not view it as a debate strength, and Harris chose not to attack his pro-bitcoin stance. This outcome can be seen as neutral or positive for an industry facing heavy regulatory pressure in the U.S.

National debt, which will eventually destroy the fabric of every nation that allows it to get out of control, was not deemed worthy of a mention by the moderators or either candidate. A possible explanation is that we have all finally accepted that there is no solution, and we will just need to see how things play out.

Lyn Alden is correct. Nothing stops this train.

BITCOIN ADOPTION CONTINUES

Standard Chartered Bank predicts bitcoin could reach $125K by year-end if Trump wins the U.S. election or $75K if Harris wins, with regulatory progress expected regardless of the outcome.

TEPCO, Japan’s largest power company, is using excess renewable energy to mine bitcoin, turning surplus energy that would otherwise be wasted into a new revenue stream​.

An Australian bitcoin ETF will integrate Hoseki’s proof-of-reserves feature, enhancing transparency and trust by providing verifiable bitcoin holdings to investors.​

Metaplanet has added ¥300 million in bitcoin to its holdings, continuing to execute what is now known as the "MicroStrategy playbook."

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HOW BITCOIN WORKS

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FDIC insurance, moral hazard, and bitcoin

FDIC insurance, which guarantees deposits up to a specific limit (unless a bank is deemed too big or important to fail) creates a moral hazard by encouraging banks to take on excessive risk. Since depositors are protected from losses, they have little incentive to scrutinize a bank’s financial health, allowing banks to pursue riskier ventures without fear of losing customers.

Historically, banks would post reserve levels, and depositors would choose institutions based on their perceived risk. This transparency and competition fostered a healthier banking environment.

FDIC insurance, however, shifts this responsibility, leading to riskier behaviors, as banks are confident they will be bailed out in case of failure. This mispricing of risk, as seen when FDIC premiums are set below the actuarially fair rate, has been linked to financial crises like the Savings & Loan collapse and the 2008 financial crisis.

Bitcoin offers a solution by allowing individuals to take custody of their assets, eliminating the need for intermediaries like banks. With bitcoin, users can "be their own bank," holding and securing their assets independently.

Moreover, for those using exchanges or financial institutions to custody their bitcoin, institutions can easily implement a proof of reserves process that would allow for the transparent verification of their holdings, ensuring the ability for their customers to asses solvency without needing government insurance schemes like the FDIC.

This system could remove the need for deposit insurance entirely, fostering a money and banking ecosystem where risk is more appropriately managed.

On The Bitcoin Standard Podcast, our own Dave Birnbaum talks about how Coinbits.app is using bitcoin to build an innovative operating system for money. Listen now: Spotify | YouTube | Apple | Fountain

COIN CHECK

When was bitcoin’s first block, known as the genesis block, mined?

  1. 2013

  2. 2009

  3. 2008

  4. 2011

Check your answer at the end of the page.

FROM THE MEME POOL

ANSWER

  1. 2009.

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