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BITCOIN BOX SCORE

Exchange Rate: $67,840
Market Capitalization: $1.34T
Hash Rate (90 days): 649.6 EH/s
Transactions (30 days): 18,687,113
Network Fees (economy): 2 sat/vB
Bitcoin Dominance: 58.97%

What do these numbers mean?

Bitcoin's enemies are fading fast.

Elizabeth Warren, the U.S. Senator from Massachusetts who advocates for a CBDC and wrote on her website that she is "raising an anti-crypto army," capitulated in a debate against opponent John Deaton, declaring that she's "fine" with people who want to buy and sell crypto.

Why the sudden change in tune?

It is likely because Kamala Harris is trying to court the industry. This strategy has likely to have come about because her handlers now recognize the power of millions of pro-bitcoin voters and billions in revenue bitcoin companies generate every year.

Warren must now fall in line with Harris’s position, or she risks limiting her party’s appeal to an important and growing voter bloc.

Harris is attempting, however poorly, to correct the course of the last few years, during which the Biden-Harris administration took proactive and possibly illegal steps to shut down the industry.

Harris has not gone as far as President Trump, who gave a keynote at the Bitcoin Conference in Nashville and pledged that he would hold bitcoin in reserve at the federal level. But Harris’s new messaging is a notable departure from recent Democratic policy.

This means that no matter who is elected in two weeks, both candidates have been forced to take bitcoin seriously, and the policy proposals of each are improvements over the status quo.

Years from now, the current administration's hostile stance will be considered a short blip when government officials took a misguided view toward a revolutionary new financial technology that permanently changed how we interact with money.

NEWS

📜 Central bankers publish anti-bitcoin screeds. Bitcoin academics fight back

An unprovoked attack by the European Central Bank

A recent working paper by two European Central Bank (ECB) officials criticized bitcoin, claiming it harms society regardless of its price movement.

The authors argued that bitcoin's rise enriches early adopters at the expense of non-holders, potentially leading to instability, inflation, and even threats to democracy. They went as far as suggesting lawmakers intervene in the market to prevent bitcoin's price from increasing.

However, bitcoin academics and industry participants, including Murray Rudd from the Satoshi Action Fund, released a detailed rebuttal. They criticized the ECB paper for misrepresenting bitcoin's purpose, misunderstanding its technology – especially proof-of-work and decentralization – and ignoring its benefits.

The rebuttal also pointed out the authors' conflict of interest, given their involvement in developing a central bank digital currency (CBDC). Historically, when governments try to foist a CBDC onto their citizens, but those citizens can access bitcoin, they choose it – and avoid the government’s digital monopoly money like the plague.

The ECB's attack on bitcoin appears disingenuous, especially considering the central bank’s role in perpetuating wealth inequality through money printing.

As central banks continue to debase their currencies, it's unsurprising they feel threatened by bitcoin's growing adoption. But history has shown that those clinging to outdated systems cannot stifle technological innovation.

Minneapolis Fed joins the fun

The Federal Reserve Bank of Minneapolis also released an anti-bitcoin paper, proposing that governments tax or ban bitcoin to help sustain their ability to run permanent budget deficits.

The authors argue that in an economy where the government relies on continuous deficits financed by nominal debt, bitcoin introduces a "balanced budget trap," which could force the government to balance its budget against its will. By using bitcoin as an example of a fixed-supply "private-sector security" without real resource claims, the researchers conclude that banning or taxing it could resolve this issue, stating:

"A legal prohibition against bitcoin can restore unique implementation of permanent primary deficits, and so can a tax on bitcoin."

Note that the United States currently faces a national debt of $35.7 trillion, with a primary deficit – excluding interest payments – of approximately $1.8 trillion.

The paper has drawn criticism from industry experts. Matthew Sigel, Head of Digital Asset Research at VanEck, commented that, in the Minneapolis Fed is joining other central banks in opposing bitcoin, they aim to ensure government debt remains the only perceived "risk-free security."

💰 Stripe acquires stablecoin platform Bridge for $1.1 billion

Payments processor Stripe finalized a deal to acquire Bridge, a stablecoin platform, for $1.1 billion. Bridge, founded by former Square and Coinbase alumni Zach Abrams and Sean Yu, raised $54 million in funding and counts SpaceX and Coinbase among its clients.

The startup aimed to become the "blockchain version of Stripe," providing a global system that developers can integrate into their applications. This acquisition underscores Stripe's ambition to advance its stablecoin offerings, including facilitating payments through stablecoins like Circle's USDC.

Why it matters

Out of all of the "crypto" mania, stablecoins have emerged as a legitimate use case for individuals to transact more seamlessly with dollars, as well as providing access to dollars in regions where they were previously difficult to acquire.

Though essentially an evolution of the eurodollar and a new, sleeker version of fiat currencies (and therefore a less-sound form of money than bitcoin), they are perceived by non-bitcoiners as a bitcoin-adjacent technology.

This acquisition, the first billion-dollar payments deal in the crypto, will positively boost public perception of the industry and drive us toward a future where individuals and institutions interact more seamlessly with dollar instruments and bitcoin.

🌊 River launches interest bearing bitcoin product

Bitcoin financial services company River introduced a new product called "Bitcoin Interest on Cash," allowing customers to earn interest on their cash deposits, which can be paid out in either dollars or bitcoin. The feature offers a variable interest rate, currently standing at 3.8% as of this writing.

River has partnered with Lead Bank, a Federal Deposit Insurance Corporation (FDIC) member, ensuring that user deposits are protected up to $250,000.

The initiative aims to allow bitcoin users to maintain a cash reserve for everyday expenses while also earning bitcoin, incentivizing customers to keep their cash on River's platform instead of a traditional bank.

Distinguishing itself from other yield-bearing bitcoin and altcoin products that have faced issues in the past, River emphasizes that it offers yield on customer cash, not their bitcoin holdings.

BITCOIN ADOPTION CONTINUES

Bitwise executive Jeff Park predicts that a Trump election victory could push bitcoin's price to $92,000 due to anticipated pro-bitcoin policies.

Bernstein analysts predict bitcoin will reach $200,000 by the end of 2025, calling this forecast "conservative" and suggesting that "if you like gold here, you should love bitcoin even more," according to digital assets lead Gautam Chhugani.

Hedge fund manager Paul Tudor Jones recommends investing in bitcoin, gold, and commodities because "all roads lead to inflation" following the U.S. election.

Per a recent survey, 7.5% of Salvadorans currently using bitcoin for transactions. Nikolaus Hoffman argues that El Salvador's adoption is progressing, stating that "if you think of it as a loading bar, we're already 7.5% complete on our way to 100% of Salvadorans transacting in bitcoin."

HOW BITCOIN WORKS

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

The bitcoin block reward

The bitcoin block reward is a fundamental component of bitcoin's design, serving as both an incentive for miners and a mechanism for introducing new bitcoins into circulation. It plays a crucial role in maintaining the security and functionality of the bitcoin network.

The block reward is the amount of newly minted bitcoins a miner receives for successfully ordering a set of transactions. Miners use computers to run calculations to try to fit transactions into an organized set called a “block” – a process known as mining. When solve a block of transactions, they broadcast the block that they found to all the nodes and users who are listening on the network, and new bitcoin is automatically generated by bitcoin’s sourcecode and sent to the miners as a reward.

The halving mechanism

Bitcoin's protocol includes a mechanism called the "halving" to control the supply of bitcoin. The block reward is cut in half every 210,000 blocks, which equates to roughly four years.

This means that the reward miners receive is reduced by 50% in a predictable four-year cycle, slowing the rate at which new bitcoins enter circulation. The initial block reward was 50 bitcoins per block. After four halving cycles, it has now decreased to 3.125 bitcoins.

Incentivizing Miners

The block reward provides a financial incentive for miners to invest in hardware and electricity to secure the network. Without this reward, mining bitcoin might not be lucrative enough to sustain mining operations, potentially compromising the network's security or slowing its growth.

Transition to transaction fees

This raises an important question. In the future, with so many halvings, will miners earn enough bitcoin to sustain themselves?

Luckily, miners have a second way to earn bitcoin: transaction fees. These fees are attached to every bitcoin transaction, and when a miner successfully orders a set of transactions into a block, they earn all the transaction fees in that block.

When the block reward dissipates and eventually ends completely in about the year 2140, transaction fees will be the primary incentive for miners.

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

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COIN CHECK

Which of the following statements best describes the purpose and mechanism of the bitcoin block reward?

1. It is a fee paid by all bitcoin users for network security.

2. It is a fixed payment miners receive for ordering transactions.

3. It is an incentive for miners, halving about every four years.

4. It is a static reward ensuring profitability without transaction fees.

Check your answer at the end of the page.

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ANSWER

2. It is a fixed payment miners receive for ordering transactions.

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