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BITCOIN BOX SCORE

Exchange Rate: $66,970
Market Capitalization: $1.32T
Hash Rate (90 days): 606.9 EH/s
Transactions (30 days): 18,573,604
Network Fees (day): 26 sat/vB
Bitcoin Dominance: 55.64%

What do these numbers mean?

We hear a lot about “game theory” but most people don’t understand what it means. Let’s take a moment to explain – and reflect on how it relates to this moment in the history of bitcoin.

Game theory provides a framework for analyzing decisions among rational actors. It can be used to interpret the actions of individuals, businesses, and nations as they cooperate and compete to meet their strategic objectives.

Consider the Prisoner's Dilemma, a classic scenario used to explain game theory. Imagine that there are two partners in crime being interrogated in separate rooms. If one snitches, he goes free, but the other goes to jail for 10 years. If both stay quiet, they both go to jail for 2 years. If both snitch, they both get 5 years. Since they can’t coordinate, how do they decide what to do in order to minimize personal loss?

Nation states and institutions may approach bitcoin adoption in a similar way. One might choose not to adopt it, but they know others might – which would force them to eventually adopt it anyway, but at a higher price. This idea was succinctly summarized by Fidelity analysts back in 2022, soon after El Salvador announced its bitcoin strategy:

In other words, even if you don’t believe bitcoin will definitely become a reserve currency, it is rational to assign a non-zero probability that it could. And in that case, acquiring some bitcoin before it is widely adopted mitigates this risk at relatively low cost.

And yet, if large institutions and nation states follow through on this line of reasoning and acquire even a small amount of bitcoin as insurance, the law of supply and demand will cause bitcoin’s purchasing power to rise, generating a feedback loop that leads to wider and faster adoption.

The payoff for early and sustained accumulation is clear in this high-stakes game.

Many analysts believed this game would kick off soon after the announcements by El Salvador and Tesla about their bitcoin accumulation strategies back in 2022. It didn’t – or did it?

Of course, if you are playing this game, it is in your interest to play it as quietly as possible. Word will get out eventually, and when it does, you want to have established as strong as a playing position as possible – by accumulating bitcoin while the price was low. There is evidence that this is already happening. Bhutan started mining bitcoin in 2019, but the world only found out about that in 2023.

Now, the frontrunner in the United States presidential election just declared that he supports bitcoin after meeting with top mining executives.

Let the games begin.

NEWS

Trump wants bitcoin to be “made in the USA”

Former President and current election frontrunner Donald Trump announced his desire for all remaining bitcoin to be mined in the U.S., framing it as a defense against central bank digital currencies (CBDCs). During a meeting with executives from CleanSpark Inc. and Riot Platforms, Trump emphasized that domestic bitcoin mining would contribute to U.S. energy dominance.

Changing perceptions

Trump's push for U.S.-based bitcoin mining portends a shift in how the industry is perceived, promoting national energy use and security while countering foreign influence.

Are jobs reports honest?

Non-regime media outlets have questioned the Labor Department's reports for months, which attempt to paint the economy as "strong" under the current administration. Last Friday's nonfarm payrolls report was the latest example, claiming a rise of 272K jobs, but alternative analysis reveals a drop of 408K actual employed workers.

Even Powell balks at "tall tales."

Last week, the New York Times wrote that President Biden loves to "tell tall tales." It appears his administration may be taking those cues when they publish economic data. Fed Chair Jerome Powell all but accused the administration of such at a press conference that payroll numbers might be "a bit overstated."

🇸🇦 Saudi Arabia joins project mBridge

Project mBridge, a Bank of International Settlement (BIS) cross-border CBDC project, has reached its minimum viable product stage, inviting private sector proposals for integration and expanding its reach with the Saudi Central Bank joining as a full participant. In addition to the IMF, World Bank, and central banks, Goldman Sachs, HSBC, and China's largest state-owned banks are also working on the project.

CBDC: Coming to a nation near you.

The BIS has stated that it is compatible with the Ethereum Virtual Machine. Expect more projects like this as countries create alternatives to the petrodollar system and bitcoin network. For an overview of the various CBDC projects active around the world, this is a great resource.

🏦 FOMC keeps rates steady

The Federal Reserve left its benchmark interest rate unchanged at 5.25%-5.5%, the highest level in 23 years, and only plans one rate cut in 2024 as it waits for more evidence of cooling inflation. Fed Chair Jerome Powell emphasized the need for more data to confirm that inflation is returning to the 2% target before considering further rate cuts. This policy will cause the cost of mortgages, auto loans, and credit card debt to remain elevated for the foreseeable future.

One cut this fall is likely – because of politics.

Cantor Fitzgerald CEO Howard Lutnick stated in a CNBC interview that the Fed is slow and holding steady, but will cut rates in September as a political gift to the current administration. See the full clip below.

The Federal Reserve is technically independent of the federal government. On the other hand, the purpose of a system is what it does.

BITCOIN ADOPTION CONTINUES

Itaú Unibanco, Brazil's largest bank, launches bitcoin trading for its 60 million customers via its Ion investment app.

DeFi Technologies Inc. adopts bitcoin as its main treasury reserve asset, starting with a purchase of 110 bitcoins.

Bitdeer Technologies unveiled its new SEAL04 chip, designed to reduce bitcoin mining energy consumption, with mass production set for Q4 2025.

Japanese firm Metaplanet purchased another ¥250 million ($1.8 million) worth of bitcoin, continuing its strategy of accumulating corporate bitcoin reserves similar to MicroStrategy.

Samson Mow predicts an "explosive" price action for bitcoin, potentially surging to $10 million per bitcoin, driven by current market conditions.

HOW BITCOIN WORKS

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

What is the TARO protocol?

The TARO (Taproot Asset Representation Overlay) protocol for bitcoin, is a new protocol designed to enable the issuance, transfer, and management of various assets on the bitcoin blockchain.

TARO allows developers to embed asset metadata into bitcoin transactions, enabling the creation and management of assets like stablecoins and other digital tokens directly on the bitcoin network. This approach benefits from bitcoin's robust security and decentralization while using the Lightning Network for fast, low-fee transactions​.

TARO essentially creates "UTXOs within a UTXO," embedding asset data inside transaction outputs. This method ensures that the assets benefit from bitcoin's double-spend protection and other security features.

Additionally, TARO uses Schnorr signatures and Merkle trees to improve scalability, allowing for efficient verification and transfer of assets without burdening the Bitcoin Network. The protocol supports multi-hop transactions, meaning that assets can be routed through multiple nodes on the Lightning Network, enhancing liquidity and network effects​.

The integration with the Lightning Network is a key feature of TARO, allowing assets to be transferred quickly and cheaply. This integration enables users to manage multiple types of assets, such as USD-denominated stablecoins and BTC, within the same wallet and transact seamlessly across the Lightning Network.

The implications of TARO are significant, as it will bring the ability to manage various digital assets within the security framework of the Bitcoin Network.

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COIN CHECK

Which of the following technologies is used to optimize the privacy and efficiency of bitcoin transactions by allowing multiple transactions to be combined and verified with a single signature?

1. TARO

2. Taproot

3. Segregated Witness

4. Schnorr Signatures

Check your answer at the end of the page.

FROM THE MEME POOL

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ANSWER

4. Schnorr Signatures are a type of digital signature scheme that offers several advantages over the ECDSA scheme originally implemented by Satoshi Nakamoto. At the time, Satoshi knew Schnorr signatures were a better choice, but they were protected by a patent at the time.

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