🎢 Stop the ride and let us off

Bitcoin is an attractive alternative to an ugly system controlled by corrupt and incompetent bureaucrats.

AuthorAuthor

Dave Birnbaum & David Waugh
May 18, 2023

Bitcoiners,

Reflect on the past two years' inflation narrative. The Federal Reserve and the Treasury's assurances of transitory inflation proved gravely wrong, a similar blunder to Ben Bernanke's "subprime is contained" episode. 

Yet, despite their lack of understanding and willingness to mislead the public, we still afford these institutions credibility.

It is reasonable to expect their denial of an impending recession, or worse, stagflation, to be chalked up to another "mistake", followed by blame shifting.

If ever called out for these repeated missteps, Treasury Secretaries and Fed Chairs just claim that they couldn't say what they really thought out loud, because doing so would have destabilized the financial system.

If this is the case, then there's no other way to say it: The system is rigged to fail. Its incentives promote irresponsible policy and derelict spending, constantly propelling the economy in the wrong direction.

Today's brain trust appears poised to repeat previous mistakes. And so, we are all settling into our seats for another session on the merry-go-round.

But now, there's a handle that you can pull to stop the ride and get off – bitcoin.

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NEWS

The Halving: 50,000 blocks away

An interesting milestone passed this week, for those following the details of how the bitcoin network works. The bitcoin "halving," or when the block reward for mining new block's is cut in half, is now only 50,000 blocks away. Expected to occur in April of 2024, this event happens every four years. Because it means that there will be less bitcoin created, which restricts supply, favorable price action often follows.  

Our friends at The Meme Factory are organizing a party in El Salvador to celebrate the event. Find the details here.

Fed vs. Fed

Breaking from tradition, former Fed Vice Chair for Supervision Randal Quarles' sharply criticized current Vice Chair Michael Barr for his report and testimony on the collapse of Silicon Valley Bank. Barr sought to deflect blame from the Fed, instead blaming Quarles and other regulators.

Quarles did not mince words pushing back against Barr's claims, stating Barr's findings are "not just loopy but obviously loopy," and that his report was an "unseemly orgy of recrimination and political maneuvering."

The easy money era is over

Vice Media and several other large companies declared bankruptcy this weekend, unable to cope with the higher cost of capital from Fed interest rate hikes.

From Axios: "S&P Global forecasts that the U.S. default rate will rise to 4.25% by the beginning of next year — from 2.5% currently — or, to 6.5% if there's a serious recession."

The bottom line

The easy money era of artificially low-interest rates spawned a host of "zombie companies" that should've gone bankrupt years ago. They are now facing the music because the Fed had to rapidly hike rates to fight inflation.

Still, it would be nice if market conditions weren't dependent on the actions of a few unelected bureaucrats in Washington.

TWITTER SPACES

Don't miss our talk with @katewand tomorrow as we dive into what it truly means to be a Liberty Maximalist, the essence of financial and psychological freedom, and the role of #bitcoin, among other topics.

BITCOIN ADOPTION CONTINUES

Bitcoin Argentina, a bitcoin-focused NGO, is offering a virtual training course for Argentinians called "Introduction to Lightning Network."

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week: Bitcoin is attractive.

Most have experienced the sting of betrayal. It upends relationships, businesses, and even large organizations. Healthy partnerships require honesty, and when it is lost, things start to crumble.

Although it might seem abstract, the relationship between governments and their citizens is just that, a relationship. It requires trust and honesty to succeed. Yet, governments have broken that bond repeatedly, especially regarding money.

Governments throughout history routinely centralize the control of money production, allowing them to manipulate and abuse the value of their citizen's wealth. 

Individuals and institutions have pushed back on this by storing their wealth in hard assets like gold, but eventually, the government has always found a way to seize the means of money production.

This leads to a cycle of government officials increasing the money supply and currency debasement, followed by lies that everything will be fine, scapegoating other causes for inflation, and so on. Rinse and repeat.

Today's fiat currency regime represents the apex of centralized government money. Central banks can print paper notes at whim, backed by nothing besides their word.

The system is so dishonest and antithetical to a normal healthy relationship that it is driving many toward a new form of money: bitcoin.

Bitcoin is attractive because it is neutral. It doesn't favor the government or any other privileged group. And it is honest because it is transparent regarding issuance, transactions, and who can use it (anyone).

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COIN CHECK

Which cryptographic algorithm does Bitcoin use to generate public and private keys?

  • A. RSA (Rivest–Shamir–Adleman)

  • B. ECC (Elliptic Curve Cryptography)

  • C. DES (Data Encryption Standard)

  • D. Blowfish

Check your answer at the end of the page.

FROM THE MEME POOL

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Answer: B. ECC (Elliptic Curve Cryptography)

Bitcoin uses the Elliptic Curve Digital Signature Algorithm (ECDSA), which is a variant of Elliptic Curve Cryptography (ECC), for its public-key cryptography.